-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G2t2T/8euC1t5SswY/s6c6hbRyRPS2Z6FD4GL78q0SNbPzx5Wepb4ZGNLzwoAFjc IW5HwBFl5fLJjNvSTFt9hA== 0001005942-96-000007.txt : 19960723 0001005942-96-000007.hdr.sgml : 19960723 ACCESSION NUMBER: 0001005942-96-000007 CONFORMED SUBMISSION TYPE: N-1A EL/A PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 19960719 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM FUNDS TRUST CENTRAL INDEX KEY: 0001005942 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-1A EL/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-00515 FILM NUMBER: 96596552 FILING VALUES: FORM TYPE: N-1A EL/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-07513 FILM NUMBER: 96596553 BUSINESS ADDRESS: STREET 1: ONE POST STREET 2: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921010 MAIL ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 N-1A EL/A 1 As filed with the Securities and Exchange Commission on July 18 , 1996 Registration No. 33--3515 811- 07513 - ------------------------------------------------------------ - ----- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM N-1A - ---- REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X / - ---- - ---- Pre-Effective Amendment No. 2 / X / - ---- - ---- Post-Effective Amendment No. / / and - ---- - ---- REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X / ACT OF 1940 - ---- - ---- Amendment No. 1 / X / (Check appropriate box or boxes) - ---- --------------- PUTNAM FUNDS TRUST (Exact name of registrant as specified in charter) One Post Office Square, Boston, Massachusetts 02109 (Address of principal executive offices) Registrant's Telephone Number, including Area Code (617) 292-1000 -------------- JOHN R. VERANI, Vice President PUTNAM FUNDS TRUST One Post Office Square Boston, Massachusetts 02109 (Name and address of agent for service) --------------- Copy to: JOHN W. GERSTMAYR, Esquire ROPES & GRAY One International Place Boston, Massachusetts 02110 ---------------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. --------------------- PUTNAM FUNDS TRUST CROSS REFERENCE SHEET (AS REQUIRED BY RULE 481(A)) PART A N-1A ITEM NO. LOCATION 1. Cover Page....................... Cover page 2. Synopsis......................... Expenses summary 3. Condensed Financial Information.. How performance is shown 4. General Description of Registrant....................... Objective; How objective is pursued; Organization and history 5. Management of the Fund........... Expenses summary; How the fund is managed; About Putnam Investments, Inc. 5A. Management's Discussion of Fund Performance............. Not applicable 6. Capital Stock and Other Securities....................... Cover page; Organization and history; How the fund makes distributions to shareholders; tax information 7. Purchase of Securities Being Offered.......................... How to buy shares; Distribution plans; How to sell shares; How to exchange shares; How the fund values its shares 8. Redemption or Repurchase......... How to buy shares; How to sell shares; How to exchange shares; Organization and history 9. Pending Legal Proceedings........ Not applicable PART B N-1A ITEM NO. LOCATION 10. Cover Page....................... Cover page 11. Table of Contents................ Cover page 12. General Information and History.. Organization and history (Part A) 13. Investment Objectives and Policies......................... How the fund pursues its objective (Part A); Investment restrictions; Miscellaneous investment practices 14. Management of the Registrant..... Management (Trustees; Officers); Additional officers 15. Control Persons and Principal Holders of Securities............ Management (Trustees; Officers); Charges and expenses (Share ownership) 16. Investment Advisory and Other Services......................... Management (Trustees; Officers; The management contract; Principal underwriter; Investor servicing agent and custodian); Charges and expenses; Distribution plans; Independent accountants 17. Brokerage Allocation............. Management (Portfolio transactions); Charges and expenses 18. Capital Stock and Other Securities....................... Organization and history (Part A); How the fund makes distributions to shareholders; tax information (Part A); Suspension of redemptions 19. Purchase, Redemption, and Pricing of Securities Being Offered...... How to buy shares (Part A); How to sell shares (Part A); How to exchange shares (Part A); How to buy shares; Determination of net asset value; Suspension of redemptions 20. Tax Status....................... How the fund makes distributions to shareholders; tax information (Part A); Taxes 21. Underwriters..................... Management (Principal underwriter); Charges and expenses 22. Calculation of Performance Data.. How performance is shown (Part A) 23. Financial Statements............. Statements of assets and liabilities PART C Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C of the Registration Statement. PROSPECTUS AUGUST 1 , 1996 PUTNAM INTERNATIONAL GROWTH AND INCOME FUND CLASS A, B AND M SHARES INVESTMENT STRATEGY: GROWTH & INCOME This prospectus explains concisely what you should know before investing in Putnam International Growth and Income Fund (the "fund"), a portfolio of Putnam Funds Trust (the "Trust"). Please read it carefully and keep it for future reference. You can find more detailed information in the August 1 , 1996 statement of additional information (the "SAI"), as amended from time to time. For a free copy of the SAI or other information, call Putnam Investor Services at 1-800-225-1581. The SAI has been filed with the Securities and Exchange Commission and is incorporated into this prospectus by reference. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. BOSTON * LONDON * TOKYO ABOUT THE FUND EXPENSES SUMMARY This section describes the sales charges, management fees, and annual operating expenses that apply to the fund's various classes of shares. Use it to help you estimate the impact of transaction costs on your investment over time. OBJECTIVES Read this section to make sure the fund's objectives are consistent with your own. HOW THE FUND PURSUES ITS OBJECTIVES This section explains in detail how the fund seeks its investment objectives. RISK FACTORS. All investments entail some risk. Read this section to make sure you understand certain risks that may be involved when investing in the fund. HOW PERFORMANCE IS SHOWN This section describes and defines the measures used to assess the fund's performance. All data are based on the fund's past investment results and do not predict future performance. HOW THE FUND IS MANAGED Consult this section for information about the fund's management, allocation of the fund's expenses, and how purchases and sales of securities are made for the fund. ORGANIZATION AND HISTORY In this section, you will learn when the fund was introduced, how it is organized, how it may offer shares, and who its Trustees are. ABOUT YOUR INVESTMENT ALTERNATIVE SALES ARRANGEMENTS Read this section for descriptions of the classes of shares this prospectus offers and for points you should consider when making your choice. HOW TO BUY SHARES This section describes the ways you may purchase shares and tells you the minimum amounts required to open various types of accounts. It explains how sales charges are determined and how you may become eligible for reduced sales charges on each class of shares. DISTRIBUTION PLANS This section tells you what distribution fees are charged against each class of shares. HOW TO SELL SHARES In this section , you can learn how to sell shares of the fund, either directly to the fund or through an investment dealer. HOW TO EXCHANGE SHARES Find out in this section how you may exchange shares of the fund for shares of other Putnam funds. The section also explains how exchanges can be made without sales charges and the conditions under which sales charges may be required. HOW THE FUND VALUES ITS SHARES This section explains how the fund determines the value of its shares. HOW THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION This section describes the various options you have in choosing how to receive dividends from the fund. It also discusses the federal tax status of the payments and counsels shareholders to seek specific advice about their own situation. ABOUT PUTNAM INVESTMENTS, INC. Read this section to learn more about the companies that provide the marketing, investment management, and shareholder account services to Putnam funds and their shareholders. ABOUT THE FUND EXPENSES SUMMARY Expenses are one of several factors to consider when investing. The following table summarizes your maximum transaction costs from investing in the fund and estimated expenses for the first fiscal year. The examples show the cumulative expenses attributable to a hypothetical $1,000 investment over specified periods. CLASS A CLASS B CLASS M SHARES SHARES SHARES SHAREHOLDER TRANSACTION EXPENSES Maximum sales charge imposed on purchases (as a percentage of offering price) 5.75% NONE* 3.50%* Deferred sales charge 5.0% in the first (as a percentage year, declining of the lower of to 1.0% in the original purchase sixth year, and price or redemption eliminated proceeds) NONE** thereafter NONE ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets) Total fund Management 12b-1 Other operating fees (after feesexpenses (after expenses (after expense limitation) expense limitation) expense limitation) - --------------- ----- --------------- --------- Class A .62% .25% .84% 1.71% Class B .62% 1.00% .84% 2.46% Class M .62% .75% .84% 2.21% The table is provided to help you understand the expenses of investing in the fund and your share of the operating expenses that the fund expects to incur during its first fiscal year. The expenses shown in the table do not reflect the application of credits related to brokerage service and expense offset arrangements that reduce certain fund expenses. In the absence of the expense limitation, management fees, "Other expenses" and total fund operating expenses would be 0.80%, O.84% and 1.89% for class A shares; 0.80%, 0.84% and 2.64% for class B shares; and 0.80%, 0.84% and 2.39% for class M shares. The 12b-1 fees shown in the table reflect amounts currently payable under each distribution plan. "Other expenses" are based on estimated expenses the fund expects to incur during its first fiscal year. EXAMPLES Your investment of $1,000 would incur the following expenses, assuming 5% annual return and, except as indicated, redemption at the end of each period: 1 3 year years CLASS A $74 $108 CLASS B $75 $107 CLASS B (NO REDEMPTION) $25 $77 CLASS M $57 $102 The examples do not represent past or future expense levels. Actual expenses may be greater or less than those shown. Federal regulations require the examples to assume a 5% annual return, but actual annual return will vary. * The higher 12b-1 fees borne by class B and class M shares may cause long-term shareholders to pay more than the economic equivalent of the maximum permitted front-end sales charge on class A shares. ** A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares that were purchased without an initial sales charge. See "How to buy shares - - Class A shares." OBJECTIVES PUTNAM INTERNATIONAL GROWTH AND INCOME FUND SEEKS CAPITAL GROWTH. CURRENT INCOME IS A SECONDARY OBJECTIVE. The fund is not intended to be a complete investment program, and there is no assurance it will achieve its objectives. HOW THE FUND PURSUES ITS OBJECTIVES BASIC INVESTMENT STRATEGY The fund will invest primarily in common stocks that offer potential for capital growth, and may, consistent with its investment objectives, invest in stocks that offer potential for current income. Under normal market conditions, the fund expects to invest substantially all of its assets in securities of issuers traded on markets outside the United States . The fund will normally diversify its investment among a number of different countries, and, except when investing for defensive purposes as described below, will invest in at least three countries other than the United States. The fund may invest in securities of issuers in emerging market countries (as defined below under "Investment policies and techniques; risk factors --Foreign investments") , as well as securities of issuers in more developed countries. Investing in emerging market countries involves special risks. See "Investment policies and techniques; risk factors -- Foreign investments." The fund may also purchase corporate bonds, notes and debentures, preferred stocks, securities convertible into common stock or other equity securities , or U.S. or foreign government securities if Putnam Investment Management, Inc., the fund's investment manager ("Putnam Management"), determines that their purchase would help further the fund's investment objectives. The types of securities held by the fund may vary from time to time in light of the fund's investment objectives, changes in interest rates, and economic and other factors. When selecting portfolio securities for the fund that have the potential for capital growth, Putnam Management will seek to identify securities that are significantly undervalued in relation to underlying asset values or earnings potential. The fund may also hold a portion of its assets in cash or high-quality money market instruments. Common stocks of foreign issuers have historically offered lower yields than common stocks of comparable U.S. issuers. In addition, foreign withholding taxes will further reduce the amount of income available for distribution to fund shareholders. As a result, the fund's yield is expected to be lower than that of funds with similar investment objectives that invest primarily in U.S. issuers. See "How the fund makes distributions to shareholders." INVESTMENT POLICIES AND TECHNIQUES; RISK FACTORS FOREIGN INVESTMENTS. Since foreign securities are normally denominated and traded in foreign currencies, the value of the fund's assets may be affected favorably or unfavorably by currency exchange rates and exchange control regulations. There may be less information publicly available about a foreign company than about a U.S. company, and foreign companies are not generally subject to accounting, auditing and financial reporting standards and practices comparable to those in the United States. The securities of some foreign companies are less liquid and at times more volatile than securities of comparable U.S. companies. Foreign brokerage commissions and other fees are also generally higher than in the United States. Foreign settlement procedures and trade regulations may involve certain risks (such as delay in payment or delivery of securities or in the recovery of the fund's assets held abroad) and expenses not present in the settlement of domestic investments. In addition, there may be a possibility of nationalization or expropriation of assets, imposition of currency exchange controls, confiscatory taxation, political or financial instability and diplomatic developments which could affect the value of the fund's investments in certain foreign countries. Legal remedies available to investors in certain foreign countries may be more limited than those available with respect to investments in the United States or in other foreign countries. The laws of some foreign countries may limit the fund's ability to invest in securities of certain issuers located in those foreign countries. Special tax considerations apply to foreign securities. The risks described above, including the risks of nationalization or expropriation of assets, are typically increased to the extent that the fund invests in issuers located in emerging market countries. For these purposes, a country is considered to be an "emerging market country" based on Putnam Management's evaluation of its level of economic development or the size and experience of its securities markets. Political and economic structures in many of these countries may be in their infancy and developing rapidly, and such countries may lack the social, political and economic stability characteristic of more developed countries. Certain of these countries have in the past failed to recognize private property rights and have at times nationalized and expropriated the assets of private companies. A MORE DETAILED EXPLANATION OF FOREIGN INVESTMENTS, AND THE RISKS AND SPECIAL TAX CONSIDERATIONS ASSOCIATED WITH THEM, IS INCLUDED IN THE SAI. FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Putnam Management may engage in foreign currency exchange transactions to protect against uncertainty in the level of future exchange rates. Putnam Management may engage in foreign currency exchange transactions in connection with the purchase and sale of portfolio securities ("transaction hedging") and to protect the value of specific portfolio positions ("position hedging"). The fund may engage in transaction hedging to protect against a change in the foreign currency exchange rate between the date on which the fund contracts to purchase or sell the security and the settlement date, or to "lock in" the U.S. dollar equivalent of a dividend or interest payment in a foreign currency. The fund may purchase or sell a foreign currency on a spot (or cash) basis at the prevailing spot rate as part of its transaction hedging strategies. If conditions warrant, the fund may also enter into contracts to purchase or sell foreign currencies at a future date ("forward contracts") and may purchase and sell foreign currency futures contracts as part of its transaction hedging strategies. A foreign currency forward contract is a negotiated agreement to exchange currency at a future time at a rate or rates that may be higher or lower than the spot rate. Foreign currency futures contracts are standardized exchange-traded contracts and have margin requirements. The fund may also purchase exchange- listed and over-the-counter call and put options on foreign currency futures contracts and on foreign currencies. The fund may engage in "position hedging" to protect against the decline in the value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of the foreign currencies for securities which the fund intends to buy, when the fund holds cash reserves or short-term investments). For position hedging purposes, the fund may purchase or sell foreign currency futures contracts, foreign currency forward contracts, and put and call options on foreign currency futures contracts and on foreign currencies on exchanges or over-the-counter markets. In connection with position hedging, the fund may also purchase or sell foreign currencies on a spot basis. The fund's currency hedging transactions may call for the delivery of one foreign currency in exchange for another foreign currency and may at times involve currencies other than those in which its portfolio securities are then denominated. Putnam Management will engage in such "cross hedging" activities when it believes that such transactions provide significant hedging opportunities for the fund. Cross hedging transactions by the fund involve the risk of imperfect correlation between changes in the values of the currencies to which such transactions relate and changes in the value of the currency or other asset or liability which is the subject of the hedge. Hedging transactions involve costs and may result in losses. The decision as to whether and to what extent the fund will engage in foreign currency exchange transactions will depend on a number of factors, including prevailing market conditions, the composition of the fund's portfolio, and the availability of suitable transactions. Accordingly, there can be no assurance that the fund will engage in foreign currency exchange transactions at any given time or from time to time. In addition, the currencies of certain foreign countries are not widely traded, and as a result, foreign currency exchange transactions may not be available with respect to such currencies . The fund's ability to engage in hedging transactions may be limited by tax considerations. The fund's hedging transactions may affect the character or amount of its distributions. INVESTMENTS IN SECURITIES OF SMALL-CAPITALIZATION COMPANIES. The fund may invest a portion of its assets in securities of small-capitalization companies (defined for these purposes as companies with equity market capitalizations of less than $1 billion). These securities may involve certain special risks. Such companies may have limited product lines, markets or financial resources, and may be dependent on a limited management group. Such securities may trade less frequently and in smaller volume than more widely held securities. The values of these securities may fluctuate more sharply than those of other securities, and the fund may experience some difficultly in establishing or closing out positions in these securities at prevailing market prices. There may be less publicly available information about the issuers of these securities or less market interest in such securities than in the case of larger companies, and it may take a longer period of time for the prices of such securities to reflect the full value of their issuers' underlying earnings potential or assets. INVESTMENTS IN FIXED-INCOME SECURITIES. The fund may invest in fixed-income securities rated at the time of purchase C or better by Moody's Investor Services, Inc. ("Moody's") or Standard & Poor's ("S&P"), and in unrated securities which Putnam Management determined to be comparable quality . The values of fixed-income securities generally fluctuate in response to changes in interest rates. Thus, a decrease in interest rates will generally result in an increase in the value of the fixed- income securities held by the fund . Conversely, during periods of rising interest rates, the value of the fixed- income securities held by the fund will generally decline. The values of lower-rated fixed-income securities (i.e., securities rated below Baa by Moody's or BBB by S&P or unrated securities of comparable quality) , commonly known as "junk bonds," generally fluctuate more than those of higher-rated fixed- income securities. Securities in the lower rating categories may, depending on the rating, have large uncertainties or major exposure to adverse conditions. The rating services' descriptions of securities in the various rating categories, including the speculative characteristics of securities in the lower rating categories, are set forth in the SAI. The lower ratings of these securities reflect a greater possibility that adverse changes in the financial condition of their issuers, or in general economic conditions, or both, or an unanticipated rise in interest rates, may impair the ability of their issuers to make payments of interest and principal. In addition, under such circumstances the values of such securities may be more volatile, and the markets for such securities may be less liquid, than those for higher-rated securities, and the fund may as a result find it more difficult to determine the fair value of such securities. When the fund invests in securities in the lower ratings categories, the achievement of the fund's goals is more dependent on Putnam Management's ability than would be the case if the fund were investing in securities in the higher rating categories. PORTFOLIO TURNOVER. The length of time the fund has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the fund is known as "portfolio turnover." As a result of the fund's investment policies, under certain market conditions , the fund's portfolio turnover rate may be higher than that of other mutual funds. Portfolio turnover generally involves some expense to the fund, including brokerage commissions or dealer markups and other transaction costs on the sale of securities and reinvestment in other securities. These transactions may result in realization of taxable capital gains. While it is impossible to predict portfolio turnover rates, based on its experience, Putnam Management believes that such rate will not exceed 150%. FINANCIAL FUTURES AND RELATED OPTIONS. The fund may buy and sell financial futures contracts on stock indexes and foreign currencies. A futures contract is a contract to buy or sell units of a particular stock index, or a certain amount of a foreign currency, at an agreed price on a specified future date. In addition to or as an alternative to purchasing or selling futures contracts, the fund may buy and sell call and put options on futures contracts , stock indexes and foreign currencies . The fund may engage in futures and options transactions for hedging purposes and for nonhedging purposes, such as to earn additional income or to adjust its exposure to relevant markets. THE USE OF FINANCIAL FUTURES AND RELATED OPTIONS INVOLVES CERTAIN SPECIAL RISKS. FUTURES AND OPTIONS TRANSACTIONS INVOLVE COSTS AND MAY RESULT IN LOSSES. Certain risks arise because of the possibility of imperfect correlations between movements in the prices of financial futures and options and movements in the prices of the underlying stock index or currencies, or of the securities or currencies which are the subject of the hedge. The successful use of futures and options further depends on Putnam Management's ability to forecast market movements correctly. Other risks arise from the fund's potential inability to close out its futures or related options positions, and there can be no assurance that a liquid secondary market will exist for any futures contract or option at a particular time. The use of futures and options transactions for purposes other than hedging entails greater risks. The fund's ability to terminate option positions established in the over-the-counter market may be more limited than for exchange-traded options and may also involve the risk that securities dealers participating in such transactions would fail to meet their obligations to the fund. Because the markets for options and futures on foreign stock indexes and currencies are relatively new and still developing, the fund's ability to engage in such transactions may be limited. Certain provisions of the Internal Revenue Code and certain regulatory requirements may also limit the fund's ability to engage in futures and options transactions. A MORE DETAILED EXPLANATION OF FUTURES AND OPTIONS TRANSACTIONS, INCLUDING THE RISKS ASSOCIATED WITH THEM, IS INCLUDED IN THE SAI. OPTIONS. The fund may seek to increase its current return by writing covered call and put options on securities it owns or in which it may invest. The fund receives a premium from writing a call or put option, which increases the return if the option expires unexercised or is closed out at a net profit. When the fund writes a call option, it gives up the opportunity to profit from any increase in the price of a security above the exercise price of the option; when it writes a put option, the fund takes the risk that it will be required to purchase a security from the option holder at a price above the current market price of the security. The fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction in which it purchases an option having the same terms as the option written. The fund may also buy and sell put and call options for hedging purposes. From time to time, the fund may also buy and sell combinations of put and call options on the same underlying security to earn additional income. The fund may also invest in warrants to purchase equity securities. The aggregate value of the securities underlying options may not exceed 25% of the fund's assets. The use of these strategies may be limited by applicable law. A MORE DETAILED EXPLAINED EXPLANATION OF OPTIONS TRANSACTIONS, INCLUDING THE RISKS ASSOCIATED WITH THEM, IS INCLUDED IN THE SAI. SECURITIES LOANS, REPURCHASE AGREEMENTS AND FORWARD COMMITMENTS. The fund may lend portfolio securities amounting to not more than 25% of its assets to broker-dealers and may enter into repurchase agreements on up to 25% of its assets. These transactions must be fully collateralized at all times. The fund may also purchase securities for future delivery, which may increase its overall investment exposure and involves a risk of loss if the value of the securities declines prior to the settlement date. These transactions involve some risk to the fund if the other party should default on its obligation and the fund is delayed or prevented from recovering the collateral or completing the transaction. DEFENSIVE STRATEGIES At times Putnam Management may judge that conditions in securities markets make pursuing the basic investment strategy of the fund inconsistent with the best interests of the fund's shareholders. At such times Putnam Management may temporarily use alternative strategies, primarily designed to reduce fluctuations in the value of the fund's assets. In implementing these "defensive" strategies, the fund may invest without limit in cash or money market instruments, preferred stocks, debt securities issued by the U.S. government or any foreign government or their agencies or instrumentalities, or in any other securities Putnam Management considers consistent with such defensive strategies. In addition, when pursuing such defensive strategies, the fund may invest without limit in securities primarily traded in U.S. markets. It is impossible to predict when, or for how long, the fund will use alternative strategies. DIVERSIFICATION The fund is a "diversified" investment company under the Investment Company Act of 1940. This means that with respect to 75% of its total assets the fund may not invest more than 5% of its total assets in the securities of any one issuer (except U.S. government securities). The remaining 25% of the fund's total assets is not subject to this restriction. To the extent the fund invests a significant portion of its assets in the securities of a particular issuer, the fund will be subject to an increased risk of loss if the market value of such issuer's securities declines. DERIVATIVES Certain of the instruments in which the fund will invest, such as futures contracts, options and forward contracts, are considered to be "derivatives." Derivatives are financial instruments whose value depends upon, or is derived from, the value of an underlying asset, such as a security, a currency or an index. Further information about these instruments and the risks involved in their use is included elsewhere in this prospectus and in the SAI. LIMITING INVESTMENT RISK SPECIFIC INVESTMENT RESTRICTIONS HELP THE FUND LIMIT INVESTMENT RISKS FOR ITS SHAREHOLDERS. These restrictions prohibit the fund (with respect to 75% of its total assets) from acquiring more than 10% of the voting securities of any one issuer. They also prohibit the fund from investing more than: (a) (with respect to 75% of its assets) 5% of its total assets (taken at current value) in securities of any one issuer;* (b) 25% of its total assets in any one industry (securities of the U.S. government, its agencies or instrumentalities are not considered to represent industries);* (c) 15% of its net assets in any combination of securities that are not readily marketable, in securities restricted as to resale (excluding securities determined by the Trustees (or the person designated by the Trustees to make such determinations) to be readily marketable), and in repurchase agreements maturing in more than seven days. Restrictions marked with an asterisk (*) above are summaries of fundamental investment policies. See the SAI for the full text of these policies and the fund's other fundamental investment policies. Except for investment policies designated as fundamental in this prospectus or the SAI, the investment policies described in this prospectus and in the SAI are not fundamental policies. The Trustees may change any non-fundamental investment policies without shareholder approval. As a matter of policy, the Trustees would not materially change the fund's investment objectives without shareholder approval. HOW PERFORMANCE IS SHOWN THE FUND'S INVESTMENT PERFORMANCE MAY FROM TIME TO TIME BE INCLUDED IN ADVERTISEMENTS ABOUT THE FUND. "Yield" for each class of shares is calculated by dividing the annualized net investment income per share during a recent 30-day period by the maximum public offering price per share of the class on the last day of that period. "Total return" for the one-, five- and ten-year periods (or for the life of a class, if shorter) through the most recent calendar quarter represents the average annual compounded rate of return on an investment of $1,000 in the fund invested at the maximum public offering price (in the case of class A and class M shares) or reflecting the deduction of any applicable contingent deferred sales charge (in the case of class B shares). Total return may also be presented for other periods or based on investment at reduced sales charge levels. Any quotation of investment performance not reflecting the maximum initial sales charge or contingent deferred sales charge would be reduced if the sales charge were used. ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT FUTURE PERFORMANCE. Investment performance, which will vary, is based on many factors, including market conditions, the composition of the fund's portfolio, the fund's operating expenses and which class of shares the investor purchases. Investment performance also often reflects the risks associated with the fund's investment objectives and policies. These factors should be considered when comparing the fund's investment results with those of other mutual funds and other investment vehicles. Quotations of investment performance for any period when an expense limitation was in effect will be greater than if the limitation had not been in effect. The fund's performance may be compared to that of various indexes. See the SAI. HOW THE FUND IS MANAGED THE TRUSTEES OF THE FUND ARE RESPONSIBLE FOR GENERALLY OVERSEEING THE CONDUCT OF THE FUND'S BUSINESS. Subject to such policies as the Trustees may determine, Putnam Management furnishes a continuing investment program for the fund and makes investment decisions on its behalf. Subject to the control of the Trustees, Putnam Management also manages the fund's other affairs and business. The fund pays Putnam Management a quarterly fee for these services based on the fund's average net assets. See "Expenses summary" and the SAI. The following officer of Putnam Management has had primary responsibility for the day-to-day management of the fund's portfolio since the year stated below: Business experience Year (at least 5 years) ----- ------------------------- Justin M. Scott 1996 Employed as an Managing Director investment professional by Putnam Management since 1988. The fund pays its share of all expenses not assumed by Putnam Management, including Trustees' fees, auditing, legal, custodial, investor servicing and shareholder reporting expenses, and payments under its distribution plans. Expenses of the Trust directly charged or attributable to the fund will be paid from the assets of the fund. General expenses of the Trust will be allocated among the fund and other series of the Trust on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of the fund and other series of the Trust or the nature of the services performed and relative applicability to the fund. The fund also reimburses Putnam Management for a portion of the compensation and related expenses of certain officers of the Trust and their staff who provide administrative services to the Trust. The total reimbursement is determined annually by the Trustees. Putnam Management places all orders for purchases and sales of the fund's securities. In selecting broker-dealers, Putnam Management may consider research and brokerage services furnished to it and its affiliates. Subject to seeking the most favorable price and execution available, Putnam Management may consider sales of shares of the fund (and, if permitted by law, of the other Putnam funds) as a factor in the selection of broker- dealers. The fund pays a quarterly fee to Putnam Management based on the average net assets of the fund, as determined at the close of each business day during the quarter, at the following annual rates, expressed as a percentage of the fund's average net assets: 0.80% of the first $500 million of the average net asset value of the fund; 0.70% of the next $500 million; 0.65% of the next $500 million; 0.60% of the next $5 billion; 0.575% of the next $5 billion; 0.555% of the next $5 billion; 0.54% of the next $5 billion; and 0.53% of any excess thereafter. In order to limit the fund's expenses during its start-up period, Putnam Management has agreed to limit its compensation (and, to the extent necessary, bear other expenses) through July 1, 1997, to the extent that expenses of the fund (exclusive of brokerage, interest, taxes, deferred organizational and extraordinary expense, and payments under the fund's distribution plans) would exceed 1.45% of the fund's average net assets. For the purpose of determining any such limitation on Putnam Management's compensation, fund expenses shall not reflect the application of commissions or cash management credits that may reduce designated fund expenses. With Trustee approval, this expense limitation may be terminated earlier, in which event shareholders would be notified and this prospectus would be revised. ORGANIZATION AND HISTORY The Trust is a Massachusetts business trust organized on January 22, 1996. A copy of the Agreement and Declaration of Trust, which is governed by Massachusetts law, is on file with the Secretary of State of The Commonwealth of Massachusetts. As of August 1 , 1996, Putnam Investments, Inc. and Putnam Investments, Inc. Profit Sharing Retirement Plan each owned more than 25% of the shares of the fund and therefore each may be deemed to "control" the fund. The Trust is an open-end, diversified management investment company with an unlimited number of authorized shares of beneficial interest. Shares of the Trust may be divided without shareholder approval into two or more series of shares representing separate investment portfolios. Only shares of Putnam International Growth and Income Fund are offered by this prospectus. Any such series of shares may be divided without shareholder approval into two or more classes of shares having such preferences and special or relative rights and privileges as the Trustees determine. The fund's shares are currently divided into four classes. Only the fund's class A, B and M shares are offered by this prospectus. The fund may also offer other classes of shares with different sales charges and expenses. Because of these different sales charges and expenses, the investment performance of the classes will vary. For more information, including your eligibility to purchase any other class of shares, contact your investment dealer or Putnam Mutual Funds (at 1- 800- 225-1581). Each share has one vote, with fractional shares voting proportionally. Shares of each class will vote together as a single class without regard to series or classes of shares on all matters except, (i) when required by the Investment Company Act of 1940 or when the Trustees have determined that the matter affects the interests of one or more series or classes materially differently, shares will be voted by individual series or class; and (ii) when the Trustees have determined that the matter affects only the interest of one or more series or classes, only shareholders of that series or class shall be entitled to vote thereon. Shares are freely transferable, are entitled to dividends as declared by the Trustees, and, if the fund were liquidated, would receive the net assets of the fund. The fund may suspend the sale of shares at any time and may refuse any order to purchase shares. Although the Trust is not required to hold annual meetings of its shareholders, shareholders holding at least 10% of the outstanding shares entitled to vote have the right to call a meeting to elect or remove Trustees, or to take other actions as provided in the Agreement and Declaration of Trust. If you own fewer shares than a minimum amount set by the Trustees (presently 20 shares), the fund may choose to redeem your shares. You will receive at least 30 days' written notice before the fund redeems your shares, and you may purchase additional shares at any time to avoid a redemption. The fund may also redeem shares if you own shares above a maximum amount set by the Trustees. There is presently no maximum, but the Trustees may establish one at any time, which could apply to both present and future shareholders. THE TRUST'S TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the Putnam funds. Chairman and Director of Putnam Management and Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director, Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE CHAIRMAN. Professor of Management, Alfred P. Sloan School of Management, Massachusetts Institute of Technology; JAMESON ADKINS BAXTER, President, Baxter Associates, Inc.; HANS H. ESTIN, Vice Chairman, North American Management Corp.; JOHN A. HILL, Chairman and Managing Director, First Reserve Corporation; RONALD J. JACKSON, Former Chairman, President and Chief Executive Officer of Fisher-Price, Inc., Trustee of Salem Hospital and Overseer of the Peabody Essex Museum; ELIZABETH T. KENNAN, President Emeritus and Professor, Mount Holyoke College; LAWRENCE J. LASSER,* Vice President of the Putnam funds. President, Chief Executive Officer and Director of Putnam Investments, Inc. and Putnam Management. Director, Marsh & McLennan Companies, Inc.; ROBERT E. PATTERSON, Executive Vice President and Director of Acquisitions, Cabot Partners Limited Partnership; DONALD S. PERKINS,* Director of various corporations, including Cummins Engine Company, Inc., Lucent Technologies Inc., Springs Industries, Inc. and Time Warner Inc.; GEORGE PUTNAM, III,* President, New Generation Research, Inc.; ELI SHAPIRO, Alfred P. Sloan Professor of Management, Emeritus, Alfred P. Sloan School of Management, Massachusetts Institute of Technology; A.J.C. SMITH,* Chairman and Chief Executive Officer, Marsh & McLennan Companies, Inc.; and W. NICHOLAS THORNDIKE, Director of various corporations and charitable organizations, including Data General Corporation, Bradley Real Estate, Inc. and Providence Journal Co. Also, Trustee of Massachusetts General Hospital and Eastern Utilities Associates. The Trust's Trustees are also Trustees of the other Putnam funds. Those marked with an asterisk (*) are or may be deemed to be "interested persons" of the fund, Putnam Management or Putnam Mutual Funds. ABOUT YOUR INVESTMENT ALTERNATIVE SALES ARRANGEMENTS This prospectus offers investors three classes of shares that bear sales charges in different forms and amounts and that bear different levels of expenses: CLASS A SHARES. An investor who purchases class A shares pays a sales charge at the time of purchase. As a result, class A shares are not subject to any charges when they are redeemed, except for certain sales at net asset value that are subject to a contingent deferred sales charge ("CDSC"). Certain purchases of class A shares qualify for reduced sales charges. Class A shares bear a lower 12b-1 fee than class B and class M shares. See "How to buy shares -- Class A shares" and "Distribution plans." CLASS B SHARES. Class B shares are sold without an initial sales charge, but are subject to a CDSC if redeemed within a specified period after purchase. Class B shares also bear a higher 12b-1 fee than class A and class M shares. Class B shares automatically convert into class A shares, based on relative net asset value, approximately eight years after purchase. For more information about the conversion of class B shares, see the SAI. This discussion will include information about how shares acquired through reinvestment of distributions are treated for conversion purposes. The discussion will also note certain circumstances under which a conversion may not occur. Class B shares provide an investor the benefit of putting all of the investor's dollars to work from the time the investment is made. Until conversion, class B shares will have a higher expense ratio and pay lower dividends than class A and class M shares because of the higher 12b-1 fee. See "How to buy shares -- Class B shares" and "Distribution plans." CLASS M SHARES. An investor who purchases class M shares pays a sales charge at the time of purchase that is lower than the sales charge applicable to class A shares. Certain purchases of class M shares qualify for reduced sales charges. Class M shares bear a 12b-1 fee that is lower than class B shares but higher than class A shares. Class M shares are not subject to any CDSC and do not convert into any other class of shares. See "How to buy shares -- Class M shares" and "Distribution plans." WHICH ARRANGEMENT IS BEST FOR YOU? The decision as to which class of shares provides a more suitable investment for an investor depends on a number of factors, including the amount and intended length of the investment. Investors making investments that qualify for reduced sales charges might consider class A or class M shares. Investors who prefer not to pay an initial sales charge might consider class B shares. Orders for class B shares for $250,000 or more will be treated as orders for class A shares or declined. For more information about these sales arrangements, consult your investment dealer or Putnam Investor Services. Sales personnel may receive different compensation depending on which class of shares they sell. Shares may only be exchanged for shares of the same class of another Putnam fund. See "How to exchange shares." HOW TO BUY SHARES You can open a fund account with as little as $500 and make additional investments at any time with as little as $50. You can buy fund shares three ways - through most investment dealers, through Putnam Mutual Funds (at 1-800-225-1581), or through a systematic investment plan. If you do not have a dealer, Putnam Mutual Funds can refer you to one. BUYING SHARES THROUGH PUTNAM MUTUAL FUNDS. Complete an order form and write a check for the amount you wish to invest, payable to the fund. Return the completed form and check to Putnam Mutual Funds, which will act as your agent in purchasing shares through your designated investment dealer. BUYING SHARES THROUGH SYSTEMATIC INVESTING. You can make regular investments of $25 or more per month through automatic deductions from your bank checking or savings account. Application forms are available from your investment dealer or through Putnam Investor Services. Shares are sold at the public offering price based on the net asset value next determined after Putnam Investor Services receives your order. In most cases, in order to receive that day's public offering price, Putnam Investor Services must receive your order before the close of regular trading on the New York Stock Exchange. If you buy shares through your investment dealer, the dealer must receive your order before the close of regular trading on the New York Stock Exchange to receive that day's public offering price. CLASS A SHARES The public offering price of class A shares is the net asset value plus a sales charge that varies depending on the size of your purchase. The fund receives the net asset value. The sales charge is allocated between your investment dealer and Putnam Mutual Funds as shown in the following table, except when Putnam Mutual Funds, in its discretion, allocates the entire amount to your investment dealer. SALES CHARGE AMOUNT OF AS A PERCENTAGE OF: SALES CHARGE ------------------- REALLOWED TO NET DEALERS AS A AMOUNT OF TRANSACTION AMOUNT OFFERING PERCENTAGE OF AT OFFERING PRICE ($) INVESTED PRICE OFFERING PRICE - ------------------------------------------------------------ - ----- Under 50,000 6.10% 5.75% 5.00% 50,000 but under 100,000 4.71 4.50 3.75 100,000 but under 250,000 3.63 3.50 2.75 250,000 but under 500,000 2.56 2.50 2.00 500,000 but under 1,000,000 2.04 2.00 1.75 - ------------------------------------------------------------ - ----- There is no initial sales charge on purchases of class A shares of $1 million or more. However, a CDSC of 1.00% or 0.50%, respectively, will be imposed if you redeem these shares within the first or second year after purchase, based on the lower of the shares' cost and current net asset value. Any shares acquired by reinvestment of distributions will be redeemed without a CDSC. In addition, there are no sales charges on shares purchased by participant-directed employee benefit plans with at least 200 eligible employees. Shares purchased by certain investors investing $1 million or more who have made arrangements with Putnam Mutual Funds and whose dealer of record waived the commission as described below are not subject to the CDSC. In determining whether a CDSC is payable, the fund will first redeem shares not subject to any charge. Putnam Mutual Funds receives the entire amount of any CDSC you pay. See the SAI for more information about the CDSC. Except as stated below, Putnam Mutual Funds pays investment dealers of record commissions on sales of class A shares of $1 million or more based on an investor's cumulative purchases during the one-year period beginning with the date of the initial purchase at net asset value. Each subsequent one-year measuring period for these purposes will begin with the first net asset value purchase following the end of the prior period. Such commissions are paid at the rate of 1.00% of the amount under $3 million, 0.50% of the next $47 million and 0.25% thereafter. On sales at net asset value to a participant-directed qualified retirement plan initially investing less than $20 million in Putnam funds and other investments managed by Putnam Management or its affiliates (including a plan with at least 200 eligible employees), Putnam Mutual Funds pays commissions during each one- year measuring period, determined as described above, at the rate of 1.00% of the first $2 million, 0.80% of the next $1 million and 0.50% thereafter. On sales at net asset value to all other participant-directed qualified retirement plans, Putnam Mutual Funds pays commissions on the initial investment and on subsequent net quarterly sales at the rate of 0.15%. CLASS B SHARES Class B shares are sold without an initial sales charge, although a CDSC will be imposed if you redeem shares within a specified period after purchase, as shown in the table below. The following types of shares may be redeemed without charge at any time: (i) shares acquired by reinvestment of distributions and (ii) shares otherwise exempt from the CDSC, as described in "How to buy shares -- General" below. For other shares, the amount of the charge is determined as a percentage of the lesser of the current market value or the cost of the shares being redeemed. YEAR 1 2 3 4 5 6 7+ - ------------------------------------------------------------ - - CHARGE 5% 4% 3% 3% 2% 1% 0% In determining whether a CDSC is payable on any redemption, the fund will first redeem shares not subject to any charge, and then shares held longest during the CDSC period. For this purpose, the amount of any increase in a share's value above its initial purchase price is not regarded as a share exempt from the CDSC. Thus, when a share that has appreciated in value is redeemed during the CDSC period, a CDSC is assessed only on its initial purchase price. For information on how sales charges are calculated if you exchange your shares, see "How to exchange shares." Putnam Mutual Funds receives the entire amount of any CDSC you pay. CLASS M SHARES The public offering price of class M shares is the net asset value plus a sales charge that varies depending on the size of your purchase. The fund receives the net asset value. The sales charge is allocated between your investment dealer and Putnam Mutual Funds as shown in the following table, except when Putnam Mutual Funds, at its discretion, allocates the entire amount to your investment dealer. SALES CHARGE AMOUNT OF AS A PERCENTAGE OF: SALES CHARGE ------------------- REALLOWED TO NET DEALERS AS A AMOUNT OF TRANSACTION AMOUNT OFFERING PERCENTAGE OF AT OFFERING PRICE ($) INVESTED PRICE OFFERING PRICE - ------------------------------------------------------------ - ----- Under 50,000 3.63% 3.50% 3.00% 50,000 but under 100,000 2.56 2.50 2.00 100,000 but under 250,000 1.52 1.50 1.00 250,000 but under 500,000 1.01 1.00 1.00 500,000 and above NONE NONE NONE GENERAL YOU MAY BE ELIGIBLE TO BUY CLASS A SHARES AND CLASS M SHARES AT REDUCED SALES CHARGES. Consult your investment dealer or Putnam Mutual Funds for details about Putnam's combined purchase privilege, cumulative quantity discount, statement of intention, group sales plan, employee benefit plans, and other plans. Descriptions are also included in the order form and in the SAI. A participant-directed employee benefit plan participating in a "multi-fund" program approved by Putnam Mutual Funds may include amounts invested in other mutual funds participating in such program for purposes of determining whether the plan may purchase class A shares at net asset value. These investments will also be included for purposes of the discount privileges and programs described above. Sales charges will not apply to class M shares purchased with redemption proceeds received within the prior 90 days from non- Putnam mutual funds on which the investor paid a front-end or a contingent deferred sales charge or to class M shares purchased by participant-directed qualified retirement plans with at least 50 eligible employees. The fund may also sell class M shares at net asset value to members of qualified groups. The fund may sell class A, class B and class M shares at net asset value without an initial sales charge or a CDSC to the fund's current and retired Trustees (and their families), current and retired employees (and their families) of Putnam Management and affiliates, registered representatives and other employees (and their families) of broker-dealers having sales agreements with Putnam Mutual Funds, employees (and their families) of financial institutions having sales agreements with Putnam Mutual Funds (or otherwise having an arrangement with a broker- dealer or financial institution with respect to sales of fund shares), financial institution trust departments investing an aggregate of $1 million or more in Putnam funds, clients of certain administrators of tax-qualified plans, tax-qualified plans when proceeds from repayments of loans to participants are invested (or reinvested) in Putnam funds, "wrap accounts" for the benefit of clients of broker-dealers, financial institutions or financial planners adhering to certain standards established by Putnam Mutual Funds, and investors meeting certain requirements who sold shares of certain Putnam closed-end funds pursuant to a tender offer by the closed-end fund. In addition, the fund may sell shares at net asset value without an initial sales charge or a CDSC in connection with the acquisition by the fund of assets of an investment company or personal holding company. The CDSC will be waived on redemptions of shares arising out of the death or post-purchase disability of a shareholder or settlor of a living trust account, and on redemptions in connection with certain withdrawals from IRA or other retirement plans. Up to 12% of the value of shares subject to a systematic withdrawal plan may also be redeemed each year without a CDSC. The SAI contains additional information about purchasing the fund's shares at reduced sales charges. Shareholders of other Putnam funds may be entitled to exchange their shares for, or reinvest distributions from their funds in, shares of the fund at net asset value. If you are considering redeeming or exchanging shares or transferring shares to another person shortly after purchase, you should pay for those shares with a certified check to avoid any delay in redemption, exchange or transfer. Otherwise the fund may delay payment until the purchase price of those shares has been collected or, if you redeem by telephone, until 15 calendar days after the purchase date. To eliminate the need for safekeeping, the fund will not issue certificates for your shares unless you request them. Putnam Mutual Funds will from time to time, at its expense, provide additional promotional incentives or payments to dealers that sell shares of the Putnam funds. These incentives or payments may include payments for travel expenses, including lodging, incurred in connection with trips taken by invited registered representatives and their guests to locations within and outside the United States for meetings or seminars of a business nature. In some instances, these incentives or payments may be offered only to certain dealers who have sold or may sell significant amounts of shares. Certain dealers may not sell all classes of shares. DISTRIBUTION PLANS CLASS A DISTRIBUTION PLAN. The class A plan provides for payments by the fund to Putnam Mutual Funds at the annual rate of up to 0.35% of the fund's average net assets attributable to class A shares, subject to the authority of the Trustees to reduce the amount of payments or to suspend the class A plan for such periods as they may determine. Subject to these limitations, the amount of such payments and the specific purposes for which they are made shall be determined by the Trustees. Putnam Mutual Funds makes quarterly payments to qualifying dealers (including, for this purpose, certain financial institutions) to compensate them for services provided in connection with sales of class A shares and the maintenance of shareholder accounts. The payments are based on the average net asset value of class A shares attributable to shareholders for whom the dealers are designated as the dealer of record. This calculation excludes until one year after purchase shares purchased at net asset value, known as "NAV shares," by shareholders investing $1 million or more. Also excluded until one year after purchase are NAV shares purchased by participant- directed qualified retirement plans with at least 200 eligible employees. NAV shares are not subject to the one-year exclusion provision in cases where certain shareholders who invested $1 million or more have made arrangements with Putnam Mutual Funds and the dealer of record waived the sales commission. Except as stated below, Putnam Mutual Funds makes the quarterly payments at the annual rate of 0.25% of such average net asset value for class A shares (including shares acquired through reinvestment of distributions). For participant-directed qualified retirement plans initially investing less than $20 million in Putnam funds and other investments managed by Putnam Management or its affiliates, Putnam Mutual Funds' payments to qualifying dealers on NAV shares are 100% of the rate stated above if average plan assets in Putnam funds (excluding money market funds) during the quarter are less than $20 million, 60% of the stated rate if average plan assets are at least $20 million but under $30 million, and 40% of the stated rate if average plan assets are $30 million or more. For all other participant-directed qualified retirement plans purchasing NAV shares, Putnam Mutual Funds makes quarterly payments to qualifying dealers at the annual rate of 0.10% of the average net asset value of such shares. CLASS B AND CLASS M DISTRIBUTION PLANS. The class B and class M plans provide for payments by the fund to Putnam Mutual Funds at the annual rate of up to 1.00% of average net assets attributable to class B shares and class M shares, as the case may be. The Trustees currently limit payments under the class M plan to the annual rate of 0.75% of such assets. Although class B shares are sold without an initial sales charge, Putnam Mutual Funds pays a sales commission equal to 4.00% of the amount invested to dealers who sell class B shares. These commissions are not paid on exchanges from other Putnam funds or on sales to investors exempt from the CDSC. The amount paid to dealers at the time of the sale of class M shares is set forth above under "How to buy shares -- Class M shares." In addition, to further compensate dealers (including qualifying financial institutions) for services provided in connection with sales of class B shares and class M shares and the maintenance of shareholder accounts, Putnam Mutual Funds makes quarterly payments to qualifying dealers. The payments are based on the average net asset value of class B shares and class M shares attributable to shareholders for whom the dealers are designated as the dealer of record. Putnam Mutual Funds makes the payments at an annual rate of 0.25% of such average net asset value of class B shares and class M shares, as the case may be. Putnam Mutual Funds also pays to dealers, as additional compensation with respect to the sale of class M shares, 0.40% of such average net asset value of class M shares. For class M shares, the total annual payment to dealers equals 0.65% of such average net asset value. GENERAL. Payments under the plans are intended to compensate Putnam Mutual Funds for services provided and expenses incurred by it as principal underwriter of fund shares, including the payments to dealers mentioned above. Putnam Mutual Funds may suspend or modify such payments to dealers. The payments are also subject to the continuation of the relevant distribution plan, the terms of service agreements between dealers and Putnam Mutual Funds, and any applicable limits imposed by the National Association of Securities Dealers, Inc. HOW TO SELL SHARES You can sell your shares to the fund any day the New York Stock Exchange is open, either directly to the fund or through your investment dealer. The fund will only redeem shares for which it has received payment. SELLING SHARES DIRECTLY TO THE FUND. Send a signed letter of instruction or stock power form to Putnam Investor Services, along with any certificates that represent shares you want to sell. The price you will receive is the next net asset value calculated after the fund receives your request in proper form less any applicable CDSC. In order to receive that day's net asset value, Putnam Investor Services must receive your request before the close of regular trading on the New York Stock Exchange. If you sell shares having a net asset value of $100,000 or more, the signatures of registered owners or their legal representatives must be guaranteed by a bank, broker-dealer or certain other financial institutions. See the SAI for more information about where to obtain a signature guarantee. Stock power forms are available from your investment dealer, Putnam Investor Services and many commercial banks. If you want your redemption proceeds sent to an address other than your address as it appears on Putnam's records, a signature guarantee is required. Putnam Investor Services usually requires additional documentation for the sale of shares by a corporation, partnership, agent or fiduciary, or a surviving joint owner. Contact Putnam Investor Services for details. THE FUND GENERALLY SENDS YOU PAYMENT FOR YOUR SHARES THE BUSINESS DAY AFTER YOUR REQUEST IS RECEIVED. Under unusual circumstances, the fund may suspend redemptions, or postpone payment for more than seven days, as permitted by federal securities law. You may use Putnam's Telephone Redemption Privilege to redeem shares valued up to $100,000 from your account unless you have notified Putnam Investor Services of an address change within the preceding 15 days. Unless an investor indicates otherwise on the account application, Putnam Investor Services will be authorized to act upon redemption and transfer instructions received by telephone from a shareholder, or any person claiming to act as his or her representative, who can provide Putnam Investor Services with his or her account registration and address as it appears on Putnam Investor Services' records. Putnam Investor Services will employ these and other reasonable procedures to confirm that instructions communicated by telephone are genuine; if it fails to employ reasonable procedures, Putnam Investor Services may be liable for any losses due to unauthorized or fraudulent instructions. For information, consult Putnam Investor Services. During periods of unusual market changes and shareholder activity, you may experience delays in contacting Putnam Investor Services by telephone. In this event, you may wish to submit a written redemption request, as described above, or contact your investment dealer, as described below. The Telephone Redemption Privilege is not available if you were issued certificates for shares that remain outstanding. The Telephone Redemption Privilege may be modified or terminated without notice. SELLING SHARES THROUGH YOUR INVESTMENT DEALER. Your dealer must receive your request before the close of regular trading on the New York Stock Exchange to receive that day's net asset value. Your dealer will be responsible for furnishing all necessary documentation to Putnam Investor Services, and may charge you for its services. HOW TO EXCHANGE SHARES You can exchange your shares for shares of the same class of certain other Putnam funds at net asset value beginning 15 days after purchase. Not all Putnam funds offer all classes of shares. If you exchange shares subject to a CDSC, the transaction will not be subject to the CDSC. However, when you redeem the shares acquired through the exchange, the redemption may be subject to the CDSC, depending upon when you originally purchased the shares. The CDSC will be computed using the schedule of any fund into or from which you have exchanged your shares that would result in your paying the highest CDSC applicable to your class of shares. For purposes of computing the CDSC, the length of time you have owned your shares will be measured from the date of original purchase and will not be affected by any exchange. To exchange your shares, simply complete an Exchange Authorization Form and send it to Putnam Investor Services. The form is available from Putnam Investor Services. For federal income tax purposes, an exchange is treated as a sale of shares and generally results in a capital gain or loss. A Telephone Exchange Privilege is currently available for amounts up to $500,000. Putnam Investor Services' procedures for telephonic transactions are described above under "How to sell shares." The Telephone Exchange Privilege is not available if you were issued certificates for shares that remain outstanding. Ask your investment dealer or Putnam Investor Services for prospectuses of other Putnam funds. Shares of certain Putnam funds are not available to residents of all states. The exchange privilege is not intended as a vehicle for short- term trading. Excessive exchange activity may interfere with portfolio management and have an adverse effect on all shareholders. In order to limit excessive exchange activity and in other circumstances where Putnam Management or the Trustees believe doing so would be in the best interests of the fund, the fund reserves the right to revise or terminate the exchange privilege, limit the amount or number of exchanges or reject any exchange. Shareholders would be notified of any such action to the extent required by law. Consult Putnam Investor Services before requesting an exchange. See the SAI to find out more about the exchange privilege. HOW THE FUND VALUES ITS SHARES THE FUND CALCULATES THE NET ASSET VALUE OF A SHARE OF EACH CLASS BY DIVIDING THE TOTAL VALUE OF ITS ASSETS, LESS LIABILITIES, BY THE NUMBER OF ITS SHARES OUTSTANDING. SHARES ARE VALUED AS OF THE CLOSE OF REGULAR TRADING ON THE NEW YORK STOCK EXCHANGE EACH DAY THE EXCHANGE IS OPEN. Portfolio securities for which market quotations are readily available are valued at market value. Short-term investments that will mature in 60 days or less are valued at amortized cost, which approximates market value. All other securities and assets are valued at their fair value following procedures approved by the Trustees. HOW THE FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION The fund distributes any net investment income at least quarterly and any net realized capital gains at least annually. Distributions from capital gains are made after applying any available capital loss carryovers. YOU CAN CHOOSE FROM THREE DISTRIBUTION OPTIONS: - - Reinvest all distributions in additional shares without a sales charge; - - Receive distributions from net investment income in cash while reinvesting net capital gains distributions in additional shares without a sales charge; or - - Receive all distributions in cash. You can change your distribution option by notifying Putnam Investor Services in writing. If you do not select an option when you open your account, all distributions will be reinvested. All distributions not paid in cash will be reinvested in shares of the class on which the distributions are paid. You will receive a statement confirming reinvestment of distributions in additional shares (or in shares of other Putnam funds for Dividends Plus accounts) promptly following the quarter in which the reinvestment occurs. If a check representing a fund distribution is not cashed within a specified period, Putnam Investor Services will notify you that you have the option of requesting another check or reinvesting the distribution in the fund or in another Putnam fund. If Putnam Investor Services does not receive your election, the distribution will be reinvested in the fund. Similarly, if correspondence sent by the fund or Putnam Investor Services is returned as "undeliverable," fund distributions will automatically be reinvested in the fund or in another Putnam fund. The fund intends to qualify as a "regulated investment company" for federal income tax purposes and to meet all other requirements necessary for it to be relieved of federal taxes on income and gains it distributes to shareholders. The fund will distribute substantially all of its ordinary income and capital gain net income on a current basis. All fund distributions will be taxable to you as ordinary income, except that any distributions of net long-term capital gains will be taxable as such, regardless of how long you have held the shares. Distributions will be taxable as described above whether received in cash or in shares through the reinvestment of distributions. Fund investments in foreign securities may be subject to withholding taxes at the source on dividend or interest payments. In that case, the fund's yield on those securities would be decreased. If at the end of the fund's fiscal year more than 50% of the value of the fund's total assets represents securities of foreign corporations, the fund intends to make an election permitted by the Internal Revenue Code to treat any foreign taxes it paid as paid by its shareholders. In this case, shareholders who are U.S. citizens, U.S. corporations and, in some cases, U.S. residents generally will be required to include in U.S. taxable income their pro rata share of such taxes, but may then generally be entitled to claim a foreign tax credit or deduction (but not both) for their share of such taxes. Fund transactions in foreign currencies and hedging activities may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in value of the foreign currency concerned. In addition, such activities will likely produce a difference between book income and taxable income. This difference may cause a portion of the fund's income distributions to constitute a return of capital for tax purposes or require the fund to make distributions exceeding book income to qualify as a regulated investment company for tax purposes. Investment in a an entity that qualifies as a "passive foreign investment company" under the Code could be subject the fund to a U.S. federal income tax or other charge on certain "excess distributions" with respect to the investment, and on the proceeds from disposition of the investment. Early in each year Putnam Investor Services will notify you of the amount and tax status of distributions paid to you for the preceding year. The foregoing is a summary of certain federal income tax consequences of investing in the fund. You should consult your tax adviser to determine the precise effect of an investment in the fund on your particular tax situation (including possible liability for state and local taxes). ABOUT PUTNAM INVESTMENTS, INC. PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937. Putnam Mutual Funds is the principal underwriter of the fund and of other Putnam funds. Putnam Fiduciary Trust Company is the fund's custodian. Putnam Investor Services, a division of Putnam Fiduciary Trust Company, is the fund's investor servicing and transfer agent. Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust Company are subsidiaries of Putnam Investments, Inc., which is wholly owned by Marsh & McLennan Companies, Inc., a publicly- owned holding company whose principal businesses are international insurance and reinsurance brokerage, employee benefit consulting and investment management. PUTNAM INTERNATIONAL GROWTH AND INCOME FUND One Post Office Square Boston, MA 02109 FUND INFORMATION: INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 INVESTOR SERVICING AGENT Putnam Investor Services Mailing address: P.O. Box 41203 Providence, RI 02940-1203 CUSTODIAN Putnam Fiduciary Trust Company One Post Office Square Boston, MA 02109 LEGAL COUNSEL Ropes & Gray One International Place Boston, MA 02110 INDEPENDENT ACCOUNTANTS Price Waterhouse LLP 160 Federal Street Boston, MA 02110 PUTNAMINVESTMENTS One Post Office Square Boston, Massachusetts 02109 Toll-free 1-800-225-1581 PUTNAM INTERNATIONAL GROWTH AND INCOME FUND FORM N-1A PART B STATEMENT OF ADDITIONAL INFORMATION ("SAI") AUGUST 1 , 1996 This SAI is not a prospectus and is only authorized for distribution when accompanied or preceded by the prospectus of the fund dated August 1 , 1996, as revised from time to time. This SAI contains information which may be useful to investors but which is not included in the prospectus. If the fund has more than one form of current prospectus, each reference to the prospectus in this SAI shall include all of the fund's prospectuses, unless otherwise noted. The SAI should be read together with the applicable prospectus. Investors may obtain a free copy of the applicable prospectus from Putnam Investor Services, Mailing address: P.O. Box 41203, Providence, RI 02940-1203. Part I of this SAI contains specific information about the fund. Part II includes information about the fund and the other Putnam funds. TABLE OF CONTENTS PART I SECURITIES RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . .I-3 INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . .I-6 CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . .I-8 ADDITIONAL OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . I-10 INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . . . . . . . I-10 PART II MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-25 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . II- 30 DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-40 HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-42 DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . .II-54 INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-55 SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . II- 60 SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-61 SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .II-61 STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . II- 61 COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-63 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . II- 67 SAI PART I SECURITIES RATINGS THE FOLLOWING RATING SERVICES DESCRIBE RATED SECURITIES AS FOLLOWS: MOODY'S INVESTORS SERVICE, INC. BONDS Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edged". Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa -- Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities. A -- Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa -- Bonds which are rated Baa are considered as medium grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba -- Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B -- Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca -- Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C -- Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. STANDARD & POOR'S BONDS AAA -- Debt rated 'AAA' has the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal is extremely strong. AA -- Debt rated 'AA' has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in small degree. A -- Debt rated 'A' has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB -- Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. BB-B-CCC-CC-C -- Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. 'BB' indicates the least degree of speculation and 'C' the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major exposures to adverse conditions. BB -- Debt rated 'BB' has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The 'BB' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'BBB-' rating. B -- Debt rated 'B' has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The 'B' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-' rating. CCC -- Debt rated 'CCC' has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The 'CCC' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied 'B' or 'B- ' rating. CC -- The rating 'CC' typically is applied to debt subordinated to senior debt that is assigned an actual or implied 'CCC'- rating. C -- The rating 'C' typically is applied to debt subordinated to senior debt which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be used to cover a situation where bankruptcy petition has been filed, but debt service payments are continued. INVESTMENT RESTRICTIONS AS FUNDAMENTAL INVESTMENT RESTRICTIONS, WHICH MAY NOT BE CHANGED WITH RESPECT TO THE FUND WITHOUT A VOTE OF THE MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF THE FUND, THE FUND MAY NOT AND WILL NOT: (1) Borrow money in excess of 10% of the value (taken at the lower of cost or current value) of its total assets (not including the amount borrowed) at the time the borrowing is made, and then only from banks as a temporary measure to facilitate the meeting of redemption requests (not for leverage) which might otherwise require the untimely disposition of portfolio investments or for extraordinary or emergency purposes. Such borrowings will be repaid before any additional investments are purchased. (2) Underwrite securities issued by other persons except to the extent that, in connection with the disposition of its portfolio investments, it may be deemed to be an underwriter under certain federal securities laws. (3) Purchase or sell real estate, although it may purchase securities of issuers which deal in real estate, and securities which represent interests in real estate, and it may acquire and dispose of real estate or interests in real estate acquired through the exercise of its rights as a holder of debt obligations secured by real estate or interests therein. (4) Purchase or sell commodities or commodity contracts, except that the fund may purchase and sell financial futures contracts and options and may enter into foreign currency exchange contracts and other financial transactions not involving physical commodities . (5) Make loans, except by purchase of debt obligations in which the fund may invest consistent with its investment policies, entering into repurchase agreements, or by lending of its portfolio securities. (6) With respect to 75% of its total assets, invest in the securities of any issuer if, immediately after such investment, more than 5% of the total assets of the fund (taken at current value) would be invested in the securities of such issuer; provided that this limitation does not apply to obligations issued or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities. (7) With respect to 75% of its total assets, acquire more than 10% of the outstanding voting securities of any issuer. (8) Purchase securities (other than securities of the U.S. government, its agencies or instrumentalities) if, as a result of such purchase, more than 25% of the fund's total assets would be invested in any one industry. (9) Issue any class of securities which is senior to the fund's shares of beneficial interest, except for permitted borrowings. IT IS CONTRARY TO THE FUND'S PRESENT POLICY, WHICH MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL, TO: (1) Invest in (a) securities which at the time of such investment are not readily marketable, (b) securities restricted as to resale (excluding securities determined by the Trustees of the fund (or the person designated by the Trustees of the fund to make such determinations) to be readily marketable), and (c) repurchase agreements maturing in more than seven days, if, as a result, more than 15% of the fund's net assets (taken at current value) would be invested in securities described in (a), (b) and (c) above. (2) Invest in warrants (other than warrants acquired by the fund as a part of a unit or attached to securities at the time of purchase) if, as a result, such investments (valued at the lower of cost or market value) would exceed 5% of the value of the fund's net assets; provided that not more than 2% of the fund's net assets may be invested in warrants not listed on the New York or American Stock Exchange. (3) Pledge, hypothecate, mortgage or otherwise encumber its assets in excess of 33 1/3% of its total assets (taken at cost) in connection with permitted borrowings. (4) Buy or sell oil, gas or other mineral leases, rights or royalty contracts, although it may purchase securities which represent interests in, are secured by interest in, or which are issued by issuers which deal in, such leases, rights, or contracts, and it may acquire and dispose of such leases, rights, or contracts acquired through the exercise of its rights as a holder of debt obligations secured thereby. (5) Invest in securities of registered open-end investment companies, except as they may be acquired as part of a merger or consolidation or acquisition of assets or by purchases in the open market involving only customary brokers' commissions. (6) Make short sales of securities or maintain a short position for the account of the fund unless at all times when a short position is open it owns an equal amount of such securities or owns securities which, without payment of any further consideration, are convertible into or exchangeable for securities of the same issue as, and in equal amount to, the securities sold short. (7) Purchase or sell real property (including limited partnership interests), except that the fund may (a) purchase or sell readily marketable interests in real estate investment trusts or readily marketable securities of companies which invest in real estate, (b) purchase or sell securities that are secured by interests in real estate , or (c) acquire real estate through exercise of its rights as holder of obligations secured by real estate or interests therein or sell real estate so acquired. (8) Invest in the securities of any issuer, if, to the knowledge of the fund and officers and Trustees of the fund and officers and directors of Putnam Management who beneficially own more than 0.5% of the securities of that issuer together own more than 5% of such securities. (9) Invest in securities of an issuer which, together with any predecessors, controlling persons, general partners and guarantors, have a record of less than three years' continuous business operation or relevant business experience, if, as a result, the aggregate of such investments would exceed 5% of the value of the fund's net assets; provided, however, that this restriction shall not apply to any obligations of the U.S. government or its instrumentalities or agencies. -------------------- All percentage limitations on investments (other than pursuant to non-fundamental restriction (1)) will apply at the time of the making of an investment and shall not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of such investment. The Investment Company Act of 1940 provides that a "vote of a majority of the outstanding voting securities" of the fund means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares present at a meeting if more than 50% of the outstanding shares of the fund are represented at the meeting in person or by proxy. CHARGES AND EXPENSES TRUSTEE FEES Each Trustee receives a fee for his or her services. Each Trustee also receives fees for serving as Trustee of other Putnam funds. The Trustees periodically review their fees to assure that such fees continue to be appropriate in light of their responsibilities as well as in relation to fees paid to trustees of other mutual fund complexes. The Trustees meet monthly over a two-day period, except in August. The Compensation Committee, which consists solely of Trustees not affiliated with Putnam Management and is responsible for recommending Trustee compensation, estimates that Committee and Trustee meeting time together with the appropriate preparation requires the equivalent of at least three business days per Trustee meeting. The following table shows the year each Trustee was first elected a Trustee of the Putnam funds, the estimated fees to be paid to each Trustee by the fund for the current fiscal year and the fees paid to each Trustee by all of the Putnam funds during calendar year 1995: COMPENSATION TABLE Estimated Total aggregate compensation compensation from all Trustees from the fund* Putnam funds** - ------------------------------------------------------------ - -- Jameson A. Baxter/1994 $581 $150,854 Hans H. Estin/1972 581 150,854 John A. Hill/1985*** 581 149,854 Ronald J. Jackson/1996**** 581 N/A Elizabeth T. Kennan/1992 581 148,854 Lawrence J. Lasser/1992 581 150,854 Robert E. Patterson/1984 581 152,854 Donald S. Perkins/1982 581 150,854 William F. Pounds/1971 581 149,854 George Putnam/1957 581 150,854 George Putnam, III/1984 581 150,854 Eli Shapiro/1995***** 581 95,372 A.J.C. Smith/1986 581 149,854 W. Nicholas Thorndike/1992 581 152,854 * Reflects estimated amounts to be paid for the current fiscal year . Includes an annual retainer and an attendance fee for each meeting attended. ** Reflects total payments received from all Putnam funds in the most recent calendar year. As of December 31, 1995, there were 99 funds in the Putnam family. *** Includes compensation deferred pursuant to a Trustee Compensation Deferral Plan. The total amount of deferred compensation payable to Mr. Hill by all Putnam funds as of December 31, 1995 was $51,141, including income earned on such amounts. **** Elected as a Trustee in May 1996. ***** Elected as a Trustee in April 1995. The Trustees have approved Retirement Guidelines for Trustees of the Putnam funds. These Guidelines provide generally that a Trustee who retires after reaching age 72 and who has at least 10 years of continuous service will be eligible to receive a retirement benefit from each Putnam fund for which he or she served as a Trustee. The amount and form of such benefit is subject to determination annually by the Trustees and, unless otherwise determined by the Trustees, will be an annual cash benefit payable for life equal to one-half of the Trustee retainer fees paid by each fund at the time of retirement. Several retired Trustees are currently receiving benefits pursuant to the Guidelines and it is anticipated that the current Trustees will receive similar benefits upon their retirement. A Trustee who retired in calendar 1995 and was eligible to receive benefits under these Guidelines would have received an annual benefit of $66,749, based upon the aggregate retainer fees paid by the Putnam funds for such year. The Trustees reserve the right to amend or terminate such Guidelines and the related payments at any time, and may modify or waive the foregoing eligibility requirements when deemed appropriate. For additional information concerning the Trustees, see "Management" in Part II of this SAI. SHARE OWNERSHIP As of the date of this SAI, Putnam Investments, Inc. owned of record and beneficially all of the shares of the fund. Putnam Investments, Inc. is incorporated in Massachusetts, and its parent corporation, Marsh & McLennan Companies, Inc., is incorporated in Delaware. The address of Putnam Investments, Inc. is One Post Office Square, Boston, MA 02109. ADDITIONAL OFFICERS In addition to the persons listed as officers of the fund in Part II of this SAI, the following person is also a Vice President of the fund and Vice President of certain of the Putnam funds. Officers of Putnam Management hold the same offices in Putnam Management's parent company, Putnam Investments, Inc. JUSTIN M. SCOTT. Managing Director of Putnam Management. INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENT Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110, are the fund's independent accountants, providing audit services, tax return review and other tax consulting services and assistance and consultation in connection with the review of various Securities and Exchange Commission filings. The following report of Independent Accountants and Statement of Assets and Liabilities have been included in this SAI in reliance upon the report of the independent accountants, given on their authority as experts in auditing and accounting. REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholder and Trustees of the Putnam International Growth and Income Fund In our opinion, the accompanying statement of assets and liabilities presents fairly, in all material respects, the financial position of Putnam International Growth and Income Fund (the "fund"), a series of Putnam Funds Trust, at July 2, 1996, in conformity with generally accepted accounting principles. This financial statement is the responsibility of the fund's management; our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit of this financial statement in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. Price Waterhouse LLP Boston, Massachusetts July 3, 1996 STATEMENT OF ASSETS AND LIABILITIES PUTNAM INTERNATIONAL GROWTH AND INCOME FUND (A SERIES OF PUTNAM FUNDS TRUST) July 2, 1996 Assets: Cash. . . . . . . . . . . . . . . . . . . . . . $100,000 Deferred organization expenses (Note 1). . . . . . . . . . . . . . . . . . . . 64,834 - ----------- Total assets. . . . . . . . . . . . . . . . . . . . 164,834 Liabilities: Estimated organization expenses payable (Note 1). . . . . . . . . . . . . . . . . . . . . . 64,834 - --------- Commitments (Notes 1, 2 and 3) Net assets applicable to 3,921.647 class A shares, 3,921.569 class B shares and 3,921.569 class M shares outstanding . . . . . . . . . . . . . . . . . . $100,000 ======== Computation of net asset value, redemption and offering price per share: Net asset value and redemption price per class A share ($33,334 divided by 3,921.647 shares) . . . . . $8.50 ===== Offering price per class A share (100/94.25 of $8.50), reduced on sales of $50,000 or more and in certain other circumstances -- see "HOW TO BUY SHARES" . . . . . . . . . . . . . . . . . . $9.02 ===== Net asset value and offering price per class B share ($33,333 divided by 3,921.569 shares) (redemption price per share is equal to net asset value less any applicable contingent deferred sales charge) -- see "HOW TO BUY SHARES". . . . . . . . . . . $8.50 ===== Net asset value and redemption price per class M share ($33,333 divided by 3,921.569 shares). . . . . $8.50 ===== Offering price per class M share (100/96.50 of $8.50), reduced on sales of $50,000 or more and in certain other circumstances -- see "HOW TO BUY SHARES" . . . . . . . . . . . . . . . . . . $8.81 ===== See Notes to Statement of Assets and Liabilities NOTES TO STATEMENT OF ASSETS AND LIABILITIES NOTE 1. ORGANIZATION Putnam Funds Trust (the "Trust") was organized as a Massachusetts business trust under an Agreement and Declaration of Trust, dated January 22, 1996, and is registered under the Investment Company Act of 1940, as amended, as an open-end, diversified, management investment company, consisting of a series of investment portfolios, each of which is represented by a separate series of shares of beneficial interest. The Trust currently consists of one series: Putnam International Growth and Income Fund (the "fund"), and offers class A, class B and class M shares. The Trust's Agreement and Declaration of Trust permits the issuance of an unlimited number of shares. The Trust has had no operations other than those relating to organizational matters and the initial capital contribution of $100,000 to the fund. The fund's outstanding shares are owned by Putnam Investments, Inc. and Putnam Investments, Inc. Profit Sharing Retirement Plan. Upon the sale of its shares to the public, the fund will become liable for registration fees payable to the Securities and Exchange Commission and for not more than $125,000 of expenses in connection with its organization and the initial public offering of its shares. Putnam Investment Management, Inc. ("Putnam Management"), a wholly owned subsidiary of Putnam Investments, Inc., will pay any such expenses in excess of that amount and will pay all such expenses in the event that the initial public offering is withdrawn. At July 2, 1996, estimated deferred organization expenses for the fund are $64,834 based upon estimated registration, legal and accounting costs. The fund will amortize such expenses borne by it over its first five years of operation based upon projected net asset levels. Putnam Investments, Inc. has agreed that if any of the initial shares of the fund are redeemed during such amortization period by any holder thereof, the redemption proceeds will be reduced by the amount of the then unamortized organization expenses in the same ratio as the number of shares redeemed bears to the number of initial shares held at the time of redemption. NOTE 2. MANAGEMENT CONTRACT The Trust has entered into a Management Contract with Putnam Management. As compensation for the services rendered, facilities furnished, and expenses borne by Putnam Management, the fund will pay Putnam Management a fee, computed and paid quarterly based on the average net assets of the fund for the quarter. Such fee is based on the following annual rates: 0.80% of the first $500 million of the average net asset value of the fund; 0.70% of the next $500 million; 0.65% of the next $500 million; 0.60% of the next $5 billion; 0.575% of the next $5 billion; 0.555% of the next $5 billion; 0.54% of the next $5 billion; and 0.53% of any excess thereafter. NOTE 3. DISTRIBUTION PLANS The Trust has adopted distribution plans (the "Plans") with respect to its class A, class B and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments, Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%, 1.00% and 1.00% of the average net assets attributable to class A, class B and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average net assets attributable to class A, class B and class M shares, respectively. TABLE OF CONTENTS MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-25 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-30 DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-40 HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-42 DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . .II-54 INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-55 SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . .II-60 SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-61 SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .II-61 STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . . . . .II-61 COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-63 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-67 THE PUTNAM FUNDS STATEMENT OF ADDITIONAL INFORMATION ("SAI") PART II The following information applies generally to your fund and to the other Putnam funds. In certain cases the discussion applies to some but not all of the funds or their shareholders, and you should refer to your prospectus to determine whether the matter is applicable to you or your fund. You will also be referred to Part I for certain information applicable to your particular fund. Shareholders who purchase shares at net asset value through employer-sponsored defined contribution plans should also consult their employer for information about the extent to which the matters described below apply to them. MISCELLANEOUS INVESTMENT PRACTICES Your fund's prospectus states which of the following investment practices are available to your fund. The fact that your fund is authorized to engage in a particular practice does not necessarily mean that it will actually do so. You should disregard any practice described below which is not mentioned in the prospectus. Short-term Trading In seeking the fund's objectives(s), Putnam Management will buy or sell portfolio securities whenever Putnam Management believes it appropriate to do so. In deciding whether to sell a portfolio security, Putnam Management does not consider how long the fund has owned the security. From time to time the fund will buy securities intending to seek short-term trading profits. A change in the securities held by the fund is known as "portfolio turnover" and generally involves some expense to the fund. This expense may include brokerage commissions or dealer markups and other transaction costs on both the sale of securities and the reinvestment of the proceeds in other securities. If sales of portfolio securities cause the fund to realize net short-term capital gains, such gains will be taxable as ordinary income. As a result of the fund's investment policies, under certain market conditions the fund's portfolio turnover rate may be higher than that of other mutual funds. Portfolio turnover rate for a fiscal year is the ratio of the lesser of purchases or sales of portfolio securities to the monthly average of the value of portfolio securities -- excluding securities whose maturities at acquisition were one year or less. The fund's portfolio turnover rate is not a limiting factor when Putnam Management considers a change in the fund's portfolio. Lower-rated Securities The fund may invest in lower-rated fixed-income securities (commonly known as "junk bonds"), to the extent described in the prospectus. The lower ratings of certain securities held by the fund reflect a greater possibility that adverse changes in the financial condition of the issuer or in general economic conditions, or both, or an unanticipated rise in interest rates, may impair the ability of the issuer to make payments of interest and principal. The inability (or perceived inability) of issuers to make timely payment of interest and principal would likely make the values of securities held by the fund more volatile and could limit the fund's ability to sell its securities at prices approximating the values the fund had placed on such securities. In the absence of a liquid trading market for securities held by it, the fund at times may be unable to establish the fair value of such securities. Securities ratings are based largely on the issuer's historical financial condition and the rating agencies' analysis at the time of rating. Consequently, the rating assigned to any particular security is not necessarily a reflection of the issuer's current financial condition, which may be better or worse than the rating would indicate. In addition, the rating assigned to a security by Moody's Investors Service, Inc. or Standard & Poor's (or by any other nationally recognized securities rating organization) does not reflect an assessment of the volatility of the security's market value or the liquidity of an investment in the security. See the prospectus or Part I of this SAI for a description of security ratings. Like those of other fixed-income securities, the values of lower-rated securities fluctuate in response to changes in interest rates. A decrease in interest rates will generally result in an increase in the value of the fund's assets. Conversely, during periods of rising interest rates, the value of the fund's assets will generally decline. The values of lower- rated securities may often be affected to a greater extent by changes in general economic conditions and business conditions affecting the issuers of such securities and their industries. Negative publicity or investor perceptions may also adversely affect the values of lower-rated securities. Changes by recognized rating services in their ratings of any fixed-income security and changes in the ability of an issuer to make payments of interest and principal may also affect the value of these investments. Changes in the value of portfolio securities generally will not affect income derived from these securities, but will affect the fund's net asset value. The fund will not necessarily dispose of a security when its rating is reduced below its rating at the time of purchase. However, Putnam Management will monitor the investment to determine whether its retention will assist in meeting the fund's investment objective(s). Issuers of lower-rated securities are often highly leveraged, so that their ability to service their debt obligations during an economic downturn or during sustained periods of rising interest rates may be impaired. Such issuers may not have more traditional methods of financing available to them and may be unable to repay outstanding obligations at maturity by refinancing. The risk of loss due to default in payment of interest or repayment of principal by such issuers is significantly greater because such securities frequently are unsecured and subordinated to the prior payment of senior indebtedness. At times, a substantial portion of the fund's assets may be invested in securities as to which the fund, by itself or together with other funds and accounts managed by Putnam Management and its affiliates, holds all or a major portion. Although Putnam Management generally considers such securities to be liquid because of the availability of an institutional market for such securities, it is possible that, under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, the fund could find it more difficult to sell these securities when Putnam Management believes it advisable to do so or may be able to sell the securities only at prices lower than if they were more widely held. Under these circumstances, it may also be more difficult to determine the fair value of such securities for purposes of computing the fund's net asset value. In order to enforce its rights in the event of a default under such securities, the fund may be required to participate in various legal proceedings or take possession of and manage assets securing the issuer's obligations on such securities. This could increase the fund's operating expenses and adversely affect the fund's net asset value. In the case of tax-exempt funds, any income derived from the fund's ownership or operation of such assets would not be tax-exempt. The ability of a holder of a tax-exempt security to enforce the terms of that security in a bankruptcy proceeding may be more limited than would be the case with respect to privately- issued securities. In addition, the fund's intention to qualify as a "regulated investment company" under the Internal Revenue Code may limit the extent to which the fund may exercise its rights by taking possession of such assets. Certain securities held by the fund may permit the issuer at its option to "call," or redeem, its securities. If an issuer were to redeem securities held by the fund during a time of declining interest rates, the fund may not be able to reinvest the proceeds in securities providing the same investment return as the securities redeemed. If the fund's prospectus describes so-called "zero-coupon" bonds and "payment-in-kind" bonds as possible investments, the fund may invest without limit in such bonds unless otherwise specified in the prospectus. Zero-coupon bonds are issued at a significant discount from their principal amount in lieu of paying interest periodically. Payment-in-kind bonds allow the issuer, at its option, to make current interest payments on the bonds either in cash or in additional bonds. Because zero-coupon and payment-in- kind bonds do not pay current interest in cash, their value is subject to greater fluctuation in response to changes in market interest rates than bonds that pay interest currently. Both zero-coupon and payment-in-kind bonds allow an issuer to avoid the need to generate cash to meet current interest payments. Accordingly, such bonds may involve greater credit risks than bonds paying interest currently in cash. The fund is required to accrue interest income on such investments and to distribute such amounts at least annually to shareholders even though such bonds do not pay current interest in cash. Thus, the fund could be required at times to liquidate investments in order to satisfy its dividend requirements. To the extent the fund invests in securities in the lower rating categories, the achievement of the fund's goals is more dependent on Putnam Management's investment analysis than would be the case if the fund were investing in securities in the higher rating categories. This may be particularly true with respect to tax- exempt securities, as the amount of information about the financial condition of an issuer of tax-exempt securities may not be as extensive as that which is made available by corporations whose securities are publicly traded. Investments in Miscellaneous Fixed Income Securities Unless otherwise specified in the prospectus or elsewhere in this SAI, if the fund may invest in inverse floating obligations, premium securities, or interest-only or principal-only classes of mortgage-backed securities (IOs and POs), it may do so without limit. The fund, however, currently does not intend to invest more than 15% of its assets in inverse floating obligations or more than 35% of its assets in IOs and POs under normal market conditions. Private Placements The fund may invest in securities that are purchased in private placements and, accordingly, are subject to restrictions on resale as a matter of contract or under federal securities laws. Because there may be relatively few potential purchasers for such investments, especially under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, the fund could find it more difficult to sell such securities when Putnam Management believes it advisable to do so or may be able to sell such securities only at prices lower than if such securities were more widely held. At times, it may also be more difficult to determine the fair value of such securities for purposes of computing the fund's net assets value. Mortgage Related Securities The fund may invest in mortgage-backed securities, including collateralized mortgage obligations ("CMOs") and certain stripped mortgage-backed securities. CMOs and other mortgage-backed securities represent a participation in, or are secured by, mortgage loans. Mortgage-backed securities have yield and maturity characteristics corresponding to the underlying assets. Unlike traditional debt securities, which may pay a fixed rate of interest until maturity, when the entire principal amount comes due, payments on certain mortgage-backed securities include both interest and a partial repayment of principal. Besides the scheduled repayment of principal, repayments of principal may result from the voluntary prepayment, refinancing, or foreclosure of the underlying mortgage loans. If property owners make unscheduled prepayments of their mortgage loans, these prepayments will result in early payment of the applicable mortgage-related securities. In that event the fund may be unable to invest the proceeds from the early payment of the mortgage-related securities in an investment that provides as high a yield as the mortgage-related securities. Consequently, early payment associated with mortgage-related securities may cause these securities to experience significantly greater price and yield volatility than that experienced by traditional fixed- income securities. The occurrence of mortgage prepayments is affected by factors including the level of interest rates, general economic conditions, the location and age of the mortgage and other social and demographic conditions. During periods of falling interest rates, the rate of mortgage prepayments tends to increase, thereby tending to decrease the life of mortgage- related securities. During periods of rising interest rates, the rate of mortgage prepayments usually decreases, thereby tending to increase the life of mortgage-related securities. If the life of a mortgage-related security is inaccurately predicted, the fund may not be able to realize the rate of return it expected. Mortgage-backed securities are less effective than other types of securities as a means of "locking in" attractive long-term interest rates. One reason is the need to reinvest prepayments of principal; another is the possibility of significant unscheduled prepayments resulting from declines in interest rates. These prepayments would have to be reinvested at lower rates. As a result, these securities may have less potential for capital appreciation during periods of declining interest rates than other securities of comparable maturities, although they may have a similar risk of decline in market value during periods of rising interest rates. Prepayments may cause losses in securities purchased at a premium. At times, some of the mortgage-backed securities in which the fund may invest will have higher than market interest rates and therefore will be purchased at a premium above their par value. Unscheduled prepayments, which are made at par, will cause the fund to experience a loss equal to any unamortized premium. CMOs may be issued by a U.S. government agency or instrumentality or by a private issuer. Although payment of the principal of, and interest on, the underlying collateral securing privately issued CMOs may be guaranteed by the U.S. government or its agencies or instrumentalities, these CMOs represent obligations solely of the private issuer and are not insured or guaranteed by the U.S. government, its agencies or instrumentalities or any other person or entity. Prepayments could cause early retirement of CMOs. CMOs are designed to reduce the risk of prepayment for investors by issuing multiple classes of securities, each having different maturities, interest rates and payment schedules, and with the principal and interest on the underlying mortgages allocated among the several classes in various ways. Payment of interest or principal on some classes or series of CMOs may be subject to contingencies or some classes or series may bear some or all of the risk of default on the underlying mortgages. CMOS of different classes or series are generally retired in sequence as the underlying mortgage loans in the mortgage pool are repaid. If enough mortgages are repaid ahead of schedule, the classes or series of a CMO with the earliest maturities generally will be retired prior to their maturities. Thus, the early retirement of particular classes or series of a CMO held by the fund would have the same effect as the prepayment of mortgages underlying other mortgage-backed securities. Prepayments could result in losses on stripped mortgage-backed securities. Stripped mortgage-backed securities are usually structured with two classes that receive different portions of the interest and principal distributions on a pool of mortgage loans. The fund may invest in both the interest-only or "IO" class and the principal-only or "PO" class. The yield to maturity on an IO class of stripped mortgage-backed securities is extremely sensitive not only to changes in prevailing interest rates but also to the rate of principal payments (including prepayments) on the underlying assets. A rapid rate of principal prepayments may have a measurable adverse effect on the fund's yield to maturity to the extent it invests in IOs. If the assets underlying the IO experience greater than anticipated prepayments of principal, the fund may fail to recoup fully its initial investment in these securities. Conversely, POs tend to increase in value if prepayments are greater than anticipated and decline if prepayments are slower than anticipated. The secondary market for stripped mortgage-backed securities may be more volatile and less liquid than that for other mortgage- backed securities, potentially limiting the fund's ability to buy or sell those securities at any particular time. Securities Loans The fund may make secured loans of its portfolio securities, on either a short-term or long-term basis, amounting to not more than 25% of its total assets, thereby realizing additional income. The risks in lending portfolio securities, as with other extensions of credit, consist of possible delay in recovery of the securities or possible loss of rights in the collateral should the borrower fail financially. As a matter of policy, securities loans are made to broker-dealers pursuant to agreements requiring that the loans be continuously secured by collateral consisting of cash or short-term debt obligations at least equal at all times to the value of the securities on loan, "marked-to-market" daily. The borrower pays to the fund an amount equal to any dividends or interest received on securities lent. The fund retains all or a portion of the interest received on investment of the cash collateral or receives a fee from the borrower. Although voting rights, or rights to consent, with respect to the loaned securities may pass to the borrower, the fund retains the right to call the loans at any time on reasonable notice, and it will do so to enable the fund to exercise voting rights on any matters materially affecting the investment. The fund may also call such loans in order to sell the securities. Forward Commitments The fund may enter into contracts to purchase securities for a fixed price at a future date beyond customary settlement time ("forward commitments") if the fund holds, and maintains until the settlement date in a segregated account, cash or high-grade debt obligations in an amount sufficient to meet the purchase price, or if the fund enters into offsetting contracts for the forward sale of other securities it owns. In the case of to-be- announced ("TBA") purchase commitments, the unit price and the estimated principal amount are established when the fund enters into a contract, with the actual principal amount being within a specified range of the estimate. Forward commitments may be considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addition to the risk of decline in the value of the fund's other assets. Where such purchases are made through dealers, the fund relies on the dealer to consummate the sale. The dealer's failure to do so may result in the loss to the fund of an advantageous yield or price. Although the fund will generally enter into forward commitments with the intention of acquiring securities for its portfolio or for delivery pursuant to options contracts it has entered into, the fund may dispose of a commitment prior to settlement if Putnam Management deems it appropriate to do so. The fund may realize short-term profits or losses upon the sale of forward commitments. The fund may enter into TBA sale commitments to hedge its portfolio positions or to sell securities it owns under delayed delivery arrangements. Proceeds of TBA sale commitments are not received until the contractual settlement date. During the time a TBA sale commitment is outstanding, equivalent deliverable securities, or an offsetting TBA purchase commitment deliverable on or before the sale commitment date, are held as "cover" for the transaction. Unsettled TBA sale commitments are valued at current market value of the underlying securities. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the fund realizes a gain or loss on the commitment without regard to any unrealized gain or loss on the underlying security. If the fund delivers securities under the commitment, the fund realizes a gain or loss from the sale of the securities based upon the unit price established at the date the commitment was entered into. Repurchase Agreements The fund may enter into repurchase agreements up to the limit specified in the prospectus. A repurchase agreement is a contract under which the fund acquires a security for a relatively short period (usually not more than one week) subject to the obligation of the seller to repurchase and the fund to resell such security at a fixed time and price (representing the fund's cost plus interest). It is the fund's present intention to enter into repurchase agreements only with commercial banks and registered broker-dealers and only with respect to obligations of the U.S. government or its agencies or instrumentalities. Repurchase agreements may also be viewed as loans made by the fund which are collateralized by the securities subject to repurchase. Putnam Management will monitor such transactions to ensure that the value of the underlying securities will be at least equal at all times to the total amount of the repurchase obligation, including the interest factor. If the seller defaults, the fund could realize a loss on the sale of the underlying security to the extent that the proceeds of sale including accrued interest are less than the resale price provided in the agreement including interest. In addition, if the seller should be involved in bankruptcy or insolvency proceedings, the fund may incur delay and costs in selling the underlying security or may suffer a loss of principal and interest if the fund is treated as an unsecured creditor and required to return the underlying collateral to the seller's estate. Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint account, along with cash of other Putnam funds and certain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. Options on Securities Writing covered options. The fund may write covered call options and covered put options on optionable securities held in its portfolio, when in the opinion of Putnam Management such transactions are consistent with the fund's investment objective(s) and policies. Call options written by the fund give the purchaser the right to buy the underlying securities from the fund at a stated exercise price; put options give the purchaser the right to sell the underlying securities to the fund at a stated price. The fund may write only covered options, which means that, so long as the fund is obligated as the writer of a call option, it will own the underlying securities subject to the option (or comparable securities satisfying the cover requirements of securities exchanges). In the case of put options, the fund will hold cash and/or high-grade short-term debt obligations equal to the price to be paid if the option is exercised. In addition, the fund will be considered to have covered a put or call option if and to the extent that it holds an option that offsets some or all of the risk of the option it has written. The fund may write combinations of covered puts and calls on the same underlying security. The fund will receive a premium from writing a put or call option, which increases the fund's return on the underlying security in the event the option expires unexercised or is closed out at a profit. The amount of the premium reflects, among other things, the relationship between the exercise price and the current market value of the underlying security, the volatility of the underlying security, the amount of time remaining until expiration, current interest rates, and the effect of supply and demand in the options market and in the market for the underlying security. By writing a call option, the fund limits its opportunity to profit from any increase in the market value of the underlying security above the exercise price of the option but continues to bear the risk of a decline in the value of the underlying security. By writing a put option, the fund assumes the risk that it may be required to purchase the underlying security for an exercise price higher than its then-current market value, resulting in a potential capital loss unless the security subsequently appreciates in value. The fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction, in which it purchases an offsetting option. The fund realizes a profit or loss from a closing transaction if the cost of the transaction (option premium plus transaction costs) is less or more than the premium received from writing the option. If the fund writes a call option but does not own the underlying security, and when it writes a put option, the fund may be required to deposit cash or securities with its broker as "margin," or collateral, for its obligation to buy or sell the underlying security. As the value of the underlying security varies, the fund may have to deposit additional margin with the broker. Margin requirements are complex and are fixed by individual brokers, subject to minimum requirements currently imposed by the Federal Reserve Board and by stock exchanges and other self-regulatory organizations. Purchasing put options. The fund may purchase put options to protect its portfolio holdings in an underlying security against a decline in market value. Such protection is provided during the life of the put option since the fund, as holder of the option, is able to sell the underlying security at the put exercise price regardless of any decline in the underlying security's market price. In order for a put option to be profitable, the market price of the underlying security must decline sufficiently below the exercise price to cover the premium and transaction costs. By using put options in this manner, the fund will reduce any profit it might otherwise have realized from appreciation of the underlying security by the premium paid for the put option and by transaction costs. Purchasing call options. The fund may purchase call options to hedge against an increase in the price of securities that the fund wants ultimately to buy. Such hedge protection is provided during the life of the call option since the fund, as holder of the call option, is able to buy the underlying security at the exercise price regardless of any increase in the underlying security's market price. In order for a call option to be profitable, the market price of the underlying security must rise sufficiently above the exercise price to cover the premium and transaction costs. Risk Factors in Options Transactions The successful use of the fund's options strategies depends on the ability of Putnam Management to forecast correctly interest rate and market movements. For example, if the fund were to write a call option based on Putnam Management's expectation that the price of the underlying security would fall, but the price were to rise instead, the fund could be required to sell the security upon exercise at a price below the current market price. Similarly, if the fund were to write a put option based on Putnam Management's expectation that the price of the underlying security would rise, but the price were to fall instead, the fund could be required to purchase the security upon exercise at a price higher than the current market price. When the fund purchases an option, it runs the risk that it will lose its entire investment in the option in a relatively short period of time, unless the fund exercises the option or enters into a closing sale transaction before the option's expiration. If the price of the underlying security does not rise (in the case of a call) or fall (in the case of a put) to an extent sufficient to cover the option premium and transaction costs, the fund will lose part or all of its investment in the option. This contrasts with an investment by the fund in the underlying security, since the fund will not realize a loss if the security's price does not change. The effective use of options also depends on the fund's ability to terminate option positions at times when Putnam Management deems it desirable to do so. There is no assurance that the fund will be able to effect closing transactions at any particular time or at an acceptable price. If a secondary market in options were to become unavailable, the fund could no longer engage in closing transactions. Lack of investor interest might adversely affect the liquidity of the market for particular options or series of options. A market may discontinue trading of a particular option or options generally. In addition, a market could become temporarily unavailable if unusual events -- such as volume in excess of trading or clearing capability -- were to interrupt its normal operations. A market may at times find it necessary to impose restrictions on particular types of options transactions, such as opening transactions. For example, if an underlying security ceases to meet qualifications imposed by the market or the Options Clearing Corporation, new series of options on that security will no longer be opened to replace expiring series, and opening transactions in existing series may be prohibited. If an options market were to become unavailable, the fund as a holder of an option would be able to realize profits or limit losses only by exercising the option, and the fund, as option writer, would remain obligated under the option until expiration or exercise. Disruptions in the markets for the securities underlying options purchased or sold by the fund could result in losses on the options. If trading is interrupted in an underlying security, the trading of options on that security is normally halted as well. As a result, the fund as purchaser or writer of an option will be unable to close out its positions until options trading resumes, and it may be faced with considerable losses if trading in the security reopens at a substantially different price. In addition, the Options Clearing Corporation or other options markets may impose exercise restrictions. If a prohibition on exercise is imposed at the time when trading in the option has also been halted, the fund as purchaser or writer of an option will be locked into its position until one of the two restrictions has been lifted. If the Options Clearing Corporation were to determine that the available supply of an underlying security appears insufficient to permit delivery by the writers of all outstanding calls in the event of exercise, it may prohibit indefinitely the exercise of put options. The fund, as holder of such a put option, could lose its entire investment if the prohibition remained in effect until the put option's expiration. Foreign-traded options are subject to many of the same risks presented by internationally-traded securities. In addition, because of time differences between the United States and various foreign countries, and because different holidays are observed in different countries, foreign options markets may be open for trading during hours or on days when U.S. markets are closed. As a result, option premiums may not reflect the current prices of the underlying interest in the United States. Over-the-counter ("OTC") options purchased by the fund and assets held to cover OTC options written by the fund may, under certain circumstances, be considered illiquid securities for purposes of any limitation on the fund's ability to invest in illiquid securities. Futures Contracts and Related Options Subject to applicable law, and unless otherwise specified in the prospectus, the fund may invest without limit in the types of futures contracts and related options identified in the prospectus for hedging and non-hedging purposes. The use of futures and options transactions for purposes other than hedging entails greater risks. A financial futures contract sale creates an obligation by the seller to deliver the type of financial instrument called for in the contract in a specified delivery month for a stated price. A financial futures contract purchase creates an obligation by the purchaser to take delivery of the type of financial instrument called for in the contract in a specified delivery month at a stated price. The specific instruments delivered or taken, respectively, at settlement date are not determined until on or near that date. The determination is made in accordance with the rules of the exchange on which the futures contract sale or purchase was made. Futures contracts are traded in the United States only on commodity exchanges or boards of trade -- known as "contract markets" -- approved for such trading by the Commodity Futures Trading Commission (the "CFTC"), and must be executed through a futures commission merchant or brokerage firm which is a member of the relevant contract market. Although futures contracts (other than index futures) by their terms call for actual delivery or acceptance of commodities or securities, in most cases the contracts are closed out before the settlement date without the making or taking of delivery. Closing out a futures contract sale is effected by purchasing a futures contract for the same aggregate amount of the specific type of financial instrument or commodity with the same delivery date. If the price of the initial sale of the futures contract exceeds the price of the offsetting purchase, the seller is paid the difference and realizes a gain. Conversely, if the price of the offsetting purchase exceeds the price of the initial sale, the seller realizes a loss. If the fund is unable to enter into a closing transaction, the amount of the fund's potential loss is unlimited. The closing out of a futures contract purchase is effected by the purchaser's entering into a futures contract sale. If the offsetting sale price exceeds the purchase price, the purchaser realizes a gain, and if the purchase price exceeds the offsetting sale price, he realizes a loss. In general 40% of the gain or loss arising from the closing out of a futures contract traded on an exchange approved by the CFTC is treated as short-term gain or loss, and 60% is treated as long-term gain or loss. Unlike when the fund purchases or sells a security, no price is paid or received by the fund upon the purchase or sale of a futures contract. Upon entering into a contract, the fund is required to deposit with its custodian in a segregated account in the name of the futures broker an amount of cash and/or U.S. government securities. This amount is known as "initial margin." The nature of initial margin in futures transactions is different from that of margin in security transactions in that futures contract margin does not involve the borrowing of funds to finance the transactions. Rather, initial margin is similar to a performance bond or good faith deposit which is returned to the fund upon termination of the futures contract, assuming all contractual obligations have been satisfied. Futures contracts also involve brokerage costs. Subsequent payments, called "variation margin" or "maintenance margin," to and from the broker (or the custodian) are made on a daily basis as the price of the underlying security or commodity fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as "marking to the market." For example, when the fund has purchased a futures contract on a security and the price of the underlying security has risen, that position will have increased in value and the fund will receive from the broker a variation margin payment based on that increase in value. Conversely, when the fund has purchased a security futures contract and the price of the underlying security has declined, the position would be less valuable and the fund would be required to make a variation margin payment to the broker. The fund may elect to close some or all of its futures positions at any time prior to their expiration in order to reduce or eliminate a hedge position then currently held by the fund. The fund may close its positions by taking opposite positions which will operate to terminate the fund's position in the futures contracts. Final determinations of variation margin are then made, additional cash is required to be paid by or released to the fund, and the fund realizes a loss or a gain. Such closing transactions involve additional commission costs. Options on futures contracts. The fund may purchase and write call and put options on futures contracts it may buy or sell and enter into closing transactions with respect to such options to terminate existing positions. Options on future contracts give the purchaser the right in return for the premium paid to assume a position in a futures contract at the specified option exercise price at any time during the period of the option. The fund may use options on futures contracts in lieu of writing or buying options directly on the underlying securities or purchasing and selling the underlying futures contracts. For example, to hedge against a possible decrease in the value of its portfolio securities, the fund may purchase put options or write call options on futures contracts rather than selling futures contracts. Similarly, the fund may purchase call options or write put options on futures contracts as a substitute for the purchase of futures contracts to hedge against a possible increase in the price of securities which the fund expects to purchase. Such options generally operate in the same manner as options purchased or written directly on the underlying investments. As with options on securities, the holder or writer of an option may terminate his position by selling or purchasing an offsetting option. There is no guarantee that such closing transactions can be effected. The fund will be required to deposit initial margin and maintenance margin with respect to put and call options on futures contracts written by it pursuant to brokers' requirements similar to those described above in connection with the discussion of futures contracts. Risks of transactions in futures contracts and related options. Successful use of futures contracts by the fund is subject to Putnam Management's ability to predict movements in various factors affecting securities markets, including interest rates. Compared to the purchase or sale of futures contracts, the purchase of call or put options on futures contracts involves less potential risk to the fund because the maximum amount at risk is the premium paid for the options (plus transaction costs). However, there may be circumstances when the purchase of a call or put option on a futures contract would result in a loss to the fund when the purchase or sale of a futures contract would not, such as when there is no movement in the prices of the hedged investments. The writing of an option on a futures contract involves risks similar to those risks relating to the sale of futures contracts. There is no assurance that higher than anticipated trading activity or other unforeseen events might not, at times, render certain market clearing facilities inadequate, and thereby result in the institution by exchanges of special procedures which may interfere with the timely execution of customer orders. To reduce or eliminate a position held by the fund, the fund may seek to close out such position. The ability to establish and close out positions will be subject to the development and maintenance of a liquid secondary market. It is not certain that this market will develop or continue to exist for a particular futures contract or option. Reasons for the absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain contracts or options; (ii) restrictions may be imposed by an exchange on opening transactions or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of contracts or options, or underlying securities; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or a clearing corporation may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of contracts or options (or a particular class or series of contracts or options), in which event the secondary market on that exchange for such contracts or options (or in the class or series of contracts or options) would cease to exist, although outstanding contracts or options on the exchange that had been issued by a clearing corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms. U.S. Treasury security futures contracts and options. U.S. Treasury security futures contracts require the seller to deliver, or the purchaser to take delivery of, the type of U.S. Treasury security called for in the contract at a specified date and price. Options on U.S. Treasury security futures contracts give the purchaser the right in return for the premium paid to assume a position in a U.S. Treasury security futures contract at the specified option exercise price at any time during the period of the option. Successful use of U.S. Treasury security futures contracts by the fund is subject to Putnam Management's ability to predict movements in the direction of interest rates and other factors affecting markets for debt securities. For example, if the fund has sold U.S. Treasury security futures contracts in order to hedge against the possibility of an increase in interest rates which would adversely affect securities held in its portfolio, and the prices of the fund's securities increase instead as a result of a decline in interest rates, the fund will lose part or all of the benefit of the increased value of its securities which it has hedged because it will have offsetting losses in its futures positions. In addition, in such situations, if the fund has insufficient cash, it may have to sell securities to meet daily maintenance margin requirements at a time when it may be disadvantageous to do so. There is also a risk that price movements in U.S. Treasury security futures contracts and related options will not correlate closely with price movements in markets for particular securities. For example, if the fund has hedged against a decline in the values of tax-exempt securities held by it by selling Treasury security futures and the values of Treasury securities subsequently increase while the values of its tax-exempt securities decrease, the fund would incur losses on both the Treasury security futures contracts written by it and the tax-exempt securities held in its portfolio. Index futures contracts. An index futures contract is a contract to buy or sell units of an index at a specified future date at a price agreed upon when the contract is made. Entering into a contract to buy units of an index is commonly referred to as buying or purchasing a contract or holding a long position in the index. Entering into a contract to sell units of an index is commonly referred to as selling a contract or holding a short position. A unit is the current value of the index. The fund may enter into stock index futures contracts, debt index futures contracts, or other index futures contracts appropriate to its objective(s). The fund may also purchase and sell options on index futures contracts. For example, the Standard & Poor's Composite 500 Stock Price Index ("S&P 500") is composed of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The S&P 500 assigns relative weightings to the common stocks included in the Index, and the value fluctuates with changes in the market values of those common stocks. In the case of the S&P 500, contracts are to buy or sell 500 units. Thus, if the value of the S&P 500 were $150, one contract would be worth $75,000 (500 units x $150). The stock index futures contract specifies that no delivery of the actual stocks making up the index will take place. Instead, settlement in cash must occur upon the termination of the contract, with the settlement being the difference between the contract price and the actual level of the stock index at the expiration of the contract. For example, if the fund enters into a futures contract to buy 500 units of the S&P 500 at a specified future date at a contract price of $150 and the S&P 500 is at $154 on that future date, the fund will gain $2,000 (500 units x gain of $4). If the fund enters into a futures contract to sell 500 units of the stock index at a specified future date at a contract price of $150 and the S&P 500 is at $152 on that future date, the fund will lose $1,000 (500 units x loss of $2). There are several risks in connection with the use by the fund of index futures. One risk arises because of the imperfect correlation between movements in the prices of the index futures and movements in the prices of securities which are the subject of the hedge. Putnam Management will, however, attempt to reduce this risk by buying or selling, to the extent possible, futures on indices the movements of which will, in its judgment, have a significant correlation with movements in the prices of the securities sought to be hedged. Successful use of index futures by the fund is also subject to Putnam Management's ability to predict movements in the direction of the market. For example, it is possible that, where the fund has sold futures to hedge its portfolio against a decline in the market, the index on which the futures are written may advance and the value of securities held in the fund's portfolio may decline. If this occurred, the fund would lose money on the futures and also experience a decline in value in its portfolio securities. It is also possible that, if the fund has hedged against the possibility of a decline in the market adversely affecting securities held in its portfolio and securities prices increase instead, the fund will lose part or all of the benefit of the increased value of those securities it has hedged because it will have offsetting losses in its futures positions. In addition, in such situations, if the fund has insufficient cash, it may have to sell securities to meet daily variation margin requirements at a time when it is disadvantageous to do so. In addition to the possibility that there may be an imperfect correlation, or no correlation at all, between movements in the index futures and the portion of the portfolio being hedged, the prices of index futures may not correlate perfectly with movements in the underlying index due to certain market distortions. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between the index and futures markets. Second, margin requirements in the futures market are less onerous than margin requirements in the securities market, and as a result the futures market may attract more speculators than the securities market does. Increased participation by speculators in the futures market may also cause temporary price distortions. Due to the possibility of price distortions in the futures market and also because of the imperfect correlation between movements in the index and movements in the prices of index futures, even a correct forecast of general market trends by Putnam Management may still not result in a profitable position over a short time period. Options on stock index futures. Options on index futures are similar to options on securities except that options on index futures give the purchaser the right, in return for the premium paid, to assume a position in an index futures contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's futures margin account which represents the amount by which the market price of the index futures contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the index future. If an option is exercised on the last trading day prior to its expiration date, the settlement will be made entirely in cash equal to the difference between the exercise price of the option and the closing level of the index on which the future is based on the expiration date. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid. Options on Indices As an alternative to purchasing call and put options on index futures, the fund may purchase and sell call and put options on the underlying indices themselves. Such options would be used in a manner identical to the use of options on index futures. Index Warrants The fund may purchase put warrants and call warrants whose values vary depending on the change in the value of one or more specified securities indices ("index warrants"). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of exercise. In general, if the value of the underlying index rises above the exercise price of the index warrant, the holder of a call warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the value of the index and the exercise price of the warrant; if the value of the underlying index falls, the holder of a put warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the exercise price of the warrant and the value of the index. The holder of a warrant would not be entitled to any payments from the issuer at any time when, in the case of a call warrant, the exercise price is greater than the value of the underlying index, or, in the case of a put warrant, the exercise price is less than the value of the underlying index. If the fund were not to exercise an index warrant prior to its expiration, then the fund would lose the amount of the purchase price paid by it for the warrant. The fund will normally use index warrants in a manner similar to its use of options on securities indices. The risks of the fund's use of index warrants are generally similar to those relating to its use of index options. Unlike most index options, however, index warrants are issued in limited amounts and are not obligations of a regulated clearing agency, but are backed only by the credit of the bank or other institution which issues the warrant. Also, index warrants generally have longer terms than index options. Although the fund will normally invest only in exchange-listed warrants, index warrants are not likely to be as liquid as certain index options backed by a recognized clearing agency. In addition, the terms of index warrants may limit the fund's ability to exercise the warrants at such time, or in such quantities, as the fund would otherwise wish to do. Foreign Securities Under its current policy, which may be changed without shareholder approval, the fund may invest up to the limit of its total assets specified in its prospectus in securities principally traded in markets outside the United States. Eurodollar certificates of deposit are excluded for purposes of this limitation. Since foreign securities are normally denominated and traded in foreign currencies, the value of the fund's assets may be affected favorably or unfavorably by changes in currency exchange rates, exchange control regulations and restrictions or prohibitions on the repatriation of foreign currencies. There may be less information publicly available about a foreign company than about a U.S. company, and foreign companies are not generally subject to accounting, auditing and financial reporting standards and practices comparable to those in the United States. The securities of some foreign companies are less liquid and at times more volatile than securities of comparable U.S. companies. Foreign brokerage commissions and other fees are also generally higher than in the United States. Foreign settlement procedures and trade regulations may involve certain risks (such as delay in payment or delivery of securities or in the recovery of the fund's assets held abroad) and expenses not present in the settlement of domestic investments. In addition, there may be a possibility of nationalization or expropriation of assets, imposition of currency exchange controls, confiscatory taxation, political or financial instability and diplomatic developments which could affect the value of the fund's investments in certain foreign countries. Legal remedies available to investors in certain foreign countries may be more limited than those available with respect to investments in the United States or in other foreign countries. The laws of some foreign countries may limit the fund's ability to invest in securities of certain issuers located in those foreign countries. Special tax considerations apply to foreign securities. The risks described above, including the risks of nationalization or expropriation of assets, are typically increased to the extent that the fund invests in issuers located in less developed and developing nations, whose securities markets are sometimes referred to as "emerging securities markets." Investments in securities located in such countries are speculative and subject to certain special risks. Political and economic structures in many of these countries may be in their infancy and developing rapidly, and such countries may lack the social, political and economic stability characteristic of more developed countries. Certain of these countries have in the past failed to recognize private property rights and have at times nationalized and expropriated the assets of private companies. In addition, unanticipated political or social developments may affect the values of the fund's investments in these countries and the availability to the fund of additional investments in these countries. The small size, limited trading volume and relative inexperience of the securities markets in these countries may make the fund's investments in such countries illiquid and more volatile than investments in more developed countries, and the fund may be required to establish special custodial or other arrangements before making investments in these countries. There may be little financial or accounting information available with respect to issuers located in these countries, and it may be difficult as a result to assess the value or prospects of an investment in such issuers. Foreign Currency Transactions Unless otherwise specified in the prospectus or Part I of this SAI, the fund may engage without limit in currency exchange transactions, including purchasing and selling foreign currency, foreign currency options, foreign currency forward contracts and foreign currency futures contracts and related options, to protect against uncertainty in the level of future currency exchange rates. In addition, the fund may write covered call and put options on foreign currencies for the purpose of increasing its current return. Generally, the fund may engage in both "transaction hedging" and "position hedging." When it engages in transaction hedging, the fund enters into foreign currency transactions with respect to specific receivables or payables, generally arising in connection with the purchase or sale of portfolio securities. The fund will engage in transaction hedging when it desires to "lock in" the U.S. dollar price of a security it has agreed to purchase or sell, or the U.S. dollar equivalent of a dividend or interest payment in a foreign currency. By transaction hedging the fund will attempt to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and the applicable foreign currency during the period between the date on which the security is purchased or sold, or on which the dividend or interest payment is earned, and the date on which such payments are made or received. The fund may purchase or sell a foreign currency on a spot (or cash) basis at the prevailing spot rate in connection with the settlement of transactions in portfolio securities denominated in that foreign currency. The fund may also enter into contracts to purchase or sell foreign currencies at a future date ("forward contracts") and purchase and sell foreign currency futures contracts. For transaction hedging purposes the fund may also purchase exchange-listed and over-the-counter call and put options on foreign currency futures contracts and on foreign currencies. A put option on a futures contract gives the fund the right to assume a short position in the futures contract until the expiration of the option. A put option on a currency gives the fund the right to sell the currency at an exercise price until the expiration of the option. A call option on a futures contract gives the fund the right to assume a long position in the futures contract until the expiration of the option. A call option on a currency gives the fund the right to purchase the currency at the exercise price until the expiration of the option. When it engages in position hedging, the fund enters into foreign currency exchange transactions to protect against a decline in the values of the foreign currencies in which its portfolio securities are denominated (or an increase in the value of currency for securities which the fund expects to purchase). In connection with position hedging, the fund may purchase put or call options on foreign currency and on foreign currency futures contracts and buy or sell forward contracts and foreign currency futures contracts. The fund may also purchase or sell foreign currency on a spot basis. It is impossible to forecast with precision the market value of portfolio securities at the expiration or maturity of a forward or futures contract. Accordingly, it may be necessary for the fund to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security or securities being hedged is less than the amount of foreign currency the fund is obligated to deliver and a decision is made to sell the security or securities and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security or securities if the market value of such security or securities exceeds the amount of foreign currency the fund is obligated to deliver. Transaction and position hedging do not eliminate fluctuations in the underlying prices of the securities which the fund owns or intends to purchase or sell. They simply establish a rate of exchange which one can achieve at some future point in time. Additionally, although these techniques tend to minimize the risk of loss due to a decline in the value of the hedged currency, they tend to limit any potential gain which might result from the increase in value of such currency. See "Risk factors in options transactions" above. The fund may seek to increase its current return or to offset some of the costs of hedging against fluctuations in current exchange rates by writing covered call options and covered put options on foreign currencies. The fund receives a premium from writing a call or put option, which increases the fund's current return if the option expires unexercised or is closed out at a net profit. The fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction in which it purchases an option having the same terms as the option written. The fund's currency hedging transactions may call for the delivery of one foreign currency in exchange for another foreign currency and may at times not involve currencies in which its portfolio securities are then denominated. Putnam Management will engage in such "cross hedging" activities when it believes that such transactions provide significant hedging opportunities for the fund. Cross hedging transactions by the fund involve the risk of imperfect correlation between changes in the values of the currencies to which such transactions relate and changes in the value of the currency or other asset or liability which is the subject of the hedge. The value of any currency, including U.S. dollars and foreign currencies, may be affected by complex political and economic factors applicable to the issuing country. In addition, the exchange rates of foreign currencies (and therefore the values of foreign currency options, forward contracts and futures contracts) may be affected significantly, fixed, or supported directly or indirectly by U.S. and foreign government actions. Government intervention may increase risks involved in purchasing or selling foreign currency options, forward contracts and futures contracts, since exchange rates may not be free to fluctuate in response to other market forces. The value of a foreign currency option, forward contract or futures contract reflects the value of an exchange rate, which in turn reflects relative values of two currencies, the U.S. dollar and the foreign currency in question. Because foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in the exercise of foreign currency options, forward contracts and futures contracts, investors may be disadvantaged by having to deal in an odd-lot market for the underlying foreign currencies in connection with options at prices that are less favorable than for round lots. Foreign governmental restrictions or taxes could result in adverse changes in the cost of acquiring or disposing of foreign currencies. There is no systematic reporting of last sale information for foreign currencies and there is no regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Available quotation information is generally representative of very large round-lot transactions in the interbank market and thus may not reflect exchange rates for smaller odd-lot transactions (less than $1 million) where rates may be less favorable. The interbank market in foreign currencies is a global, around-the-clock market. To the extent that options markets are closed while the markets for the underlying currencies remain open, significant price and rate movements may take place in the underlying markets that cannot be reflected in the options markets. Currency forward and futures contracts. A forward foreign currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract as agreed by the parties, at a price set at the time of the contract. In the case of a cancelable forward contract, the holder has the unilateral right to cancel the contract at maturity by paying a specified fee. The contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades. A foreign currency futures contract is a standardized contract for the future delivery of a specified amount of a foreign currency at a price set at the time of the contract. Foreign currency futures contracts traded in the United States are designed by and traded on exchanges regulated by the CFTC, such as the New York Mercantile Exchange. Forward foreign currency exchange contracts differ from foreign currency futures contracts in certain respects. For example, the maturity date of a forward contract may be any fixed number of days from the date of the contract agreed upon by the parties, rather than a predetermined date in a given month. Forward contracts may be in any amounts agreed upon by the parties rather than predetermined amounts. Also, forward foreign exchange contracts are traded directly between currency traders so that no intermediary is required. A forward contract generally requires no margin or other deposit. At the maturity of a forward or futures contract, the fund either may accept or make delivery of the currency specified in the contract, or at or prior to maturity enter into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with respect to forward contracts are usually effected with the currency trader who is a party to the original forward contract. Closing transactions with respect to futures contracts are effected on a commodities exchange; a clearing corporation associated with the exchange assumes responsibility for closing out such contracts. Positions in the foreign currency futures contracts may be closed out only on an exchange or board of trade which provides a secondary market in such contracts. Although the fund intends to purchase or sell foreign currency futures contracts only on exchanges or boards of trade where there appears to be an active secondary market, there is no assurance that a secondary market on an exchange or board of trade will exist for any particular contract or at any particular time. In such event, it may not be possible to close a futures position and, in the event of adverse price movements, the fund would continue to be required to make daily cash payments of variation margin. Foreign currency options. In general, options on foreign currencies operate similarly to options on securities and are subject to many of the risks described above. Foreign currency options are traded primarily in the over-the-counter market, although options on foreign currencies are also listed on several exchanges. Options are traded not only on the currencies of individual nations, but also on the European Currency Unit ("ECU"). The ECU is composed of amounts of a number of currencies, and is the official medium of exchange of the European Community's European Monetary System. The fund will only purchase or write foreign currency options when Putnam Management believes that a liquid secondary market exists for such options. There can be no assurance that a liquid secondary market will exist for a particular option at any specific time. Options on foreign currencies are affected by all of those factors which influence foreign exchange rates and investments generally. Settlement procedures. Settlement procedures relating to the fund's investments in foreign securities and to the fund's foreign currency exchange transactions may be more complex than settlements with respect to investments in debt or equity securities of U.S. issuers, and may involve certain risks not present in the fund's domestic investments. For example, settlement of transactions involving foreign securities or foreign currencies may occur within a foreign country, and the fund may be required to accept or make delivery of the underlying securities or currency in conformity with any applicable U.S. or foreign restrictions or regulations, and may be required to pay any fees, taxes or charges associated with such delivery. Such investments may also involve the risk that an entity involved in the settlement may not meet its obligations. Foreign currency conversion. Although foreign exchange dealers do not charge a fee for currency conversion, they do realize a profit based on the difference (the "spread") between prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the fund at one rate, while offering a lesser rate of exchange should the fund desire to resell that currency to the dealer. Restricted Securities The SEC Staff currently takes the view that any delegation by the Trustees of the authority to determine that a restricted security is readily marketable (as described in the investment restrictions of the funds) must be pursuant to written procedures established by the Trustees. It is the present intention of the funds' Trustees that, if the Trustees decide to delegate such determinations to Putnam Management or another person, they would do so pursuant to written procedures, consistent with the Staff's position. Should the Staff modify its position in the future, the Trustees would consider what action would be appropriate in light of the Staff's position at that time. TAXES Taxation of the fund. The fund intends to qualify each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In order so to qualify and to qualify for the special tax treatment accorded regulated investment companies and their shareholders, the fund must, among other things: (a) Derive at least 90% of its gross income from dividends, interest, payments with respect to certain securities loans, and gains from the sale of stock, securities and foreign currencies, or other income (including but not limited to gains from options, futures, or forward contracts) derived with respect to its business of investing in such stock, securities, or currencies; (b) derive less than 30% of its gross income from the sale or other disposition of certain assets (including stock or securities and certain options, futures contracts, forward contracts and foreign currencies) held for less than three months; (c) distribute with respect to each taxable year at least 90% of the sum of its taxable net investment income, its net tax-exempt income, and the excess, if any, of net short-term capital gains over net long-term capital losses for such year; and (d) diversify its holdings so that, at the end of each fiscal quarter, (i) at least 50% of the market value of the fund's assets is represented by cash and cash items, U.S. government securities, securities of other regulated investment companies, and other securities limited in respect of any one issuer to a value not greater than 5% of the value of the fund's total assets and to not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its assets is invested in the securities (other than those of the U.S. Government or other regulated investment companies) of any one issuer or of two or more issuers which the fund controls and which are engaged in the same, similar, or related trades or businesses. If the fund qualifies as a regulated investment company that is accorded special tax treatment, the fund will not be subject to federal income tax on income paid to its shareholders in the form of dividends (including capital gain dividends). If the fund failed to qualify as a regulated investment company accorded special tax treatment in any taxable year, the fund would be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would be taxable to shareholders as ordinary income. In addition, the fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying as a regulated investment company that is accorded special tax treatment. If the fund fails to distribute in a calendar year substantially all of its ordinary income for such year and substantially all of its capital gain net income for the one-year period ending October 31 (or later if the fund is permitted so to elect and so elects), plus any retained amount from the prior year, the fund will be subject to a 4% excise tax on the undistributed amounts. A dividend paid to shareholders by the fund in January of a year generally is deemed to have been paid by the fund on December 31 of the preceding year, if the dividend was declared and payable to shareholders of record on a date in October, November or December of that preceding year. The fund intends generally to make distributions sufficient to avoid imposition of the 4% excise tax. Exempt-interest dividends. The fund will be qualified to pay exempt-interest dividends to its shareholders only if, at the close of each quarter of the fund's taxable year, at least 50% of the total value of the fund's assets consists of obligations the interest on which is exempt from federal income tax. Distributions that the fund properly designates as exempt- interest dividends are treated as interest excludable from shareholders' gross income for federal income tax purposes but may be taxable for federal alternative minimum tax purposes and for state and local purposes. If the fund intends to be qualified to pay exempt-interest dividends, the fund may be limited in its ability to enter into taxable transactions involving forward commitments, repurchase agreements, financial futures and options contracts on financial futures, tax-exempt bond indices and other assets. Part or all of the interest on indebtedness, if any, incurred or continued by a shareholder to purchase or carry shares of a fund paying exempt-interest dividends is not deductible. The portion of interest that is not deductible is equal to the total interest paid or accrued on the indebtedness, multiplied by the percentage of the fund's total distributions (not including distributions from net long-term capital gains) paid to the shareholder that are exempt-interest dividends. Under rules used by the Internal Revenue Service for determining when borrowed funds are considered used for the purpose of purchasing or carrying particular assets, the purchase of shares may be considered to have been made with borrowed funds even though such funds are not directly traceable to the purchase of shares. In general, exempt-interest dividends, if any, attributable to interest received on certain private activity obligations and certain industrial development bonds will not be tax-exempt to any shareholders who are "substantial users" of the facilities financed by such obligations or bonds or who are "related persons" of such substantial users. A fund which is qualified to pay exempt-interest dividends will inform investors within 60 days of the fund's fiscal year-end of the percentage of its income distributions designated as tax-exempt. The percentage is applied uniformly to all distributions made during the year. The percentage of income designated as tax-exempt for any particular distribution may be substantially different from the percentage of the fund's income that was tax-exempt during the period covered by the distribution. Hedging transactions. If the fund engages in hedging transactions, including hedging transactions in options, futures contracts, and straddles, or other similar transactions, it will be subject to special tax rules (including mark-to-market, straddle, wash sale, and short sale rules), the effect of which may be to accelerate income to the fund, defer losses to the fund, cause adjustments in the holding periods of the fund's securities, or convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing and character of distributions to shareholders. The fund will endeavor to make any available elections pertaining to such transactions in a manner believed to be in the best interests of the fund. Under the 30% of gross income test described above (see "Taxation of the fund"), the fund will be restricted in selling assets held or considered under Code rules to have been held for less than three months, and in engaging in certain hedging transactions (including hedging transactions in options and futures) that in some circumstances could cause certain fund assets to be treated as held for less than three months. Certain of the fund's hedging activities (including its transactions, if any, in foreign currencies or foreign currency-denominated instruments) are likely to produce a difference between its book income and its taxable income. If the fund's book income exceeds its taxable income, the distribution (if any) of such excess will be treated as (i) a dividend to the extent of the fund's remaining earnings and profits (including earnings and profits arising from tax-exempt income), (ii) thereafter as a return of capital to the extent of the recipient's basis in the shares, and (iii) thereafter as gain from the sale or exchange of a capital asset. If the fund's book income is less than its taxable income, the fund could be required to make distributions exceeding book income to qualify as a regulated investment company that is accorded special tax treatment. Return of capital distributions. If the fund makes a distribution to you in excess of its current and accumulated "earnings and profits" in any taxable year, the excess distribution will be treated as a return of capital to the extent of your tax basis in your shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces your tax basis in your shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by you of your shares. Securities issued or purchased at a discount. The fund's investment in securities issued at a discount and certain other obligations will (and investments in securities purchased at a discount may) require the fund to accrue and distribute income not yet received. In order to generate sufficient cash to make the requisite distributions, the fund may be required to sell securities in its portfolio that it otherwise would have continued to hold. Capital loss carryover. Distributions from capital gains are made after applying any available capital loss carryovers. The amounts and expiration dates of any capital loss carryovers available to the fund are shown in Note 1 (Federal income taxes) to the financial statements included in Part I of this SAI or incorporated by reference into this SAI. Foreign currency-denominated securities and related hedging transactions. The fund's transactions in foreign currencies, foreign currency-denominated debt securities and certain foreign currency options, futures contracts and forward contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned. If more than 50% of the fund's assets at year end consists of the debt and equity securities of foreign corporations, the fund may elect to permit shareholders to claim a credit or deduction on their income tax returns for their pro rata portion of qualified taxes paid by the fund to foreign countries. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes. A shareholder's ability to claim a foreign tax credit or deduction in respect of foreign taxes paid by the fund may be subject to certain limitations imposed by the Code, as a result of which a shareholder may not get a full credit or deduction for the amount of such taxes. Shareholders who do not itemize on their federal income tax returns may claim a credit (but no deduction) for such foreign taxes. Investment by the fund in "passive foreign investment companies" could subject the fund to a U.S. federal income tax or other charge on the proceeds from the sale of its investment in such a company; however, this tax can be avoided by making an election to mark such investments to market annually or to treat the passive foreign investment company as a "qualified electing fund." A "passive foreign investment company" is any foreign corporation: (i) 75 percent of more of the income of which for the taxable year is passive income, or (ii) the average percentage of the assets of which (generally by value, but by adjusted tax basis in certain cases) that produce or are held for the production of passive income is at least 50 percent. Generally, passive income for this purpose means dividends, interest (including income equivalent to interest), royalties, rents, annuities, the excess of gains over losses from certain property transactions and commodities transactions, and foreign currency gains. Passive income for this purpose does not include rents and royalties received by the foreign corporation from active business and certain income received from related persons. Sale or redemption of shares. The sale, exchange or redemption of fund shares may give rise to a gain or loss. In general, any gain or loss realized upon a taxable disposition of shares will be treated as long-term capital gain or loss if the shares have been held for more than 12 months, and otherwise as short-term capital gain or loss. However, if a shareholder sells shares at a loss within six months of purchase, any loss will be disallowed for Federal income tax purposes to the extent of any exempt- interest dividends received on such shares. In addition, any loss (not already disallowed as provided in the preceding sentence) realized upon a taxable disposition of shares held for six months or less will be treated as long-term, rather than short-term, to the extent of any long-term capital gain distributions received by the shareholder with respect to the shares. All or a portion of any loss realized upon a taxable disposition of fund shares will be disallowed if other shares of the same fund are purchased within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss. Shares purchased through tax-qualified plans. Special tax rules apply to investments though defined contribution plans and other tax-qualified plans. Shareholders should consult their tax adviser to determine the suitability of shares of a fund as an investment through such plans and the precise effect of an investment on their particular tax situation. Backup withholding. The fund generally is required to withhold and remit to the U.S. Treasury 31% of the taxable dividends and other distributions paid to any individual shareholder who fails to furnish the fund with a correct taxpayer identification number (TIN), who has under-reported dividends or interest income, or who fails to certify to the fund that he or she is not subject to such withholding. Shareholders who fail to furnish their correct TIN are subject to a penalty of $50 for each such failure unless the failure is due to reasonable cause and not wilful neglect. An individual's taxpayer identification number is his or her social security number. MANAGEMENT Trustees Name (Age) *+George Putnam (69), Chairman and President. Chairman and Director of Putnam Management and Putnam Mutual Funds. Director, The Boston Company, Inc., Boston Safe Deposit and Trust Company, Freeport-McMoRan, Inc., Freeport Copper and Gold, Inc., McMoRan Oil and Gas, Inc., General Mills, Inc., Houghton Mifflin Company, Marsh & McLennan Companies, Inc. and Rockefeller Group, Inc. +William F. Pounds (68), Vice Chairman. Professor of Management, Alfred P. Sloan School of Management, Massachusetts Institute of Technology. Director of EG&G, Inc., IDEXX Laboratories, Inc., Perseptive Biosystems, Inc., Management Sciences for Health, Inc., and Sun Company, Inc. Jameson A. Baxter (52), Trustee. President, Baxter Associates, Inc. (a management and financial consultant). Director of Avondale Federal Savings Bank, ASHTA Chemicals, Inc. and Banta Corporation. Chairman Emeritus of the Board of Trustees, Mount Holyoke College. +Hans H. Estin (67), Trustee. Vice Chairman, North American Management Corp. (a registered investment adviser). Director of The Boston Company, Inc. and Boston Safe Deposit and Trust Company. John A. Hill (54), Trustee. Chairman and Managing Director, First Reserve Corporation (a registered investment adviser). Director, Maverick Tube Corporation, PetroCorp Incorporated, Snyder Oil Corporation, Weatherford Enterra, Inc. (an oil field service company) and various First Reserve Funds. Ronald J. Jackson (52), Trustee. Former Chairman, President and Chief Executive Officer of Fisher-Price, Inc. Trustee of Salem Hospital and Overseer of the Peabody Essex Museum. Elizabeth T. Kennan (58), Trustee. President Emeritus and Professor, Mount Holyoke College. Director, the Kentucky Home Life Insurance Companies, NYNEX Corporation, Northeast Utilities and Talbots. Trustee of the University of Notre Dame. *Lawrence J. Lasser (53), Trustee and Vice President. President, Chief Executive Officer and Director of Putnam Investments, Inc. and Putnam Investment Management, Inc. Director of Marsh & McLennan Companies, Inc. +Robert E. Patterson (51), Trustee. Executive Vice President and Director of Acquisitions, Cabot Partners Limited Partnership (a registered investment adviser). *Donald S. Perkins (69), Trustee. Director of various corporations, including AON Corp., Cummins Engine Company, Inc., Current Assets L.L.C., Illinova and Illinois Power Company, Inland Steel Industries, Inc., LaSalle Street Fund, Inc., Lucent Technologies Inc., Springs Industries, Inc. (a textile manufacturer), and Time Warner Inc. *#George Putnam III (44), Trustee. President, New Generation Research, Inc. (publisher of bankruptcy information) and New Generation Advisers, Inc. (a registered investment adviser). Eli Shapiro (79), Trustee. Alfred P. Sloan Professor of Management, Emeritus, Alfred P. Sloan School of Management, Massachusetts Institute of Technology. Director of Nomura Dividend Fund, Inc. (a privately held registered investment company managed by Putnam Management) and former Trustee of the Putnam funds (1984-1990). *A.J.C. Smith (62), Trustee. Chairman and Chief Executive Officer, Marsh & McLennan Companies, Inc. Director, Trident Corp. W. Nicholas Thorndike (63), Trustee. Director of various corporations and charitable organizations, including Courier Corporation, Data General Corporation, Bradley Real Estate, Inc., and Providence Journal Co. Officers Name (Age) Charles E. Porter (57), Executive Vice President. Managing Director of Putnam Investments, Inc. and Putnam Management. Patricia C. Flaherty (49), Senior Vice President. Senior Vice President of Putnam Investments, Inc. and Putnam Management. William N. Shiebler (54), Vice President. Director and Senior Managing Director of Putnam Investments, Inc. President and Director of Putnam Mutual Funds. Gordon H. Silver (48), Vice President. Director and Senior Managing Director of Putnam Investments, Inc. and Putnam Management. John R. Verani (56), Vice President. Senior Vice President of Putnam Investments, Inc. and Putnam Management. Paul M. O'Neil (42), Vice President. Vice President of Putnam Investments, Inc. and Putnam Management. John D. Hughes (61), Vice President and Treasurer. Beverly Marcus (51), Clerk and Assistant Treasurer. *Trustees who are or may be deemed to be "interested persons" (as defined in the Investment Company Act of 1940) of the fund, Putnam Management or Putnam Mutual Funds. +Members of the Executive Committee of the Trustees. The Executive Committee meets between regular meetings of the Trustees as may be required to review investment matters and other affairs of the fund and may exercise all of the powers of the Trustees. #George Putnam, III is the son of George Putnam. ----------------- Certain other officers of Putnam Management are officers of the fund. See "Additional officers" in Part I of this SAI. The mailing address of each of the officers and Trustees is One Post Office Square, Boston, Massachusetts 02109. Except as stated below, the principal occupations of the officers and Trustees for the last five years have been with the employers as shown above, although in some cases they have held different positions with such employers. Prior to 1993, Mr. Jackson was Chairman of the Board, President and Chief Executive Officer of Fisher-Price, Inc. Prior to January, 1992, Ms. Baxter was Vice President and Principal, Regency Group, Inc. and Consultant, The First Boston Corporation. Prior to May, 1991, Dr. Pounds was Senior Advisor to the Rockefeller Family and Associates, Chairman of Rockefeller Trust Company and Director of Rockefeller Group, Inc. During the past five years Dr. Shapiro has provided economic and financial consulting services to various clients. Each Trustee of the fund receives an annual fee and an additional fee for each Trustees' meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings and for special services rendered in that connection. All of the Trustees are Trustees of all the Putnam funds and each receives fees for his or her services. For details of Trustees' fees paid by the fund and information concerning retirement guidelines for the Trustees, see "Charges and expenses" in Part I of this SAI. The Agreement and Declaration of Trust of the fund provides that the fund will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the fund, except if it is determined in the manner specified in the Agreement and Declaration of Trust that they have not acted in good faith in the reasonable belief that their actions were in the best interests of the fund or that such indemnification would relieve any officer or Trustee of any liability to the fund or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties. The fund, at its expense, provides liability insurance for the benefit of its Trustees and officers. Putnam Management and its affiliates Putnam Management is one of America's oldest and largest money management firms. Putnam Management's staff of experienced portfolio managers and research analysts selects securities and constantly supervises the fund's portfolio. By pooling an investor's money with that of other investors, a greater variety of securities can be purchased than would be the case individually; the resulting diversification helps reduce investment risk. Putnam Management has been managing mutual funds since 1937. Today, the firm serves as the investment manager for the funds in the Putnam Family, with over $93 billion in assets in nearly 5 million shareholder accounts at December 31, 1995. An affiliate, The Putnam Advisory Company, Inc., manages domestic and foreign institutional accounts and mutual funds, including the accounts of many Fortune 500 companies. Another affiliate, Putnam Fiduciary Trust Company, provides investment advice to institutional clients under its banking and fiduciary powers. At December 31, 1995, Putnam Management and its affiliates managed over $125 billion in assets, including over $17 billion in tax- exempt securities and over $55 billion in retirement plan assets. Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust Company are subsidiaries of Putnam Investments, Inc., a holding company which is in turn wholly owned by Marsh & McLennan Companies, Inc., a publicly-owned holding company whose principal operating subsidiaries are international insurance and reinsurance brokers, investment managers and management consultants. Trustees and officers of the fund who are also officers of Putnam Management or its affiliates or who are stockholders of Marsh & McLennan Companies, Inc. will benefit from the advisory fees, sales commissions, distribution fees, custodian fees and transfer agency fees paid or allowed by the fund. The Management Contract Under a Management Contract between the fund and Putnam Management, subject to such policies as the Trustees may determine, Putnam Management, at its expense, furnishes continuously an investment program for the fund and makes investment decisions on behalf of the fund. Subject to the control of the Trustees, Putnam Management also manages, supervises and conducts the other affairs and business of the fund, furnishes office space and equipment, provides bookkeeping and clerical services (including determination of the fund's net asset value, but excluding shareholder accounting services) and places all orders for the purchase and sale of the fund's portfolio securities. Putnam Management may place fund portfolio transactions with broker-dealers which furnish Putnam Management, without cost to it, certain research, statistical and quotation services of value to Putnam Management and its affiliates in advising the fund and other clients. In so doing, Putnam Management may cause the fund to pay greater brokerage commissions than it might otherwise pay. For details of Putnam Management's compensation under the Management Contract, see "Charges and expenses" in Part I of this SAI. Putnam Management's compensation under the Management Contract may be reduced in any year if the fund's expenses exceed the limits on investment company expenses imposed by any statute or regulatory authority of any jurisdiction in which shares of the fund are qualified for offer or sale. The term "expenses" is defined in the statutes or regulations of such jurisdictions, and generally excludes brokerage commissions, taxes, interest, extraordinary expenses and, if the fund has a distribution plan, payments made under such plan. The only such limitation as of the date of this SAI (applicable to any fund registered for sale in California) was 2.5% of the first $30 million of average net assets, 2% of the next $70 million and 1.5% of any excess over $100 million. Under the Management Contract, Putnam Management may reduce its compensation to the extent that the fund's expenses exceed such lower expense limitation as Putnam Management may, by notice to the fund, declare to be effective. The expenses subject to this limitation are exclusive of brokerage commissions, interest, taxes, deferred organizational and extraordinary expenses and, if the fund has a distribution plan, payments required under such plan. For the purpose of determining any such limitation on Putnam Management's compensation, expenses of the fund shall not reflect the application of commissions or cash management credits that may reduce designated fund expenses. The terms of any expense limitation from time to time in effect are described in either the prospectus or Part I of this SAI. In addition to the fee paid to Putnam Management, the fund reimburses Putnam Management for the compensation and related expenses of certain officers of the fund and their assistants who provide certain administrative services for the fund and the other Putnam funds, each of which bears an allocated share of the foregoing costs. The aggregate amount of all such payments and reimbursements is determined annually by the Trustees. The amount of this reimbursement for the fund's most recent fiscal year is included in "Charges and Expenses" in Part I of this SAI. Putnam Management pays all other salaries of officers of the fund. The fund pays all expenses not assumed by Putnam Management including, without limitation, auditing, legal, custodial, investor servicing and shareholder reporting expenses. The fund pays the cost of typesetting for its prospectuses and the cost of printing and mailing any prospectuses sent to its shareholders. Putnam Mutual Funds pays the cost of printing and distributing all other prospectuses. The Management Contract provides that Putnam Management shall not be subject to any liability to the fund or to any shareholder of the fund for any act or omission in the course of or connected with rendering services to the fund in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its duties on the part of Putnam Management. The Management Contract may be terminated without penalty by vote of the Trustees or the shareholders of the fund, or by Putnam Management, on 30 days' written notice. It may be amended only by a vote of the shareholders of the fund. The Management Contract also terminates without payment of any penalty in the event of its assignment. The Management Contract provides that it will continue in effect only so long as such continuance is approved at least annually by vote of either the Trustees or the shareholders, and, in either case, by a majority of the Trustees who are not "interested persons" of Putnam Management or the fund. In each of the foregoing cases, the vote of the shareholders is the affirmative vote of a "majority of the outstanding voting securities" as defined in the Investment Company Act of 1940. Personal Investments by Employees of Putnam Management Employees of Putnam Management are permitted to engage in personal securities transactions, subject to requirements and restrictions set forth in Putnam Management's Code of Ethics. The Code of Ethics contains provisions and requirements designed to identify and address certain conflicts of interest between personal investment activities and the interests of investment advisory clients such as the funds. Among other things, the Code of Ethics, consistent with standards recommended by the Investment Company Institute's Advisory Group on Personal Investing, prohibits certain types of transactions absent prior approval, imposes time periods during which personal transactions may not be made in certain securities, and requires the submission of duplicate broker confirmations and quarterly reporting of securities transactions. Additional restrictions apply to portfolio managers, traders, research analysts and others involved in the investment advisory process. Exceptions to these and other provisions of the Code of Ethics may be granted in particular circumstances after review by appropriate personnel. Portfolio Transactions Investment decisions. Investment decisions for the fund and for the other investment advisory clients of Putnam Management and its affiliates are made with a view to achieving their respective investment objectives. Investment decisions are the product of many factors in addition to basic suitability for the particular client involved. Thus, a particular security may be bought or sold for certain clients even though it could have been bought or sold for other clients at the same time. Likewise, a particular security may be bought for one or more clients when one or more other clients are selling the security. In some instances, one client may sell a particular security to another client. It also sometimes happens that two or more clients simultaneously purchase or sell the same security, in which event each day's transactions in such security are, insofar as possible, averaged as to price and allocated between such clients in a manner which in Putnam Management's opinion is equitable to each and in accordance with the amount being purchased or sold by each. There may be circumstances when purchases or sales of portfolio securities for one or more clients will have an adverse effect on other clients. Brokerage and research services. Transactions on U.S. stock exchanges, commodities markets and futures markets and other agency transactions involve the payment by the fund of negotiated brokerage commissions. Such commissions vary among different brokers. A particular broker may charge different commissions according to such factors as the difficulty and size of the transaction. Transactions in foreign investments often involve the payment of fixed brokerage commissions, which may be higher than those in the United States. There is generally no stated commission in the case of securities traded in the over-the-counter markets, but the price paid by the fund usually includes an undisclosed dealer commission or mark-up. In underwritten offerings, the price paid by the fund includes a disclosed, fixed commission or discount retained by the underwriter or dealer. It is anticipated that most purchases and sales of securities by funds investing primarily in tax-exempt securities and certain other fixed-income securities will be with the issuer or with underwriters of or dealers in those securities, acting as principal. Accordingly, those funds would not ordinarily pay significant brokerage commissions with respect to securities transactions. See "Charges and expenses" in Part I of this SAI for information concerning commissions paid by the fund. It has for many years been a common practice in the investment advisory business for advisers of investment companies and other institutional investors to receive brokerage and research services (as defined in the Securities Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that execute portfolio transactions for the clients of such advisers and from third parties with which such broker-dealers have arrangements. Consistent with this practice, Putnam Management receives brokerage and research services and other similar services from many broker-dealers with which Putnam Management places the fund's portfolio transactions and from third parties with which these broker-dealers have arrangements. These services include such matters as general economic and market reviews, industry and company reviews, evaluations of investments, recommendations as to the purchase and sale of investments, newspapers, magazines, pricing services, quotation services, news services and personal computers utilized by Putnam Management's managers and analysts. Where the services referred to above are not used exclusively by Putnam Management for research purposes, Putnam Management, based upon its own allocations of expected use, bears that portion of the cost of these services which directly relates to their non-research use. Some of these services are of value to Putnam Management and its affiliates in advising various of their clients (including the fund), although not all of these services are necessarily useful and of value in managing the fund. The management fee paid by the fund is not reduced because Putnam Management and its affiliates receive these services even though Putnam Management might otherwise be required to purchase some of these services for cash. Putnam Management places all orders for the purchase and sale of portfolio investments for the fund and buys and sells investments for the fund through a substantial number of brokers and dealers. In so doing, Putnam Management uses its best efforts to obtain for the fund the most favorable price and execution available, except to the extent it may be permitted to pay higher brokerage commissions as described below. In seeking the most favorable price and execution, Putnam Management, having in mind the fund's best interests, considers all factors it deems relevant, including, by way of illustration, price, the size of the transaction, the nature of the market for the security or other investment, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker-dealer involved and the quality of service rendered by the broker-dealer in other transactions. As permitted by Section 28(e) of the 1934 Act, and by the Management Contract, Putnam Management may cause the fund to pay a broker-dealer which provides "brokerage and research services" (as defined in the 1934 Act) to Putnam Management an amount of disclosed commission for effecting securities transactions on stock exchanges and other transactions for the fund on an agency basis in excess of the commission which another broker-dealer would have charged for effecting that transaction. Putnam Management's authority to cause the fund to pay any such greater commissions is also subject to such policies as the Trustees may adopt from time to time. Putnam Management does not currently intend to cause the fund to make such payments. It is the position of the staff of the Securities and Exchange Commission that Section 28(e) does not apply to the payment of such greater commissions in "principal" transactions. Accordingly Putnam Management will use its best effort to obtain the most favorable price and execution available with respect to such transactions, as described above. The Management Contract provides that commissions, fees, brokerage or similar payments received by Putnam Management or an affiliate in connection with the purchase and sale of portfolio investments of the fund, less any direct expenses approved by the Trustees, shall be recaptured by the fund through a reduction of the fee payable by the fund under the Management Contract. Putnam Management seeks to recapture for the fund soliciting dealer fees on the tender of the fund's portfolio securities in tender or exchange offers. Any such fees which may be recaptured are likely to be minor in amount. Consistent with the Rules of Fair Practice of the National Association of Securities Dealers, Inc. and subject to seeking the most favorable price and execution available and such other policies as the Trustees may determine, Putnam Management may consider sales of shares of the fund (and, if permitted by law, of the other Putnam funds) as a factor in the selection of broker-dealers to execute portfolio transactions for the fund. Principal Underwriter Putnam Mutual Funds is the principal underwriter of shares of the fund and the other continuously offered Putnam funds. Putnam Mutual Funds is not obligated to sell any specific amount of shares of the fund and will purchase shares for resale only against orders for shares. See "Charges and expenses" in Part I of this SAI for information on sales charges and other payments received by Putnam Mutual Funds. Investor Servicing Agent and Custodian Putnam Investor Services, a division of Putnam Fiduciary Trust Company ("PFTC"), is the fund's investor servicing agent (transfer, plan and dividend disbursing agent), for which it receives fees which are paid monthly by the fund as an expense of all its shareholders. The fee paid to Putnam Investor Services is determined on the basis of the number of shareholder accounts, the number of transactions and the assets of the fund. Putnam Investor Services has won the DALBAR Quality Tested Service Seal every year since the award's 1990 inception. Over 10,000 tests of 38 separate shareholder service components demonstrated that Putnam Investor Services tied for highest scores, with two other mutual fund companies, in all categories. PFTC is the custodian of the fund's assets. In carrying out its duties under its custodian contract, PFTC may employ one or more subcustodians whose responsibilities include safeguarding and controlling the fund's cash and securities, handling the receipt and delivery of securities and collecting interest and dividends on the fund's investments. PFTC and any subcustodians employed by it have a lien on the securities of the fund (to the extent permitted by the fund's investment restrictions) to secure charges and any advances made by such subcustodians at the end of any day for the purpose of paying for securities purchased by the fund. The fund expects that such advances will exist only in unusual circumstances. Neither PFTC nor any subcustodian determines the investment policies of the fund or decides which securities the fund will buy or sell. PFTC pays the fees and other charges of any subcustodians employed by it. The fund may from time to time pay custodial expenses in full or in part through the placement by Putnam Management of the fund's portfolio transactions with the subcustodians or with a third- party broker having an agreement with the subcustodians. The fund pays PFTC an annual fee based on the fund's assets, securities transactions and securities holdings and reimburses PFTC for certain out-of-pocket expenses incurred by it or any subcustodian employed by it in performing custodial services. See "Charges and expenses" in Part I of this SAI for information on fees and reimbursements for investor servicing and custody received by PFTC. The fees may be reduced by credits allowed by PFTC. DETERMINATION OF NET ASSET VALUE The fund determines the net asset value per share of each class of shares once each day the New York Stock Exchange (the "Exchange") is open. Currently, the Exchange is closed Saturdays, Sundays and the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July, Labor Day, Thanksgiving and Christmas. The fund determines net asset value as of the close of regular trading on the Exchange, currently 4:00 p.m. However, equity options held by the fund are priced as of the close of trading at 4:10 p.m., and futures contracts on U.S. government and other fixed-income securities and index options held by the fund are priced as of their close of trading at 4:15 p.m. Securities for which market quotations are readily available are valued at prices which, in the opinion of Putnam Management, most nearly represent the market values of such securities. Currently, such prices are determined using the last reported sale price or, if no sales are reported (as in the case of some securities traded over-the-counter), the last reported bid price, except that certain securities are valued at the mean between the last reported bid and asked prices. Short-term investments having remaining maturities of 60 days or less are valued at amortized cost, which approximates market value. All other securities and assets are valued at their fair value following procedures approved by the Trustees. Liabilities are deducted from the total, and the resulting amount is divided by the number of shares of the class outstanding. Reliable market quotations are not considered to be readily available for long-term corporate bonds and notes, certain preferred stocks, tax-exempt securities, and certain foreign securities. These investments are valued at fair value on the basis of valuations furnished by pricing services, which determine valuations for normal, institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships between securities which are generally recognized by institutional traders. If any securities held by the fund are restricted as to resale, Putnam Management determines their fair value following procedures approved by the Trustees. The fair value of such securities is generally determined as the amount which the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. The valuation procedures applied in any specific instance are likely to vary from case to case. However, consideration is generally given to the financial position of the issuer and other fundamental analytical data relating to the investment and to the nature of the restrictions on disposition of the securities (including any registration expenses that might be borne by the fund in connection with such disposition). In addition, specific factors are also generally considered, such as the cost of the investment, the market value of any unrestricted securities of the same class, the size of the holding, the prices of any recent transactions or offers with respect to such securities and any available analysts' reports regarding the issuer. Generally, trading in certain securities (such as foreign securities) is substantially completed each day at various times prior to the close of the Exchange. The values of these securities used in determining the net asset value of the fund's shares are computed as of such times. Also, because of the amount of time required to collect and process trading information as to large numbers of securities issues, the values of certain securities (such as convertible bonds, U.S. government securities, and tax-exempt securities) are determined based on market quotations collected earlier in the day at the latest practicable time prior to the close of the Exchange. Occasionally, events affecting the value of such securities may occur between such times and the close of the Exchange which will not be reflected in the computation of the fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value following procedures approved by the Trustees. Money market funds generally value their portfolio securities at amortized cost according to Rule 2a-7 under the Investment Company Act of 1940. HOW TO BUY SHARES General The prospectus contains a general description of how investors may buy shares of the fund and states whether the fund offers more than one class of shares. This SAI contains additional information which may be of interest to investors. Class A shares and class M shares are generally sold with a sales charge payable at the time of purchase (except for class A shares and class M shares of money market funds). As used in this SAI and unless the context requires otherwise, the term "class A shares" includes shares of funds that offer only one class of shares. The prospectus contains a table of applicable sales charges. For information about how to purchase class A or class M shares of a Putnam fund at net asset value through an employer's defined contribution plan, please consult your employer. Certain purchases of class A shares and class M shares may be exempt from a sales charge or, in the case of class A shares, may be subject to a contingent deferred sales charge ("CDSC"). See "General--Sales without sales charges or contingent deferred sales charges," "Additional Information About Class A and Class M shares," and "Contingent Deferred Sales Charges--Class A shares." Class B shares and class C shares are sold subject to a CDSC payable upon redemption within a specified period after purchase. The prospectus contains a table of applicable CDSCs. Class B shares will automatically convert into class A shares at the end of the month eight years after the purchase date. Class B shares acquired by exchanging class B shares of another Putnam fund will convert into class A shares based on the time of the initial purchase. Class B shares acquired through reinvestment of distributions will convert into Class A shares based on the date of the initial purchase to which such shares relate. For this purpose, class B shares acquired through reinvestment of distributions will be attributed to particular purchases of class B shares in accordance with such procedures as the Trustees may determine from time to time. The conversion of class B shares to class A shares is subject to the condition that such conversions will not constitute taxable events for Federal tax purposes. Class Y shares, which are not subject to sales charges or a CDSC, are available only to certain defined contribution plans. See the prospectus that offers class Y shares for more information. Certain purchase programs described below are not available to defined contribution plans. Consult your employer for information on how to purchase shares through your plan. The fund is currently making a continuous offering of its shares. The fund receives the entire net asset value of shares sold. The fund will accept unconditional orders for shares to be executed at the public offering price based on the net asset value per share next determined after the order is placed. In the case of class A shares and class M shares, the public offering price is the net asset value plus the applicable sales charge, if any. No sales charge is included in the public offering price of other classes of shares. In the case of orders for purchase of shares placed through dealers, the public offering price will be based on the net asset value determined on the day the order is placed, but only if the dealer receives the order before the close of regular trading on the Exchange. If the dealer receives the order after the close of the Exchange, the price will be based on the net asset value next determined. If funds for the purchase of shares are sent directly to Putnam Investor Services, they will be invested at the public offering price based on the net asset value next determined after receipt. Payment for shares of the fund must be in U.S. dollars; if made by check, the check must be drawn on a U.S. bank. Initial and subsequent purchases must satisfy the minimums stated in the prospectus, except that (i) individual investments under certain employee benefit plans or Tax Qualified Retirement Plans may be lower, (ii) persons who are already shareholders may make additional purchases of $50 or more by sending funds directly to Putnam Investor Services (see "Your investing account" below), and (iii) for investors participating in systematic investment plans and military allotment plans, the initial and subsequent purchases must be $25 or more. Information about these plans is available from investment dealers or from Putnam Mutual Funds. As a convenience to investors, shares may be purchased through a systematic investment plan. Pre-authorized monthly bank drafts for a fixed amount (at least $25) are used to purchase fund shares at the applicable public offering price next determined after Putnam Mutual Funds receives the proceeds from the draft (normally the 20th of each month, or the next business day thereafter). Further information and application forms are available from investment dealers or from Putnam Mutual Funds. Except for funds that declare a distribution daily, distributions to be reinvested are reinvested without a sales charge in shares of the same class as of the ex-dividend date using the net asset value determined on that date, and are credited to a shareholder's account on the payment date. Dividends for Putnam money market funds are credited to a shareholder's account on the payment date. Distributions for all other funds that declare a distribution daily are reinvested without a sales charge as of the next day following the period for which distributions are paid using the net asset value determined on that date, and are credited to a shareholder's account on the payment date. Payment in securities. In addition to cash, the fund may accept securities as payment for fund shares at the applicable net asset value. Generally, the fund will only consider accepting securities to increase its holdings in a portfolio security, or if Putnam Management determines that the offered securities are a suitable investment for the fund and in a sufficient amount for efficient management. While no minimum has been established, it is expected that the fund would not accept securities with a value of less than $100,000 per issue as payment for shares. The fund may reject in whole or in part any or all offers to pay for purchases of fund shares with securities, may require partial payment in cash for such purchases to provide funds for applicable sales charges, and may discontinue accepting securities as payment for fund shares at any time without notice. The fund will value accepted securities in the manner described in the section "Determination of Net Asset Value" for valuing shares of the fund. The fund will only accept securities which are delivered in proper form. The fund will not accept options or restricted securities as payment for shares. The acceptance of securities by certain funds in exchange for fund shares is subject to additional requirements. In the case of Putnam American Government Income Fund, Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds, Putnam Capital Appreciation Fund, Putnam Diversified Equity Trust, Putnam Diversified Income Trust II, Putnam Equity Income Fund, Putnam Europe Growth Fund, The Putnam Fund for Growth & Income, Putnam Funds Trust, Putnam Global Governmental Income Trust, Putnam Growth and Income Fund II, Putnam High Yield Advantage Fund, Putnam Intermediate Tax Exempt Fund, Putnam Investment Funds, Putnam Intermediate U.S. Government Income Fund, Putnam Investment-Grade Bond Fund, Putnam Municipal Income Fund, Putnam Natural Resources Fund, Putnam OTC Emerging Growth Fund, Putnam Overseas Growth Fund, Putnam Preferred Income Fund, Putnam Tax Exempt Income Fund and Putnam Tax-Free Income Trust, transactions involving the issuance of fund shares for securities or assets other than cash will be limited to a bona-fide re- organization or statutory merger and to other acquisitions of portfolio securities that meet all the following conditions: (a) such securities meet the investment objective(s) and policies of the fund; (b) such securities are acquired for investment and not for resale; (c) such securities are liquid securities which are not restricted as to transfer either by law or liquidity of market; and (d) such securities have a value which is readily ascertainable, as evidenced by a listing on the American Stock Exchange, the New York Stock Exchange or The Nasdaq Stock Market, Inc. In addition, Putnam Global Governmental Income Trust may accept only investment grade bonds with prices regularly stated in publications generally accepted by investors, such as the London Financial Times and the Association of International Bond Dealers manual, or securities listed on the New York or American Stock Exchanges or on The Nasdaq Stock Market, Inc. Putnam Diversified Income Trust may accept only bonds with prices regularly stated in publications generally accepted by investors. For federal income tax purposes, a purchase of fund shares with securities will be treated as a sale or exchange of such securities on which the investor will realize a taxable gain or loss. The processing of a purchase of fund shares with securities involves certain delays while the fund considers the suitability of such securities and while other requirements are satisfied. For information regarding procedures for payment in securities, contact Putnam Mutual Funds. Investors should not send securities to the fund except when authorized to do so and in accordance with specific instructions received from Putnam Mutual Funds. Sales without sales charges or contingent deferred sales charges. The fund may sell shares without a sales charge or CDSC to: (i) current and retired Trustees of the fund; officers of the fund; directors and current and retired U.S. full-time employees of Putnam Management, Putnam Mutual Funds, their parent corporations and certain corporate affiliates; family members of and employee benefit plans for the foregoing; and partnerships, trusts or other entities in which any of the foregoing has a substantial interest; (ii) employee benefit plans, for the repurchase of shares in connection with repayment of plan loans made to plan participants (if the sum loaned was obtained by redeeming shares of a Putnam fund sold with a sales charge) (not offered by tax-exempt funds); (iii) clients of administrators of tax-qualified employee benefit plans which have entered into agreements with Putnam Mutual Funds (not offered by tax-exempt funds); (iv) registered representatives and other employees of broker-dealers having sales agreements with Putnam Mutual Funds; employees of financial institutions having sales agreements with Putnam Mutual Funds or otherwise having an arrangement with any such broker-dealer or financial institution with respect to sales of fund shares; and their spouses and children under age 21 (Putnam Mutual Funds is regarded as the dealer of record for all such accounts); (v) investors meeting certain requirements who sold shares of certain Putnam closed-end funds pursuant to a tender offer by such closed-end fund; (vi) a trust department of any financial institution purchasing shares of the fund in its capacity as trustee of any trust, if the value of the shares of the fund and other Putnam funds purchased or held by all such trusts exceeds $1 million in the aggregate; and (vii) "wrap accounts" maintained for clients of broker- dealers, financial institutions or financial planners who have entered into agreements with Putnam Mutual Funds with respect to such accounts. In addition, the fund may issue its shares at net asset value without an initial sales charge or a CDSC in connection with the acquisition of substantially all of the securities owned by other investment companies or personal holding companies, and the CDSC will be waived on redemptions of shares arising out of death or disability or in connection with certain withdrawals from IRA or other retirement plans. Up to 12% of the value of class B shares subject to a systematic withdrawal plan may also be redeemed each year without a CDSC. The fund may sell class M shares at net asset value to members of qualified groups. See "Group purchases of class A and class M shares" below. Payments to dealers. Putnam Mutual Funds may, at its expense, pay concessions in addition to the payments disclosed in the prospectus to dealers which satisfy certain criteria established from time to time by Putnam Mutual Funds relating to increasing net sales of shares of the Putnam funds over prior periods, and certain other factors. Additional Information About Class A and Class M Shares The underwriter's commission is the sales charge shown in the prospectus less any applicable dealer discount. Putnam Mutual Funds will give dealers ten days' notice of any changes in the dealer discount. Putnam Mutual Funds retains the entire sales charge on any retail sales made by it. Putnam Mutual Funds offers several plans by which an investor may obtain reduced sales charges on purchases of class A shares and class M shares. The variations in sales charges reflect the varying efforts required to sell shares to separate categories of purchasers. These plans may be altered or discontinued at any time. Combined purchase privilege. The following persons may qualify for the sales charge reductions or eliminations shown in the prospectus by combining into a single transaction the purchase of class A shares or class M shares with other purchases of any class of shares: (i) an individual, or a "company" as defined in Section 2(a)(8) of the Investment Company Act of 1940 (which includes corporations which are corporate affiliates of each other); (ii) an individual, his or her spouse and their children under twenty-one, purchasing for his, her or their own account; (iii) a trustee or other fiduciary purchasing for a single trust estate or single fiduciary account (including a pension, profit-sharing, or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Internal Revenue Code of 1986, as amended (the "Code")); (iv) tax-exempt organizations qualifying under Section 501(c)(3) of the Internal Revenue Code (not including tax- exempt organizations qualifying under Section 403(b)(7) (a "403(b) plan") of the Code; and (v) employee benefit plans of a single employer or of affiliated employers, other than 403(b) plans. A combined purchase currently may also include shares of any class of other continuously offered Putnam funds (other than money market funds) purchased at the same time through a single investment dealer, if the dealer places the order for such shares directly with Putnam Mutual Funds. Cumulative quantity discount (right of accumulation). A purchaser of class A shares or class M shares may qualify for a cumulative quantity discount by combining a current purchase (or combined purchases as described above) with certain other shares of any class of Putnam funds already owned. The applicable sales charge is based on the total of: (i) the investor's current purchase; and (ii) the maximum public offering price (at the close of business on the previous day) of: (a) all shares held by the investor in all of the Putnam funds (except money market funds); and (b) any shares of money market funds acquired by exchange from other Putnam funds; and (iii) the maximum public offering price of all shares described in paragraph (ii) owned by another shareholder eligible to participate with the investor in a "combined purchase" (see above). To qualify for the combined purchase privilege or to obtain the cumulative quantity discount on a purchase through an investment dealer, when each purchase is made the investor or dealer must provide Putnam Mutual Funds with sufficient information to verify that the purchase qualifies for the privilege or discount. The shareholder must furnish this information to Putnam Investor Services when making direct cash investments. Statement of Intention. Investors may also obtain the reduced sales charges for class A shares or class M shares shown in the prospectus for investments of a particular amount by means of a written Statement of Intention, which expresses the investor's intention to invest that amount (including certain "credits," as described below) within a period of 13 months in shares of any class of the fund or any other continuously offered Putnam fund (excluding money market funds). Each purchase of class A shares or class M shares under a Statement of Intention will be made at the public offering price applicable at the time of such purchase to a single transaction of the total dollar amount indicated in the Statement of Intention. A Statement of Intention may include purchases of shares made not more than 90 days prior to the date that an investor signs a Statement; however, the 13-month period during which the Statement of Intention is in effect will begin on the date of the earliest purchase to be included. An investor may receive a credit toward the amount indicated in the Statement of Intention equal to the maximum public offering price as of the close of business on the previous day of all shares he or she owns on the date of the Statement of Intention which are eligible for purchase under a Statement of Intention (plus any shares of money market funds acquired by exchange of such eligible shares). Investors do not receive credit for shares purchased by the reinvestment of distributions. Investors qualifying for the "combined purchase privilege" (see above) may purchase shares under a single Statement of Intention. The Statement of Intention is not a binding obligation upon the investor to purchase the full amount indicated. The minimum initial investment under a Statement of Intention is 5% of such amount, and must be invested immediately. Class A shares or class M shares purchased with the first 5% of such amount will be held in escrow to secure payment of the higher sales charge applicable to the shares actually purchased if the full amount indicated is not purchased. When the full amount indicated has been purchased, the escrow will be released. If an investor desires to redeem escrowed shares before the full amount has been purchased, the shares will be released from escrow only if the investor pays the sales charge that, without regard to the Statement of Intention, would apply to the total investment made to date. To the extent that an investor purchases more than the dollar amount indicated on the Statement of Intention and qualifies for a further reduced sales charge, the sales charge will be adjusted for the entire amount purchased at the end of the 13-month period, upon recovery from the investor's dealer of its portion of the sales charge adjustment. Once received from the dealer, which may take a period of time or may never occur, the sales charge adjustment will be used to purchase additional shares at the then current offering price applicable to the actual amount of the aggregate purchases. These additional shares will not be considered as part of the total investment for the purpose of determining the applicable sales charge pursuant to the Statement of Intention. No sales charge adjustment will be made unless and until the investor's dealer returns any excess commissions previously received. To the extent that an investor purchases less than the dollar amount indicated on the Statement of Intention within the 13- month period, the sales charge will be adjusted upward for the entire amount purchased at the end of the 13-month period. This adjustment will be made by redeeming shares from the account to cover the additional sales charge, the proceeds of which will be paid to the investor's dealer and Putnam Mutual Funds in accordance with the prospectus. If the account exceeds an amount that would otherwise qualify for a reduced sales charge, that reduced sales charge will be applied. Statements of Intention are not available for certain employee benefit plans. Statement of Intention forms may be obtained from Putnam Mutual Funds or from investment dealers. Interested investors should read the Statement of Intention carefully. Group purchases of class A and class M shares. Members of qualified groups may purchase class A shares of the fund at a group sales charge rate of 4.50% of the public offering price (4.71% of the net amount invested). The dealer discount on such sales is 3.75% of the offering price. Members of qualified groups may also purchase class M shares at net asset value. To receive the class A or class M group rate, group members must purchase shares through a single investment dealer designated by the group. The designated dealer must transmit each member's initial purchase to Putnam Mutual Funds, together with payment and completed application forms. After the initial purchase, a member may send funds for the purchase of shares directly to Putnam Investor Services. Purchases of shares are made at the public offering price based on the net asset value next determined after Putnam Mutual Funds or Putnam Investor Services receives payment for the shares. The minimum investment requirements described above apply to purchases by any group member. Only shares purchased under the class A group discount are included in calculating the purchased amount for the purposes of these requirements. Qualified groups include the employees of a corporation or a sole proprietorship, members and employees of a partnership or association, or other organized groups of persons (the members of which may include other qualified groups) provided that: (i) the group has at least 25 members of which, with respect to the class A discount only, at least 10 members participate in the initial purchase; (ii) the group has been in existence for at least six months; (iii) the group has some purpose in addition to the purchase of investment company shares at a reduced sales charge; (iv) the group's sole organizational nexus or connection is not that the members are credit card holders of a company, policy holders of an insurance company, customers of a bank or broker-dealer, clients of an investment adviser or security holders of a company; (v) with respect to the class A discount only, the group agrees to provide its designated investment dealer access to the group's membership by means of written communication or direct presentation to the membership at a meeting on not less frequently than an annual basis; (vi) the group or its investment dealer will provide annual certification in form satisfactory to Putnam Investor Services that the group then has at least 25 members and, with respect to the class A discount only, that at least ten members participated in group purchases during the immediately preceding 12 calendar months; and (vii) the group or its investment dealer will provide periodic certification in form satisfactory to Putnam Investor Services as to the eligibility of the purchasing members of the group. Members of a qualified group include: (i) any group which meets the requirements stated above and which is a constituent member of a qualified group; (ii) any individual purchasing for his or her own account who is carried on the records of the group or on the records of any constituent member of the group as being a good standing employee, partner, member or person of like status of the group or constituent member; or (iii) any fiduciary purchasing shares for the account of a member of a qualified group or a member's beneficiary. For example, a qualified group could consist of a trade association which would have as its members individuals, sole proprietors, partnerships and corporations. The members of the group would then consist of the individuals, the sole proprietors and their employees, the members of the partnerships and their employees, and the corporations and their employees, as well as the trustees of employee benefit trusts acquiring class A shares for the benefit of any of the foregoing. A member of a qualified group may, depending upon the value of class A shares of the fund owned or proposed to be purchased by the member, be entitled to purchase class A shares of the fund at non-group sales charge rates shown in the prospectus which may be lower than the group sales charge rate, if the member qualifies as a person entitled to reduced non-group sales charges. Such a group member will be entitled to purchase at the lower rate if, at the time of purchase, the member or his or her investment dealer furnishes sufficient information for Putnam Mutual Funds or Putnam Investor Services to verify that the purchase qualifies for the lower rate. Interested groups should contact their investment dealer or Putnam Mutual Funds. The fund reserves the right to revise the terms of or to suspend or discontinue group sales at any time. Employee benefit plans; Individual account plans. The term "employee benefit plan" means any plan or arrangement, whether or not tax-qualified, which provides for the purchase of class A shares. The term "affiliated employer" means employers who are affiliated with each other within the meaning of Section 2(a)(3)(C) of the Investment Company Act of 1940. The term "individual account plan" means any employee benefit plan whereby (i) class A shares are purchased through payroll deductions or otherwise by a fiduciary or other person for the account of participants who are employees (or their spouses) of an employer, or of affiliated employers, and (ii) a separate investing account is maintained in the name of such fiduciary or other person for the account of each participant in the plan. The table of sales charges in the prospectus applies to sales to employee benefit plans, except that the fund may sell class A shares at net asset value to employee benefit plans, including individual account plans, of employers or of affiliated employers which have at least 750 employees to whom such plan is made available, in connection with a payroll deduction system of plan funding (or other system acceptable to Putnam Investor Services) by which contributions or account information for plan participation are transmitted to Putnam Investor Services by methods acceptable to Putnam Investor Services. The fund may also sell class A shares at net asset value to participant- directed qualified retirement plans with at least 200 eligible employees, or prior to December 1, 1995, a plan sponsored by an employer or by affiliated employers which have at least 750 employees and, beginning December 1, 1995, the fund may sell class M shares at net asset value to participant-directed qualified retirement plans with at least 50 eligible employees. A participant-directed qualified retirement plan participating in a "multi-fund" program approved by Putnam Mutual Funds may include amounts invested in the other mutual funds participating in such program for purposes of determining whether the plan may purchase class A shares at net asset value based on the size of the purchase as described in the prospectus. These investments will also be included for purposes of the discount privileges and programs described above. Additional information about participant-directed qualified retirement plans and individual account plans is available from investment dealers or from Putnam Mutual Funds. Contingent Deferred Sales Charges Class A shares. Class A shares purchased at net asset value by shareholders investing $1 million or more, including purchases pursuant to any Combined Purchase Privilege, Right of Accumulation or Statement of Intention, are subject to a CDSC of 1.00% or 0.50%, respectively, if redeemed within the first or second year after purchase. The class A CDSC is imposed on the lower of the cost and the current net asset value of the shares redeemed. The CDSC does not apply to shares sold without a sales charge through participant-directed qualified retirement plans and shares purchased by certain investors investing $1 million or more that have made arrangements with Putnam Mutual Funds and whose dealer of record waived the commission described in the next paragraph. Except as stated below, Putnam Mutual Funds pays investment dealers of record commissions on sales of class A shares of $1 million or more based on an investor's cumulative purchases of such shares, including purchases pursuant to any Combined Purchase Privilege, Right of Accumulation or Statement of Intention, during the one-year period beginning with the date of the initial purchase at net asset value and each subsequent one- year period beginning with the first net asset value purchase following the end of the prior period. Such commissions are paid at the rate of 1.00% of the amount under $3 million, 0.50% of the next $47 million and 0.25% thereafter. On sales at net asset value to a participant-directed qualified retirement plan initially investing less than $20 million in Putnam funds and other investments managed by Putnam Management or its affiliates (including a plan with at least 200 eligible employees, or prior to December 1, 1995, a plan sponsored by an employer with more than 750 employees), Putnam Mutual Funds pays commissions during each one-year measuring period, determined as described above, at the rate of 1.00% of the first $2 million, 0.80% of the next $1 million and 0.50% thereafter, except that commissions on sales prior to December 1, 1995 are based on cumulative purchases during the life of the account and are paid at the rate of 1.00% of the amount under $3 million and 0.50% thereafter. On sales at net asset value to all other participant-directed qualified retirement plans, Putnam Mutual Funds pays commissions on the initial investment and on subsequent net quarterly sales (gross sales minus gross redemptions during the quarter) at the rate of 0.15%. Money market fund shares are excluded from all commission calculations, except for determining the amount initially invested by a participant-directed qualified retirement plan. Commissions on sales at net asset value to such plans are subject to Putnam Mutual Funds' right to reclaim such commissions if the shares are redeemed within two years. Different CDSC and commission rates may apply to shares purchased before April 1, 1994. Class B and class C shares. Investors who set up an Automatic Cash Withdrawal Plan ("ACWP") for a class B and class C share account (see "Plans available to shareholders -- Automatic Cash Withdrawal Plan") may withdraw through the ACWP up to 12% of the net asset value of the account (calculated as set forth below) each year without incurring any CDSC. Shares not subject to a CDSC (such as shares representing reinvestment of distributions) will be redeemed first and will count toward the 12% limitation. If there are insufficient shares not subject to a CDSC, shares subject to the lowest CDSC liability will be redeemed next until the 12% limit is reached. The 12% figure is calculated on a pro rata basis at the time of the first payment made pursuant to an ACWP and recalculated thereafter on a pro rata basis at the time of each ACWP payment. Therefore, shareholders who have chosen an ACWP based on a percentage of the net asset value of their account of up to 12% will be able to receive ACWP payments without incurring a CDSC. However, shareholders who have chosen a specific dollar amount (for example, $100 per month from a fund that pays income distributions monthly) for their periodic ACWP payment should be aware that the amount of that payment not subject to a CDSC may vary over time depending on the net asset value of their account. For example, if the net asset value of the account is $10,000 at the time of payment, the shareholder will receive $100 free of the CDSC (12% of $10,000 divided by 12 monthly payments). However, if at the time of the next payment the net asset value of the account has fallen to $9,400, the shareholder will receive $94 free of any CDSC (12% of $9,400 divided by 12 monthly payments) and $6 subject to the lowest applicable CDSC. This ACWP privilege may be revised or terminated at any time. All shares. No CDSC is imposed on shares of any class subject to a CDSC ("CDSC Shares") to the extent that the CDSC Shares redeemed (i) are no longer subject to the holding period therefor, (ii) resulted from reinvestment of distributions on CDSC Shares, or (iii) were exchanged for shares of another Putnam fund, provided that the shares acquired in such exchange or subsequent exchanges (including shares of a Putnam money market fund) will continue to remain subject to the CDSC, if applicable, until the applicable holding period expires. In determining whether the CDSC applies to each redemption of CDSC Shares, CDSC Shares not subject to a CDSC are redeemed first. The fund will waive any CDSC on redemptions, in the case of individual, joint or Uniform Transfers to Minors Act accounts, in the event of death or post-purchase disability of a shareholder, for the purpose of paying benefits pursuant to tax-qualified retirement plans ("Benefit Payments"), or, in the case of living trust accounts, in the event of the death or post-purchase disability of the settlor of the trust). Benefit payments currently include, without limitation, (1) distributions from an IRA due to death or disability, (2) a return of excess contributions to an IRA or 401(k) plan, and (3) distributions from retirement plans qualified under Section 401(a) of the Code or from a 403(b) plan due to death, disability, retirement or separation from service. These waivers may be changed at any time. Additional waivers may apply to IRA accounts opened prior to February 1, 1994. DISTRIBUTION PLANS If the fund or a class of shares of the fund has adopted a distribution plan, the prospectus describes the principal features of the plan. This SAI contains additional information which may be of interest to investors. Continuance of a plan is subject to annual approval by a vote of the Trustees, including a majority of the Trustees who are not interested persons of the fund and who have no direct or indirect interest in the plan or related arrangements (the "Qualified Trustees"), cast in person at a meeting called for that purpose. All material amendments to a plan must be likewise approved by the Trustees and the Qualified Trustees. No plan may be amended in order to increase materially the costs which the fund may bear for distribution pursuant to such plan without also being approved by a majority of the outstanding voting securities of the fund or the relevant class of the fund, as the case may be. A plan terminates automatically in the event of its assignment and may be terminated without penalty, at any time, by a vote of a majority of the Qualified Trustees or by a vote of a majority of the outstanding voting securities of the fund or the relevant class of the fund, as the case may be. If plan payments are made to reimburse Putnam Mutual Funds for payments to dealers based on the average net asset value of fund shares attributable to shareholders for whom the dealers are designated as the dealer of record, "average net asset value" attributable to a shareholder account means the product of (i) the fund's average daily share balance of the account and (ii) the fund's average daily net asset value per share (or the average daily net asset value per share of the class, if applicable). For administrative reasons, Putnam Mutual Funds may enter into agreements with certain dealers providing for the calculation of "average net asset value" on the basis of assets of the accounts of the dealer's customers on an established day in each quarter. Financial institutions receiving payments from Putnam Mutual Funds as described above may be required to comply with various state and federal regulatory requirements, including among others those regulating the activities of securities brokers or dealers. INVESTOR SERVICES Shareholder Information Each time shareholders buy or sell shares, they will receive a statement confirming the transaction and listing their current share balance. (Under certain investment plans, a statement may only be sent quarterly.) Shareholders will receive a statement confirming reinvestment of distributions in additional fund shares (or in shares of other Putnam funds for Dividends Plus accounts) promptly following the quarter in which the reinvestment occurs. To help shareholders take full advantage of their Putnam investment, they will receive a Welcome Kit and a periodic publication covering many topics of interest to investors. The fund also sends annual and semiannual reports that keep shareholders informed about its portfolio and performance, and year-end tax information to simplify their recordkeeping. Easy-to-read, free booklets on special subjects such as the Exchange Privilege and IRAs are available from Putnam Investor Services. Shareholders may call Putnam Investor Services toll-free weekdays at 1-800-225-1581 between 8:30 a.m. and 7:00 p.m. Boston time for more information, including account balances. Your Investing Account The following information provides more detail concerning the operation of a Putnam Investing Account. For further information or assistance, investors should consult Putnam Investor Services. Shareholders who purchase shares through a defined contribution plan should note that not all of the services or features described below may be available to them, and they should contact their employer for details. A shareholder may reinvest a cash distribution without a front-end sales charge or without the reinvested shares being subject to a CDSC, as the case may be, by delivering to Putnam Investor Services the uncashed distribution check, endorsed to the order of the fund. Putnam Investor Services must receive the properly endorsed check within 1 year after the date of the check. The Investing Account also provides a way to accumulate shares of the fund. In most cases, after an initial investment of $500, a shareholder may send checks to Putnam Investor Services for $50 or more, made payable to the fund, to purchase additional shares at the applicable public offering price next determined after Putnam Investor Services receives the check. Checks must be drawn on a U.S. bank and must be payable in U.S. dollars. Putnam Investor Services acts as the shareholder's agent whenever it receives instructions to carry out a transaction on the shareholder's account. Upon receipt of instructions that shares are to be purchased for a shareholder's account, shares will be purchased through the investment dealer designated by the shareholder. Shareholders may change investment dealers at any time by written notice to Putnam Investor Services, provided the new dealer has a sales agreement with Putnam Mutual Funds. Shares credited to an account are transferable upon written instructions in good order to Putnam Investor Services and may be sold to the fund as described under "How to sell shares" in the prospectus. Money market funds and certain other funds will not issue share certificates. A shareholder may send to Putnam Investor Services any certificates which have been previously issued for safekeeping at no charge to the shareholder. Putnam Mutual Funds, at its expense, may provide certain additional reports and administrative material to qualifying institutional investors with fiduciary responsibilities to assist these investors in discharging their responsibilities. Institutions seeking further information about this service should contact Putnam Mutual Funds, which may modify or terminate this service at any time. Putnam Investor Services may make special services available to shareholders with investments exceeding $1,000,000. Contact Putnam Investor Services for details. The fund pays Putnam Investor Services' fees for maintaining Investing Accounts. Reinstatement Privilege An investor who has redeemed shares of the fund may reinvest (within 1 year) the proceeds of such sale in shares of the same class of the fund, or may be able to reinvest (within 1 year) the proceeds in shares of the same class of one of the other continuously offered Putnam funds (through the Exchange Privilege described in the prospectus), including, in the case of shares subject to a CDSC, the amount of CDSC charged on the redemption. Any such reinvestment would be at the net asset value of the shares of the fund(s) the investor selects, next determined after Putnam Mutual Funds receives a Reinstatement Authorization. The time that the previous investment was held will be included in determining any applicable CDSC due upon redemptions and, in the case of class B shares, the eight-year period for conversion to class A shares. Shareholders will receive from Putnam Mutual Funds the amount of any CDSC paid at the time of redemption as part of the reinstated investment, which may be treated as capital gains to the shareholder for tax purposes. Exercise of the Reinstatement Privilege does not alter the federal income tax treatment of any capital gains realized on a sale of fund shares, but to the extent that any shares are sold at a loss and the proceeds are reinvested in shares of the fund, some or all of the loss may be disallowed as a deduction. Consult your tax adviser. Investors who desire to exercise the Reinstatement Privilege should contact their investment dealer or Putnam Investor Services. Exchange Privilege Except as otherwise set forth in this section, by calling Putnam Investor Services, investors may exchange shares valued up to $500,000 between accounts with identical registrations, provided that no certificates are outstanding for such shares and no address change has been made within the preceding 15 days. During periods of unusual market changes and shareholder activity, shareholders may experience delays in contacting Putnam Investor Services by telephone to exercise the Telephone Exchange Privilege. Putnam Investor Services also makes exchanges promptly after receiving a properly completed Exchange Authorization Form and, if issued, share certificates. If the shareholder is a corporation, partnership, agent, or surviving joint owner, Putnam Investor Services will require additional documentation of a customary nature. Because an exchange of shares involves the redemption of fund shares and reinvestment of the proceeds in shares of another Putnam fund, completion of an exchange may be delayed under unusual circumstances if the fund were to suspend redemptions or postpone payment for the fund shares being exchanged, in accordance with federal securities laws. Exchange Authorization Forms and prospectuses of the other Putnam funds are available from Putnam Mutual Funds or investment dealers having sales contracts with Putnam Mutual Funds. The prospectus of each fund describes its investment objective(s) and policies, and shareholders should obtain a prospectus and consider these objectives and policies carefully before requesting an exchange. Shares of certain Putnam funds are not available to residents of all states. The fund reserves the right to change or suspend the Exchange Privilege at any time. Shareholders would be notified of any change or suspension. Additional information is available from Putnam Investor Services. Shares of the fund must be held at least 15 days by the shareholder requesting an exchange. There is no holding period if the shareholder acquired the shares to be exchanged through reinvestment of distributions, transfer from another shareholder, prior exchange or certain employer-sponsored defined contribution plans. In all cases, the shares to be exchanged must be registered on the records of the fund in the name of the shareholder requesting the exchange. Shareholders of other Putnam funds may also exchange their shares at net asset value for shares of the fund, as set forth in the current prospectus of each fund. For federal income tax purposes, an exchange is a sale on which the investor generally will realize a capital gain or loss depending on whether the net asset value at the time of the exchange is more or less than the investor's basis. The Exchange Privilege may be revised or terminated at any time. Shareholders would be notified of any such change or suspension. Dividends PLUS Shareholders may invest the fund's distributions of net investment income or distributions combining net investment income and short-term capital gains in shares of the same class of another continuously offered Putnam fund (the "receiving fund") using the net asset value per share of the receiving fund determined on the date the fund's distribution is payable. No sales charge or CDSC will apply to the purchased shares unless the fund paying the distribution is a money market fund. The prospectus of each fund describes its investment objective(s) and policies, and shareholders should obtain a prospectus and consider these objective(s) and policies carefully before investing their distributions in the receiving fund. Shares of certain Putnam funds are not available to residents of all states. The minimum account size requirement for the receiving fund will not apply if the current value of your account in the fund paying the distribution is more than $5,000. Shareholders of other Putnam funds (except for money market funds, whose shareholders must pay a sales charge or become subject to a CDSC) may also use their distributions to purchase shares of the fund at net asset value. For federal tax purposes, distributions from the fund which are reinvested in another fund are treated as paid by the fund to the shareholder and invested by the shareholder in the receiving fund and thus, to the extent comprised of taxable income and deemed paid to a taxable shareholder, are taxable. The Dividends PLUS program may be revised or terminated at any time. Plans Available To Shareholders The plans described below are fully voluntary and may be terminated at any time without the imposition by the fund or Putnam Investor Services of any penalty. All plans provide for automatic reinvestment of all distributions in additional shares of the fund at net asset value. The fund, Putnam Mutual Funds or Putnam Investor Services may modify or cease offering these plans at any time. Automatic cash withdrawal plan ("ACWP"). An investor who owns or buys shares of the fund valued at $10,000 or more at the current public offering price may open an ACWP plan and have a designated sum of money ($50 or more) paid monthly, quarterly, semi-annually or annually to the investor or another person. (Payments from the fund can be combined with payments from other Putnam funds into a single check through a designated payment plan.) Shares are deposited in a plan account, and all distributions are reinvested in additional shares of the fund at net asset value (except where the plan is utilized in connection with a charitable remainder trust). Shares in a plan account are then redeemed at net asset value to make each withdrawal payment. Payment will be made to any person the investor designates; however, if shares are registered in the name of a trustee or other fiduciary, payment will be made only to the fiduciary, except in the case of a profit-sharing or pension plan where payment will be made to a designee. As withdrawal payments may include a return of principal, they cannot be considered a guaranteed annuity or actual yield of income to the investor. The redemption of shares in connection with a plan generally will result in a gain or loss for tax purposes. Some or all of the losses realized upon redemption may be disallowed pursuant to the so-called wash sale rules if shares of the same fund from which shares were redeemed are purchased (including through the reinvestment of fund distributions) within a period beginning 30 days before, and ending 30 days after, such redemption. In such a case, the basis of the replacement shares will be increased to reflect the disallowed loss. Continued withdrawals in excess of income will reduce and possibly exhaust invested principal, especially in the event of a market decline. The maintenance of a plan concurrently with purchases of additional shares of the fund would be disadvantageous to the investor because of the sales charge payable on such purchases. For this reason, the minimum investment accepted while a plan is in effect is $1,000, and an investor may not maintain a plan for the accumulation of shares of the fund (other than through reinvestment of distributions) and a plan at the same time. The cost of administering these plans for the benefit of those shareholders participating in them is borne by the fund as an expense of all shareholders. The fund, Putnam Mutual Funds or Putnam Investor Services may terminate or change the terms of the plan at any time. A plan will be terminated if communications mailed to the shareholder are returned as undeliverable. Investors should consider carefully with their own financial advisers whether the plan and the specified amounts to be withdrawn are appropriate in their circumstances. The fund and Putnam Investor Services make no recommendations or representations in this regard. Tax Qualified Retirement Plans; 403(b) and SEP Plans. (Not offered by funds investing primarily in tax-exempt securities.) Investors may purchase shares of the fund through the following Tax Qualified Retirement Plans, available to qualified individuals or organizations: Standard and variable profit-sharing (including 401(k)) and money purchase pension plans; and Individual Retirement Account Plans (IRAs). Each of these Plans has been qualified as a prototype plan by the Internal Revenue Service. Putnam Investor Services will furnish services under each plan at a specified annual cost. Putnam Fiduciary Trust Company serves as trustee under each of these Plans. Forms and further information on these Plans are available from investment dealers or from Putnam Mutual Funds. In addition, specialized professional plan administration services are available on an optional basis; contact Putnam Defined Contribution Plan Services at 1-800-225-2465, extension 8600. A 403(b) Retirement Plan is available for employees of public school systems and organizations which meet the requirements of Section 501(c)(3) of the Internal Revenue Code. Forms and further information on the 403(b) Plan are also available from investment dealers or from Putnam Mutual Funds. Shares of the fund may also be used in simplified employee pension (SEP) plans. For further information on the Putnam prototype SEP plan, contact an investment dealer or Putnam Mutual Funds. Consultation with a competent financial and tax adviser regarding these Plans and consideration of the suitability of fund shares as an investment under the Employee Retirement Income Security Act of 1974, or otherwise, is recommended. SIGNATURE GUARANTEES Redemption requests for shares having a net asset value of $100,000 or more must be signed by the registered owners or their legal representatives and must be guaranteed by a bank, broker/dealer, municipal securities dealer or broker, government securities dealer or broker, credit union, national securities exchange, registered securities association, clearing agency, savings association or trust company, provided such institution is acceptable under and conforms with Putnam Fiduciary Trust Company's signature guarantee procedures. A copy of such procedures is available upon request. If you want your redemption proceeds sent to an address other than your address as it appears on Putnam's records, you must provide a signature guarantee. Putnam Investor Services usually requires additional documentation for the sale of shares by a corporation, partnership, agent or fiduciary, or a surviving joint owner. Contact Putnam Investor Services for details. SUSPENSION OF REDEMPTIONS The fund may not suspend shareholders' right of redemption, or postpone payment for more than seven days, unless the New York Stock Exchange is closed for other than customary weekends or holidays, or if permitted by the rules of the Securities and Exchange Commission during periods when trading on the Exchange is restricted or during any emergency which makes it impracticable for the fund to dispose of its securities or to determine fairly the value of its net assets, or during any other period permitted by order of the Commission for protection of investors. SHAREHOLDER LIABILITY Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the fund. However, the Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the fund and requires that notice of such disclaimer be given in each agreement, obligation, or instrument entered into or executed by the fund or the Trustees. The Agreement and Declaration of Trust provides for indemnification out of fund property for all loss and expense of any shareholder held personally liable for the obligations of the fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the fund would be unable to meet its obligations. The likelihood of such circumstances is remote. STANDARD PERFORMANCE MEASURES Yield and total return data for the fund may from time to time be presented in Part I of this SAI and in advertisements. In the case of funds with more than one class of shares, all performance information is calculated separately for each class. The data is calculated as follows. Total return for one-, five- and ten-year periods (or for such shorter periods as the fund has been in operation or shares of the relevant class have been outstanding) is determined by calculating the actual dollar amount of investment return on a $1,000 investment in the fund made at the beginning of the period, at the maximum public offering price for class A shares and class M shares and net asset value for other classes of shares, and then calculating the annual compounded rate of return which would produce that amount. Total return for a period of one year is equal to the actual return of the fund during that period. Total return calculations assume deduction of the fund's maximum sales charge or CDSC, if applicable, and reinvestment of all fund distributions at net asset value on their respective reinvestment dates. The fund's yield is presented for a specified thirty-day period (the "base period"). Yield is based on the amount determined by (i) calculating the aggregate amount of dividends and interest earned by the fund during the base period less expenses for that period, and (ii) dividing that amount by the product of (A) the average daily number of shares of the fund outstanding during the base period and entitled to receive dividends and (B) the per share maximum public offering price for class A shares or class M shares, as appropriate, and net asset value for other classes of shares on the last day of the base period. The result is annualized on a compounding basis to determine the yield. For this calculation, interest earned on debt obligations held by the fund is generally calculated using the yield to maturity (or first expected call date) of such obligations based on their market values (or, in the case of receivables-backed securities such as the Government National Mortgage Association ("GNMAs"), based on cost). Dividends on equity securities are accrued daily at their stated dividend rates. The amount of expenses used in determining the fund's yield includes, in addition to expenses actually accrued by the fund, an estimate of the amount of expenses that the fund would have incurred if brokerage commissions had not been used to reduce such expenses. If the fund is a money market fund, yield is computed by determining the percentage net change, excluding capital changes, in the value of an investment in one share over the seven-day period for which yield is presented (the "base period"), and multiplying the net change by 365/7 (or approximately 52 weeks). Effective yield represents a compounding of the yield by adding 1 to the number representing the percentage change in value of the investment during the base period, raising that sum to a power equal to 365/7, and subtracting 1 from the result. If the fund is a tax-exempt fund, the tax-equivalent yield during the base period may be presented for shareholders in one or more stated tax brackets. Tax-equivalent yield is calculated by adjusting the tax-exempt yield by a factor designed to show the approximate yield that a taxable investment would have to earn to produce an after-tax yield equal, for that shareholder, to the tax-exempt yield. The tax-equivalent yield will differ for shareholders in other tax brackets. At times, Putnam Management may reduce its compensation or assume expenses of the fund in order to reduce the fund's expenses. The per share amount of any such fee reduction or assumption of expenses during the fund's past ten fiscal years (or for the life of the fund, if shorter) is reflected in the table in the section entitled "Financial highlights" in the prospectus. Any such fee reduction or assumption of expenses would increase the fund's yield and total return during the period of the fee reduction or assumption of expenses. All data are based on past performance and do not predict future results. COMPARISON OF PORTFOLIO PERFORMANCE Independent statistical agencies measure the fund's investment performance and publish comparative information showing how the fund, and other investment companies, performed in specified time periods. Three agencies whose reports are commonly used for such comparisons are set forth below. From time to time, the fund may distribute these comparisons to its shareholders or to potential investors. The agencies listed below measure performance based on their own criteria rather than on the standardized performance measures described in the preceding section. Lipper Analytical Services, Inc. distributes mutual fund rankings monthly. The rankings are based on total return performance calculated by Lipper, generally reflecting changes in net asset value adjusted for reinvestment of capital gains and income dividends. They do not reflect deduction of any sales charges. Lipper rankings cover a variety of performance periods, including year-to-date, 1-year, 5-year, and 10-year performance. Lipper classifies mutual funds by investment objective and asset category. Morningstar, Inc. distributes mutual fund ratings twice a month. The ratings are divided into five groups: highest, above average, neutral, below average and lowest. They represent a fund's historical risk/reward ratio relative to other funds in its broad investment class as determined by Morningstar, Inc. Morningstar ratings cover a variety of performance periods, including 3-year, 5- year, 10-year and overall performance. The performance factor for the overall rating is a weighted-average assessment of the fund's 3-year, 5-year, and 10-year total return performance (if available) reflecting deduction of expenses and sales charges. Performance is adjusted using quantitative techniques to reflect the risk profile of the fund. The ratings are derived from a purely quantitative system that does not utilize the subjective criteria customarily employed by rating agencies such as Standard & Poor's and Moody's Investor Service, Inc. CDA/Wiesenberger's Management Results publishes mutual fund rankings and is distributed monthly. The rankings are based entirely on total return calculated by Weisenberger for periods such as year-to-date, 1-year, 3-year, 5-year and 10-year. Mutual funds are ranked in general categories (e.g., international bond, international equity, municipal bond, and maximum capital gain). Weisenberger rankings do not reflect deduction of sales charges or fees. Independent publications may also evaluate the fund's performance. The fund may from time to time refer to results published in various periodicals, including Barrons, Financial World, Forbes, Fortune, Investor's Business Daily, Kiplinger's Personal Finance Magazine, Money, U.S. News and World Report and The Wall Street Journal. Independent, unmanaged indexes, such as those listed below, may be used to present a comparative benchmark of fund performance. The performance figures of an index reflect changes in market prices, reinvestment of all dividend and interest payments and, where applicable, deduction of foreign withholding taxes, and do not take into account brokerage commissions or other costs. Because the fund is a managed portfolio, the securities it owns will not match those in an index. Securities in an index may change from time to time. The Consumer Price Index, prepared by the U.S. Bureau of Labor Statistics, is a commonly used measure of the rate of inflation. The index shows the average change in the cost of selected consumer goods and services and does not represent a return on an investment vehicle. The Dow Jones Industrial Average is an index of 30 common stocks frequently used as a general measure of stock market performance. The Dow Jones Utilities Average is an index of 15 utility stocks frequently used as a general measure of stock market performance. CS First Boston High Yield Index is a market-weighted index including publicly traded bonds having a rating below BBB by Standard & Poor's and Baa by Moody's. The Lehman Brothers Aggregate Bond Index is an index composed of securities from The Lehman Brothers Government/Corporate Bond Index, The Lehman Brothers Mortgage-Backed Securities Index and The Lehman Brothers Asset-Backed Securities Index and is frequently used as a broad market measure for fixed-income securities. The Lehman Brothers Asset-Backed Securities Index is an index composed of credit card, auto, and home equity loans. Included in the index are pass-through, bullet (noncallable), and controlled amortization structured debt securities; no subordinated debt is included. All securities have an average life of at least one year. The Lehman Brothers Corporate Bond Index is an index of publicly issued, fixed-rate, non-convertible investment-grade domestic corporate debt securities frequently used as a general measure of the performance of fixed-income securities. The Lehman Brothers Government/Corporate Bond Index is an index of publicly issued U.S. Treasury obligations, debt obligations of U.S. government agencies (excluding mortgage-backed securities), fixed-rate, non-convertible, investment-grade corporate debt securities and U.S. dollar-denominated, SEC-registered non-convertible debt issued by foreign governmental entities or international agencies used as a general measure of the performance of fixed-income securities. The Lehman Brothers Intermediate Treasury Bond Index is an index of publicly issued U.S. Treasury obligations with maturities of up to ten years and is used as a general gauge of the market for intermediate-term fixed-income securities. The Lehman Brothers Long-Term Treasury Bond Index is an index of publicly issued U.S. Treasury obligations (excluding flower bonds and foreign-targeted issues) that are U.S. dollar-denominated and have maturities of 10 years or greater. The Lehman Brothers Mortgage-Backed Securities Index includes 15- and 30-year fixed rate securities backed by mortgage pools of the Government National Mortgage Association, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. The Lehman Brothers Municipal Bond Index is an index of approximately 20,000 investment-grade, fixed-rate tax-exempt bonds. The Lehman Brothers Treasury Bond Index is an index of publicly issued U.S. Treasury obligations (excluding flower bonds and foreign-targeted issues) that are U.S. dollar denominated, have a minimum of one year to maturity, and are issued in amounts over $100 million. The Morgan Stanley Capital International World Index is an index of approximately 1,482 equity securities listed on the stock exchanges of the United States, Europe, Canada, Australia, New Zealand and the Far East, with all values expressed in U.S. dollars. The Morgan Stanley Capital International EAFE Index is an index of approximately 1,045 equity securities issued by companies located in 18 countries and listed on the stock exchanges of Europe, Australia, and the Far East. All values are expressed in U.S. dollars. The Morgan Stanley Capital International Europe Index is an index of approximately 627 equity securities issued by companies located in one of 13 European countries, with all values expressed in U.S. dollars. The Morgan Stanley Capital International Pacific Index is an index of approximately 418 equity securities issued by companies located in 5 countries and listed on the exchanges of Australia, New Zealand, Japan, Hong Kong, Singapore/Malaysia. All values are expressed in U.S. dollars. The NASDAQ Industrial Average is an index of stocks traded in The Nasdaq Stock Market, Inc. National Market System. The Russell 2000 Index is composed of the 2,000 smallest securities in the Russell 3000 Index, representing approximately 7% of the Russell 3000 total market capitalization. The Russell 3000 Index is composed of 3,000 large U.S. companies ranked by market capitalization, representing approximately 98% of the U.S. equity market. The Salomon Brothers Long-Term High-Grade Corporate Bond Index is an index of publicly traded corporate bonds having a rating of at least AA by Standard & Poor's or Aa by Moody's and is frequently used as a general measure of the performance of fixed-income securities. The Salomon Brothers Long-Term Treasury Index is an index of U.S. government securities with maturities greater than 10 years. The Salomon Brothers World Government Bond Index is an index that tracks the performance of the 14 government bond markets of Australia, Austria, Belgium Canada, Denmark, France, Germany, Italy, Japan, Netherlands, Spain, Sweden, United Kingdom and the United States. Country eligibility is determined by market capitalization and investability criteria. The Salomon Brothers World Government Bond Index (non $U.S.) is an index of foreign government bonds calculated to provide a measure of performance in the government bond markets outside of the United States. Standard & Poor's 500 Composite Stock Price Index is an index of common stocks frequently used as a general measure of stock market performance. Standard & Poor's 40 Utilities Index is an index of 40 utility stocks. Standard & Poor's/Barra Value Index is an index constructed by ranking the securities in the Standard & Poor's 500 Composite Stock Price Index by price-to-book ratio and including the securities with the lowest price- to-book ratios that represent approximately half of the market capitalization of the Standard & Poor's 500 Composite Stock Price Index. In addition, Putnam Mutual Funds may distribute to shareholders or prospective investors illustrations of the benefits of reinvesting tax-exempt or tax-deferred distributions over specified time periods, which may include comparisons to fully taxable distributions. These illustrations use hypothetical rates of tax-advantaged and taxable returns and are not intended to indicate the past or future performance of any fund. DEFINITIONS "Putnam Management" -- Putnam Investment Management, Inc., the fund's investment manager. "Putnam Mutual Funds" -- Putnam Mutual Funds Corp., the fund's principal underwriter. "Putnam Fiduciary Trust -- Putnam Fiduciary Trust Company, Company" the fund's custodian. "Putnam Investor Services" -- Putnam Investor Services, a division of Putnam Fiduciary Trust Company, the fund's investor servicing agent. PUTNAM FUNDS TRUST FORM N-1A PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a) Index to Financial Statements and Supporting Schedules: (1) Financial Statements: Statement of assets and liabilities -- July 2, 1996 Notes to financial statements(a). (2) Supporting Schedules: Schedules I through IX omitted because the required matter is not present. (a) Included in Part B. - -------------------------- (B) EXHIBITS: 1. Agreement and Declaration of Trust dated January 22, 1996 -- Incorporated by reference to Registrant's Initial Registration Statement. 2. By-Laws, as amended through January 22 , 1996 -- Exhibit 1. 3. Not applicable. 4a. Not applicable. 4b. Portions of Agreement and Declaration of Trust Relating to Shareholders' Rights -- Incorporated by reference to Registrant's Initial Registration Statement. 4c. Portions of By-Laws Relating to Shareholders' Rights -- Incorporated by reference to Registrant's Initial Registration Statement. 5. Management Contract dated June 7 , 1996 -- Exhibit 2. 6a. Distributor's Contract for Class A , Class B and Class M shares dated June 7 , 1996 -- Exhibit 3 . 6b. Copy of Specimen Dealer Sales Contract -- Exhibit 4 . 6c. Copy of Specimen Financial Institution Sales Contract -- Exhibit 5 . 7. Not applicable. 8. Copy of Custodian Agreement with Putnam Fiduciary Trust Company dated May 3, 1991 as amended July 13, 1992 -- Exhibit 6 . 9. Copy of Investor Servicing Agreement dated June 3, 1991 with Putnam Fiduciary Trust Company -- Exhibit 7 . 10. Opinion of Ropes & Gray, including consent -- Exhibit 8 . 11. Not applicable. 12. Not applicable. 13. Investment Letter from Putnam Investments, Inc. to the Registrant -- Exhibit 9 . 14a. Copy of Prototype Individual Retirement Account Plan -- Exhibit 10 . 14b. Copy of Prototype Basic Plan Document and related Plan Agreements -- Exhibit 11. 15a. Class A Distribution Plan and Agreement dated June 7 , 1996 -- Exhibit 12. 15b. Class B Distribution Plan and Agreement dated June 7 , 1996 -- Exhibit 13. 15c. Class M Distribution Plan and Agreement dated June 7 , 1996 -- Exhibit 14 . 15c. Copy of Specimen Dealer Service Agreement - -- Exhibit 15 . 15d. Copy of Specimen Financial Institution Service Agreement -- Exhibit 16 . 16. Not applicable. ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT As of July 17, 1996 , Putnam Investments, Inc. owned all of the outstanding shares of the Registrant. Also, as of May 31, 1996 , Putnam Investments, Inc. owned 91.0% of the outstanding shares of Putnam American Rennaisance Fund class A shares, 95.30% of the outstanding shares of Putnam Balanced Fund class A shares, 84.60% of the outstanding shares of Putnam Emerging Growth Fund class A shares, 92.30% of the outstanding shares of Putnam Genesis Fund class A shares, 95.80% of the outstanding shares of Putnam Global Growth and Income Fund class A shares, 96.70% of the outstanding shares of Putnam International Fund class A shares, 94.10% of the outstanding shares of Putnam Japan Fund class A shares, and may be deemed to control such funds . ITEM 26. NUMBER OF HOLDERS OF SECURITIES The information required by this item is included in Part B (Fund Charges and Expenses). ITEM 27. INDEMNIFICATION The information required by this item is incorporated herein by reference to the Registrant's Initial Registration Statement on Form N-1A under the Investment Company Act of 1940 (File No. 811-07513). Item 28. Business and Other Connections of Investment Adviser Except as set forth below, the directors and officers of the Registrant's investment adviser have been engaged during the past two fiscal years in no business, vocation or employment of a substantial nature other than as directors or officers of the investment adviser or certain of its corporate affiliates. Certain officers of the investment adviser serve as officers of some or all of the Putnam funds. The address of the investment adviser, its corporate affiliates and the Putnam Funds is One Post Office Square, Boston, Massachusetts 02109. NAME NON-PUTNAM BUSINESS AND OTHER CONNECTIONS James D. Babcock Prior to June, 1994, Interest Assistant Vice President Supervisor, Salomon Brothers, Inc. 7 World Trade Center, New York, NY 10048 Robert K. Baumbach Prior to August, 1994, Vice President Vice President and Analyst, Keystone Custodian Funds, 200 Berkeley St., Boston, MA 02110 Janet S. Becker Prior to July, 1995, National Account Assistant Vice President Manager for Booz-Allen & Hamilton, American Express Travel Management Services, 100 Cambridge Park Drive, 02140; Prior to August, 1994, Account Manager, Hilton at Dedham Place, Dedham, MA 02026 Matthew G. Bevin Prior to February, 1995, Consultant, Assistant Vice President SEI Corporation, 680 East Swedesford Road, Wayne, PA 19807 Thomas Bogan Prior to November, 1994, Analyst Senior Vice President Lord, Abbett & Co., 767 Fifth Avenue, New York, NY 10153 Michael F. Bouscaren Prior to May, 1994, President and Senior Vice President Chairman of the Board of Directors at Salomon Series Funds, Inc. and a Director of Salomon Brothers Asset Management, 7 World Trade Center, New York, NY 10048 Susan M. Braid Prior to October, 1995, Manager, Vice President Pioneer Group, Inc., 60 State St., Boston, MA 02109 Brett Browchuk Prior to April, 1994, Managing Managing Director Director, Fidelity Investments, 82 Devonshire St., Boston, MA 02109 Brian E. Broyles Prior to September, 1995, Accounts Assistant Vice President Payable Manager, Entex Information Services, Six International Drive, Rye Brook, NY 10573 Andrea Burke Prior to August, 1994, Vice President Vice President and Portfolio Manager, Back Bay Advisors, 399 Boylston St., Boston, MA 02116 Susan Chapman Prior to June, 1995, Vice President, Senior Vice President Forbes, Walsh, Kelly & Company, Inc., 17 Battery Place, New York, NY 10004 Louis F. Chrostowski Prior to August, 1995, Manager of Vice President Compensation and Benefits, Itek Optical Systems, 10 MacGuire Rd., Lexington, MA 02173 Beth C. Cotner Prior to September, 1995, Executive Senior Vice President Vice President, Director of U.S. Equity Funds, Kemper Financial Services, 120 S. LaSalle St., Chicago, IL 60603 Peter J. Curran Prior to January, 1996, Vice President Senior Vice President ITT Sheraton Director Worldwide Staffing, ITT Sheraton Corporation, 60 State St., Boston, MA 02109 Judith S. Deming Prior to May, 1995, Asset Manager, Assistant Vice President Fidelity Management & Research Company, 82 Devonshire St., Boston, MA 02109 Theodore J. Deutz Prior to January, 1995, Senior Vice Vice President President, Metropolitan West Securities, Inc. 10880 Wilshire Blvd., Suite 200, Los Angeles, CA 90024 Joseph J. Eagleeye Prior to August, 1994, Associate, Assistant Vice President David Taussig & Associates, 424 University Ave., Sacramento, CA 95813 Michael T. Fitzgerald Prior to September, 1994, Senior Senior Vice President Vice President, Vantage Global Advisers, 1201 Morningside Dr., Manhattan Beach, CA 90266 Brian J. Fullterton Prior to November, 1995, Vice Senior Vice President President, Pension and 401(k) Derivatives Marketing, J.P. Morgan, 60 Wall Street, New York, NY 10260 Roland Gillis Prior to March, 1995, Vice President Senior Vice President and Senior Portfolio Manager, Keystone Group, Inc., 200 Berkeley St., Boston, MA 02116 Mark D. Goodwin Prior to May, 1994, Manager, Audit & Assistant Vice President Operations Analysis, Mitre Corporation, 202 Burlington Rd., Bedford, MA 01730 Stephen A. Gorman Prior to July, 1994, Financial Assistant Vice President Analyst, Boston Harbor Trust Company, 100 Federal St., Boston, MA 02110 Jill Grossberg Prior to March, 1995, Associate Assistant Vice President Counsel, 440 Financial Group of and Associate Counsel Worcester, Inc., 440 Lincoln St., Worcester, MA 01653 Deborah R. Healey Prior to June, 1994, Senior Equity Senior Vice President Trader, Fidelity Management & Research Company, 82 Devonshire St., Boston, MA 02109 Lisa A. Heitman Prior to July, 1994, Securities Senior Vice President Analyst, Lord, Abbett & Company, 767 Fifth Ave., New York, NY 10153 Pamela Holding Prior to May, 1995, Senior Securities Vice President Analyst, Kemper Financial Services, Inc., 120 South LaSalle St., Chicago, IL 60603 Michael F. Hotchkiss Prior to May, 1994, Vice President, Vice President Massachusetts Financial Services, 500 Boylston St., Boston, MA 02116 Walter Hunnewell, Jr. Prior to April, 1994, Managing Vice President Director, Veronis, Suhler & Associates, 350 Park Avenue, New York, NY 10022 Joseph Joseph Prior to October, 1994, Managing Vice President Director, Vert Independent Capital Research, 53 Wall St., New York, NY 10052 Mary E. Kearney Prior to February, 1995, Partner, Managing Director Price Waterhouse, 160 Federal St., Boston, MA 02110 Paula Kienert Prior to June, 1995, Senior Reference Assistant Vice President Librarian, Fidelity Investments, 82 Devonshire Street, Boston, MA 02109 D. William Kohli Prior to September, 1994, Executive Managing Director Vice President and Co-Director of Global Bond Management, Franklin Advisors/Templeton Investment Counsel, 777 Mariners Island Blvd., San Mateo, CA 94404 Karen R. Korn Prior to June, 1994, Vice President, Vice President Assistant to the President, Designs, Inc. 1244 Boylston St., Chestnut Hill, MA 02167 Peter B. Krug Prior to January, 1995, Owner and Vice President Director, Griswold Special Care, 42 Ethan Allen Drive, Acton, MA 01720 Catherine A. Latham Prior to August, 1995, Director of Vice President Human Resources, Electronic Data Systems, 1601 Trapello Rd., Waltham, MA 02154 Kevin Lemire Prior to March, 1995, Corporate Assistant Vice President Facilities Manager, Bose Corporation, The Mountain, Framingham, MA 01701; Prior to June, 1994, Facilities Manager, The Pioneer Group, 60 State St., Boston, MA 02109 Lawrence J. Lasser Director, Marsh & McLennan Companies, President, Director Inc., 1221 Avenue of the Americas, and Chief Executive New York, NY 10020; Director, Officer INROADS/Central New England, Inc., 99 Bedford St., Boston,MA 02111 Jeffrey R. Lindsey Prior to April, 1994, Vice President, Vice President Strategic Portfolio Management, 1200 Ashwood Parkway, Suite 290, Atlanta, GA 30338 James W. Lukens Prior to February, 1995, Vice Senior Vice President President of Institutional Marketing, Keystone Group, Inc., 200 Berkeley St., Boston, MA 02116 Helen Mazareas Prior to May, 1995, Librarian, Assistant Vice President Scudder, Stevens & Clark, 2 International Place, Boston, MA 02110 Alexander J. McAuley Prior to June, 1995, Vice President, Senior Vice President Deutsche Bank Securities Corp. - Deutsche Asset Management, 1290 Avenue of the Americas, New York, NY 10019 Susan A. McCormack Prior to May, 1994, Associate Vice President Investment Banker, Merrill Lynch & Co., 350 South Grand Ave., Suite 2830, Los Angeles, CA 90071 Carol McMullen Prior to June, 1995, Senior Vice, Managing Director President and Senior Portfolio Manager, Baring Asset Management, 125 High Street, Boston, MA 02110 Darryl Mikami Prior to June, 1995, Vice President, Senior Vice President Fidelity Management & Research Company, 82 Devonshire St., Boston, MA 02109 Carol H. Miller Prior to July, 1995, Business Assistant Vice President Development Officer, Bank of Boston - Connecticut, 100 Pearl St., Hartford, CT 06101 Seung H. Minn Prior to June, 1995, Vice President Vice President in Portfolio Management and Research, Templeton Quantitative Advisors, Inc., Maziar Minovi Prior to January, 1995, Associate Vice President Privatization Specialist, The International Bank for Reconstruction and Development, 1818 H St. N.W., Washington, DC 20433 Kenneth Mongtomery Prior to July, 1995, Senior Vice Managing Director President and Director of World Wide Sales, Chemcial Banking Corporation, Paul G. Murphy Prior to January, 1995, Section Assistant Vice President Manager, First Data Corp., 53 State Street, Boston, MA 02109 C. Patrick O'Donnell, Jr. Prior to May, 1994, President, Managing Director Exeter Research, Inc., 163 Water Street, Exeter, New Hampshire, 03833 Samuel Perry Prior to January, 1996, Regional Vice Vice President President, AIM Distributors, Inc., Jane E. Price Prior to February, 1995, Associate Assistant Vice President ERISA Attorney, Hale & Dorr, 60 State St., Boston, MA 02109 Keith Quinton Prior to July, 1995, Vice President, Senior Vice President Falconwood Securities Corporation., Paul T. Quistberg Prior to July, 1995, Assistant Assistant Vice President Investment Officer, The Travelers Insurance Group., George Putnam Chairman and Director, Putnam Mutual Chairman and Director Funds Corp.; Director, The Boston Company, Inc., One Boston Place, Boston, MA 02108; Director, Boston Safe Deposit and Trust Company, One Boston Place, Boston, MA 02108; Director, Freeport-McMoRan, Inc., 200 Park Avenue, New York, NY 10166; Director, General Mills, Inc., 9200 Wayzata Boulevard, Minneapolis, MN 55440; Director, Houghton Mifflin Company, One Beacon Street, Boston, MA 02108; Director, Marsh & McLennan Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020; Director, Rockefeller Group, Inc., 1230 Avenue of the Americas, New York, NY 10020 Thomas Rosalanko Prior to February, 1995, Senior Senior Vice President Account Manager, SEI Corporation, 680 East Swedesford Road, Wayne, PA 19807 Michael Scanlon Prior to February, 1995, Senior Assistant Vice President Financial Analyst, Massachusetts Financial Services, 500 Boylston St., Boston, MA 02116 Robert M. Shafto Prior to January, 1995, Account Assistant Vice President Manager, IBM Corporation, 404 Wyman St., Waltham, MA 02254 Karen F. Smith Prior to May, 1994, Consultant and Assistant Vice President Portfolio Manager, Wyatt Asset Services, Inc., 1211 W.W. 5th Ave., Portland, OR 97204 Margaret Smith Prior to September, 1995, Vice Senior Vice President President, State Street Research, One Financial Center, Boston, MA 02111 Steven Spiegel Prior to December, 1994, Managing Senior Managing Director Director/Retirement, Lehman Brothers, Inc., 200 Vesey St., World Financial Center, New York, NY 10285 George W. Stairs Prior to July, 1994, Equity Research Vice President Analyst, ValueQuest Limited, Roundy's Hill, Marblehead, MA 01945 James H. Steggall Prior to May, 1995, Senior Municipal Assistant Vice President Analyst, Colonial Management Associates, Inc., One Financial Center, Boston, MA 02111; Prior to May, 1994, Controller, Wheelabrator Environmental Systems, Libery Lane, Hampton, NH 03842 Karen Stewart Prior to May, 1995, Equity Research Assistant Vice President Analyst, Chancellor Capital Management, 1166 Avenue of the Americas, New York, NY 10036 Roger Sullivan Prior to December, 1994, Vice Senior Vice President President, State Street Research & Management Co., One Financial Center, Boston, MA 02111 Robert Swift Prior to August, 1995, Far East Team Senior Vice President Leader and Portfolio Manager, IAI International/Hill Samuel Investment Advisors, 10 Fleet Place, London, England Jerry H. Tempelman Prior to May, 1994, Senior Money Assistant Vice President Market Trader, State Street Bank & Trust Co., 225 Franklin, Street, Boston, MA 02110 Michael Temple Prior to June, 1995, Vice President, Vice President Duff & Phelps, 55 East Monroe, Chicago, IL 60613 Hillary F. Till Prior to May, 1994, Fixed-Income Vice President Derivative Trader, Bank of Boston, 100 Federal Street, Boston, MA 02109 Lisa L. Trubiano Prior to July, 1995, Senior Marketing Vice President Consultant, John Hancock Mutual Life Insurance Company, Elizabeth A. Underhill Prior to August, 1994, Vice President Senior Vice President and Senior Equity Analyst, State Street Bank and Trust Company, 225 Franklin St., Boston, MA 02110 Charles C. Van Vleet Prior to August, 1994, Vice President Senior Vice President and Fixed-Income Manager, Alliance Capital Management, 1345 Avenue of the Americas, New York, NY 10105 Francis P. Walsh Prior to November, 1994, Research Vice President Analyst, Furman, Selz, Inc. 230 Park Avenue, New York, NY 10169 Herbert S. Wagner, III Prior to August, 1995, Investment Assistant Vice President The First National Bank of Chicago, One First National Plaza, Chicago, IL 60670 Michael R. Weinstein Prior to March, 1994, Management Vice President Consultant, Arthur D. Little, Acorn Park, Cambridge, MA 02140 Item 29. Principal Underwriter (a) Putnam Mutual Funds Corp. is the principal underwriter for each of the following investment companies, including the Registrant: Putnam Adjustable Rate U.S. Government Fund, Putnam American Government Income Fund, Putnam Arizona Tax Exempt Income Fund, Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds, Putnam Balanced Retirement Fund, Putnam California Tax Exempt Income Trust, Putnam California Tax Exempt Money Market Fund, Putnam Capital Appreciation Fund, Putnam Capital Manager Trust, Putnam Convertible Income-Growth Trust, Putnam Diversified Equity Trust, Putnam Diversified Income Trust, Putnam Diversified Income Trust II, Putnam Equity Income Fund, Putnam Europe Growth Fund, Putnam Federal Income Trust, Putnam Florida Tax Exempt Income Fund, The George Putnam Fund of Boston, Putnam Global Governmental Income Trust, Putnam Global Growth Fund, Putnam Growth Fund, The Putnam Fund for Growth and Income, Putnam Growth and Income Fund II, Putnam Health Sciences Trust, Putnam High Yield Trust, Putnam High Yield Advantage Fund, Putnam Income Fund, Putnam Intermediate Tax Exempt Fund, Putnam Intermediate U.S. Government Income Fund, Putnam Investment Funds, Putnam Investors Fund, Putnam Massachusetts Tax Exempt Income Fund, Putnam Michigan Tax Exempt Income Fund, Putnam Minnesota Tax Exempt Income Fund, Putnam Money Market Fund, Putnam Municipal Income Fund, Putnam Natural Resources Fund, Putnam New Jersey Tax Exempt Income Fund, Putnam New Opportunities Fund, Putnam New York Tax Exempt Income Trust, Putnam New York Tax Exempt Money Market Fund, Putnam New York Tax Exempt Opportunities Fund, Putnam Ohio Tax Exempt Income Fund, Putnam OTC Emerging Growth Fund, Putnam Overseas Growth Fund, Putnam Pennsylvania Tax Exempt Income Fund, Putnam Preferred Income Fund, Putnam Tax Exempt Income Fund, Putnam Tax Exempt Money Market Fund, Putnam Tax-Free Income Trust, Putnam U.S. Government Income Trust, Putnam Utilities Growth and Income Fund, Putnam Vista Fund, Putnam Voyager Fund, Putnam Voyager Fund II.
(b) The directors and officers of the Registrant's principal underwriter are: Positions and Offices Positions and Offices Name with Underwriter with Registrant John V. Adduci Assistant Vice President None Christopher S. Alpaugh Vice President None Paulette C. Amisano Vice President None Ronald J. Anwar Vice President None Steven E. Asher Senior Vice President None Scott A. Avery Vice President None Christian E. Aymond Vice President None Hallie L. Baron Assistant Vice President None Ira G. Baron Senior Vice President None John L. Bartlett Senior Vice President None Dale Beardon Senior Vice President None Steven M. Beatty Vice President None Matthew F. Beaudry Vice President None Janet S. Becker Assistant Vice President None John J. Bent Vice President None Thomas A. Beringer Vice President None Sharon A. Berka Vice President None Maureen L. Boisvert Vice President None John F. Boneparth Managing Director None Keith R. Bouchard Vice President None Linda M. Brady Assistant Vice President None Susan M. Braid Vice President None Leslee R. Bresnahan Senior Vice President None James D. Brockelman Senior Vice President None Brian E. Broyles Assistant Vice President None Gail D. Buckner Senior Vice President None Robert W. Burke Senior Managing Director None Susan D. Cabana Vice President None Ellen S. Callahan Vice President None Thomas C. Callahan Assistant Vice President None Peter J. Campagna Vice President None Robert Capone Vice President None Patricia A. Cartwright Assistant Vice President None Janet Casale-Sweeney Vice President None Stephen J. Chaput Assistant Vice President None Louis F. Chrostowski Vice President None Daniel J. Church Vice President None James E. Clinton Assistant Vice President None Kathleen M. Collman Managing Director None Mark L. Coneeny Vice President None Donald A. Connelly Senior Vice President None Karen E. Connolly Assistant Vice President None Anna Coppola Vice President None F. Nicholas Corvinus Senior Vice President None Thomas A. Cosmer Vice President None Chad H. Cristo Assistant Vice President None Peter J. Curran Senior Vice President None Jessica E. Dahill Vice President None Kenneth L. Daly Senior Vice President None Edward H. Dane Vice President None Nancy M. Days Assistant Vice President None Pamela De Oliveira-Smith Assistant Vice President None Lisa M. DeMont Assistant Vice President None Richard D. DeSalvo Vice President None Joseph C. DeSimone Assistant Vice President None Daniel J. Delianedis Vice President None Judith S. Deming Assistant Vice President None Teresa F. Dennehy Assistant Vice President None J. Thomas Despres Senior Vice President None Michael G. Dolan Assistant Vice President None Scott M. Donaldson Vice President None Emily J. Durbin Vice President None Dwyer Cabana, Susan Vice President None David B. Edlin Senior Vice President None James M. English Senior Vice President None Vincent Esposito Managing Director None Mary K. Farrell Assistant Vice President None Michael J. Fechter Vice President None Susan H. Feldman Vice President None Paul F. Fichera Senior Vice President None C. Nancy Fisher Senior Vice President None Mitchell B. Fishman Senior Vice President None Joseph C. Fiumara Vice President None Patricia C. Flaherty Senior Vice President None Brian J. Fullerton Senior Vice President None Samuel F. Gagliardi Vice President None Karen M. Gardner Assistant Vice President None Judy S. Gates Vice President None Richard W. Gauger Assistant Vice President None Joseph P. Gennaco Vice President None Stephen E. Gibson Managing Director None Mark P. Goodfellow Assistant Vice President None Robert Goodman Managing Director None Mark D. Goodwin Assistant Vice President None Anthony J. Grace Assistant Vice President None Linda K. Grace Assistant Vice President None Robert G. Greenly Vice President None Jill Grossberg Assistant Vice President None Jeffrey P. Gubala Vice President None James E. Halloran Vice President None Thomas W. Halloran Vice President None Meghan C. Hannigan Assistant Vice President None Bruce D. Harrington Assistant Vice President None Marilyn M. Hausammann Senior Vice President None Howard W. Hawkins, III Vice President None Deanna R. Hayes-Castro Vice President None Paul P. Heffernan Vice President None Susan M. Heimanson Vice President None Joanne Heyman Assistant Vice President None Bess J.M. Hochstein Vice President None Maureen A. Holmes Assistant Vice President None Paula J. Hoyt Assistant Vice President None William J. Hurley Senior Vice President None Gregory E. Hyde Senior Vice President None Dwight D. Jacobsen Senior Vice President None Douglas B. Jamieson Senior Managing Director, Director None Jay M. Johnson Vice President None Kevin M. Joyce Senior Vice President None Karen R. Kay Senior Vice President None Mary E. Kearney Managing Director None John P. Keating Vice President None A. Siobahn Kelly Assistant Vice President None Brian J. Kelly Vice President None Anne Kinsman Assistnat Vice President None Deborah H. Kirk Senior Vice President None Jill A. Koontz Assistant Vice President None Linda G. Kraunelis Assistant Vice President None Howard H. Kreutzberg Senior Vice President None Marjorie B. Krieger Assistant Vice President None Charles Lacasia Assistant Vice President None Arthur B. Laffer, Jr. Vice President None Catherine A. Latham Vice President None James D. Lathrop Vice President None Charles C. Ledbetter Vice President None Kevin Lemire Assistant Vice President None Anthony J. Leonard Vice President None Eric S. Levy Vice President None Edward V. Lewandowski Senior Vice President None Edward V. Lewandowski, Jr. Vice President None Samuel L. Lieberman Vice President None David M. Lifsitz Assistant Vice President None Ann Marie Linehan Assistant Vice President None Maura A. Lockwood Vice President None Rufino R. Lomba Vice President None Peter V. Lucas Senior Vice President None Robert F. Lucey Senior Managing Director, Director None Kathryn A. Lucier Assistant Vice President None Alana Madden Vice President None Ann Malatos Assistant Vice President None Bonnie Mallin Vice President None Renee L. Maloof Assistant Vice President None Frederick S. Marius Assistant Vice President None Karen E. Marotta Vice President None Anne B. McCarthy Assistant Vice President None Paul McConville Vice President None Marla J. McDougall Assistant Vice President None Walter S. McFarland Vice President None Mark J. McKenna Senior Vice President None Gregory J. McMillan Vice President None Claye A. Metelmann Vice President None Bart D. Miller Vice President None Douglas W. Miller Vice President None Jeffery M. Miller Senior Vice President None Ronald K. Mills Vice President None Peter M. Moore Assistant Vice President None Mitchell Moret Senior Vice President None Donald E. Mullen Vice President None Paul G. Murphy Assistant Vice President None Brendan R. Murray Vice President None Robert Nadherny Vice President None Alexander L. Nelson Managing Director None John P. Nickodemus Vice President None Michael C. Noonis Assistant Vice President None Kristen P. O'Brien Vice President None Kevin L. O'Shea Senior Vice President None Nathan D. O'Steen Assistant Vice President None Larence J. Olewinksi Vice President None Joseph R. Palombo Managing Director None Scott A. Papes Vice President None Cynthia O. Parr Vice President None John D. Pataccoli Vice President None John G. Phoenix Vice President None Joseph Phoenix Senior Vice President None Jeffrey E. Place Senior Vice President None Keith Plapinger Vice President None Douglas H. Powell Vice President None Jane E. Price Assistant Vice President None Susannah Psomas Vice President None Scott M. Pulkrabek Vice President None George Putnam Director Chairman & President George A. Rio Senior Vice President None Debra V. Rothman Vice President None Robert B. Rowe Vice President None Kevin A. Rowell Senior Vice President None Thomas C. Rowley Vice President None Charles A. Ruys de Perez Senior Vice President None Deborah A. Ryan Assistant Vice President None Debra J. Sarkisian Assistant Vice President None Catherine A. Saunders Senior Vice President None Robbin L. Saunders Assistant Vice President None Karl W. Saur Vice President None Michael Scanlon Assistant Vice President None Shannon D. Schofield Vice President None Christine A. Scordato Vice President None Joseph W. Scott Assistant Vice President None John B. Shamburg Vice President None Kathleen G. Sharpless Managing Director None William N. Shiebler Director and President Vice President Mark J. Siebold Assistant Vice President None Gordon H. Silver Senior Managing Director Vice President John Skistimas, Jr. Assistant Vice President None Steven Spiegel Senior Managing Director None Nicholas T. Stanojev Senior Vice President None Paul R. Stickney Vice President None Brian L. Sullivan Vice President None Guy Sullivan Seniior Vice President None Kevin J. Sullivan Vice President None Moira Sullivan Vice President None James S. Tambone Managing Director None B. Iris Tanner Assistant Vice President None Louis Tasiopoulos Managing Director None David S. Taylor Vice President None John R. Telling Vice President None Cynthia Tercha Vice President None Richard B. Tibbetts Senior Vice President None Patrice M. Tirado Vice President None Janet E. Tosi Assistant Vice President None Bonnie L. Troped Vice President None Christine M. Twigg Assistant Vice Presient None Larry R. Unger Vice President None Douglas J. Vander Linde Senior Vice President None Edward F. Whalen Vice President None Robert J. Wheeler Senior Vice President None John B. White Vice President None Kirk E. Williamson Senior Vice President None Leigh T. Williamson Vice President None Jane Wolfson Vice President None Benjamin I. Woloshin Vice President None William H. Woolverton Senior Vice President None Timothy R. Young Vice President None SooHee L. Zebedee Vice President None Laura J. Zografos Vice President None
The principal business address of each person listed above is One Post Office Square, Boston, MA 02109, except for: Mr. Alpaugh, 5980 Richmond Highway, Alexandria, VA 22303 Mr. Anwar, 131 Crystal Road, Colmar, PA 18915 Mr. Avery, 7031 Spring Ridge Rd., Cary NC 27511 Mr. Aymond, 212 Lochview Drive, Cary, NC 27511 Mr. Baron, 31 Cala Moreya, Laguna Niguel, CA 92667 Mr. Bartlett, 7 Fairfield St., Boston, MA 02116 Mr. Beatty, 200 High St., Winchester, MA 01890 Mr. Beringer, 4915 Dupont Avenue South, Minneapolis, MN 55409 Ms. Besset, 1140 North LaSalle Blvd, Chicago, IL 60610 Mr. Bouchard, 18 Brice Rd., Annapolis, MD 21401 Mr. Brockelman, 94 Middleton Rd., Boxford, MA 01921 Mr. Brown, 2012 West Grove Drive, Gibson, PA 15044 Ms. Buckner, 21012 West Grove Drive, Gibsonia, PA 15044 Mr. Campagna, 1130 Green Meadow Court, Acworth, GA 30102 Ms. Castro, 26 Gould Road, Andover, MA 01810 Mr. Church, 4504 Sir Winston Place, Charlotte, NC 28211 Mr. Cristo, 11 Schenck Ave., Great Neck, NY 11021 Mr. Coneeny, 10 Amherst St., Arlington, MA 02174 Mr. Connelly, 4634 Mirada Way, Sarasota, FL 34238 Mr. Corvinus, 274 Water St., Newburyport, MA 01950 Ms. Dahill, 270-1 C Iven Ave., St. David's, PA 19087 Mr. Deliandis, 5161 Muirfield Lane, Concord, CA 94521 Mr. DeSalvo, 54 Morriss Place, Maddison, NJ 07940 Mr. DeSimone, Pheasant Run Apartments, Inlet Ridge Drive, Maryland Heights, MO 63043 Ms. Dwyer-Cabana, 7730 Herrick Park, Hudson, OH 44236 Mr. Edlin, 7 River Road, 305 Palmer Point, Cos Cob, CT 06807 Mr. English, 1184 Pintail Circle, Boulder, CO 80303 Mr. Goodman, 14 Clover Place, Cos Cob, CT 06807 Mr. Gubala, 4308 Rickover Drive, Dallas, TX 75244 Mr. J. Halloran, 978 W. Creek Lane, Westlake Village, CA 91362 Mr. T. Halloran, 19449 Misty Lake Dr., Strongsville, OH 44136 Mr. Hyde, 3305 Sulky, Marietta, GA 30067 Mr. Jacobsen, 2744 Joyce Ridge Drive, Chesterfield, MO 63017 Mr. Johnson, 200 Clock Tower Place, Carmel, CA 93923 Mr. Keating, 5521 Greenville Avenue, Dallas, TX 75206 Mr. Kelley, 1026 E. Olympus Ridge Cove, Salt Lake City, UT 84117 Ms. Kelly, 31 Jeffrey's Neck Road, Ipswich, MA 01938 Ms. Kinsman, 9599 Brookview Circle, Woodbury, MN 55125 Ms. Kirk, 200 East 62nd Street, New York, NY 10021 Ms. Kraunelis, 584 East Eighth St., South Boston, MA 02127 Mr. Lathrop, 14814 Straub Hill Lane, Chesterfield, MO 63017 Mr. Ledbetter, 820 South Monaco, Denver, CO 80224 Mr. Leonard, 3673 Hopper Ridge Road, Cincinnati, OH 45255 Mr. Lewandowski, 805 Darrell Road, Hillsborough, CA 94010 Mr. Lewandowski, Jr., 1 Kara East, Irvine, CA 92720 Mr. Lieberman, 200 Roy St., Seattle, WA 98109 Ms. Madden, 201 Plantation Club Drive, Melbourne, FL 32940 Mr. McConville, 515 S. Arlington Heights Rd., Arlington Heights, IL 6005 Mr. McFarland, 8012 Dancing Fern Trail, Chattanooga, TN 37421 Mr. McMillan, 203 D. Zigler St., Zelienople, PA 16063 Mr. McMurtrie, 14529 Glastonbury, Detroit, MI 48223 Mr. B. Miller, 24815 Acropolis Drive, Mission Viejo, CA 92691 Mr. D. Miller, 7 Anthony Place, Riverside, CT 06878 Mr. Moret, 4519 Lawn Avenue, Western Springs, IL 60558 Mr. Murray, 710 Cheyenne Drive, Franklin Lakes, NJ 07417 Mr. Nadherny, 9714 Marmount Drive, Seattle, WA 98117 Mr. Nickodemus, 463 Village Oaks Court, Ann Arbor, MI 48103 Mr. Olewinski, 7707 Hamilton Avenue, Burr Ridge, IL 60521 Mr. O'Steen, 2091-B Lake Park Drive, Smyrna, GA 30080 Mr. Papes, 12891 S. Summit, Olatag, KS 66062 Mr. Pataccoli, 333 39th St., Manhattan Beach, CA 90266 Mr. Perry, 4031 West Main, Houston, TX 77027 Mr. Joe Phoenix, 1426 Asbury Avenue, Hubbard Woods, IL 60093 Mr. John Phoenix, 2987 Jackson Ave., Coconut Grove, FL 33133 Mr. Place, 4211 Loch Highland Parkway, Roswell, GA 30075 Mr. Pulkrabek, 190 Jefferson Lane, Streamwood, IL 60107 Mr. Powell, 1508 Ruth Lane, Newport Beach, CA 92660 Mr. Rowe, 109 Shore Drive, Longwood, FL 32779 Mr. Rowell, 2240 Union St., San Francisco, CA 94123 Mr. Rowley, 237 Peeke Avenue, Kirkwood, MO 63122 Ms. Sarkisian, 1 Goodridge Ct., Boston, MA 02113 Ms. Saunders, 39939 Stevenson Common, Freemont, CA 94538 Ms. Schofield, 172 Rime Village, Hoover, AL 35216 Mr. Shamburg, 10603 N. 100th Street, Scottsdale, AZ 85260 Mr. Stickney, 1314 Log Cabin Lane, St. Louis, MO 63124 Mr. B. Sullivan, 777 Pinoake Road, Pittsburgh, PA 15243 Mr. G. Sullivan, 35 Marlborough St., Boston, MA 02116 Ms. M. Sullivan, 493 Zinfandel Lane, St. Helena, CA 94574 Ms. Sweeney, 8 Surf St., Marblehead, MA 01945 Mr. Tambone, 10 Commercial Wharf, Boston, MA 02110 Mr. Tasiopolous, 5 Homestead Farms Drive, Norwell, MA 02061 Ms. Tercha, 611 East 18th St., Houston, TX 77009 Mr. Telling, 5 Spindriff Court, Williamsville, NY 14221 Mr. Unger, 212 E. Broadway, New York, NY 10002 Mr. Williamson, 111 Maple Ridge Way, Covington, LA 70433 Ms. Williamson, 158 Summer St., Hingham, MA 02043 Mr. White, 10 Mannion Place, Littleton, MA 01460 Mr. Woloshin, 100 West 89th St., New York, NY 10024 Ms. Zebedee, 1616 Queen Ann Ave., N., Seattle, WA 98109 Ms. Zografos, 12712 Coeur de Monde Ct., St. Louis, MO 63146 ITEM 30. LOCATION OF ACCOUNTS AND RECORDS Persons maintaining physical possession of accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are Registrant's Clerk, Beverly Marcus; Registrant's investment adviser, Putnam Investment Management, Inc.; Registrant's principal underwriter, Putnam Mutual Funds Corp.; Registrant's custodian, Putnam Fiduciary Trust Company ("PFTC"); and Registrant's transfer and dividend disbursing agent, Putnam Investor Services, a division of PFTC. The address of the Clerk, investment adviser, principal underwriter, custodian and transfer and dividend disbursing agent is One Post Office Square, Boston, Massachusetts 02109. ITEM 31. MANAGEMENT SERVICES None. ITEM 32. UNDERTAKINGS (a) Registrant hereby undertakes to file a post- effective amendment to this Registration Statement on Form N-1A, using financial statements which need not be certified, within four to six months from the effective date of this Registration Statement. (b) Registrant hereby undertakes, if requested to do so by the holders of at least 10% of its outstanding shares, to call a meeting of shareholders for the purposes of voting upon the question of removal of a Trustee or Trustees and to assist in communications with other shareholders as required by Section 16(c) of the Investment Company Act of 1940. (c) The Registrant undertakes to furnish to each person to whom a prospectus of the Registrant is delivered a copy of the Registrant's latest annual report to shareholders, upon request and without charge. ---------------------------- CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in the Statement of Additional Information constituting part of this Registration Statement on Form N-1A (File No. 33-00515) of our report dated July 3 , 1996 relating to the statement of assets and liabilities of the Fund, which appears in such Statement of Additional Informaton. We also consent to the reference to us under the heading "Independent Accountants and Financial Statements" in such Statement of Additional Information. PRICE WATERHOUSE LLP July 17, 1996 Boston, Massachusetts -------------------------- NOTICE A copy of the Agreement and Declaration of Trust of Putnam Funds Trust is on file with the Secretary of State of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the Registrant. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boston, and The Commonwealth of Massachusetts, on the 18th day of July , 1996. PUTNAM FUNDS TRUST By: Gordon H. Silver, Vice President Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement of Putnam Funds Trust has been signed below by the following persons in the capacities and on the dates indicated: Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement of Putnam Diversified Income Trust II has been signed below by the following persons in the capacities and on the dates indicated: SIGNATURE TITLE George Putnam President and Chairman of the Board; Principal Executive Officer; Trustee William F. Pounds Vice Chairman; Trustee John D. Hughes Senior Vice President; Treasurer and Principal Financial Officer Paul G. Bucuvalas Assistant Treasurer and Principal Accounting Officer Jameson A. Baxter Trustee Hans H. Estin Trustee John A. Hill Trustee Ronald J. Jackson Trustee Elizabeth T. Kennan Trustee Lawrence J. Lasser Trustee Robert E. Patterson Trustee Donald S. Perkins Trustee George Putnam, III Trustee Eli Shapiro Trustee A.J.C. Smith Trustee W. Nicholas Thorndike Trustee By: Gordon H. Silver, as Attorney-in-Fact July 18 , 1996 PUTNAM FUNDS TRUST EXHIBIT INDEX 2. By-Laws, as amended through January 22, 1996 -- Exhibit 1. 5. Management Contract dated June 7, 1996 -- Exhibit 2. 6a. Distributor's Contract for Class A, Class B and Class M shares dated June 7, 1996 -- Exhibit 3. 6b. Copy of Specimen Dealer Sales Contract -- Exhibit 4. 6c. Copy of Specimen Financial Institution Sales Contract - -- Exhibit 5. 8. Copy of Custodian Agreement with Putnam Fiduciary Trust Company dated May 3, 1991 as amended July 13, 1992 -- Exhibit 6. 9. Copy of Investor Servicing Agreement dated June 3, 1991 with Putnam Fiduciary Trust Company -- Exhibit 7. 10. Opinion of Ropes & Gray, including consent -- Exhibit 8. 13. Investment Letter from Putnam Investments, Inc. to the Registrant -- Exhibit 9. 14a. Copy of Prototype Individual Retirement Account Plan - - - Exhibit 10. 14b. Copy of Prototype Basic Plan Document and related Plan Agreements -- Exhibit 11. 15a. Class A Distribution Plan and Agreement dated June 7, 1996 -- Exhibit 12. 15b. Class B Distribution Plan and Agreement dated June 7, 1996 -- Exhibit 13. 15c. Class M Distribution Plan and Agreement dated June 7, 1996 -- Exhibit 14. 15d. Copy of Specimen Dealer Service Agreement -- Exhibit 15. 15e. Copy of Specimen Financial Institution Service Agreement - - Exhibit 16. EX-99.B2BYLAWS 2 BYLAWS OF PUTNAM ADJUSTABLE RATE U.S. GOVERNMENT FUND, PUTNAM AMERICAN GOVERNMENT INCOME FUND, PUTNAM ARIZONA TAX EXEMPT INCOME FUND, PUTNAM ASIA PACIFIC GROWTH FUND, PUTNAM ASSET ALLOCATION FUNDS, PUTNAM BALANCED RETIREMENT FUND, PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND, PUTNAM CONVERTIBLE INCOME-GROWTH TRUST, PUTNAM DIVERSIFIED INCOME TRUST, PUTNAM EQUITY INCOME FUND, PUTNAM EUROPE GROWTH FUND, PUTNAM FLORIDA TAX EXEMPT INCOME FUND, THE GEORGE PUTNAM FUND OF BOSTON, PUTNAM GLOBAL GOVERNMENTAL INCOME TRUST, PUTNAM GLOBAL GROWTH FUND, PUTNAM HEALTH SCIENCES TRUST, PUTNAM HIGH YIELD TRUST, PUTNAM INCOME FUND, PUTNAM INVESTORS FUND, PUTNAM INTERMEDIATE U.S. GOVERNMENT INCOME FUND PUTNAM MANAGED INCOME TRUST, PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND, PUTNAM MICHIGAN TAX EXEMPT INCOME FUND, PUTNAM MINNESOTA TAX EXEMPT INCOME FUND, PUTNAM MONEY MARKET FUND, PUTNAM MUNICIPAL INCOME FUND, PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND, PUTNAM NEW OPPORTUNITIES FUND, PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND, PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND, PUTNAM OHIO TAX EXEMPT INCOME FUND, PUTNAM OTC EMERGING GROWTH FUND, PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND, PUTNAM TAX EXEMPT INCOME FUND, PUTNAM TAX EXEMPT MONEY MARKET FUND, PUTNAM TAX-FREE INCOME TRUST, PUTNAM U.S. GOVERNMENT INCOME TRUST, PUTNAM UTILITIES GROWTH AND INCOME FUND, PUTNAM VISTA FUND, PUTNAM VOYAGER FUND (AS AMENDED THROUGH FEBRUARY 1, 1994), PUTNAM INTERMEDIATE TAX EXEMPT FUND (AS AMENDED THROUGH MARCH 7, 1994), PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST, PUTNAM NEW YORK TAX EXEMPT INCOME TRUST (AS AMENDED THROUGH APRIL 8, 1994), PUTNAM DIVERSIFIED EQUITY TRUST (AS APPROVED APRIL 13, 1994) PUTNAM HIGH YIELD ADVANTAGE FUND, PUTNAM OVERSEAS GROWTH FUND (AS AMENDED THROUGH JUNE 1, 1994), PUTNAM FEDERAL INCOME TRUST (AS AMENDED THROUGH JUNE 6, 1994), PUTNAM NATURAL RESOURCES FUND (AS AMENDED THROUGH JULY 1, 1994), THE PUTNAM FUND FOR GROWTH AND INCOME (AS AMENDED THROUGH JULY 7, 1994), PUTNAM DIVERSIFIED INCOME TRUST II, PUTNAM GROWTH AND INCOME FUND II, (AS AMENDED THROUGH OCTOBER 5, 1994) AND PUTNAM PREFERRED INCOME FUND, (AS AMENDED THROUGH OCTOBER 6, 1994) AND PUTNAM INVESTMENT FUNDS (AS AMENDED THROUGH OCTOBER 30, 1994) PUTNAM FUNDS TRUST (AS AMENDED THROUGH JANUARY 22, 1996) ARTICLE 1 Agreement and Declaration of Trust and Principal Office 1.1 AGREEMENT AND DECLARATION OF TRUST. These Bylaws shall be subject to the Agreement and Declaration of Trust, as from time to time in effect (the "Declaration of Trust"), of the Massachusetts business trust established by the Declaration of Trust (the "Trust"). 1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust shall be located in Boston, Massachusetts. ARTICLE 2 MEETINGS OF TRUSTEES 2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held without call or notice at such places and at such times as the Trustees may from time to time determine, provided that notice of the first regular meeting following any such determination shall be given to absent Trustees. 2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held at any time and at any place designated in the call of the meeting when called by the Chairman of the Trustees, the President or the Treasurer or by two or more Trustees, sufficient notice thereof being given to each Trustee by the Clerk or an Assistant Clerk or by the officer or the Trustees calling the meeting. 2.3 NOTICE OF SPECIAL MEETINGS. It shall be sufficient notice to a Trustee of a special meeting to send notice by mail at least forty-eight hours or by telegram at least twenty- four hours before the meeting addressed to the Trustee at his or her usual or last known business or residence address or to give notice to him or her in person or by telephone at least twenty-four hours before the meeting. Notice of a special meeting need not be given to any Trustee if a written waiver of notice, executed by him or her before or after the meeting, is filed with the records of the meeting, or to any Trustee who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him or her. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting. 2.4 QUORUM. At any meeting of the Trustees a majority of the Trustees then in office shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 2.5 NOTICE OF CERTAIN ACTIONS BY CONSENT. If in accordance with the provisions of the Declaration of Trust any action is taken by the Trustees by a written consent of less than all of the Trustees, then prompt notice of any such action shall be furnished to each Trustee who did not execute such written consent, provided that the effectiveness of such action shall not be impaired by any delay or failure to furnish such notice. ARTICLE 3 OFFICERS 3.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a Chairman of the Trustees, a President, a Treasurer, a Clerk and such other officers, if any, as the Trustees from time to time may in their discretion elect. The Trust may also have such agents as the Trustees from time to time may in their discretion appoint. The Chairman of the Trustees and the President shall be a Trustee and may but need not be a shareholder; and any other officer may but need not be a Trustee or a shareholder. Any two or more offices may be held by the same person. A Trustee may but need not be a shareholder. 3.2 ELECTION. The Chairman of the Trustees, the President, the Treasurer and the Clerk shall be elected by the Trustees upon the occurrence of any vacancy in any such office. Other officers, if any, may be elected or appointed by the Trustees at any time. Vacancies in any such other office may be filled at any time. 3.3 TENURE. The Chairman of the Trustees, the President, the Treasurer and the Clerk shall hold office in each case until he or she dies, resigns, is removed or becomes disqualified. Each other officer shall hold office and each agent shall retain authority at the pleasure of the Trustees. 3.4 POWERS. Subject to the other provisions of these Bylaws, each officer shall have, in addition to the duties and powers herein and in the Declaration of Trust set forth, such duties and powers as are commonly incident to the office occupied by him or her as if the Trust were organized as a Massachusetts business corporation and such other duties and powers as the Trustees may from time to time designate. 3.5 CHAIRMAN; PRESIDENT. Unless the Trustees otherwise provide, the Chairman of the Trustees or, if there is none or in the absence of the Chairman of the Trustees, the President shall preside at all meetings of the shareholders and of the Trustees. Unless the Trustees otherwise provide, the President shall be the chief executive officer. 3.6 TREASURER. Unless the Trustees shall provide otherwise, the Treasurer shall be the chief financial and accounting officer of the Trust, and shall, subject to the provisions of the Declaration of Trust and to any arrangement made by the Trustees with a custodian, investment adviser or manager, or transfer, shareholder servicing or similar agent, be in charge of the valuable papers, books of account and accounting records of the Trust, and shall have such other duties and powers as may be designated from time to time by the Trustees or by the President. 3.7 CLERK. The Clerk shall record all proceedings of the shareholders and the Trustees in books to be kept therefor, which books or a copy thereof shall be kept at the principal office of the Trust. In the absence of the Clerk from any meeting of the shareholders or Trustees, an Assistant Clerk, or if there be none or if he or she is absent, a temporary Clerk chosen at such meeting shall record the proceedings thereof in the aforesaid books. 3.8 RESIGNATIONS AND REMOVALS. Any Trustee or officer may resign at any time by written instrument signed by him or her and delivered to the Chairman of the Trustees, the President or the Clerk or to a meeting of the Trustees. Such resignation shall be effective upon receipt unless specified to be effective at some other time. The Trustees may remove any officer elected by them with or without cause. Except to the extent expressly provided in a written agreement with the Trust, no Trustee or officer resigning and no officer removed shall have any right to any compensation for any period following his or her resignation or removal, or any right to damages on account of such removal. ARTICLE 4 COMMITTEES 4.1 QUORUM; VOTING. A majority of the members of any Committee of the Trustees shall constitute a quorum for the transaction of business, and any action of such a Committee may be taken at a meeting by a vote of a majority of the members present (a quorum being present) or evidenced by one or more writings signed by such a majority. Members of a Committee may participate in a meeting of such Committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting. ARTICLE 5 REPORTS 5.1 GENERAL. The Trustees and officers shall render reports at the time and in the manner required by the Declaration of Trust or any applicable law. Officers and Committees shall render such additional reports as they may deem desirable or as may from time to time be required by the Trustees. ARTICLE 6 FISCAL YEAR 6.1 GENERAL. Except as from time to time otherwise provided by the Trustees, the initial fiscal year of the Trust shall end on such date as is determined in advance or in arrears by the Treasurer, and subsequent fiscal years shall end on such date in subsequent years. ARTICLE 7 SEAL 7.1 GENERAL. The seal of the Trust shall consist of a flat-faced die with the word "Massachusetts", together with the name of the Trust and the year of its organization cut or engraved thereon but, unless otherwise required by the Trustees, the seal shall not be necessary to be placed on and its absence shall not impair the validity of, any document, instrument or other paper executed and delivered by or on behalf of the Trust. ARTICLE 8 EXECUTION OF PAPERS 8.1 GENERAL. Except as the Trustees may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, contracts, notes and other obligations made by the Trustees shall be signed by the President, the Vice Chairman, a Vice President or the Treasurer and need not bear the seal of the Trust. ARTICLE 9 ISSUANCE OF SHARES AND SHARE CERTIFICATES 9.1 SALE OF SHARES. Except as otherwise determined by the Trustees, the Trust will issue and sell for cash or securities from time to time, full and fractional shares of its shares of beneficial interest, such shares to be issued and sold at a price of not less than the par value per share, if any, and not less than the net asset value per share as from time to time determined in accordance with the Declaration of Trust and these Bylaws and, in the case of fractional shares, at a proportionate reduction in such price. In the case of shares sold for securities, such securities shall be valued in accordance with the provisions for determining the value of the assets of the Trust as stated in the Declaration of Trust and these Bylaws. The officers of the Trust are severally authorized to take all such actions as may be necessary or desirable to carry out this Section 9.1. 9.2 SHARE CERTIFICATES. In lieu of issuing certificates for shares, the Trustees or the transfer agent may either issue receipts therefor or may keep accounts upon the books of the Trust for the record holders of such shares, who shall in either case be deemed, for all purposes hereunder, to be the holders of certificates for such shares as if they had accepted such certificates and shall be held to have expressly assented and agreed to the terms hereof. The Trustees may at any time authorize the issuance of share certificates. In that event, each shareholder shall be entitled to a certificate stating the number of shares of each class owned by him, in such form as shall be prescribed from time to time by the Trustees. Such certificate shall be signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer. Such signatures may be facsimile if the certificate is signed by a transfer agent or by a registrar. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall cease to be such officer before such certificate is issued, it may be issued by the Trust with the same effect as if he were such officer at the time of its issue. 9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust, with the approval of any two officers of the Trust, is authorized to issue and countersign replacement certificates for the shares of the Trust which have been lost, stolen or destroyed upon (i) receipt of an affidavit or affidavits of loss or non-receipt and of an indemnity agreement executed by the registered holder or his legal representative and supported by an open penalty surety bond, said agreement and said bond in all cases to be in form and content satisfactory to and approved by the President or the Treasurer, or (ii) receipt of such other documents as may be approved by the Trustees. 9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of shares transferred as collateral security shall be entitled to a new certificate if the instrument of transfer substantially describes the debt or duty that is intended to be secured thereby. Such new certificate shall express on its face that it is held as collateral security, and the name of the pledgor shall be stated thereon, who alone shall be liable as a shareholder and entitled to vote thereon. 9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any time discontinue the issuance of share certificates and may, by written notice to each shareholder, require the surrender of share certificates to the Trust for cancellation. Such surrender and cancellation shall not affect the ownership of shares in the Trust. ARTICLE 10 PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS 10.1 CERTAIN DEFINITIONS. When used herein the following words shall have the following meanings: "Distributor" shall mean any one or more corporations, firms or associations which have distributor's or principal underwriter's contracts in effect with the Trust providing that redeemable shares issued by the Trust shall be offered and sold by such Distributor. "Manager" shall mean any corporation, firm or association which may at the time have an advisory or management contract with the Trust. 10.2 LIMITATIONS ON DEALINGS WITH OFFICERS OR TRUSTEES. The Trust will not lend any of its assets to the Distributor or Manager or to any officer or director of the Distributor or Manager or any officer or Trustee of the Trust, and shall not permit any officer or Trustee or any officer or director of the Distributor or Manager to deal for or on behalf of the Trust with himself or herself as principal or agent, or with any partnership, association or corporation in which he or she has a financial interest; provided that the foregoing provisions shall not prevent (a) officers and Trustees of the Trust or officers and directors of the Distributor or Manager from buying, holding or selling shares in the Trust or from being partners, officers or directors of or otherwise financially interested in the Distributor or the Manager; (b) purchases or sales of securities or other property if such transaction is permitted by or is exempt or exempted from the provisions of the Investment Company Act of 1940 or any Rule or Regulation thereunder and if such transaction does not involve any commission or profit to any security dealer who is, or one or more of whose partners, shareholders, officers or directors is, an officer or Trustee of the Trust or an officer or director of the Distributor or Manager; (c) employment of legal counsel, registrar, transfer agent, shareholder servicing agent, dividend disbursing agent or custodian who is, or has a partner, shareholder, officer or director who is, an officer or Trustee of the Trust or an officer or director of the Distributor or Manager; (d) sharing statistical, research, legal and management expenses and office hire and expenses with any other investment company in which an officer or Trustee of the Trust or an officer or director of the Distributor or Manager is an officer or director or otherwise financially interested. 10.3 SECURITIES AND CASH OF THE TRUST TO BE HELD BY CUSTODIAN SUBJECT TO CERTAIN TERMS AND CONDITIONS. (a) All securities and cash owned by the Trust shall be held by or deposited with one or more banks or trust companies having (according to its last published report) not less than $1,000,000 aggregate capital, surplus and undivided profits (any such bank or trust company being hereby designated as "Custodian"), provided such a Custodian can be found ready and willing to act; subject to such rules, regulations and orders, if any, as the Securities and Exchange Commission may adopt, the Trust may, or may permit any Custodian to, deposit all or any part of the securities owned by the Trust in a system for the central handling of securities pursuant to which all securities of any particular class or series of any issue deposited within the system may be transferred or pledged by bookkeeping entry, without physical delivery. The Custodian may appoint, subject to the approval of the Trustees, one or more subcustodians. (b) The Trust shall enter into a written contract with each Custodian regarding the powers, duties and compensation of such Custodian with respect to the cash and securities of the Trust held by such Custodian. Said contract and all amendments thereto shall be approved by the Trustees. (c) The Trust shall upon the resignation or inability to serve of any Custodian or upon change of any Custodian: (i) in case of such resignation or inability to serve, use its best efforts to obtain a successor Custodian; (ii) require that the cash and securities owned by the Trust be delivered directly to the successor Custodian; and (iii) in the event that no successor Custodian can be found, submit to the shareholders, before permitting delivery of the cash and securities owned by the Trust otherwise than to a successor Custodian, the question whether the Trust shall be liquidated or shall function without a Custodian. 10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each shareholder of record at least semi-annually a statement of the condition of the Trust and of the results of its operations, containing all information required by applicable laws or regulations. 10.5 DETERMINATION OF NET ASSET VALUE PER SHARE. Net asset value per share of each class or series of shares of the Trust shall mean: (i) the value of all the assets properly allocable to such class or series; (ii) less total liabilities properly allocable to such class or series; (iii) divided by the number of shares of such class or series outstanding, in each case at the time of each determination. Except as otherwise determined by the Trustees, the net asset value per share of each class or series shall be determined no less frequently than once daily, Monday through Friday, on days on which the New York Stock Exchange is open for trading, at such time or times that the Trustees set at least annually. In valuing the portfolio investments of any class or series of shares for the determination of the net asset value per share of such class or series, securities for which market quotations are readily available shall be valued at prices which, in the opinion of the Trustees or the person designated by the Trustees to make the determination, most nearly represent the market value of such securities, and other securities and assets shall be valued at their fair value as determined by or pursuant to the direction of the Trustees, which in the case of debt obligations, commercial paper and repurchase agreements may, but need not, be on the basis of yields for securities of comparable maturity, quality and type, or on the basis of amortized cost. Expenses and liabilities of the Trust shall be accrued each day. Liabilities may include such reserves for taxes, estimated accrued expenses and contingencies as the Trustees or their designates may in their sole discretion deem fair and reasonable under the circumstances. No accruals shall be made in respect of taxes on unrealized appreciation of securities owned unless the Trustees shall otherwise determine. ARTICLE 11 SHAREHOLDERS 11.1 MEETINGS. A meeting of the shareholders shall be called by the Clerk whenever ordered by the Trustees, the Chairman of the Trustees or requested in writing by the holder or holders of at least one-tenth of the outstanding shares entitled to vote at such meeting. If the Clerk, when so ordered or requested, refuses or neglects for more than two days to call such meeting, the Trustees, Chairman of the Trustees or the shareholders so requesting may, in the name of the Clerk, call the meeting by giving notice thereof in the manner required when notice is given by the Clerk. 11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record may apply to the Trustees for assistance in communicating with other shareholders for the purpose of calling a meeting in order to vote upon the question of removal of a Trustee. When ten or more shareholders of record who have been such for at least six months preceding the date of application and who hold in the aggregate shares having a net asset value of at least $25,000 so apply, the Trustees shall within five business days either: (i) afford to such applicants access to a list of names and addresses of all shareholders as recorded on the books of the Trust; or (ii) inform such applicants of the approximate number of shareholders of record and the approximate cost of mailing material to them, and, within a reasonable time thereafter, mail, at the applicants' expense, materials submitted by the applicants, to all such shareholders of record. The Trustees shall not be obligated to mail materials which they believe to be misleading or in violation of applicable law. 11.3 RECORD DATES. For the purpose of determining the shareholders of any class or series of shares of the Trust who are entitled to vote or act at any meeting or any adjournment thereof, or who are entitled to receive payment of any dividend or of any other distribution, the Trustees may from time to time fix a time, which shall be not more than 90 days before the date of any meeting of shareholders or more than 60 days before the date of payment of any dividend or of any other distribution, as the record date for determining the shareholders of such class or series having the right to notice of and to vote at such meeting and any adjournment thereof or the right to receive such dividend or distribution, and in such case only shareholders of record on such record date shall have such right notwithstanding any transfer of shares on the books of the Trust after the record date; or without fixing such record date the Trustees may for any such purposes close the register or transfer books for all or part of such period. 11.4 PROXIES. The placing of a shareholder's name on a proxy pursuant to telephone or electronically transmitted instructions obtained pursuant to procedures reasonably designed to verify that such instructions have been authorized by such shareholder shall constitute execution of such proxy by or on behalf of such shareholder. ARTICLE 12 PREFERENCES, RIGHTS AND PRIVILEGES OF THE TRUST'S CLASSES OF SHARES 12.1 GENERAL. Each class of shares of the Trust or of a particular series of the Trust, as the case may be, will represent interests in the same portfolio of investments of the Trust (or that series) and be identical in all respects, except as set forth below: (a) each class of shares shall be charged with the expense of any Distribution Plan adopted by the Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940 with respect to such class of shares, (b) each class of shares will be charged with any incremental shareholder servicing expense attributable solely to such class, as determined by the Trustees, (c) each class of shares shall be charged with any other expenses properly allocated to such class, as determined by the Trustees and approved by the Securities and Exchange Commission, (d) each class of shares shall vote as a separate class on matters which pertain to any Rule 12b-1 Distribution Plan pertaining to such class of shares, (e) each class of shares will have only such exchange privileges as may from time to time be described in the Trust's prospectus with respect to such class, (f) each class of shares shall bear such designation as may be approved from time to time by the Trustees and (g) reinvestments of distributions from the Trust paid with respect to the shares of a particular class will be paid in additional shares of such class. 12.2. CONVERSION OF CLASS B SHARES. Except as hereinafter provided with respect to shares acquired by exchange or reinvestment of distributions, Class B shares of the Trust will automatically convert into Class A shares of the Trust at the end of the month eight years after the month of purchase, or at such earlier time as the Trustees may in their sole discretion determine from time to time as to all Class B shares purchased on or before such date as the Trustees may specify. Class B shares acquired by exchange from Class B shares of another Putnam Fund will convert into Class A shares based on the date of the initial purchase of the Class B shares of such other Fund. Class B shares acquired through reinvestment of distributions will convert into Class A shares based on the date of the initial purchase of Class B shares to which such reinvestment shares relate. For this purpose, Class B shares acquired through reinvestment of distributions will be attributed to particular purchases of Class B shares in accordance with such procedures, which may include without limitation methods of proration or approximation, as the Trustees may in their sole discretion determine from time to time. ARTICLE 13 AMENDMENTS TO THE BYLAWS 13.1 GENERAL. These Bylaws may be amended or repealed, in whole or in part, by a majority of the Trustees then in office at any meeting of the Trustees, or by one or more writings signed by such a majority. EX-99.B5ADVSRCONTR 3 PUTNAM FUNDS TRUST MANAGEMENT CONTRACT Management Contract dated as of June 7, 1996 between PUTNAM FUNDS TRUST, a Massachusetts business trust (the "Fund"), and PUTNAM INVESTMENT MANAGEMENT, INC., a Massachusetts corporation (the "Manager"). WITNESSETH: That in consideration of the mutual covenants herein contained, it is agreed as follows: 1. SERVICES TO BE RENDERED BY MANAGER TO FUND. (a) The Manager, at its expense, will furnish continuously an investment program for each series of the Fund, will determine what investments shall be purchased, held, sold or exchanged by each series of the Fund and what portion, if any, of the assets of each series of the Fund shall be held uninvested and shall, on behalf of each series of the Fund, make changes in such series' investments. Subject always to the control of the Trustees of the Fund and except for the functions carried out by the officers and personnel referred to in Section 1(d), the Manager will also manage, supervise and conduct the other affairs and business of the Fund and matters incidental thereto. In the performance of its duties, the Manager will comply with the provisions of the Agreement and Declaration of Trust and By-Laws of the Fund and the stated investment objectives, policies and restrictions of each series of the Fund, and will use its best efforts to safeguard and promote the welfare of the Fund and to comply with other policies which the Trustees may from time to time determine and shall exercise the same care and diligence expected of the Trustees. (b) The Manager, at its expense, except as such expense is paid by the Fund as provided in Section 1(d), will furnish (1) all necessary investment and management facilities, including salaries of personnel, required for it to execute its duties faithfully; (2) suitable office space for the Fund; and (3) administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of the affairs of the Fund, including determination of the net asset value of each series of the Fund, but excluding shareholder accounting services. Except as otherwise provided in Section 1(d), the Manager will pay the compensation, if any, of the officers of the Fund. (c) The Manager, at its expense, shall place all orders for the purchase and sale of portfolio investments for the Fund's account with brokers or dealers selected by the Manager. In the selection of such brokers or dealers and the placing of such orders, the Manager shall use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. In using its best efforts to obtain for the Fund the most favorable price and execution available, the Manager, bearing in mind the Fund's best interests at all times, shall consider all factors it deems relevant, including by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker or dealer involved and the quality of service rendered by the broker or dealer in other transactions. Subject to such policies as the Trustees of the Fund may determine, the Manager shall not be deemed to have acted unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of its having caused the Fund to pay a broker or dealer that provides brokerage and research services to the Manager an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Manager determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Manager's overall responsibilities with respect to the Fund and to other clients of the Manager as to which the Manager exercises investment discretion. The Manager agrees that in connection with purchases or sales of portfolio investments for the Fund's account, neither the Manager nor any officer, director, employee or agent of the Manager shall act as a principal or receive any commission other than as provided in Section 3. (d) The Fund will pay or reimburse the Manager for the compensation in whole or in part of such officers of the Fund and persons assisting them as may be determined from time to time by the Trustees of the Fund. The Fund will also pay or reimburse the Manager for all or part of the cost of suitable office space, utilities, support services and equipment attributable to such officers and persons, as may be determined in each case by the Trustees of the Fund. The Fund will pay the fees, if any, of the Trustees of the Fund. (e) The Manager shall pay all expenses incurred in connection with the organization of the Fund and the initial public offering and sale of its shares of beneficial interest, provided that upon the issuance and sale of such shares to the public pursuant to the offering, and only in such event, the Fund shall become liable for, and to the extent requested reimburse the Manager for, registration fees payable to the Securities and Exchange Commission and for an additional amount not exceeding $125,000 as its agreed share of such expenses. (f) The Manager shall not be obligated to pay any expenses of or for the Fund not expressly assumed by the Manager pursuant to this Section 1 other than as provided in Section 3. 2. OTHER AGREEMENTS, ETC. It is understood that any of the shareholders, Trustees, officers and employees of the Fund may be a shareholder, director, officer or employee of, or be otherwise interested in, the Manager, and in any person controlled by or under common control with the Manager, and that the Manager and any person controlled by or under common control with the Manager may have an interest in the Fund. It is also understood that the Manager and any person controlled by or under common control with the Manager have and may have advisory, management, service or other contracts with other organizations and persons, and may have other interests and business. 3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER. The Fund will pay to the Manager as compensation for the Manager's services rendered, for the facilities furnished and for the expenses borne by the Manager pursuant to paragraphs (a), (b), (c) and (e) of Section 1, a fee, computed and paid quarterly at the following annual rates for each series of the Fund: (a) 0.80% of the first $500 million of the average net asset value of each series; (b) 0.70% of the next $500 million of such average net asset value; (c) 0.65% of the next $500 million of such average net asset value; (d) 0.60% of the next $5 billion of such average net asset value; (e) 0.575% of the next $5 billion of such average net asset value; (f) 0.555% of the next $5 billion of such average net asset value; (g) 0.54% of the next $5 billion of such average net asset value; and (h) 0.53% of any excess thereafter. Such average net asset value shall be determined by taking an average of all of the determinations of such net asset value during such quarter at the close of business on each business day during such quarter while this Contract is in effect. Such fee shall be payable for each fiscal quarter within 30 days after the close of such quarter and shall commence accruing as of the date of the initial issuance of shares of the Fund to the public. The fees payable by the Fund to the Manager pursuant to this Section 3 shall be reduced by any commissions, fees, brokerage or similar payments received by the Manager or any affiliated person of the Manager in connection with the purchase and sale of portfolio investments of the Fund, less any direct expenses approved by the Trustees incurred by the Manager or any affiliated person of the Manager in connection with obtaining such payments. In the event that expenses of the Fund or any series of the Fund for any fiscal year should exceed the expense limitation on investment company expenses imposed by any statute or regulatory authority of any jurisdiction in which shares of the Fund or such series are qualified for offer or sale, the compensation due the Manager for such fiscal year shall be reduced by the amount of excess by a reduction or refund thereof. In the event that the expenses of the Fund or any series of the Fund exceed any expense limitation which the Manager may, by written notice to the Fund, voluntarily declare to be effective subject to such terms and conditions as the Manager may prescribe in such notice, the compensation due the Manager shall be reduced, and, if necessary, the Manager shall assume expenses of the Fund or such series to the extent required by the terms and conditions of such expense limitation. If the Manager shall serve for less than the whole of a quarter, the foregoing compensation shall be prorated. 4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT. This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment; and this Contract shall not be amended as to any series of the Fund unless such amendment be approved at a meeting by the affirmative vote of a majority of the outstanding shares of such series, and by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees of the Fund who are not interested persons of the Fund or of the Manager. 5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. This Contract shall become effective upon its execution, and shall remain in full force and effect as to a particular series continuously thereafter (unless terminated automatically as set forth in Section 4) until terminated as follows: (a) Either party hereto may at any time terminate this Contract as to any series by not more than sixty days' nor less than thirty days' written notice delivered or mailed by registered mail, postage prepaid, to the other party, or (b) If (i) the Trustees of the Fund or the shareholders by the affirmative vote of a majority of the outstanding shares of such series, and (ii) a majority of the Trustees of the Fund who are not interested persons of the Fund or of the Manager, by vote cast in person at a meeting called for the purpose of voting on such approval, do not specifically approve at least annually the continuance of this Contract with respect to such series, then this Contract shall automatically terminate with respect to such series at the close of business on the second anniversary of its execution, or upon the expiration of one year from the effective date of the last such continuance, whichever is later. Action by the Fund under (a) above may be taken either (i) by vote of a majority of its Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of the relevant series. Termination of this Contract pursuant to this Section 5 will be without the payment of any penalty. 6. CERTAIN DEFINITIONS. For the purposes of this Contract, the "affirmative vote of a majority of the outstanding shares" of a series means the affirmative vote, at a duly called and held meeting of shareholders of such series, (a) of the holders of 67% or more of the shares of such series present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of such series entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of such series entitled to vote at such meeting, whichever is less. For the purposes of this Contract, the terms "affiliated person", "control", "interested person" and "assignment" shall have their respective meanings defined in the Investment Company Act of 1940 and the Rules and Regulations thereunder (the "1940 Act"), subject, however, to such exemptions as may be granted by the Securities and Exchange Commission under said Act; the term "specifically approve at least annually" shall be construed in a manner consistent with the 1940 Act, and the Rules and Regulations thereunder; and the term "brokerage and research services" shall have the meaning given in the Securities Exchange Act of 1934 and the Rules and Regulations thereunder. 7. NON-LIABILITY OF MANAGER. In the absence of willful misfeasance, bad faith or gross negligence on the part of the Manager, or reckless disregard of its obligations and duties hereunder, the Manager shall not be subject to any liability to the Fund or to any shareholder of the Fund, for any act or omission in the course of, or connected with, rendering services hereunder. 8. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, AND SHAREHOLDERS. A copy of the Agreement and Declaration of Trust of the Fund is on file with the Secretary of State of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of the Fund as Trustees and not individually and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the relevant series of the Fund. IN WITNESS WHEREOF, PUTNAM FUNDS TRUST and PUTNAM INVESTMENT MANAGEMENT, INC. have each caused this instrument to be signed in duplicate in its behalf by its President or a Vice President thereunto duly authorized, all as of the day and year first above written. PUTNAM FUNDS TRUST By: /s/ Charles E. Porter ------------------------------- - - Charles E. Porter Executive Vice President PUTNAM INVESTMENT MANAGEMENT, INC. By: /s/ Gordon H. Silver ------------------------------- - - Gordon H. Silver Senior Managing Director EX-99.B6DISTRCONTR 4 PUTNAM FUNDS TRUST DISTRIBUTOR'S CONTRACT Distributor's Contract dated June 7, 1996, by and between PUTNAM FUNDS TRUST, a Massachusetts business trust (the "Trust"), and PUTNAM MUTUAL FUNDS CORP., a Massachusetts corporation ("Putnam"). WHEREAS, the Trust and Putnam are desirous of entering into this agreement to provide for the distribution by Putnam of shares of the various portfolio series of the Trust (each a "Fund"); NOW, THEREFORE, in consideration of the mutual agreements contained in the Terms and Conditions of Distributor's Contract attached to and forming a part of this Contract (the "Terms and Conditions"), the Trust hereby appoints Putnam as a distributor of shares of the Trust, and Putnam hereby accepts such appointment, all as set forth in the Terms and Conditions. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the relevant Fund. IN WITNESS WHEREOF, PUTNAM FUNDS TRUST and PUTNAM MUTUAL FUNDS CORP. have each caused this Distributor's Contract to be signed in duplicate in its behalf, all as of the day and year first above written. PUTNAM FUNDS TRUST By: /s/ Charles E. Porter --------------------------- - -- Charles E. Porter Executive Vice President PUTNAM MUTUAL FUNDS CORP. By: /s/ William N. Shiebler --------------------------- - -- William N. Shiebler President TERMS AND CONDITIONS OF DISTRIBUTOR'S CONTRACT 1. RESERVATION OF RIGHT NOT TO SELL. The Trust reserves the right to refuse at any time or times to sell hereunder any shares of beneficial interest ("shares") of a Fund for any reason deemed adequate by it. 2. PAYMENTS TO PUTNAM. In connection with the distribution of shares of a Fund, Putnam will be entitled to receive: (a) payments pursuant to any Distribution Plan and Agreement from time to time in effect between the Trust and Putnam with respect to such Fund or any particular class of shares of such Fund, (b) any contingent deferred sales charges applicable to the redemption of shares of such Fund or of any particular class of shares of such Fund, determined in the manner set forth in the then current Prospectus and Statement of Additional Information of such Fund and (c) subject to the provisions of Section 3 below, any front-end sales charges applicable to the sale of shares of such Fund or of any particular class of shares of such Fund, less any applicable dealer discount. 3. SALES OF SHARES TO PUTNAM AND SALES BY PUTNAM. Putnam will have the right, as principal, to sell shares of a Fund to investment dealers against orders therefor (a) at the public offering price (calculated as described below) less a discount determined by Putnam, which discount shall not exceed the amount of the sales charge referred to below, or (b) at net asset value. Upon receipt of an order to purchase shares from an investment dealer with whom Putnam has a Sales Contract, Putnam will promptly purchase shares from the relevant Fund to fill such order. The public offering price of a class of shares of a Fund shall be the net asset value of such shares then in effect, plus any applicable front-end sales charge determined in the manner set forth in the then current Prospectus and Statement of Additional Information of the Fund or as permitted by the Investment Company Act of 1940, as amended, and the Rules and Regulations of the Securities and Exchange Commission promulgated thereunder. In no event shall the public offering price exceed 1000/915ths of such net asset value, and in no event shall any applicable sales charge exceed 8 1/2% of the public offering price. The net asset value of the shares shall be determined in the manner provided in the Agreement and Declaration of Trust of the Trust as then amended and when determined shall be applicable to transactions as provided for in the then current Prospectus and Statement of Additional Information of the relevant Fund. Putnam will also have the right, as principal, to purchase shares from a Fund at their net asset value and to sell such shares to the public against orders therefor at the public offering price or at net asset value. Putnam will also have the right, as principal, to sell shares at their net asset value and not subject to a contingent deferred sales charge to such persons as may be approved by the Trustees of the Trust, all such sales to comply with the provisions of the Investment Company Act of 1940, as amended, and the Rules and Regulations of the Securities and Exchange Commission promulgated thereunder. Putnam will also have the right, as agent for the Trust, to sell shares at the public offering price or at net asset value to such persons and upon such conditions as the Trustees of the Trust may from time to time determine. On every sale the Trust shall receive the applicable net asset value of the shares. Putnam will reimburse the Trust for any increased issue tax paid on account of sales charges. Upon receipt of registration instructions in proper form and payment for shares, Putnam will transmit such instructions to the Trust or its agent for registration of the shares purchased. 4. SALES OF SHARES BY THE TRUST. The Trust reserves the right to issue shares at any time directly to its shareholders as a stock dividend or stock split and to sell shares to its shareholders or to other persons approved by Putnam at not less than net asset value. 5. REPURCHASE OF SHARES. Putnam will act as agent for the Trust in connection with the repurchase of shares by the Trust upon the terms and conditions set forth in the then current Prospectus and Statement of Additional Information of the relevant Fund. 6. BASIS OF PURCHASES AND SALES OF SHARES. Putnam will use its best efforts to place shares sold by it on an investment basis. Putnam does not agree to sell any specific number of shares. Shares will be sold by Putnam only against orders therefor. Putnam will not purchase shares from anyone other than the Trust or a Fund except in accordance with Section 5, and will not take "long" or "short" positions in shares contrary to the Agreement and Declaration of Trust of the Trust. 7. RULES OF NASD, ETC. Putnam will conform to the Rules of Fair Practice of the National Association of Securities Dealers, Inc. and the sale of securities laws of any jurisdiction in which it sells, directly or indirectly, any shares. Putnam also agrees to furnish to the Trust sufficient copies of any agreements or plans it intends to use in connection with any sales of shares in adequate time for the Trust to file and clear them with the proper authorities before they are put in use, and not to use them until so filed and cleared. 8. PUTNAM INDEPENDENT CONTRACTOR. Putnam shall be an independent contractor and neither Putnam nor any of its officers or employees as such is or shall be an employee of the Trust. Putnam is responsible for its own conduct and the employment, control and conduct of its agents and employees and for injury to such agents or employees or to others through its agents or employees. Putnam assumes full responsibility for its agents and employees under applicable statutes and agrees to pay all employer taxes thereunder. Putnam will maintain at its own expense insurance against public liability in such an amount as the Trustees of the Trust may from time to time reasonably request. 9. EXPENSES. Putnam will pay all expenses of qualifying shares for sale under the so-called "Blue Sky" laws of any state (except expenses of any action by the Trust relating to its Agreement and Declaration of Trust or other matters in which the Trust has a direct concern), and expenses of preparing, printing and distributing advertising and sales literature (apart from expenses of registering shares under the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, and the preparation and printing of Prospectuses and Statements of Additional Information and reports as required by said Acts and the direct expenses of the issue of shares, except that Putnam will pay the cost of the preparation and printing of Prospectuses and Statements of Additional Information and shareholders' reports used by it and by others in the sale of shares to the extent such cost is not paid by others). 10. INDEMNIFICATION OF TRUST. Putnam agrees to indemnify and hold harmless the Trust and each person who has been, is, or may hereafter be a Trustee of the Trust against expenses reasonably incurred by any of them in connection with any claim or in connection with any action, suit or proceeding to which any of them may be a party, which arises out of or is alleged to arise out of any misrepresentation or omission to state a material fact, or out of any alleged misrepresentation or omission to state a material fact, on the part of Putnam or any agent or employee of Putnam or any other person for whose acts Putnam is responsible or is alleged to be responsible unless such misrepresentation or omission was made in reliance upon written information furnished by the Trust. Putnam also agrees likewise to indemnify and hold harmless the Trust and each such person in connection with any claim or in connection with any action, suit or proceeding which arises out of or is alleged to arise out of Putnam's (or an affiliate of Putnam's) failure to exercise reasonable care and diligence with respect to its services rendered in connection with investment, reinvestment, automatic withdrawal and other plans for shares. The term "expenses" includes amounts paid in satisfaction of judgments or in settlements which are made with Putnam's consent. The foregoing rights of indemnification shall be in addition to any other rights to which the Trust or a Trustee may be entitled as a matter of law. 11. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT. This Contract shall automatically terminate, without the payment of any penalty, in the event of its assignment. This Contract may be amended only if such amendment be approved either by action of the Trustees of the Trust or at a meeting of the shareholders of the relevant Fund by the affirmative vote of a majority of the outstanding shares of such Fund, and by a majority of the Trustees of the Trust who are not interested persons of the Trust or of Putnam by vote cast in person at a meeting called for the purpose of voting on such approval. 12. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. This Contract shall take effect upon the date first above written and shall remain in full force and effect continuously (unless terminated automatically as set forth in Section 11) until terminated with respect to a particular Fund as follows: (a) Either by the Trust or Putnam by not more than sixty (60) days' nor less than ten (10) days' written notice delivered or mailed by registered mail, postage prepaid, to the other party; or (b) If the continuance of this Contract is not specifically approved at least annually by the Trustees of the Trust or the shareholders of the relevant Fund by the affirmative vote of a majority of the outstanding shares of such Fund, and by a majority of the Trustees of the Trust who are not interested persons of the Trust or of Putnam by vote cast in person at a meeting called for the purpose of voting on such approval, then this Contract shall automatically terminate at the close of business on the second anniversary of its execution, or upon the expiration of one year from the effective date of the last such continuance, whichever is later. Action by the Trust under (a) above may be taken either (i) by vote of its Trustees or (ii) by the affirmative vote of a majority of the outstanding shares of the relevant Fund. The requirement under (b) above that continuance of this Contract be "specifically approved at least annually" shall be construed in a manner consistent with the Investment Company Act of 1940, as amended, and the Rules and Regulations thereunder. Termination of this Contract pursuant to this Section 12 shall be without the payment of any penalty. 13. CERTAIN DEFINITIONS. For the purposes of this Contract, the "affirmative vote of a majority of the outstanding shares of a Fund" means the affirmative vote, at a duly called and held meeting of shareholders of such Fund, (a) of the holders of 67% or more of the shares of such Fund present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of such Fund entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of more than 50% of the outstanding shares of such Fund entitled to vote at such meeting, whichever is less. For the purposes of this Contract, the terms "interested person" and "assignment" shall have the meanings defined in the Investment Company Act of 1940, as amended, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission under said Act. EX-99.B6DISTRCONTR 5 DEALER SALES CONTRACT Between: PUTNAM MUTUAL FUNDS CORP. and General Distributor of The Putnam Family of Mutual Funds One Post Office Square Boston, MA 02109 As general distributor of The Putnam Family of Mutual Funds (the "Funds"), we agree to sell you shares of beneficial interest issued by the Funds (the "Shares"), subject to any limitations imposed by any of the Funds and to confirmation by us in each instance of such sales. By your acceptance hereof, you agree to all of the following terms and conditions: 1. OFFERING PRICE AND FEES The public offering price at which you may offer the Shares is the net asset value thereof, as computed from time to time, plus any applicable sales charge described in the then-current Prospectus of the applicable Fund. As compensation for each sale of Shares made by you, you will be allowed the dealer discount if any, on such Shares described in the then-current Prospectus of the Fund whose Shares are sold. We reserve the right to revise the dealer discount referred to herein upon ten days' written notice to you. We will furnish you upon request with the public offering prices for the Shares, and you agree to quote such prices in connection with any Shares offered by you for sale. Your attention is specifically called to the fact that each sale is always made subject to confirmation by us at the public offering price next computed after receipt of the order. There is no sales charge or dealer discount to dealers on the reinvestment of dividends and distributions. In addition to the dealer discount, if any, allowed pursuant to the foregoing provisions of this Section 1, we may, at our expense, provide additional promotional incentives or payments to dealers. If non-cash concessions are provided, each dealer earning such a concession may elect to receive an amount in cash equivalent to the cost of providing such concessions. Notice of the availability of concessions will be given to you by us. All dealer discounts, promotional incentives, payments and concessions will be made by us in accordance with National Association of Securities Dealers, Inc. ("NASD") guidelines and rules. 2. MANNER OF OFFERING, SELLING AND PURCHASING SHARES We have delivered to you a copy of each Fund's current Prospectus and will provide you with such number of copies of each Fund's Prospectus, Statement of Additional Information and shareholder reports and of supplementary sales materials prepared by us, as you may reasonably request. You will offer and sell the Shares only in accordance with the terms and conditions of the current Prospectus and Statement of Additional Information of the applicable Fund. Neither you nor any other person is authorized to give any information or to make any representations other than those contained in such Prospectuses, Statements of Additional Information and shareholder reports or in such supplementary sales materials. You agree that you will not use any other offering materials for the Funds without our written consent. You hereby agree: (i) to exercise your best efforts to find purchasers for the Shares of the Funds, (ii) to furnish to each person to whom any sale is made a copy of the then-current Prospectus of the applicable fund, (iii) to transmit to us promptly upon receipt any and all orders received by you, and (iv) to pay to us the offering price, less any dealer discount to which you are entitled, within three (3) business days of our confirmation of your order, or such shorter time as may be required by law. If such payment is not received within said time period, we reserve the right, without prior notice, to cancel the sale, or at our option to return the Shares to the issuer for redemption or repurchase. In the latter case, we shall have the right to hold you responsible for any loss resulting to us. Should payment be made by check on your local bank, liquidation of Shares may be delayed pending clearance of your check. You agree to issue confirmations promptly for all accepted purchase orders for accounts held in street name. You shall make all sales subject to our confirmation. All orders are subject to acceptance or rejection by us in our sole discretion, and by the Funds in their sole discretion. The procedure stated herein relating to the pricing and handling of orders shall be subject to instructions which we may forward to you from time to time. 3. COMPLIANCE WITH LAW You hereby represent that you are registered as a broker- dealer under the Securities Exchange Act of 1934, as amended, and are licensed and qualified as a broker-dealer or otherwise authorized to offer and sell the Shares under the laws of each jurisdiction in which the Shares will be offered and sold by you. You further confirm that you are a member in good standing of the NASD and agree to maintain such membership in good standing or, in the alternative, you are a foreign dealer not eligible for membership in the NASD. You agree that in selling Shares you will comply with all applicable laws, rules and regulations, including the applicable provisions of the Securities Act of 1933, as amended, the applicable rules and regulations of the NASD, and the applicable rules and regulations of any jurisdiction in which you sell, directly or indirectly, any Shares. You agree not to offer for sale or sell the Shares in any jurisdiction in which the Shares are not qualified for sale or in which you are not qualified as a broker-dealer. 4. RELATIONSHIP WITH DEALERS In offering and selling Shares under this Contract, you shall be acting as principal and nothing herein shall be construed to constitute you or any of your agents, employees or representatives as our agent or employee, or as an agent or employee of the Funds. As general distributor of the Funds, we shall have full authority to take such action as we may deem advisable in respect of all matters pertaining to the distribution of the Shares. We shall not be under any obligation to you, except for obligations expressly assumed by us in this Contract. 5. TERMINATION Either party hereto may terminate this Contract, without cause, upon ten days' written notice to the other party. We may terminate this Contract for cause upon the violation by you of any of the provisions hereof, such termination to become effective on the date such notice of termination is mailed to you. This Contract shall terminate automatically if either Party ceases to be a member of the NASD. 6. ASSIGNABILITY This Contract is not assignable or transferable, except that we may assign or transfer this Contract to any successor which becomes general distributor of the Funds. 7. GOVERNING LAW This Contract and the rights and obligations of the parties hereunder shall be governed by and construed under the laws of The Commonwealth of Massachusetts. If the foregoing correctly sets forth our understanding, please indicate your acceptance thereof in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between us. Very truly yours, PUTNAM MUTUAL FUNDS CORP. By: ------------------------------ William N. Shiebler, President and Chief Executive Officer We accept and agree to the foregoing Contract as of the date set forth below. Please indicate which best Dealer:--------- - ---- describes your firm's entity: / / Partnership ---------------- - ---- / / Corporation By: ---------------- - ---- / / Other - please specify: Authorized Signature, Title --------------------- --------------------- - ---- Please provide your organization's Tax Identification Number on the --------------------- - ---- following line: Address - ---------------------------- Dated:--------------- - ---- Please return the signed Putnam copy to Putnam Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940-1203 Approval:----------------- - ---- Date required:------------ - ---- NF-22.94 EX-99.B6DISTRCONTR 6 FINANCIAL INSTITUTION SALES CONTRACT Between: and PUTNAM MUTUAL FUNDS CORP. General Distributor of The Putnam Family of Mutual Funds One Post Office Square Boston, MA 02109 As general distributor of The Putnam Family of Mutual Funds (the "Funds"), we agree that you will make available to your customers, under an agency relationship with your customers, shares of beneficial interest issued by the Funds (the "Shares"), subject to any limitations imposed by any of the Funds and to confirmation by us of each transaction. By your acceptance hereof, you agree to all of the following terms and conditions: 1. OFFERING PRICES AND FEES The public offering price at which you may make the Shares available to your customers is the net asset value thereof, as computed from time to time, plus any applicable sales charge described in the then-current Prospectus of the applicable Fund. In the case of purchases by you, as agent for your customers, of Shares sold with a sales charge, you shall receive an agency commission consisting of a portion of the public offering price, determined on the same basis as the "dealer discount" described in the then-current Prospectus of the Fund, and such other compensation to dealers as may be described therein, which shall be payable to you at the same time and on the same basis as the same is paid to such dealers, consistent with applicable law, rules and regulations. In determining the amount of any agency commission payable to you hereunder, we reserve the right to exclude any purchases for any accounts which we reasonably determine are not made in accordance with the terms of the applicable Fund Prospectus and the provisions of this Contract. We reserve the right to revise the agency commission referred to herein upon ten days' written notice to you. We will furnish you upon request with the public offering prices for the Shares, and you agree to quote such prices in connection with any Shares made available by you as agent for your customers. Your attention is specifically called to the fact that each purchase of Shares by your customers is always made subject to confirmation by us at the public offering price next computed after receipt of the order. There is no sales charge or agency commission to you on the reinvestment of dividends and distributions. 2. MANNER OF MAKING SHARES AVAILABLE FOR PURCHASE We will, upon request, deliver to you a copy of each Fund's then- current Prospectus and will provide you with such number of copies of each Fund's then-current Prospectus, Statement of Additional Information and shareholder reports and of supplementary sales materials prepared by us, as you may reasonably request. It shall be your obligation to ensure that all such information and materials are distributed to your customers who own Shares, in accordance with securities and/or banking law and regulations and any other applicable regulations. Neither you nor any other person is authorized to give any information or to make any representations other than those contained in such Prospectuses, Statements of Additional Information and shareholder reports or in such supplementary sales materials. You shall not furnish or cause to be furnished to any person, display or publish any information or materials relating to any Fund (including, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar material), except such information and materials as may be furnished to you by us or the Fund, and such other information and materials as may be approved in writing by us. You hereby agree: (i) to not purchase any Shares as agent for any customer, unless you deliver or cause to be delivered to such customer, at or prior to the time of such purchase, a copy of the then-current Prospectus of the applicable Fund unless such customer has acknowledged receipt of the Prospectus of such Fund. You hereby represent that you understand your obligation to deliver a prospectus to customers who purchase Shares pursuant to federal securities laws and you have taken all necessary steps to comply with such prospectus delivery requirements; (ii) to transmit to us promptly upon receipt any and all orders received by you, it being understood that no conditional orders will be accepted; (iii) to obtain from each customer for whom you act as agent for the purchase of Shares any taxpayer identification number certification and backup withholding information required under the Internal Revenue Code of 1986, as amended from time to time (the "Code"), and the regulations promulgated thereunder, or other sections of the Code which may become applicable, and to provide us or our designee with timely written notice of any failure to obtain such taxpayer identification number certification or information in order to enable the implementation of any required backup withholding in accordance with the Code and the regulations thereunder; and (iv) to pay to us the offering price, less any agency commission to which you are entitled, within three (3) business days of our confirmation of your customer's order, or such shorter time as may be required by law. You may, subject to our approval, remit the total public offering price to us, and we will return to you your agency commission. If such payment is not received within said time period, we reserve the right, without prior notice, to cancel the sale, or at our option to return the Shares to the issuer for redemption or repurchase. In the latter case, we shall have the right to hold you responsible for any loss resulting to us. Should payment be made by local bank check, liquidation of Shares may be delayed pending clearance of your check. Unless otherwise mutually agreed in writing or except as provided below, each transaction placed by you shall be promptly confirmed by us in writing to you, and shall be confirmed to the customer promptly upon receipt by us of instructions from you as to such customer. In the case of a purchase order by customer's application, each transaction shall be promptly confirmed in writing directly to the customer and a copy of each confirmation shall be sent simultaneously to you. We reserve the right, at our discretion and without notice, to suspend the sale of Shares or withdraw entirely the sale of Shares of any or all of the Funds. All orders are subject to acceptance or rejection by us in our sole discretion, and by the Funds in their sole discretion. The procedure stated herein relating to the pricing and handling of orders shall be subject to instructions which we may forward to you from time to time. 3. COMPLIANCE WITH LAW You hereby represent that you are either (1) a "bank" as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and at the time of each transaction in shares of the Funds, are not required to register as a broker- dealer under the Exchange Act or regulations thereunder; or (2) registered as a broker-dealer under the Exchange Act, a member in good standing of the National Association of Securities Dealers, Inc. ("NASD") and affiliated with a bank. (a) If you are a bank, not required to register as a broker- dealer under the Exchange Act: You further represent and warrant to us that with respect to any sales in the United States, you will use your best efforts to ensure that any purchase of Shares by your customers constitutes a suitable investment for such customers. You shall not effect any transaction in, or induce any purchase or sale of, any Shares by means of any manipulative, deceptive or other fraudulent device or contrivance, and shall otherwise deal equitably and fairly with your customers with respect to transactions in Shares of a Fund. (b) If you are a NASD member broker-dealer affiliated with a bank and registered under the Exchange Act: You further represent and warrant to us that with respect to any sales in the United States, you agree to abide by all of the applicable laws, rules and regulations including applicable provisions of the Securities Act of 1933, as amended, and the applicable rules and regulations of the NASD, including, without limitation, its Rules of Fair Practice, and the applicable rules and regulations of any jurisdiction in which you make Shares available for sale to your customers. You agree not to make available for sale to your customers the Shares in any jurisdiction in which the Shares are not qualified for sale or in which you are not qualified as a broker-dealer. We shall have no obligation or responsibility as to your right to make Shares of any Funds available to your customers in any jurisdiction. You agree to notify us immediately in the event of (i) your expulsion or suspension from the NASD or your becoming subject to any enforcement action by the Securities and Exchange Commission, NASD, or any other self- regulatory organization, or (ii) your violation of any applicable federal or state law, rule or regulation including, but not limited to, those of the SEC, NASD or other self-regulatory organization, arising out of or in connection with this Agreement, or which may otherwise affect in any material way your ability to act in accordance with the terms of this Contract. You shall not make Shares of any Fund available to your customers, including your fiduciary customers, except in compliance with all federal and state laws and rules and regulations of regulatory agencies or authorities applicable to you, or any of your affiliates engaging in such activity, which may affect your business practices. You confirm that you are not in violation of any banking law or regulations as to which you are subject. 4. RELATIONSHIP WITH CUSTOMER With respect to any and all transactions in the Shares of any Fund pursuant to this Contract, it is understood and agreed in each case that: (a) you shall be acting solely as agent for the account of your customer; (b) each transaction shall be initiated solely upon the order of your customer; (c) we shall execute transactions only upon receiving instructions from you acting as agent for your customer or upon receiving instructions directly from your customer; (d) as between you and your customer, your customer will have full beneficial ownership of all Shares; (e) each transaction shall be for the account of your customer and not for your account; and (f) unless otherwise agreed in writing we will serve as a clearing broker for you on a fully disclosed basis, and you shall serve as the introducing agent for your customers' accounts. Subject to the foregoing, however, and except for Shares sold subject to a contingent deferred sales charge, you may maintain record ownership of such customers' Shares in an account registered in your name or the name of your nominee, for the benefit of such customers. With respect to Shares sold subject to a contingent deferred sales charge, you agree not to hold shares of such Funds in an account registered in your name or in the name of your nominee for the benefit of certain of your customers. You understand that such Shares must be held in a separate account for each shareholder of such Funds. Each transaction shall be without recourse to you provided that you act in accordance with the terms of this Agreement. You represent and warrant to us that you will have full right, power and authority to effect transactions (including, without limitation, any purchases and redemptions) in Shares on behalf of all customer accounts provided by you. 5. RELATIONSHIP WITH FINANCIAL INSTITUTION Neither this Contract nor the performance of the services of the respective parties hereunder shall be considered to constitute an exclusive arrangement, or to create a partnership, association or joint venture between you and us. In making available Shares of the Funds under this Contract, nothing herein shall be construed to constitute you or any of your agents, employees or representatives as our agent or employee, or as an agent or employee of the Funds, and you shall not make any representations to the contrary. As general distributor of the Funds, we shall have full authority to take such action as we may deem advisable in respect of all matters pertaining to the distribution of the Shares. We shall not be under any obligation to you, except for obligations expressly assumed by us in this Contract. 6. TERMINATION Either party hereto may terminate this Contract, without cause, upon ten days' written notice to the other party. We may terminate this Contract for cause upon the violation by you of any of the provisions hereof, such termination to become effective on the date such notice of termination is mailed to you. If you are registered as a broker-dealer and affiliated with a bank, this Contract shall terminate automatically if either Party ceases to be a member of the NASD. 7. ASSIGNABILITY This Contract is not assignable or transferable, except that we may assign or transfer this Contract to any successor which becomes general distributor of the Funds. 8. MISCELLANEOUS (a)All communications mailed to us should be sent to the above address. Any notice to you shall be duly given if mailed or delivered to you at the address specified by you below. (b) This Contract constitutes the entire agreement and understanding between the parties and supercedes any and all prior agreements between the parties. (c) This Contract and the rights and obligations of the parties hereunder shall be governed by and construed under the laws of The Commonwealth of Massachusetts. Very truly yours, PUTNAM MUTUAL FUNDS CORP. By: ------------ - ------------------ William N. Shiebler, President and Chief Executive Officer We accept and agree to the foregoing Contract as of the date set forth below. Financial Institution: --------------------------- By: -------- - -------------------- Authorized Signature, Title -------- - -------------------- -------- - -------------------- Address Dated: ---------------------------- Please return the signed Putnam copy of this sales Contract to Putnam Mutual Funds Corp., P. O. Box 41203, Providence, RI 02940-1203 NF-59.94 EX-99.B8CUSTCONTR 7 CUSTODIAN AGREEMENT AGREEMENT made as of the 3rd day of May, 1991, as amended July 13, 1992, between each of the Putnam Funds listed in Schedule A, each of such Funds acting on its own behalf separately from all the other Funds and not jointly or jointly and severally with any of the other Funds (each of the Funds being hereinafter referred to as the "Fund"), and Putnam Fiduciary Trust Company (the "Custodian"). WHEREAS, the Custodian represents to the Fund that it is eligible to serve as a custodian for a management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and WHEREAS, the Fund wishes to appoint the Custodian as the Fund's custodian. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows: 1. APPOINTMENT OF CUSTODIAN. The Fund hereby employs and appoints the Custodian as custodian of its assets for the term and subject to the provisions of this Agreement. At the direction of the Custodian, the Fund agrees to deliver to the Sub-Custodians appointed pursuant to Section 2 below (the "Sub- Custodians") securities, funds and other property owned by it. The Custodian shall have no responsibility or liability for or on account of securities, funds or other property not so delivered to the Sub-Custodians. Upon request, the Fund shall deliver to the Custodian or to such Sub-Custodians as the Custodian may direct such proxies, powers of attorney or other instruments as may be reasonably necessary or desirable in connection with the performance by the Custodian or any Sub-Custodian of their respective obligations under this Agreement or any applicable Sub-Custodian Agreement. 2. APPOINTMENT OF SUB-CUSTODIANS. The Custodian may at any time and from time to time appoint, at its own cost and expense, as a Sub-Custodian for the Fund any bank or trust company which meets the requirements of the 1940 Act and the rules and regulations thereunder to act as a custodian, provided that the Fund shall have approved in writing any such bank or trust company and the Custodian gives prompt written notice to the Fund of any such appointment. The agreement between the Custodian and any Sub-Custodian shall be substantially in the form of the Sub- Custodian agreement attached hereto as Exhibit 1 (the "Sub- Custodian Agreement") unless otherwise approved by the Fund, provided, however, that the agreement between the Custodian and any Sub-Custodian appointed primarily for the purpose of holding foreign securities of the Fund shall be substantially in the form of the Sub-Custodian Agreement attached hereto as Exhibit 1(A) (the "Foreign Sub-Custodian Agreement"; the "Sub-Custodian Agreement" and the "Foreign Sub-Custodian Agreement" are herein referred to collectively and each individually as the "Sub- Custodian Agreement"). All Sub-Custodians shall be subject to the instructions of the Custodian and not the Fund. The Custodian may, at any time in its discretion, remove any bank or trust company which has been appointed as a Sub-Custodian but shall in such case promptly notify the Fund in writing of any such action. Securities, funds and other property of the Fund delivered pursuant to this Agreement shall be held exclusively by Sub-Custodians appointed pursuant to the provisions of this Section 2. The Sub-Custodians which the Fund has approved to date are set forth in Schedule B hereto. Schedule B shall be amended from time to time as Sub-Custodians are changed, added or deleted. The Fund shall be responsible for informing the Custodian sufficiently in advance of a proposed investment which is to be held at a location not listed on Schedule B, in order that there shall be sufficient time for the Custodian to put the appropriate arrangements in place with such Sub-Custodian pursuant to such Sub-Custodian Agreement. With respect to the securities, funds or other property held by a Sub-Custodian, the Custodian shall be liable to the Fund if and only to the extent that such Sub-Custodian is liable to the Custodian. The Custodian shall nevertheless be liable to the Fund for its own negligence in transmitting any instructions received by it from the Fund and for its own negligence in connection with the delivery of any securities, funds or other property of the Fund to any such Sub-Custodian. In the event that any Sub-Custodian appointed pursuant to the provisions of this Section 2 fails to perform any of its obligations under the terms and conditions of the applicable Sub- Custodian Agreement, the Custodian shall use its best efforts to cause such Sub-Custodian to perform such obligations. In the event that the Custodian is unable to cause such Sub-Custodian to perform fully its obligations thereunder, the Custodian shall forthwith terminate such Sub-Custodian and, if necessary or desirable, appoint another Sub-Custodian in accordance with the provisions of this Section 2. The Custodian may with the approval of the Fund commence any legal or equitable action which it believes is necessary or appropriate in connection with the failure by a Sub-Custodian to perform its obligations under the applicable Sub-Custodian Agreement. Provided the Custodian shall not have been negligent with respect to any such matter, such action shall be at the expense of the Fund. The Custodian shall keep the Fund fully informed regarding such action and the Fund may at any time upon notice to the Custodian elect to take responsibility for prosecuting such action. In such event the Fund shall have the right to enforce and shall be subrogated to the Custodian's rights against any such Sub-Custodian for loss or damage caused the Fund by such Sub-Custodian. At the written request of the Fund, the Custodian will terminate any Sub-Custodian appointed pursuant to the provisions of this Section 2 in accordance with the termination provisions of the applicable Sub-Custodian Agreement. The Custodian will not amend any Sub-Custodian Agreement in any material manner except upon the prior written approval of the Fund and shall in any case give prompt written notice to the Fund of any amendment to the Sub-Custodian Agreement. 3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY SUB-CUSTODIANS. 3.1 HOLDING SECURITIES - The Custodian shall cause one or more Sub-Custodians to hold and, by book-entry or otherwise, identify as belonging to the Fund all non-cash property delivered to such Sub-Custodian. 3.2 DELIVERY OF SECURITIES - The Custodian shall cause Sub- Custodians holding securities of the Fund to release and deliver securities owned by the Fund held by the Sub-Custodian or in a Securities System account of the Sub-Custodian only upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: 3.2.1 Upon sale of such securities for the account of the Fund and receipt of payment therefor; PROVIDED, HOWEVER, that a Sub-Custodian may release and deliver securities prior to the receipt of payment therefor if (i) in the Sub-Custodian's judgment, (A) release and delivery prior to payment is required by the terms of the instrument evidencing the security or (B) release and delivery prior to payment is the prevailing method of settling securities transactions between institutional investors in the applicable market and (ii) release and delivery prior to payment is in accordance with generally accepted trade practice and with any applicable governmental regulations and the rules of Securities Systems or other securities depositories and clearing agencies in the applicable market. The Custodian agrees, upon request, to advise the Fund of all pending transactions in which release and delivery will be made prior to the receipt of payment therefor; 3.2.2 Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Fund; 3.2.3 In the case of a sale effected through a Securities System, in accordance with the provisions of Section 3.12 hereof; 3.2.4 To the depository agent in connection with tender or other similar offers for portfolio securities of the Fund; provided that, in any such case, the cash or other consideration is thereafter to be delivered to the Sub-Custodian; 3.2.5 To the issuer thereof or its agent, when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Sub-Custodian; 3.2.6 To the issuer thereof, or its agent for transfer into the name of the Fund or into the name of any nominee or nominees of the Sub-Custodian or into the name or nominee name of any agent appointed pursuant to Section 3.11 or any other name permitted pursuant to Section 3.3; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Sub- Custodian; 3.2.7 Upon the sale of such securities for the account of the Fund, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Sub- Custodian's own negligence or willful misconduct; 3.2.8 For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Sub-Custodian; 3.2.9 In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Sub- Custodian; 3.2.10 For delivery in connection with any loans of securities made by the Fund, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the Fund, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities; except that in connection with any loan of securities held in a Securities System for which collateral is to credited to the Sub-Custodian's account in another Securities System, the Sub-Custodian will not be held liable or responsible for delivery of the securities prior to the receipt of such collateral. 3.2.11 For delivery as security in connection with any borrowings by the Fund requiring a pledge of assets by the Fund, but only against receipt of amounts borrowed; 3.2.12 Upon receipt of instructions from the transfer agent ("Transfer Agent") for the Fund, for delivery to such Transfer Agent or to the shareholders of the Fund in connection with distributions in kind, as may be described from time to time in the Fund's Declaration of Trust and currently effective registration statement, if any, in satisfaction of requests by Fund shareholders for repurchase or redemption; 3.2.13 For delivery to another Sub-Custodian of the Fund; and 3.2.14 For any other proper corporate purpose, but only upon receipt of, in addition to Proper Instructions, a certified copy of a resolution of the Trustees or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Clerk or an Assistant Clerk, specifying the securities to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purposes to be proper corporate purposes, and naming the person or persons to whom delivery of such securities shall be made. 3.3 REGISTRATION OF SECURITIES. Securities of the Fund held by the Sub-Custodians hereunder (other than bearer securities) shall be registered in the name of the Fund or in the name of any nominee of the Fund or of any nominee of the Sub-Custodians or any 17f-5 Sub-Custodian or Foreign Depository (as each of those terms is defined in the Foreign Sub-Custodian Agreement, which nominee shall be assigned exclusively to the Fund, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Fund, or in the name or nominee name of any agent appointed pursuant to Section 3.12. Notwithstanding the foregoing, a Sub-Custodian, agent, 17f-5 Sub-Custodian or Foreign Depository may hold securities of the Fund in a nominee name which is used for its other clients provided that such name is not used by the Sub- Custodian, agent, 17f-5 Sub-Custodian or Foreign Depository for its own securities and that securities of the Fund are, by book-entry or otherwise, at all times identified as belonging to the Fund and distinguished from other securities held for other clients using the same nominee name. In addition, and notwithstanding the foregoing, a Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or Foreign Depository may hold securities of the Fund in its own name if such registration is the prevailing method in the applicable market by which custodians register securities of institutional clients and provided that securities of the Fund are, by book-entry or otherwise, at all times identified as belonging to the Fund and distinguished from other securities held for other clients or for the Sub-Custodian or agent thereof or 17f-5 Sub- Custodian or Foreign Depository. All securities accepted by a Sub-Custodian under the terms of a Sub-Custodian Agreement shall be in good delivery form. 3.4 BANK ACCOUNTS. The Custodian shall cause one or more Sub-Custodians to open and maintain a separate bank account or accounts in the name of the Fund or the Custodian, subject only to draft or order by the Sub-Custodian acting pursuant to the terms of a Sub-Custodian Contract or by the Custodian acting pursuant to this Agreement, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Fund, other than cash maintained by the Fund in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds held by the Sub-Custodian for the Fund may be deposited by it to its credit as sub-custodian or to the Custodian's credit as custodian in the Banking Department of the Sub-Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the Investment Company Act of 1940 and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall be approved by vote of a majority of the Trustees of the Fund. Such funds shall be deposited by the Sub-Custodian or the Custodian in its capacity as sub-custodian or custodian, respectively, and shall be withdrawable by the Sub-Custodian or the Custodian only in that capacity. The Sub-Custodian shall be liable for actual losses incurred by the Fund attributable to any failure on the part of the Sub-Custodian to report accurate cash availability information with respect to the Fund's or the Custodian's bank accounts maintained by the Sub-Custodian or any of its agents. 3.5 PAYMENTS FOR SHARES. The Custodian shall cause one or more Sub-Custodians to deposit into the Fund's account amounts received from the Transfer Agent of the Fund for shares of the Fund issued by the Fund and sold by its distributor. The Custodian will provide timely notification to the Fund of any receipt by the Sub-Custodian from the Transfer Agent of payments for shares of the Fund. 3.6 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund and the Custodian, the Custodian shall cause one or more Sub-Custodians, upon the receipt of Proper Instructions, to make federal funds available to the Fund as of specified times agreed upon from time to time by the Fund and the Custodian with respect to amounts received by the Sub-Custodians for the purchase of shares of the Fund. 3.7 COLLECTION OF INCOME. The Custodian shall cause one or more Sub-Custodians to collect on a timely basis all income and other payments with respect to registered securities held hereunder, including securities held in a Securities System, to which the Fund shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer securities if, on the date of payment by the issuer, such securities are held by the Sub-Custodian or agent thereof and shall credit such income, as collected, to the Fund's account. Without limiting the generality of the foregoing, the Custodian shall cause the Sub-Custodian to detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held under the applicable Sub-Custodian Agreement. Arranging for the collection of income due the Fund on securities loaned pursuant to the provisions of Section 3.2.10 shall be the responsibility of the Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Sub- Custodian of the income to which the Fund is properly entitled. 3.8 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall cause one or more Sub-Custodians to pay out monies of the Fund in the following cases only: 3.8.1 Upon the purchase of securities for the account of the Fund but only (a) against the delivery of such securities to the Sub- Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the Investment Company Act of 1940, as amended, to act as a custodian and has been designated by the Sub-Custodian as its agent for this purpose) or any 17f-5 Sub-Custodian or any Foreign Depository registered in the name of the Fund or in the name of a nominee of the Sub-Custodian referred to in Section 3.3 hereof or in proper form for transfer; PROVIDED, HOWEVER, that the Sub-Custodian may cause monies of the Fund to be paid out prior to delivery of such securities if (i) in the Sub-Custodian's judgment, (A) payment prior to delivery is required by the terms of the instrument evidencing the security or (B) payment prior to delivery is the prevailing method of settling securities transactions between institutional investors in the applicable market and (ii) payment prior to delivery is in accordance with generally accepted trade practice and with any applicable governmental regulations and the rules of Securities Systems or other securities depositories and clearing agencies in the applicable market; the Custodian agrees, upon request, to advise the Fund of all pending transactions in which payment will be made prior to the receipt of securities in accordance with the provision to the foregoing sentence; (b) in the case of a purchase effected through a Securities System, in accordance with the conditions set forth in Section 3.13 hereof; or (c)(i) in the case of a repurchase agreement entered into between the Fund and the Sub-Custodian, another bank, or a broker-dealer against delivery of the securities either in certificate form or through an entry crediting the Sub- Custodian's account at the Federal Reserve Bank with such securities or (ii) in the case of a repurchase agreement entered into between the Fund and the Sub-Custodian, against delivery of a receipt evidencing purchase by the Fund of Securities owned by the Sub-Custodian along with written evidence of the agreement by the Sub- Custodian to repurchase such securities from the Fund; or (d) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign, which transfer may be effected prior to receipt of a confirmation of the deposit from the applicable bank or a financial intermediary; 3.8.2 In connection with conversion, exchange or surrender of securities owned by the Fund as set forth in Section 3.2 hereof; 3.8.3 For the redemption or repurchase of Shares issued by the Fund as set forth in Section 3.10 hereof; 3.8.4 For the payment of any expense or liability incurred by the Fund, including but not limited to the following payments for the account of the Fund: interest, taxes, management, accounting, transfer agent and legal fees, including the Custodian's fee; and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; 3.8.5 For the payment of any dividends or other distributions declared to shareholders of the Fund; 3.8.6 For transfer to another Sub-Custodian of the Fund; 3.8.7 For any other proper purpose, but only upon receipt of, in addition to Proper Instructions, a certified copy of a resolution of the Trustees or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Clerk or an Assistant Clerk, specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom such payments is to be made. 3.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. Except as otherwise provided in this Agreement, in any and every case where payment for purchase of securities for the account of the Fund is made by a Sub-Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from the Fund to so pay in advance, the Custodian shall cause the Sub-Custodian to be absolutely liable to the Fund in the event any loss results to the Fund from the payment by the Sub-Custodian in advance of delivery of such securities. 3.10 PAYMENTS FOR REPURCHASE OR REDEMPTIONS OF SHARES OF THE FUND. From such funds as may be available, the Custodian shall, upon receipt Proper Instructions, cause one or more Sub- Custodians to make funds available for payment to a shareholder who has delivered to the Transfer Agent a request for redemption or repurchase of shares of the Fund. In connection with the redemption or repurchase of shares of the Fund, the Custodian is authorized, upon receipt of Proper Instructions, to cause one or more Sub-Custodian, to wire funds to or through a commercial bank designated by the redeeming shareholder. In connection with the redemption or repurchase of Shares of the Fund, the Custodian, upon receipt of Proper Instructions, shall cause one or more Sub- Custodians to honor checks drawn on the Sub-Custodian by a shareholder when presented to the Sub-Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time among the Fund, the Custodian and the Sub- Custodian. 3.11 APPOINTMENT OF AGENTS. The Custodian may permit any Sub-Custodian at any time or times in its discretion to appoint (and may at any time remove) any other bank or trust company which is itself qualified under the Investment Company Act of 1940, as amended, to act as a custodian, as its agent to carry out such of the provisions of this Section 3 as the Sub- Custodian may from time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian or any Sub-Custodian of its responsibilities or liabilities hereunder and provided that any such agent shall have been approved by vote of the Trustees of the Fund. The Custodian may also permit any Sub-Custodian to which foreign securities of the Fund have been delivered to direct such securities to be held by 17f-5 Sub-Custodians and to use the facilities of Foreign Depositories, as those terms are defined in the Foreign Sub- Custodian Agreement, in accordance with the terms of the Foreign Sub-Custodian Agreement. The agents which the Fund and the Custodian have approved to date are set forth in Schedule B hereto. Schedule B shall be amended from time to time as agents are changed, added or deleted. The Fund shall be responsible for informing the Custodian, and the Custodian shall be responsible for informing the appropriate Sub-Custodian, sufficiently in advance of a proposed investment which is to be held at a location not listed on Schedule B, in order that there shall be sufficient time for the Sub-Custodian to complete the appropriate contractual and technical arrangements with such agent. Any Sub-Custodian Agreement shall provide that the engagement by the Sub-Custodian of one or more agents shall not relieve the Sub-Custodian of its responsibilities or liabilities thereunder. 3.12 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may permit any Sub-Custodian to deposit and/or maintain securities owned by the Fund in a clearing agency registered with the Securities and Exchange Commission under Section 17A of the Securities Exchange Act of 1934, which acts as a securities depository, or in the book-entry system authorized by the U.S. Department of the Treasury and certain federal agencies, collectively referred to herein as "Securities System" in accordance with applicable rules and regulations (including Rule 17f-4 of the 1940 Act) and subject to the following provisions: 3.12.1 The Sub-Custodian may, either directly or through one or more agents, keep securities of the Fund in a Securities System provided that such securities are represented in an account ("Account") of the Sub-Custodian in the Securities System which shall not include any assets of the Sub-Custodian other than assets held as a fiduciary, custodian or otherwise for customers; 3.12.2 The records of the Sub-Custodian with respect to securities of the Fund which are maintained in a Securities System shall identify by book-entry those securities belonging to the Fund; 3.12.3 The Sub-Custodian shall pay for securities purchased for the account of the Fund upon (i) receipt of advice from the Securities System that such securities have been transferred to the Account, and (ii) the making of an entry on the records of the Sub-Custodian to reflect such payment and transfer for the account of the Fund. The Sub-Custodian shall transfer securities sold for the account of the Fund upon (i) receipt of advice from the Securities System that payment for such securities has been transferred to the Account, and (ii) the making of an entry on the records of the Sub-Custodian to reflect such transfer and payment for the account of the Fund. Copies of all advices from the Securities System of transfers of securities for the account of the Fund shall identify the Fund, be maintained for the Fund by the Sub-Custodian or such an agent and be provided to the Fund at its request. The Sub-Custodian shall furnish the Fund confirmation of each transfer to or from the account of the Fund in the form of a written advice or notice and shall furnish to the Fund copies of daily transaction sheets reflecting each day's transactions in the Securities System for the account of the Fund on the next business day; 3.12.4 The Sub-Custodian shall provide the Fund with any report obtained by the Sub- Custodian on the Securities System's accounting system, internal accounting controls and procedures for safeguarding securities deposited in the Securities System; 3.12.5 The Sub-Custodian shall utilize only such Securities Systems as are approved by the Board of Trustees of the Fund, and included on a list maintained by the Custodian; 3.12.6 Anything to the contrary in this Agreement notwithstanding, the Sub-Custodian shall be liable to the Fund for any loss or damage to the Fund resulting from use of the Securities System by reason of any negligence, misfeasance or misconduct of the Sub-Custodian or any of its agents or of any of its or their employees or from failure of the Sub-Custodian or any such agent to enforce effectively such rights as it may have against the Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of the Sub- Custodian with respect to any claim against the Securities System or any other person which the Sub-Custodian may have as a consequence of any such loss or damage if and to the extent that the Fund has not been made whole for any such loss or damage. 3.12A DEPOSITARY RECEIPTS. Only upon receipt of Proper Instructions, the Sub-Custodian shall instruct a 17f-5 Sub- Custodian or an agent of the Sub-Custodian appointed pursuant to the applicable Foreign Sub-Custodian Agreement (an "Agent") to surrender securities to the depositary used by an issuer of American Depositary Receipts or International Depositary Receipts (hereinafter collectively referred to as "ADRs") for such securities against a written receipt therefor adequately describing such securities and written evidence satisfactory to the 17f-5 Sub-Custodian or Agent that the depositary has acknowledged receipt of instructions to issue with respect to such securities ADRs in the name of the Sub-Custodian, or a nominee of the Sub-Custodian, for delivery to the Sub-Custodian. Only upon receipt of Proper Instructions, the Sub-Custodian shall surrender ADRs to the issuer thereof against a written receipt therefor adequately describing the ADRs surrendered and written evidence satisfactory to the Sub-Custodian that the issuer of the ADRs has acknowledged receipt of instructions to cause its depository to deliver the securities underlying such ADRs to a 17f-5 Sub-Custodian or an Agent. 3.12BFOREIGN EXCHANGE TRANSACTIONS AND FUTURES CONTRACTS. Only upon receipt of Proper Instructions, the Sub- Custodian shall enter into foreign exchange contracts or options to purchase and sell foreign currencies for spot and future delivery on behalf and for the account of the Fund or shall enter into futures contracts or options on futures contracts. Such transactions may be undertaken by the Sub-Custodian with such banking institutions, including the Sub-Custodian and 17f-5 Sub- Custodian(s) appointed pursuant to the applicable Foreign Sub- Custodian Agreement, as principals, as approved and authorized by the Fund. Foreign exchange contracts, futures contracts and options, other than those executed with the Sub-Custodian, shall for all purposes of this Agreement be deemed to be portfolio securities of the Fund. 3.12COPTION TRANSACTIONS. Only upon receipt of Proper Instructions, the Sub-Custodian shall enter into option transactions in accordance with the provisions of any agreement among the Fund, the Custodian and/or the Sub-Custodian and a broker-dealer. 3.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall cause one or more Sub-Custodians as may be appropriate to execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to securities of the Fund held by the Sub-Custodian and in connection with transfers of securities. 3.14 PROXIES. The Custodian shall, with respect to the securities held by the Sub-Custodians, cause to be promptly executed by the registered holder of such securities, if the securities are registered other than in the name of the Fund or a nominee of the fund, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Fund such proxies, all proxy soliciting materials and all notices relating to such securities. 3.15 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The Custodian shall cause the Sub-Custodians to transmit promptly to the Custodian, and the Custodian shall transmit promptly to the Fund, all written information (including, without limitation, pendency of calls and maturities of securities and expirations of rights in connection therewith) received by the Sub-Custodian from issuers of the securities being held for the account of the Fund. With respect to tender or exchange offers, the Custodian shall cause the Sub-Custodian to transmit promptly to the Fund, all written information received by the Sub-Custodian from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Fund desires to take action with respect to any tender offer, exchange offer or any other similar transaction, the Fund shall notify the Custodian of the action the Fund desires such Sub-Custodian to take, provided, however, neither the Custodian nor the Sub- Custodian shall be liable to the Fund for the failure to take any such action unless such instructions are received by the Custodian at least four business days prior to the date on which the Sub-Custodian is to take such action or, in the case of foreign securities, such longer period as shall have been agreed upon in writing by the Custodian and the Sub-Custodian. 3.16 PROPER INSTRUCTIONS. Proper Instructions as used throughout this Agreement means a writing signed or initialed by one or more person or persons who are authorized by the Trustees of the Fund and the Custodian. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. Oral instructions will be considered Proper Instructions if the Custodian or Sub-Custodian, as the case may be, reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. All oral instructions shall be confirmed in writing. Proper Instructions also include communications effected directly between electro-mechanical or electronic devices provided that the Trustees have approved such procedures. Notwithstanding the foregoing, no Trustee, officer, employee or agent of the Fund shall be permitted access to any securities or similar investments of the Fund deposited with any Sub-Custodian or any agent of any Sub-Custodian for any reason except in accordance with the provisions of Rule 17f-2 under the 1940 Act. 3.17 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in its discretion, and may permit one or more Sub- Custodians in their discretion, without express authority from the Fund to: 3.17.1 make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Agreement, or in the case of a Sub- Custodian, under the applicable Sub- Custodian Agreement, provided that all such payments shall be accounted for to the Fund; 3.17.2 surrender securities in temporary form for securities in definitive form; 3.17.3 endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments; and 3.17.4 in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Fund except as otherwise directed by the Trustees of the Fund. 3.18 EVIDENCE OF AUTHORITY. The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed by or on behalf of the Fund. 3.19 INVESTMENT LIMITATIONS. In performing its duties generally, and more particularly in connection with the purchase, sale and exchange of securities made by or for the Fund, the Custodian may assume, unless and until notified in writing to the contrary, that Proper Instructions received by it are not in conflict with or in any way contrary to any provisions of the Fund's Declaration of Trust or By-Laws (or comparable documents) or votes or proceedings of the shareholders or Trustees of the Fund. The Custodian shall in no event be liable to the Fund and shall be indemnified by the Fund for any violation of any investment limitations to which the Fund is subject or other limitations with respect to the Fund's powers to expend funds, encumber securities, borrow or take similar actions affecting its portfolio. 4. PERFORMANCE STANDARDS. The Custodian shall use its best efforts to perform its duties hereunder in accordance with the standards set forth in Schedule C hereto. Schedule C may be amended from time to time as agreed to by the Custodian and the Trustees of the Fund. 5. RECORDS. The Custodian shall create and maintain all records relating to the Custodian's activities and obligations under this Agreement and cause all Sub-Custodians to create and maintain all records relating to the Sub-Custodian's activities and obligations under the appropriate Sub-Custodian Agreement in such manner as will meet the obligations of the Fund under the 1940 Act, with particular attention to Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1 and 31a-2 thereunder, applicable federal and state tax laws, and any other law or administrative rules or procedures which may be applicable to the Fund. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian or during the regular business hours of the Sub-Custodian, as the case may be, be open for inspection by duly authorized officers, employees or agents of the Custodian and Fund and employees and agents of the Securities and Exchange Commission. At the Fund's request, the Custodian shall supply the Fund and cause one or more Sub-Custodians to supply the Custodian with a tabulation of securities owned by the Fund and held under this Agreement. When requested to do so by the Fund and for such compensation as shall be agreed upon, the Custodian shall include and cause one or more Sub-Custodians to include certificate numbers in such tabulations. 6. OPINION AND REPORTS OF FUND'S INDEPENDENT ACCOUNTANTS. The Custodian shall take all reasonable actions, as the Fund may from time to time request, to furnish such information with respect to its activities hereunder as the Fund's independent public accountants may request in connection with the accountant's verification of the Fund's securities and similar investments as required by Rule 17f-2 under the 1940 Act, the preparation of the Fund's registration statement and amendments thereto, the Fund's reports to the Securities and Exchange Commission, and with respect to any other requirements of such Commission. The Custodian shall also direct any Sub-Custodian to take all reasonable actions, as the Fund may from time to time request, to furnish such information with respect to its activities under the applicable Sub-Custodian Agreement as the Fund's independent public accountant may request in connection with the accountant's verification of the Fund's securities and similar investments as required by Rule 17f-2 under the 1940 Act, the preparation of the Fund's registration statement and amendments thereto, the Fund's reports to the Securities and Exchange Commission, and with respect to any other requirements of such Commission. 7. REPORTS OF CUSTODIAN'S AND SUB-CUSTODIANS' INDEPENDENT ACCOUNTANTS. The Custodian shall provide the Fund, at such times as the Fund may reasonably require, with reports by its independent public accountant on its accounting system, internal accounting controls and procedures for safeguarding securities, including securities deposited and/or maintained in Securities Systems, relating to services provided by the Custodian under this Agreement. The Custodian shall also cause one or more of the Sub-Custodians to provide the Fund, at such time as the Fund may reasonably require, with reports by independent public accountants on their accounting systems, internal accounting controls and procedures for safeguarding securities, including securities deposited and/or maintained in Securities Systems, relating to services provided by those Sub-Custodians under their respective Sub-Custody Agreements. Such reports, which shall be of sufficient scope and in sufficient detail as may reasonably be required by the Fund, shall provide reasonable assurance that any material inadequacies would be disclosed by such examinations, and, if there is no such inadequacies, shall so state. 8. COMPENSATION. The Custodian shall be entitled to reasonable compensation for its services and expenses as custodian, as agreed upon from time to time between the Fund and the Custodian. Such expenses shall not include, however, the fees paid by the Custodian to any Sub-Custodian. 9. RESPONSIBILITY OF CUSTODIAN. The Custodian shall exercise reasonable care and diligence in carrying out the provisions of this Agreement and shall not be liable to the Fund for any action taken or omitted by it in good faith without negligence. So long as and to the extent that it is in the exercise of reasonable care, neither the Custodian nor any Sub-Custodian shall be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and, if in writing, reasonably believed by it to be signed by the proper party or parties. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. Notwithstanding the foregoing, the responsibility of the Custodian or a Sub-Custodian with respect to redemptions effected by check shall be in accordance with a separate Agreement entered into between the Custodian and the Fund. It is also understood that the Custodian shall not be liable for any loss resulting from a Sovereign Risk. A "Sovereign Risk" shall mean nationalization, expropriation, devaluation, revaluation, confiscation, seizure, cancellation, destruction or similar action by any governmental authority, de facto or de jure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, taxes, levies or other charges affecting the Fund's property; or acts of war, terrorism, insurrection or revolution; or any other similar act or event beyond the Custodian's control. If the Fund requires the Custodian which in turn may require a Sub-Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian or the Sub-Custodian result in the Custodian or its nominee or a Sub-Custodian or its nominee being liable for the payment of money or incurring liability of some other form, the Fund, as a prerequisite to requiring the Custodian or the Custodian requiring any Sub-Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it. The Fund agrees to indemnify and hold harmless the Custodian and its nominee from and against all taxes, charges, expenses, assessments, claims and liabilities (including counsel fees) incurred or assessed against it or its nominee or any Sub- Custodian or its nominee in connection with the performance of this Agreement, or any Sub-Custodian Agreement except, as to the Custodian, such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, and as to a Sub-Custodian, such as may arise from such Sub- Custodian's or its nominee's own negligent action, negligent failure to act or willful misconduct. The negligent action, negligent failure to act or willful misconduct of the Custodian shall not diminish the Fund's obligation to indemnify the Custodian in the amount, but only in the amount, of any indemnity required to be paid to a Sub-Custodian under its Sub-Custodian Agreement. The Custodian may assign this indemnity from the Fund directly to, and for the benefit of, any Sub-Custodian. The Custodian is authorized, and may authorize any Sub-Custodian, to charge any account of the Fund for such items and such fees. To secure any such authorized charges and any advances of cash or securities made by the Custodian or any Sub-Custodian to or for the benefit of the Fund for any purpose which results in the Fund incurring an overdraft at the end of any business day or for extraordinary or emergency purposes during any business day, the Fund (except a Fund specified in Schedule D to this Agreement) hereby grants to the Custodian a security interest in and pledges to the Custodian securities up to a maximum of 10% of the value of the Fund's net assets for the purpose of securing payment of any such advances and hereby authorizes the Custodian on behalf of the Fund to grant to any Sub-Custodian a security interest in and pledge of securities held for the Fund (including those which may be held in a Securities System) up to a maximum of 10% of the value of the net assets held by such Sub-Custodian. The specific securities subject to such security interest may be designated in writing from time to time by the Fund or its investment adviser. In the absence of any designation of securities subject to such security interest, the Custodian or the Sub-Custodian, as the case may be, may designate securities held by it. Should the Fund fail to repay promptly any authorized charges or advances of cash or securities, the Custodian or the Sub-Custodian shall be entitled to use such available cash and to dispose of pledged securities and property as is necessary to repay any such authorized charges or advances and to exercise its rights as a secured party under the U.C.C. The Fund agrees that a Sub- Custodian shall have the right to proceed directly against the Fund and not solely as subrogee to the Custodian with respect to any indemnity hereunder assigned to a Sub-Custodian, and in that regard, the Fund agrees that it shall not assert against any Sub- Custodian proceeding against it any defense or right of set-off the Fund may have against the Custodian arising out of the negligent action, negligent failure to act or willful misconduct of the Custodian, and hereby waives all rights it may have to object to the right of a Sub-Custodian to maintain an action against it. 10. SUCCESSOR CUSTODIAN. If a successor custodian shall be appointed by the Trustees of the Fund, the Custodian shall, upon termination, cause to be delivered to such successor custodian, duly endorsed and in the form for transfer, all securities, funds and other properties then held by the Sub-Custodians and all instruments held by the Sub-Custodians relative thereto and cause the transfer to an account of the successor custodian all of the Fund's securities held in any Securities System. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a certified copy of a vote of the Trustees of the Fund, cause to be delivered at the office of the Custodian and transfer such securities, funds and other properties in accordance with such vote. In the event that no written order designating a successor custodian or certified copy of a vote of the Trustees shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which meets the requirements of the 1940 Act and the rules and regulations thereunder, such securities, funds and other properties. Thereafter, such bank or trust company shall be the successor of the Custodian under this Agreement. In the event that such securities, funds and other properties remain in the possession of the Custodian or any Sub- Custodian after the date of termination hereof owing to failure of the Fund to procure the certified copy of the vote referred to or of the Trustees to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Sub-Custodians retain possession of such securities, funds and other properties and the provisions of this Agreement relating to the duties and obligations of the Custodian shall remain in full force and effect. 11. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, such termination to take effect not sooner than thirty (30) days after the date of such delivery or mailing; provided either party may at any time immediately terminate this Agreement in the event of the appointment of a conservator or receiver for the other party or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. No provision of this Agreement may be amended or terminated except by a statement in writing signed by the party against which enforcement of the amendment or termination is sought. Upon termination of the Agreement, the Fund shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian and through the Custodian any Sub-Custodian for its costs, expenses and disbursements. 12. INTERPRETATION. This Agreement constitutes the entire understanding and agreement of the parties hereto with respect to the subject matter hereof. In connection with the operation of this Agreement, the Custodian and the Fund may from time to time agree in writing on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement. 13. GOVERNING LAW. This instrument is executed and delivered in The Commonwealth of Massachusetts and shall be governed by and construed according to the internal laws of said Commonwealth, without regard to principles of conflicts of law. 14. NOTICES. Notices and other writings delivered or mailed postage prepaid to the Fund addressed to the Fund attention: John Hughes, or to such other person or address as the Fund may have designated to the Custodian in writing, or to the Custodian at One Post Office Square, Boston, Massachusetts 02109 attention: George Crane, or to such other address as the Custodian may have designated to the Fund in writing, shall be deemed to have been properly delivered or given hereunder to the respective addressee. 15. BINDING OBLIGATION. This Agreement shall be binding on and shall inure to the benefit of the Fund and the Custodian and their respective successors and assigns, provided that neither party hereto may assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other party. 16. DECLARATION OF TRUST. A copy of the Declaration of Trust of each of the Funds is on file with the Secretary of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of each of the Funds as Trustees and not individually and that the obligations of this instrument are not binding on any of the Trustees or officers or shareholders individually, but are binding only on the assets and property of each Fund with respect to its obligations hereunder. IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf as of the day and year first above written. THE PUTNAM FUNDS LISTED IN SCHEDULE A By ---------------------------- Vice President and Treasurer PUTNAM FIDUCIARY TRUST COMPANY By ---------------------------- President Putnam Investments, Inc. ("Putnam"), the sole owner of the Custodian, agrees that Putnam shall be the primary obligor with respect to compensation due the Sub-Custodians pursuant to the Sub-Custodian Agreements in connection with the Sub-Custodians' performance of their responsibilities thereunder and agrees to take all actions necessary and appropriate to assure that the Sub-Custodians shall be compensated in the amounts and on the schedules agreed to by the Custodian and the Sub-Custodians pursuant to those Agreements. PUTNAM INVESTMENTS, INC. By ------------------------------ EXHIBIT 1 MASTER SUB-CUSTODIAN AGREEMENT AGREEMENT made this day of , 199 , between Putnam Fiduciary Trust Company, a Massachusetts-chartered trust company (the "Custodian"), and , a (the "Sub-Custodian"). WHEREAS, the Sub-Custodian represents to the Custodian that it is eligible to serve as a custodian for a management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and WHEREAS, the Custodian has entered into a Custodian Agreement between it and each of the Putnam Funds listed in Schedule A, each of such Funds acting on its own behalf separately from all the other Funds and not jointly or jointly and severally with any of the other Funds (each of the Funds being hereinafter referred to as the "Fund"), and WHEREAS, the Custodian and the Fund desire to utilize sub- custodians for the purpose of holding cash and securities of the Fund, and WHEREAS, the Custodian wishes to appoint the Sub-Custodian as the Fund's Sub-Custodian, NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows: 1. APPOINTMENT OF CUSTODIAN. The Custodian hereby employs and appoints the Sub-Custodian as a Sub-Custodian for the Fund for the term and subject to the provisions of this Agreement. Upon request, the Custodian shall deliver to the Sub-Custodian such proxies, powers of attorney or other instruments as may be reasonably necessary or desirable in connection with the performance by the Sub-Custodian of its obligations under this Agreement on behalf of the Fund. 2. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY IT. The Custodian may from time to time deposit securities or cash owned by the Fund with the Sub-Custodian. The Sub-Custodian shall have no responsibility or liability for or on account of securities, funds or other property of the Fund not so delivered to it. The Sub-Custodian shall hold and dispose of the securities hereafter held by or deposited with the Sub-Custodian as follows: 2.1 HOLDING SECURITIES. The Sub-Custodian shall hold and physically segregate for the account of the Fund all non-cash property, including all securities owned by the Funds, other than securities which are maintained pursuant to Section 2.13 in a Securities System. All such securities are to be held or disposed of for, and subject at all times to the instructions of, the Custodian pursuant to the terms of this Agreement. The Sub- Custodian shall maintain adequate records identifying the securities as being held by it as Sub-Custodian of the Fund. 2.2 DELIVERY OF SECURITIES. The Sub-Custodian shall release and deliver securities of the Fund held by it hereunder (or in a Securities System account of the Sub-Custodian) only upon receipt of Proper Instructions (as defined in Section 2.17), which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: 1) Upon sale of such securities for the account of the Fund and receipt of payment therefor; 2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Fund; 3) In the case of a sale effected through a Securities System, in accordance with the provisions of Section 2.13 hereof; 4) To the depository agent in connection with tender or other similar offers for portfolio securities of the Fund; 5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Sub-Custodian; 6) To the issuer thereof, or its agent, for transfer into the name of the Fund or into the name of any nominee or nominees of the Sub-Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.12; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Sub-Custodian; 7) Upon the sale of such securities for the account of the Fund, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that, in any such case, the Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Sub-Custodian's own negligence or willful misconduct; 8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Sub-Custodian; 9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Sub-Custodian; 10) For delivery in connection with any loans of securities made by the Fund, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the Sub-Custodian, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities; 11) For delivery as security in connection with any borrowings by the Fund requiring a pledge of assets by the Fund, but only against receipt of amounts borrowed; 12) Upon receipt of instructions from the transfer agent for the Fund (the "Transfer Agent"), for delivery to such Transfer Agent or to the shareholders of the Fund in connection with distributions in kind, as may be described from time to time in the Fund's Declaration of Trust and currently effective registration statement, if any, in satisfaction of requests by shareholders for repurchase or redemption; 13) For delivery to another Sub-Custodian of the Fund; and 14) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions, a certified copy of a resolution of the Trustees or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Clerk or an Assistant Clerk, specifying the securities to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purposes to be proper corporate purposes, and naming the person or persons to whom delivery of such securities is to be made. 2.3 REGISTRATION OF SECURITIES. Securities of the Fund held by the Sub-Custodian hereunder (other than bearer securities) shall be registered in the name of the Fund or in the name of any nominee of the Fund or of any nominee of the Sub- Custodian, which nominee shall be assigned exclusively to the Fund, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Fund, or in the name or nominee name of any agent appointed pursuant to Section 2.12. Notwithstanding the foregoing, a Sub- Custodian or agent thereof may hold securities of the Fund in a nominee name which is used for its other clients provided such name is not used by the Sub-Custodian or agent for its own securities and that securities of the Fund are physically segregated at all times from other securities held for other clients using the same nominee name. All securities accepted by the Sub-Custodian under the terms of this Agreement shall be in "street name" or other good delivery form. 2.4 BANK ACCOUNTS. The Sub-Custodian shall open and maintain a separate bank account or accounts in the name of the Fund, subject only to draft or order by the Sub-Custodian acting pursuant to the terms of this Agreement, and shall hold in such account or accounts, subject to the provisions hereof, all cash received for the account of the Funds, other than cash maintained by the Fund in a bank account established and used in accordance with Rule 17f-3 under the 1940 Act. Funds held by the Sub- Custodian for the Fund shall be deposited by it to its credit as Sub-Custodian of the Fund in the Banking Department of the Sub- Custodian or other banks. Such funds shall be deposited by the Sub-Custodian in its capacity as Sub-Custodian and shall be withdrawable by the Sub-Custodian only in that capacity. The Sub-Custodian shall be liable for losses incurred by the Fund attributable to any failure on the part of the Sub-Custodian to report accurate cash availability information with respect to the Fund's bank accounts maintained by the Sub-Custodian or any of its agents, provided that such liability shall be determined solely on a cost-of-funds basis. 2.5 PAYMENTS FOR SHARES. The Sub-Custodian shall receive from any distributor of the Fund's shares or from the Transfer Agent of the Fund and deposit into the Fund's account such payments as are received for shares of the Fund issued or sold from time to time by the Fund. The Sub-Custodian will provide timely notification to the Custodian, and the Transfer Agent of any receipt by it of payments for shares of the Fund. 2.6 INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Custodian and the Sub-Custodian, the Sub-Custodian shall, upon the receipt of Proper Instructions, 1) invest in such instruments as may be set forth in such instructions on the same day as received all federal funds received after a time agreed upon between the Sub-Custodian and the Custodian; and 2) make federal funds available to the Fund as of specified times agreed upon from time to time by the Custodian and the Sub-Custodian in the amount of checks, when cleared within the Federal Reserve System, received in payment for shares of the Fund which are deposited into the Fund's account or accounts. 2.7 COLLECTION OF INCOME. The Sub-Custodian shall collect on a timely basis all income and other payments with respect to registered securities held hereunder to which the Fund shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer securities if, on the date of payment by the issuer, such securities are held hereunder and shall credit such income, as collected, to the Fund's account. Without limiting the generality of the foregoing, the Sub- Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Arranging for the collection of income due the Fund on securities loaned pursuant to the provisions of Section 2.2(10) shall be the responsibility of the Custodian. The Sub- Custodian will have no duty or responsibility in connection therewith, other than to provide the Custodian with such information or data as may be necessary to assist the Custodian in arranging for the timely delivery to the Sub-Custodian of the income to which the Fund is properly entitled. 2.8 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Sub-Custodian shall cause monies of a Fund to be paid out in the following cases only: 1) Upon the purchase of securities for the account of the Fund but only (a) against the delivery of such securities to the Sub-Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act, as amended, to act as a custodian and has been designated by the Sub-Custodian as its agent for this purpose) registered in the name of the Fund or in the name of a nominee referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a Securities System, in accordance with the conditions set forth in Section 2.13 hereof; or (c) in the case of repurchase agreements entered into between the Fund and the Sub-Custodian, or another bank, (i) against delivery of the securities either in certificate form or through an entry crediting the Sub- Custodian's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Fund of securities owned by the Sub-Custodian along with written evidence of the agreement by the Sub-Custodian to repurchase such securities from the Fund; 2) In connection with conversion, exchange or surrender of securities owned by the Fund as set forth in Section 2.2 hereof; 3) For the redemption or repurchase of shares issued by the Fund as set forth in Section 2.10 hereof; 4) For the payment of any expense or liability incurred by the Fund, including but not limited to the following payments for the account of the Fund: interest, taxes, management, accounting, custodian and Sub-Custodian, transfer agent and legal fees, including the Custodian's fee; and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; 5) For the payment of any dividends declared pursuant to the governing documents of the Fund; 6) For transfer to another Sub-Custodian of the Fund; and 7) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions, a certified copy of a resolution of the Trustees or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Clerk or an Assistant Clerk, specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom such payment is to be made. 2.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In any and every case where payment for purchase of securities for the account of a Fund is made by the Sub-Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from the Custodian to so pay in advance, the Sub-Custodian shall be absolutely liable to the Fund and the Custodian in the event any loss results to the Fund or the Custodian from the failure of the Sub-Custodian to make such payment against delivery of such securities, except that in the case of repurchase agreements entered into by the Fund with a bank which is a member of the Federal Reserve System, the Sub-Custodian may transfer funds to the account of such bank prior to the receipt of written evidence that the securities subject to such a repurchase agreement have been transferred by book-entry into a segregated non-proprietary account of the Sub-Custodian maintained with any Federal Reserve Bank or of the safe-keeping receipt, provided that such securities have in fact been so transferred by book-entry. 2.10 PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND. From such funds as may be available for the purpose but subject to the limitations of the Declaration of Trust and By-Laws and any applicable votes of the Trustees of the Fund pursuant thereto, the Sub-Custodian shall, upon receipt of instructions from the Custodian, make funds available for payment to shareholders of the Fund who have delivered to the Transfer Agent a request for redemption or repurchase of their shares. In connection with the redemption or repurchase of shares of the Fund, the Sub-Custodian, upon receipt of Proper Instructions, is authorized to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of shares of the Fund, the Sub- Custodian, upon receipt of Proper Instructions, shall honor checks drawn on the Sub-Custodian by a shareholder, when presented to the Sub-Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time among the Fund, the Custodian and the Sub-Custodian. 2.11 VARIANCES. The Sub-Custodian may accept securities or cash delivered in settlement of trades notwithstanding variances between the amount of securities or cash so delivered and the amount specified in the instructions furnished to it by the Custodian, provided that the variance in any particular transaction does not exceed (i) $25 in the case of transactions of $1,000,000 or less, and (ii) $50 in the case of transactions exceeding $1,000,000. The Sub-Custodian shall maintain a record of any such variances and notify the Custodian of such variances in periodic transaction reports submitted to the Custodian. The Sub-Custodian will not advise any party with whom the Fund effects securities transactions of the existence of these variance provisions without the consent of the Fund and the Custodian. 2.12 APPOINTMENT OF AGENTS. Without limiting its own responsibility for its obligations assumed hereunder, the Sub- Custodian may at any time and from time to time engage, at its own cost and expense, as an agent to act for the Fund on the Sub- Custodian's behalf with respect to any such obligations any bank or trust company which meets the requirements of the 1940 Act, and the rules and regulations thereunder, to perform services delegated to the Sub-Custodian hereunder, provided that the Fund shall have approved in writing any such bank or trust company and the Sub-Custodian shall give prompt written notice to the Custodian and the Fund of any such engagement. All agents of the Sub-Custodian shall be subject to the instructions of the Sub- Custodian and not the Custodian. The Sub-Custodian may, at any time in its discretion, and shall at the Custodian's direction, remove any bank or trust company which has been appointed as an agent, and shall in either case promptly notify the Custodian and the Fund in writing of the completion of any such action. The agents which the Fund has approved to date are set forth in Schedule B hereto. Schedule B shall be amended from time to time as approved agents are changed, added or deleted. The Custodian shall be responsible for informing the Sub-Custodian sufficiently in advance of a proposed investment which is to be held at a location not listed on Schedule B, in order that there shall be sufficient time for the Fund to give the approval required by the preceding paragraph and for the Sub-Custodian to complete the appropriate contractual and technical arrangements with such agent. The engagement by the Sub-Custodian of one or more agents to carry out such of the provisions of this Section 2 shall not relieve the Sub-Custodian of its responsibilities or liabilities hereunder. 2.13 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Sub-Custodian may deposit and/or maintain securities owned by the Fund in a clearing agency registered with the Securities and Exchange Commission under Section 17A of the Securities Exchange Act of 1934, which acts as a securities depository, or in the book-entry system authorized by the U.S. Department of the Treasury (collectively referred to herein as "Securities System") in accordance with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations (including Rule 17f-4 of the 1940 Act), and subject to the following provisions: 1) The Sub-Custodian may keep securities of the Fund in a Securities System provided that such securities are represented in an account ("Account") of the Sub-Custodian in the Securities System which shall not include any assets other than assets held as a fiduciary, custodian or otherwise for customers; 2) The records of the Sub-Custodian with respect to securities of the Fund which are maintained in a Securities System shall identify by book-entry those securities belonging to the Fund; 3) The Sub-Custodian shall pay for securities purchased for the account of the Fund upon (i) receipt of advice from the Securities System that such securities have been transferred to the Account, and (ii) the making of an entry on the records of the Sub-Custodian to reflect such payment and transfer for the account of the Fund. The Sub-Custodian shall transfer securities sold for the account of the Fund upon (a) receipt of advice from the Securities System that payment for such securities has been transferred to the Account, and (b) the making of an entry on the records of the Sub-Custodian to reflect such transfer and payment for the account of the Fund. Copies of all advices from the Securities System of transfers of securities for the account of the Fund shall identify the Fund, be maintained for the Fund by the Sub-Custodian and be provided to the Fund or the Custodian at the Custodian's request. The Sub- Custodian shall furnish the Custodian confirmation of each transfer to or from the account of the Fund in the form of a written advice or notice and shall furnish to the Custodian copies of daily transaction sheets reflecting each day's transactions in the Securities System for the account of the Fund on the next business day; 4) The Sub-Custodian shall provide the Custodian with any report obtained by the Sub-Custodian on the Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the Securities System; 5) The Sub-Custodian shall have received the initial or annual certificate, as the case may be, required by Section 2.10 hereof; 6) Anything to the contrary in this Agreement notwithstanding, the Sub-Custodian shall be liable to the Fund and the Custodian for any loss or damage to the Fund or the Custodian resulting from use of the Securities System by reason of any negligence, misfeasance or misconduct of the Sub-Custodian or any of its agents or of any of its or their employees or from failure of the Sub-Custodian or any such agent to enforce effectively such rights as it may have against the Securities System; at the election of the Custodian, it shall be entitled to be subrogated to the rights of the Sub-Custodian with respect to any claim against the Securities System or any other person which the Sub-Custodian may have as a consequence of any such loss or damage if and to the extent that the Fund and the Custodian have not been made whole for any such loss or damage. 2.14 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Sub- Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to securities held by it hereunder and in connection with transfers of securities. 2.15 PROXIES. The Sub-Custodian shall, with respect to the securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of a Fund, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Custodian such proxies, all proxy soliciting materials and all notices relating to such securities. 2.16 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The Sub-Custodian shall transmit promptly to the Custodian all written information (including, without limitation, pendency of calls and maturities of securities and expirations of rights in connection therewith) received by the Sub-Custodian from issuers of the securities being held for the account of the Fund. With respect to tender or exchange offers, the Sub- Custodian shall transmit promptly to the Custodian all written information received by the Sub-Custodian from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Fund desires to take action with respect to any tender offer, exchange offer or any other similar transactions, the Custodian shall notify the Sub-Custodian of the action the Fund desires the Sub- Custodian to take; provided, however, that the Sub-Custodian shall not be liable to the Fund or the Custodian for the failure to take any such action unless such instructions are received by the Sub-Custodian at least two business days prior to the date on which the Sub-Custodian is to take such action. 2.17 PROPER INSTRUCTIONS. Proper Instructions as used throughout this Agreement means a writing signed or initialed by one or more persons who are authorized by the Trustees of the Fund and by vote of the Board of Directors of the Custodian. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. Oral instructions will be considered Proper Instructions if the Sub- Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. The Custodian shall cause all oral instructions to be confirmed in writing. Upon receipt of a certificate of the Clerk or an Assistant Clerk as to the authorization by the Trustees of the Funds accompanied by a detailed description of procedures approved by the Trustees, Proper Instructions may include communications effected directly between electro-mechanical or electronic devices, provided that the Trustees, the Custodian and the Sub-Custodian are satisfied that such procedures afford adequate safeguards for the Fund's assets. Notwithstanding the foregoing, no Trustee, officer, employee or agent of the Fund shall be permitted access to any securities or similar investments of the Fund deposited with the Sub-Custodian or any agent for any reason except in accordance with the provisions of Rule 17f-2 under the 1940 Act. 2.18 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Sub-Custodian may in its discretion, without express authority from the Custodian: 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Agreement, provided that all such payments shall be accounted for to the Fund and the Custodian; 2) surrender securities in temporary form for securities in definitive form; 3) endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments; and 4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Fund held by the Sub-Custodian hereunder except as otherwise directed by the Custodian or the Trustees of the Fund. 2.19 EVIDENCE OF AUTHORITY. The Sub-Custodian shall be protected in acting upon any instruction, notice, request, consent, certificate or other instrument or paper reasonably believed by it to be genuine and to have been properly executed by or on behalf of the Fund or the Custodian as custodian of the Fund. The Sub-Custodian may receive and accept a certified copy of a vote of the Trustees of the Fund or the Board of Directors of the Custodian, as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Trustees pursuant to the Declaration of Trust and By-Laws and the Board of Directors of the Custodian, as the case may be as described in such vote, and such vote may be considered as in full force and effect until receipt by the Sub-Custodian of written notice to the contrary. 3. PERFORMANCE STANDARDS; PROTECTION OF THE FUND. The Sub-Custodian shall use its best efforts to perform its duties hereunder in accordance with the standards set forth in Schedule C hereto. Schedule C may be amended from time to time as agreed to by the Custodian and the Trustees of the Fund. 4. RECORDS. The Sub-Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Trustees of the Fund to keep the books of account of the Funds or, if directed in writing to do so by the Custodian, shall itself keep such books of account. The Sub-Custodian shall create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of the Custodian under its Custodian Agreement with the Fund under the 1940 Act, with particular attention to Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1 and 31a-2 thereunder, applicable federal and state tax laws, and any other law or administrative rules or procedures which may be applicable to the Fund or the Custodian. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Sub-Custodian be open for inspection by duly authorized officers, employees or agents of the Custodian and the Fund and employees and agents of the Securities and Exchange Commission. The Sub-Custodian shall, at the Custodian's request, supply the Custodian with a tabulation of securities owned by the Fund and held under this Agreement and shall, when requested to do so by the Custodian and for such compensation as shall be agreed upon between the Custodian and Sub-Custodian, include certificate numbers in such tabulations. 5. OPINION AND REPORTS OF THE FUND'S INDEPENDENT ACCOUNTANTS. The Sub-Custodian shall take all reasonable actions, as the Custodian may from time to time request, to obtain from year to year favorable opinions from the Fund's independent public accountants with respect to its activities hereunder in connection with the preparation of the Fund's registration statements and amendments thereto, the Fund's reports to the Securities and Exchange Commission and with respect to any other requirements of such Commission. 6. REPORTS OF SUB-CUSTODIAN'S INDEPENDENT ACCOUNTANTS. The Sub-Custodian shall provide the Custodian, at such times as the Custodian may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, including securities deposited and/or maintained in a Securities System, relating to the services provided by the Sub-Custodian under this Agreement; such reports, which shall be of sufficient scope and in sufficient detail as may reasonably be required by the Custodian, shall provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, shall so state. 7. COMPENSATION. The Sub-Custodian shall be entitled to reasonable compensation for its services and expenses as Sub- Custodian, as agreed upon from time to time between the Custodian and the Sub-Custodian. 8. RESPONSIBILITY OF SUB-CUSTODIAN. The Sub-Custodian shall exercise reasonable care and diligence in carrying out the provisions of this Agreement and shall not be liable to the Fund or the Custodian for any action taken or omitted by it in good faith without negligence. So long as and to the extent that it is in the exercise of reasonable care, the Sub-Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. Notwithstanding the foregoing, the responsibility of the Sub- Custodian with respect to redemptions effected by check shall be in accordance with a separate agreement entered into between the Custodian and the Sub-Custodian. The Sub-Custodian shall protect the Fund and the Custodian from direct losses to the Fund resulting from any act or failure to act of the Sub-Custodian in violation of its duties hereunder or of law and shall maintain customary errors and omissions and fidelity insurance policies in an amount not less than $25 million to cover losses to the Fund resulting from any such act or failure to act. If the Custodian requires the Sub-Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Sub- Custodian, result in the Sub-Custodian's being liable for the payment of money or incurring liability of some other form, the Custodian, as a prerequisite to requiring the Sub-Custodian to take such action, shall provide indemnity to the Sub-Custodian in an amount and form satisfactory to it. The Custodian agrees to indemnify and hold harmless the Sub- Custodian from and against all taxes, charges, expenses, assessments, claims and liabilities (including counsel fees) incurred or assessed against it or its nominee in connection with the performance of this Agreement, except such as may arise from its own negligent action, negligent failure to act or willful misconduct. To secure any such authorized charges and any advances of cash or securities made by the Sub-Custodian to or for the benefit of the Fund for any purpose which results in the Fund's incurring an overdraft at the end of any business day or for extraordinary or emergency purposes during any business day, the Custodian on behalf of the Fund, unless prohibited from doing so by one or more of the Fund's fundamental investment restrictions, hereby represents that it has obtained from the Fund authorization to apply available cash in any account maintained by the Sub-Custodian on behalf of the Fund and a security interest in and pledge to it of securities held for the Fund by the Sub-Custodian, in an amount not to exceed the amount not prohibited by such restrictions, for the purposes of securing payment of any such advances, and that the Fund has agreed, from time to time, to designate in writing, or to cause its investment adviser to designate in writing, the specific securities subject to such security interest and pledge. The Custodian hereby assigns the benefits of such security interest and pledge to the Sub-Custodian, and agrees that, should the Fund or the Custodian fail to repay promptly any advances of cash or securities, the Sub-Custodian shall be entitled to use such available cash and to dispose of such pledged securities as is necessary to repay any such advances. 9. SUCCESSOR SUB-CUSTODIAN. If a successor Sub-Custodian shall be appointed by the Custodian, the Sub-Custodian shall, upon termination, cause to be delivered to such successor Sub- Custodian, duly endorsed and in the form for transfer, all securities then held by it, shall cause the transfer to an account of the successor Sub-Custodian all of the Fund's securities held in a Securities System and shall cause to be delivered to such successor Sub-Custodian all funds and other property held by it or any of its agents. If no such successor Sub-Custodian shall be appointed, the Sub-Custodian shall, in like manner, upon receipt of a certified copy of a vote of the Trustees of the Fund, cause to be delivered at the office of the Sub-Custodian and transfer such securities, funds and other properties in accordance with such vote. In the event that no written order designating a successor Sub-Custodian or certified copy of a vote of the Trustees shall have been delivered to the Sub-Custodian on or before the date when such termination shall become effective, then the Sub- Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the 1940 Act, doing business in Boston, Massachusetts, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Sub-Custodian and its agents and all instruments held by the Sub-Custodian and its agents relative thereto and all other property held by it and its agents under this Agreement and to cause to be transferred to an account of such successor Sub-Custodian all of the Fund's securities held in any Securities System. Thereafter, such bank or trust company shall be the successor of the Sub-Custodian under this Agreement. In the event that securities, funds and other properties remain in the possession of the Sub-Custodian after the date of termination hereof owing to failure of the Custodian to obtain the certified copy of vote referred to or of the Trustees to appoint a successor Sub-Custodian, the Sub-Custodian shall be entitled to fair compensation for its services during such period as the Sub-Custodian retains possession of such securities, funds and other properties and the provisions of this Agreement relating to the duties and obligations of the Sub-Custodian shall remain in full force and effect. Upon termination, the Sub-Custodian shall, upon receipt of a certified copy of a vote of the Trustees of the Fund, cause to be delivered to any other Sub-Custodian designated in such vote such assets, securities and other property of the Fund as are designated in such vote, or pursuant to Proper Instructions, cause such assets, securities and other property of the Fund as are designated by the Custodian to be delivered to one or more of the sub-custodians designated on Schedule D hereto, as from time to time amended. 10. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT. This Agreement shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid, to the other party, such termination to take effect not sooner than thirty (30) days after the date of mailing; provided, however, that the Sub-Custodian shall not act under Section 2.13 hereof in the absence of receipt of an initial certificate of the Clerk or an Assistant Clerk that the Trustees of the Fund have approved the initial use of a particular Securities System and the receipt of an annual certificate of the Clerk or an Assistant Clerk that the Trustees have reviewed the use by the Fund of such Securities System, as required in each case by Rule 17f-4 under the Investment Company Act of 1940; and provided, further, however, that the Custodian shall not amend or terminate this Agreement in contravention of any applicable federal or state regulations or any provision of the Declarations of Trust or By-Laws of the Fund; and provided, further, that the Custodian may at any time, by action of its Board of Directors, or the Trustees of the Fund, as the case may be, immediately terminate this Agreement in the event of the appointment of a conservator or receiver for the Sub-Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of this Agreement, the Custodian shall pay to the Sub-Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Sub- Custodian for its reimbursable costs, expenses and disbursements. 11. AMENDMENT AND INTERPRETATION. This Agreement constitutes the entire understanding and agreement of the parties hereto with respect to the subject matter hereof. No provision of this Agreement may be amended or terminated except by a statement in writing signed by the party against which enforcement of the amendment or termination is sought. In connection with the operation of this Agreement, the Sub- Custodian and the Custodian may from time to time agree in writing on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement. 12. GOVERNING LAW. This Agreement is executed and delivered in The Commonwealth of Massachusetts and shall be governed by and construed according to the laws of said Commonwealth. 13. NOTICES. Notices and other writings delivered or mailed postage prepaid to the Custodian addressed to the Custodian attention: , or to such other person or address as the Custodian may have designated to the Sub-Custodian in writing, or to the Sub-Custodian at , or to such other address as the Sub-Custodian may have designated to the Custodian in writing, shall be deemed to have been properly delivered or given hereunder to the respective addressee. 14. BINDING OBLIGATION. This Agreement shall be binding on and shall inure to the benefit of the Custodian and the Sub- Custodian and their respective successors and assigns, provided that neither party hereto may assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other party. 15. PRIOR AGREEMENTS. This Agreement supersedes and terminates, as of the date hereof, all prior contracts between the Fund or the Custodian and the Sub-Custodian relating to the custody of the Fund's assets. 16. DECLARATION OF TRUST. A copy of the Agreement and Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that the obligations of or arising out of this instrument are not binding upon any of the Trustees or beneficiaries individually but binding only upon the assets and property of the Funds. IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the day of , 199 . PUTNAM FIDUCIARY TRUST COMPANY By --------------------------- (SUB-CUSTODIAN) By --------------------------- EXHIBIT 1(A) MASTER FOREIGN SUB-CUSTODIAN AGREEMENT AGREEMENT made this day of , 199 , between Putnam Fiduciary Trust Company, a Massachusetts-chartered trust company (the "Custodian"), and , (the "Sub-Custodian"). WHEREAS, the Sub-Custodian represents to the Custodian that it is eligible to serve as a custodian for a management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and WHEREAS, the Custodian has entered into a Custodian Agreement between it and each of the Putnam Funds listed in Schedule A to this Agreement, each of such Funds acting on its own behalf separately from all the other Funds and not jointly or jointly and severally with any of the other Funds (each of the Funds being hereinafter referred to as the "Fund"), and WHEREAS, the Custodian and the Fund desire to utilize sub-custodians for the purpose of holding cash and securities of the Fund, and WHEREAS, the Custodian wishes to appoint the Sub-Custodian as the Fund's Sub-Custodian, NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows: 1. APPOINTMENT OF SUB-CUSTODIAN. The Custodian hereby employs and appoints the Sub-Custodian as a sub-custodian for safekeeping of securities and other assets of the Fund for the term and subject to the provisions of this Agreement. Upon request, the Custodian shall deliver to the Sub-Custodian such proxies, powers of attorney or other instruments as may be reasonably necessary or desirable in connection with the performance by the Sub-Custodian of its obligations under this Agreement on behalf of the Fund. 2. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY IT. The Custodian may from time to time deposit or direct the deposit of securities or cash owned by the Fund with the Sub-Custodian. The Sub-Custodian shall have no responsibility or liability for or on account of securities, funds or other property of the Fund not so delivered to it. Except for securities and funds held by 17f-5 Sub-Custodians (as defined in Section 2.11(b)) the Sub-Custodian shall hold and dispose of the securities or cash hereafter held by or deposited with the Sub-Custodian as follows: 2.1. HOLDING SECURITIES. The Sub-Custodian shall hold and, by book-entry or otherwise, identify as belonging to the Fund all non-cash property which has been delivered to the Sub-Custodian. All such securities are to be held or disposed of for, and subject at all times to the instructions of, the Custodian pursuant to the terms of this Agreement. The Sub-Custodian shall maintain adequate records identifying the securities as being held by it as sub-custodian of the Fund. 2.2. DELIVERY OF SECURITIES. The Sub-Custodian shall release and deliver securities of the Fund held by it hereunder (or in a Securities System account of the Sub-Custodian) only upon receipt of Proper Instructions (as defined in Section 2.19), which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: 1) Upon sale of such securities for the account of the Fund and receipt of payment therefor, provided, however, that the Sub-Custodian may release and deliver securities prior to the receipt of payment therefor if (i) in the Sub-Custodian's judgment, (A) release and delivery prior to payment is required by the terms of the instrument evidencing the security or (B) release and delivery prior to payment is the prevailing method of settling securities transactions between institutional investors in the applicable market and (ii) release and delivery prior to payment is in accordance with generally accepted trade practice and with any applicable governmental regulations and the rules of Securities Systems or other securities depositories and clearing agencies in the applicable market. The Sub-Custodian agrees, upon request, to advise the Custodian of all pending transactions in which release and delivery will be made prior to the receipt of payment therefor; 2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Fund; 3) In the case of a sale effected through a Securities System, in accordance with the provisions of Section 2.12 hereof; 4) To the depository agent in connection with tender or other similar offers for such securities; provided that, in any such case, the cash or other consideration is thereafter to be delivered to the Sub-Custodian; 5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is thereafter to be delivered to the Sub-Custodian; 6) To the issuer thereof, or its agent, for transfer into the name of the Fund or into the name of any nominee or nominees of the Sub-Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.11 or any other name permitted pursuant to Section 2.3; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are thereafter to be delivered to the Sub-Custodian; 7) Upon the sale of such securities for the account of the Fund, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that, in any such case, the Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Sub-Custodian's own negligence or willful misconduct; 8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, thereafter are to be delivered to the Sub-Custodian; 9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the now securities and cash, if any, are thereafter to be delivered to the Sub-Custodian; 10) For delivery in connection with any loans of securities made by the Fund, but only against receipt of collateral the adequacy and timing of receipt of which shall be as agreed upon from time to time in writing by the Custodian and the Sub-Custodian, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities; 11) For delivery as security in connection with any borrowings by the Fund requiring a pledge of assets by the Fund, but only against receipt of amounts borrowed; 12) Upon receipt of instructions from the transfer agent for the Fund (the "Transfer Agent"), for delivery to such Transfer Agent or to the shareholders of the Fund in connection with distributions in kind, in satisfaction of requests by shareholders for repurchase or redemption; 13) For delivery to the Custodian or another sub-custodian of the Fund; and 14) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions, a certified copy of a resolution of the Trustees or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Clerk or an Assistant Clerk, specifying the securities to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purposes to be proper corporate purposes, and naming the person or persons to whom delivery of such securities is to be made. 2.3. REGISTRATION OF SECURITIES. Securities of the Fund held by the Sub-Custodian hereunder (other than bearer securities) shall be registered in the name of the Fund or in the name of any nominee of the Fund or of any nominee of the Sub-Custodian or any 17f-5 Sub-Custodian or Foreign Depository (as each of those terms is defined in Section 2.11(b)), which nominee shall be assigned exclusively to the Fund, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Fund, or in the name or nominee name of any agent appointed pursuant to Section 2.11(a). Notwithstanding the foregoing, the Sub-Custodian or agent thereof or any 17f-5 Sub-Custodian or Foreign Depository may hold securities of the Fund in a nominee name which is used for its other clients provided that such name is not used by the Sub-Custodian, agent, 17f-5 Sub-Custodian or Foreign Depository for its own securities and that securities of the Fund are, by book-entry or otherwise, at all times identified as belonging to the Fund and distinguished from other securities held for other clients using the same nominee name. In addition, and notwithstanding the foregoing, the Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or Foreign Depository may hold securities of the Fund in its own name if such registration is the prevailing method in the applicable market by which custodians register securities of institutional clients and provided that securities of the Fund are, by book-entry or otherwise, at all times identified as belonging to the Fund and distinguished from other securities held for other clients or for the Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or Foreign Depository. All securities accepted by the Sub-Custodian under the terms of this Agreement shall be in good delivery form. 2.4. BANK ACCOUNTS. The Sub-Custodian shall open and maintain a separate bank account or accounts in the name of the Fund or of the Custodian for the benefit of the Fund, subject only to draft or order by the Sub-Custodian acting pursuant to the terms of this Agreement or by the Custodian acting pursuant to the Custodian Agreement, and shall hold in such account or accounts, subject to the provisions hereof, to the Sub-Custodian's credit as sub-custodian of the Fund or the Custodian's credit as custodian for the Fund, cash received for the account of the Fund other than cash maintained by the Fund in a bank account established and used in accordance with Rule 17f-3 under the 1940 Act or cash held as deposits with 17f-5 Sub-Custodians in accordance with the following paragraph. The responsibilities of the Sub-Custodian for cash, including foreign currency, of the Fund accepted on the Sub-Custodian's books as a deposit shall be that of a U.S. bank for a similar deposit. The Sub-Custodian may open a bank account on the books of a 17f-5 Sub-Custodian in the name of the Fund or of the Sub- Custodian as a sub-custodian for the Fund, and may deposit cash, including foreign currency, of the Fund in such account, and such funds shall be withdrawable only pursuant to draft or order of the Sub-Custodian. The records for such account will be maintained by the Sub-Custodian but such account shall not constitute a deposit liability of the Sub-Custodian. The responsibilities of the Sub- Custodian for deposits maintained in such account shall be the same as and no greater than the Sub-Custodian's responsibility in respect of other portfolio securities of the Fund. The Sub-Custodian shall be liable for actual losses incurred by the Fund attributable to any failure on the part of the Sub- Custodian to report accurate cash availability information with respect to the bank accounts referred to in this Section 2.4. 2.5. PAYMENTS FOR SHARES. The Sub-Custodian shall maintain custody of amounts received from the Transfer Agent of the Fund for shares of the Fund issued by the Fund and sold by its distributor and deposit such amounts into the Fund's account. The Sub-Custodian will provide timely notification to the Custodian and the Transfer Agent of any receipt by it of payments for shares of the Fund. 2.6. AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Custodian and the Sub-Custodian, the Sub-Custodian shall, upon the receipt of Proper Instructions, make federal funds available to the Custodian for the account of the Fund as of specified times agreed upon from time to time by the Custodian and the Sub-Custodian with respect to amounts received by the Sub-Custodian for the purchase of shares of the Fund. 2.7. COLLECTION OF INCOME. The Sub-Custodian shall collect on a timely basis all income and other payments with respect to registered securities held hereunder, including securities held in a Securities System, to which the Fund shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer securities if, on the date of payment by the issuer, such securities are held hereunder and shall credit such income, as collected, to the Fund's account. Without limiting the generality of the foregoing, the Sub-Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Arranging for the collection of income due the Fund on securities loaned pursuant to the provisions of Section 2.2(10) shall be the responsibility of the Custodian. The Sub-Custodian will have no duty or responsibility in connection therewith, other than to provide the Custodian with such information or data as may be necessary to assist the Custodian in arranging for the timely delivery to the Sub-Custodian of the income to which the Fund is properly entitled. 2.8. PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Sub-Custodian shall cause monies of the Fund to be paid out in the following cases only: 1) Upon the purchase of securities for the account of the Fund but only (a) against the delivery of such securities to the Sub-Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act, as amended, to act as a custodian and has been designated by the Sub-Custodian as its agent for this purpose) or any 17f-5 Sub-Custodian or any Foreign Depository (as each of those terms is defined in Section 2.11(b)) registered in the name of the Fund or in the name of a nominee referred to in Section 2.3 hereof or in proper form for transfer, provided, however, that the Sub-Custodian may cause monies of the Fund to be paid out prior to delivery of such securities if (i) in the Sub-Custodian's judgment, (A) payment prior to delivery is required by the terms of the instrument evidencing the security or (B) payment prior to delivery is the prevailing method of settling securities transactions between institutional investors in the applicable market and (ii) payment prior to delivery is in accordance with generally accepted trade practice and with any applicable governmental regulations and the rules of Securities Systems or other securities depositories and clearing agencies in the applicable market. The Sub-Custodian agrees, upon request, to advise the Custodian of all pending transactions in which payment will be made prior to the receipt of securities in accordance with the proviso to the foregoing sentence; (b) in the case of a purchase effected through a Securities System, in accordance with the conditions set forth in Section 2.12 hereof; or (c) (i) in the case of a repurchase agreement entered into between the Fund and the Sub-Custodian, another bank or a broker-dealer, against delivery of the securities either in certificate form or through an entry crediting the Sub-Custodian's or its agent's non-proprietary account at any Federal Reserve Bank with such securities or (ii) in the case of a repurchase agreement entered into between the Fund and the Sub-Custodian, against delivery of a receipt evidencing purchase by the Fund of securities owned by the Sub-Custodian along with written evidence of the agreement by the Sub-Custodian to repurchase such securities from the Fund; or (d) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign, which transfer may be effected prior to receipt of a confirmation of the deposit from the applicable bank or a financial intermediary; 2) In connection with conversion, exchange or surrender or tender or exercise of securities owned by the Fund as set forth in Section 2.2 hereof; 3) For the redemption or repurchase of shares issued by the Fund as set forth in Section 2.10 hereof; 4) For the payment of any expense or liability incurred by the Fund, including but not limited to the following payments for the account of the Fund: interest, taxes, management, accounting, custodian and sub-custodian, transfer agent and legal fees, including the Custodian's fee; and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; 5) For the payment of any dividends or other distributions declared to shareholders of the Fund; 6) For transfer to the Custodian or another sub-custodian of the Fund; and 7) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions, a certified copy of a resolution of the Trustees or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Clerk or Assistant Clerk, specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom such payment is to be made. 2.9. LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. Except as otherwise provided in this Agreement, in any and every case where payment for purchase of securities for the account of the Fund is made by the Sub-Custodian in advance of receipt of the securities purchased in the absence of Proper Instructions from the Custodian to so pay in advance, the Sub-Custodian shall be absolutely liable to the Fund and the Custodian in the event any loss results to the Fund or the Custodian from the payment by the Sub-Custodian in advance of delivery of such securities. 2.10. PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND. From such funds as may be available, the Sub-custodian shall, upon receipt of Proper Instructions, make funds available for payment to a shareholder of the Fund who has delivered to the Transfer Agent a request for redemption or repurchase of shares of the Fund. In connection with the redemption or repurchase of shares of the Fund, the Sub-Custodian, upon receipt of Proper Instructions, is authorized to wire funds to or through a commercial bank designated by the redeeming shareholder. In connection with the redemption or repurchase of shares of the Fund, the Sub-Custodian, upon receipt of Proper Instructions, shall honor checks drawn on the Sub-Custodian by a shareholder, when presented to the Sub-Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time among the Fund, the Custodian and the Sub-Custodian. 2.11. APPOINTMENT OF AGENTS AND SUB-CUSTODIANS PURSUANT TO RULE 17F-5. (a) Agents. Without limiting its own responsibility for its obligations assumed hereunder, the Sub-Custodian may at any time and from time to time engage, at its own cost and expense, as an agent to act for the Fund on the Sub-Custodian's behalf with respect to any such obligations any bank or trust company which meets the requirements of the 1940 Act, and the rules and regulations thereunder, to perform services delegated to the Sub-Custodian hereunder, provided that the Fund and the Custodian shall have approved in writing any such bank or trust company. All agents of the Sub-Custodian shall be subject to the instructions of the Sub-Custodian and not the Custodian. The Sub- Custodian may, at any time in its discretion, and shall at the Custodian's direction, remove any bank or trust company which has been appointed as an agent, and shall in either case promptly notify the Custodian and the Fund in writing of the completion of any such action. The agents which the Fund has approved to date are set forth in Schedule B hereto. Schedule B shall be amended from time to time as approved agents are changed, added or deleted. The Custodian shall be responsible for informing the Sub-Custodian sufficiently in advance of a proposed investment which is to be held at a location not listed on Schedule B, in order that there shall be sufficient time for the Fund to give the approval required by the preceding paragraph and for the Sub-Custodian to complete the appropriate contractual and technical arrangements with such agent. The engagement by the Sub-Custodian of one or more agents shall not relieve the Sub-Custodian of its responsibilities or liabilities hereunder. (b) 17f-5 Sub-Custodians. Securities, funds and other property of the Fund may be held by sub-custodians appointed pursuant to the provisions of this Section 2.11 (each, a "17f-5 Sub-Custodian"). The Sub-Custodian may, at any time and from time to time, appoint any bank or trust company (that meets the requirements of a custodian or a foreign custodian under the Investment Company Act of 1940 and the rules and regulations thereunder, including without limitation Rule 17f-5 thereunder, or that has received an order of the Securities and Exchange Commission ("SEC") exempting it from any of such requirements that it does not meet) to act as a 17f-5 Sub-Custodian for the Fund, provided that the Fund shall have approved in writing (1) any such bank or trust company and the sub-custodian agreement to be entered into between such bank or trust company and the Sub- Custodian, and (2) the 17f-5 Sub-Custodian's offices or branches at which the 17f-5 Sub-Custodian is authorized to hold securities, cash and other property of the Fund. Upon such approval by the Fund, the Sub-Custodian is authorized on behalf of the Fund to notify each 17f-5 Sub-Custodian of its appointment as such. The Sub-Custodian may, at any time in its discretion, remove any bank or trust company that has been appointed as a 17f-5 Sub-Custodian. Those 17f-5 Sub-Custodians and their offices or branches which the Fund has approved to date are set forth on Schedule C hereto. Such Schedule C shall be amended from time to time as 17f-5 Sub-Custodians, branches or offices are changed, added or deleted. The Custodian shall be responsible for informing the Sub-Custodian sufficiently in advance of a proposed investment which is to be held at a location not listed on Schedule C, in order that there shall be sufficient time for the Fund to give the approval required by the preceding paragraph and for the Sub- Custodian to put the appropriate arrangements in place with such 17f-5 Sub-Custodian pursuant to such sub-custodian agreement. With respect to the securities and funds held by a 17f-5 Sub- Custodian, either directly or indirectly, including demand and interest bearing deposits, currencies or other deposits and foreign exchange contracts, the Sub-Custodian shall be liable to the Custodian and the Fund if and only to the extent that such 17f-5 Sub-Custodian is liable to the Sub-Custodian and the Sub- Custodian recovers under the applicable sub-custodian agreement, provided, however, that the foregoing limitation shall not apply if such 17f-5 Sub-Custodian's liability to the Sub-Custodian is limited because the applicable sub-custodian agreement does not contain provisions substantially similar to the provisions of Section 2 (but not including Section 2.12) of this Agreement. The Sub-Custodian shall also be liable to the Custodian and the Fund for its own negligence in transmitting any instructions received by it from the Fund or the Custodian and for its own negligence in connection with the delivery of any securities or funds held by it to any such 17f-5 Sub-Custodian. The Custodian or the Fund may authorize the Sub-Custodian or one or more of the 17f-5 Sub-Custodians to use the facilities of one or more foreign securities depositories or clearing agencies (each, a "Foreign Depository") that is permitted to be used by registered investment companies by a Rule or Rules of the SEC or that has received an order of the SEC exempting it from any of such requirements that it does not meet. The records of the Sub- Custodian or a 17f-5 Sub-Custodian employing a Foreign Depository or clearing agency shall identify those securities belonging to the Fund which are maintained in such a Foreign Depository. The engagement by the Sub-Custodian of one or more Foreign Depositories shall not relieve the Sub-Custodian of its responsibilities or liabilities hereunder. The Foreign Depositories which the Fund has approved to date are set forth in Schedule C hereto. Schedule C shall be amended from time to time as approved Foreign Depositories are changed, added or deleted. The Custodian shall be responsible for informing the Sub-Custodian sufficiently in advance of a proposed investment which is to be held at a location not listed on Schedule C, in order that there shall be sufficient time for the Fund to give the approval required by the preceding paragraph and for the Sub-Custodian to complete the appropriate contractual and technical arrangements with such Foreign Depository. In the event that any 17f-5 Sub-Custodian appointed pursuant to the provisions of this Section 2.11 fails to perform any of its obligations under the terms and conditions of the applicable sub- custodian agreement, the Sub-Custodian shall use its best efforts to cause such 17f-5 Sub-Custodian to perform such obligations. In the event that the Sub-Custodian is unable to cause such 17f-5 Sub-Custodian to perform fully its obligations thereunder, the Sub-Custodian shall forthwith upon the Custodian's request terminate such 17f-5 Sub-Custodian as a sub-custodian for the Fund and, if necessary or desirable, appoint another 17f-5 Sub- Custodian in accordance with the provisions of this Section 2.11. At the election of the Custodian, it shall have the right to enforce and shall be subrogated to the Sub-Custodian's rights against any such 17f-5 Sub-Custodian for loss or damage caused the Fund by such 17f-5 Sub-Custodian. At the written request of the Fund, the Sub-Custodian will terminate as a sub-custodian for the Fund any 17f-5 Sub-Custodian appointed pursuant to the provisions of this Section 2.11 in accordance with the termination provisions under the applicable sub-custodian agreement. The Sub-Custodian will not amend any sub-custodian agreement or agree to change or permit any changes thereunder except upon the prior written approval of the Fund. In the event the Sub-Custodian makes any payment to a 17f-5 Sub-Custodian under the indemnification provisions of any sub- custodian agreement, no more than thirty days after written notice to the Custodian of the Sub-Custodian's having made such payment, the Custodian will reimburse the Sub-Custodian the amount of such payment except in respect of any negligence or misconduct of the Sub-Custodian. 2.12. DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Sub-Custodian may deposit and/or maintain securities owned by the Fund in a clearing agency registered with the Securities and Exchange Commission under Section 17A of the Securities Exchange Act of 1934, which acts as a securities depository, or in the book-entry system authorized by the U.S. Department of the Treasury or by a federal agency (collectively referred to herein as "Securities System") in accordance with applicable rules and regulations (including Rule 17f-4 of the 1940 Act), and subject to the following provisions: 1) The Sub-Custodian may, either directly or through one or more agents, keep securities of the Fund in a Securities System provided that such securities are represented in an account ("Account") of the Sub-Custodian or such an agent in the Securities System which shall not include any assets other than assets held as a fiduciary, custodian or otherwise for customers; 2) The records of the Sub-Custodian with respect to securities of the Fund which are maintained in a Securities System shall identify by book-entry those securities belonging to the Fund; 3) The Sub-Custodian shall pay for securities purchased for the account of the Fund upon (i) receipt of advice from the Securities System that such securities have been transferred to the Account, and (ii) the making of an entry on the records of the Sub-Custodian to reflect such payment and transfer for the account of the Fund. The Sub-Custodian shall transfer securities sold for the account of the Fund upon (i) receipt of advice from the Securities System that payment for such securities has been transferred to the Account, and (ii) the making of an entry on the records of the Sub-Custodian to reflect such transfer and payment for the account of the Fund. Copies of all advices from the Securities System of transfers of securities for the account of the Fund shall identify the Fund, be maintained for the Fund by the Sub-Custodian or such an agent and be provided to the Fund or the Custodian at the Custodian's request. The Sub-Custodian shall furnish the Custodian confirmation of each transfer to or from the account of the Fund in the form of a written advice or notice and shall furnish to the Custodian copies of daily transaction statements reflecting each day's transactions in the Securities System for the account of the Fund on the next business day; 4) The Sub-Custodian shall provide the Custodian with any report obtained by the Sub-Custodian on the Securities System's accounting system, internal accounting controls and procedures for safeguarding securities deposited in the Securities System; 5) The Sub-Custodian shall utilize only such Securities Systems as are set forth in a list provided by the Custodian of Securities Systems approved for use by the Board of Trustees of the Fund, which list will be amended from time to time by the Custodian as may be necessary to reflect any subsequent action taken by the Trustees of the Fund; 6) Anything to the contrary in this Agreement notwithstanding, the Sub-Custodian shall be liable to the Fund and the Custodian for any loss or damage to the Fund or the Custodian resulting from use of the Securities System by reason of any negligence, misfeasance or misconduct of the Sub-Custodian or any of its agents or of any of its or their employees or from failure of the Sub-Custodian or any such agent or employee to enforce effectively such rights as it may have against the Securities System. At the election of the Custodian, it shall be entitled to be subrogated to the rights of the Sub-Custodian with respect to any claim against the Securities System or any other person which the Sub-Custodian may have as a consequence of any such loss or damage if and to the extent that the Fund and the Custodian have not been made whole for any such loss or damage. 2.13. DEPOSITARY RECEIPTS. Only upon receipt of Proper Instructions, the Sub-Custodian shall instruct a 17f-5 Sub- Custodian appointed pursuant to Section 2.11(b) hereof or an agent of the Sub-Custodian appointed pursuant to Section 2.11(a) hereof (an "Agent") to surrender securities to the depositary used by an issuer of American Depositary Receipts or International Depositary Receipts (hereinafter collectively referred to as "ADRs") for such securities against a written receipt therefor adequately describing such securities and written evidence satisfactory to the 17f-5 Sub-Custodian or Agent that the depositary has acknowledged receipt of instructions to issue with respect to such securities ADRs in the name of the Sub-Custodian, or a nominee of the Sub-Custodian, for delivery to the Sub-Custodian in Boston, Massachusetts, or at such other place as the Sub-Custodian may from time to time designate. Only upon receipt of Proper Instructions, the Sub-Custodian shall surrender ADRs to the issuer thereof against a written receipt therefor adequately describing the ADRs surrendered and written evidence satisfactory to the Sub-Custodian that the issuer of the ADRs has acknowledged receipt of instructions to cause its depository to deliver the securities underlying such ADRs to a 17f-5 Sub-Custodian or an Agent. 2.14. FOREIGN EXCHANGE TRANSACTIONS AND FUTURES CONTRACTS. Only upon receipt of Proper Instructions, the Sub- Custodian shall enter into foreign exchange contracts or options to purchase and sell foreign currencies for spot and future delivery on behalf and for the account of the Fund or shall enter into futures contracts or options on futures contracts. Such transactions may be undertaken by the Sub-Custodian with such banking institutions, including the Sub-Custodian and 17f-5 Sub- Custodian(s) appointed pursuant to Section 2.11(b), as principals, as approved and authorized by the Fund. In connection with such transaction, the Sub-Custodian is authorized to make free outgoing payments of cash in the form of U.S. Dollars or foreign currency without receiving confirmation of a foreign exchange contract, futures contract or option thereon or confirmation that the countervalue currency completing the foreign exchange contract or futures contract has been delivered or received or that the option has been delivered or received. Foreign exchange contracts, futures contracts and options, other than those executed with the Sub-Custodian as principal, shall for all purposes of this Agreement be deemed to be portfolio securities of the Fund. 2.15. OPTION TRANSACTIONS. Only upon receipt of Proper Instructions, the Sub-Custodian shall enter into option transactions in accordance with the provisions of any agreement among the Fund, the Custodian, and/or the Sub-Custodian and a broker-dealer. 2.16. OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Sub-Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to securities held by it hereunder and in connection with transfers of securities. 2.17. PROXIES. The Sub-Custodian shall, with respect to the securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered other than in the name of the Fund, all proxies that are received by the Sub-Custodian, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Custodian such proxies, all proxy soliciting materials and all notices relating to such securities. 2.18. COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The Sub-Custodian shall transmit promptly to the Custodian all written information (including, without limitation, pendency of calls and maturities of securities and expirations of rights in connection therewith) received by the Sub-Custodian from issuers of the securities being held for the account of the Fund. With respect to tender or exchange offers, the Sub-Custodian shall transmit promptly to the Custodian all written information received by the Sub-Custodian from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Fund desires to take action with respect to any tender offer, exchange offer or any other similar transactions, the Custodian shall notify the Sub-Custodian of the action the Fund desires the Sub-Custodian to take; provided, however, that the Sub-Custodian shall not be liable to the Fund or the Custodian for the failure to take any such action unless Proper Instructions are received by the Sub-Custodian at least two business days prior to the date on which the Sub-Custodian is to take such action, or in the case of foreign securities, such longer periods as shall have been agreed upon in writing by the Custodian and the Sub-Custodian, which may be in the form of written operating procedures or standards. 2.19. PROPER INSTRUCTIONS. Proper Instructions as used throughout this Agreement means a writing signed or initialed by one or more persons who are authorized by the Trustees of the Fund and by the Custodian. Each such writing shall set forth the specific transaction or type of transaction involved. Oral instructions will be considered Proper Instructions if the Sub-Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. The Custodian shall cause all oral instructions to be confirmed in writing. Proper Instructions shall also include communications effected directly between the Custodian and Sub-Custodian by electro-mechanical or electronic devices, provided that the Custodian and the Sub-Custodian have approved such procedures. Notwithstanding the foregoing, no Trustee, officer, employee or agent of the Fund shall be permitted access to any securities or similar investments of the Fund deposited with the Sub-Custodian or any agent for any reason except in accordance with the provisions of Rule 17f-2 under the 1940 Act. 2.20. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Sub-Custodian may in its discretion, without express authority from the Custodian: 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Agreement, provided that all such payments shall be accounted for to the Custodian; 2) surrender securities in temporary form for securities in definitive form; 3) endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments; and 4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Fund held by the Sub-Custodian hereunder except as otherwise directed by the Custodian. 2.21. EVIDENCE OF AUTHORITY. The Sub-Custodian shall be protected in acting upon any instruction, notice, request, consent, certificate or other instrument or paper reasonably believed by it to be genuine and to have been properly executed by or on behalf of the Fund or the Custodian as custodian of the Fund. 2.22. PERFORMANCE STANDARDS. The Sub-Custodian shall use its best efforts to perform its duties hereunder in accordance with such standards as are agreed upon from time to time by the Custodian and the Sub-Custodian. 3. RECORDS. The Sub-Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Trustees of the Fund to keep the books of account of the Fund or, if directed in writing to do so by the Custodian, shall itself keep such books of account. The Sub-Custodian shall create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of the Fund under the 1940 Act, with particular attention to Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1 and 31a-2 thereunder; the Sub-Custodian shall also create and maintain such records as are required by applicable federal and state tax laws, and any other law or administrative rules or procedures which may be applicable to the Fund or the Custodian, such laws, rules or procedures to be specified by the Custodian from time to time. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Sub-Custodian be open for inspection by duly authorized officers, employees or agents of the Custodian and the Fund and employees and agents of the Securities and Exchange Commission. The Sub-Custodian shall, at the Custodian's request, supply the Custodian with a tabulation of securities owned by the Fund and held under this Agreement and shall, when requested to do so by the Custodian and for such compensation as shall be agreed upon between the Custodian and Sub-Custodian, include certificate numbers in such tabulations. 4. Opinion and Reports of the Fund's Independent Accountant. The Sub-Custodian shall take all reasonable actions, as the Custodian may from time to time request, to furnish such information with respect to its activities hereunder as the Fund's independent public accountant may request in connection with the accountant's verification of the Fund's securities and similar investments as required by Rule 17f-2 under the 1940 Act, the preparation of the Fund's registration statement and amendments thereto, the Fund's reports to the Securities and Exchange Commission and with respect to any other requirements of such Commission. 5. Reports of Sub-Custodian's Independent Accountant. The Sub-Custodian shall provide the Custodian, at such times as the Custodian may reasonably require, with reports by an independent public accountant on the accounting system, internal accounting controls and procedures for safeguarding securities, including securities deposited and/or maintained in a Securities System, relating to the services provided by the Sub-Custodian under this Agreement; such reports, which shall be of sufficient scope and in sufficient detail as may reasonably be required by the Custodian, shall provide reasonable assurance that any material inadequacies would be disclosed by such examination, and if there are no such inadequacies, shall so state. 6. Compensation. The Sub-Custodian shall be entitled to reasonable compensation for its services and expenses as sub-custodian, as agreed upon from time to time between the Custodian and the Sub-Custodian. 7. Responsibility of Sub-Custodian. The Sub-Custodian shall exercise reasonable care and diligence in carrying out the provisions of this Agreement and shall not be liable to the Fund or the Custodian for any action taken or omitted by it in good faith without negligence or willful misconduct. So long as and to the extent that it is in the exercise of reasonable care, the Sub-Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and, if in writing, reasonably believed to be signed by the proper party or parties. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters and shall be without liability for any action reasonably taken or omitted pursuant to such advice. Notwithstanding the foregoing, the responsibility of the Sub-Custodian with respect to redemptions effected by check shall be in accordance with a separate agreement entered into between the Custodian and the Sub-Custodian. It is also understood that the Sub-Custodian shall not be liable for any loss resulting from a Sovereign Risk. A "Sovereign Risk" shall mean nationalization, expropriation, devaluation, revaluation, confiscation, seizure, cancellation, destruction or similar action by any governmental authority, de facto or de jure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, taxes, levies or other charges affecting the Fund's property; or acts of war, terrorism, insurrection or revolution; or any other similar act or event beyond the Sub-Custodian's control. The Sub-Custodian shall protect the Fund and the Custodian from losses to the Fund resulting from any act or failure to act of the Sub-Custodian in violation of its duties hereunder or of any law applicable to the Sub-Custodian's duties hereunder. If the Custodian requires the Sub-Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Sub-Custodian, result in the Sub-Custodian's being liable for the payment of money or incurring liability of some other form, the Custodian, as a prerequisite to requiring the Sub-Custodian to take such action, shall provide indemnity to the Sub-Custodian in an amount and form satisfactory to the Sub-Custodian. The Custodian agrees to indemnify and hold harmless the Sub-Custodian from and against all taxes, charges, expenses, assessments, claims and liabilities (including counsel fees) (collectively, "Authorized Charges") incurred or assessed against it or its nominee in connection with the performance of this Agreement, except such as may arise from its own negligent action, negligent failure to act or willful misconduct. The Sub-Custodian is authorized to charge any account of the Fund for such items and such fees. To secure any such Authorized Charges and any advances of cash or securities made by the Sub-Custodian to or for the benefit of the Fund for any purpose which results in the Fund's incurring an overdraft at the end of any business day or for extraordinary or emergency purposes during any business day, the Custodian on behalf of the Fund hereby represents that it has obtained from the Fund authorization to apply available cash in any account maintained by the Sub-Custodian on behalf of the Fund and a security interest in and pledge to the Sub-Custodian of securities of the Fund held by the Sub-Custodian (including those which may be held in a Securities System) up to a maximum of 10% of the value of the net assets held by the Sub-Custodian for the purposes of securing payment of any Authorized Charges and any advances of cash or securities, and that the Fund has agreed, from time to time, to designate in writing, or to cause its investment adviser to, or permit the Custodian to, designate in writing, the securities subject to such security interest and pledge with such specificity and detail as the Sub-Custodian may reasonably request (and in the absence of such designation to permit the Sub- Custodian so to designate securities). The Custodian hereby grants on behalf of the Fund a security interest and pledge to the Sub-Custodian, as aforesaid, in securities and available cash, as security for any Authorized Charges and any advances of cash or securities and agrees that, should the Fund or the Custodian fail to repay promptly any Authorized Charges and any advances of cash or securities, the Sub-Custodian shall be entitled to use such available cash and to dispose of such pledged securities as is necessary to repay any such Authorized Charges or any advances of cash or securities and to exercise the rights of a secured party under the Uniform Commercial Code. The Custodian agrees not to amend the third paragraph of Section 9 of the Custodian Agreement unless it provides the Sub- Custodian with at least thirty (30) days' prior written notice of the substance of any proposed amendments, provided that the foregoing shall not be construed to in any way to provide that the Sub-Custodian's consent shall be required to make such an amendment effective or that the Sub-Custodian's failure to give such consent shall in any way affect its obligations under this Agreement. 8. SUCCESSOR SUB-CUSTODIAN. If a successor sub-custodian shall be appointed by the Custodian, the Sub-Custodian shall, upon termination and upon receipt of Proper Instructions, cause to be delivered to such successor sub-custodian, duly endorsed and in the form for transfer, all securities, funds and other property of the Fund then held by it and all instruments held by the Sub-Custodian related thereto and cause the transfer to an account of the successor sub-custodian all of the Fund's securities held in any Securities Systems. If no such successor sub-custodian shall be appointed, the Sub-Custodian shall, in like manner, upon receipt of a certified copy of a vote of the Trustees of the Fund, cause to be transferred such securities, funds and other property in accordance with such vote. In the event that no written order designating a successor sub-custodian or certified copy of a vote of the Trustees shall have been delivered to the Sub-Custodian on or before the date when such termination shall become effective, then the Sub- Custodian shall have the right to deliver to a bank or trust company, which meets the requirements of the 1940 Act and the rules and regulations thereunder, all securities, funds and other properties of the Fund. Thereafter, such bank or trust company shall be the successor of the Sub-Custodian under this Agreement. In the event that securities, funds and other property remain in the possession of the Sub-Custodian after the date of termination hereof owing to failure of the Custodian to obtain a certified copy of the Trustees appointing a successor sub- custodian, the Sub-Custodian shall be entitled to fair compensation for its services during such period as the Sub- Custodian retains possession of such securities, funds and other property and the provisions of this Agreement relating to the duties and obligations of the Sub-Custodian shall remain in full force and affect. 9. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT. This Agreement shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid, to the other party, such termination to take effect not sooner than thirty (30) days after the date of mailing; provided, that either party may at any time immediately terminate this Agreement in the event of the appointment of a conservator or receiver for the other party or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. No provision of this Agreement may be amended or terminated except by a statement in writing signed by the party against which enforcement of the amendment or termination is sought. Upon termination of this Agreement, the Custodian shall pay to the Sub-Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Sub-Custodian for its reimbursable costs, expenses and disbursements. The provisions of Section 7, including, until any Authorized Charges and any advances of cash or securities referred to therein are repaid, all liens and security interests created pursuant thereto, and all rights to indemnification, shall survive any termination of this Agreement. 10. INTERPRETATION. This Agreement constitutes the entire understanding and agreement of the parties hereto with respect to the subject matter hereof. In connection with the operation of this Agreement, the Sub-Custodian and the Custodian may from time to time agree in writing on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement. 11. GOVERNING LAW. This Agreement is executed and delivered in The Commonwealth of Massachusetts and shall be governed by and construed according to the internal laws of said Commonwealth, without regard to principles of conflicts of law. 12. NOTICES. Notices and other writings delivered or mailed postage prepaid to the Custodian addressed to the Custodian attention: George H. Crane, Senior Vice President, The Putnam Companies, 99 High Street, Boston, MA 02109 or to such other person or address as the Custodian may have designated to the Sub- Custodian in writing, or to the Sub-Custodian attention: or to such other address as the SubCustodian may have designated to the Custodian in writing, shall be deemed to have been properly delivered or given hereunder to the respective addressee. 13. BINDING OBLIGATION. This Agreement shall be binding on and shall inure to the benefit of the Custodian and the Sub- Custodian and their respective successors and assigns, provided that neither party hereto may assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other party. 14. PRIOR AGREEMENTS. This Agreement supersedes and terminates, as of the date hereof, all prior contracts between the Fund or the Custodian and the Sub-Custodian relating to the custody of the Fund's assets. 15. DECLARATION OF TRUST. A copy of the Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that the obligations of or arising out of this instrument are not binding upon any of the Trustees or beneficiaries individually but binding only upon the assets and property of the Fund. IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the day of , 199 . PUTNAM FIDUCIARY TRUST COMPANY By-------------------------------- Name: Title: (Sub-Custodian) By--------------------------------- Name: Title: The Sub-Custodian and Putnam Investments, Inc. ("Putnam"), the sole owner of the Custodian, agree that Putnam shall be the primary obligor with respect to compensation due the Sub-Custodian pursuant to Section 6 of this Agreement in connection with the Sub-Custodian's performance of its responsibilities hereunder. The Custodian and Putnam agree to take all actions necessary and appropriate to assure that the Sub-Custodian shall be compensated in the amounts and on the schedule agreed to by the Custodian and the Sub-Custodian pursuant to Section 6. PUTNAM INVESTMENTS, INC. By:------------------------------- Name: Title: PUTNAM FIDUCIARY TRUST COMPANY By:-------------------------------- Name: Title: (Sub-Custodian) By:---------------------------------- Name: Title: S:\shared\boiler\newfunds\pre-eff\NF-27d.rev EX-99.B9OTHCONTRCT 8 INVESTOR SERVICING AGREEMENT AGREEMENT made as of the 3rd day of June, 1991, between each of the Putnam Funds listed in Appendix A hereto (as the same may from time to time be amended to add one or more additional Putnam Funds or to delete one or more of such Funds), each of such Funds acting severally on its own behalf and not jointly with any of such other Funds (each of such Funds being hereinafter referred to as the "Fund"), and The Putnam Management Company, Inc. (the "Manager"), a Delaware corporation, and Putnam Fiduciary Trust Company (the "Agent"), a Massachusetts trust company. W I T N E S S E T H: WHEREAS, the Fund is an investment company registered under the Investment Company Act of 1940; and WHEREAS, the Fund desires to engage the Manager and the Agent to provide all services required by the Fund in connection with the establishment, maintenance and recording of shareholder accounts, including without limitation all related tax and other reporting requirements, and the implementation of investment and redemption arrangements offered in connection with the sale of the Fund's shares; and WHEREAS, the Agent, an affiliate of the Manager, is willing to provide such services on the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein, the parties hereto agree as follows: 1. APPOINTMENT. The Fund hereby appoints the Agent as its "Investor Servicing Agent" on the terms and conditions set forth herein. In such capacity the Agent shall act as transfer, distribution disbursing and redemption agent for the Fund and shall act as agent for the shareholders of the Fund in connection with the various shareholder investment and/or redemption plans from time to time made available to shareholders. The Agent hereby accepts such appointment and agrees to perform the respective duties and functions of such offices in accordance with the terms of this agreement and in a manner generally consistent with the practices and standards customarily followed by other high quality investor servicing agents for registered investment companies. Notwithstanding such appointment, however, the parties agree that the Manager may, upon thirty (30) days prior written notice to the Fund, assume such appointment and perform such duties and functions itself. Pending any such assumption, however, the Manager hereby guarantees the performance of the Agent hereunder and shall be fully responsible to the Fund, financially and otherwise, for the performance by the Agent of its agreements contained herein. 2. GENERAL AUTHORITY AND DUTIES. By its acceptance of the foregoing appointment, the Agent shall be responsible for performing all functions and duties which, in the reasonable judgment of the Fund, are necessary or desirable in connection with the establishment, maintenance and recording of the Fund's shareholder accounts and the conduct of its relations with shareholders with respect to their accounts. Without limiting the generality of the foregoing, the Agent shall be responsible: (a) as transfer agent, for performing all functions customarily performed by transfer agents for registered investment companies, including without limitation all functions necessary or desirable to establish and maintain accounts evidencing the ownership of securities issued by the Fund and, to the extent applicable, the issuance of certificates representing such securities, the recording of all transactions pertaining to such accounts, and effecting the issuance and redemption of securities issued by the Fund; (b) as distribution disbursing agent, for performing all functions customarily performed by distribution disbursing agents for registered investment companies, including without limitation all functions necessary or desirable to effect the payment to shareholders of distributions declared from time to time by the Trustees of the Fund; (c) as redemption agent for the Fund, for performing all functions necessary or desirable to effect the redemption of securities issued by the Fund and payment of the proceeds thereof; and (d) as agent for shareholders of the Fund, performing all functions necessary or desirable to maintain all plans or arrangements from time to time made available to shareholders to facilitate the purchase or redemption of securities issued by the Fund. In performing its duties hereunder, in addition to the provisions set forth herein, the Agent shall comply with the terms of the Declaration of Trust, the Bylaws and the current Prospectus and Statement of Additional Information of the Fund, and with the terms of votes adopted from time to time by the Trustees and shareholders of the Fund, relating to the subject matters of this Agreement, all as the same may be amended from time to time. 3. STANDARD OF SERVICE; COMPLIANCE WITH LAWS. The Agent will use its best efforts to provide high quality services to the Fund's shareholders and in so doing will seek to take advantage of such innovations and technological improvements as may be appropriate or desirable with a view to improving the quality and, where possible, reducing the cost of its services to the Fund. In performing its duties hereunder, the Agent shall comply with the provisions of all applicable laws and regulations and shall comply with the requirements of any governmental authority, having jurisdiction over the Agent or the Fund with respect to the duties of the Agent hereunder. 4. COMPENSATION. The Fund shall pay to the Agent, for its services rendered and its costs incurred in connection with the performance of its duties hereunder, such compensation and reimbursements as may from time to time be approved by vote of the Trustees of the Fund. 5. DUTY OF CARE; INDEMNIFICATION. The Agent will at all times act in good faith and exercise reasonable care in performing its duties hereunder. The Agent will not be liable or responsible for delays of errors resulting from circumstances beyond its control, including acts of civil or military authorities, national emergencies, labor difficulties, fire, mechanical breakdown beyond its control, flood or catastrophe, acts of God, insurrection, war, riots or failure beyond its control of transportation, communication or power supply. The Agent may rely on certifications of the Clerk, the President, the Vice Chairman, the Executive Vice President, the Senior Vice President or the Treasurer of the Fund as to any action taken by the shareholders or trustees of the Fund, and upon instructions not inconsistent with this Agreement received from the President, Vice Chairman, the Executive Vice President, the Senior Vice President or the Treasurer of the Fund. If any officer of the Fund shall no longer be vested with authority to sign for the Fund, written notice thereof shall forthwith be given to the Agent by the Fund and, until receipt of such notice by it, the Agent shall be entitled to recognize and act in good faith upon certificates or other instruments bearing the signatures or facsimile signatures of such officers. The Agent may request advice of counsel for the Fund, at the expense of the Fund, with respect to the performance of its duties hereunder. The Fund will indemnify and hold the Agent harmless from any and all losses, claims, damages, liabilities and expenses (including reasonable fees and expenses of counsel) arising out of (i) any action taken by the Agent in good faith consistent with the exercise of reasonable care in accordance with such certifications, instructions or advice, (ii) any action taken by the Agent in good faith consistent with the exercise of reasonable care in reliance upon any instrument or certificate for securities believed by it (a) to be genuine, and (b) to be executed by any person or persons authorized to execute the same; PROVIDED, HOWEVER, that the Agent shall not be so indemnified in the event of its failure to obtain a proper signature guarantee to the extent the same is required by the Declaration of Trust, Bylaws, current Prospectus or Statement of Additional Information of the Fund or a vote of the Trustees of the Fund, and such requirement has not been waived by vote of the Trustees of the Fund, or (iii) any other action taken by the Agent in good faith consistent with the exercise of reasonable care in connection with the performance of its duties hereunder. In the event that the Agent proposes to assert the right to be indemnified under this Section 5 in connection with any action, suit or proceeding against it, the Agent shall promptly after receipt of notice of commencement of such action, suit or proceeding notify the Fund of the same, enclosing a copy of all papers served. In such event, the Fund shall be entitled to participate in such action, suit or proceeding, and, to the extent that it shall wish, to assume the defense thereof, and after notice from the Fund to the Agent of its election so to assume the defense thereof the Fund shall not be liable to the Agent for any legal or other expenses. The parties shall cooperate with each other in the defense of any such action, suit or proceeding. In no event shall the Fund be liable for any settlement of any action or claim effected without its consent. 6. MAINTENANCE OF RECORDS. The Agent will maintain and preserve all records relating to its duties under this Agreement in compliance with the requirements of applicable statutes, rules and regulations, including, without limitation, Rule 31a-1 under the Investment Company Act of 1940. Such records shall be the property of the Fund and shall at all times be available for inspection and use by the officers and agents of the Fund. The Agent shall furnish to the Fund such information pertaining to the shareholder accounts of the Fund and the performance of its duties hereunder as the Fund may from time to time request. The Agent shall notify the Fund promptly of any request or demand by any third party to inspect the records of the Fund maintained by it and will act upon the instructions of the Fund in permitting or refusing such inspection. 7. FUND ACCOUNTS. All moneys of the Fund from time to time made available for the payment of distributions to shareholders or redemptions of shares, or otherwise coming into the possession or control of the Agent or its officers, shall be deposited and held in one or more accounts maintained by the Agent solely for the benefit of the Funds. 8. INSURANCE. The Agent will at all times maintain in effect insurance coverage, including, without limitation, Errors and Omissions, Fidelity Bond and Electronic Data Processing coverages, at levels of coverage consistent with those customarily maintained by other high quality investor servicing agents for registered investment companies and with such policies as the Trustees of the Fund may from time to time adopt. 9. EMPLOYEES. The Agent shall be responsible for the employment, control and conduct of its agents and employees and for injury to such agents or employees or to others caused by such agents or employees. The Agent shall assume full responsibility for its agents and employees under applicable statutes and agrees to pay all applicable employer taxes thereunder with respect to such agents and employees, and such agents and employees shall in no event be considered to be agents or employees of the Fund. 10. TERMINATION. This Agreement shall continue indefinitely until terminated by not less than ninety (90) days prior written notice given by the Fund to the Agent, or by not less than six months prior written notice given by the Agent to the Fund. In the event that in connection with any such termination a successor to any of the Agent's duties or responsibilities hereunder is designated by the Fund by written notice to the Agent, the Agent will cooperate fully in the transfer of such duties and responsibilities, including provision for assistance by the Agent's personnel in the establishment of books, records and other data by such successor. The Fund will reimburse the Agent for all expenses incurred by the Agent in connection with such transfer. 11. MISCELLANEOUS. This Agreement shall be construed and enforced in accordance with and governed by the laws of The Commonwealth of Massachusetts. The captions in this Agreement are included for convenience of reference only and in no way define or limit any of the provisions of this Agreement or otherwise affect their construction or effect. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. A copy of the Declaration of Trust (including any amendments thereto) of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of the Fund as Trustees and not individually and that the obligations of or arising out of this instrument are not binding upon any of the Trustees or officers or shareholders individually, but binding only upon the assets and property of the Fund. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers as of the date and year first above written. THE PUTNAM FUNDS, listed on Appendix A /s/Charles E. Porter By ------------------------------- - ---- Charles E. Porter Executive Vice President PUTNAM FIDUCIARY TRUST COMPANY /s/John R. Verani By ------------------------------- - ---- John R. Verani President THE PUTNAM MANAGEMENT COMPANY, INC. /s/Gordon H. Silver By ------------------------------- - ---- Gordon H. Silver Senior Managing Director APPENDIX A Putnam Adjustable Rate U.S. Government Fund Putnam American Government Income Fund Putnam Arizona Tax Exempt Income Fund Putnam Asia Pacific Growth Fund Putnam Asset Allocation Funds - Balanced Portfolio - Conservative Portfolio - Growth Portfolio Putnam Balanced Retirement Fund Putnam California Tax Exempt Income Trust -California Tax Exempt Income Fund Putnam California Tax Exempt Money Market Fund Putnam Capital Appreciation Fund Putnam Capital Manager Trust -PCM Voyager Fund -PCM Growth & Income Fund -PCM Money Market Fund -PCM High Yield Fund -PCM U.S. Government and High Quality Bond Fund -PCM Global Asset Allocation Fund -PCM Global Growth Fund -PCM Utilities Growth & Income Fund -PCM Diversified Income Fund -PCM New Opportunities Fund -PCM Asia Pacific Growth Fund Putnam Convertible Income-Growth Trust Putnam Diversified Equity Trust Putnam Diversified Income Trust Putnam Diversified Income Trust II Putnam Equity Income Fund Putnam Europe Growth Fund Putnam Federal Income Trust Putnam Florida Tax Exempt Income Fund Putnam Funds Trust -Putnam International Growth and Income Fund The George Putnam Fund of Boston Putnam Global Governmental Income Trust Putnam Global Growth Fund The Putnam Fund for Growth and Income Putnam Growth and Income Fund II Putnam Health Sciences Trust Putnam High Yield Advantage Fund Putnam High Yield Trust Putnam Income Fund Putnam Intermediate U.S. Government Fund Putnam Investment Funds -Putnam Balanced Fund -Putnam American Renaissance Fund -Putnam Emerging Growth Fund -Putnam Genesis Fund -Putnam Global Growth and Income Fund -Putnam Global Utilities Fund -Putnam International Fund -Putnam International New Opportunities Fund -Putnam Japan Fund -Putnam New Value Fund -Putnam Real Estate Opportunities Fund -Putnam Research Fund Putnam Investors Fund Putnam Massachusetts Tax Exempt Income Fund Putnam Michigan Tax Exempt Income Fund Putnam Minnesota Tax Exempt Income Fund Putnam Money Market Fund Putnam Municipal Income Fund Putnam Natural Resources Fund Putnam New Jersey Tax Exempt Income Fund Putnam New Opportunities Fund Putnam New York Tax Exempt Income Trust -New York Tax Exempt Income Fund Putnam New York Tax Exempt Money Market Fund Putnam New York Tax Exempt Opportunities Fund Putnam Ohio Tax Exempt Income Fund Putnam OTC Emerging Growth Fund Putnam Overseas Growth Fund Putnam Pennsylvania Tax Exempt Income Fund Putnam Preferred Income Fund Putnam Tax Exempt Income Fund Putnam Tax Exempt Money Market Fund Putnam Tax-Free Income Trust -Tax-Free High Yield Fund -Tax-Free Insured Fund Putnam U.S. Government Income Trust Putnam Utilities Growth and Income Fund Putnam Vista Fund Putnam Voyager Fund Putnam Voyager Fund II Dated: June 7, 1996 NF-26.96 EX-99.B10OPINCOUNS 9 ROPES & GRAY ONE INTERNATIONAL PLACE BOSTON, MASSACHUSETTS 02110 617 951-7000 July 18, 1996 Putnam Funds Trust One Post Office Square Boston, Massachusetts 02109 Gentlemen: We are furnishing this opinion in connection with the Registration Statement on Form N-1A (the "Registration Statement") filed under the Securities Act of 1933, as amended, by Putnam Funds Trust (the "Fund") for the registration of an indefinite number of its shares of beneficial interest (the "Shares") of Putnam International Growth and Income Fund, a series of shares of beneficial interest (the "series"), of the Fund. The Shares are proposed to be sold pursuant to a Distributor's Contract dated June 7, 1996 (the "Distributor's Contract") between the Fund and Putnam Mutual Funds Corp. We have acted as counsel for the Fund since its organization. We are familiar with the action taken by its Trustees to authorize this issuance of the Shares. We have examined its records of Trustee and shareholder action, its Bylaws, and its Agreement and Declaration of Trust on file at the office of the Secretary of State of The Commonwealth of Massachusetts. We have examined copies of such Registration Statement, in the form filed or to be filed with the Securities and Exchange Commission, and such other documents as we deem necessary for the purpose of this opinion. We assume that upon sale of the Shares the Fund will receive the net asset value thereof. Based upon the foregoing, we are of the opinion that the Fund is authorized to issue an unlimited number of Shares, and that when the Shares are issued and sold pursuant to the Distributor's Contract, they will be validly issued, fully paid and nonassessable by the Fund. The Fund is an entity of the type commonly known as a "Massachusetts business trust". Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in each agreement, obligation, or instrument entered into or executed by the Fund or the Trustees. The Agreement and Declaration of Trust provides for indemnification out of the property of the particular series of shares of that series for all loss and expense of any shareholder held personally liable solely by ROPES & GRAY Putnam Funds Trust -2- July 18, 1996 reason of his being or having been a shareholder. Thus, the risk of a shareholder's incurring financial loss on account of shareholder liability is limited to circumstances in which that series of shares itself would be unable to meet its obligations. We consent to the filing of this opinion as an exhibit to such Registration Statement. Very truly yours, Ropes & Gray EX-99.B13STOCKLTR 10 July 2, 1996 Putnam Funds Trust One Post Office Square Boston, MA 02109 Gentlemen: In connection with your sale to us today of 3,921.647 Class A shares, 3,921.569 Class B shares and 3,921.569 Class M shares of beneficial interest (the "Shares") in Putnam International Growth and Income Fund (the "Fund"), a series of Putnam Funds Trust, we understand that: (i) the Shares have not been registered under the Securities Act of 1933, as amended; (ii) your sale of the Shares to us is in reliance on the sale's being exempt under Section 4(2) of the Act as not involving any public offering; and (iii) in part, your reliance on such exemption is predicated on our representation, which we hereby confirm, that we are acquiring the Shares for investment and for our own account as the sole beneficial owner hereof, and not with a view to or in connection with any resale or distribution of any or all of the Shares or of any interest therein. We hereby agree that we will not sell, assign or transfer the Shares or any interest therein except upon repurchase or redemption by the Fund unless and until the Shares have been registered under the Securities Act of 1933, as amended, or you have received an opinion of your counsel indicating to your satisfaction that such sale, assignment or transfer will not violate the provisions of the Securities Act of 1933, as amended, or any rules and regulations promulgated thereunder. We further agree, pursuant to the requirements of the Staff of the Securities and Exchange Commission, that if any of the Shares are redeemed during the first five years of the Fund's operations by any holder thereof, the redemption proceeds will be reduced by the amount of the then unamortized organizational expenses in the same ratio as the number of Shares redeemed bears to the number of Shares held at the time of redemption. This letter is intended to take effect as an instrument under seal, shall be construed under the laws of Massachusetts, and is delivered at Boston, Massachusetts, as of the date written above. Very truly yours, PUTNAM INVESTMENTS, INC. By: /s/ Lawrence J. Lasser ----------------------------- Lawrence J. Lasser, President EX-99.B14RETMTPLAN 11 PUTNAM INDIVIDUAL RETIREMENT ACCOUNT PLAN ARTICLE I INTRODUCTION By executing the related Adoption Agreement, the Participant, or the Employer on behalf of the Participants, has established an Individual Retirement Account Plan for the exclusive benefit of the Participant(s) and his or their Beneficiaries intended to qualify under Section 408(a) or 408(c), in the case of a Plan established by the Employer on behalf of the Participants, of the Code. ARTICLE II DEFINITIONS As used in this Plan the following terms shall have the following meanings, unless a different meaning is plainly required by the context: 2.1 "Agreement" shall mean the Adoption Agreement pursuant to which the Participant or the Employer has adopted the Plan. 2.2 "Annuity" shall mean an annuity contract or participating in any annuity contract which is made available as a funding option by the Trustee to an Employer or a particular class of Participants under the Plan. Each such contract or participating interest, when it is issued in the name of any person other than the Trustee, shall provide that it is non- transferable, that the owner shall have no right or power to sell, assign, discount or pledge as collateral or security for the performance of any obligation or for any other purpose, any interest in such annuity contract other than to the issuer. 2.3 "Beneficiary" shall mean the person or persons designated by a Participant pursuant to Section 7.4. 2.4 "Code" shall mean the Internal Revenue Code of 1986, as it may be amended from time to time. 2.5 "Compensation" shall mean wages, salaries, professional fees, or other amounts derived from or received for personal service actually rendered (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, and bonuses) and includes earned income, as defined in Section 401(c)(2) of the Code (reduced by the deduction the self- employed individual takes for contributions to a plan qualified under Section 401(a) of the Code). For purposes of this definition, section 401(c)(2) shall be applied as if the term trade or business for purposes of section 1402 included service described in subsection (c)(6). Compensation shall not include any amounts derived from or received as earnings or profits from property (including, but not limited to, interest and dividends) or amounts not includible in gross income. Compensation shall not include any amount received as a pension or annuity or as deferred compensation. Compensation shall include any amount includible in the individual's gross income under Section 71 of the Code with respect to a divorce or separation instrument described in subparagraph (A) of Section 71(b)(2) of the Code. 2.6 "Designated Beneficiary" shall mean the Beneficiary who is considered as such under Sections 401(a)(9) and 408 of the Code and the regulations promulgated thereunder. 2.7 "Effective Date" shall mean the date on which the Employer or Participant signs the Agreement. 2.8 "Employer" shall mean the employer or an association of employees (within the meaning of Section 408(c) of the Code) named in the Agreement, if any is so named. 2.9 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time. 2.10 "Excess Contribution" shall mean the amount of any contribution (other than a Rollover Contribution) made by or on behalf of a Participant for any Plan Year which is in excess of the contribution limitations under Sections 219 and 408(o) of the Code. 2.11 "Investment Company Shares" shall mean shares issued by any registered investment company for which Putnam Investment Management, Inc., or its affiliate, serves as investment advisor, or for which Putnam Mutual Funds Corp., or its affiliate, serves as principal underwriter; provided, however, that in the case of any open-end investment company, the then current prospectus of such investment company offers its shares for purchase under the Plan. 2.12 "IRA Account" shall mean the property held in trust by the Trustee for the account of the Participant and his Beneficiaries. 2.13 "Participant" shall mean each individual named as a participant in the Agreement. 2.14 "Plan" shall mean The Putnam Individual Retirement Account Plan set forth in this instrument, as it may be amended from time to time. 2.15 "Plan Year" shall mean the calendar year. 2.16 "Required Beginning Date" shall mean April 1 following the calendar year in which the Participant attains age 70 1/2. 2.17 "Rollover Contribution" shall mean, after December 31, 1992, a rollover contribution described in Section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3). Prior to January 1, 1990 a Rollover Contribution includes a rollover contribution described in Section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code. 2.18 "Simplified Employee Pension Program" shall mean an arrangement as defined in Section 408(k) of the Code. 2.19 "Term Deposit" shall mean a deposit offered by a bank and which is made available as a funding option by the Trustee to an Employer or a particular class of Participants under the Plan. 2.20 "Trustee" shall mean Putnam Fiduciary Trust Company. 2.21 A pronoun in the masculine gender includes the feminine gender unless the context indicates otherwise. ARTICLE III CONTRIBUTIONS 3.1 For each Plan Year, contributions to the IRA Account of each Participant may be made in accordance with the following provisions: (a) The contribution made by or on behalf of each Participant may not exceed the less of $2,000 or 100% of the Participant's Compensation. (b) If the Participant has no Compensation (or elects to be treated as having no Compensation) and is the spouse of another Participant in a similar individual account retirement plan, the contribution may not exceed the amount in (a); provided, that the aggregate of (a) and (b) may not exceed the lesser of $2,250 or 100% of the spouse's Compensation. (c) A contribution on behalf of a Participant by an Employer pursuant to a Simplified Employee Pension Program shall be made in accordance with the terms of the Simplified Employee Pension Program and in accordance with Section 408(k) of the Code. (d) If the Participant has attained age 70 1/2 before the close of a Plan Year, no contribution may be made for the Plan Year except Rollover Contributions or Employer contributions made pursuant to a Simplified Employee Pension. 3.2 In addition to the current cash contributions contemplated by Section 3.1, any Participant may cause a Rollover Contribution to be contributed to his IRA Account at any time. 3.3 In no event shall a contribution, other than a Rollover Contribution or an employer contribution to a Simplified Employee Pension Program, by or on behalf of a Participant be made if (a) the contribution, when added to other contributions (other than Rollover Contributions) for the same Plan Year, exceeds the applicable limits set forth in Section 3.1, or (b) the contribution is not in cash. A Rollover Contribution shall not be accepted under the Plan unless it is in cash or is in a form of investment permitted under Article V. The Participant assumes sole responsibility for making sure that all contributions made to his IRA Account satisfy the applicable limits set forth in Section 3.1 and the Trustee shall have no duty to determine whether such contributions are in excess of such limits. 3.4 The Employer shall notify the Trustee in writing or other medium acceptable to the Trustee of the amount of each contribution made by it on behalf of each Participant (and such Participant's spouse). 3.5 For purposes of Section 3.1, a contribution to a Participant's IRA Account shall be deemed to have been made for the Plan Year in which it is made unless the Participant directs that it was made with respect to the preceding Plan Year. A contribution shall be deemed to have been made on the last day of the preceding Plan Year if the contribution is made on account of such Plan Year, and it is made no later than the due date of the Participant's Federal income tax return. 3.6 The deductibility or non-deductibility of contributions made by or on behalf of the Participant (other than contributions made under Section 3.1(c)) shall be determined under Sections 219 and 408(o) of the Code. The Participant, and not the Trustee, determines whether contributions are deductible or non- deductible. ARTICLE IV PARTICIPANT'S IRA ACCOUNTS 4.1 Each Participant's interest in his IRA Account shall be fully vested and nonforfeitable at all times. 4.2 The Trustee shall keep records showing the amount of each Participant's interest in his IRA Account. The Trustee shall establish and maintain such other accounts and records as it deems in its discretion to be reasonably required in order to discharge its duties under the Plan. 4.3 The Trustee shall have no duty to account for deductible contributions separately from nondeductible contributions. In determining the taxable amount of a distribution, the Participant shall only rely on his annual Federal income tax returns and not on any reports of the Trustee. The Trustee shall withhold Federal income tax from any distribution from the Participant's IRA Account as if the total amount of the distribution is includible in the Participant's income, unless otherwise permitted by applicable law. ARTICLE V INVESTMENT OF THE IRA ACCOUNT The Participant shall determine what proportion of each contribution by or on behalf of the Participant to the IRA Account shall be invested in Investment Company Shares, an Annuity, a Term Deposit, and/or in such other securities that are acceptable to the Trustee. The Participant shall from time to time direct the Trustee with respect to the investment and reinvestment of assets held in the IRA Account by means of written instructions given to the Trustee in such manner required by the Trustee. Notwithstanding the foregoing, the Employer may limit on the Agreement the funding choices available to the Participant. The Trustee shall invest all contributions made to the IRA Account and all income received thereon in the funding option(s) in accordance with the Participant's directions and shall reinvest in each such funding option all income, interest or other distributions thereon (unless directed otherwise by the Participant). If at any time investment instructions given by the Participant to the Trustee are unclear in the opinion of the Trustee, the Trustee may invest part or all of the assets in the IRA Account in the Putnam Daily Dividend Trust or any other similar fund. The Trustee reserves the right, however, when prudent, to postpone the investment of initial contributions for seven days from the date of adoption of the Agreement. The Participant may change the choice of funding options as often as desired but subject to any restrictions or penalties imposed by the underlying investment. Any such change shall be made in the manner required by the Trustee; except that the Employer may place further restrictions on the change of funding options by the Participant if the Employer so elects in the Agreement. The Trustee assumes no responsibility for rendering advice with respect to the investment and reinvestment of the Participant's IRA Account and shall not be liable for any loss incurred with respect to any investment made or retained in accordance with the Participant's instructions. The Participant shall have and exercise exclusive responsibility and control over the investment of the assets of his IRA Account in accordance with the terms of this Plan and the Agreement, and the Trustee shall have no duty to question his instructions in that regard or to advise him regarding purchase, retention, or sale of such assets. No part of the IRA Account shall be invested in life insurance contracts or in collectibles, as defined in Section 408(m) of the Code, except as otherwise permitted under Section 408(m)(3) which permits investment in certain gold and silver coins and coins issued under the laws of any state. No part of the IRA Account shall be commingled with any other property except in a common trust fund or common investment fund (within the meaning of Section 408(a)(5) of the Code and the regulations thereunder), and no part of the IRA Account shall be commingled with other property in any common trust fund or common investment fund which includes assets other than the assets of individual retirement accounts as described in Section 408(a) or (c) of the Code and the assets of trusts exempt from taxation under Section 501(a) of the Code which are parts of plans described in Section 401(a) of the Code. If the Participant authorizes the Employer to withhold contributions from the Participant's pay and remit them to the Trustee periodically, those contributions may be invested in a group trust maintained by the Trustee, and commingled with contributions made by other individual retirement plan participants pending allocation of the Participant's contributions to his IRA Account. The group trust assets shall be invested, and its earnings shall be allocated, as described in the Adoption Agreement signed by the Participant, and the governing instrument of that group trust shall be deemed to be adopted as a part of this Plan. ARTICLE VI POWERS AND DUTIES OF THE TRUSTEE 6.1 Each Participant may direct the manner in which any Investment Company Shares and such other securities (including fractional shares) held in his IRA Account shall be voted with respect to any matters coming before any meeting of shareholders of the investment company which issued such shares. The Participant's directions must be in writing on a form approved by the Trustee, signed by the Participant and delivered to the Trustee within the time prescribed by it. Subject to any requirements of applicable law, the Trustee shall deliver to each Participant copies of any notices of shareholders' meetings, proxies and proxy-soliciting materials, prospectuses and the annual and other reports to shareholders which have been received by the Trustee with respect to Investment Company Shares and any other securities held for that Participant. The Trustee shall not vote any Investment Company Shares or any other securities except upon receipt by the Trustee of adequate written instructions from the Participant. 6.2 In addition to and not in limitation of such powers as the Trustee has by law or under any other provisions of the Plan, the Trustee shall, subject to the limitations set forth in Article V hereof, have the following powers: (a) to deal with all or any part of the IRA Account; (b) to retain uninvested such cash as it may deem necessary or advisable, without liability for interest thereon; (c) to enforce by suit or otherwise, or to waive, its rights on behalf of the IRA Account, and to defend claims asserted against it or the IRA Account, provided that the Trustee is indemnified by the Participant to its satisfaction against liability and expenses; (d) to compromise, adjust and settle any and all claims against or in favor of it or the IRA Account; (e) to register securities in its own name (with or without indication of its fiduciary capacity hereunder), including commingling with other securities held by the Trustee as provided in Article V; (f) to enter into contracts or participating interests for investments permitted under the Plan; (g) to make, execute, acknowledge and deliver any and all instruments that it deems necessary or appropriate to carry out the powers herein granted; and (h) except as otherwise provided herein, generally to exercise any of the powers of an owner with respect to all or any part of the IRA Account. 6.3 Within a reasonable period after (a) the end of each Plan Year and (b) the termination of the Plan, the Trustee shall render to each Participant, and to other persons as required by law, accounts for its administration under the Plan during the preceding Plan Year or interim period. The Trustee shall make reports regarding such accounts to the Commissioner of Internal Revenue or his delegate and individuals for whom the IRA Account is maintained with respect to contributions, distributions and such other matters as the Commissioner or his delegate may be required by regulation. The Participant or, in the case of a Plan adopted by an Employer, the Employer shall furnish such information as is necessary to prepare such reports. Such reports shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by regulation. The Trustee shall also give access to its records with respect to the Plan at reasonable times and upon reasonable notice to any person designated by a Participant or to any person required by law to have access to such records. Should no person or persons to whom an account is rendered, as required by law, file with the Trustee written objection to specific items in such account within a period of 60 days after its mailing, and commence legal proceedings within a further 60 days after the filing of written objection, the account shall be considered approved to the extent permitted by applicable law, with the same effect as though it had been judicially allowed. If any Participant, or any other person required by law to receive such accounts, files any exceptions or objections within such 60-day period with respect to any matters or transactions stated or shown in the account and questions raised in such exception or objections cannot be amicably settled, the Trustee or any person required by law to receive such accounts shall have the right to have such questions settled by judicial proceedings although the Participant or any person required by law to receive such accounts shall have, to the extent permitted by applicable law, only 60 days from the filing of written objection to the account to commence legal proceedings. Nothing herein contained shall be construed as depriving the Trustee of the right to have a judicial settlement of accounts. In any proceeding for a judicial settlement, the only necessary parties, except as required by law, shall be the Trustee and all persons to whom the accounting was rendered; and any judgment or decree entered in any such proceeding shall, to the extent permitted by applicable law, be binding and conclusive on all persons claiming to have any interest in the IRA Account. 6.4 The Trustee shall be entitled to reasonable compensation for services, determined from time to time on such basis as shall be specified in the last preceding account rendered by the Trustee. Unless otherwise provided, the Trustee's compensation and all reasonable expenses incurred by it in the administration of the Plan shall be paid from the Participant's IRA Account. The Trustee is expressly authorized to cause IRA Account assets to be redeemed for the purpose of paying such amounts. 6.5 Any corporation into which the Trustee may merge or with which it may consolidate or any corporation resulting from any such merger or consolidation shall be the successor of the Trustee, as the case may be, without the execution or filing of any additional instrument or the performance of any further act. 6.6 Except as may otherwise be required by law and other provisions of this Plan, (a) the Trustee shall be responsible only for the management and disbursement of amounts actually contributed to the IRA Account; (b) the Trustee shall not have any responsibility for determining the correctness of the amount of any contributions, the propriety of any contribution as a Rollover Contribution, the failure of a Participant or an Employer to make the contributions provided for in the Agreement, the correctness of any disbursement made pursuant to the written directions of a Participant or an Employer, the taxable amount of a distribution or whether any Participant is an individual by or on behalf of whom deductible contributions within the meaning of Section 219 of the Code may be made; (c) the Trustee shall not be liable for any acts or omissions except its own negligence or bad faith in failing to carry out the terms contained in the Plan and the Agreement; and (d) the Trustee shall not be liable for any loss or breach caused by any Participant's exercise of control over assets in his IRA Account. ARTICLE VII PAYMENTS TO PARTICIPANT AND BENEFICIARY 7.1 Subject to the further provisions of this Article VII, the Trustee shall make distributions to a Participant and/or his Beneficiary from the Participant's IRA Account in accordance with instructions in writing from the Participant (or his Beneficiary if the Participant is deceased). It shall be the responsibility of the Participant (or his Beneficiary if the Participant is deceased) to determine that any such distribution is in accordance with Sections 408(a)(6) and 408(b)(3) of the Code and the regulations promulgated thereunder. The Trustee shall not assume any responsibility to make any distributions to the Participant (or his Beneficiary if the Participant is deceased) unless and until such written instructions specify the occasion for such distribution, the amount of such distribution, the elected manner of distribution, and any written statement required by this Article VII. Prior to making any such distributions from the IRA Account, the Trustee shall be furnished with any and all applications, certificates, tax waivers, signature guarantees, and other documents (including power of any legal representative's authority) deemed necessary or desirable by the Trustee, but the Trustee shall not be liable for complying with written instructions which appear on their face to be genuine, or for refusing to comply if not satisfied that such instructions are genuine, and assumes no duty of further inquiry. Upon receipt of proper written instructions as required above, the Trustee shall cause the assets of the IRA Account to be distributed in cash and/or in Investment Company Shares or other securities, as specified in such written instructions, to the Participant (or his Beneficiary if the Participant is deceased). 7.2 (a) Distributions to a Participant may be paid in any one or more of the following ways as the Participant may direct the Trustee in writing, on a form acceptable to the Trustee: (i) in a lump sum in cash and/or in Investment Company Shares or other securities; (ii) in systematic monthly, quarterly, semiannual or annual installments in cash and/or in Investment Company Shares or other securities over a period not to exceed the life expectancy of the Participant or the joint life and last survivor expectancy of the Participant and his Designated Beneficiary; (iii) in systematic monthly, quarterly, semiannual or annual installments in cash and/or in Investment Company Shares or other securities over a period designated by the Participant; (iv) in a dollar amount designated by the Participant in cash and/or in Investment Company Shares or other securities; (v) in installments in cash consisting of current dividends and capital gains earned by the IRA Account; (vi) in installments in cash consisting only of current dividends earned by the IRA Account; or (vii) if the IRA Account is invested in an Annuity, in periodic payments under any form of annuity payment then available under the Annuity. Payments under the Annuity must be made in periodic payments at intervals of no longer than one year and must be either nonincreasing or increase only as provided in Q & A F-3 of section 1.401(a)(9)-1 of the Proposed Income Tax Regulations. (b) With respect to any distributions made under this Article VII to or on behalf of a Participant who has not attained the age of 59 1/2 (unless the distribution is made after the Participant's death or the Participant has become disabled), the Trustee prior to making a distribution must receive a written statement, on a form acceptable to it, addressed to the Trustee from that Participant declaring his intention as to the disposition of the amount distributed. A Participant shall be considered to be disabled only if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long continued and indefinite duration. All other distributions may be subject to any penalties imposed by the Code. Any distributions from the Term Deposit or Annuity may be subject to penalties and other conditions. 7.3 Unless distribution of the entire balance standing in the credit of a Participant's IRA Account has commenced in accordance with Section 7.1 by the Participant's Required Beginning Date, the Participant shall direct the Trustee to begin the distribution of his remaining balance in his IRA Account beginning no later than his Required Beginning Date pursuant to the distribution method specified in either Section 7.2(a)(i) or (ii) as the Participant may select in writing on a form acceptable to the Trustee. If distribution is to be made over a period under Section 7.2(a)(ii) above, the minimum amount to be distributed for each year, beginning with the Participant's Required Beginning Date and each December 31 thereafter, shall be made in accordance with the requirements of Section 408(a)(6), Proposed Regulation Section 1.408-8, and the incidental death benefit rules described in Proposed Regulation Section 1.401(a)(9)-2. Such minimum amount shall be at least an amount equal to the lesser of the balance standing to the credit of the Participant's IRA Account or the quotient obtained by dividing the Participant's entire interest in his IRA Account as of the close of business on December 31 of the preceding year by the life expectancy of the Participant or the joint life and last survivor expectancy of the Participant and his Designated Beneficiary, whichever is applicable. Life expectancy and joint and last survivor expectancy shall be computed by use of the return multiples contained in Section 1.72-9 of the Income Tax Regulation. The initial life expectancy or joint life and last survivor expectancy shall be computed using the attained ages of the Participant and his designated Beneficiary as of their birthdays in the year the Participant attains age 70 1/2. The life expectancy of the Participant (and the life expectancy of his spouse, if applicable) shall be recalculated annually using their attained ages as of their birthdays in the year for which the minimum annual payment is being determined. The life expectancy of any other Designated Beneficiary shall not be recalculated. If the Designated Beneficiary of a Participant is not his spouse, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the life expectancy of the Participant. Therefore, the period over which annual distributions shall be made to the Participant and his Beneficiary shall not exceed the applicable period determined by use of the table contained in Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. 7.4 If a Participant dies after his Required Beginning Date but before his entire interest in his IRA Account has been distributed or if the Participant dies before his Required Beginning Date and payments have irrevocably commenced under an Annuity, the Participant's remaining interest in his IRA Account shall continue to be distributed to his Beneficiary at least as rapidly as under the method of distribution being used prior to the Participant's death. The Beneficiary shall be the person whom the Participant shall have designated in a writing prior to this death, which writing shall have been deposited with the Trustee in a form acceptable to it. Such designation may be changed by the Participant during his lifetime, except as otherwise provided by the terms of the Annuity, if applicable. If no Beneficiary has been properly designated, or if no Beneficiary survives the Participant, distribution shall be made to the Participant's surviving spouse, or if no spouse, to his issue per stirpes, or if none, to his estate. 7.5 If the Participant dies prior to his Required Beginning Date (except where the IRA Account has been invested in an Annuity and payments have irrevocably commenced), the following provisions shall apply: (a) Distribution to his Beneficiary may be made by one of the following methods as the Beneficiary shall request in writing on a form acceptable to the Trustee: (i) lump sum in cash and/or in Investment Company Shares or other securities distributed no later than December 31 of the year containing the fifth anniversary of the Participant's death; (ii) in systematic monthly, quarterly, semiannual or annual installments in cash and/or in Investment Company Shares or other securities over a period of time ending no later than December 31 of the year containing the fifth anniversary of the Participant's death; provided, however, that the Trustee shall not be required to pay installments amounting to less than fifty dollars per month; (iii) in substantial equal monthly, quarterly, semiannual or annual installments in cash and/or in Investment Company Shares or other securities over a period of years not exceeding the life expectancy of the Designated Beneficiary; provided, however, that the Trustee shall not be required to pay installments amounting to less than fifty dollars per month; or (iv) if the IRA Account is invested in an Annuity, in periodic payments under any form of annuity payment then available under the Annuity. (b) The Beneficiary who is other than a surviving spouse shall elect one of the distribution methods described in (a) above no later than December 31 of the year following the year of the Participant's death and shall so inform the Trustee in writing. The Beneficiary who is a surviving spouse shall elect one of the distribution methods described in (a) above no later than December 31 of the year containing the fifth (5th) anniversary of the Participant's death and shall so inform the Trustee in writing. If the Beneficiary or Beneficiaries do not make such election, the Trustee shall make a distribution in cash in accordance with Section 7.5(a)(i) if the Beneficiary is other than the surviving spouse, and in accordance with Section 7.5(a)(iii) if the Beneficiary is the Participant's surviving spouse. (c) If distribution is to be made in accordance with either Section 7.5(a)(iii) or (iv), it must commence by December 31 of the year following the year of the Participant's death; provided, however, that if the Participant's spouse is the Designated Beneficiary, distribution may be delayed until December 31 of the year the Participant would have attained age 70 1/2, if later. The minimum amount to be distributed each year shall be at least an amount equal to the lesser of the balance standing to the credit of the Participant's IRA Account or the quotient obtained by dividing the Participant's entire interest in his IRA Account as of the close of business on December 31 of the preceding year by the life expectancy of the Designated Beneficiary. The Beneficiary may elect at any time to receive a greater amount of distribution or to accelerate the method of distribution. Life expectancy shall be calculated by use of the return multiples specified in Section 1.72-9 of the Income Tax Regulations. The initial life expectancy shall be computed using the attained age of the Designated Beneficiary as of his birthday in the year distributions are required to commence. Life expectancy of a surviving spouse shall be recalculated annually using the spouse's attained age as of the spouse's birthday in the year for which the minimum annual payment is being determined. In the case of any other Designated Beneficiary, payments for any calendar year after the year in which distributions are required to commence shall be based on the initial life expectancy minus the number of whole years passed since distribution first commenced. 7.6 Notwithstanding the foregoing, if the Designated Beneficiary is the Participant's surviving spouse, such spouse may treat the IRA Account as the spouse's own individual retirement account (IRA). This election will be deemed to have been made if such surviving spouse makes a regular IRA contribution to the account, makes a rollover to or from such account, or fails to receive distribution pursuant to Section 7.4 or 7.5 above. 7.7 In making distributions to a Participant, the Trustee shall, to the extent allowed by applicable law, be entitled to rely on the written certification by a Participant as to the Participant's and Designated Beneficiary's age or as to the Participant's having become disabled within the meaning of Section 7.2(b). 7.8 Whenever the consent of the Participant or a direction by the Participant is required under this Article VII, action by the Trustee may be taken without such consent or direction by reason of death, illness or absence of the Participant. 7.9 Notwithstanding any of the foregoing, any Employer contribution to the IRA Account pursuant to a Simplified Employee Pension Program may be withdrawn by the Participant at any time. ARTICLE VIII RETURN OF EXCESS CONTRIBUTIONS; LIABILITY OF TAXES 8.1 If a Participant, an Employer on behalf of the Participant if the Agreement so provides, or the Commissioner of Internal Revenue notifies the Trustee in writing that there has been made by or on behalf of the Participant a contribution which has been determined by the Participant, the Employer or the Commissioner to be an Excess Contribution, or nondeductible contribution, the Trustee shall, as soon as practicable, pay to such Participant in cash (if permitted by the terms of the investment in his IRA Account) an amount equal to the amount of the Excess Contribution or nondeductible contribution made by him or on his behalf and, if the payment is made on or prior to the due date of the Participant's tax return (including extensions) for the year in which the Excess Contribution or nondeductible contribution was made, the net income attributable thereto (reduced by any administrative charge or penalty applicable thereto). Alternatively, the Participant may, by written instructions on a form acceptable to the Trustee, elect to treat the Excess Contribution and the net income attributable thereto (reduced by any administrative charge applicable thereto), to the extent it does not exceed the limitations under Section 219 and 408(o) of the Code, as a contribution for the Plan Year in which notice is received (and reducing, as is appropriate, the contributions that can be made under Section 3.1 for such Plan Year). 8.2 If a Participant or an Employer on behalf of the Participant in the case of an IRA Account established under a Simplified Employee Pension Program, notifies the Trustee in writing that there has been an employer contribution to the IRA Account which is in excess of the limitation under Section 402(h) or 408(k)(6)(A)(iii) of the Code, the Trustee shall, as soon as practicable, pay to such Participant in cash (if permitted by the terms of the investment in his IRA Account) an amount equal to the amount of such excess employer contribution made on his behalf, as adjusted for income or loss, and reduced by any administrative charge or penalty applicable thereto. 8.3 In the event the Trustee shall be required to pay any tax with respect to an IRA Account, the amount of such tax (including interest) shall be paid from such IRA Account. ARTICLE IX AMENDMENT AND TERMINATION 9.1 A Participant may at any time terminate the Plan adopted by the Participant, and an Employer may at any time terminate a Plan adopted by the Employer. Termination may be effected by delivering to the Trustee a written notice of termination addressed to the Trustee and signed by the Participant or the Employer. On termination, if permitted by the terms of the investment, distribution of the IRA Account (reduced by any penalty applicable thereto) shall be made by payment of a lump sum in cash and/or in Investment Company Shares or other securities to the Participant as the Participant elects. Upon complete distribution of the assets in the IRA Account, this Plan shall terminate and shall have no further force and effect and the Trustee shall be relieved from all further liability with respect to the Plan, the IRA Account, and all assets thereof so established. 9.2 Putnam Fiduciary Trust Company may at any time and from time to time modify or amend this Plan as is necessary or appropriate to qualify this Plan as an Individual Retirement Account under Section 408(a) of the Code, or as is necessary or appropriate under any applicable law by delivering to the Trustee and mailing to the Employer, or, in the case of a Plan where there is no Employer, the Participant at his last known address shown on the books of the Trustee, a copy of such amendment. Each Participant and each Employer shall be deemed to have consented to any modification or amendment so made. No amendment of this Plan shall cause any part of the IRA Account to be used for a purpose other than for the exclusive benefit of the Participant and his Beneficiary. No amendment shall change the rights, duties or responsibilities of the Trustee without the written consent of either of them. ARTICLE X TRANSFER TO OTHER QUALIFIED PLANS A Participant or an Employer, subject to the provisions of the Agreement and to the extent allowed by applicable law, may request the Trustee to transfer assets held in the IRA Account of the Participant or Participants to another bank or banks as custodian or trustee or to any other plan or plans maintained by the Participant or the Employer or the Employers of a Participant for the benefit of the Participant, provided the Trustee, before transfer, may at its discretion require an opinion of counsel satisfactory to it that the requirements of Section 401(a) or Section 408, whichever is applicable, of the Code or any successor provision of law are satisfied by such other plan or plans; and provided, further, that the Trustee shall have the right to reduce from the amount to be transferred (a) any amounts referred to in Section 6.4, and (b) any amounts required to be distributed in the calendar year of the transfer to the Participant under Section 408(a)(6) or 408(b)(3) of the Code. Upon such transfer, the provisions of the plan to which such transfer is made shall govern and the provisions of this Plan shall have no further effect. ARTICLE XI RESIGNATION OF THE TRUSTEE 11.1 Either the Trustee may resign at any time upon thirty (30) days' notice, in writing, to the Participant or the Employer in the case of a Plan established by the Employer. 11.2 Within thirty (30) days of the effective date of a successor trustee's appointment, the Trustee shall perform all acts necessary to transfer and deliver the assets and records of the IRA Account to its successor. However, the Trustee may reserve such portion of the IRA Account as it may reasonably determine to be necessary for payment of its fees and any taxes and expenses and any balance of such reserve remaining after payment of such fees, taxes and expenses shall be paid over to the successor. 11.3 Resignation of the Trustee will not terminate the Plan adopted by an Employer or a Participant. In the event of any vacancy due to the resignation of the Trustee, the Trustee shall appoint a successor unless the Agreement is sooner terminated. Any successor Trustee shall be a "bank" within the meaning of Section 581 of the Code or another person found qualified to act as a trustee or custodian under an individual retirement account plan by the Secretary of the Treasury, or his delegate. The appointment of a successor Trustee shall be effective upon receipt by the Trustee of such written acceptance which shall be submitted to the Participant, the Employer in the case of a Plan established by the Employer and the Trustee. In the event no successor Trustee is appointed within thirty (30) days after resignation becomes effective, each Participant or Employer may request the Trustee to transfer the assets held in the Participant's IRA Account as is provided in Article X. ARTICLE XII NOTICES 12.1 All notices required to be given by the Trustee to a Participant or an Employer shall be deemed to have been given when sent by mail to the address of the Participant or the Employer indicated by the Trustee's records. 12.2 All notices required to be given by a Participant or an Employer to the Trustee shall be deemed to have been given when received by the Trustee. 12.3 Whenever the Trustee is required or authorized to take any action under the Plan on the direction of a Participant, such action shall be taken on the direction of the duly appointed representative of the Participant or his estate, in the event of his incompetency or death. ARTICLE XIII SPENDTHRIFT PROVISION To the extent permitted by applicable law, a Participant's beneficial interest in the Plan shall not be assignable, subject to hypothecation, pledge, or lien, nor subject to attachment or receivership, nor shall it pass to any trustee in bankruptcy or be reached or applied by the legal process for the payment of any obligation of the Participant or any Beneficiary hereunder; provided, however, that in the case of the Participant's death the value of his IRA Account shall be paid, as provided in Article VII; and provided, further, that the Participant (or the Trustee) shall have the right to direct the transfer or distribution of the value of his IRA Account, or any part thereof as provided in Article VII, VIII, X or XI. ARTICLE XIV GOVERNING LAW The terms of this Plan and the Agreement shall be construed, administered and enforced according to the laws of the Commonwealth of Massachusetts except to the extent such laws are preempted by the provisions of ERISA. EX-99.B14RETMTPLAN 12 4019502.02 PUTNAM BASIC PLAN DOCUMENT #05 PUTNAM BASIC PLAN DOCUMENT #05 TABLE OF CONTENTS PAGE ARTICLE 1. INTRODUCTION 1 ARTICLE 2. DEFINITIONS 2 2.1. Account 2 2.2. Affiliated Employer 2 2.3. Authorized Leave of Absence 2 2.4. Base Contribution Percentage 3 2.5. Beneficiary 3 2.6. CODA 3 2.7. Code 3 2.8. Compensation 3 2.9. Date of Employment 3 2.10. Deductible Employee Contribution Account 4 2.11. Disabled 4 2.12. Earned Income 4 2.13. Earnings 4 2.14. Effective Date 5 2.15. Eligibility Period 5 2.16. Employee 5 2.17. Employer 5 2.18. Employer Contribution Account 6 2.19. Employer Stock 6 2.20. ERISA 6 2.21. Excess Earnings 6 2.22. Forfeiture 6 2.23. Hour of Service 6 2.24. Insurance Trustee 8 2.25. Integration Level 8 2.26. Investment Company 8 2.27. Investment Company Shares 8 2.28. Investment Products 8 2.29. Leased Employee 8 2.30. One-Year Eligibility Break 9 2.31. One-Year Vesting Break 9 2.32. Owner-Employee 9 2.33. Participant 9 2.34. Participant Contribution 9 2.35. Participant Contribution Account 9 2.36. Plan 9 2.37. Plan Administrator 10 2.38. Plan Agreement 10 2.39. Plan Year 10 2.40. Policy 10 2.41. Profit Sharing Contribution 10 2.42. Putnam 10 2.43. Qualified Domestic Relations Order 10 2.44. Qualified Participant 10 2.45. Recordkeeper 11 2.46. Retirement 11 2.47. Rollover Account 11 2.48. Self-Employed Individual 11 2.49. Shareholder-Employee 11 2.50. Social Security Wage Base 11 2.51. Trust and Trust Fund 11 2.52. Trustee 11 2.53. Valuation Date 11 2.54. Year of Service 11 2.55. Deferral Agreement 12 2.56. Elective Deferral 12 2.57. Elective Deferral Account 12 2.58. Employer Matching Contribution 13 2.59. Employer Matching Account 13 2.60. Highly Compensated Employee 13 2.61. Non-Highly Compensated Employee 16 2.62. Qualified Matching Contribution 16 2.63. Qualified Matching Account 16 2.64. Qualified Nonelective Contribution 16 2.65. Qualified Nonelective Contribution Account 16 ARTICLE 3. PARTICIPATION 17 3.1. Initial Participation 17 3.2. Special Participation Rule 17 3.3. Resumed Participation 18 3.4. Benefits for Owner-Employees 18 3.5. Changes in Classification 18 ARTICLE 4. CONTRIBUTIONS 20 4.1. Provisions Applicable to All Plans 20 4.2. Provisions Applicable Only to Profit Sharing Plans 21 4.3. Provisions Applicable Only to Money Purchase Pension Plans 25 4.4. Rollover Contributions 28 4.5. No Deductible Employee Contributions 28 4.6. Paired Plans 28 ARTICLE 5. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k) (CODA) 29 5.1. Applicability; Allocations 29 5.2. CODA Participation 29 5.3. Annual Limit on Elective Deferrals 29 5.4. Distribution of Certain Elective Deferrals 30 5.5. Satisfaction of ADP and ACP Tests 31 5.6. Actual Deferral Percentage Test Limit 31 5.7. Distribution of Excess Contributions 33 5.8. Matching Contributions 34 5.9. Participant Contributions 35 5.10. Recharacterization of Excess Contributions 35 5.11. Average Contribution Percentage Test Limit and Aggregate Limit 36 5.12. Distribution of Excess Aggregate Contributions 39 5.13. Restriction on Distributions 40 5.14. Hardship Distributions 41 5.15. Special Effective Dates 42 ARTICLE 6. LIMITATIONS ON ALLOCATIONS 43 6.1. No Additional Plan 43 6.2. Additional Master or Prototype Plan 44 6.3. Additional Non-Master or Non-Prototype Plan 45 6.4. Additional Defined Benefit Plan 46 6.5. Definitions 46 ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS 51 7.1. Retirement 51 7.2. Death 51 7.3. Other Termination of Employment 52 ARTICLE 8. VESTING 53 8.1. Vested Balance 53 8.2. Vesting of Accounts of Returned Former Employees 53 8.3. Forfeiture of Non-Vested Amounts 54 8.4. Special Rule in the Event of a Withdrawal 55 8.5. Vesting Election 56 ARTICLE 9. PAYMENT OF BENEFITS 57 9.1. Distribution of Accounts 57 9.2. Restriction on Immediate Distributions 57 9.3. Optional Forms of Distribution 59 9.4. Distribution Procedure 59 9.5. Lost Distributee 60 9.6. Direct Rollovers 60 9.7. Distributions Required by a Qualified Domestic Relations Order 61 ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS 62 10.1. Applicability 62 10.2. Qualified Joint and Survivor Annuity 63 10.3. Qualified Preretirement Survivor Annuity 63 10.4. Definitions 63 10.5. Notice Requirements 65 10.6. Transitional Rules 66 ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS 69 11.1. General Rules 69 11.2. Required Beginning Date 69 11.3. Limits on Distribution Periods 70 11.4. Determination of Amount to Be Distributed Each Year 71 11.5. Death Distribution Provisions 72 11.6. Transitional Rule 74 ARTICLE 12. WITHDRAWALS AND LOANS 76 12.1. Withdrawals from Participant Contribution Accounts 76 12.2. Withdrawals on Account of Hardship 76 12.3. Withdrawals After Reaching Age 591/2 76 12.4. Loans 76 12.5. Procedure; Amount Available 79 12.6. Protected Benefits 79 12.7. Restrictions Concerning Transferred Assets 79 ARTICLE 13. TRUST FUND AND INVESTMENTS 80 13.1. Establishment of Trust Fund 80 13.2. Management of Trust Fund 80 13.3. Investment Instructions 81 13.4. Valuation of the Trust Fund 83 13.5. Distributions on Investment Company Shares 84 13.6. Registration and Voting of Investment Company Shares 84 13.7. Investment Manager 84 13.8. Employer Stock 84 13.9. Insurance Contracts 87 13.10. Registration and Voting of Non-Putnam Investment Company Shares 88 ARTICLE 14. INSURANCE POLICIES 90 14.1. Purchase of Insurance Policies 90 14.2. Limitation on Premiums 90 14.3. Policy Options 90 14.4. Insurability 90 14.5. Dividends on Policies 91 14.6. Trustee of Policy 91 14.7. Obligations with Respect to Policies 91 14.8. Distribution of Proceeds on Participant's Death 91 14.9. Conversion of Policies 91 14.10. Conflict with Policies 92 14.11. Insurance Loans to Owner-Employees 92 ARTICLE 15. TOP-HEAVY PLANS 93 15.1. Superseding Effect 93 15.2. Definitions 93 15.3. Minimum Allocation 96 15.4. Adjustment of Fractions 97 15.5. Minimum Vesting Schedules 97 ARTICLE 16. ADMINISTRATION OF THE PLAN 99 16.1. Plan Administrator 99 16.2. Claims Procedure 99 16.3. Employer's Responsibilities 100 16.4. Recordkeeper 100 16.5. Prototype Plan 101 ARTICLE 17. TRUSTEE AND INSURANCE TRUSTEE 102 17.1. Powers and Duties of the Trustee 102 17.2. Limitation of Responsibilities 103 17.3. Fees and Expenses 104 17.4. Reliance on Employer 104 17.5. Action Without Instructions 104 17.6. Advice of Counsel 105 17.7. Accounts 105 17.8. Access to Records 106 17.9. Successors 106 17.10. Persons Dealing with Trustee or Insurance Trustee 106 17.11. Resignation and Removal; Procedure 106 17.12. Action of Trustee Following Resignation or Removal 106 17.13. Action of Insurance Trustee Following Resignation or Removal 106 17.14. Effect of Resignation or Removal 106 17.15. Fiscal Year of Trust 107 17.16. Limitation of Liability 107 17.17. Indemnification 107 ARTICLE 18. AMENDMENT 108 18.1. General 108 18.2. Delegation of Amendment Power 109 ARTICLE 19. TERMINATION OF THE PLAN AND TRUST 110 19.1. General 110 19.2. Events of Termination 110 19.3. Effect of Termination 110 19.4. Approval of Plan 111 ARTICLE 20. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS 112 20.1. General 112 20.2. Amounts Transferred 112 20.3. Merger or Consolidation 112 ARTICLE 21. MISCELLANEOUS 113 21.1. Notice of Plan 113 21.2. No Employment Rights 113 21.3. Distributions Exclusively From Plan 113 21.4. No Alienation 113 21.5. Provision of Information 113 21.6. No Prohibited Transactions 113 21.7. Governing Law 113 21.8. Gender 114 PUTNAM BASIC PLAN DOCUMENT #05 ARTICLE 1. INTRODUCTION By executing the Plan Agreement, the Employer has established a retirement plan (the "Plan") according to the terms and conditions of the Plan Agreement and this Putnam Basic Plan Document #05, for the purpose of providing a retirement fund for the benefit of Participants and Beneficiaries. ARTICLE 2. DEFINITIONS The terms defined in Sections 2.1 through 2.54 appear generally throughout the document. Sections 2.55 through 2.65 and Article 5 contain definitions of terms used only in a CODA and Section 10.4 contains additional definitions related to distributions from the Plan. Articles 6 and 11 contain additional definitions of terms used only in those Articles. 2.1. Account means any of, and Accounts means all of, aParticipant's Employer Contribution Account, Participant Contribution Account, Rollover Account, Deductible Employee Contribution Account and if the Plan contains a CODA, the accounts maintained for the Participant pursuant to Article 5. 2.2 Affiliated Employer, for purposes of the Plan other than Article 6, means the Employer and a trade or business, whether or not incorporated, which is any of the following: (a) A member of a group of controlled corporations (within the meaning of Section 414(b) of the Code) which includes the Employer; or (b) A trade or business under common control (within the meaning of Section 414(c) of the Code) with the Employer; or (c) A member of an affiliated service group (within the meaning of Section 414(m) of the Code) which includes the Employer; or (d) An entity otherwise required to be aggregated with the Employer pursuant to Section 414(o) of the Code. In determining an Employee's service for vesting and for eligibility to participate in the Plan, all employment with Affiliated Employers will be treated as employment by the Employer. For purposes of Article 6 only, the definitions in paragraphs (a) and (b) of this Section 2.2 shall be modified by adding at the conclusion of the parenthetical phrase in each such paragraph the words "as modified by Section 415(h) of the Code." 2.3. Authorized Leave of Absence means a leave of absence from employment granted in writing by an Affiliated Employer.Authorized Leave of Absence shall be granted on account of military service for any period during which an Employee's right to re-employment is guaranteed by law, and for such other reasons and periods as an Affiliated Employer shall consider proper, provided that Employees in similar situations shall be similarly treated. 2.4. Base Contribution Percentage means the percentage so specified in the Plan Agreement. 2.5. Beneficiary means a person entitled to receive benefits under the Plan upon the death of a Participant, in accordance with Section 7.2 and Articles 10 and 11. 2.6. CODA means a cash or deferred arrangement that meets the requirements of Section 401(k) of the Code, adopted as part of a profit sharing plan. 2.7. Code means the Internal Revenue Code of 1986, as amended. 2.8. Compensation means all of an Employee's compensation determined in accordance with the definition elected by the Employer in the Plan Agreement. For purposes of that election, "Form W-2 earnings" means "wages" as defined in Section 3401(a) of the Code in connection with income tax withholding at the source, and all other compensation paid to the Employee by the Employer in the course of its trade or business, for which the Employer is required to furnish the Employee with a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the Code, determined without regard to exclusions based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2) of the Code). Compensation shall include only amounts actually paid to the Employee during the Plan Year, except that if the Employer so elects in the Plan Agreement, in an Employee's initial year of participation in the Plan, Compensation shall include only amounts actually paid to the Employee from the Employee's effective date of participation pursuant to Section 3.1 to the end of the Plan Year. In addition, if the Employer so elects in the Plan Agreement, Compensation shall include any amount which is contributed to an employee benefit plan for the Employee by the Employer pursuant to a salary reduction agreement, and which is not includible in the gross income of the Employee under Section 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code. (For a self-employed person, the relevant term is Earned Income, as defined in Section 2.12.) 2.9. Date of Employment means the first date on which an Employee performs an Hour of Service; or, in the case of an Employee who has incurred one or more One-Year Eligibility Breaks and who is treated as a new Employee under the rules of Section 3.3, the first date on which he performs an Hour of Service after his return to employment. 2.10. Deductible Employee Contribution Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded amounts contributed by him to the Plan on a tax-deductible basis under prior law, and the income, expenses, gains and losses thereon. 2.11. Disabled means unable to engage in any substantialgainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. The permanence and degree of such impairment shall be supported by medical evidence. 2.12. Earned Income means a Self-Employed Individual's net earnings from self-employment in the trade or business with respect to which the Plan is established, excluding items not included in gross income and the deductions allocable to such items, and reduced by (i) contributions by the Employer to qualified plans, to the extent deductible under Section 404 of the Code, and (ii) the deduction allowed to the taxpayer under Section 164(f) of the Code for taxable years beginning after December 31, 1989. 2.13. Earnings for determining all benefits provided under the Plan for all Plan Years beginning after December 31, 1988, means the first $200,000 (as adjusted by the Secretary of the Treasury at the same time and in the same manner as under Section 415(d) of the Code, except that the dollar increase effective on any January 1 is effective for all Plan Years beginning in the calendar year in which that January 1 occurs, and the first such dollar increase is effective on January 1, 1990) of the sum of the Compensation and the Earned Income received by an Employee during a Plan Year. Notwithstanding the foregoing, for Plan Years beginning after December 31, 1993, Earnings means the first $150,000 (as adjusted periodically by the Secretary of the Treasury for inflation) of the sum of the Compensation and Earned Income received by an Employee during a Plan Year. To calculate an allocation to a Participant's Account for any Plan Year shorter than 12 months, the dollar limit on Earnings must be multiplied by a fraction of which the denominator is 12 and the numerator is the number of months in the Plan Year. In determining the Earnings of a Participant, the rules of Section 414(q)(6) of the Code shall apply, except that in applying those rules the term "family" shall include only the Participant's spouse and the Participant's lineal descendants who have not reached age 19 by the last day of the Plan Year. If, as a result of the application of such rules, the applicable Earnings limitation described above is exceeded, then the limitation shall be prorated among the affected individuals in proportion to each such individual's Earnings as determined under this Section prior to the application of this limitation. 2.14. Effective Date means the date so designated in the Plan Agreement. If the Plan Agreement indicates that the Employer is adopting the Plan as an amendment of an existing plan, the provisions of the existing plan apply to all events preceding the Effective Date, except as to specific provisions of the Plan which set forth a retroactive effective date in accordance with Section 1140 of the Tax Reform Act of 1986. 2.15. Eligibility Period means a period of service with the Employer which an Employee is required to complete in order to commence participation in the Plan. A 12-month Eligibility Period is a period of 12 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, in which he is credited with at least 1,000 Hours of Service or the number of Hours of Services set forth in the Plan Agreement. A 6-month Eligibility Period is a period of 6 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, or on the 6-month anniversary of such Date of Employment or any anniversary thereof, in which he is credited with at least 500 Hours of Service or the number of Hours of Service set forth in the Plan Agreement. If the Employer has selected another period of service as the Eligibility Period under the Plan, Eligibility Period means the period so designated in which the Employee is credited with the number of hours designated in the Plan Agreement. Notwithstanding the foregoing, if an Employee is credited with 1,000 Hours of Service during a 12-consecutive- month period following his Date of Employment or any anniversary thereof, he shall be credited with an Eligibility Period. In the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service in the case of a 12-month Eligibility Period, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. If the Employer so elects in the Plan Agreement, an Employee's most recent Date of Employment for purposes of this Section 2.15 shall be the first date on which he performed services for a business acquired by the Employer. 2.16. Employee means a common law Employee of an Affiliated Employer; in the case of an Affiliated Employer which is a sole proprietorship, the sole proprietor thereof; in the case of an Affiliated Employer which is a partnership, a partner thereof; and a Leased Employee of an Affiliated Employer. The term "Employee" includes an individual on Authorized Leave of Absence, a Self-Employed Individual and an Owner-Employee. 2.17. Employer means the Employer named in the Plan Agreement and any successor to all or the major portion of its assets or business which assumes the obligations of the Employer under the Plan Agreement. 2.18. Employer Contribution Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded the amounts allocated for his benefit from contributions by the Employer (other than contributions pursuant to Article 5), Forfeitures by former Participants (if the Plan provides for reallocation of Forfeitures), amounts reapplied under Section 6.1(d), and the income, expenses, gains and losses incurred thereon. 2.19. Employer Stock means securities constituting "qualifying employer securities" of an Employer within the meaning of Section 407(d)(5) of ERISA. 2.20. ERISA means the Employee Retirement Income Security Act of 1974, as amended. 2.21. Excess Earnings means a Participant's Earnings in excess of the Integration Level of the Plan. 2.22 Forfeiture means a nonvested amount forfeited by a former Participant, pursuant to Section 8.3, or an amount forfeited by a former Participant or Beneficiary who cannot be located, pursuant to Section 9.5. 2.23 Hour of Service means each hour described in paragraphs (a), (b), (c), (d) or (e) below, subject to paragraphs (f) and (g) below. a) Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Affiliated Employer. These hours shall be credited to the Employee for the computation period or periods in which the duties are performed. (b) Each hour for which an Employee is paid, or entitled to payment, by an Affiliated Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. No more than 501 Hours of Service shall be credited under this paragraph for any single continuous period of absence (whether or not such period occurs in a single computation period) unless the Employee's absence is not an Authorized Leave of Absence. Hours under this paragraph shall be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations, which are incorporated herein by this reference. (c) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Affiliated Employer. The same Hours of Service shall not be credited under both paragraph (a) or paragraph (b), as the case may be, and under this paragraph (c); and no more than 501 Hours of Service shall be credited under this paragraph (c) with respect to payments of back pay, to the extent that such pay is agreed to or awarded for a period of time described in paragraph (b) during which the Employee did not perform or would not have performed any duties. These hours shall be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made. (d) Each hour during an Authorized Leave of Absence. Such hours shall be credited at the rate of a customary full work week for an Employee. (e) Solely for purposes of determining whether a One Year Vesting Break or a One-Year Eligibility Break has occurred, each hour which otherwise would have been credited to an Employee but for an absence from work by reason of: the pregnancy of the Employee, the birth of a child of the Employee, the placement of a child with the Employee in connection with the adoption of the child by the Employee, or caring for a child for a period beginning immediately after its birth or placement. If the Plan Administrator cannot determine the hours which would normally have been credited during such an absence, the Employee shall be credited with eight Hours of Service for each day of absence. No more than 501 Hours of Service shall be credited under this paragraph by reason of any pregnancy or placement. Hours credited under this paragraph shall be treated as Hours of Service only in the Plan Year or Eligibility Period or both, as the case may be, in which the absence from work begins, if necessary to prevent the Participant's incurring a One-Year Vesting Break or One-Year Eligibility Break in that period, or, if not, in the period immediately following that in which the absence begins. The Employee must timely furnish to the Employer information reasonably required to establish (i) that an absence from work is for a reason specified above, and (ii) the number of days for which the absence continued. (f) Hours of Service shall be determined on the basis of actual hours for which an Employee is paid or entitled to payment, or as otherwise specified in the Plan Agreement. (g) If the Employer maintains the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer. If the Employer does not maintain the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer only to the extent that the Employer so elects in the Plan Agreement. (h) Hours of Service shall be credited to a Leased Employee as though he were an Employee. 2.24. Insurance Trustee means the person named in the Plan Agreement as Insurance Trustee, and any successor thereto. 2.25. Integration Level means the Earnings amount selected by the Employer in the Plan Agreement. 2.26. Investment Company means an open-end registered investment company for which Putnam Mutual Funds Corp., or its affiliate acts as principal underwriter, or for which Putnam Investment Management, Inc., or its affiliate serves as an investment adviser; provided that its prospectus offers its shares under the Plan. 2.27. Investment Company Shares means shares issued by an Investment Company. 2.28. Investment Products means any of the investment products specified by the Employer in accordance with Section 13.2, from the group of those products sponsored, underwritten or managed by Putnam as shall be made available by Putnam under the Plan, and such other products as shall be expressly agreed to in writing by Putnam for availability under the Plan. The term "Investment Products" does not include any Policy selected pursuant to Article 14. 2.29. Leased Employee means any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with Section 414(n)(6) of the Code) on a substantially full time basis for a period of at least one year, and such services are of a type historically performed by Employees in the business field of the recipient Employer. The compensation of a Leased Employee for purposes of the Plan means the Compensation (as defined in Section 2.8) of the Leased Employee attributable to services performed for the recipient Employer. Contributions or benefits provided to a leased Employee by the leasing organization which are attributable to services performed for the recipient Employer shall be treated as provided by the recipient Employer. Provided that leased Employees do not constitute more than 20% of the recipient's nonhighly compensated workforce, a leased Employee shall not be considered an Employee of the recipient if he is covered by a money purchase pension plan providing: (1) a nonintegrated Employer contribution rate of at least 10% of compensation (as defined in Section 415(c)(3) of the Code, but including amounts contributed pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code), (2) immediate participation, and (3) full and immediate vesting. 2.30. One-Year Eligibility Break means a 12-month Eligibility Period during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations of the Secretary of Labor dealing with breaks in service, and provided further that if the Employer has elected in the Plan Agreement to establish a number less than 500 as the requisite Hours of Service for crediting a 12-month Eligibility Period, that number shall be substituted for 500. 2.31. One-Year Vesting Break means a Year of Service measuring period, as elected by the Employer in the Plan Agreement, during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations for the Secretary of Labor dealing with breaks in service, and provided further that if the Employer has elected in the Plan Agreement to establish a number less than 500 as the requisite Hours of Service for crediting a Year of Service, that number shall be substituted for 500. 2.32. Owner-Employee means the sole proprietor of an Affiliated Employer that is a sole proprietorship, or a partner owning more than 10% of either the capital or profits interest of an Affiliated Employer that is a partnership. The Plan Administrator shall be responsible for identifying Owner-Employees to the Recordkeeper. 2.33. Participant means each Employee who has met the requirement for participation in Article 3. An Employee is not a Participant for any period before the entry date applicable to him. 2.34. Participant Contribution means an after-tax contribution made by a Participant in accordance with Sections 4.2(e), 4.3(e) or 5.9. 2.35. Participant Contribution Account means an account maintained on the books of the Plan, in which are recorded Participant Contributions by a Participant and any income, expenses, gains or losses incurred thereon. 2.36. Plan means the form of defined contribution retirement plan and trust agreement adopted by the Employer, consisting of the Plan Agreement and the Putnam Basic Plan Document #05 as set forth herein, together with any and all amendments and supplements thereto. 2.37. Plan Administrator means the Employer or its appointee pursuant to Section 16.1. 2.38. Plan Agreement means the separate agreement entered into between the Employer and the Trustee (and the Insurance Trustee, if any) and accepted by Putnam, under which the Employer adopts the Plan and selects among its optional provisions. 2.39. Plan Year means the period of 12 consecutive months specified by the Employer in the Plan Agreement, as well as any initial short plan year period specified by the Employer in the Plan Agreement. 2.40. Policy means an ordinary life insurance, term insurance, retirement income or endowment policy or an individual or group annuity contract issued by a life insurance company in connection with the Plan, or an interest therein. An ordinary life insurance policy within the meaning of this definition provides non-decreasing death benefits and non-increasing premiums. Policy shall also include any other insurance policy expressly agreed to in writing by Putnam. 2.41. Profit Sharing Contribution means a contribution made for the benefit of a Participant by the Employer pursuant to Section 4.2(a). 2.42. Putnam means Putnam Mutual Funds Corp., or a company affiliated with it which Putnam Mutual Funds Corp. has designated as its agent to perform specified actions or procedures in connection with the prototype Plan. 2.43. Qualified Domestic Relations Order means any judgment, decree or order (including approval of a property settlement agreement) which constitutes a "qualified domestic relations order" within the meaning of Code Section 414(p). A judgment, decree or order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan. 2.44. Qualified Participant means any Participant who is an active Employee on the last day of the Plan Year in question or who is credited with more than 500 Hours of Service during the Plan Year in question or whose Retirement or death occurred during the Plan Year in question. If the Plan is not adopted to replace an existing plan, this Section 2.44 is effective on the Effective Date. If the Plan replaces an existing plan, this Section 2.44 is effective on the first day of the first Plan Year that begins after December 31, 1988, or if later, on the Effective Date, and the provision of the existing plan that this Section 2.44 replaces shall continue to apply until that time. 2.45. Recordkeeper means the person or entity designated by the Employer in the Plan Agreement to perform the duties described in Section 16.4, and any successor thereto. If Putnam is the Recordkeeper, the terms and conditions of its service will be as specified in a service agreement between the Employer and Putnam. 2.46. Retirement means ceasing to be an Employee in accordance with Section 7.1. 2.47. Rollover Account means an account established for anEmployee who makes a rollover contribution to the Plan pursuant to Section 4.4. 2.48. Self-Employed Individual means an individual whose personal services are a material income-producing factor in the trade or business for which the Plan is established, and who has Earned Income for the taxable year from that trade or business, or would have Earned Income but for the fact that the trade or business had no net profits for the taxable year. 2.49. Shareholder-Employee means any officer or Employee of an electing small business corporation, within the meaning of Section 1362 of the Code, who on any day during a taxable year of the Employer owns (or is considered as owning under Section 318(a)(1) of the Code) more than 5% of the outstanding stock of the Employer. The Plan administrator shall be responsible for identifying Shareholder-Employees to the Recordkeeper. 2.50. Social Security Wage Base means the maximum amount considered as wages under Section 3121(a)(1) of the Code as in effect on the first day of the Plan Year. 2.51. Trust and Trust Fund mean the trust fund established under Section 13.1. 2.52. Trustee means the person, or the entity with trustee powers, named in the Plan Agreement as trustee, and any successor thereto. 2.53. Valuation Date means each day when the New York Stock Exchange is open, or such other date or dates as the Employer may designate by written agreement with the Recordkeeper. 2.54. Year of Service means a Plan Year or an 12- month Eligibility Period, as elected by the Employer in the Plan Agreement, in which an Employee is credited with at least 1,000 Hours of Service; provided, however, that if the Employer has elected in the Plan Agreement to establish a number less than 1,000 as the requisite for crediting a Year of Service, that number shall be substituted for 1,000, and provided further that in the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. An Employee's Years of Service shall include service credited prior to the Effective Date under any predecessor plan. If the initial Plan Year is shorter than 12 months, each Employee who is credited with at least 1,000 Hours of Service in the 12-month period ending on the last day of the initial Plan Year shall be credited with a Year of Service with respect to the initial Plan Year. If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall not include: (a) Service in any Plan Year (or comparable period prior to the Effective Date) completed before the Employee reached age 18; (b) Service completed during a period in which the Employer did not maintain the Plan or any predecessor plan (as defined under regulations prescribed by the Secretary of the Treasury). If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall include employment by a business acquired by the Employer, before the date of the acquisition. The following definitions apply only to cash or deferred arrangements under Section 401(k) (CODA): 2.55. Deferral Agreement means an Employee's agreement to make one or more Elective Deferrals in accordance with Section 5.2. 2.56. Elective Deferral means any contribution made to the Plan by the Employer at the election of a Participant, in lieu of cash compensation, including contributions made pursuant to a Deferral Agreement or other deferral mechanism. 2.57. Elective Deferral Account means an account maintained on the books of the Plan, in which are recorded a Participant's Elective Deferrals and the income, expenses, gains and losses incurred thereon. 2.58. Employer Matching Contribution means a contribution made by the Employer (i) to the Plan pursuant to Section 5.8, or (ii) to another defined contribution plan on account of a Participant's "elective deferrals" or "employee contributions," as those terms are used in Section 401(m)(4) of the Code. 2.59. Employer Matching Account means an account maintained on the books of the Plan, in which are recorded the Employer Matching Contributions made on behalf of a Participant and the income, expenses, gains and losses incurred thereon. 2.60. Highly Compensated Employee means any highly compensated active Employee or highly compensated former Employee as defined in subsection (a) below; provided, however, that if the Employer so elects in the Plan Agreement, Highly Compensated Employee means any highly compensated Employee under the simplified method described in subsection (b) below. a) Regular Method. A highly compensated active Employee includes any Employee who performs service for the Employer during the determination year and who during the look-back year: (i) received compensation from the Employer in excess of $75,000 (as adjusted pursuant to Section 415(d) of the Code); (ii) received compensation from the Employer in excess of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a member of the top-paid group for such year; or (iii) was an officer of the Employer and received compensation during such year that is greater than 50% of the dollar limitation in effect under Section 415(b)(1)(A) of the Code. The term also includes (A) Employees who are both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year," and among the 100 Employees who received the most compensation from the Employer during the determination year; and (B) Employees who are 5% owners at any time during the look-back year or determination year. If no officer has satisfied the compensation requirement of (iii) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee. A highly compensated former Employee includes any Employee who separated from service (or was deemed to have separated) before the determination year, performed no service for the Employer during the determination year, and was a highly compensated active Employee for either the year of separation from service or any determination year ending on or after the Employee's 55th birthday. If during a determination year or look-back year an Employee is a family member of either a 5% owner who is an active or former Employee, or a Highly Compensated Employee who is one of the 10 most highly paid Highly Compensated Employees ranked on the basis of compensation paid by the Employer during the year, then the family member and the 5% owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving compensation and Plan contributions or benefits equal to the sum of the compensation and contributions or benefits of the family member and the 5% owner or top-ten Highly Compensated Employee. For purposes of this Section 2.60(a), family members include the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants. For purposes of this subsection (a), the "determination year" shall be the Plan Year, and the "look-back year" shall be the 12-month period immediately preceding the determination year; provided, however, that in a Plan for which the Plan Year is the calendar year, the current Plan Year shall be both the "determination year" and the "look-back year" if the Employer so elects in the Plan Agreement. (b) Simplified Method. An Employee is a Highly Compensated Employee under this simplified method if (i) the Employee is a 5% owner during the Plan Year; (ii) the Employee's compensation for the Plan Year exceeds $75,000 (as adjusted pursuant to Section 415(d) of the Code); (iii) the Employee's compensation for the Plan Year exceeds $50,000 (as adjusted pursuant to Section 415(d) of the Code) and the Employee is in the top-paid group of Employees; or (iv) the Employee is an officer of the Employer and received compensation during the Plan Year that is greater than 50% of the dollar limitation under Code Section 415(b)(1)(A). The lookback provisions of Code Section 414(q) do not apply to determining Highly Compensated Employees under this simplified method. An Employer that applies this simplified method for determining Highly Compensated Employees may choose to apply this method on the basis of the Employer's workforce as of a single day during the Plan Year ("snapshot day"). In applying this simplified method on a snapshot basis, the Employer shall determine who is a Highly Compensated Employee on the basis of the data as of the snapshot day. If the determination of who is a Highly Compensated Employee is made earlier than the last day of the Plan Year, the Employee's compensation that is used to determine an Employee's status must be projected for the Plan Year under a reasonable method established by the Employer. Notwithstanding the foregoing, in addition to those Employees who are determined to be highly compensated on the Plan's snapshot day, as described above, where there are Employees who are not employed on the snapshot day but who are taken into account for purposes of testing under Section 5.6 or 5.11, the Employer must treat as a Highly Compensated Employee any Eligible Employee for the Plan Year who: (1) terminated prior to the snapshot day and was a Highly Compensated Employee in the prior year; (2) terminated prior to the snapshot day and (i) was a 5% owner, (ii) had compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) was an officer and had compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer; or (3) becomes employed subsequent to the snapshot day and (i) is a 5% owner, (ii) has compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) is an officer and has compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer. If during a Plan Year an Employee is a family member of either a 5% owner who is an Employee, or a Highly Compensated Employee who is one of the ten most highly paid Highly Compensated Employees ranked on the basis of compensation paid by the Employees during the year, then the family member and the 5% owner or top-ten-Highly-Compensated-Employee shall be treated as a single Employee receiving compensation and Plan contributions or benefits equal to the sum of the compensation and contributions or benefits of the family member and the 5% owner or top-ten-Highly-Compensated-Employee. For purposes of this Section 2.60(b), family members include the spouse, lineal ascendants and descendants of the Employee and the spouses of such lineal ascendants and descendants. The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder. The Plan Administrator is responsible for identifying the Highly Compensated Employees and reporting such data to the Recordkeeper. 2.61. Non-Highly Compensated Employee means an Employee who is not a Highly Compensated Employee. 2.62. Qualified Matching Contribution means a contribution made by the Employer that: (i) is allocated with respect to a Participant's Elective Deferrals or Participant Contributions or both (as elected by the Employer in the Plan Agreement), (ii) is fully vested at all times and (iii) is distributable only in accordance with Section 5.11. 2.63. Qualified Matching Account means an account maintained on the books of the Plan, in which are recorded the Qualified Matching Contributions on behalf of a Participant and the income, expense, gain and loss attributable thereto. 2.64. Qualified Nonelective Contribution means a contribution (other than an Employer Matching Contribution or Qualified Matching Contribution) made by the Employer, that: (i) a Participant may not elect to receive in cash until it is distributed from the Plan; (ii) is fully vested at all times; and (iii) is distributable only in accordance with Section 5.11. 2.65. Qualified Nonelective Contribution Account means an account maintained on the books of the Plan, in which are recorded the Qualified Nonelective Contributions on behalf of a Participant and the income, expense, gain and loss attributable thereto. ARTICLE 3. PARTICIPATION 3.1. Initial Participation. Upon completion of the eligibility for Plan participation requirements specified in the Plan Agreement, an Employee shall begin participation in the Plan as of the entry date specified in the Plan Agreement, or as of the Effective Date, whichever is later; provided, however, that: (a) If the Plan is adopted as an amendment of a predecessor plan of the Employer, every Employee who was participating under the predecessor plan when it was so amended shall become a Participant in the Plan as of the Effective Date, whether or not he has satisfied the age and service requirements specified in the Plan Agreement; and (b) Unless the Employer specifies otherwise in the Plan Agreement, any individual who is (i) a nonresident alien receiving no earned income from an Affiliated Employer which constitutes income from sources within the United States, or (ii) included in a unit of Employees covered by a collective bargaining agreement between the Employer and Employee representatives (excluding from the term "Employee representatives" any organization of which more than half of the members are Employees who are owners, officers, or executives of an Affiliated Employer), if retirement benefits were the subject of good faith bargaining and no more than 2% of the Employees covered by the collective bargaining agreement are professionals as defined in Section 1.410(b)-9 of the Income Tax Regulations, shall not participate in the Plan until the later of the date on which he ceases to be described in clause (i) or (ii), whichever is applicable, or the entry date specified by the Employer in the Plan Agreement; and (c) If the Plan is not adopted as an amendment of a predecessor plan of the Employer, all Employees on the Effective Date shall begin participation on the Effective Date, if the Employer so elects in the Plan Agreement; and (d) A Participant shall cease to participate in the Plan when he becomes a member of a class of Employees ineligible to participate in the Plan, and shall resume participation immediately upon his return to a class of Employees eligible to participate in the Plan. 3.2. Special Participation Rule. With respect to a Plan in which the Employer has specified full and immediate vesting in the Plan Agreement, an Employee who incurs a One-Year Eligibility Break before completing the number of Eligibility Periods required under Section 3.1 shall not thereafter be credited with any Eligibility Period completed before the One-Year Eligibility Break. 3.3. Resumed Participation. A former Employee who incurs a One-Year Eligibility Break after having become a Participant shall participate in the Plan as of the date on which he again becomes an Employee, if (i) his Employer Contribution Account or Employer Matching Account had become partially or fully vested before he incurred a One-Year Vesting Break, or (ii) he incurred fewer than five consecutive One-Year Eligibility Breaks. In any other case, when he again becomes an Employee he shall be treated as a new Employee under Section 3.1. 3.4. Benefits for Owner-Employees. If the Plan provides contributions or benefits for one or more Owner-Employees who control both the trade or business with respect to which the Plan is established and one or more other trades or businesses, the Plan and plans established with respect to such other trades or businesses must, when looked at as a single plan, satisfy Sections 401(a) and (d) of the Code with respect to the Employees of this and all such other trades or businesses. If the Plan provides contributions or benefits for one or more Owner-Employees who control one or more other trades or businesses, the Employees of each such other trade or business must be included in a plan which satisfies Sections 401(a) and (d) of the Code and which provides contributions and benefits not less favorable than those provided for such Owner-Employees under the Plan. If an individual is covered as an Owner-Employee under the plans of two or more trades or businesses which he does not control and such individual controls a trade or business, then the contributions or benefits of the Employees under the plan of the trade or business which he does control must be as favorable as those provided for him under the most favorable plan of the trade or business which he does not control. For purposes of this Section 3.4, an Owner-Employee, or two or more Owner-Employees, shall be considered to control a trade or business if such Owner-Employee, or such two or more Owner- Employees together: (a) own the entire interest in an unincorporated trade or business, or (b) in the case of a partnership, own more than 50% of either the capital interest or the profits interest in such partnership. For purposes of the preceding sentence, an Owner-Employee or two or more Owner-Employees shall be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner-Employee or such two or more Owner-Employees are considered to control within the meaning of the preceding sentence. 3.5. Changes in Classification. If a Participant ceases to be a member of a classification of Employees eligible to participate in the Plan, but does not incur a One-Year Eligibility Break, he will continue to be credited with Years of Service for vesting while he remains an Employee, and he will resume participation as of the date on which he again becomes a member of a classification of Employees eligible to participate in the Plan. If such a Participant incurs a One-Year Eligibility Break, Section 3.3 will apply. If a Participant who ceases to be a member of a classification of Employees eligible to participate in the Plan becomes a member of a classification of Employees eligible to participate in another plan of the Employer, his Account, if any, under the Plan shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account. If an Employee who is not a member of a classification of Employees eligible to participate in the Plan satisfies the age and service requirements specified in the Plan Agreement, he will begin to participate immediately upon becoming a member of an eligible classification. If such an Employee has account balances under another plan of the Employer, such account balances shall be transferred to the Plan upon the Employee's commencement of participation in the Plan, if such other plan permits such transfer. ARTICLE 4. CONTRIBUTIONS 4.1. Provisions Applicable to All Plans. (a) Payment and Crediting of Contributions. The Employer shall pay to the order of the Trustee the aggregate contributions to the Trust Fund (other than the premium payments on any Policy) for each Plan Year. Each contribution shall be accompanied by written instructions from the Employer, in the manner prescribed by Putnam. Neither the Trustee nor Putnam shall be under any duty to inquire into the correctness of the amount or the timing of any contribution, or to collect any amount if the Employer fails to make a contribution as provided in the Plan. (b) Responsibility for Premium Payments. Contributions to be applied to the payment of the premiums on any Policy shall be paid by the Employer directly to the insurer in cash. In determining the amount of any premium due under any Policy with respect to any Participant, the Employer and the Insurance Trustee may rely conclusively upon information furnished by the provider of the Policy. For purposes of Sections 4.2, 4.3 and Article 5, all Employer contributions used to pay premiums on Policies shall be treated as contributions made to the appropriate Participant's Employer Contribution Account. If the Employer omits any premium payment or makes any mistake concerning a premium payment, neither the Employer nor the Insurance Trustee shall have any liability in excess of the premium to be paid. (c) Time for Payment. Elective Deferrals will be transferred to the Trustee or the insurer as soon as such contributions can reasonably be segregated from the general assets of the Employer, but in any event within 90 days after the date on which the Compensation to which such contributions relate is paid. The aggregate of all other contributions with respect to a Plan Year shall be transferred to the Trustee or the insurer no later than the due date (including extensions) for filing the Employer's federal income tax return for that Plan Year. (d) Limitations on Allocations. All allocations shall be subject to the limitations in Article 6. (e) Establishment of Accounts. The Employer will establish and maintain (or cause to be established and maintained) for each Participant individual accounts adequate to disclose his interest in the Trust Fund, including such of the following separate accounts as shall apply to the Participant: Employer Contribution Account, Participant Contribution Account, Deductible Employee Contribution Account, and Rollover Account; and in a Plan with a CODA, Elective Deferral Account, Qualified Nonelective Account, Qualified Matching Account and Employer Matching Account. The maintenance of such accounts shall be only for recordkeeping purposes, and the assets of separate accounts shall not be required to be segregated for purposes of investment. (f) Restoration of Accounts. Notwithstanding any other provision of the Plan, for any Plan Year in which it is necessary to restore any portion of a Participant's Account pursuant to Section 8.3(b) or 9.5, to the extent that the amount of Forfeitures available is insufficient to accomplish such restoration, the Employer shall contribute the amount necessary to eliminate the insufficiency, regardless of whether the contribution is currently deductible by the Employer under Section 404 of the Code. Forfeitures shall be considered available for allocation pursuant to Sections 4.2 and 5.8 in a Plan Year only after all necessary restoration of Accounts has been accomplished. 4.2. Provisions Applicable Only to Profit Sharing Plans. a) Amount of Annual Contribution. The Employer will contribute for each Plan Year an amount determined in accordance with the formula specified by the Employer in the Plan Agreement, less any amounts reapplied for the Plan Year under Section 6.1(d), not to exceed the amount deductible under Section 404 of the Code. If the Employer so elects in the Plan Agreement, the amount of Forfeitures occurring in a Plan Year (including, if the Employer elects in the Plan Agreement, Forfeitures of Employer Matching Accounts) shall be applied to reduce the Employer's Profit Sharing Contribution by a like amount, and such Forfeitures shall be treated as a portion of the Profit Sharing Contribution for purposes of paragraphs (b) and (c). (b) Allocation of Profit Sharing Contributions; General Rule. As of the last day of each Plan Year, the Profit Sharing Contribution (and any amounts reapplied under Section 6.1(d)) for the Plan Year shall be allocated as indicated by the Employer in the Plan Agreement. To the extent that the Employer has so elected in the Plan Agreement, the amount of Forfeitures occurring in a Plan Year shall be treated as additional Profit Sharing Contributions and shall be allocated under this paragraph. (c) Plans Integrated with Social Security. Subject to Section 4.6 and if the Employer elects in the Plan Agreement an allocation formula integrated with Social Security, Employer contributions (and any amounts reapplied under Section 6.1(d)) shall be allocated as of the last day of the Plan Year, as follows: (1) Top-Heavy Integration Formula. If the Plan is required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 15, or if the Employer has specified in the Plan Agreement that this paragraph (1) will apply whether or not the Plan is Top-Heavy, then: (A) First, among the Employer Contribution Accounts of all Qualified Participants, in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings. The total amount allocated in this manner shall be equal to three percent (3%) of all Qualified Participants' Earnings (or, if less, the entire amount to be allocated). (B) Next, among the Employer Contribution Accounts of all Qualified Participants who have Excess Earnings, in the ratio that each Qualified Participant's Excess Earnings bears to all Qualified Participants' Excess Earnings. The total amount allocated in this manner shall be equal to three percent (3%) of all Qualified Participants' Excess Earnings (or, if less, the entire amount remaining to be allocated). In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, all of such Qualified Participant's Earnings shall be taken into account. (C) Next, among the Employer Contribution Accounts of all Qualified Participants, in the ratio that the sum of each Qualified Participant's Earnings and Excess Earnings bears to the sum of all Qualified Participants' Earnings and Excess Earnings. The total amount allocated in this manner shall not exceed the lesser of (i) the sum of all Participants' Earnings and Excess Earnings multiplied by the Top-Heavy Maximum Disparity Percentage determined under subparagraph (1)(E), or (ii) the entire amount remaining to be allocated. In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, two times such Qualifying Participant's Earnings shall be taken into account. (D) Finally, any amount remaining shall be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings. (E) The Top-Heavy Maximum Disparity Percentage shall be the lesser of (i) 2.7% or (ii) the applicable percentage from the following table: If the Plan s Integration Level is The applicable More than: But not more than: percentage is: $0 The greater of $10,000 2.7% or 20% of the Social Security Wage Base The greater of $10,000 80% of the Social 1.3% or 20% of the Social Security Security Wage Base Wage Base 80% of the Social Security Less than the Social 2.4% Security Wage Base Security Wage Base If the Plan's Integration Level is equal to the Social Security Wage Base, the Top-Heavy Maximum Disparity Percentage is 2.7%. (2) Non-Top-Heavy Integration Formula. If the Plan is not required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 15, and the Employer has not specified in the Plan Agreement that paragraph (1) will apply whether or not the Plan is Top-Heavy, then: (A) An amount equal to (i) the Maximum Disparity Percentage determined under subparagraph (2)(C) multiplied by the sum of all Qualified Participants' Earnings and Excess Earnings, or (ii) if less, the entire amount to be allocated, shall be allocated among the Employer Contribution Account of all Participants in the ratio that the sum of each Qualified Participant's Earnings and Excess Earnings bears to the sum of all Qualified Participants' Earnings and Excess Earnings. In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, two times such Qualified Participant's Earnings shall be taken into account. (B) Any amount remaining after the allocation in paragraph (2)(A) shall be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings. (C) The Maximum Disparity Percentage shall be the lesser of (i) 5.7% or (ii) the applicable percentage from the following table: If the Plan s Integration Level is The applicable More than: But not more than: percentage is: $0 The greater of $10,000 2.7% or 20% of the Social Security Wage Base The greater of $10,000 80% of the Social or 20% of the Social Security Wage Base 1.3% Security Wage Base 80% of the Social Less than the Social 2.4% Security Wage Base Security Wage Base If the Plan's Integration Level is equal to the Social Security Wage Base, the Maximum Disparity Percentage is 5.7%. (3) In this Section 4.2, "Earnings" means Earnings as defined in Section 2.13. (4) Annual overall permitted disparity limit. Notwithstanding subparagraphs (1) through (3) above, for any Plan Year this Plan benefits any Participant who benefits under another qualified plan or simplified employee pension (as defined in Section 408(k) of the Code) maintained by the Employer that provides for permitted disparity (or imputes disparity), Employer Contributions and Forfeitures will be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that such Qualified Participant's Earnings bears to the Earnings of all Participants. For all purposes under the Plan, a Participant is treated as benefiting under a plan (including this Plan) for any plan year during which the Participant receives or is deemed to receive an allocation under a plan in accordance with Section 1.410(b)-3(a) of the Treasury Regulations. (5) Cumulative Permitted Disparity Limit. Effective for Plan years beginning on or after January 1, 1995, the cumulative permitted disparity limit for a Participant is 35 cumulative permitted disparity years. Total cumulative permitted disparity years means the number of years credited to the Participant for allocation or accrual purposes under the Plan, any other qualified plan or simplified employee pension plan (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, all years ending in the same calendar year are treated as the same year. If the Participant has not benefitted under a defined benefit or target benefit plan for any year beginning on or after January 1, 1994, the Participant has no cumulative disparity limit. (d) Allocation of Forfeitures. Forfeitures shall be allocated among the Employer Contribution Accounts of all Qualified Participants in accordance with paragraph (a) or (b), whichever applies to Profit Sharing Contributions. Forfeitures may be allocated pursuant to paragraphs (c)(1)(B), (c)(1)(C) and (c)(2)(A) only to the extent that the limitation described therein has not been fully utilized by the allocation of Profit Sharing Contributions and amounts reapplied under Section 6.1(d). (e) Participant Contributions. If so specified in the Plan Agreement, a Participant may make Participant Contributions to the Plan in accordance with the Plan Agreement. Such contributions shall be limited so as to meet the nondiscrimination test of Section 401(m) of the Code, as set out in Section 5.11 of the Plan. Participant Contributions will be allocated to the Participant Contributions Account of the contributing Participant. All Participant Contributions Accounts will be fully vested at all times. 4.3. Provisions Applicable Only to Money Purchase Pension Plans. (a) Amount of Annual Contributions. The Employer will contribute for each Plan Year an amount described in paragraph (b) or (c) below, whichever is applicable, less any amounts reapplied for the Plan Year under Section 6.1(d), not to exceed the amount deductible under Section 404(c) of the Code. If the Employer so elects in the Plan Agreement, the amount of Forfeitures occurring in a Plan Year shall be applied to reduce the Employer's contribution by a like amount, and such Forfeitures shall be treated as a portion of the Employer Contribution for purposes of paragraphs (b) and (c). (b) Allocation of Contributions; General Rule. The Employer shall contribute an amount equal to the product of the Earnings of all Qualified Participants and the Base Contribution Percentage, and the contribution shall be allocated as of the last day of the Plan Year among the Employer Contribution Accounts of all Qualified Participants in the ratio that the Earnings of each Qualified Participant bears to the Earnings of all Qualified Participants. This general rule does not apply to a Plan that is integrated with Social Security. (c) Plans Integrated with Social Security. Subject to Section 4.6 and if the Employer has elected in the Plan Agreement to integrate the Plan with Social Security, the Employer shall contribute an amount equal to the sum of the following amounts, and the contribution shall be allocated as of the last day of the Plan Year as follows: (1) To the Employer Contribution Account of each Qualified Participant, an amount equal to the product of the Base Contribution Percentage and his Earnings, and (2) To the Employer Contribution Account of each Qualified Participant who has Excess Earnings, the product of his Excess Earnings and the lesser of (i) the Base Contribution Percentage or (ii) the Money Purchase Maximum Disparity Percentage determined under paragraph (d). (3) The Base Contribution Percentage shall be no less than three percent (3%) in either of the following circumstances: (i) any Plan Year of a Plan for which the Plan Agreement does not specify that the Employer will perform annual Top-Heavy testing, or (ii) any Plan Year in which the Plan is required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 15. (4) Notwithstanding subparagraphs (1) through (3) above, in the case of any Participant who has exceeded the cumulative permitted disparity limit described in paragraph (h) below, the amount shall be each Qualified Participant's Earnings multiplied by the percentage determined in subparagraph (2) above. (d) The Money Purchase Maximum Disparity Percentage is equal to the lesser of (i) 5.7% or (ii) the applicable percentage from the following table: If the Plan s Integration Level is The applicable more than: But not more than: percentage is: $0 The greater of $10,000 5.7% or 20% of the Social Security Wage Base The greater of $10,000 80% of the Social 4.3% or 20% of the Social Security Wage Base Security Wage Base 80% of the Social Less than the Social 5.4% Security Wage Base Security Wage Base If the Plan's Integration Level is equal to the Social Security Wage Base, the Money Purchase Maximum Disparity Percentage is 5.7%. (e) Participant Contributions. If so specified in the Plan Agreement, a Participant may make Participant Contributions to the Plan in accordance with the Plan Agreement. Such contributions shall be limited so as to meet the nondiscrimination test of Section 401(m) of the Code, as set out in Section 5.11 of the Plan. Participant Contributions will be allocated to the Participant Contributions Account of the contributing Participant. All Participant Contributions Accounts will be fully vested at all times. (f) Separate Allocation of Forfeitures. If the Employer has not elected in the Plan Agreement to use Forfeitures to reduce the amount of its contribution, Forfeitures shall be allocated among the Employer Contribution Accounts of all Qualified Participants in proportion of their Earnings. (g) Annual overall permitted disparity limit. Notwithstanding the preceding paragraphs, for any Plan Year this Plan benefits any Participant who benefits under another qualified plan or simplified employee pension (as defined in Section 408(k) of the Code) maintained by the Employer that provides for permitted disparity (or imputes disparity), the Employer shall contribute for each Qualified Participant an amount equal to the Qualified Participant's Earnings multiplied by the lesser of (i) the Base Contribution Percentage or (ii) the Money Purchase Maximum Disparity Percentage determined under paragraph (d). For all purposes under the Plan, a Participant is treated as benefiting under a plan (including this Plan) for any plan year during which the Participant receives or is deemed to receive an allocation under a plan in accordance with Section 1.410(b)-3(a) of the Treasury Regulations. (h) Cumulative Permitted Disparity Limit. Effective for Plan Years beginning on or after January 1, 1995, the cumulative permitted disparity limit for a Participant is 35 total cumulative permitted disparity years. Total cumulative permitted disparity years means the number of years credited to the Participant for allocation or accrual purposes under the Plan, any other qualified plan or simplified employee pension (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, all years ending in the same calendar year are treated as the same year. If the Participant has not benefited under a defined benefit plan or target benefit plan for any year beginning on or after January 1, 1994, the Participant has no cumulative disparity limit. 4.4. Rollover Contributions. An Employee in an eligible class may contribute at any time cash or other property (which is not a collectible within the meaning of Section 408(m) of the Code) acceptable to the Trustee representing qualified rollover amounts under Sections 402, 403, or 408 of the Code. Amounts so contributed shall be credited to a Rollover Account for the Participant. 4.5. No Deductible Employee Contributions. The PlanAdministrator shall not accept deductible employee contributions, other than those held in a Deductible Employee Contribution Account transferred from a predecessor plan of the Employer. 4.6. Paired Plans. An Employer may adopt as paired plans Putnam Profit Sharing and 401(k) Plan (Plan Agreement #001) and Putnam Money Purchase Pension Plan (Plan Agreement #002) or Putnam Basic Profit Sharing and 401(k) Plan (Plan Agreement #003) and Putnam Money Purchase Pension Plan (Plan Agreement #002). Only one of the two paired plans may be integrated with Social Security. In any Plan Year in which Putnam paired plans are Top- Heavy (as defined in Section 15.2(b)), each employee who is not a Key Employee (as defined in Section 15.2(a)) and who is eligible to participate in both plans will have allocated to his account in the Putnam Money Purchase Pension Plan a minimum contribution that meets the requirements of Section 15.3. ARTICLE 5. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k) (CODA) 5.1. Applicability; Allocations. This Article 5 applies toany plan for which the Employer has elected in the Plan Agreement to include a CODA. The Employer may specify in the Plan Agreement that contributions will be made to the Plan only under the CODA, or that contributions may be made under Section 4.2 as well as under the CODA. Allocations to Participants' Accounts of contributions made pursuant to this Article 5 shall be made as soon as administratively feasible after their receipt by the Trustee, but in any case no later than as of the last day of the Plan Year for which the contributions were made. 5.2. CODA Participation. Each Employee who has met the eligibility requirements of Article 3 may make Elective Deferrals to the Plan by completing and returning to the Plan Administrator a Deferral Agreement form which provides that the Participant's cash compensation from the Employer will be reduced by the amount indicated in the Deferral Agreement, and that the Employer will contribute an equivalent amount to the Trust on behalf of the Participant. The following rules will govern Elective Deferrals: (a) Subject to the limits specified in the Plan Agreement and set forth in Section 5.3, a Deferral Agreement may apply to any amount or percentage of either or both of the Earnings payable to a Participant in each year, or one or more bonuses payable to a Participant from time to time as specified by the Employer. (b) In accordance with such reasonable rules as the Plan Administrator shall specify, a Deferral Agreement will become effective as soon as is administratively feasible after the Deferral Agreement is returned to the Plan Administrator, and will remain effective until it is modified or terminated. No Deferral Agreement may become effective retroactively. (c) A Participant may modify his Deferral Agreement by completing and returning to the Plan Administrator a new Deferral Agreement form as of any of the dates specified in the Plan Agreement, and any such modification will become effective as described in paragraph (b). (d) A Participant may terminate his Deferral Agreement at any time upon advance written notice to the Plan Administrator, and any such termination will become effective as described in paragraph (b). 5.3. Annual Limit on Elective Deferrals. During any taxable year of a Participant, his Elective Deferrals under the Plan and any other qualified plan of an Affiliated Employer shall not exceed the dollar limit contained in Section 402(g) of the Code in effect at the beginning of the taxable year. With respect to any taxable year, a Participant's Elective Deferrals for purposes of this Section 5.3 include all Employer contributions made on his behalf pursuant to an election to defer under any qualified CODA as described in Section 401(k) of the Code, any simplified employee pension cash or deferred arrangement (SARSEP) as described in Section 402(h)(1)(B) of the Code, any eligible deferred compensation plan under Section 457 of the Code, any plan described under Section 501(c)(18) of the Code, and any Employer contributions made on behalf of the Participant for the purchase of an annuity contract under Section 403(b) of the Code pursuant to a salary reduction agreement. The amount of Elective Deferrals of a Participant who receives a hardship distribution pursuant to Section 5.14 shall be reduced, for the taxable year next following the distribution, by the amount of Elective Deferrals made in the taxable year of the hardship distribution. 5.4. Distribution of Certain Elective Deferrals. "Excess Elective Deferrals" means those Elective Deferrals described in Section 5.3 that are includible in a Participant's gross income under Section 402(g) of the Code, to the extent that the Participant's aggregate elective deferrals for a taxable year exceed the dollar limitation under that Code Section. Excess Elective Deferrals shall be treated as Annual Additions under the Plan, whether or not they are distributed under this Section 5.4. A Participant may designate to the Plan any Excess Elective Deferrals made during his taxable year by notifying the Employer on or before the following March 15 of the amount of the Excess Elective Deferrals to be so designated. A Participant who has Excess Elective Deferrals for a taxable year, taking into account only his Elective Deferrals under the Plan and any other plans of the Affiliated Employers, shall be deemed to have designated the entire amount of such Excess Elective Deferrals. Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose Account Excess Elective Deferrals were so designated or deemed designated for the preceding year. The income or loss allocable to Excess Elective Deferrals is the income or loss allocable to the Participant's Elective Deferral Account for the taxable year multiplied by a fraction, the numerator of which is the Participant's Excess Elective Deferrals for the year and the denominator of which is the Participant's Account balance attributable to Elective Deferrals without regard to any income or loss occurring during the year. To the extent that the return to a Participant of his Elective Deferrals would reduce an Excess Amount (as defined in Section 6.5(f)), such Excess Deferrals shall be distributed to the Participant in accordance with Article 6. 5.5. Satisfaction of ADP and ACP Tests. In each Plan Year, the Plan must satisfy the ADP test described in Section 5.6 and the ACP test described in Section 5.9. The Employer may cause the Plan to satisfy the ADP or ACP test or both tests for a Plan Year by any of the following methods or by any combination of them: (a) By the distribution of Excess Contributions in accordance with Section 5.7, or the distribution of Excess Aggregate Contributions in accordance with Section 5.12, or both; or (b) By recharacterization of Excess Contributions in accordance with Section 5.10; or (c) If the Employer has so elected in the Plan Agreement, by making Qualified Nonelective Contributions or Qualified Matching Contributions or both, in accordance with the Plan Agreement and this Section 5.5. 5.6. Actual Deferral Percentage Test Limit. The ActualDeferral Percentage (hereinafter "ADP") for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (a) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or (b) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 2.0, provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-Highly Compensated Employees by more than two percentage points. The following special rules shall apply to the computation of the ADP: (c) "Actual Deferral Percentage" means, for a specified group of Participants for a Plan Year, the average of the ratios (calculated separately for each Participant in the group) of (1) the amount of Employer contributions actually paid over to the Trust on behalf of the Participant for the Plan Year to (2) the Participant's Earnings for the Plan Year (or, provided that the Employer applies this method to all Employees for a Plan Year, the Participant's Earnings for that portion of the Plan Year during which he was eligible to participate in the Plan). Employer contributions on behalf of any Participant shall include: (i) his Elective Deferrals, including Excess Elective Deferrals of Highly Compensated Employees, but excluding (A) Excess Elective Deferrals of Non-Highly Compensated Employees that arise solely from Elective Deferrals made under the Plan or another plan maintained by an Affiliated Employer, and (B) Elective Deferrals that are taken into account in the Average Contribution Percentage test described in Section 5.11 (provided the ADP test is satisfied both with and without exclusion of these Elective Deferrals), and excluding Elective Deferrals returned to a Participant to reduce an Excess Amount as defined in Section 6.5(f); and (ii) if the Employer has elected to make Qualified Nonelective Contributions, such amount of Qualified Nonelective Contributions, if any, as shall be necessary to enable the Plan to satisfy the ADP test; and (iii) if the Employer has elected to make Qualified Matching Contributions, such amount of Qualified Matching Contributions, if any, as shall be necessary to enable the Plan to satisfy the ADP test. For purposes of computing Actual Deferral Percentages, an Employee who would be a Participant but for his failure to make Elective Deferrals shall be treated as a Participant on whose behalf no Elective Deferrals are made. (d) In the event that the Plan satisfies the requirements of Sections 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with the Plan, then this Section 5.6 shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year. (e) The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if these are treated as Elective Deferrals for purposes of the ADP test) allocated to his Accounts under two or more CODAs described in Section 401(k) of the Code that are maintained by the Affiliated Employers shall be determined as if such Elective Deferrals (and, if applicable, such Qualified Nonelective Contributions or Qualified Matching Contributions, or both) were made under a single CODA. If a Highly Compensated Employee participates in two or more CODAs that have different Plan Years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs. (f) For purposes of determining the ADP of a Participant who is a 5% owner or one of the ten most highly- paid Highly Compensated Employees, the Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if these are treated as Elective Deferrals for purposes of the ADP test) and the Compensation of such a Participant shall include the Elective Deferrals (and, if applicable, Qualified Nonelective Contributions and Qualified Matching Contributions, or both) and Compensation for the Plan Year of his Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the ADP both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees. (g) For purposes of the ADP test, Elective Deferrals, Qualified Nonelective Contributions and Qualified Matching Contributions must be made before the last day of the 12-month period immediately following the Plan Year to which those contributions relate. (h) The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in satisfying the test. (i) The determination and treatment of the ADP amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 5.7. Distribution of Excess Contributions. "Excess Contributions" means, with respect to any Plan Year, the excess of: (a) The aggregate amount of Employer contributions actually taken into account in computing the ADP of Highly Compensated Employees for the Plan Year, over (b) The maximum amount of Employer contributions permitted by the ADP test, determined by reducing contributions made on behalf of Highly Compensated Employees in order of their ADPs, beginning with the highest of such percentages. Notwithstanding any other provision of the Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose Accounts Excess Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Contributions is the income or loss allocable to the Participant's Elective Deferral Account (and, if applicable, his Qualified Nonelective Account or Qualified Matching Account or both) for the Plan Year multiplied by a fraction, the numerator of which is the Participant's Excess Contributions for the year and the denominator is the Participant's account balance attributable to Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if any of these are included in the ADP test) without regard to any income or loss occurring during the Plan Year. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which the excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Contributions attributable to each of them. Excess Contributions shall be allocated to a Participant who is a family member subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Elective Deferrals (and other amounts treated as his Elective Deferrals) bear to the combined Elective Deferrals (and other amounts treated as Elective Deferrals) of all of the Participants aggregated to determine his family members' combined ADP. Excess Contributions shall be treated as Annual Additions under the Plan. Excess Contributions shall be distributed from the Participant's Elective Deferral Account and Qualified Matching Account (if applicable) in proportion to the Participant's Elective Deferrals and Qualified Matching Contributions (to the extent used in the ADP test) for the Plan Year. Excess Contributions shall be distributed from the Participant's Qualified Nonelective Account only to the extent that such Excess Contributions exceed the balance in the Participant's Elective Deferral Account and Qualified Matching Account. 5.8. Matching Contributions. If so specified in the Plan Agreement, the Employer will make Matching Contributions to the Plan in accordance with the Plan Agreement, but no Matching Contribution shall be made with respect to an Elective Deferral or a Participant Contribution that is returned to a Participant because it represents an Excess Elective Deferral, an Excess Contribution, and Excess Aggregate Contribution or an Excess Amount (as defined in Section 6.5(f)); and if a Matching Contribution has nevertheless been made with respect to such an Elective Deferral or Participant Contribution, the Matching Contribution shall be forfeited, notwithstanding any other provision of the Plan. (a) Employer Matching Contributions. Employer Matching Contributions will be allocated among the Employer Matching Accounts of Participants in proportion to their Elective Deferrals or Participant Contributions, if applicable. Employer Matching Accounts shall become vested according to the vesting schedule specified in the Plan Agreement, but regardless of that schedule shall be fully vested upon the Participant's Retirement (or, if earlier, his fulfillment of the requirements for early retirement, if any, or attainment of the normal retirement age specified in the Plan Agreement), his death during employment with an Affiliated Employer, and in accordance with Section 19.3. Forfeitures of Employer Matching Contributions, other than Excess Aggregate Contributions, shall be made in accordance with Section 8.3. Forfeitures of Employer Matching Accounts for a Plan Year shall be applied to reduce the total Employer Matching Contribution for the Plan Year, applied to reduce the Employer's Profit Sharing Contribution for the Plan Year, or allocated among the Employer Matching Accounts of Participants in addition to the Employer Matching Contribution for the Plan Year, as elected by the Employer in the Plan Agreement. If the Employer so elects in the Plan Agreement, to the extent that the amount of Forfeitures for a Plan Year other than Forfeitures of Employer Matching Accounts exceeds the amount applied to reduce Employer Profit Sharing Contributions for such Plan Year as provided in Section 4.2(a), such excess shall be applied to reduce the total Employer Matching Contribution for the Plan Year. (b) Qualified Matching Contributions. Qualified Matching Contributions will be allocated among the Qualified Matching Contribution Accounts of Participants as specified by the Employer in the Plan Agreement. 5.9. Participant Contributions. If so specified in the Plan Agreement, a Participant may make Participant Contributions to the Plan in accordance with the Plan Agreement. Such contributions, together with any matching contributions (as defined in Section 401(m)(4) of the Code), shall be limited so as to meet the nondiscrimination test of Section 401(m) of the Code, as set forth in Section 5.11 of the Plan. Participant Contributions will be allocated to the Participant Contributions Account of the contributing Participant. All Participant Contribution Accounts will be fully vested at all times. 5.10. Recharacterization of Excess Contributions. Provided that the Plan Agreement permits all Participants to make Participant Contributions, the Employer may treat a Participant's Excess Contributions as an amount distributed to the Participant and then contributed by the Participant to the Plan as a Participant Contribution. Recharacterized amounts will remain nonforfeitable and subject to the same distribution requirements as Elective Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee to the extent that a recharacterized amount in combination with other Participant Contributions made by that Employee would exceed any stated limit under the Plan on Participant Contributions. Recharacterization must occur no later than two and one-half months after the last day of the Plan Year in which the Excess Contributions arose, and is deemed to occur no earlier than the date the last Highly Compensated Employee is informed in writing by the Employer of the amount recharacterized and the consequences thereof. Recharacterized amounts will be taxable to the Participant for his tax year in which the Participant would have received them in cash. 5.11. Average Contribution Percentage Test Limit and Aggregate Limit. The Average Contribution Percentage (hereinafter "ACP") for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (a) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or (b) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by two (2), provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-Highly Compensated Employees by more than two percentage points. The following rules shall apply to the computation of the ACP: (c) "Average Contribution Percentage" means the average of the Contribution Percentages of the Eligible Participants in a group. (d) "Contribution Percentage" means the ratio (expressed as a percentage) of a Participant's Contribution Percentage Amounts to the Participant's Earnings for the Plan Year (or, provided that the Employer applies this method to all Employees for a Plan Year, the Participant's Earnings for that portion of the Plan Year during which he was eligible to participate in the Plan). (e) "Contribution Percentage Amounts" means the sum of the Participant Contributions, Employer Matching Contributions, and Qualified Matching Contributions (to the extent not taken into account for purposes of the ADP test) made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall include Forfeitures of Excess Aggregate Contributions or Employer Matching Contributions allocated to the Participant's Account, taken into account in the year in which the allocation is made. If the Employer has elected in the Plan Agreement to make Qualified Nonelective Contributions, such amount of Qualified Nonelective Contributions, if any, as shall be necessary to enable the Plan to satisfy the ACP test shall be in the Contribution Percentage Amounts. Elective Deferrals shall also be included in the Contribution Percentage Amounts to the extent, if any, needed to enable the Plan to satisfy the ACP test, so long as the ADP test is met before the Elective Deferrals are used in the ACP test, and continues to be met following the exclusion of those Elective Deferrals that are used to meet the ACP test. (f) "Eligible Participant" means any Employee who is eligible to make a Participant Contribution, or an Elective Deferral, if Elective Deferrals are taken into account in the calculation of the Contribution Percentage, or to receive an Employer Matching Contribution (or a Forfeiture thereof) or a Qualified Matching Contribution. (g) "Aggregate Limit" means the sum of (i) 125% of the greater of the ADP of the Non-Highly Compensated Employees for the Plan Year, or the ACP of Non-Highly Compensated Employees under the Plan subject to Code Section 401(m) for the Plan Year beginning with or within the Plan Year of the CODA, and (ii) the lesser of 200% of, or two plus, the lesser of the ADP or ACP. "Lesser" is substituted for "greater" in clause (i) of the preceding sentence, and "greater" is substituted for "lesser" after the phrase "two plus the" in clause (ii) of the preceding sentence, if that formulation will result in a larger Aggregate Limit. (h) If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the ACP test maintained by an Affiliated Employer, and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the ACP of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with the Highly Compensated Employee whose ACP is the highest) so that the Aggregate Limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amount is reduced shall be treated as an Excess Aggregate Contribution. In determining the Aggregate Limit, the ADP and ACP of Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. The Aggregate Limit will be considered satisfied if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-Highly Compensated Employees. (i) For purposes of this section, the Contribution Percentage for any Participant who is a Highly Compensated Employee and who is eligible to have Contribution Percentage Amounts allocated to his account under two or more plans described in Section 401(a) of the Code, or CODAs described in Section 401(k) of the Code, that are maintained by an Affiliated Employer, shall be determined as if the total of such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participates in two or more CODAs that have different plan years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs. (j) In the event that the Plan satisfies the requirements of Sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with the Plan, then this Section 5.11 shall be applied by determining the Contribution Percentage of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(m) of the Code only if they have the same Plan Year. (k) For purposes of determining the Contribution Percentage of a Participant who is a 5% owner or one of the ten most highly-paid Highly Compensated Employers, the Contribution Percentage Amounts and Compensation of the Participant shall include the Contribution Percentage Amounts and Compensation for the Plan Year of Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the Contribution Percentage both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees. (l) For purposes of the ACP test, Matching Contributions and Qualified Nonelective Contributions will be considered made for a Plan Year if made no later than the end of the 12-month period beginning on the day after the close of the Plan Year. (m) The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in the ACP test. (n) The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 5.12. Distribution of Excess Aggregate Contributions. Notwithstanding any other provision of the Plan, Excess AggregateContributions, plus any income and minus any loss allocable thereto, shall be forfeited if forfeitable, or if not forfeitable, distributed no later than the last day of each Plan Year to Participants to whose accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Aggregate Contributions is the income or loss allocable to the Participant's Employer Matching Contribution Account, Qualified Matching Contribution Account (if any, and if all amounts therein are not used in the ADP test), and, if applicable, Qualified Nonelective Account, Participant Contribution Account and Elective Deferral Account for the Plan Year, multiplied by a fraction, the numerator of which is the Participant's Excess Aggregate Contributions for the year and the denominator of which is the Participant's account balance(s) attributable to Contribution Percentage Amounts without regard to any income or loss occurring during the Plan Year. Excess Aggregate Contributions shall be allocated to a Participant who is subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Employer Matching Contributions (and other amounts treated as his Employer Matching Contributions) bear to the combined Employer Matching Contributions (and other amounts treated as Employer Matching Contributions) of all of the Participants aggregated to determine its family members' combined ACP. If excess amounts attributable to Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Excess Aggregate Contributions shall be treated as Annual Additions under the Plan. Forfeitures of Excess Aggregate Contributions that are Employer Matching Contributions shall either be reallocated to the accounts of Non-Highly Compensated Employees or applied to reduce Employer Contributions, as elected by the Employer in the Plan Agreement. Excess Aggregate Contributions shall be forfeited if forfeitable, or distributed on a pro-rata basis from the Participant's Participant Contribution Account, Employer Matching Account, and Qualified Matching Account (and, if applicable, the Participant's Qualified Nonelective Account or Elective Deferral Account, or both). Excess Aggregate Contributions means, with respect to any Plan Year, the excess of: (a) The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage and actually made on behalf of Highly Compensated Employees for the Plan Year, over (b) The maximum Contribution Percentage Amounts permitted by the ACP test and the Aggregate Limit (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages, beginning with the highest of such percentages). Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 5.4, and then determining Excess Contributions pursuant to Section 5.7. 5.13. Restriction on Distributions. Except as provided in Sections 5.4, 5.7 and 5.12, no distribution may be made from a Participant's Elective Deferral Account, Qualified Nonelective Account or Qualified Matching Account until the occurrence of one of the following events: (a) The Participant's Disability, death or termination of employment with the Affiliated Employers; (b) Termination of the Plan without the establishment of another defined contribution plan other than an employee stock ownership plan as defined in Section 4975(e) or Section 409 of the Code, or a simplified employee pension plan as defined in Section 408(k) of the Code; (c) The Participant's attainment of age 59 1/2 (if the Employer has elected in the Plan Agreement to permit such distributions); or (d) In the case of an Employer that is a corporation, the disposition by the Employer to an unrelated entity of (i) substantially all of the assets (within the meaning of Section 409(d)(2) of the Code) used in a trade or business of the Employer, if the Employer continues to maintain the Plan after the disposition, but only with respect to Employees who continue employment with the entity acquiring such assets; or (ii) the Employer's interest in a subsidiary (within the meaning of Section 409(d)(3) of the Code), if the Employer continues to maintain the Plan after the disposition, but only with respect to Employees who continue employment with such subsidiary. In addition, if the Employer has elected in the Plan Agreement to permit such distributions, a distribution may be made from a Participant's Elective Deferral Account in the event of his financial hardship as described in Section 5.14. All distributions upon any of the events listed above are subject to the conditions of Article 10, Joint and Survivor Annuity Requirements. In addition, distributions made after March 31, 1988, on account of an event described in subsection (b) or (d) above must be made in a lump sum. 5.14. Hardship Distributions. If the Employer has so elected in the Plan Agreement, upon a Participant's written request the Employer may permit a distribution from his Elective Deferral Account and from his Employer Matching Account. The terms and conditions of Section 12.2 and the special vesting rule contained in Section 8.4 shall apply to hardship distributions from an Employer Contribution Account or an Employer Matching Account. The further terms of this Section 5.14 shall apply to hardship distributions from an Elective Deferral Account. No hardship distribution shall be made from a Qualified Nonelective Account or a Qualified Matching Account. (a) The maximum amount that may be distributed on account of hardship from an Elective Deferral Account after December 31, 1988, shall not exceed the sum of (1) the amount credited to the Account as of December 31, 1988, and (2) the aggregate amount of the Elective Deferrals made by the Participant after December 31, 1988, and before the hardship distribution. (b) Hardship distributions shall be permitted only on account of the following financial needs: (1) Expenses for medical care described in Section 213(d) of the Code for the Participant, his spouse, children and dependents, or necessary for these persons to obtain such care; (2) Purchase of the principal residence of the Participant (excluding regular mortgage payments); (3) Payment of tuition and related educational fees and room and board expenses for the upcoming 12 months of post-secondary education for the Participant, his spouse, children or dependents; or (4) Payments necessary to prevent the Participant's eviction from, or the foreclosure of a mortgage on, his principal residence. (c) Hardship distributions shall be subject to the spousal consent requirements contained in Sections 411(a)(11) and 417 of the Code, to the same extent that those requirements apply to a Participant pursuant to Section 10.1. (d) A hardship distribution will be made to a Participant only upon satisfaction of the following conditions: (1) The Participant has obtained all nontaxable loans and all distributions other than hardship distributions available to him from all plans maintained by the Affiliated Employers; (2) The hardship distribution does not exceed the amount of the Participant's financial need as described in paragraph (b) plus any amounts necessary to pay federal, state and local income taxes and penalties reasonably anticipated to result from the distribution; (3) All plans maintained by the Affiliated Employers provide that the Participant's Elective Deferrals and voluntary after-tax contributions will be suspended for a period of 12 months following his receipt of a hardship distribution; and (4) All plans maintained by the Affiliated Employers provide that the amount of Elective Deferrals that the Participant may make in his taxable year immediately following the year of a hardship distribution will not exceed the applicable limit under Section 402(g) of the Code for the taxable year, reduced by the amount of Elective Deferrals made by the Participant in the taxable year of the hardship distribution. 5.15. Special Effective Dates. If the Plan is adopted as an amendment of an existing plan, the provisions of Sections 5.3 and Section 5.7 through 5.11 are effective as of the first day of the first Plan Year beginning after December 31, 1986. ARTICLE 6. LIMITATIONS ON ALLOCATIONS 6.1. No Additional Plan. If the Participant does not participate in and has never participated in another qualified plan, or a welfare benefit fund (as defined in Section 419(e) of the Code), or an individual medical account (as defined in Section 415(l)(2) of the Code) which provides an Annual Addition as defined in Section 6.5(a), maintained by an Affiliated Employer: (a) The amount of Annual Additions (as defined in Section 6.5(a)) which may be credited to the Participant's Accounts for any Limitation Year will not exceed the lesser of the Maximum Annual Additions or any other limitation contained in this Plan. If the Employer contribution that would otherwise be contributed or allocated to the Participant's Account would cause the Annual Additions for the Limitation Year to exceed the Maximum Annual Additions, the amount contributed or allocated will be reduced so that the Annual Additions for the Limitation Year will equal the Maximum Annual Additions. (b) Before determining a Participant's actual Section 415 Compensation for a Limitation Year, the Employer may determine the Maximum Annual Additions for the Participant on the basis of a reasonable estimation of the Participant's Section 415 Compensation for the Limitation Year, uniformly determined for all Participants similarly situated. (c) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Annual Additions for the Limitation Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Limitation Year. (d) If pursuant to paragraph (c), or as a result of the reallocation of Forfeitures, or as a result of a reasonable error in determining the amount of Elective Deferrals that may be made by a Participant, the Annual Additions exceed the Maximum Annual Additions, the Excess Amount will be disposed of as follows: (1) Any Participant Contributions and Elective Deferrals, to the extent they would reduce the Excess Amount, will be returned to the Participant. (2) If after the application of (1) above an Excess Amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the Excess Amount in the Participant's Accounts will be used to reduce Employer contributions (including any allocation of Forfeitures) for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary. (3) If after the application of (1) above an Excess Amount still exists, and the Participant is not covered by the Plan at the end of a Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer contributions (including allocation of any Forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary. (4) If a suspense account is in existence at any time during a Limitation Year pursuant to this Section 6.1(d), it will participate in the allocation of the Trust's investment gains and losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants' Accounts before any Employer or any Employee contributions may be made to the Plan for that Limitation Year. Excess amounts may not be distributed to Participants or former Participants. 6.2. Additional Master or Prototype Plan. If in addition to this Plan a Participant is covered under another qualified Master or Prototype defined contribution plan or a welfare benefit fund (as defined in Section 419(e) of the Code), or an individual medical account (as defined in Section 415(1)(2) of the Code) which provides an Annual Addition as defined in Section 6.5(a), maintained by an Affiliated Employer during any Limitation Year: (a) The Annual Additions which may be credited to a Participant's Accounts under this Plan for any such Limitation Year will not exceed the Maximum Annual Additions reduced by the Annual Additions credited to a Participant's accounts under the other plans and welfare benefit funds for the same Limitation Year. If the Annual Additions with respect to the Participant under other defined contribution plans and welfare benefit funds maintained by an Affiliated Employer are less than the Maximum Annual Additions, and the Employer contribution that would otherwise be contributed or allocated to the Participant's Accounts under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated will be reduced so that the Annual Additions under all such plans and funds for the Plan Year will equal the Maximum Annual Additions. If the Annual Additions with respect to the Participant under such other defined contribution plans and welfare benefit funds in the aggregate are equal to or greater than the Maximum Annual Additions, no amount will be contributed or allocated to the Participant's Accounts under this Plan for the Limitation Year. (b) Before determining a Participant's actual Section 415 Compensation for a Limitation Year, the Employer may determine the Maximum Annual Additions for the Participant in the manner described in Section 6.1(b). (c) As soon as is administratively feasible after the end of the Plan Year, the Maximum Annual Additions for the Plan Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Plan Year. (d) If, pursuant to Section 6.2(c) or as a result of the allocation of Forfeitures, or of a reasonable error in determining the amount of Elective Deferrals that may be made by him, a Participant's Annual Additions under this Plan and such other plans would result in an Excess Amount for a Limitation Year, the Excess Amount will be deemed to consist of the Annual Additions last allocated under any qualified Master or Prototype defined contribution plan, except that Annual Additions to any welfare benefit fund or individual medical account will be deemed to have been allocated first regardless of the actual allocation date. (e) If an Excess Amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the Excess Amount attributed to this Plan will be the product of X and Y, where (X) is the total Excess Amount allocated as of such date, and (Y) is the ratio of: (1) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (2) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified Master or Prototype defined contribution plans. (f) Any Excess Amount attributed to this Plan will be disposed of in the manner described in Section 6.1(d). 6.3. Additional Non-Master or Non-Prototype Plan. If the Participant is covered under another qualified defined contribution plan maintained by an Affiliated Employer which is not a Master or Prototype plan, Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with Section 6.2 as though the other plan were a Master or Prototype plan, unless the Employer provides other limitations in the Plan Agreement. 6.4. Additional Defined Benefit Plan. If an Affiliated Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year. The Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with the Plan Agreement. 6.5. Definitions. (a) Annual Additions means the sum of the following amounts credited to a Participant's Accounts for the Limitation Year: (1) Employer contributions; (2) For any Limitation Year beginning after December 31, 1986, Participant Contributions; (3) Forfeitures; (4) Amounts allocated after March 31, 1984, to any individual medical account, as defined in Section 415(1)(2) of the Code, which is part of a pension or annuity plan maintained by an Affiliated Employer; (5) Amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post retirement medical benefits allocated to the separate account of a key Employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit fund as defined in Section 419(e) of the Code, maintained by an Affiliated Employer; and (6) In a Plan that includes a CODA, Excess Elective Deferrals, Excess Contributions (including recharacterized Elective Deferrals) and Excess Aggregate Contributions. For this purpose, any Excess Amount applied under Sections 6.1(d) or 6.2(e) in the Limitation Year to reduce Employer contributions will be considered Annual Additions for such Limitation Year. Any rollover contribution will not be considered an Annual Addition. (b) Section 415 Compensation means, for a Self-Employed Individual, his Earned Income; and for any other Participant, his "Form W-2 earnings" as defined in Section 2.8, if the Employer has elected in item 4 of the Plan Agreement a definition of Compensation based on "Form W-2 earnings"; or if the Employer has not so elected, his wages, salaries, and fees for professional services and other amounts received for personal services actually rendered in the course of employment with the Employer maintaining the Plan (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits and reimbursements or other expense allowances under a nonaccountable plan as described in Income Tax Regulations Section 1.62-2(c)), and excluding the following: (1) Employer contributions to a plan of deferred compensation which are not includible in the Participant's gross income for the taxable year in which contributed, or Employer contributions under a simplified employee pension plan to the extent such contributions are deductible by the Employee, or any distributions from a plan of deferred compensations; (2) Amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by the Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (3) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (4) Other amounts which received special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity contract described in Section 403(b) of the Code (whether or not the contributions are actually excludable from the gross income of the Participant). For purposes of applying the limitations of this Article 6, Section 415 Compensation for a Limitation Year is the Section 415 Compensation actually paid or made available during such Limitation Year. (c) Defined Benefit Fraction means a fraction, the numerator of which is the sum of the Participant's Projected Annual Benefits under all the defined benefit plans (whether or not terminated) maintained by the Affiliated Employers, and the denominator of which is the lesser of 125% of the dollar limitation in effect for the Limitation Year under Sections 415(b) and (d) of the Code, or 140% of the Participant's Highest Average Compensation including any adjustments under Section 415(b) of the Code. Notwithstanding the foregoing, if the Participant was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any change in the terms and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all Limitation Years beginning before January 1, 1987. (d) Defined Contribution Dollar Limitation means $30,000 or if greater, one-fourth of the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code as in effect for the Limitation Year. (e) Defined Contribution Fraction means a fraction, the numerator of which is the sum of the Annual Additions to the Participant's accounts under all the defined contribution plans (whether or not terminated) maintained by Affiliated Employers for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant's nondeductible Employee contributions to all defined benefit plans, whether or not terminated, maintained by the Affiliated Employers, and the Annual Additions attributable to all welfare benefit funds, as defined in Section 419(e) of the Code, and individual medical accounts, as defined in Section 415(l)(2) of the Code), and the denominator of which is the sum of the Maximum Annual Additions for the current and all prior Limitation Years of service with the Affiliated Employers (regardless of whether a defined contribution plan was maintained by any Affiliated Employer). The Maximum Annual Additions in any Plan Year is the lesser of 125% of the dollar limitation determined under Sections 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code, or 35% of the Participant's Section 415 Compensation for such year. If the Employee was a Participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986 in one or more defined contribution plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to product of the excess of the sum of the fractions over 1.0, multiplied by the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat 100% of nondeductible Employee contributions as Annual Additions. (f) Excess Amount means, with respect to any Participant, the amount by which Annual Additions exceed the Maximum Annual Additions. (g) Highest Average Compensation means the average compensation for the three consecutive Years of Service with the Employer that produces the highest average. A Year of Service with the Employer is the period of 12 consecutive months specified as the Limitation Year in the Plan Agreement. (h) Limitation Year means the period of 12 consecutive months specified in the Plan Agreement. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different period of 12 consecutive months, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. (i) Master or Prototype plan means a plan the form of which is the subject of a favorable opinion letter from the Internal Revenue Service. (j) Maximum Annual Additions, which is the maximum annual addition that may be contributed or allocated to a Participant's account under the plan for any Limitation Year, means an amount not exceeding the lesser of (a) the Defined Contribution Dollar Limitation or (b) 25% of the Participant's Section 415 Compensation for the Limitation Year. The compensation limitation referred to in (b) shall not apply to any contribution for medical benefits (within the meaning of Section 401(h) or Section 419A(f)(2) of the Code) which is otherwise treated as an Annual Addition under Section 415(l)(1) or Section 419A(d)(2) of the Code. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different period of 12 consecutive months, the Maximum Annual Additions will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction: number of months in the short Limitation Year 12 (k) Projected Annual Benefit means the annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or Qualified Joint and Survivor Annuity) to which the Participant would be entitled under the terms of the Plan assuming: (1) The Participant will continue employment until normal retirement age under the Plan (or current age, if later), and (2) The Participant's Section 415 Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the plan will remain constant for all future Limitation Years. ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS 7.1. Retirement. After his Retirement, the amount credited to a Participant's Accounts will be distributed to him in accordance with Article 9. The termination of a Participant's employment with the Affiliated Employers after he has (i) attained the normal retirement age specified in the Plan Agreement, (ii) fulfilled the requirements for early retirement (if any) specified in the Plan Agreement, or (iii) become Disabled will constitute his Retirement. Upon a Participant's Retirement (or, if earlier, his attainment of the normal retirement age specified in the Plan Agreement or fulfillment of the requirements for early retirement, if any, specified in the Plan Agreement) the Participant's Accounts shall become fully vested, regardless of the vesting schedule specified by the Employer in the Plan Agreement. A Participant who separates from service with any vested balance in his Accounts, after satisfying the service requirements for early retirement (if any is specified in the Plan Agreement) but before satisfying the age requirement for early retirement (if any is specified in the Plan Agreement), shall be entitled to a fully vested early retirement benefit upon his satisfaction of such age requirement. 7.2. Death. If a Participant dies before the distribution of his Accounts has been completed, his Beneficiary will be entitled to distribution of benefits in accordance with Article 9. A Participant's Accounts will become fully vested upon his death before termination of his employment with the Affiliated Employers, regardless of the vesting schedule specified by the Employer in the Plan Agreement. A Participant may designate a Beneficiary by completing and returning to the Plan Administrator a form provided for this purpose. The form most recently completed and returned to the Plan Administrator before the Participant's death shall supersede any earlier form. If a Participant has not designated any Beneficiary before his death, or if no Beneficiary so designated survives the Participant, his Beneficiary shall be his surviving spouse, or if there is no surviving spouse, his estate. A married Participant may designate a Beneficiary other than his spouse only if his spouse consents in writing to the designation, and the spouse's consent acknowledges the effect of the consent and is witnessed by a notary public or a representative of the Plan. The beneficiary or beneficiaries named in the designation to which the spouse has so consented may not be changed without further written spousal consent unless the terms of the spouse's original written consent expressly permit such a change, and acknowledge that the spouse voluntarily relinquishes the right to limit the consent to a specific beneficiary. The marriage of a Participant shall nullify any designation of a beneficiary previously executed by the Participant. If it is established to the satisfaction of the Plan Administrator that the Participant has no spouse or that the spouse cannot be located, the requirement of spousal consent shall not apply. Any spousal consent, or establishment that spousal consent cannot be obtained, shall apply only to the particular spouse involved. 7.3. Other Termination of Employment. A Participant whose employment terminates for any reason other than his Retirement or death will be entitled to distribution, in accordance with Article 9, of benefits equal to the amount of the vested balance of his Accounts as determined under Article 8. ARTICLE 8. VESTING 8.1. Vested Balance. The vested balance of a Participant's Accounts will be determined as follows: (a) General Rule. A Participant's Participant Contribution Account and Rollover Account shall be fully vested at all times. The vested portion of his Employer Contribution Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates. The vesting schedule specified in the Plan Agreement applies to all benefits within the meaning of Section 411(a)(7) of the Code, except those attributable to Participant Contributions. (b) Special Rules for CODA. In a Plan that includes a CODA, a Participant's Elective Deferral Account, Qualified Nonelective Account, and Qualified Matching Account shall be fully vested at all times. The vested portion of his Employer Matching Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates. (c) Retirement. All of a Participant's Accounts shall become fully vested upon his Retirement or his earlier attainment of early retirement age (if any) or the normal retirement age elected by the Employer in the Plan Agreement. For so long as a former Employee does not receive a distribution (or a deemed distribution) of the vested portion of his Accounts, the undistributed portion shall be held in a separate account which shall be invested pursuant to Section 13.3 and shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants. 8.2. Vesting of Accounts of Returned Former Employees. The following rules apply in determining the vested portion of the Accounts of a Participant who incurs one or more consecutive One- Year Vesting Breaks and then returns to employment with an Affiliated Employer: (a) If the Participant incurred fewer than five consecutive One-Year Vesting Breaks, then all of his Years of Service will be taken into account in determining the vested portion of his Accounts, as soon as he has completed one Year of Service following his return to employment. (b) If the Participant incurred five or more consecutive One-Year Vesting Breaks, then: (1) (No Year of Service completed after his return to employment will be taken into account in determining the vested portion of his Accounts as of any time before he incurred the first One-Year Vesting Break; (2) Years of Service completed before he incurred the first One-Year Vesting Break will not be taken into account in determining the vested portion of his Accounts as of any time after his return to employment (i) unless some portion of his Employer Contribution Account or Employer Matching Account had become vested before he incurred the first One-Year Vesting Break, and (ii) until he has completed one Year of Service following his return to employment; and (3) Separate sub-accounts will be maintained for the Participant's pre-break and post-break Employer Contribution Account and Employer Matching Account, until both sub-accounts become fully vested. Both sub-accounts will share in the earnings and losses of the Trust Fund. 8.3. Forfeiture of Non-Vested Amounts. The portion of aformer Employee's Accounts that has not become vested under Section 8.1 shall become a Forfeiture in accordance with the following rules, and shall be reallocated in accordance with Section 4.2, Section 4.3 or Article 5 (whichever applies) no later than the end of the Plan Year in which it becomes a Forfeiture. (a) If Distribution Is Made. If any or all of the vested portion of a Participant's Accounts is distributed in accordance with Section 9.1 or 9.2 before the Participant incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture in the Plan Year in which the distribution occurs. For purposes of this Section 8.3, if the value of the vested portion of a Participant's Accounts is zero, he shall be deemed to have received a distribution of the entire vested balance of his Accounts on the day his employment terminates. If the Participant elects to have distributed less than the entire vested portion of his Employer Contribution Account or Employer Matching Accounts, the part of the nonvested portion that will become a Forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator of which is the total value of the entire vested portion of such Accounts. (b) Right of Repayment. If a Participant who receives a distribution pursuant to paragraph (a) returns to employment with an Affiliated Employer, the balance of his Employer Contribution Account and Employer Matching Account will be restored to the amount of such balance on the date of distribution, if he repays to the Plan the full amount of the distribution, before the earlier of (i) the fifth anniversary of his return to employment or (ii) the date he incurs five consecutive One-Year Vesting Breaks following the date of distribution. If an Employee is deemed to receive a distribution pursuant to this Section 8.3, and he resumes employment covered under this Plan before the date he incurs five consecutive One-Year Vesting Breaks, upon his reemployment the Employer-derived account balance of the Employee will be restored to the amount on the date of such deemed distribution. Such restoration will be made, first, from the amount of any Forfeitures available for reallocation as of the last day of the Plan Year in which repayment is made, to the extent thereof; and to the extent that Forfeitures are not available or are insufficient to restore the balance, from contributions made by the Employer pursuant to Section 4.1(f). (c) If No Distribution Is Made. If no distribution (or deemed distribution) is made to a Participant before he incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture at the end of the Plan Year that constitutes his fifth consecutive One-Year Vesting Break. (d) Adjustment of Accounts. Before a Forfeiture is incurred, a Participant's Accounts shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants. (e) Accumulated Deductible Contributions. For Plan Years beginning before January 1, 1989, a Participant's vested Account balance shall not include accumulated deductible contributions within the meaning of Section 72(o)(5)(B) of the Code. 8.4. Special Rule in the Event of a Withdrawal. If a withdrawal pursuant to Section 12.2 or 12.3 is made from a Participant's Employer Contribution Account or Employer Matching Account before the Account is fully vested, and the Participant may increase the vested percentage in the Account, then a separate account will be established at the time of the withdrawal, and at any relevant time after the withdrawal the vested portion of the separate account will be equal to the amount "X" determined by the following formula: X = P(AB + D) - D For purposes of the formula, P is the Participant's vested percentage at the relevant time, AB is the account balance at the relevant time, and D is the amount of the withdrawal. 8.5. Vesting Election. If the Plan is amended to change any vesting schedule, or is amended in any way that directly or indirectly affects the computation of a Participant's vested percentage, each Participant who has completed not less than three Years of Service may elect, within a reasonable period after the adoption of the amendment or change, in a writing filed with the Employer to have his vested percentage computed under the Plan without regard to such amendment. For a Participant who is not credited with at least one Hour of Service in a Plan Year beginning after December 31, 1988, the preceding sentence shall be applied by substituting "five Years of Service" for "three Years of Service." The period during which the election may be made shall commence with the date the amendment is adopted, or deemed to be made, and shall end on the latest of (a) 60 days after the amendment is adopted; (b) 60 days after the amendment becomes effective; or (c) 60 days after the Participant is issued written notice of the amendment by the Employer. ARTICLE 9. PAYMENT OF BENEFITS 9.1. Distribution of Accounts. A Participant or Beneficiary who has become eligible for a distribution of benefits pursuant to Article 7 may elect to receive such benefits at any time, subject to the terms and conditions of this Article 9, Article 10 and Article 11. Unless a Participant or Beneficiary elects otherwise, distribution of benefits will begin no later than the 60th day after the end of the Plan Year in which the latest of the following events occurs: (a) The Participant attains age 65 (or if earlier, the normal retirement age specified by the Employer in the Plan Agreement); or (b) The tenth anniversary of the year in which the Participant commenced participation in the Plan; or (c) The Participant's employment with the Affiliated Employers terminates. A Beneficiary who is the surviving spouse of a Participant may elect to have distribution of benefits begin within the 90-day period following the Participant's death. For purposes of this Section 9.1, the failure of a Participant (and his spouse, if spousal consent is required pursuant to Article 10) to consent to a distribution while a benefit is "immediately distributable" within the meaning of Section 9.2 shall be considered an election to defer commencement of payment. If the Employer has so specified in the Plan Agreement, the vested portion of a Participant's Accounts will be distributed in a lump sum in cash no later than 60 days after the end of the Plan Year in which his employment terminates, if at the time the Participant first became entitled to a distribution the value of such vested portion derived from Employer and Employee contributions does not exceed $3,500. Commencement of distributions in any case shall be subject to Section 9.4. 9.2. Restriction on Immediate Distributions. A Participant's account balance is considered "immediately distributable" if any part of the account balance could be distributed to the Participant (or his surviving spouse) before the Participant attains, or would have attained if not deceased, the later of the normal retirement age specified in the Plan Agreement or age 62. (a) If the value of a Participant's vested account balance derived from Employer and Employee contributions exceeds (or at the time of any prior distribution exceeded) $3,500, and the account balance is immediately distributable, the Participant and his spouse (or where either the Participant or the spouse has died), the survivor must consent to any such distribution, unless an exception described in paragraph (b) applies. The consent of the Participant and his spouse shall be obtained in writing within the 90-day period ending on the annuity starting date, which is the first day of the first period for which an amount is paid as an annuity (or any other form). The Plan Administrator shall notify the Participant and the spouse, no less than 30 days and no more than 90 days before the annuity starting date, of the right to defer any distribution until the Participant's account balance is no longer immediately distributable. Such notification shall include a general description of the material features of the optional forms of benefit available under the Plan and an explanation of their relative values, in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code. If a distribution is one to which Sections 401(a)(11) and 417 of the Code do not apply, such distribution may commence less than 30 days after the required notification is given, provided that: (1) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); and (2) the Participant, after receiving the notice, affirmatively elects a distribution. (b) Notwithstanding paragraph (a), only the Participant need consent to the commencement of a distribution in the form of a Qualified Joint and Survivor Annuity while the account balance is immediately distributable. Furthermore, if payment in the form of a Qualified Joint and Survivor Annuity is not required with respect to the Participant pursuant to Section 10.1(b) of the Plan, only the Participant need consent to the distribution of an account balance that is immediately distributable. Neither the consent of the Participant nor the spouse shall be required to the extent that a distribution is required to satisfy Section 401(a)(9) or Section 415 of the Code. In addition, upon termination of the Plan, if the Plan does not offer an annuity option purchased from a commercial provider), and no Affiliated Employer maintains another defined contribution plan (other than an employee stock ownership plan as defined in Section 4975(e)(7) of the Code), a Participant's account balance shall be distributed to the Participant without his consent. If any Affiliated Employer maintains another defined contribution plan (other than an employee stock ownership plan as defined in Section 4975(e)(7) of the Code), a Participant's account balance shall be transferred to that defined contribution plan without his consent, unless he consents to an immediate distribution. For purposes of determining the applicability of the foregoing consent requirements to distributions made before the first day of the first Plan Year beginning after December 31, 1988, the Participant's vested account balance shall not include amounts attributable to accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code. 9.3. Optional Forms of Distribution. Provided that the Employer has so elected in the Plan Agreement, if at the time a Participant first becomes entitled to a distribution the value of his vested Account balance derived from Employer and Employee contributions does not exceed $3,500, distribution shall be made in a lump sum in cash. Subject to the preceding sentence and to the rules of Article 10 concerning joint and survivor annuities, a Participant or Beneficiary may elect to receive benefits in any of the following optional forms: (a) A lump sum payment in cash or in kind or in a combination of both; (b) A series of installments over a period certain that meets the requirements of Article 11; or (c) A nontransferable annuity contract, purchased by the Plan Administrator from a commercial provider, with terms complying with the requirements of Article 11; provided, however, that an annuity for the life of any person shall be available as an optional form of distribution only if the Employer has so elected in the Plan Agreement. (d) In the event that the Plan is adopted as an amendment to an existing plan, each optional form of distribution available under the existing plan shall be made available under the Plan, and may be made available where necessary through the purchase by the Plan Administrator of an appropriate annuity contract in accordance with paragraph (c). If the Plan is a direct or indirect transferee of a defined benefit plan, money purchase plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code, the provisions of Article 10 shall apply. 9.4. Distribution Procedure. The Trustee shall make or commence distributions to or for the benefit of Participants only on receipt of an order from the Employer in writing or by such other means as shall be acceptable to the Trustee, certifying that a distribution of a Participant's benefits is payable pursuant to the Plan, and specifying the time and manner of payment. The amount to be distributed shall be determined as of the Valuation Date coincident with or next following the Employer's order. The Trustee shall be fully protected in acting upon the directions of the Employer in making benefit distributions, and shall have no duty to determine the rights or benefits of any person under the Plan or to inquire into the right or power of the Employer to direct any such distribution. The Trustee shall be entitled to assume conclusively that any determination by the Employer with respect to a distribution meets the requirements of the Plan. The Trustee shall not be required to make any payment hereunder in excess of the net realizable value of the assets of the Account in question at the time of such payment, nor to make any payment in cash unless the Employer has furnished instructions as to the assets to be converted to cash for the purposes of making payment. 9.5. Lost Distributee. In the event that the PlanAdministrator is unable with reasonable effort to locate a person entitled to distribution under the Plan, the Accounts distributable to such a person shall become a Forfeiture at the end of the third Plan Year after the Plan Administrator's efforts to locate such person began; provided, however, that the amount of the Forfeiture shall be restored in the event that such person thereafter submits a claim for benefits under the Plan. Such restoration will be made, first, from the amount of Forfeitures available for reallocation as of the last day of the Plan Year in which the claim is made, to the extent thereof; and to the extent that Forfeitures are not available or are insufficient to restore the balance, from contributions made by the Employer pursuant to Section 4.1(f). A Forfeiture occurring under this Section 9.5 shall be reallocated as though it were an Employer contribution. 9.6. Direct Rollovers. This Section 9.6 applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. For purposes of this Section 9.6, the following definitions shall apply: (a) Eligible Rollover Distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributees and the distributee's Designated Beneficiary (as defined in Section 11.3), or for a specified period of ten years or more, any distribution to the extent such distribution is required under section 401(a)(9) of the Code, and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (b) Eligible Retirement Plan. An eligible retirement plan is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (c) Distributee. A distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a Qualified Domestic Relations Order are distributees with regard to the interest of the spouse or former spouse. (d) Direct Rollover. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. 9.7. Distributions Required by a Qualified Domestic Relations Order. To the extent required by a Qualified Domestic Relations Order, the Plan Administrator shall make distributions from a Participant's Accounts to any alternate payee named in such order in a manner consistent with the distribution options otherwise available under the Plan, regardless of whether the Participant is otherwise entitled to a distribution at such time under the Plan. ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS 10.1. Applicability. (a) Generally. The provisions of Sections 10.2 through 10.5 shall generally apply to a Participant who is credited with at least one Hour of Service on or after August 23, 1984, and such other Participants as provided in Section 10.6. (b) Exception for Certain Plans. The provisions of Sections 10.2 through 10.5 shall not apply to a Participant if: (i) the Participant does not or cannot elect payment of benefits in the form of a life annuity, and (ii) on the death of the Participant, his Vested Account Balance will be paid to his surviving spouse (unless there is no surviving spouse, or the surviving spouse has consented to the designation of another Beneficiary in a manner conforming to a Qualified Election) and the surviving spouse may elect to have distribution of the Vested Account Balance (adjusted in accordance with Section 13.4 for gains or losses occurring after the Participant's death) commence within the 90-day period following the date of the Participant's death. The Participant may waive the spousal death benefit described in this paragraph (b) at any time, provided that no such waiver shall be effective unless it satisfies the conditions applicable under Section 10.4(c) to a Participant's waiver of a Qualified Preretirement Survivor Annuity. The exception in this paragraph (b) shall not be operative with respect to a Participant in a profit sharing plan if the Plan: (1) Is a direct or indirect transferee of a defined benefit plan, money purchase pension plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code; or (2) Is adopted as an amendment of a plan that did not qualify for the exception in this paragraph (b) before the amendment was adopted. For purposes of this paragraph (b), Vested Account Balance shall have the meaning provided in Section 10.4(f). The provisions of Sections 10.2 through 10.6 set forth the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code. (c) Exception for Certain Amounts. The provisions of Sections 10.2 through 10.5 shall not apply to any distribution made on or after the first day of the first Plan Year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible employee contributions as defined in Section 72(o)(5)(B) of the Code, and maintained on behalf of a Participant in a money purchase pension plan or a target benefit plan, provided that the exceptions applicable to certain profit sharing plans under paragraph (b) are applicable with respect to the separate account (for this purpose, Vested Account Balance means the Participant's separate account balance attributable solely to accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code). 10.2. Qualified Joint and Survivor Annuity. Unless an optional form of benefit is selected pursuant to a Qualified Election within the 90-day period ending on the Annuity Starting Date, a married Participant's Vested Account Balance will be paid in the form of a Qualified Joint and Survivor Annuity and an unmarried Participant's Vested Account Balance will be paid in the form of a life annuity. In either case, the Participant may elect to have such an annuity distributed upon his attainment of the Earliest Retirement Age under the Plan. 10.3. Qualified Preretirement Survivor Annuity. Unless an optional form of benefit has been selected within the Election Period pursuant to a Qualified Election, the Vested Account Balance of a Participant who dies before the Annuity Starting Date shall be applied toward the purchase of an annuity for the life of his surviving spouse (a "Qualified Preretirement Survivor Annuity"). The surviving spouse may elect to have such an annuity distributed within a reasonable period after the Participant's death. For purposes of this Article 10, the term "spouse" means the current spouse or surviving spouse of a Participant, except that a former spouse will be treated as the spouse or surviving spouse (and a current spouse will not be treated as the spouse or surviving spouse) to the extent provided under a qualified domestic relations order as described in Section 414(p) of the Code. 10.4. Definitions. The following definitions apply: (a) "Election Period" means the period beginning on the first day of the Plan Year in which a Participant attains age 35 and ending on the date of the Participant's death. If a Participant separates from service before the first day of the Plan Year in which he reaches age 35, the Election Period with respect to his account balance as of the date of separation shall begin on the date of separation. A Participant who will not attain age 35 as of the end of a Plan Year may make a special Qualified Election to waive the Qualified Preretirement Survivor Annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age 35. Such an election shall not be valid unless the Participant receives a written explanation of the Qualified Preretirement Survivor Annuity in such terms as are comparable to the explanation required under Section 10.5. Qualified Preretirement Survivor Annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35. Any new waiver on or after that date shall be subject to the full requirements of this article. (b) "Earliest Retirement Age" means the earliest date on which the Participant could elect to receive Retirement benefits under the Plan. (c) "Qualified Election" means a waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any such waiver shall not be effective unless: (1) the Participant's spouse consents in writing to the waiver; (2) the waiver designates a specific Beneficiary, including any class of beneficiaries or any contingent beneficiaries, which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent); (3) the spouse's consent acknowledges the effect of the waiver; and (4) the spouse's consent is witnessed by a plan representative or notary public. Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity shall not be effective unless the waiver designates a form of benefit payment which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent). If it is established to the satisfaction of a plan representative that there is no spouse or that the spouse cannot be located, a waiver will be deemed a Qualified Election. Any consent by a spouse obtained under these provisions (and any establishment that the consent of a spouse may not be obtained) shall be effective only with respect to the particular spouse involved. A consent that permits designations by the Participant without any requirement of further consent by the spouse must acknowledge that the spouse has the right to limit the consent to a specific Beneficiary and a specific form of benefit where applicable, and that the spouse voluntarily elects to relinquish either or both of those rights. A revocation of a prior waiver may be made by a Participant without the consent of the spouse at any time before the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in Section 10.5. (d) "Qualified Joint and Survivor Annuity" means an immediate annuity for the life of a Participant, with a survivor annuity for the life of the spouse which is not less than 50% and not more than 100% of the amount of the annuity which is payable during the joint lives of the Participant and the spouse, and which is the amount of benefit that can be purchased with the Participant's Vested Account Balance. The percentage of the survivor annuity under the Plan shall be 50%. (e) "Annuity Starting Date" means the first day of the first period for which an amount is paid as an annuity (or any other form). (f) "Vested Account Balance" means the aggregate value of the Participant's vested account balance derived from Employer and Employee contributions (including rollovers), whether vested before or upon death, including the proceeds of insurance contracts, if any, on the Participant's life. The provisions of this Article 10 shall apply to a Participant who is vested in amounts attributable to Employer contributions, Employee contributions or both at the time of death or distribution. (g) "Straight life annuity" means an annuity payable in equal installments for the life of the Participant that terminates upon the Participant's death. 10.5. Notice Requirements. In the case of a Qualified Joint and Survivor Annuity, no less than 30 days and no more than 90 days before a Participant's Annuity Starting Date the Plan Administrator shall provide to him a written explanation of (i) the terms and conditions of a Qualified Joint and Survivor Annuity, (ii) the Participant's right to make, and the effect of, an election to waive the Qualified Joint and Survivor Annuity form of benefit, (iii) the rights of the Participant's spouse, and (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity. In the case of a Qualified Preretirement Survivor Annuity, within the applicable period for a Participant the Plan Administrator shall provide to him a written explanation of the Qualified Preretirement Survivor Annuity, in terms and manner comparable to the requirements applicable to the explanation of a Qualified Joint and Survivor Annuity as described in the preceding paragraph. The applicable period for a Participant is whichever of the following periods ends last: (i) the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35; (ii) a reasonable period ending after an individual becomes a Participant; (iii) a reasonable period ending after this Article 10 first applies to the Participant. Notwithstanding the foregoing, in the case of a Participant who separates from service before attaining age 35, notice must be provided within a reasonable period ending after his separation from service. For purposes of applying the preceding paragraph, a reasonable period ending after the enumerated events described in (ii) and (iii) is the end of the two-year period beginning one year before the date the applicable event occurs, and ending one year after that date. In the case of a Participant who separates from service before the Plan Year in which he reaches age 35, notice shall be provided within the two-year period beginning one year before the separation and ending one year after the separation. If such a Participant thereafter returns to employment with the Employer, the applicable period for the Participant shall be redetermined. 10.6. Transitional Rules. (a) Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the preceding Sections of this Article 10, must be given the opportunity to elect to have those Sections apply if the Participant is credited with at least one Hour of Service under the Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and the Participant had at least ten years of vesting service when he or she separated from service. (b) Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under the Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his benefits paid in accordance with paragraph (d) of this Section 10.6. (c) The respective opportunities to elect (as described in paragraphs (a) and (b) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to be paid to those Participants. (d) Any Participant who has so elected pursuant to paragraph (b) of this Section 10.6, and any Participant who does not elect under paragraph (a), or who meets the requirements of paragraph (a) except that he does not have at least ten years of vesting service when he separates from service, shall have his benefits distributed in accordance with all of the following requirements, if his benefits would otherwise have been payable in the form of a life annuity: (1) Automatic joint and survivor annuity. If benefits in the form of a life annuity become payable to a married Participant who: (A) begins to receive payments under the Plan on or after normal retirement age; or (B) dies on or after normal retirement age while still working for the Employer; or (C) begins to receive payments on or after the qualified early retirement age; or (D) separates from service on or after attaining normal retirement age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits; then such benefits will be received under the Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the election period, which must begin at least six months before the Participant attains qualified early retirement age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time. (2) Election of early survivor annuity. A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect during the election period to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (i) the 90th day before the Participant attains the qualified early retirement age, or (ii) the date on which participation begins, and ends on the date the Participant terminates employment. (3) For purposes of this Section 10.6, qualified early retirement age is the latest of the earliest date under the Plan on which the Participant may elect to receive Retirement benefits, the first day of the 120th month beginning before the Participant reaches normal retirement age, or the date the Participant begins participation. ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS 11.1. General Rules. Subject to Article 10, Joint and Survivor Annuity Requirements, the requirements of this Article 11 shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provisions of the Plan. Unless otherwise specified, the provisions of this Article 11 apply to calendar years beginning after December 31, 1984. All distributions required under this Article 11 shall be determined and made in accordance with the Income Tax Regulations issued under Section 401(a)(9) of the Code (including proposed regulations, until the adoption of final regulations), including the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2 of the proposed regulations. 11.2. Required Beginning Date. The entire interest of a Participant must be distributed, or begin to be distributed, no later than the Participant's required beginning date, determined as follows. (a) General Rule. The required beginning date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age 70 1/2. (b) Transitional Rules. The required beginning date of a Participant who attains age 70 1/2 before January 1, 1988, shall be determined in accordance with (1) or (2) below: (1) Non-5% owners. The required beginning date of a Participant who is not a 5% owner is the first day of April of the calendar year following the calendar year in which the later of his Retirement or his attainment of age 70 1/2 occurs. (2) 5% owners. The required beginning date of a Participant who is a 5% owner during any year beginning after December 31, 1979, is the first day of April following the later of: (A) the calendar year in which the Participant attains age 70 1/2, or (B) the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a 5% owner, or the calendar year in which the Participant retires. The required beginning date of a Participant who is not a 5% owner, who attains age 70 1/2 during 1988 and who has not retired as of January 1, 1989, is April 1, 1990. (c) Rules for 5% Owners. A Participant is treated as a 5% owner for purposes of this Section 11.2 if he is a 5% owner as defined in Section 416(i) of the Code (determined in accordance with Section 416 but without regard to whether the Plan is top heavy) at any time during the Plan Year ending with or within the calendar year in which he attains age 66 1/2, or any subsequent Plan Year. Once distributions have begun to a 5% owner under this Section 11.2, they must continue, even if the Participant ceases to be a 5% owner in a subsequent year. 11.3. Limits on Distribution Periods. As of the first Distribution Calendar Year, distributions not made in a single sum may be made only over one or a combination of the following periods: (a) the life of the Participant, (b) the life of the Participant and his Designated Beneficiary, (c) a period certain not extending beyond the Life Expectancy of the Participant, or (d) a period certain not extending beyond the Joint and Last Survivor Expectancy of the Participant and his Designated Beneficiary. "Designated Beneficiary" means the individual who is designated as the Beneficiary under the Plan in accordance with Section 401(a)(9) of the Code and the regulations issued thereunder (including proposed regulations, until the adoption of final regulations) and Section 7.2. "Distribution Calendar Year" means a calendar year for which a minimum distribution is required under Section 401(a)(9) of the Code and this Section 11.3. For distributions beginning before the Participant's death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Participant's required beginning date. For distributions beginning after the Participant's death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin pursuant to Section 11.5. "Life Expectancy" and "Joint and Last Survivor Expectancy" are computed by use of the expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Unless otherwise elected by the Participant (or his spouse, in the case of distributions described in Section 11.5(b)) by the time distributions are required to begin, Life Expectancies shall be recalculated annually. Any such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The Life Expectancy of a nonspouse beneficiary may not be recalculated. 11.4. Determination of Amount to Be Distributed Each Year. If the Participant's interest is to be distributed in other than a single sum, the following minimum distribution rules shall apply on or after the required beginning date. Paragraphs (a) through (d) apply to distributions in forms other than the purchase of an annuity contract. (a) If a Participant's Benefit is to be distributed over (1) a period not extending beyond the Life Expectancy of the Participant or the Joint Life and Last Survivor Expectancy of the Participant and his Designated Beneficiary, or (2) a period not extending beyond the Life Expectancy of the Designated Beneficiary, the amount required to be distributed for each calendar year, beginning with distributions for the first Distribution Calendar Year, must at least equal the quotient obtained by dividing the Participant's Benefit by the Applicable Life Expectancy. (b) For calendar years beginning before January 1, 1989, if the Participant's spouse is not the Designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the Life Expectancy of the Participant. (c) For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first Distribution Calendar Year, shall not be less than the quotient obtained by dividing the Participant's Benefit by the lesser of (1) the Applicable Life Expectancy or (2) if the Participant's spouse is not the Designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Distributions after the death of the Participant shall be distributed using the Applicable Life Expectancy in paragraph (a) above as the relevant divisor, without regard to Proposed Regulations Section 1.401(a)(9)-2. (d) The minimum distribution required for the Participant's first Distribution Calendar Year must be made on or before the Participant's required beginning date. The minimum distribution for other calendar years, including the minimum distribution for the Distribution Calendar Year in which the Employee's required beginning date occurs, must be made on or before December 31 of that Distribution Calendar Year. (e) If the Participant's Benefit is distributed in the form of an annuity contract purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of Section 401(a)(9) of the Code and the regulations issued thereunder (including proposed regulations, until the adoption of final regulations). "Applicable Life Expectancy" means the Life Expectancy (or Joint and Last Survivor Expectancy) calculated using the attained age of the Participant (or Designated Beneficiary) as of the Participant's (or Designated Beneficiary's) birthday in the applicable calendar year, reduced by one for each calendar year which has elapsed since the date Life Expectancy was first calculated. If Life Expectancy is being recalculated, the Applicable Life Expectancy shall be the Life Expectancy as so recalculated. The applicable calendar year shall be the first Distribution Calendar Year, and if Life Expectancy is being recalculated such succeeding calendar year. If annuity payments commence in accordance with Section 11.4(e) before the required beginning date, the applicable calendar year is the year such payments commence. If distribution is in the form of an immediate annuity purchased after the Participant's death with the Participant's remaining interest in the Plan, the applicable calendar year is the year of purchase. "Participant's Benefit" means the account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year), increased by the amount of any contributions or Forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. For purposes of the preceding sentence, if any portion of the minimum distribution for the first Distribution Calendar Year is made in the second Distribution Calendar Year on or before the required beginning date, the amount of the minimum distribution made in the second Distribution Calendar Year shall be treated as if it had been made in the immediately preceding Distribution Calendar Year. 11.5. Death Distribution Provisions. (a) Distribution Beginning before Death. If the Participant dies after distribution of his interest has begun, the remaining portion of his interest will continue to be distributed at least as rapidly as under the method of distribution being used before the Participant's death. (b) Distribution Beginning after Death. If the Participant dies before distribution of his interest begins, distribution of his entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death, except to the extent that an election is made to receive distributions in accordance with (1) or (2) below: (1) If any portion of the Participant's interest is payable to a Designated Beneficiary, distributions may be made over the Designated Beneficiary's life, or over a period certain not greater than the Life Expectancy of the Designated Beneficiary, commencing on or before December 31 of the calendar year immediately following the calendar year in which the Participant died; or (2) If the Designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant died, and (ii) December 31 of the calendar year in which the Participant would have attained age 70 1/2. If the Participant has not made an election pursuant to this Section 11.5 by the time of his death, the Participant's Designated Beneficiary must elect the method of distribution no later than the earlier of (i) December 31 of the calendar year in which distributions would be required to begin under this Section 11.5, or (ii) December 31 of the calendar year which contains the fifth anniversary of the date of death of the Participant. If the Participant has no Designated Beneficiary, or if the Designated Beneficiary does not elect a method of distribution, distribution of the Participant's entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (c) For purposes of paragraph (b), if the surviving spouse dies after the Participant, but before payments to the spouse begin, the provisions of paragraph (b), with the exception of subparagraph (2) therein, shall be applied as if the surviving spouse were the Participant. (d) For purposes of this Section 11.5, any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse of the Participant if the amount becomes payable to the surviving spouse when the child reaches the age of majority. (e) For the purposes of this Section 11.5, distribution of a Participant's interest is considered to begin on the Participant's required beginning date (or, if paragraph (c) above is applicable, the date distribution is required to begin to the surviving spouse pursuant to paragraph (b) above). If distribution in the form of an annuity contract described in Section 11.4(e) irrevocably commences to the Participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences. 11.6. Transitional Rule. Notwithstanding the other requirements of this Article 11, and subject to the requirements of Article 10, Joint and Survivor Annuity Requirements, distribution on behalf of any Participant, including a 5% owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences): (a) The distribution is one which would not have disqualified the Trust under Section 401(a)(9) of the Internal Revenue Code of 1954 as in effect before its amendment by the Deficit Reduction Act of 1984. (b) The distribution is in accordance with a method of distribution designated by the Employee whose interest in the Trust is being distributed or, if the Employee is deceased, by a Beneficiary of the Employee. (c) The designation specified in paragraph (b) was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984. (d) The Employee had accrued a benefit under the Plan as of December 31, 1983. (e) The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority. A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee or the Beneficiary to whom such distribution is being made will be presumed to have designated the method of distribution under which the distribution is being made, if the method of distribution was specified in writing and the distribution satisfies the requirements in paragraphs (a) and (e). If a designation is revoked, any subsequent distribution must satisfy the requirements of Section 401(a)(9) of the Code and the regulations thereunder. If a designation is revoked after the date distributions are required to begin, the Trust must distribute by the end of the calendar year following the calendar year in which the revocation occurs the total amount not yet distributed which would have been required to have been distributed to satisfy Section 401(a)(9) of the Code and the regulations thereunder, but for the designation described in paragraphs (b) through (e). For calendar years beginning after December 31, 1988, such distributions must meet the minimum distribution incidental benefit requirements in Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any changes in the designation generally will be considered to be a revocation of the designation, but the mere substitution or addition of another beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as the substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). In the case of an amount transferred or rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-l of the Proposed Income Tax Regulations shall apply. ARTICLE 12. WITHDRAWALS AND LOANS 12.1. Withdrawals from Participant Contribution Accounts. Subject to the requirements of Article 10, a Participant may upon written notice (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) to the Employer withdraw any amount from his Participant Contribution Account. A withdrawn amount may not be repaid to the Plan. No Forfeiture will occur solely as a result of an Employee's withdrawal of Participant Contributions. 12.2. Withdrawals on Account of Hardship. If the Employer has so elected in the Plan Agreement, upon a Participant's written request (or in such other manner as shall be made available and agreed upon by the Employer and Putnam), the Plan Administrator may permit a withdrawal of funds from the vested portion of the Participant's Accounts on account of the Participant's financial hardship, which must be demonstrated to the satisfaction of the Plan Administrator. In considering such requests, the Plan Administrator shall apply uniform standards that do not discriminate in favor of Highly Compensated Employees. In a Plan with a CODA, if hardship withdrawals are permitted from both the Employer Contribution Account and the Elective Deferral Account, they shall be made first from a Participant's Employer Contribution Account and thereafter from a Participant's Elective Deferral Account, subject to the additional requirements set forth in Section 5.14. The requirements of Section 5.14(b), (c), (d)(1) and (d)(2) shall also apply to hardship distributions from a Participant's Employer Contribution Account and Employer Matching Account. In a Plan with a CODA, if hardship withdrawals are permitted from more than one of the Elective Deferral Account, Employer Matching Account, and Employer Contribution Account, they shall be made first from a Participant's Employer Contribution Account, and thereafter from the Employer Matching Account, and finally from the Elective Deferral Account, subject to the additional requirements of Section 5.14. A withdrawn amount may not be repaid to the Plan. 12.3. Withdrawals After Reaching Age 59 1/2. If so specified by the Employer in the Plan Agreement, a Participant who has reached age 59 1/2 may upon written request to the Employer (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) withdraw during his employment any amount not exceeding the vested balance of his Accounts. A withdrawn amount may not be repaid to the Plan. 12.4. Loans. If the Employer has so elected in the Plan Agreement, the Employer may direct the Trustee to make a loan to a Participant or Beneficiary from the vested portion of his Accounts, subject to the following terms and conditions and to such reasonable additional rules and regulations as the Plan Administrator may establish for the orderly operation of the program: (a) The Plan Administrator shall administer the loan program subject to the terms and conditions of this Section 12.4. (b) A Participant's or Beneficiary's request for a loan shall be submitted to the Plan Administrator by means of a written application on a form supplied by the Plan Administrator (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). Applications shall be approved or denied by the Plan Administrator on the basis of its assessment of the borrower's ability to collateralize and repay the loan, as revealed in the loan application. (c) Loans shall be made to all Participants and Beneficiaries on a reasonably equivalent basis. Loans shall not be made available to Highly Compensated Employees (as defined in Section 414(q) of the Code) in amounts greater than the amounts made available to other Employees (relative to the borrower's Account balance). (d) Loans must be evidenced by the Participant's promissory note for the amount of the loan payable to the order of the Trustee, and adequately secured by assignment of not more than fifty percent (50%) of the Participant's entire right, title and interest in and to the Trust Fund, exclusive of any asset as to which Putnam is not the Trustee. (e) Loans must bear a reasonable interest rate comparable to the rate charged by commercial lenders in the geographical area for similar loans. The Plan Administrator shall not discriminate among Participants in the matter of interest rates, but loans may bear different interest rates if, in the opinion of the Plan Administrator, the difference in rates is justified by conditions that would customarily be taken into account by a commercial lender in the Employer's geographical area. (f) The period for repayment for any loan shall not exceed five years, except in the case of a loan used to acquire a dwelling unit which within a reasonable time is to be used as the principal residence of the Participant, in which case the repayment period shall not exceed ten years. The terms of a loan shall require that it be repaid in level payments of principal and interest not less frequently then quarterly throughout the repayment period, except that alternative arrangements for repayment may apply in the event that the borrower is on unpaid leave of absence for a period not to exceed one year. (g) To the extent that a Participant would be required under Article 10 to obtain the consent of his spouse to a distribution of an immediately distributable benefit other than a Qualified Joint and Survivor Annuity, the consent of the Participant's spouse shall be required for the use of his Account as security for a loan. The spouse's consent must be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured, and obtained in accordance with the requirements of Section 10.4(c) for a Qualified Election. Any such consent shall thereafter be binding on the consenting spouse and any subsequent spouse of the Participant. A new consent shall be required for use of the Account as security for any extension, renewal, renegotiation or revision of the original loan. (h) If valid spousal consent has been obtained in accordance with Section 12.4(g), then notwithstanding any other provision of the Plan the portion of the Participant's account balance used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than 100% of the Participant's vested account balance (determined without regard to the preceding sentence) is payable to the surviving spouse, then the account balance shall be adjusted by first reducing the vested account balance by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse. (i) In the event of default on a loan by a Participant who is an active Employee, foreclosure on the Participant's Account as security will not occur until the Employer has reported to the Trustee the occurrence of an event permitting distribution from the Plan in accordance with Article 9 or Section 5.13. (j) No loan shall be made to an Owner-Employee or a Shareholder-Employee unless a prohibited transaction exemption is obtained by the Employer. (k) No loan to any Participant or Beneficiary can be made to the extent that the amount of the loan, when added to the outstanding balance of all other loans to the Participant or Beneficiary, would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made, or (b) one-half the value of the vested account balance of the Participant. For the purpose of the above limitation, all loans from all qualified plans of the Affiliated Employers are aggregated. (1) Loans shall be considered investments directed by a Participant pursuant to Section 13.3. The amount loaned shall be charged solely against the Accounts of the Participant, and repaid amounts and interest shall be credited solely thereto. 12.5. Procedure; Amount Available. Withdrawals and loans shall be made subject to the terms and conditions applicable to distributions pursuant to Section 9.4, except that the amount of any withdrawal or loan shall be determined by reference to the vested balance of the Participant's Account as of the most recent Valuation Date preceding the withdrawal or loan, and shall not exceed the amount of the vested account balance. 12.6. Protected Benefits. Notwithstanding any provision to the contrary, if an Employer amends an existing retirement plan ("prior plan") by adopting this Plan, to the extent any withdrawal option or form of payment available under the prior plan is an optional form of benefit within the meaning of Code Section 411(d)(6), such option or form of payment shall continue to be available to the extent required by such Code Section. 12.7. Restrictions Concerning Transferred Assets. Notwithstanding any provision to the contrary, if an Employer amends an existing defined benefit or money purchase pension plan ("prior pension plan") by adopting this Plan, accrued benefits attributable to the assets and liabilities transferred from the prior pension plan (which accrued benefits include the account balance of such Participant in the Plan attributable to such accrued benefits as of the date of the transfer and any earnings on such account balance subsequent to the transfer) shall be distributable only on or after the events upon which distributions are or were permissible under the prior pension plan. ARTICLE 13. TRUST FUND AND INVESTMENTS 13.1. Establishment of Trust Fund. The Employer and the Trustee hereby agree to the establishment of a Trust Fund consisting of all amounts as shall be contributed or transferred from time to time to the Trustee pursuant to the Plan, and all earnings thereon. The Trustee shall hold the assets of the Trust Fund for the exclusive purpose of providing benefits to Participants and Beneficiaries and defraying the reasonable expenses of administering the Plan, and no such assets shall ever revert to the Employer, except that: (a) contributions made by the Employer by mistake of fact, as determined by the Employer, may be returned to the Employer within one (1) year of the date of payment, (b) contributions that are conditioned on their deductibility under Section 404 of the Code may be returned to the Employer, to the extent disallowed, within one (1) year of the disallowance of the deduction, (c) contributions that are conditioned on the initial qualification of the Plan under the Code, and all investment gains attributable to them, may be returned to the Employer within one (1) year after such qualification is denied by determination of the Internal Revenue Service, but only if an application for determination of such qualification is made within the time prescribed by law for filing the Employer's federal income tax return for its taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe, and (d) amounts held in a suspense account may be returned to the Employer on termination of the Plan, to the extent that they may not then be allocated to any Participant's Account in accordance with Article 6. All Employer contributions under the Plan other than those made pursuant to Section 4.1(f) are hereby expressly conditioned on the initial qualification of the Plan and their deductibility under the Code. Investment gains attributable to contributions returned pursuant to Subsections (a) and (b) shall not be returned to the contributing Employer, and investment losses attributable to such contributions shall reduce the amount returned. 13.2. Management of Trust Fund. Except to the extent of any investment in Policies pursuant to Article 14, the assets of the Trust Fund shall be held in trust by the Trustee and accounted for in accordance with this Article 13, and shall be invested in accordance with Section 13.3 in the Investment Products specified by the Employer in the Plan Agreement and from time to time thereafter in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). The Employer shall have the exclusive authority and discretion to select the Investment Products available under the Plan. In making that selection, the Employer shall use the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. The Employer shall cause the available Investment Products to be diversified sufficiently to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. It is especially intended that the Trustee shall have no discretionary authority to determine the investment of Trust assets. Notwithstanding the foregoing, assets of the Trust Fund shall also be invested in Employer Stock if so elected by the Employer and agreed to by Putnam under the service agreement executed by the Employer and Putnam pursuant to the establishment of the Plan. 13.3. Investment Instructions. Except as Article 14 may apply, all amounts held in the Trust Fund under the Plan shall be invested in Investment Products. If the Employer has elected in the Plan Agreement to make investment decisions with respect to Elective Deferrals, Participant Contributions, Rollover Contributions, Profit Sharing and other Employer Contributions, Employer Matching Contributions, Deductible Employee Contributions, Qualified Matching Contributions and/or Qualified Nonelective Contributions, investment instructions as to the Accounts for such contributions shall be the fiduciary responsibility of the Employer, and each of such affected Accounts shall have a pro rata interest in all assets of the Trust (other than Policies under Article 14) to which the Employer's instructions apply. To the extent the Employer has not elected to make investment decisions for all of the Accounts of the Plan, then assets of the Trust over which the Employer has not elected to make investment decisions shall be invested solely in accordance with the instructions of the Participant to whose Accounts they are allocable, as delivered to Putnam in accordance with its service agreement with the Employer. Instructions shall apply to future contributions, past accumulations, or both, according to their terms, and shall be communicated by the Employer to Putnam in accordance with procedures prescribed in the service agreement between the Employer and Putnam. Instructions shall be effective prospectively, coincident with or within a reasonable time after their receipt in good order by Putnam. An instruction once received shall remain in effect until it is changed by the provision of a new instruction. New instructions shall be accepted by Putnam at the time and in the manner provided in the Plan Agreement. To the extent any assets of the Trust are to be invested solely in accordance with the instructions of the Participants, the Plan is intended to constitute a plan described in section 404(c) of ERISA and Title 29 of the Code of Federal Regulations section 2550.404c-1. In such case, the Employer shall be the Plan fiduciary responsible for providing the Participants with all information required to be given pursuant to ERISA section 404(c) and Title 29 of the Code of Federal Regulations section 2550.404c-1. In the event that the Employer adopts a Putnam prototype plan as an amendment to or restatement of an existing plan, the Employer shall specify one or more Investment Products to serve as the sole investments for all Participants' Accounts during the period in which existing records of the Plan are transferred to the Recordkeeper. During that period, new investment instructions as to existing assets of the Plan cannot be carried out, nor can distributions be made from the Plan except to the extent permitted under the terms of the service agreement between the Employer and Putnam. The Employer and the Recordkeeper shall use their best efforts to minimize the duration of the period to which the preceding sentence applies. To the extent specifically authorized and provided in the service agreement between the Employer and Putnam, the Employer may direct the Trustee to establish as an Investment Product a fund all of the assets of which shall be invested in shares of stock of the Employer that constitute "qualifying employer securities" within the meaning of section 407(d)(5) of ERISA ("Employer Stock"). The Plan Administrator as named fiduciary shall continually monitor the suitability of acquiring and holding Employer Stock under the fiduciary duty rules of section 404(a)(1) of ERISA (as modified by section 404(a)(2) of ERISA) and the requirements of section 404(c) of ERISA, and shall be responsible for ensuring that the procedures relating to the purchase, holding and sale of Employer Stock, and the exercise of any and all rights with respect to such Employer Stock shall be in accordance with section 404(c) of ERISA unless the Employer retains voting, tender or similar rights with respect to the Employer Stock. The Trustee shall not be liable for any loss, or by reason of any breach, which arises from the direction of the Plan Administrator with respect to the acquisition and holding of Employer Stock. The Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Plan Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting and tender or retention of Employer Stock. Putnam shall be under no duty to question or review the investment directions given by the Employer or to make suggestions to the Employer in connection therewith. Putnam shall not be liable for any loss, or by reason of any breach, that arises from the Employer's exercise or non-exercise of rights under this Article 13, or from any direction of the Employer unless it is clear on the face of the direction that the actions to be taken under the direction are prohibited by the fiduciary duty rules of Section 404(a) of ERISA. All interest, dividends and other income received with respect to, and any proceeds received from the sale or other disposition of, securities or other property held in an investment fund shall be credited to and reinvested in such investment fund, and all expenses of the Trust that are properly allocated to a particular investment fund shall be so allocated and charged. The Employer may at any time direct Putnam to eliminate any investment fund or funds, and Putnam shall thereupon dispose of the assets of such investment fund and reinvest the proceeds thereof in accordance with the directions of the Employer. Neither the Employer nor the Trustee nor Putnam shall be responsible for questioning any instructions of a Participant or for reviewing the investments selected therein, or for any loss resulting from instructions of a Participant or from the failure of a Participant to provide or to change instructions. Neither Putnam nor the Trustee shall have any duty to question any instructions received from the Employer or a Participant or to review the investments selected thereby, nor shall Putnam or the Trustee be responsible for any loss resulting from instructions received from the Employer or a Participant or from the failure of the Employer or a Participant to provide or to change instructions. In the event that Putnam or the Trustee receives a contribution under the Plan as to which no instructions are delivered, or such instructions as are delivered are unclear to Putnam or the Trustee, such contribution shall be invested until clear instructions are received in the default investment option set forth in the service agreement between the Employer and Putnam, or if no such option is so set forth, the Employer, by execution of the Plan Agreement, shall affirmatively elect to have such contributions invested in the Putnam Money Market Fund. Neither Putnam nor the Trustee shall have any discretionary authority or responsibility in the investment of the assets of the Trust Fund. 13.4. Valuation of the Trust Fund. As of each Valuation Date, the Trustee shall determine the fair market value of the Trust Fund, and the net earnings or losses and expenses of the Trust Fund for the period elapsed since the most recent previous Valuation Date shall be allocated among the Accounts of Participants. Earnings, losses and expenses which pertain to investments which are specifically held for a given Participant's Account shall be allocated solely to that Account. In the event that an investment is not specifically held for a given Participant's Account, the earnings, losses and expenses pertaining to that investment shall be allocated among all Participants' Accounts in the ratio that each such Account bears to the total of all Accounts of all Participants. Each Participant's Accounts shall be adjusted pursuant to this Section 13.4 until such time as they are either fully distributed or forfeited, regardless of whether the Participant continues to be an Employee. 13.5. Distributions on Investment Company Shares. Subject to Section 9.3, all dividends and capital gains or other distributions received on any Investment Company Shares credited to Participant's Account will (unless received in additional Investment Company Shares) be reinvested in full and fractional shares of the same Investment Company at the price determined as provided in the then current prospectus of the Investment Company. The shares so received or purchased upon such reinvestment will be credited to such accounts. If any dividends or capital gain or other distributions may be received on such Investment Company Shares at the election of the shareholder in additional shares or in cash or other property, the Trustee will elect to receive such dividends or distributions in additional Investment Company Shares. 13.6. Registration and Voting of Investment Company Shares. All Investment Company Shares shall be registered in the name of the Trustee or its nominee. Subject to any requirements of applicable law, the Trustee will transmit to the Employer copies of any notices of shareholders' meetings, proxies and proxy-soliciting materials, prospectuses and the annual or other reports to shareholders, with respect to Investment Company Shares held in the Trust Fund. The Trustee shall act in accordance with directions received from Participants or the Employer, as the case may be, with respect to matters to be voted upon by the shareholders of the Investment Company. Such directions must be in writing on a form approved by the Trustee, signed by the addressee and delivered to the Trustee within the time prescribed by it. The Trustee will not vote Investment Company Shares as to which it receives no written directions. 13.7. Investment Manager. The Employer, with the consent of Putnam, may appoint an investment manager, as defined in Section 3(38) of the Employee Retirement Income Security Act of 1974, with respect to all or a portion of the assets of the Trust Fund. The Trustee shall have no liability in connection with any action or nonaction pursuant to directions of such an investment manager. 13.8. Employer Stock. (a) Voting Rights. Notwithstanding any other provision of the Plan, the provisions of this Section 13.8(a) shall govern the voting of Employer Stock held by Putnam as Trustee under the Plan. The Trustee shall vote Employer Stock in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the voting of Employer Stock and shall direct the Trustee as to the voting of Employer Stock in accordance with the provisions of this Section 13.8(a). In either case, the Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting of Employer Stock. The remainder of this Section 13.8(a) applies only if the Employer elects in the Plan Agreement that Participants shall direct the Trustee as to the voting of Employer Stock. For purposes of this Section 13.8(a), the term "Participant" includes any Beneficiary with an Account in the Plan which is invested in Employer Stock. When the issuer of Employer Stock files preliminary proxy solicitation materials with the Securities and Exchange Commission, the Employer shall cause a copy of all the materials to be simultaneously sent to the Trustee, and the Trustee shall prepare a voting instruction form based upon these materials. At the time of mailing of notice of each annual or special stockholders' meeting of the issuer of Employer Stock, the Employer shall cause a copy of the notice and all proxy solicitation materials to be sent to each Participant, together with the foregoing voting instruction form to be returned to the Trustee or its designee. The form shall show the number of full and fractional shares of Employer Stock credited to the Participant's accounts, whether or not vested. For purposes of this Section 13.8(a), the number of shares of Employer Stock deemed credited to a Participant's accounts shall be determined as of the date of record determined by the Employer for which an allocation has been completed and Employer Stock has actually been credited to Participant's accounts. Procedures for the execution of purchases and sales of Employer Stock shall be as set forth in the service agreement between the Employer and Putnam. The Employer shall provide the Trustee with a copy of any materials provided to Participants and shall certify to the Trustee that the materials have been mailed or otherwise sent to Participants. Each Participant shall have the right to direct the Trustee as to the manner in which to vote that number of shares of Employer Stock held under the Plan (whether or not vested) equal to a fraction, of which the numerator is the number of shares of Employer Stock credited to his Account and the denominator is the number of shares of Employer Stock credited to all Participants' Accounts. Such directions shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) and shall be held in confidence by the Trustee and not divulged to the Employer, or any officer or employee thereof, or any other persons. Upon its receipt of directions, the Trustee shall vote the shares of Employer Stock as directed by the Participant. The Trustee shall not vote those shares of Employer Stock credited to the Accounts of Participants for which no voting directions are received. With respect to shares of Employer Stock held in the Trust which are not credited to a Participant's Account, the Plan Administrator shall retain the status of named fiduciary and shall direct the voting of such Employer Stock. (b) Tendering Rights. Notwithstanding any other provision of the Plan, the provisions of this Section 13.8(b) shall govern the tendering of Employer Stock by Putnam as Trustee under the Plan. In the event of a tender offer, the Trustee shall tender Employer Stock in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the tendering of Employer Stock in accordance with the provisions of this Section 13.8(b). The remainder of this Section 13.8(b) applies only if the Employer elects in the Plan Agreement that Participants shall direct the Trustee as to the tendering of Employer Stock. For purposes of this Section 13.8(b), the term "Participant" includes any Beneficiary with an Account in the Plan which is invested in Employer Stock. Upon commencement of a tender offer for any Employer Stock, the Employer shall notify each Plan Participant, and use its best efforts to distribute timely or cause to be distributed to Participants the same information that is distributed to shareholders of the issuer of Employer Stock in connection with the tender offer, and after consulting with the Trustee shall provide at the Employer's expense a means by which Participants may direct the Trustee whether or not to tender the Employer Stock credited to their accounts (whether or not vested). The Employer shall provide to the Trustee a copy of any material provided to Participants and shall certify to the Trustees that the materials have been mailed or otherwise sent to Participants. Each Participant shall have the right to direct the Trustee to tender or not to tender some or all of the shares of Employer Stock credited to his accounts. Directions from a Participant to the Trustee concerning the tender of Employer Stock shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) as is agreed upon by the Trustees and the Employer. The Trustee shall tender or not tender shares of Employer Stock as directed by the Participant. A Participant who has directed the Trustee to tender some or all of the shares of Employer Stock credited to his accounts may, at any time before the tender offer withdrawal date, direct the Trustee to withdraw some or all of the tendered shares, and the Trustee shall withdraw the directed number of shares from the tender offer before the tender offer withdrawal deadline. A Participant shall not be limited as to the number of directions to tender or withdraw that he may give to the Trustee. The Trustee shall not tender shares of Employer Stock credited to a Participant's accounts for which it has received no directions from the Plan Participant. The Trustee shall tender that number of shares of Employer Stock not credited to Participants' accounts determined by multiplying the total number of such shares by a fraction, the numerator of which is the number of shares of Employer Stock credited to Participants' accounts for which the Trustee has received directions from Participants to tender (which directions have not been withdrawn as of the date of this determination), and the denominator of which is the total number of shares of Employer Stock credited to Participants' accounts. A direction by a Participant to the Trustee to tender shares of Employer Stock credited to his accounts shall not be considered a written election under the Plan by the Participant to withdraw or to have distributed to him any or all of such shares. The Trustee shall credit to each account of the Plan Participant from which the tendered shares were taken the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from that account. Pending receipt of directions through the Administrator from the Participant as to the investment of the proceeds of the tendered shares, the Trustee shall invest the proceeds as the Administrator shall direct. To the extent that any Participant gives no direction as to the tendering of Employer stock that he has the right to direct under this Section 13.8(a), the Trustee shall not tender such Employer Stock. (c) Other Rights. With respect to all rights in connection with Employer Stock other than the right to vote and the right to tender, Participants are hereby appointed named fiduciaries to the same extent (if any) as provided in the foregoing paragraphs of this Section 13.8 with regard to the right to vote, and the Trustee shall follow the directions of Participants and the Plan Administrator with regard to the exercise of such rights to the same extent as with regard to the right to vote. 13.9. Insurance Contracts. If so provided in the Plan Agreement, the Plan Administrator may direct the Trustee to receive and hold or apply assets of the Trust to the purchase of individual or group insurance or annuity contracts ("policies" or "contracts") issued by any insurance company and in a form approved by the Plan Administrator (including contracts under which the contract holder is granted options to purchase insurance or annuity benefits), or financial agreements which are backed by group insurance or annuity contracts ("financial agreements"). If such investments are to be made, the Plan Administrator shall direct the Trustee to execute and deliver such applications and other documents as are necessary to establish record ownership, to value such policies, contracts or financial agreements under the method of valuation selected by the Plan Administrator, and to record or report such values to the Plan Administrator or any investment manager selected by the Plan Administrator, in the form and manner agreed to by the Plan Administrator. The Plan Administrator may direct the Trustee to exercise or may exercise directly the powers of contract holder under any policy, contract or financial agreement, and the Trustee shall exercise such powers only upon direction of the Plan Administrator. The Trustee shall have no authority to act in its own discretion, with respect to the terms, acquisition, valuation, continued holding and/or disposition of any such policy, contract or financial agreement or any asset held thereunder. The Trustee shall be under no duty to question any direction of the Plan Administrator or to review the form of any such policy, contract or financial agreement or the selection of the issuer thereof, or to make recommendations to the Plan Administrator or to any issuer with respect to the form of any such policy, contract or financial agreement. The Trustee shall be fully protected in acting in accordance with written directions of the Plan Administrator, and shall be under no liability for any loss of any kind which may result by reason of any action taken or omitted by it in accordance with any direction of the Plan Administrator, or by reason of inaction in the absence of written directions from the Plan Administrator. In the event that the Plan Administrator directs that any monies or property be paid or delivered to the contract holder other than for the benefit of specific individual beneficiaries, the Trustee agrees to accept such monies or property as assets of the Trust subject to all the terms hereof. 13.10 Registration and Voting of Non-Putnam Investment Company Shares. All shares of registered investment companies other than Investment Companies shall be registered in the name of the Trustee or its nominee. Subject to any requirements of applicable law and to the extent provided in an agreement between Putnam and a third party investment provider, the Trustee shall transmit to the Employer copies of any notices of shareholders' meetings, proxies or proxy-soliciting materials, prospectuses or the annual or other reports to shareholders, with respect to shares of registered investment companies other than Investment Companies held in the Trust Fund. Notwithstanding any other provision of the Plan, the Trustee shall vote shares of registered investment companies other than Investment Companies in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the voting of such shares. Directions as to voting such shares must be in writing on a form approved by the Trustee or such other manner acceptable to the Trustee, signed by the addressee and delivered to the Trustee within the time prescribed by it. The Trustee shall vote those shares of registered investment companies other than Investment Companies for which no voting directions are received in the same proportion as it votes those shares for which it has received voting directions. ARTICLE 14. INSURANCE POLICIES 14.1. Purchase of Insurance Policies. At the time of establishment of the Plan, if elected by the Employer and agreed to by Putnam under the service agreement executed by the Employer and Putnam pursuant to the establishment of the Plan, the Employer shall purchase for each Participant such Policy or Policies, if any, as a Participant shall request and annually thereafter such additional Policies as a Participant shall request, subject to the limitations of Section 14.2. All Policies shall have the same day and month of issue, insofar as reasonably possible. The premiums on all Policies shall be paid at the same intervals (for example, annually, semi-annually, quarterly or monthly), but the interval may be changed with respect to all Policies from time to time. 14.2. Limitation on Premiums. The premiums paid for Policies in respect of any Participants shall be limited so that premiums paid on any ordinary insurance Policies (that is, Policies with both nonincreasing premiums and nondecreasing death benefits) on the life of the Participant shall be 49% or less of the Employer's total contributions for the Participant (and Forfeitures allocated and amounts reapplied to his Employer Contribution Account), and premiums paid on term insurance Policies on the life of the Participant shall be less than 25% of such amount; provided that if both ordinary life insurance Policies and term Policies are purchased for any Participant, the total premiums on term Policies plus one-half the premiums on ordinary life Policies shall be less than 25% of such amount. If at any time the total premiums to be paid by the Employer for a Participant shall equal or exceed the above limitations, then the life insurance coverage of that Participant shall be reduced so that the total premiums shall not equal or exceed the limitations. The required reduction shall be made by changing all or a portion of the life insurance on the Participant to paid- up life insurance or by cancelling all or a portion of any term life insurance. 14.3. Policy Options. At the election of the Participant covered hereunder, a Policy may contain a waiver of premium disability benefit provision or a provision for additional indemnity in the event of accidental death, or both, if available on the type of Policy selected and if permitted by the insurer. 14.4. Insurability. If any Participant who has elected that a Policy be purchased is found by the insurer not to be insurable at standard rates, the Employer shall, if permitted by the rules of the insurer, purchase a similar Policy which provides a lesser death benefit and which can be purchased for the same premium. 14.5. Dividends on Policies. Dividends and other credits payable on any Policy shall be applied to the purchase of additional benefits under the Policy unless the Participant requests that they be applied in reduction of premiums. 14.6. Trustee of Policy. Upon direction by the Plan Administrator, the Insurance Trustee shall apply for and be the owner of each Policy purchased under the terms of the Plan. Each Policy must provide that proceeds will be payable to the Insurance Trustee; however, the Insurance Trustee shall be required to pay over all such proceeds to the Participant's Beneficiary in accordance with the distribution provisions of the Plan including, without limitation, Section 10.3. Under no circumstances shall the Trust retain any part of the proceeds. In the event of any conflict between the terms of the Plan and the terms of any Policy purchased hereunder, the Plan provisions shall control. The Insurance Trustee shall be fully protected in acting in accordance with written instructions of the Plan Administrator and shall be under no liability for any loss of any kind which may result by reason of any action taken or omitted by it in accordance with any direction of the Plan Administrator, or by reason of inaction in the absence of written directions from the Plan Administrator. 14.7. Obligations with Respect to Policies. Except as may be otherwise provided in any conditional or binding receipt issued by an insurer, there shall be no coverage and no death benefit payable under any Policy to be purchased from such insurer until such Policy shall have been delivered and the premium therefor shall have been paid. The Employer and the Insurance Trustee shall not have any responsibility as to the effectiveness of any Policy purchased from an insurer, nor shall either of them have any liability or obligation to pay any amount to any Participant or his beneficiary by reason of any failure or refusal by the insurer to make such payment. 14.8. Distribution of Proceeds on Participant's Death. In the event of the death of a Participant before the conversion provided for in Section 14.9, there shall be payable to the beneficiary named in any Policy on his life the benefits provided by the terms of such Policy. 14.9. Conversion of Policies. Except as provided in Section 19.3, if any Policies of a Participant (other than retirement income, endowment or annuity Policies) are held for his benefit at the time distribution is to commence, the Policies may be converted by the Insurance Trustee into cash, paid to the Trustee, credited to the Employer Contribution Account of the Participant, invested in accordance with the written instructions of the Employer (and if no such instructions have been given or if such instructions are not clear, invested in Investment Company Shares in the same proportion as the most recent contributions to the Participant's Accounts) and distributed pursuant to Article 9, subject to the terms and conditions of Article 10. Retirement income, endowment or annuity Policies will be distributed directly to the Participant at the time distribution is to commence. 14.10. Conflict with Policies. In the event of any conflict between the terms of the Plan and the terms of any Policies hereunder, the Plan provisions shall control. 14.11. Insurance Loans to Owner-Employees. If an Owner- Employee or Shareholder-Employee receives, either directly or indirectly, any amount from an insurer as a loan under a Policy, the amount so received shall be considered a distribution under the Plan. Any assignment or pledge (or agreement to assign or pledge) by an Owner-Employee or Shareholder-Employee of any interest in the Plan shall be considered a distribution of such interest. ARTICLE 1. TOP-HEAVY PLANS 15.1. Superseding Effect. For any Plan Year beginning after December 31, 1983, in which Plan is determined to be a Top- Heavy Plan under Section 15.2(b), the provisions of this Article 15 will supersede any conflicting provisions in the Plan or the Plan Agreement. 15.2. Definitions. For purposes of this Article 15, the terms below shall be defined as follows: (a) Key Employee means any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the determination period was: (1) an officer of the Employer having annual compensation greater than 50% of the amount in effect under Section 415(b)(1)(A) of the Code; (2) an owner (or considered an owner under Section 318 of the Code) of one of the ten largest interests in the Employer having annual compensation exceeding the dollar limitation under Section 415(c)(1)(A) of the Code; (3) a 5% owner of the Employer; or (4) a 1% owner of the Employer having annual compensation of more than $150,000. Annual compensation means compensation satisfying the definition elected by the Employer in item 4 of the Plan Agreement, but including amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of the Code. The determination period is the Plan Year containing the Determination Date and the four preceding Plan Years. The determination of who is a Key Employee will be made in accordance with Section 416(i)(1) of the Code and the Regulations thereunder. (b) Top-Heavy: The Plan is Top-Heavy for any Plan Year beginning after December 31, 1983, if any of the following conditions exists: (1) If the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans. (2) If this Plan is a part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the group of plans exceeds 60%. (3) If this plan is part of a Required Aggregation Group and part of a Permissive Aggregation Group of Plans and the Top-Heavy Ratio for the Permissive Aggregation group exceeds 60%. (c) Top-Heavy Ratio means the following: (1) If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer has not maintained any qualified defined benefit plan which during the 5-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-Heavy ratio for this Plan alone or for the Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date(s) (including any part of any account distributed in the 5-year period ending on the Determination Date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the 5-year period ending on the Determination Date(s)), both computed in accordance with Section 416 of the Code and the regulations thereunder. Both the numerator and denominator of the Top-Heavy Ratio are increased to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Section 416 of the Code and the regulations thereunder. (2) If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer maintains or has maintained one or more qualified defined benefit plans which during the 5-year period ending on the Determination Date(s) has or has had any accrued benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated qualified defined contribution plan or plans for all Key Employees, determined in accordance with (1) above, and the Present Value of accrued benefits under the aggregated qualified defined benefit plan or plans for all Key Employees as of the Determination Date(s), and the denominator of which is the sum of the account balances under the aggregated qualified defined contributions plan or plans for all Participants, determined in accordance with (1) above, and the Present Value of accrued benefits under the qualified defined benefit plan or plans for all Participants as of the Determination Date(s), all determined in accordance with Section 416 of the Code and the regulations thereunder. The accrued benefits under a defined benefit plan in both the numerator and denominator of the Top-Heavy Ratio are increased for any distribution of an accrued benefit made in the 5-year period ending on the Determination Date. (3) For purposes of (1) and (2) above, the value of account balances and the Present Value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12-month period ending on the Determination Date; except as provided in Section 416 of the Code and the regulations thereunder for the first and second Plan Years of a defined benefit plan. The account balances and accrued benefits of a Participant (A) who is not a Key Employee but who was a Key Employee in a prior Plan Year, or (B) who has not been credited with at least one Hour of Service for the Employer during the 5-year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. Deductible Employee contributions will not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year. The accrued benefit of a Participant other than a Key Employee shall be determined under (a) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employer, or (b) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Section 411(b)(1)(C) of the Code. (d) Permissive Aggregation Group means the Required Aggregation Group of plans plus any other qualified plan or plans (or simplified employee pension plan) of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the Code. (e) Required Aggregation Group means (i) each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the determination period (regardless of whether the Plan has terminated) and (ii) any other qualified plan of the Employer which enables a plan described in (i) to meet the requirements of Section 401(a)(4) or 410 of the Code. (f) Determination Date means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the Determination Date is the last day of that Plan Year. (g) Valuation Date means the last day of the Plan Year. (h) Present Value means present value based only on the interest and mortality rates specified by the Employer in the Plan Agreement. 15.3. Minimum Allocation. (a) Except as otherwise provided in paragraphs (c) and (d) below, the Employer contributions and Forfeitures allocated on behalf of any Participant who is not a Key Employee shall not be less than the lesser of 3% of such Participant's Earnings, or in the case where the Employer has no defined benefit plan which designates this Plan to satisfy Section 401 of the Code, the largest percentage of Employer contributions and Forfeitures, as a percentage of the Key Employee's Earnings, allocated on behalf of any Key Employee for that year. The minimum allocation is determined without regard to any Social Security contribution. This minimum allocation shall be made even though, under other Plan provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation of the Employer's contributions and Forfeitures for the Plan Year because of (1) the Participant's failure to be credited with at least 1,000 Hours of Service, or (2) the Participant's failure to make mandatory Employee contributions to the Plan, or (3) the Participant's receiving Earnings less than a stated amount. Neither Elective Deferrals, Employer Matching Contributions nor Qualified Matching Contributions for non- Key Employees shall be taken into account for purposes of satisfying the requirement of this Section 15.3(a). (b) For purposes of computing the minimum allocation, Earnings will mean Section 415 Compensation as defined in Section 6.5(b) of the Plan. (c) The provision in paragraph (a) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year. (d) The provision in paragraph (a) above shall not apply to any Participant to the extent he is covered under any other plan or plans of the Employer, and the Employer has provided in the Plan Agreement that the minimum allocation requirement applicable to Top-Heavy Plans will be met in the other plan or plans. Notwithstanding the foregoing, if the Employer has adopted Putnam paired plans (as described in Section 4.6) and the Participant is eligible to participate in both paired plans, the minimum allocation described in paragraph (a) shall be provided by the Putnam Money Purchase Pension Plan. (e) The minimum allocation required (to the extent required to be nonforfeitable under Section 416(b) of the Code) may not be forfeited under Sections 411(a)(3)(B) or (D) of the Code. 15.4. Adjustment of Fractions. For any Plan Year in which the Plan is Top-Heavy, the Defined Benefit Fraction and the Defined Contribution Fraction in Article 6 shall each be computed using 100% of the dollar limitations specified in Sections 415(b)(1)(A) and 415(c)(1)(A) instead of 125%. The foregoing requirement shall not apply if the Top-Heavy Ratio does not exceed 90% and the Employer has elected in the Plan Agreement to provide increased minimum allocations or benefits satisfying Section 416(h)(2) of the Code. 15.5. Minimum Vesting Schedules. For any Plan Year in which this Plan is Top-Heavy and for any subsequent Plan Year, a minimum vesting schedule will automatically apply to the Plan, as follows: (a) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule 100% immediate vesting, the Three-Year Cliff, Five-Year Graded or Six-Year Graded schedule, then the schedule selected in the Plan Agreement shall continue to apply for any Plan Year to which this Section 15.5 applies. (b) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Five-Year Cliff schedule, then the Three-Year Cliff schedule shall apply in any Plan Year to which this Section 15.5 applies. (c) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Seven-Year Graded schedule, then the Six-Year Graded schedule shall apply in any Plan Year to which this Section 15.5 applies. (d) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule a schedule other than those described in paragraphs (a), (b) and (c), then the Top- Heavy schedule specified by the Employer in the Plan Agreement for this purpose shall apply in any Plan Year to which this Section 15.5 applies. The minimum vesting schedule applies to all benefits within the meaning of Section 411(a)(7) of the Code except those attributable to Participant Contributions, including benefits accrued before the effective date of Section 416 of the Code and benefits accrued before the Plan became Top-Heavy. Further, no reduction in a Participant's nonforfeitable percentage may occur in the event the Plan's status as Top-Heavy changes for any Plan Year. However, the vested portion of the Profit Sharing Contribution Account of any Employee who does not have an Hour of Service after the Plan has initially become Top-Heavy will be determined without regard to this Section 15.5. ARTICLE 16. ADMINISTRATION OF THE PLAN 16.1. Plan Administrator. The Plan shall be administered by the Employer, as Plan Administrator and Named Fiduciary within the meaning of ERISA, under rules of uniform application; provided, however, that the Plan Administrator's duties and responsibilities may be delegated to a person appointed by the Employer or a committee established by the Employer for that purpose, in which case the committee shall be the Plan Administrator and Named Fiduciary. The members of such a committee shall act by majority vote, and may by majority vote authorize any one or ones of their number to act for the committee. The person or committee (if any) initially appointed by the Employer may be named in the Plan Agreement, but the Employer may remove any such person or committee member by written notice to him, and any such person or committee may resign by written notice to the Employer, without the necessity of amending the Plan Agreement. To the extent permitted under applicable law, the Plan Administrator shall have the sole authority to enforce the terms hereof on behalf of any and all persons having or claiming any interest under the Plan, and shall be responsible for the operation of the Plan in accordance with its terms. The Plan Administrator shall have discretionary authority to determine all questions arising out of the administration, interpretation and application of the Plan, all of which determinations shall be conclusive and binding on all persons. The Plan Administrator, in carrying out its responsibilities under the Plan, may rely upon the written opinions of its counsel and on certificates of physicians. Subject to the provisions of the Plan and applicable law, the Plan Administrator shall have no liability to any person as a result of any action taken or omitted hereunder by the Plan Administrator. 16.2. Claims Procedure. Claims for participation in or distribution of benefits under the Plan shall be made in writing to the Plan Administrator, or an agent designated by the Plan Administrator whose name shall have been communicated to all Participants and other persons as required by law. If any claim so made is denied in whole or in part, the claimant shall be furnished promptly by the Plan Administrator with a written notice: (a) setting forth the reason for the denial, (b) making reference to pertinent Plan provisions, (c) describing any additional material or information from the claimant which is necessary and why, and (d) explaining the claim review procedure set forth herein. Within 60 days after denial of any claim for participation or distribution under the Plan, the claimant may request in writing a review of the denial by the Plan Administrator. Any claimant seeking review hereunder shall be entitled to examine all pertinent documents and to submit issues and comments in writing. The Plan Administrator shall render a decision on review hereunder; provided, that if the Plan Administrator determines that a hearing would be appropriate, its decision on review shall be rendered within 120 days after receipt of the request for review. The decision on review shall be in writing and shall state the reason for the decision, referring to the Plan provisions upon which it is based. 16.3. Employer's Responsibilities. The Employer shall be responsible for: (a) Keeping records of employment and other matters containing all relevant data pertaining to any person affected hereby and his eligibility to participate, allocations to his Accounts, and his other rights under the Plan; (b) Periodic, timely filing of all statements, reports and returns required to be filed by ERISA; (c) Timely preparation and distribution of disclosure materials required by ERISA; (d) Providing notice to interested parties as required by Section 7476 of the Code; (e) Retention of records for periods required by law; and (f) Seeing that all persons required to be bonded on account of handling assets of the Plan are bonded. 16.4. Recordkeeper. The Recordkeeper is hereby designated as agent of the Employer under the Plan to perform directly or through agents certain ministerial duties in connection with the Plan, in particular: (a) To keep and regularly furnish to the Employer a detailed statement of each Participant's Accounts, showing contributions thereto by the Employer and the Participant, Investment Products purchased therewith, earnings thereon and Investment Products purchased therewith, and each redemption or distribution made for any reason, including fees or benefits; and (b) To the extent agreed between the Employer and the Recordkeeper, to prepare for the Employer or to assist the Employer to prepare such returns, reports or forms as the Employer shall be required to furnish to Participants and Beneficiaries or other interested persons and to the Internal Revenue Service or the Department of Labor; all as may be more fully set forth in a service agreement executed by the Employer and the Recordkeeper. If the Employer does not appoint another person or entity as Recordkeeper, the Employer itself shall be the Recordkeeper. 16.5. Prototype Plan. Putnam is the sponsor of the Putnam Basic Plan Document, a prototype plan approved as to form by the Internal Revenue Service. Provided that an Employer's adoption of the Plan is made known to and accepted by Putnam in accordance with the Plan Agreement, Putnam will inform the Employer of amendments to the prototype plan and provide such other services in connection with the Plan as may be agreed between Putnam and the Employer. Putnam may impose for its services as sponsor of the prototype plan such fees as it may establish from time to time in a fee schedule addressed to the Employer. Such fees shall, unless paid by the Employer, be paid from the Trust Fund, and shall in that case be charged pro rata against the Accounts of all Participants. The Trustee is expressly authorized to cause Investment Products to be sold or redeemed for the purpose of paying such fees. ARTICLE 17. TRUSTEE AND INSURANCE TRUSTEE 17.1. Powers and Duties of the Trustee. The Trustee shall have the authority, in addition to any authority given by law, to exercise the following powers in the administration of the Trust: (a) To invest all or a part of the Trust Fund in Investment Products in accordance with the investment instructions delivered by the Employer pursuant to Section 13.3, without restriction to investments authorized for fiduciaries, including without limitation any common, collective or commingled trust fund maintained by the Trustee (or any other such fund, acceptable to Putnam and the Trustee, that qualifies for exemption from federal income tax pursuant to Revenue Ruling 81-100). Any investment in, and any terms and conditions of, any such common, collective or commingled trust fund available only to employee trusts which meet the requirements of the Code, or corresponding provisions of subsequent income tax laws of the United States, shall constitute an integral part of this Agreement; (b) If Putnam and the Trustee have consented thereto in writing, to invest without limit in stock of the Employer or any affiliated company; (c) To dispose of all or part of the investments, securities or other property which may from time to time or at any time constitute the Trust Fund in accordance with the written directions furnished by the Employer for the investment of Participants' separate Accounts or the payment of benefits or expenses of the Plan, and to make, execute and deliver to the purchasers thereof good and sufficient deeds of conveyance therefore, and all assignments, transfers and other legal instruments, either necessary or convenient for passing the title and ownership thereto, free and discharged of all trusts and without liability on the part of such purchasers to see to the application of the purchase money; (d) To hold cash uninvested to the extent necessary to pay benefits or expenses of the Plan; (e) To follow the directions of an investment manager appointed pursuant to Section 13.7; (f) To cause any investment of the Trust Fund to be registered in the name of the Trustee or the name of its nominee or nominees or to retain such investment unregistered or in a form permitting transfer by delivery; provided that the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund; (g) Upon written direction of or through the Employer, to vote in person or by proxy (in accordance with Section 13.6 and, in the case of stock of the Employer, at the direction of the Employer or Participants in accordance with Section 13.8) with respect to all securities that are part of the Trust Fund; (h) To consult and employ any suitable agent to act on behalf of the Trustee and to contract for legal, accounting, clerical and other services deemed necessary by the Trustee to manage and administer the Trust Fund according to the terms of the Plan; (i) Upon the written direction of the Employer, to make loans from the Trust Fund to Participants in amounts and on terms approved by the Plan Administrator in accordance with the provisions of the Plan; provided that the Employer shall have the sole responsibility for computing and collecting all loan repayments required to be made under the Plan; and (j) To pay from the Trust Fund all taxes imposed or levied with respect to the Trust Fund or any part thereof under existing or future laws, and to contest the validity or amount of any tax assessment, claim or demand respecting the Trust Fund or any part thereof. 17.2. Limitation of Responsibilities. Except as may otherwise be required under applicable law, neither the Trustee nor the Insurance Trustee nor any of their respective agents shall have any responsibility for: (a) Determining the correctness of the amount of any contribution for the sole collection or payment of contributions, which shall be the sole responsibility of the Employer; (b) Loss or breach caused by any Participant's exercise of control over his Accounts, which shall be the sole responsibility of the Participant; (c) Loss or breach caused by the Employer's exercise of control over Accounts pursuant to Section 13.3, which shall be the sole responsibility of the Employer; (d) Sums paid to an insurer or the validity of any Policy or the accuracy of information provided by an insurer, which shall be the sole responsibility of the insurer; (e) Performance of any other responsibilities not specifically allocated to them under the Plan. 17.3. Fees and Expenses. The Trustee's fees for performing its duties hereunder shall be such reasonable amounts as shall be established by the Trustee from time to time in a fee schedule addressed to the Employer. Such fees, any taxes of any kind which may be levied or assessed upon or in respect of the Trust Fund and any and all expenses reasonably incurred by the Trustee shall, unless paid by the Employer, be paid from the Trust Fund and shall, unless allocable to the Accounts of specific Participants, be charged pro rata against the Accounts of all Participants. The Trustee is expressly authorized to cause Investment Products to be sold or redeemed for the purpose of paying such amounts. Charges and expenses incurred in connection with a specific Investment Product, unless allocable to the Accounts of specific Participants, shall be charged pro rata against the Accounts of all Participants for whose benefit amounts have been invested in the specific Investment Product. 17.4. Reliance on Employer. The Trustee and its agents (and the Insurance Trustee, if any) shall rely upon any decision of the Employer, or of any person authorized by the Employer, purporting to be made pursuant to the terms of the Plan, and upon any information or statements submitted by the Employer or such person (including those relating to the entitlement of any Participant to benefits under the Plan), and shall not inquire as to the basis of any such decision or information or statements, and shall incur no obligation or liability for any action taken or omitted in reliance thereon. The Trustee and its agents shall be entitled to rely on the latest written instructions received from the Employer as to the person or persons authorized to act for the Employer hereunder, and to sign on behalf of the Employer any directions or instructions, until receipt from the Employer of written notice that such authority has been revoked. 17.5. Action Without Instructions. If the Trustee receives no instructions from the Employer in response to communications sent by registered or certified mail to the Employer at its last known address as shown on the books of the Trustee, then the Trustee may make such determinations with respect to administrative matters arising under the Plan as it considers reasonable, notwithstanding any prior instructions or directions given by or on behalf of the Employer, but subject to any instruction or direction given by or on behalf of the Participants. To the extent permitted by applicable law, any determination so made will be binding on all persons having or claiming any interest under the Plan or Trust, and the Trustee will incur no obligation or responsibility for any such determination made in good faith or for any action taken pursuant thereto. In making any such determination the Trustee may require that it be furnished with such relevant documents as it reasonable considers necessary. 17.6. Advice of Counsel. The Trustee and the Insurance Trustee may each consult with legal counsel (who may, but need not be, counsel for the Employer) concerning any questions which may arise with respect to their respective rights and duties under the Plan, and the opinion of such counsel shall be full and complete protection to the extent permitted by applicable law in the respect of any action taken or omitted by the Trustee or the Insurance Trustee, as the case may be, hereunder in accordance with the opinion of such counsel. 17.7. Accounts. The Trustee shall keep full accounts of all receipts and disbursements which pertain to investments in Investment Products, and the Trustee and the Insurance Trustee shall each keep accounts of such other transactions as it is required to perform hereunder. Within a reasonable time following the close of each Plan Year, or upon its removal or resignation or upon termination of the Trust and at such other times as may be appropriate, each shall render to the Employer and any other persons as may be required by law an account of its administration of the Plan and Trust during the period since the last previous such accounting, including such information as may be required by law. The written approval of any account by the Employer and all other persons to whom an account is rendered shall be final and binding as to all matters and transactions stated or shown therein, upon the Employer and Participants and all persons who then are or thereafter become interested in the Trust. The failure of the Employer or any other person to whom an account is rendered to notify the party rendering the account within 60 days after the receipt of any account of his or its objection to the account shall be the equivalent of written approval. If the Employer or any other person to whom an account is rendered files any objections within such 60-day period with respect to any matters or transactions stated or shown in the account and the Employer or such other person and the party rendering the account cannot amicably settle the questions raised by such objections, the party rendering the account and the Employer or such person shall have the right to have such questions settled by judicial proceedings, although the Employer or such other person to whom an account is rendered shall have, to the extent permitted by applicable law, only 60 days from filing of written objection to the account to commence legal proceedings. Nothing herein contained shall be construed so as to deprive the Trustee or the Insurance Trustee of the right to have a judicial settlement of its accounts. In any proceeding for a judicial settlements of any account or for instructions, the only necessary parties shall be the Trustee, the Insurance Trustee, the Employer and persons to whom an account is required by law to be rendered. 17.8. Access to Records. The Trustee and the Insurance Trustee shall give access to their respective records with respect to the Plan at reasonable times and on reasonable notice to any person required by law to have access to such records. 17.9. Successors. Any corporation into which the Trustee may merge or with which it may consolidate or any corporation resulting from any such merger or consolidation shall be the successor of the Trustee without the execution or filing of any additional instrument or the performance of any further act. 17.10. Persons Dealing with Trustee or Insurance Trustee. No person dealing with the Trustee or the Insurance Trustee shall be bound to see to the application of any money or property paid or delivered to such party or to inquire into the validity or propriety of any transactions. 17.11. Resignation and Removal; Procedure. The Trustee or the Insurance Trustee may resign at any time by giving 60 days' written notice to the Employer and to Putnam. The Employer may remove the Trustee or the Insurance Trustee at any time by giving 60 days' written notice to the party removed and to Putnam. In any case of resignation or removal hereunder, the period of notice may be reduced to such shorter period as is satisfactory to the Trustee, the Insurance Trustee and the Employer. Notwithstanding anything to the contrary herein, any resignation hereunder shall take effect at the time notice thereof is given if the Employer may no longer participate in the prototype Plan and is deemed to have an individually designed plan at the time notice is given. 17.12. Action of Trustee Following Resignation or Removal. When the resignation or removal of the Trustee becomes effective, the Trustee shall perform all acts necessary to transfer the Trust Fund to its successor. However, the Trustee may reserve such portion of the Trust Fund as it may reasonably determine to be necessary for payment of its fees and any taxes and expenses, and any balance of such reserve remaining after payment of such fees, taxes and expenses shall be paid over to its successor. The Trustee shall have no responsibility for acts or omissions occurring after its resignation becomes effective. 17.13. Action of Insurance Trustee Following Resignation or Removal. When the Insurance Trustee's resignation or removal becomes effective, the Insurance Trustee shall perform all acts necessary to transfer ownership of the Policies to its successor. If no successor has accepted appointment, the Policies shall be held and owned by the Employer acting as Insurance Trustee until a successor is appointed. 17.14. Effect of Resignation or Removal. Resignation or removal of the Trustee or the Insurance Trustee shall not terminate the Trust. In the event of any vacancy in the position of Trustee (or, in a Plan having amounts invested in Policies, the position of Insurance Trustee), whether the vacancy occurs because of the resignation or removal of the Trustee (or the Insurance Trustee) the Employer shall appoint a successor to fill the vacant position. If the Employer does not appoint such a successor who accepts appointment by the later of 60 days after notice of resignation or removal is given or by such later date as the Trustee or the Insurance Trustee, as the case may be, and Employer may agree in writing to postpone the effective date of the Trustee's or the Insurance Trustee's resignation or removal, the Trustee or Insurance Trustee may apply to a court of competent jurisdiction for such appointment or cause the Trust to be terminated, effective as of the date specified by the Trustee or Insurance Trustee, as the case may be, in writing delivered to the Employer. Each successor Trustee so appointed and accepting a trusteeship hereunder shall have all of the rights and powers and all of the duties and obligations of the original Trustee or Insurance Trustee, as the case may be, under the provisions hereof, but shall have no responsibility for acts or omissions before he becomes a Trustee or Insurance Trustee. 17.15. Fiscal Year of Trust. The fiscal year of the Trust will coincide with the Plan Year. 17.16. Limitation of Liability. Except as may otherwise be required by law and other provisions of the Plan, no fiduciary of the Plan, within the meaning of Section 3(21) of ERISA, shall be liable for any losses incurred with respect to the management of the Plan, nor shall he or it be liable for any acts or omissions except those caused by his or its own negligence or bad faith in failing to carry out his or its duties under the terms contained in the Plan. 17.17. Indemnification. Subject to the limitations of applicable law, the Employer agrees to indemnify and hold harmless (i) all fiduciaries, within the meaning of ERISA Sections 3(21) and 404, and (ii) Putnam, for all liability occasioned by any act of such party or omission to act, in good faith and without gross negligence, and for all expenses incurred by any such party in determining its duty or liability under ERISA with respect to any question under the Plan. ARTICLE 18. AMENDMENT 18.1. General. The Employer reserves the power at any time or times to amend the provisions of the Plan and the Plan Agreement to any extent and in any manner that it may deem advisable. If, however, the Employer makes any amendment (including an amendment occasioned by a waiver of the minimum funding requirement under Section 412(d) of the Code) other than (a) a change in an election made in the Plan Agreement, (b) amendments stated in the Plan Agreement which allow the Plan to satisfy Section 415 and to avoid duplication of minimums under Section 416 of the Code because of the required aggregation of multiple plans, or (c) model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed, the Employer shall cease to participate in this prototype Plan and will be considered to have an individually designed plan. In that event, Putnam shall have no further responsibility to provide to the Employer any amendments or other material incident to the prototype plan, and Putnam may resign immediately as Trustee and as Recordkeeper. Any amendment shall be made by delivery to the Trustee (and the Recordkeeper, if any) of a written instrument executed by the Employer providing for such amendment. Upon the delivery of such instrument to the Trustee, such instrument shall become effective in accordance with its terms as to all Participants and all persons having or claiming any interest hereunder, provided, that the Employer shall not have the power: (1) To amend the Plan in such a manner as would cause or permit any part of the assets of the Trust to be diverted to purposes other than the exclusive benefit of Participants or their Beneficiaries, or as would cause or permit any portion of such assets to revert to or become the property of the Employer. (2) To amend the Plan retroactively in such a manner as would have the effect of decreasing a Participant's accrued benefit, except that a Participant's Account balance may be reduced to the extent permitted under Section 412(c)(8) of the Code. For purposes of this paragraph (2), an amendment shall be treated as reducing a Participant's accrued benefit if it has the effect of reducing his Account balance, or of eliminating an optional form of benefit with respect to amounts attributable to contributions made performed before the adoption of the amendment; or (3) To amend the Plan so as to decrease the portion of a Participant's Account balance that has become vested, as compared to the portion that was vested, under the terms of the Plan without regard to the amendment, as of the later of the date the amendment is adopted or the date it becomes effective. (4) To amend the Plan in such a manner as would increase the duties or liabilities of the Trustee or the Recordkeeper unless the Trustee or the Recordkeeper consents thereto in writing. 18.2. Delegation of Amendment Power. The Employer and allsponsoring organizations of the Putnam Basic Plan Document delegate to Putnam Mutual Funds Corp., the power to amend the Plan (including the power to amend this Section 18.2 to name a successor to which such power of amendment shall be delegated), for the purpose of adopting amendments which are certified to Putnam Mutual Funds Corp., by counsel satisfactory to it, as necessary or appropriate under applicable law, including any regulation or ruling issued by the United States Treasury Department or any other federal or state department or agency; provided that Putnam Mutual Funds Corp., or such successor may amend the Plan only if it has mailed a copy of the proposed amendment to the Employer at its last known address as shown on its books by the date on which it delivers a written instrument providing for such amendment, and only if the same amendment is made on said date to all plans in this form as to which Putnam Mutual Funds Corp., or such successor has a similar power of amendment. If a sponsoring organization does not adopt any amendment made by Putnam Mutual Funds Corp., such sponsoring organization shall cease to participate in this prototype Plan and will be considered to have an individually designed plan. ARTICLE 19. TERMINATION OF THE PLAN AND TRUST 19.1. General. The Employer has established the Plan and the Trust with the bona fide intention and expectation that contributions will be continued indefinitely, but the Employer shall have no obligation or liability whatsoever to maintain the Plan for any given length of time and may discontinue contributions under the Plan or terminate the Plan at any time by written notice delivered to the Trustee and the Insurance Trustee, without any liability whatsoever for any such discontinuance or termination. 19.2. Events of Termination. The Plan will terminate upon the happening of any of the following events: (a) Death of the Employer, if a sole proprietor, or dissolution or termination of the Employer, unless within 60 days thereafter provision is made by the successor to the business with respect to which the Plan was established for the continuation of the Plan, and such continuation is approved by the Trustee; (b) Merger, consolidation or reorganization of the Employer into one or more corporations or organizations, unless the surviving corporations or organizations adopt the Plan by an instrument in writing delivered to the Trustee within 60 days after such a merger, consolidation and reorganization; (c) Sale of all or substantially all of the assets of the Employer, unless the purchaser adopts the Plan by an instrument in writing delivered to the Trustee within 60 days after the sale; (d) The institution of bankruptcy proceedings by or against the Employer, or a general assignment by the Employer to or for the benefit of its creditors; or (e) Delivery of notice as provided in Section 19.1. 19.3. Effect of Termination. Notwithstanding any other provisions of this Plan, other than Section 19.4, upon termination of the Plan or complete discontinuance of contributions thereunder, each Participant's Accounts will become fully vested and nonforfeitable, and upon partial termination of the Plan, the Accounts of each Participant affected by the partial termination will become fully vested and nonforfeitable. The Employer shall notify the Trustee and the Insurance Trustee in writing of such termination, partial termination or complete discontinuance of contributions. In the event of the complete termination of the Plan or discontinuance of contributions, the Trustee will, after payment of all expenses of the Trust Fund, make distribution of the Trust asses to the Participants or other persons entitled thereto, in such form as the Employer may direct pursuant to Article 10 or, in the absence of such direction, in a single payment in cash or in kind. Upon completion of such distributions under this Article, the Trust will terminate, the Trustee and the Insurance Trustee will be relieved from their obligations under the Trust, and no Participant or other person will have any further claim thereunder. 19.4. Approval of Plan. Notwithstanding any other provision of the Plan, if the Employer fails to obtain or to retain the approval by the Internal Revenue Service of the Plan as a qualified plan under Section 401(a) of the Code, then (i) the Employer shall promptly notify the Trustee, and (ii) the Employer may no longer participate in the Putnam prototype plan, but will be deemed to have an individually designed plan. If it is determined by the Internal Revenue Service that the Plan upon its initial adoption does not qualify under Section 401(a) of the Code, all assets then held under the Plan will be returned within one year of the denial of initial qualification to the Participants and the Employer to the extent attributable to their respective contributions and any income earned thereon, but only if the application for qualification is made by the time prescribed by law for filing the Employer's federal income tax return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. Upon such distribution, the Plan will be considered to be rescinded and to be of no force or effect. ARTICLE 20. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS 20.1. General. Notwithstanding any other provision hereof, subject to the approval of the Trustee there may be transferred to the Trustee all or any of the assets held (whether by a trustee, custodian or otherwise) in respect of any other plan which satisfies the applicable requirements of Section 401(a) of the Code and which is maintained for the benefit of any Employee (provided, however, that the Employee is not a member of a class of Employees excluded from eligibility to participate in the Plan) except that insurance policies held in respect of such other plan shall be transferred to the Insurance Trustee as trustee if the Employer so determines. Any such assets so transferred shall be accompanied by written instructions from the Employer naming the persons for whose benefit such assets have been transferred and showing separately the respective contributions made by the Employer and by the Participants and the current value of the assets attributable thereto. Notwithstanding the foregoing, if a Participant's employment classification changes under Section 3.5 such that he begins participation in another plan of the Employer, his Account, if any, shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account. 20.2. Amounts Transferred. The Employer shall credit any assets transferred pursuant to Section 20.1 or Section 3.5 to the appropriate Accounts of the persons for whose benefit such assets have been transferred. Any amounts credited as contributions previously made by an employer or by such persons under such other plan shall be treated as contributions previously made under the Plan by the Employer or by such persons, as the case may be. 20.3. Merger or Consolidation. The Plan shall not be merged or consolidated with any other plan, nor shall any assets or liabilities of the Trust Fund be transferred to any other plan, unless each Participant would receive a benefit immediately after the transaction, if the Plan then terminated, which is equal to or greater than the benefit he would have been entitled to receive immediately before the transaction if the Plan had then terminated. ARTICLE 21. MISCELLANEOUS 21.1. Notice of Plan. The Plan shall be communicated to all Participants by the Employer on or before the last day on which such communication may be made under applicable law. 21.2. No Employment Rights. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the purchase of Policies, nor the payment of any benefits shall be construed as giving to any Participant or any other person any legal or equitable right against the Employer, the Trustee, or the Insurance Trustee, except as provided herein or by ERISA; and in no event shall the terms of employment or service of any Participant be modified or in any way be affected hereby. 21.3. Distributions Exclusively From Plan. Participants and Beneficiaries shall look solely to the assets held in the Trust and any Policies purchased pursuant to the Plan for the payment of any benefits under the Plan. 21.4. No Alienation. The benefits provided hereunder shall not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, and any attempt to cause such benefits to be so subjected shall not be recognized, except as provided in Section 12.4 or in accordance with a Qualified Domestic Relations Order. The Plan Administrator shall determine whether a domestic relations order is qualified in accordance with written procedures adopted by the Plan Administrator. Notwithstanding the foregoing, an order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan. 21.5. Provision of Information. The Employer, Trustee and Insurance Trustee shall furnish to each other such information relating to the Plan and Trust as may be required under the Code or ERISA and any regulations issued or forms adopted by the Treasury Department or the Labor Department or otherwise thereunder. 21.6. No Prohibited Transactions. The Employer, Trustee, and Insurance Trustee shall, to the extent of their respective powers and authority under the Plan, prevent the Plan from engaging in any transaction known by that person to constitute a transaction prohibited by Section 4975 of the Code and any rules or regulations with respect thereto. 21.7. Governing Law. The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States, and to the extent permitted by such laws, by the laws of the Commonwealth of Massachusetts 21.8. Gender. Whenever used herein, a pronoun in the masculine gender includes the feminine gender unless the context clearly indicates otherwise. PUTNAM PROFIT SHARING AND 401(K) PLAN PLAN AGREEMENT #001 This is the Plan Agreement for a Putnam prototype profit sharing plan with optional Section 401(k) provisions. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. You can get further information to help you complete the Plan Agreement from your investment dealer, or from Putnam at: Putnam Defined Contribution Plans One Putnam Place E2B 859 Willard Street Quincy, MA 02269 Phone: 1-800-752-9894 * * * * * By executing this Plan Agreement, the Employer establishes a profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #05, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Profit Sharing and 401(k) Plan. * * * * * All Employers complete items 1-11 below. Employers who wish to adopt Section 401(k) provisions also complete item 12. Business Information. The Employer adopting this Plan is: Business Name: _____________________________________________________ Business Address: _______________________________ _______________________________ SIC Code: _______ _______________________________ Person for Putnam to Contact: ______________________________________________ Phone: __________________________ Federal Tax Identification Number: __________________________ Form of Organization (check one): _____ Sole proprietorship _____ Corporation _____ Other _____ Partnership _____ S Corporation Plan Name: __________________________________ Plan Number: 00__(complete) Taxable Year of Business: ______ Calendar Year ______ Fiscal year ending on _________________________________________ Plan Information. Plan Year. Check one: _____ The Plan Year will be the same as the Taxable Year of the Business shown in 1.F. above. If the Taxable Year of the Business changes, the Plan Year will change accordingly. _____ The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month). The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan. Effective Date of Adoption of Plan. Are you adopting this Plan to replace an existing plan? _____ Yes _____ No If you answered Yes in 2.B. above, the Effective Date of your adoption of this Plan will be the first day of the current Plan Year unless you elect a later date below. Please complete the following: ______________________________________________________________ Name of the plan you are replacing ______________________________________________________________ Original Effective Date of the plan you are replacing ______________________________________________________________ Effective Date of amendment If you answered No in 2.B. above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began): The Effective Date is: ______________________________________ month/day/year Identifying Highly Compensated Employees. Check One: _____ The Plan will use the regular method under Plan Section 2.60(a) for identifying Highly Compensated Employees. If your Plan Year is the calendar year, do you wish to make the regular method's "calendar year election" for identifying your Highly Compensated Employees? _____ Yes _____ No _____ The Plan will use the simplified method under Plan Section 2.60(b) for identifying Highly Compensated Employees. Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B and C below. Classes of Eligible Employees. The Plan requires coverage of all classes of employees of the Employer and any Affiliated Employer, except for union employees and nonresident aliens without U.S.-source income. The general rules of the Plan exclude employees in those two groups, but if you want employees in one or both categories to be eligible for your Plan, check the appropriate space below. The following employees will be eligible to participate in the Plan: _____ Members of the following collective bargaining unit(s) (give names of unions): _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _____ Nonresident aliens with no U.S.-source income Age Requirement (check and complete one): _____ No minimum age required for participation _____ Employees must reach age __ (not over 21) to participate Service Requirements. A 6-month Eligibility Period is a 6-month period beginning either on an employee's first day of work with the Employer or on the date 6 months following the employee's first day of work, and anniversaries of those dates. A 12-month Eligibility Period is the 12- month period beginning on an employee's first day of work with the Employer, and anniversaries of that date. You may also select another Eligibility Period consisting of a number of months of your choice and each successive period of that number of months. To become eligible, an employee must complete (choose one): _____ a. No minimum service required. Skip to (5) below. _____ b. One 6-month Eligibility Period _____ c. One __-month Eligibility Period (must be less than 12) _____ d. One 12-month Eligibility Period _____ e. Two 12-month Eligibility Periods (may not be chosen if you adopt either the Section 401(k) provisions under item 12 or a vesting schedule other than the first choice under item 8.A(1), which provides for 100% full and immediate vesting). If the Employer acquires a business, will the Eligibility Period for employees of the acquired business be the period selected in (1) above, beginning on the first day of work for the acquired business? _____ Yes _____ No a. To receive credit for a 6- month Eligibility Period, an employee must complete during it at least: _____ 500 Hours of Service _____ _____________ Hours of Service (under 500) b. Complete only if (1)(c) above is selected. To receive credit for the Eligibility Period selected in (1)(c) above, an employee must complete during it at least: _____ _____________ Hours of Service (under 1000) Note: If you adopt an Eligibility Period of less than 12 months, in any event, an employee will automatically receive credit for the Eligibility Period if the employee completes at least 1,000 Hours of Service during a 12 consecutive month period following the first day of work. c. To receive credit for a 12-month Eligibility Period, an employee must complete during it at least: _____ 1,000 Hours of Service _____ _____________ Hours of Service (under 1,000) Hours of Service will be credited to an employee by the following method (check one): _____ a. Actual hours for which an employee is paid _____ b. Any employee who has one actual paid hour in the following period will be credited with the number of Hours of Service indicated (check one): _____ Day (10 Hours of Service) _____ Week (45 Hours of Service) _____ Semi-monthly payroll period (95 Hours of Service) _____ Month (190 Hours of Service) Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing. Entry Dates. Each Employee in an eligible class who completes the age and service requirements specified above will begin to participate in the Plan on (check one): _____ The first day of the month in which he fulfills the requirements. _____ The first of the following dates occurring after he fulfills the requirements (or, if earlier, the first day of the first Plan Year that begins after the date he fulfills the requirements) (check one): _____ The first day of the month following the date he fulfills the requirements (monthly). _____ The first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly). _____ The first day of the first month and the seventh month in a Plan Year (semiannually). (For New Plans Only) Will all eligible Employees be required to meet the age and service requirements specified in B and C above? _____ Yes _____ No; all Employees on the Effective Date will be eligible as of the Effective Date, even if they have not met the age and service requirements. Compensation (Plan Section 2.8). A. Amount Compensation for purposes of the Plan will be the amount of the following that is actually paid by your Business to an employee during the Plan Year (check one): _____ Form W-2 earnings as defined in Section 2.8 of the Plan. _____ Form W-2 earnings as defined in Section 2.8 of the Plan, plus any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. _____ All compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan. _____ All compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan, plus any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. B. Measuring Period. Compensation will be based on the Plan Year. However, for an employee's initial year of participation in the Plan, Compensation shall be recognized as of: _____ The first day of the Plan Year. _____ The date the Participant entered the Plan. Contributions (Plan Sections 4.1 and 4.2). Employer Contributions - Profit Limitation. Will Employer contributions to the Plan be limited to the current and accumulated profits of your Business? Check one: _____ Yes _____ No If you will make contributions only under the Section 401(k) provisions in item 12 of this Plan Agreement, skip the rest of this part 5. Employer Contributions - Amount. (1) The Employer will contribute to the Plan for each Plan Year (check one): _____ An amount chosen by the Employer from year to year _____ ____% of the Earnings of all Qualified Participants for the Plan Year _____ $____ for each Qualified Participant per ___ __ __ __ __ (e nt er ti me pe ri od , ex . pa yr ol l pe ri od , pl an ye ar ) (2) Will Forfeitures for a Plan Year be applied to reduce the amount of the contribution otherwise required? _____ Yes _____ No (3) Will Forfeitures that are not applied to reduce the amount of contribution otherwise required for the Plan Year be applied to reduce the required Employer Matching Contribution for the Plan Year described in 12.B.(1)? _____ Yes _____ No If you check No to both (2) and (3) above, Forfeitures will be allocated as though they were additional Profit Sharing Contributions. Employer Contributions - Allocations to Participants (1) Allocation to Qualified Participants. Any Employee who has met the eligibility requirements in item 3 of this Plan Agreement is a Qualified Participant unless, for reasons other than his death or Retirement, he is not an active Employee on the last day of the Plan Year, and he is not credited with more than 500 Hours of Service in the Plan Year. How will contributions be allocated: _______ Pro rata (percentage based on compensation) _______ Uniform Dollar amount _______ Integrated With Social Security (complete (2) and (3) below) (2) Integration with Social Security. (Complete only if you have elected in 5.C.1 to integrate your Plan with Social Security.) Contributions under paragraph B will be allocated to Qualified Participants as you check below: _____ Contributions will be allocated according to the Top-Heavy Integration Formula in Section 4.2(c)(1) of the Basic Plan Document in every Plan Year, whether or not the Plan is top-heavy. _____ Contributions will be allocated according to the Top-Heavy Integration Formula in Section 4.2(c)(1) of the Basic Plan Document only in Plan Years in which the Plan is top-heavy. In all other Plan Years, contributions will be allocated according to the Non-Top-Heavy Integration Formula in Section 4.2(c)(2) of the Basic Plan Document. (3) Integration Level. (Complete only if you have elected in 5.C.1 to integrate your Plan with Social Security.) The Integration Level will be (check one): _____ The Social Security Wage Base in effect at the beginning of the Plan Year. ____ __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year. ____ $__________ (not more than the Social Security Wage Base). Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living. D. Participant Contributions (Plan Section 4.2(e)). Will your Plan allow Participants to make after-tax contributions? Yes No Investments (Plan Sections 13.2 and 13.3). The Employer selects in part A below the Investment Products that will be available under the Plan (in addition to Policies selected under Plan Article 14, if any). All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. From the group of available Investment Products selected by the Employer, each Participant chooses the investments for his own Accounts unless the Employer elects differently in B below. Available Investment Products (Plan Section 13.2). The following investments will be available under the Plan (check one): Mutual Funds _____ The group of funds made available by Putnam, selected by the Employer and communicated to Participants in writing. A current list of the funds selected by the Employer from time to time shall be kept with the records of the Plan. The initial list of funds is as follows: _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ Other Investment Options ______ Putnam Stable Value Fund ______ Other Investment Products (as defined in Section 2.28 of the Plan) If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam (or if the Employer makes no such selection, by execution of the Plan Agreement, the Employer shall affirmatively elect to have such amounts invested in the Putnam Money Market Fund) until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement with Putnam (or if none, The Putnam Money Market Fund) as an available Investment Product for that purpose. Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.) _____ The Employer will make all investment decisions with respect to all employee contributions, including Elective Deferrals, Participant Contributions, Deductible Employee Contributions and Rollover Contributions. _____ The Employer will make all investment decisions with respect to all Employer contributions, including Profit Sharing Contributions, Employer Matching Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions. _____ The Employer will make investment decisions with respect to Employer Matching Contributions and Qualified Matching Contributions made pursuant to Section 12.B and C of this Plan Agreement. _____ The Employer will make investment decisions with respect to Qualified Nonelective Contributions made pursuant to Section 12.D of this Plan Agreement. _____ The Emplo yer will make inves tment decis ions with respe ct to Profi t Shari ng Contr ibuti ons made pursu ant to Secti on 5.B. of this Plan Agree ment. Changes. Investment instructions may be changed (check one): _____ on any Valuation Date (daily) _____ on the first day of any month (monthly) _____ on the first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly) Employer Stock. (Skip this paragraph if you did not designate Employer Stock as an investment under the Service Agreement.) Voting. Section 13.8 of the Plan provides that Employer Stock held as an investment under the Plan will be voted in accordance with the Employer's instructions unless the Employer elects that Participants will direct the voting of Employer Stock to the extent described in Section 13.8. Check below only if Participants will direct the voting of Employer Stock. _____ Participants are hereby appointed named fiduciaries for the purpose of the voting of Employer Stock in accordance with Section 13.8. (Note: To the extent a Participant fails to direct the voting of Employer Stock credited to his Account, the Trustee shall not vote such Employer Stock. Unallocated shares of Employer Stock will be voted by the Trustee as directed by the Plan Administrator.) Tendering. Section 13.8 of the Plan provides that Employer Stock held as an investment under the Plan will be tendered in accordance with the Employer's instructions unless the Employer elects that Participants will direct the tendering of Employer Stock to the extent described in Section 13.8. Check below only if Participants will direct the tendering of Employer Stock. (Note: Unallocated shares of Employer Stock will be tendered in proportion to the percentage of allocated shares which are tendered.) _____ Participants are hereby appointed named fiduciaries for the purpose of the tendering of Employer Stock in accordance with Section 13.8. (Note: To the extent a Participant fails to direct the tendering of Employer Stock credited to his Account, the Trustee shall not tender such Employer Stock.) Voting of Non-Putnam Shares. Section 13.10 of the Plan provides that shares of registered investment companies held under the Plan other than Putnam mutual funds shall be voted in accordance with the Employer's instructions unless the Employer elects that Participants will direct the voting of such non-Putnam investment company shares to the extent described in Section 13.10. Check below only if Participants will direct the voting of such non-Putnam investment company shares: _____ Participants are hereby appointed named fiduciaries for the purpose of voting shares of registered investment companies other than Putnam mutual funds in accordance with Section 13.10. Note: Shares of non-Putnam investment companies for which the Trustee receives no voting instructions shall be voted in the same proportion as it votes such shares for which it has received instructions. Distributions and Withdrawals. Retirement Distributions. Normal Retirement Age (Plan Section 7.1). Normal retirement age will be _______ (not over age 65). Early Retirement (Plan Section 7.1). Check and complete the item below only if you want Participants to become fully vested upon fulfilling specified age and service requirements before reaching normal retirement age: _____ Early retirement will be permitted at age ____ with at least ________ Years of Service. Annuities (Plan Section 9.3). Will your Plan permit a Participant to select a life annuity form of distribution? You must check Yes if this Plan replaces an existing Plan that permits distributions in a life annuity form. _____ Yes _____ No Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions from Employer Contribution Accounts? You must check Yes if this Plan replaces an existing Plan that permits hardship distributions of Profit Sharing Contributions. _____ Yes _____ No Withdrawals after Age 59 1/2 (Plan Section 12.3). Will your Plan permit employees over age 59 1/2 to withdraw amounts upon request? You must check Yes if this Plan replaces an existing Plan that permits withdrawals after age 59 1/2. _____ Yes _____ No Loans. (Plan Section 12.4). Will your Plan permit loans to employees from their Accounts? _____ Yes _____ No Automatic Distribution of Small Accounts (Plan Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment? _____ Yes _____ No Note: The time for distribution cannot be left to the discretion of the Employer or the Plan Administrator. If you check No above, small accounts will be distributable at the time selected by the Participant. Vesting (Plan Article 8). Time of Vesting. (1) The provision checked below will determine a Participant's vested percentage in the Profit Sharing Contribution portion of his Employer Contribution Account: _____ 100% vesting immediately upon participation in the Plan. _____ Five-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 1 2 3 4 5 _____ Six-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 2 3 4 5 6 _____ Seven-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 3 4 5 6 7 _____ Three-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-2 3 _____ Five-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-4 5 _____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule): Vested Percentage __% __% __% __% __% Years of Service ___ ___ ___ ___ ___ If you selected above an "Other Schedule," specify in the space below the schedule that will apply after the Plan is top-heavy. The schedule you specify must be (i) the Six-Year Graded Schedule, or (ii) the Three-year Cliff Schedule, or (iii) any other schedule that is at least as favorable to employees, at all years of service, as either the Six-Year Schedule or the Three-Year Cliff Schedule. The top-heavy vesting schedule will be: _____ the same "Other Schedule" selected above _____ Veste d Perce ntage __% __% __% __% __% Years of Servi ce ___ ___ ___ ___ ___ (2) If you adopt the Section 401(k) provisions in item 12 and will make Employer Matching Contributions, check the provision below that will determine a Participant's vested percentage in his Employer Matching Contribution Account (check one): _____ 100% vesting immediately upon participation in the Plan. _____ Five-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 1 2 3 4 5 _____ Six-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 2 3 4 5 6 _____ Seven-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 3 4 5 6 7 _____ Three-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-2 3 _____ Five-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-4 5 _____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule): Vested Percentage __% __% __% __% __% Years of Service ___ ___ ___ ___ ___ If you selected "Other Schedule" above, the vesting schedule that will apply to the Employer Matching Contribution Account after the Plan becomes top-heavy will be the top-heavy vesting schedule applicable to the Employer Contribution Account, as specified in Section 8.A.(1). Service for Vesting. Skip this part B if your Plan will include all of an employee's service in determining his Years of Service for vesting. Years of Service for vesting will exclude (check one or more): _____ Service before the Effective Date of the Plan, if this is a new plan, or service before the effective date of your existing plan, if this Plan replaces an existing plan _____ Service before the Plan Year in which an employee reached age 18 _____ Service for a business acquired by the Employer, before the date of acquisition Hours of Service for Vesting. The number of Hours of Service required for crediting a Year of Service for vesting will be (check one): _____ 1,000 Hours of Service _____ ___________________ Hours of Service (under 1,000) Year of Service Measuring Period for Vesting (Plan Section 2.54). The periods of 12 months used for measuring Years of Service will be (check one): _____ Plan Years _____ 12-month Eligibility Periods Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing. Top-Heavy Minimum Contributions (Plan Section 15.3). For any Plan Year in which the Plan is top-heavy, you must provide for each Participant who is a non-key employee and who is employed on the last day of the Plan Year an allocation equal to 3% of his Earnings (or if less, the highest percentage allocated to any key employee). Neither Elective Deferrals, nor Employer Matching Contributions nor Qualified Matching Contributions for a non-key employee may be taken into account for purposes of this requirement. If you have adopted Putnam paired plans, for any Plan Year in which the Plan is top-heavy, the top-heavy minimum contribution will be provided under the Putnam Money Purchase Pension Plan. Skip paragraphs A and B below if you have Putnam paired plans or if you do not maintain any other qualified plan in addition to this Plan. If you maintain another qualified plan in addition to this Plan, specify below whether a non-key employee who participates in both plans will receive a top-heavy minimum contribution (or benefit) in this Plan or the other plan. The top-heavy minimum contribution (or benefit) for non-key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in (check one): _____ This Plan _____ The plan named here: __________________________________ (Skip this paragraph if you do not maintain a defined benefit plan.) If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 15.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 15.4. Specify your election by completing the statement below: The Employer will provide an increased (specify contribution or benefit) __________________________________ in its (specify defined contribution or defined benefit) ______________________ plan as permitted under Plan Section 15.4. Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant. The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below: If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one): _____ The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan. _____ The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below. _________________________________________________________________ _______ _________________________________________________________________ _______ B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below: _________________________________________________________________ _______ _________________________________________________________________ _______ Note: Your description under A or B above cannot be left to discretion and changed from year to year. If you want to amend it from year to year, you must execute a new plan agreement. If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio: Interest rate: %__________________________ Mortality Table: __________________________ Administration. Plan Administrator (Plan Section 16.1). You may appoint a person or a committee to serve as Plan Administrator. You may remove and replace anyone you have appointed, and anyone you have appointed may resign, without the need to amend this Plan Agreement, provided that you notify Participants in writing of any such change. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator. The initial Plan Administrator will be (check one): _____ This person: _______________________________ _____ A committee composed of these people: _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ Recordkeeper (Plan Section 16.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and you. The initial Recordkeeper will be: _______________________________________________________ ___ Name _______________________________________________________ ___ Address Complete item 12 below if your Plan will allow employees to elect pre-tax contributions under Section 401(k) of the Code. Section 401(k) Plan Provisions (Plan Article 5). Elective Deferrals (Plan Section 5.2). A Participant may make Elective Deferrals for each year in an amount not to exceed (check one): _____ (a) ___% of his Earnings _____ (b) ___% of his Earnings not to exceed $_______ (specify a dollar amount) _____ (c) $_______ (specify a dollar amount) Note: Elective Deferrals may not exceed the annual dollar limit under Section 402(g) of the Internal Revenue Code. A Participant may begin to make Elective Deferrals, or change the amount of his Elective Deferrals, as of the following dates (check one): _____ First business day of each month (monthly). _____ First business day of the first, fourth, seventh and tenth months of the Plan Year (quarterly). _____ First business day of the first and seventh months of the Plan Year (semiannually). _____ First business day of the Plan Year only (annually). May Participants make Elective Deferrals of bonuses? _____ Yes _____ No Note: You may choose to make Employer Matching Contributions or Qualified Matching Contributions, or neither, or both. Qualified Matching Contributions are always fully vested and cannot be distributed from the Plan before a Participant reaches age 59 1/2 or leaves employment. They will be used, to the extent needed, to help the Plan pass the ADP test explained on page __ of the Qs & As. Employer Matching Contributions are subject to the vesting schedule elected in item 8 of this Plan Agreement, and can be withdrawn during employment in the event of financial hardship (as defined in Section 12.2 of the Plan) if you so elect in part F below. Employer Matching Contributions (Plan Section 5.8). Skip this part B if you will not make Employer Matching Contributions. The Employer will contribute and will allocate to each Participant's Employer Matching Account an amount equal to: (Check the provision(s) desired, and fill in the % and/or $ limitation blank(s) in each provision you check. If you wish to determine the amount of Employer Matching Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check. Also write "V" for variable in the % blank for Earnings.) _____ ___% of Elective Deferrals _____ ___% of Elective Deferrals that do not exceed ___% of Earnings _____ ___% of Participant Contributions _____ In applying the above election, Elective Deferrals shall not exceed $__________. Will forfeited Employer Matching Contributions be applied to reduce the total contribution specified in B (1) above? _____ Yes _____ No (3) Will forfeited Employer Matching Contributions that are not applied to reduce required Employer Matching Contributions specified in B(1) above be applied to reduce required Employer Contributions for the Plan Year described in 5.B? _____ Yes _____ No If you check No to both (2) and (3) above, forfeited Employer Matching Contributions will be allocated as though they were additional Employer Matching Contributions. Qualified Matching Contributions (Plan Section 2.62). Skip this part C if you will not make Qualified Matching Contributions. Qualified Matching Contributions will be made with respect to (check one): _____ Elective Deferrals by all Participants _____ Elective Deferrals only by Non-Highly Compensated Participants The amount of Qualified Matching Contributions made with respect to a Participant will be: (Check the provision desired and fill in the % and/or $ limitation blank(s) in the provision you check. If you wish to determine the amount of Qualified Matching Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check. Also write "V" for variable in the % blank for Earnings.) _____ ___% of his Elective Deferrals _____ ___% of his Elective Deferrals that do not exceed ___% of his Earnings _____ ___% of Participant Contributions _____ In applying the above election, Elective Deferrals shall not exceed $________. Qualified Nonelective Contributions (Plan Section 2.64): Skip this part D if you will not make Qualified Nonelective Contributions. Qualified Nonelective Contributions will be made on behalf of (check one): _____ All Participants _____ Only Participants who are not Highly Compensated Employees The amount of Qualified Nonelective Contributions for a Plan Year will be (check one): _____ ___% (not over 15%) of the Earnings of Participants on whose behalf Qualified Nonelective Contributions are made _____ An amount determined by the Employer from year to year, to be shared in proportion to their Earnings by Participants on whose behalf Qualified Nonelective Contributions are made Note: Qualified Nonelective Contributions will be used, to the extent needed, to help the Plan pass the ADP test, explained on page __ of the Qs & As. ACP Test. Every plan that has after-tax Participant Contributions, Employer Matching Contributions or Qualified Matching Contributions must pass an annual test called the ACP test, which is explained on page __ of the Qs & As. Elective Deferrals and Qualified Nonelective Contributions will be used to help the Plan pass the ACP test, to the extent needed. Hardship Distributions from 401(k) Accounts (Plan Sections 12.2 and 5.14). Will your Plan permit hardship distributions from Elective Deferral Accounts? _____ Yes _____ No If your Plan has Employer Matching Contributions, will it permit hardship distributions from Employer Matching Accounts? You must check Yes if this Plan replaces an existing plan that permits hardship distributions of Employer Matching Contributions. _____ Yes _____ No Reliance on Opinion Letter. If you ever maintained or you later adopt any plan (including a welfare benefit fund, as defined in Section 419(e) of the Code, which provides post-retirement medical benefits allocated to separate accounts for key employees, as defined in Section 419A(d)(3) of the Code; or an individual medical account, as defined in Section 415(l)(2) of the Code) in addition to this plan, you may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. If you maintain or adopt multiple plans, in order to obtain reliance with respect to plan qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties. The Employer may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this plan is qualified under Section 401 of the Code unless the terms of the plan, as herein adopted or amended, that pertain to the requirements of Section 401(a)(4), 401(a)(5), 401(a)(17), 401(l), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986 or later laws, (a) are made effective retroactively to the first day of the first Year beginning after December 31, 1988 (or such later date on which these requirements first become effective with respect to this plan); or (b) are made effective no later than the first day on which the Employer is no longer entitled, under regulations, to rely on a reasonable, good faith interpretation of these requirements, and the prior provisions of the plan constitute such an interpretation. Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #001 may be used only in conjunction with Putnam's basic plan document #05. * * * * * EMPLOYER'S ADOPTION OF PUTNAM PROFIT SHARING AND 401(k) PLAN The Employer named below hereby adopts a PUTNAM PROFIT SHARING AND 401(k) PLAN, and appoints __________________ to serve as Trustee of the Plan. (Note: you may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission.) The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Profit Sharing and 401(k) Plan only upon Putnam's acceptance of this Plan Agreement. Employer signature(s) to adopt Plan: Date of signature: ____________________________________________________ __________________________ ____________________________________________________ __________________________ Please print name(s) of authorized person(s) signing above: ____________________________________________________ Telephone:___________________ ____________________________________________________ Telephone:___________________ A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective. INVESTMENT DEALER INFORMATION Firm: _________________________________________________________________ ___________ Branch: _________________________________________________________________ ___________ Address: _________________________________________________________________ ___________ Registered Representative: _________________________________________ Name _________________________________________ Telephone * * * * * ACCEPTANCE OF TRUSTEE The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above. A. Putnam Fiduciary Trust Company, Trustee By: _________________________________________________________________ ______________ Complete Part B only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. Note: Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Prototype Profit Sharing and 401(k) Plan. B. _________________________________, Trustee By: ______________________________ ___ Trustee's Tax I.D. Number _______________ (Trustee) _________________________________________________________________ ____________________ Address of Trustee Person for Putnam to Contact: ________________________________ Telephone: _______________ Complete Part C only if insurance Policies will be purchased under Article 14 of the Plan (in addition to Putnam Investment Products). C. Appointment and Acceptance of Insurance Trustee 1. Appointment to: _________________________________________________________________ ____________________ Name of Insurance Trustee You are hereby designated as Insurance Trustee for Policies to be held in accordance with the terms and conditions of this Plan and Trust. Employer signature to appoint Insurance Trustee: By:______________________________________________________________ ____________________ (Authorized Signature) 2. Acceptance as Insurance Trustee is agreed to in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer as set forth above. By:_____________________________________ Trustee's Tax I.D. Number _________________ _________________________________________________________________ ____________________ Address of Insurance Trustee Person for Putnam to Contact: ________________________________ Telephone: _______________ * * * * * ACCEPTANCE BY PUTNAM Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #05. Putnam Mutual Funds Corp. By: ______________________________ PUTNAM MONEY PURCHASE PENSION PLAN PLAN AGREEMENT #002 This is the Plan Agreement for a Putnam prototype money purchase plan. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. You can get further information to help you complete the Plan Agreement from your investment dealer, or from Putnam at: Putnam Defined Contribution Plans One Putnam Place E2B 859 Willard Street Quincy, MA 02269 Phone: 1-800-752-9894 * * * * * By executing this Plan Agreement, the Employer establishes a money purchase pension plan and trust upon the terms and conditions of Putnam Basic Plan Document #05, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Money Purchase Pension Plan. * * * * * Business Information. The Employer adopting this Plan is: Business Name: _____________________________________________________ Business Address: _______________________________ _______________________________ SIC Code: _______ _______________________________ Person for Putnam to Contact: ______________________________________________ Phone: __________________________ Federal Tax Identification Number: __________________________ Form of Organization (check one): _____ Sole proprietorship _____ Corporation ______ Other _____ Partnership _____ S Corporation Plan Name: __________________________________ Plan Number: 00__(complete) Taxable Year of Business: ______ Calendar Year ______ Fiscal year ending on ________________________________________ Plan Information. Plan Year. Check one: _____ The Plan Year will be the same as the Taxable Year of the Business shown in 1.F. above. If the Taxable Year of the Business changes, the Plan Year will change accordingly. _____ The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month). The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan. Effective Date of Adoption of Plan. Are you adopting this Plan to replace an existing plan? _____ Yes _____ No If you answered Yes in 2.B. above, the Effective Date of your adoption of this Plan will be the first day of the current Plan Year unless you elect a later date below. Please complete the following: ______________________________________________________________ Name of the plan you are replacing ______________________________________________________________ Original Effective Date of the plan you are replacing ______________________________________________________________ Effective Date of amendment If you answered No in 2.B. above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began): The Effective Date is: ______________________________________ month/day/year Identifying Highly Compensated Employees. Check One: _____ The Plan will use the regular method under Plan Section 2.60(a) for identifying Highly Compensated Employees. If your Plan Year is the calendar year, do you wish to make the "calendar year election" for identifying your Highly Compensated Employees? _____ Yes _____ No _____ The Plan will use the simplified method under Plan Section 2.60(b) for identifying Highly Compensated Employees. Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B and C below. Classes of Eligible Employees. The Plan requires coverage of all classes of employees of the Employer and any Affiliated Employer, except for union employees and nonresident aliens without U.S.-source income. The general rules of the Plan exclude employees in those two groups, but if you want employees in one or both categories to be eligible for your Plan, check the appropriate space below. The following employees will be eligible to participate in the Plan: _____ Members of the following collective bargaining unit(s) (give names of unions): _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _____ Nonresident aliens with no U.S.-source income Age Requirement (check and complete one): _____ No minimum age required for participation _____ Employees must reach age __ (not over 21) to participate Service Requirements. A 6-month Eligibility Period is a 6-month period beginning either on an employee's first day of work with the Employer or on the date 6 months following the employee's first day of work, and anniversaries of those dates. A 12-month Eligibility Period is the 12- month period beginning on an employee's first day of work with the Employer, and anniversaries of that date. You may also select another Eligibility Period consisting of a number of months of your choice and each successive period of that number of months. To become eligible, an employee must complete (choose one): _____ a. No minimum service required. Skip to (5) below. _____ b. One 6-month Eligibility Period _____ c. One ____- month Eligibility Period (must be less than 12) _____ d. One 12-month Eligibility Period _____ e. Two 12-month Eligibility Periods (may not be chosen if you adopt a vesting schedule other than the first choice under item 8.A, which provides for 100% full and immediate vesting). If the Employer acquires a business, will the Eligibility Period for employees of the acquired business be the period selected in (1) above, beginning on the first day of work for the acquired business? _____ Yes _____ No a. To receive credit for a 6-month Eligibility Period, an employee must complete during it at least: _____ 500 Hours of Service _____ _____________ Hours of Service (under 500) b. Complete only if (1)(c) above is selected. To receive credit for the Eligibility Period selected in (1)(c) above, an employee must complete during it at least: _____ _____________ Hours of Service (under 1000) Note: If you adopt an Eligibility Period of less than 12 months, in any event, an employee will automatically receive credit for the Eligibility Period if the employee completes at least 1,000 Hours of Service during a 12 consecutive month period following the first day of work. c. To receive credit for a 12-month Eligibility Period, an employee must complete during it at least: _____ 1,000 Hours of Service _____ _____________ Hours of Service (under 1,000) Hours of Service will be credited to an employee by the following method (check one): _____ a. Actual hours for which an employee is paid _____ b. Any employee who has one actual paid hour in the following period will be credited with the number of Hours of Service indicated (check one): _____ Day (10 Hours of Service) _____ Week (45 Hours of Service) _____ Semi-monthly payroll period (95 Hours of Service) _____ Month (190 Hours of Service) Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing. Entry Dates. Each Employee in an eligible class who completes the age and service requirements specified above will begin to participate in the Plan on (check one): _____ The first day of the month in which he fulfills the requirements. _____ The first of the following dates occurring after he fulfills the requirements (or, if earlier, the first day of the first Plan Year that begins after the date he fulfills the requirements) (check one): _____ The first day of the month following the date he fulfills the requirements (monthly). _____ The first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly). _____ The first day of the first month and the seventh month in a Plan Year (semiannually). (For New Plans Only) Will all eligible Employees be required to meet the age and service requirements specified in B and C above? _____ Yes _____ No; all Employees on the Effective Date will be eligible as of the Effective Date, even if they have not met the age and service requirements. Compensation (Plan Section 2.8). Amount. Compensation for purposes of the Plan will be the amount of the following that is actually paid by your Business to an employee during the Plan Year (check one): _____ Form W-2 earnings as defined in Section 2.8 of the Plan. _____ Form W-2 earnings as defined in Section 2.8 of the Plan, plus any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. _____ All compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan. _____ All compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan, plus any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, and Code Section 457 deferred compensation plan, or contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. Measuring Period. Compensation will be based on the Plan Year. However, for an employee's initial year of participation in the Plan, Compensation shall be recognized as of: ______ the first day of the Plan Year. ______ the date the employee entered the Plan. Contributions (Plan Section 4.3). Employer Contributions - Amount. The Employer will contribute to the Plan for each Plan Year this Basic Contribution Percentage ____% (not more than 25%) of the Earnings of all Qualified Participants for the Plan Year. Employer Contributions - Allocations to Participants 1. Allocation to Qualified Participants. Any Employee who has met the eligibility requirements in item 3 of this Plan Agreement is a Qualified Participant unless, for reasons other than his death or Retirement, he is not an active Employee on the last day of the Plan Year, and he is not credited with more than 500 Hours of Service in the Plan Year. 2. Integration with Social Security. Contributions under paragraph B will be allocated to Qualified Participants in proportion to their Earnings, unless you check the following space to indicate that your Plan will be integrated with Social Security, as explained on page of the Qs & As. ____ The Plan will be integrated with Social Security, and the Base Contributi on Percentage will be ___% (not less than 3% unless you will perform annual top- heavy testing for your Plan). 3. Integration Level. (Complete only if you have elected in 5.B.2. to integrate your Plan with Social Security). The Integration Level will be (check one): ____ The Social Security Wage Base in effect at the beginning of the Plan Year. ____ __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year. ____ $__________ (not more than the Social Security Wage Base). Participant Contributions (Plan Section 4.3(e)). Will your Plan allow Participants to make after-tax contributions? Yes No Investments (Plan Sections 13.2 and 13.3). The Employer selects in part A below the Investment Products that will be available under the Plan (in addition to Policies selected under Plan Article 14, if any). All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. From the group of available Investment Products selected by the Employer, each Participant chooses the investments for his own Accounts unless the Employer elects differently in B below. Available Investment Products (Plan Section 13.2). The following investments will be available under the Plan (check one): Mutual Funds _____ The group of funds made available by Putnam, selected by the Employer and communicated to Participants in writing. A current list of the funds selected by the Employer from time to time shall be kept with the records of the Plan. The initial list of funds is as follows: _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ Other Investment Options ______ Putnam Fiduciary Trust Company GIC Fund ______ Other Investment Products (as defined in Section 2.28 of the Plan) If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam (or if the Employer makes no such selection, by execution of the Plan Agreement, the Employer shall affirmatively elect to have such amounts invested in the Putnam Money Market Fund) until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement with Putnam (or if none, the Putnam Money Market Fund) as an available Investment Product for that purpose. Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan. _____ The Employer will make all investment decisions with respect to all Employer contributions. _____ The Employer will make all investment decisions with respect to all employee contributions, including Participant Contributions and Rollover Contributions. Changes. Investment instructions may be changed (check one): _____ on any Valuation Date (daily) _____ on the first day of any month (monthly) _____ on the first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly) Employer Stock. (Skip this paragraph if you did not designate Employer Stock as an investment under the Service Agreement.) Voting. Section 13.8 of the Plan provides that Employer Stock held as an investment under the Plan will be voted in accordance with the Employer's instructions unless the Employer elects that Participants will direct the voting of Employer Stock to the extent described in Section 13.8. Check below only if Participants will direct the voting of Employer Stock. _____ Participants are hereby appointed named fiduciaries for the purpose of voting of Employer Stock in accordance with Section 13.8. (Note: To the extent a Participant fails to direct the voting of Employer Stock credited to his Account, the Trust shall not vote such Employer Stock. Unallocated shares of Employee Stock will be voted by the Trustee as directed by the Plan Administrator.) Tendering. Section 13.8 of the Plan provides that Employer Stock held as an investment under the Plan will be tendered in accordance with the Employer's instructions unless the Employer elects that Participants will direct the tendering of Employer Stock to the extent described in Section 13.8. Check below only if Participants will direct the tendering of Employer Stock. (Note: Unallocated shares of Employer Stock will be tendered in proportion to the percentage of allocated shares which are tendered.) _____ Participants are hereby appointed named fiduciaries for the purpose of the tendering of Employer Stock in accordance with Section 13.8. (Note: To the extent a Participant fails to direct the tendering of Employer Stock, the Trustee shall not tender such Employer Stock.) Voting of Non-Putnam Shares. Section 13.10 of the Plan provides that shares of registered investment companies held under the Plan other than Putnam mutual funds shall be voted in accordance with the Employer's instructions unless the Employer elects that Participants will direct the voting of such non-Putnam investment company shares to the extent described in Section 13.10. Check below only if Participants will direct the voting of such non-Putnam investment company shares: _____ Participants are hereby appointed named fiduciaries for the purpose of voting shares of registered investment companies other than Putnam mutual funds in accordance with Section 13.10. Note: Shares of non-Putnam investment companies for which the Trustee receives no voting instructions shall be voted in the same proportion as it votes such shares for which it has received instructions. Retirement Age. Normal Retirement Age (Plan Section 7.1). Normal retirement age will be _______ (not over age 65). Early Retirement (Plan Section 7.1). Check and complete the item below only if you want Participants to become fully vested upon fulfilling specified age and service requirements before reaching normal retirement age: _____ Early retirement will be permitted at age ____ with at least ________ Years of Service. Vesting (Plan Article 8). Time of Vesting. The provision checked below will determine a Participant's vested percentage in his Employer Contribution Account. _____ 100% vesting immediately upon participation in the Plan. If you check this option, skip the rest of this part 8. _____ Five-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 1 2 3 4 5 _____ Six- Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 2 3 4 5 6 _____ Seven-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 3 4 5 6 7 _____ Three-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-2 3 _____ Five-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-4 5 _____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule): Vested Percentage __% __% __% __% __% Years of Service ___ ___ ___ ___ ___ If you selected above "Other Schedule", specify in the space below the schedule that will apply after the Plan is top-heavy. The schedule you specify must be (i) the Six-Year Graded Schedule, or (ii) the Three-Year Cliff Schedule, or (iii) any other schedule that is at least as favorable to employees, at all years of service, as either the Six-Year Graded Schedule or the Three-Year Cliff Schedule The top-heavy vesting schedule will be: ____ the same "Other Schedule" selected above ____ Vested Percentage % % % % % Years of Service ___ ___ ___ ___ ___ Service for Vesting. Skip this part B if your Plan will include all of an employee's service in determining his Years of Service for vesting. Years of Service for vesting will exclude (check one or more): _____ Service before the Effective Date of the Plan, if this is a new plan, or service before the effective date of your existing plan, if this Plan replaces an existing plan _____ Service before the Plan Year in which an employee reached age 18 _____ Service for a business acquired by the Employer, before the date of acquisition Hours of Service for Vesting. The number of Hours of Service required for crediting a Year of Service for vesting will be (check one): _____ 1,000 Hours of Service _____ ___________________ Hours of Service (under 1,000) Year of Service Measuring Period for Vesting (Plan Section 2.54). The periods of 12 months used for measuring Years of Service will be (check one): _____ Plan Years _____ 12-month Eligibility Periods Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing. Loans (Plan Section 12.4). Will your Plan permit loans to employees from their Accounts? _____ Yes _____ No Automatic Distribution of Small Accounts (Plan Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment? _____ Yes _____ No Note: The time for distribution cannot be left to the discretion of the Employer or the Plan Administrator. If you check No above, small accounts will be distributable at the time selected by the Participant. Top-Heavy Minimum Contributions (Plan Section 15.3). For any Plan Year in which the Plan is top-heavy, you must provide for each Participant who is a non-key employee and who is employed on the last day of the Plan Year an allocation equal to 3% of his Earnings (or if less, the highest percentage allocated to any key employee). If you have adopted Putnam paired plans, for any Plan Year in which the Plan is top-heavy, the top-heavy minimum contribution will be provided under this Plan. Skip paragraphs A and B below if you have Putnam paired plans or if you do not maintain any other qualified plan in addition to this Plan. If you maintain another qualified plan in addition to this Plan, specify below whether a non-key employee who participates in both plans will receive a top-heavy minimum contribution (or benefit) in this Plan or the other plan (check one): The top-heavy minimum contribution (or benefit) for non-key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in: _____ This Plan (Check this if the other plan is another Putnam prototype plan.) _____ The plan named here: _________________________________ (Skip this paragraph if you do not maintain a defined benefit plan.) If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 15.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 15.4. Specify your election by completing the statement below: The Employer will provide an increased (specify contribution or benefit) __________________________________ in its (specify defined contribution or defined benefit) ______________________ plan as permitted under Plan Section 15.4. Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant. The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below: If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one): _____ The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan. _____ The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below. _________________________________________________________________ _______ _________________________________________________________________ _______ B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below: _________________________________________________________________ _______ _________________________________________________________________ _______ Note: Your description under A or B above cannot be left to discretion and changed from year to year. If you want to amend it from year to year, you must execute a new plan agreement. If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio: Interest rate: %______________________________________ Mortality table: ________________________________________ Administration. Plan Administrator (Plan Section 16.1). You may appoint a person or a committee to serve as Plan Administrator. You may remove and replace anyone you have appointed, and anyone you have appointed may resign, without the need to amend this Plan Agreement, provided that you notify Participants in writing of any such change. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator. The initial Plan Administrator will be (check one): _____ This person: _______________________________ _____ A committee composed of these people: _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ Recordkeeper (Plan Section 16.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and you. The initial Recordkeeper will be: _______________________________________________________ ___ Name _______________________________________________________ ___ Address Reliance on Opinion Letter. If you ever maintained or you later adopt any plan (including a welfare benefit fund, as defined in Section 419(e) of the Code, which provides post-retirement medical benefits allocated to separate accounts for key employees, as defined in Section 419A(d)(3) of the Code; or an individual medical account, as defined in Section 415(l)(2) of the Code) in addition to this plan, you may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. If you maintain or adopt multiple plans, in order to obtain reliance with respect to plan qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties. The Employer may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this plan is qualified under Section 401 of the Code unless the terms of the plan, as herein adopted or amended, that pertain to the requirements of Section 401(a)(4), 401(a)(5), 401(a)(17), 401(1), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986 or later laws, (a) are made effective retroactively to the first day of the first Year beginning after December 31, 1988 (or such later date on which these requirements first become effective with respect to this plan); or (b) are made effective no later than the first day on which the Employer is no longer entitled, under regulations, to rely on a reasonable, good faith interpretation of these requirements, and the prior provisions of the plan constitute such an interpretation. Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #002 may be used only in conjunction with Putnam's basic plan document #05. * * * * * EMPLOYER'S ADOPTION OF PUTNAM MONEY PURCHASE PENSION PLAN The Employer named below hereby adopts a PUTNAM MONEY PURCHASE PENSION PLAN, and appoints __________________ to serve as Trustee of the Plan. (Note: you may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission.) The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Money Purchase Pension Plan only upon Putnam's acceptance of this Plan Agreement. Employer signature(s) to adopt Plan: Date of signature: ____________________________________________________ __________________________ ____________________________________________________ __________________________ Please print name(s) of authorized person(s) signing above: ____________________________________________________ Telephone:________________ ____________________________________________________ Telephone:________________ A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective. INVESTMENT DEALER INFORMATION Firm: _________________________________________________________________ ___________ Branch: _________________________________________________________________ ___________ Address: _________________________________________________________________ ___________ Registered Representative: _________________________________________ Name _________________________________________ Telephone * * * * * ACCEPTANCE OF TRUSTEE The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above. A. Putnam Fiduciary Trust Company, Trustee By: _________________________________________________________________ ______________ Complete Part B only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. Note: Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Prototype Money Purchase Pension Plan. B. _________________________________, Trustee By: ______________________________ ___ Trustee's Tax I.D. Number _______________ (Trustee) _________________________________________________________________ ____________________ Address of Trustee Person for Putnam to Contact: ________________________________ Telephone: _______________ Complete Part C only if insurance Policies will be purchased under Article 14 of the Plan (in addition to Putnam Investment Products). C. Appointment and Acceptance of Insurance Trustee 1. Appointment to: _________________________________________________________________ ____________________ Name of Insurance Trustee You are hereby designated as Insurance Trustee for Policies to be held in accordance with the terms and conditions of this Plan and Trust. Employer signature to appoint Insurance Trustee: By:______________________________________________________________ ____________________ (Authorized Signature) 2. Acceptance as Insurance Trustee is agreed to in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer as set forth above. By:_____________________________________ Trustee's Tax I.D. Number _________________ _________________________________________________________________ ____________________ Address of Insurance Trustee Person for Putnam to Contact: ________________________________ Telephone: _______________ * * * * * ACCEPTANCE BY PUTNAM Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #05. Putnam Mutual Funds Corp. By: ______________________________ PUTNAM BASIC PROFIT SHARING AND 401(K) PLAN PLAN AGREEMENT #003 This is the Plan Agreement for a Putnam prototype profit sharing plan with optional Section 401(k) provisions. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. You can get further information to help you complete the Plan Agreement from your investment dealer, or from Putnam at: Putnam Defined Contribution Plans Attn: L-3 Plan Administration Putnam DCPA, Location 34 P.O. Box 9740 Providence, RI 02940-9740 Phone: 1-800-752-5766 * * * * * By executing this Plan Agreement, the Employer establishes a profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #05, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Basic Profit Sharing and 401(k) Plan. * * * * * All Employers complete items 1-11 below. Employers who wish to adopt Section 401(k) provisions also complete item 12. Business Information. The Employer adopting this Plan is: Business Name: _____________________________________________________ Business Address: _______________________________ _______________________________ _______________________________ Person for Putnam to Contact: ______________________________________________ Phone: __________________________ Federal Tax Identification Number: __________________________ Form of Organization (check one): _____ Sole proprietorship _____ Corporation _____ Other _____ Partnership _____ S Corporation Plan Name:_______________________________ Plan Number: 00 (complete) Taxable Year of Business: _____ Calendar Year _____ Fiscal year ending on _______________________________________________ Plan Information. Plan Year. Check one: _____ The Plan Year will be the same as the Taxable Year of the Business shown in 1.F. above. If the Taxable Year of the Business changes, the Plan Year will change accordingly. _____ The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month). The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan. Effective Date of Adoption of Plan. Are you adopting this Plan to replace an existing plan? _____ Yes _____ No If you answered Yes in 2.B. above, please complete the following: ______________________________________________________________ Name of the plan you are replacing ______________________________________________________________ Original Effective Date of the plan you are replacing ______________________________________________________________ Effective Date of amendment If you answered No in 2.B. above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began). The Effective Date is: ______________________________________ month/day/year Identifying Highly Compensated Employees. Check One: _____ The Plan will use the regular method under Plan Section 2.60(a) for identifying Highly Compensated Employees. If your Plan Year is the calendar year, do you wish to make the regular method's "calendar year election" for identifying your Highly Compensated Employees? _____ Yes _____ No _____ The Plan will use the simplified method under Plan Section 2.60(b) for identifying Highly Compensated Employees. Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B and C below. Classes of Eligible Employees. The Plan requires coverage of all classes of employees of the Employer and any Affiliated Employer, except for union employees and nonresident aliens without U.S.-source income. The general rules of the Plan exclude employees in those two groups, but if you want employees in one or both categories to be eligible for your Plan, check the appropriate space below. The following employees will be eligible to participate in the Plan: _____ Members of the following collective bargaining unit(s) (give names of unions): _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _____ Nonresident aliens with no U.S.-source income Age Requirement (check and complete one): _____ No minimum age required for participation _____ Employees must reach age ___ (not over 21) to participate Service Requirements. A 6-month Eligibility Period is a 6-month period beginning either on an employee's first day of work with the Employer or on the date 6 months following the employee's first day of work, and anniversaries of those dates. A 12-month Eligibility Period is the 12- month period beginning on an employee's first day of work with the Employer, and anniversaries of that date. You may also select another Eligibility Period consisting of a number of months of your choice and each successive period of that number of months. To become eligible, an employee must complete (choose one): _____ a. No minimum service required. Skip to (5) below. _____ b. One 6-month Eligibility Period _____ c. One __-month Eligibility Period (must be less than 12) _____ d. One 12-month Eligibility Period _____ e. Two 12-month Eligibility Periods (may not be chosen if you adopt either the Section 401(k) provisions under item 12 or a vesting schedule other than the first choice under item 8.A(1), which provides for 100% full and immediate vesting). If the Employer acquires a business, will the Eligibility Period for employees of the acquired business be the period selected in (1) above, beginning on the first day of work for the acquired business? _____ Yes _____ No a. To receive credit for a 6-month Eligibility Period, an employee must complete during it at least: _____ 500 Hours of Service _____ _____________ Hours of Service (must be 1 hour or more) (under 500) b. Complete only if (1)(c) above is selected. To receive credit for the Eligibility Period selected in (1)(c), an employee must complete during it at least: _____ _____________ Hours of Service (under 1000) Note: If you adopt an Eligibility Period of less than 12 months, in any event, an employee will automatically receive credit for the Eligibility Period if the employee completes at least 1,000 Hours of Service during a 12 consecutive month period following the first day of work. c. To receive credit for a 12-month Eligibility Period, an employee must complete it during at least: _____ 1,000 Hours of Service _____ _____________ Hours of Service (must be 1 hour or more) (under 1,000) Hours of Service will be credited to an employee by the following method (check one): _____ a. Actual hours for which an employee is paid _____ b. Any employee who has one actual paid hour in the following period will be credited with the number of Hours of Service indicated (check one): _____ Day (10 Hours of Service) _____ Week (45 Hours of Service) _____ Semi-monthly payroll period (95 Hours of Service) _____ Month (190 Hours of Service) Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing. Entry Dates. Each Employee in an eligible class who completes the age and service requirements specified above will begin to participate in the Plan on (check one): _____ The first day of the month in which he fulfills the requirements. _____ The first of the following dates occurring after he fulfills the requirements (check one): _____ The first day of the month following the date he fulfills the requirements (monthly). _____ The first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly). _____ The first day of the first month and the seventh month in a Plan Year (semiannually). (For New Plans Only) Will all eligible Employees be required to meet the age and service requirements specified in B and C above? _____ Yes _____ No; all Employees on the Effective Date will be eligible as of the Effective Date, even if they have not met the age and service requirements. Compensation (Plan Section 2.8). Amount. Compensation for purposes of the Plan will be the amount of the following that is actually paid by your Business to an employee during the Plan Year (check one): _____ Form W-2 earnings as defined in Section 2.8 of the Plan. _____ Form W-2 earnings as defined in Section 2.8 of the Plan, plus any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, or contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. _____ All compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan. _____ All compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan, plus any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, or contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. Measuring Period. Compensation will be based on the Plan Year. However, for an employee's initial year of Participation in the Plan, Compensation shall be recognized as of: _____ The first day of the Plan Year. _____ The date the Participant entered the Plan. Contributions (Plan Sections 4.1 and 4.2). Employer Contributions - Profit Limitation. Will Employer contributions to the Plan be limited to the current and accumulated profits of your business? (check one): _____ Yes _____ No If you will make contributions only under the Section 401(k) provisions in item 12 of this Plan Agreement, skip the rest of this part 5. Employer Contributions - Amount. (1) The Employer will contribute to the Plan for each Plan Year (check one): _____ An amount chosen by the Employer from year to year ______ ____% of the Earnings of all Qualified Participants for the Plan Year ______ $____ for each Qualified Participant (2) Will Forfeitures for a Plan Year be applied to reduce the amount of the contribution otherwise required? _____ Yes _____ No (3) Will Forfeitures that are not applied to reduce the amount of contribution otherwise required for the Plan Year be applied to reduce the required Employer Matching Contribution for the Plan Year described in 12.B.(1)? _____ Yes _____ No If you check No to both (2) and (3) above, Forfeitures will be allocated as though they were additional Profit Sharing Contributions. Employer Contributions - Allocations to Participants 1. Allocation to Qualified Participants. Any Employee who has met the eligibility requirements in item 3 of this Plan Agreement is a Qualified Participant unless, for reasons other than his death or retirement, he is not an active Employee on the last day of the Plan Year, and he is not credited with more than 500 Hours of Service in the Plan Year. How will contributions be allocated? _______ Pro rata (percentage based on compensation) _______ Uniform Dollar amount _______ Integrated With Social Security (complete (2) and (3) below) 2. Integration with Social Security. (Complete only if you have elected in 5.C.1. to integrate your Plan with Social Security.) Contributions under paragraph B will be allocated to Qualified Participants as you check below: _____ Contributions will be allocated according to the Top-Heavy Integration Formula in Section 4.2(c)(1) of the Basic Plan Document in every Plan Year, whether or not the Plan is top-heavy. _____ Contributions will be allocated according to the Top-Heavy Integration Formula in Section 4.2(c)(1) of the Basic Plan Document only in Plan Years in which the Plan is top-heavy. In all other Plan Years, contributions will be allocated according to the Non-Top-Heavy Integration Formula in Section 4.2(c)(2) of the Basic Plan Document. 3. Integration Level. (Complete only if you have elected in 5.C.1 to integrate your Plan with Social Security.) The Integration Level will be (check one): ____ The Social Security Wage Base in effect at the beginning of the Plan Year. ____ __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year. ____ $__________ (not more than the Social Security Wage Base). Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living. D. Participant Contributions (Plan Section 4.2(e)). Will your Plan allow Participants to make after-tax contributions? _____ Yes _____ No Investments (Plan Sections 13.2 and 13.3). The Employer selects in part A below the Investment Products that will be available under the Plan. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. From the group of available Investment Products selected by the Employer, each Participant chooses the investments for his own Accounts unless the Employer elects differently in B below. Available Investment Products (Plan Section 13.2). The following investments will be available under the Plan (check one): Mutual Funds _____ The group of funds made available by Putnam, selected by the Employer and communicated to Participants in writing. A current list of the funds selected by the Employer from time to time shall be kept with the records of the Plan. The initial list of funds is as follows (up to six (6) funds may be selected): _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ Other Investment Options ______ Putnam Stable Value Fund ______ Existing Guaranteed Investment Contract ("GIC") ______________________________ Note: You may include an existing GIC option above, provided that the entire balance of the contract(s) mature within three years of the date your assets are transferred to Putnam. In the event that there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam (or if the Employer makes no such selection, by execution of the Plan Agreement, the Employer shall affirmatively elect to have such amounts invested in the Putnam Money Market Fund) until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement with Putnam (or if none, the Putnam Money Market Fund) as an available Investment Product for that purpose. Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.) _____ The Employer will make all investment decisions with respect to all employee contributions including Elective Deferrals, Participant Contributions, Deductible Employee Contributions and Rollover Contributions. _____ The Employer will make investment decisions with respect to all Employer Contributions, including Profit Sharing Contributions, Employer Matching Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions. _____ The Employer will make investment decisions with respect to Employer Matching Contributions and Qualified Matching Contributions made pursuant to Sections 12.B and 13.A of this Plan Agreement. _____ The Employer will make investment decisions with respect to Qualified Nonelective Contributions made pursuant to Section 13.B of this Plan Agreement. _____ The Emplo yer will make inves tment decis ions with respe ct to Profi t Shari ng Contr ibuti ons made pursu ant to Secti on 5.B. of this Plan Agree ment. Changes. Investment instructions may be changed (check one): _____ on any Valuation Date (daily) _____ on the first day of any month. _____ on the first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly) Voting of Non-Putnam Shares. Section 13.10 of the Plan provides that shares of registered investment companies held under the Plan other than Putnam mutual funds shall be voted in accordance with the Employer's instructions unless the Employer elects that Participants will direct the voting of such non-Putnam investment company shares to the extent described in Section 13.10. Check below only if Participants will direct the voting of such non-Putnam investment company shares: _____ Participants are hereby appointed named fiduciaries for the purpose of voting shares of registered investment companies other than Putnam mutual funds in accordance with Section 13.10. Note: Shares of non-Putnam investment companies for which the Trustee receives no voting instructions shall be voted in the same proportion as it votes such shares for which it has received instructions. Distributions and Withdrawals. Retirement Distributions. Normal Retirement Age (Plan Section 7.1). Normal retirement age will be _______ (not over age 65). Early Retirement (Plan Section 7.1). Check and complete the item below only if you want Participants to become fully vested upon fulfilling specified age and service requirements before reaching normal retirement age: _____ Early retirement will be permitted at age ____ with at least ________ Years of Service. Annuities (Plan Section 9.3). Will your Plan permit a Participant to select a life annuity form of distribution? You must check Yes if this Plan replaces an existing plan that permits distributions in a life annuity form: _____ Yes _____ No Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions from Employer Contribution Accounts? You must check Yes if this Plan replaces an existing plan that permits hardship distributions of Profit Sharing Contributions: _____ Yes _____ No Withdrawals after Age 59 1/2 (Plan Section 12.3). Will your Plan permit employees over age 59 1/2 to withdraw amounts upon request? You must check Yes if this Plan replaces an existing plan that permits withdrawals after age 59 1/2: _____ Yes _____ No Loans (Plan Section 12.4). Will your Plan permit loans under the Putnam Loan Program to employees from their Accounts? (Note: no other loan program may be used.) _____ Yes _____ No Automatic Distribution of Small Accounts (Plan Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment? _____ Yes _____ No Note: If you check No above, the time for distribution cannot be left to the discretion of the Employer or the Plan Administrator. Small accounts will be distributable at the time selected by the Participant. Vesting (Plan Article 8). Time of Vesting. (1) The provision checked below will determine a Participant's vested percentage in the Profit Sharing Contribution portion of his Employer Contribution Account: _____ 100% vesting immediately upon participation in the Plan. _____ Five-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 1 2 3 4 5 _____ Six-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 2 3 4 5 6 _____ Seven-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 3 4 5 6 7 _____ Three-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-2 3 _____ Five-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-4 5 _____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule): Vested Percentage __% __% __% __% __% Years of Service ___ ___ ___ ___ ___ If you selected above an "Other Schedule", specify in the space below the schedule that will apply after the Plan is top-heavy. The schedule you specify must be (i) the Six-Year Graded Schedule, or (ii) the Three-year Cliff Schedule, or (iii) any other schedule that is at least as favorable to employees, at all years of service, as either the Six-Year Schedule or the Three-Year Cliff Schedule. The top-heavy vesting schedule will be: _____ the same "Other Schedule" selected above _____ Veste d Perce ntage __% __% __% __% __% Years of Servi ce ___ ___ ___ ___ ___ (2) If you adopt the Section 401(k) provisions in item 12 and will make Employer Matching Contributions, check the provision below that will determine a Participant's vested percentage in his Employer Matching Contribution Account (check one): _____ 100% vesting immediately upon participation in the Plan. _____ Five-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 1 2 3 4 5 _____ Six-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 2 3 4 5 6 _____ Seven-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 3 4 5 6 7 _____ Three-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-2 3 _____ Five-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-4 5 _____ Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five- Year Cliff Schedule): Vested Percentage __% __% __% __% __% Years of Service ___ ___ ___ ___ ___ If you selected "Other Schedule" above, the vesting schedule that will apply to the Employer Matching Contribution Account after the Plan becomes top-heavy will be the top-heavy vesting schedule applicable to the Employer Contribution Account, as specified in Section 8.A.(1). Service for Vesting. Skip this part B if your Plan will include all of an employee's service in determining his Years of Service for vesting. Years of Service for vesting will exclude (check one or more): _____ Service before the Effective Date of the Plan, if this is a new plan, or service before the effective date of your existing plan, if this Plan replaces an existing plan _____ Service before the Plan Year in which an employee reached age 18 _____ Service for a business acquired by the Employer, before the date of acquisition Hours of Service for Vesting. The number of Hours of Service required for crediting a Year of Service for vesting will be (check one): _____ 1,000 Hours of Service _____ ___________________ Hours of Service (under 1,000) Year of Service Measuring Period for Vesting (Plan Section 2.54). The periods of 12 months used for measuring Years of Service will be (check one): _____ Plan Years _____ 12-month Eligibility Periods Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing. Top-Heavy Minimum Contributions (Plan Section 15.3). For any Plan Year in which the Plan is top-heavy, you must provide for each Participant who is a non-key employee and who is employed on the last day of the Plan Year an allocation equal to 3% of his Earnings (or if less, the highest percentage allocated to any key employee). Neither Elective Deferrals, Employer Matching Contributions nor Qualified Matching Contributions for a non-key employee may be taken into account for purposes of this requirement. If you have adopted Putnam paired plans, for any Plan Year in which the Plan is top-heavy, the top-heavy minimum contribution will be provided under the Putnam Money Purchase Pension Plan. Skip paragraphs A and B below if you have Putnam paired plans or if you do not maintain any other qualified plan in addition to this Plan. If you maintain another qualified plan in addition to this Plan, specify below whether a non-key employee who participates in both plans will receive a top-heavy minimum contribution (or benefit) in this Plan or the other plan (check one): The top-heavy minimum contribution (or benefit) for non-key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in: _____ This Plan _____ The plan named here: __________________________________ (Skip this paragraph if you do not maintain a defined benefit plan.) If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 15.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 15.4. Specify your election by completing the statement below: The Employer will provide an increased (specify contribution or benefit) __________________________________ in its (specify defined contribution or defined benefit) ______________________ plan as required under Plan Section 15.4. Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant. The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below: If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one): _____ The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan. _____ The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below. _________________________________________________________________ _______ _________________________________________________________________ _______ B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below: _________________________________________________________________ _______ _________________________________________________________________ _______ Note: Your description under A or B cannot be left to discretion and changed from year to year. If you want to amend it from year to year, you must execute a new plan agreement. If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio: Interest rate: %__________________________ Mortality Table: __________________________ Administration. Plan Administrator (Plan Section 16.1). You may appoint a person or a committee to serve as Plan Administrator. You may remove and replace anyone you have appointed, and anyone you have appointed may resign, without the need to amend this Plan Agreement, provided that you notify Participants in writing of any such change. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator. The initial Plan Administrator will be (check one): _____ This person: _______________________________ _____ A committee composed of these people: _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ Recordkeeper (Plan Section 16.4). You must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and you. _______________________________________________________ ___ Name _______________________________________________________ ___ Address Complete item 12 below if your Plan will allow employees to elect pre-tax contributions under Section 401(k) of the Code. Section 401(k) Plan Provisions (Plan Article 5). Elective Deferrals (Plan Section 5.2). A Participant may make Elective Deferrals for each year in an amount not to exceed (check one): _____ (a) _______% of his Earnings _____ (b) $______ (specify dollar amount) _____ (c) _______% of his Earnings not to exceed $_______ (specify dollar amount) Note: Elective Deferrals may not exceed the annual dollar limit under Section 402(g) of the Internal Revenue Code. A Participant may begin to make Elective Deferrals, or change the amount of his Elective Deferrals, as of the following dates (check one): _____ First business day of each month (monthly). _____ First business day of the first, fourth, seventh and tenth months of the Plan Year (quarterly). _____ First business day of the first and seventh months of the Plan Year (semiannually). _____ First business day of the Plan Year only (annually). May Participants make Elective Deferrals of bonuses? _____ Yes _____ No Employer Matching Contributions of Employee Elective Deferrals (Plan Section 5.8). Skip this part B if you will not make Employer Matching Contributions. Employer Matching Contributions are subject to the vesting schedule elected in item 8 of this Plan Agreement, and can be withdrawn during employment in the event of financial hardship (as defined in Section 12.2 of the Plan) if you so elect in part F below. The Employer will contribute and will allocate to each Participant's Employer Matching Account an amount equal to: (Check the provision(s) desired, and fill in the % blank(s) in each provision you check. If you wish to determine the amount of Employer Matching Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check. Also write "V" for variable in the % blank for Earnings.) _____ ___% of Elective Deferrals _____ ___% of Elective Deferrals that do not exceed ___% of Earnings _____ ___% of Participant Contributions _____ In applying the above election, Elective Deferrals shall not exceed $______. (2) Will forfeited Employer Matching Contributions be applied to reduce the total contribution specified in B(1) above? _____ Yes _____ No (3) Will forfeited Employer Matching Contributions that are not applied to reduce required Employer Matching Contributions specified in B(1) above be applied to reduce required Employer Contributions for the Plan Year described in 5.B? _____ Yes _____ No If you check No to both (2) and (3) above, forfeited Employer Matching Contributions will be allocated as though they were additional Employer Matching Contributions. Hardship Distributions from 401(k) Accounts (Plan Sections 12.2 and 5.14). (1) Will your Plan permit hardship distributions from Elective Deferral Accounts? _____ Yes _____ No (2) If your Plan has Employer Matching Contributions, will it permit hardship distributions from Employer Matching Accounts? You must check Yes if this Plan replaces an existing plan that permits hardship distributions of Employer Matching Contributions. _____ Yes _____ No QNEC and QMACs. Note: Qualified Matching Contributions are always fully vested and cannot be distributed from the Plan before a Participant reaches age 59 1/2 or leaves employment. They will be used to the extent needed, to help the Plan pass the ADP test explained on page __ of the Qs & As. Qualified Matching Contributions (Plan Section 2.62). Skip this part A if you will not make Qualified Matching Contributions. Qualified Matching Contributions will be made with respect to (check one): _____ Elective Deferrals by all Participants _____ Elective Deferrals only by Non-Highly Compensated Participants The amount of Qualified Matching Contributions made with respect to a Participant will be: (Check the provision desired and fill in the % blank(s) in the provision you check. If you wish to determine the amount of Qualified Matching Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check. Also write "V" for variable in the % blank for Earnings.) _____ ___% of his Elective Deferrals _____ ___% of his Elective Deferrals that do not exceed ___% of his Earnings _____ ___% of Participant Contributions _____ In applying the above election, Elective Deferrals shall not exceed $________. Qualified Nonelective Contributions (Plan Section 2.64). Qualified Nonelective Contributions will be made on behalf of (check one): _____ All Participants _____ Only Participants who are not Highly Compensated Employees The amount of Qualified Nonelective Contributions for a Plan Year will be (check one): (If you wish to determine the amount of Qualified Nonelective Contributions from year to year instead of specifying a fixed percentage, write "V" for variable in the % blank at the beginning of each provision you check.) _____ ___% (not over 15%) of the Earnings of Participants on whose behalf Qualified Nonelective Contributions are made _____ An amount determined by the Employer from year to year, to be shared in proportion to their Earnings by Participants on whose behalf Qualified Nonelective Contributions are made Note: Qualified Nonelective Contributions will be used, to the extent needed, to help the Plan pass the ADP test, explained on page __ of the Qs & As. ACP Test. Every plan that has after-tax Participant Contributions, Employer Matching Contributions or Qualified Matching Contributions must pass an annual test called the ACP test, which is explained on page __ of the Qs & As. Elective Deferrals and Qualified Nonelective Contributions will be used to help the Plan pass the ACP test, to the extent needed. Reliance on Opinion Letter. If you ever maintained or you later adopt any plan (including a welfare benefit fund, as defined in Section 419(e) of the Code, which provides post-retirement medical benefits allocated to separate accounts for key employees, as defined in Section 419A(d)(3) of the Code; or an individual medical account, as defined in Section 415(l)(2) of the Code) in addition to this plan, you may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. If you maintain or adopt multiple plans, in order to obtain reliance with respect to plan qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties. The Employer may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this plan is qualified under Section 401 of the Code unless the terms of the plan, as herein adopted or amended, that pertain to the requirements of Sections 401(a)(4), 401(a)(5), 401(a)(17), 401(l), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986 or later laws, (a) are made effective retroactively to the first day of the first Year beginning after December 31, 1988 (or such later date on which these requirements first become effective with respect to this plan); or (b) are made effective no later than the first day on which the Employer is no longer entitled, under regulations, to rely on a reasonable, good faith interpretation of these requirements, and the prior provisions of the plan constitute such an interpretation. Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #003 may be used only in conjunction with Putnam's basic plan document #05. * * * * * EMPLOYER'S ADOPTION OF PUTNAM BASIC PROFIT SHARING AND 401(k) PLAN The Employer named below hereby adopts a PUTNAM BASIC PROFIT SHARING AND 401(k) PLAN, and appoints Putnam Fiduciary Trust Company to serve as Trustee of the Plan. The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Basic Profit Sharing and 401(k) Plan only upon Putnam's acceptance of this Plan Agreement. Employer signature(s) to adopt Plan: Date of signature: ____________________________________________________ __________________________ ____________________________________________________ __________________________ Please print name(s) of authorized person(s) signing above: ____________________________________________________ Telephone:________________ ____________________________________________________ Telephone:________________ A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective. INVESTMENT DEALER INFORMATION Firm: _________________________________________________________________ ___________ Branch: _________________________________________________________________ ___________ Address: _________________________________________________________________ ___________ Registered Representative: _________________________________________ Name _________________________________________ Telephone * * * * * ACCEPTANCE OF TRUSTEE The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above. A. Putnam Fiduciary Trust Company, Trustee By: _________________________________________________________________ ______________ ACCEPTANCE BY PUTNAM Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #05. Putnam Mutual Funds Corp. By: ______________________________ PUTNAM BASIC PLAN DOCUMENT #06 PUTNAM BASIC PLAN DOCUMENT #06 TABLE OF CONTENTS PAGE ARTICLE 1. INTRODUCTION 1 ARTICLE 2. DEFINITIONS 2 2.1. Account 2 2.2. Affiliated Employer 2 2.3. Authorized Leave of Absence 2 2.4. Beneficiary 3 2.5. CODA 3 2.6. Code 3 2.7. Compensation 3 2.8. Date of Employment 3 2.9. Deductible Employee Contribution Account 3 2.10. Deferral Agreement 3 2.11. Disabled 3 2.12. Earned Income 4 2.13. Earnings 4 2.14. Effective Date 4 2.15. Elective Deferral 4 2.16. Elective Deferral Account 4 2.17. Eligibility Period 5 2.18. Employee 5 2.19. Employer 5 2.20. Employer Matching Account 5 2.21. Employer Matching Contribution 5 2.22. Employer Profit Sharing Account 5 2.23. Employer Profit Sharing Contribution 6 2.24. Employer Stock 6 2.25. ERISA 6 2.26. Forfeiture 6 2.27. Highly Compensated Employee 6 2.28. Hour of Service 7 2.29. Investment Company 9 2.30. Investment Company Shares 9 2.31. Investment Products 9 2.32. Leased Employee 9 2.33. Non-Highly Compensated Employee 9 2.34. One-Year Eligibility Break 10 2.35. One-Year Vesting Break 10 2.36. Owner-Employee 10 2.37. Participant 10 2.38. Participant Contribution Account 10 2.39. Plan 10 2.40. Plan Administrator 10 2.41. Plan Agreement 10 2.42. Plan Year 10 2.43. Putnam 11 2.44. Qualified Domestic Relations Order 11 2.45. Qualified Matching Account 11 2.46. Qualified Matching Contribution 11 2.47. Qualified Nonelective Contribution 11 2.48. Qualified Nonelective Contribution Account 11 2.49. Qualified Participant 11 2.50. Recordkeeper 11 2.51. Retirement 11 2.52. Rollover Account 12 2.53. Self-Employed Individual 12 2.54. Service Agreement 12 2.55. Shareholder-Employee 12 2.56. Trust and Trust Fund 12 2.57. Trustee 12 2.58. Valuation Date 12 2.59. Year of Service 12 ARTICLE 3. PARTICIPATION 14 3.1. Initial Participation 14 3.2. Resumed Participation 14 3.3. Benefits for Owner-Employees 15 3.4. Changes in Classification 15 ARTICLE 4. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k) (CODA) 17 4.1. General Provisions Applicable to Contributions Under Both Articles 4 and 5 17 4.2. CODA Participation 18 4.3. Annual Limit on Elective Deferrals 18 4.4. Distribution of Certain Elective Deferrals 19 4.5. Satisfaction of ADP and ACP Tests 19 4.6. Actual Deferral Percentage Test Limit 20 4.7. Distribution of Excess Contributions 21 4.8. Employer Matching Contributions 22 4.9. Average Contribution Percentage Test Limit and Aggregate Limit 23 4.10. Distribution of Excess Aggregate Contributions 25 4.11. Qualified Nonelective Contributions; Qualified Matching Contributions 26 4.12. Restriction on Distributions 26 4.13. Forfeitures of Employer Matching Contributions 27 4.14. Special Effective Dates 27 ARTICLE 5. OTHER CONTRIBUTIONS 28 5.1. Employer Profit Sharing Contributions 28 5.2. Forfeitures of Employer Profit Sharing Contributions 28 5.3. Rollover Contributions 28 5.4. No After-Tax Participant Contributions or Deductible Employee Contributions 28 ARTICLE 6. LIMITATIONS ON ALLOCATIONS 29 6.1. No Additional Plan 29 6.2. Additional Master or Prototype Plan 30 6.3. Additional Non-Master or Non-Prototype Plan 31 6.4. Additional Defined Benefit Plan 31 6.5. Definitions 31 ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS 35 7.1. Retirement 35 7.2. Death 35 7.3. Other Termination of Employment 35 ARTICLE 8. VESTING 37 8.1. Vested Balance 37 8.2. Vesting of Accounts of Returned Former Employees 37 8.3. Forfeiture of Non-Vested Amounts 38 8.4. Special Rule in the Event of a Withdrawal 39 8.5. Vesting Election 39 ARTICLE 9. PAYMENT OF BENEFITS 40 9.1. Distribution of Accounts 40 9.2. Restriction on Immediate Distributions 40 9.3. Optional Forms of Distribution 41 9.4. Distribution Procedure 42 9.5. Lost Distributee 42 9.6. Direct Rollovers 43 9.7. Distributions Required by a Qualified Domestic Relations Order 43 ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS 45 10.1. Applicability 45 10.2. Qualified Joint and Survivor Annuity 46 10.3. Qualified Preretirement Survivor Annuity 46 10.4. Definitions 46 10.5. Notice Requirements 48 10.6. Transitional Rules 48 ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS 51 11.1. General Rules 51 11.2. Required Beginning Date 51 11.3. Limits on Distribution Periods 52 11.4. Determination of Amount to Be Distributed Each Year 53 11.5. Death Distribution Provisions 54 11.6. Transitional Rule 55 ARTICLE 12. WITHDRAWALS AND LOANS 57 12.1. Withdrawals from Participant Contribution Accounts 57 12.2. Withdrawals on Account of Hardship 57 12.3. Withdrawals After Reaching Age 59 1/2 58 12.4. Loans 59 12.5. Procedure; Amount Available 61 12.6. Protected Benefits 61 12.7. Restrictions Concerning Transferred Assets 61 ARTICLE 13. TRUST FUND AND INVESTMENTS 62 13.1. Establishment of Trust Fund 62 13.2. Management of Trust Fund 62 13.3. Investment Instructions 63 13.4. Valuation of the Trust Fund 64 13.5. Distributions on Investment Company Shares 65 13.6. Registration and Voting of Investment Company Shares 65 13.7. Investment Manager 65 13.8. Employer Stock 65 13.9. Insurance Contracts 68 13.10. Registration and Voting of Non-Putnam Investment Company Shares 69 ARTICLE 14. TOP-HEAVY PLANS 70 14.1. Superseding Effect 70 14.2. Definitions 70 14.3. Minimum Allocation 72 14.4. Adjustment of Fractions 73 14.5. Minimum Vesting Schedules 73 ARTICLE 15. ADMINISTRATION OF THE PLAN 75 15.1. Plan Administrator 75 15.2. Claims Procedure 75 15.3. Employer's Responsibilities 76 15.4. Recordkeeper 76 15.5. Prototype Plan 77 ARTICLE 16. TRUSTEE 78 16.1. Powers and Duties of the Trustee 78 16.2. Limitation of Responsibilities 79 16.3. Fees and Expenses 79 16.4. Reliance on Employer 80 16.5. Action Without Instructions 80 16.6. Advice of Counsel 80 16.7. Accounts 80 16.8. Access to Records 81 16.9. Successors 81 16.10. Persons Dealing with Trustee 81 16.11. Resignation and Removal; Procedure 81 16.12. Action of Trustee Following Resignation or Removal 82 16.13. Effect of Resignation or Removal 82 16.14. Fiscal Year of Trust 82 16.15. Limitation of Liability 82 16.16. Indemnification 82 ARTICLE 17. AMENDMENT 83 17.1. General 83 17.2. Delegation of Amendment Power 84 ARTICLE 18. TERMINATION OF THE PLAN AND TRUST 85 18.1. General 85 18.2. Events of Termination 85 18.3. Effect of Termination 85 18.4. Approval of Plan 86 ARTICLE 19. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS 87 19.1. General 87 19.2. Amounts Transferred 87 19.3. Merger or Consolidation 87 ARTICLE 20. MISCELLANEOUS 88 20.1. Notice of Plan 88 20.2. No Employment Rights 88 20.3. Distributions Exclusively From Plan 88 20.4. No Alienation 88 20.5. Provision of Information 88 20.6. No Prohibited Transactions 88 20.7. Governing Law 88 20.8. Gender 88 PUTNAM BASIC PLAN DOCUMENT #06 ARTICLE INTRODUCTION By executing the Plan Agreement, the Employer has established a retirement plan (the "Plan") according to the terms and conditions of the Plan Agreement and this Putnam Basic Plan Document #06, for the purpose of providing a retirement fund for the benefit of Participants and Beneficiaries. A Plan established hereunder pursuant to a Plan Agreement is intended to qualify under section 401(a) and section 401(k) of the Code. ARTICLE DEFINITIONS The terms defined in Sections 2.1 through 2.59 appear generally throughout the document. Article 4 contain additional definitions of terms related to the cash or deferred arrangement (CODA) contained in this Plan and Section 10.4 contains additional definitions related to distributions from the Plan. Articles 6 and 11 contain additional definitions of terms used only in those Articles. 2.1. Account means any of, and Accounts means all of, a Participant's Elective Deferral Account, Employer Matching Account, Qualified Nonelective Contribution Account, Qualified Matching Account, Employer Profit Sharing Account, Participant Contribution Account, Rollover Account, and Deductible Employee Contribution Account. 2.2. Affiliated Employer, for purposes of the Plan other than Article 6, means the Employer and a trade or business, whether or not incorporated, which is any of the following: (a) A member of a group of controlled corporations (within the meaning of Section 414(b) of the Code) which includes the Employer; or (b) A trade or business under common control (within the meaning of Section 414(c) of the Code) with the Employer; or (c) A member of an affiliated service group (within the meaning of Section 414(m) of the Code) which includes the Employer; or (d) An entity otherwise required to be aggregated with the Employer pursuant to Section 414(o) of the Code. In determining an Employee's service for vesting and for eligibility to participate in the Plan, all employment with Affiliated Employers will be treated as employment by the Employer. For purposes of Article 6 only, the definitions in paragraphs (a) and (b) of this Section 2.2 shall be modified by adding at the conclusion of the parenthetical phrase in each such paragraph the words "as modified by Section 415(h) of the Code." 2. Authorized Leave of Absence means a leave of absence from employment granted in writing by an Affiliated Employer. Authorized Leave of Absence shall be granted on account of military service for any period during which an Employee's right to re-employment is guaranteed by law, and for such other reasons and periods as an Affiliated Employer shall consider proper, provided that Employees in similar situations shall be similarly treated. 2. Beneficiary means a person entitled to receive benefits under the Plan upon the death of a Participant, in accordance with Section 7.2 and Articles 10 and 11. 2. CODA means the cash or deferred arrangement that meets the requirements of Section 401(k) of the Code, as described in Article 4. 2. Code means the Internal Revenue Code of 1986, as amended. 2. Compensation means all of an Employee's compensation determined in accordance with the definition elected by the Employer in the Plan Agreement. For purposes of that election, "Form W-2 earnings" means "wages" as defined in Section 3401(a) of the Code in connection with income tax withholding at the source, and all other compensation paid to the Employee by the Employer in the course of its trade or business, for which the Employer is required to furnish the Employee with a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the Code, determined without regard to exclusions based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2) of the Code). Compensation shall include only amounts actually paid to the Employee during the Plan Year. In addition, if the Employer so elects in the Plan Agreement, Compensation shall include any amount which is contributed to an employee benefit plan for the Employee by the Employer pursuant to a salary reduction agreement, and which is not includible in the gross income of the Employee under Section 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code. (For a self-employed person, the relevant term is Earned Income, as defined in Section 2.12.) 2. Date of Employment means the first date on which an Employee performs an Hour of Service; or, in the case of an Employee who has incurred one or more One-Year Eligibility Breaks and who is treated as a new Employee under the rules of Section 3.2, the first date on which he performs an Hour of Service after his return to employment. 2. Deductible Employee Contribution Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded amounts contributed by him to the Plan on a tax-deductible basis under prior law, and the income, expenses, gains and losses thereon. 2. Deferral Agreement means an Employee's agreement to make one or more Elective Deferrals in accordance with Section 4.2. 2. Disabled means unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. The permanence and degree of such impairment shall be supported by medical evidence. 2. Earned Income means a Self-Employed Individual's net earnings from self-employment in the trade or business with respect to which the Plan is established, excluding items not included in gross income and the deductions allocable to such items, and reduced by (i) contributions by the Employer to qualified plans, to the extent deductible under Section 404 of the Code, and (ii) the deduction allowed to the taxpayer under Section 164(f) of the Code for taxable years beginning after December 31, 1989. 2. Earnings, for determining all benefits provided under the Plan for all Plan Years beginning after December 31, 1988, means the first $200,000 (as adjusted by the Secretary of the Treasury at the same time and in the same manner as under Section 415(d) of the Code, except that the dollar increase effective on any January 1 is effective for all Plan Years beginning in the calendar year in which that January 1 occurs, and the first such dollar increase is effective on January 1, 1990) of the sum of the Compensation and the Earned Income received by an Employee during a Plan Year. Notwithstanding the foregoing, for Plan Years beginning after December 31, 1993, Earnings means the first $150,000 (as adjusted periodically by the Secretary of the Treasury for inflation) of the sum of the Compensation and Earned Income received by an Employee during a Plan Year. To calculate an allocation to a Participant's Account for any Plan Year shorter than 12 months, the dollar limit on Earnings must be multiplied by a fraction of which the denominator is 12 and the numerator is the number of months in the Plan Year. In determining the Earnings of a Participant, the rules of Section 414(q)(6) of the Code shall apply, except that in applying those rules the term "family" shall include only the Participant's spouse and the Participant's lineal descendants who have not reached age 19 by the last day of the Plan Year. If, as a result of the application of such rules, the applicable Earnings limitation described above is exceeded, then the limitation shall be prorated among the affected individuals in proportion to each such individual's Earnings as determined under this Section prior to the application of this limitation. 2. Effective Date means the first day of the Plan Year in which the Plan is adopted, provided that, if the Employer is adopting the Plan as an amendment to an existing plan, the Effective Date will be the date elected by the Employer in the Plan Agreement, which date shall be no earlier than the first day of the Plan Year in which the Plan is adopted. If the Plan Agreement indicates that the Employer is adopting the Plan as an amendment of an existing plan, the provisions of the existing plan apply to all events preceding the Effective Date, except as to specific provisions of the Plan which set forth a retroactive effective date in accordance with Section 1140 of the Tax Reform Act of 1986. 2. Elective Deferral means any contribution made to the Plan by the Employer at the election of a Participant, in lieu of cash compensation, including contributions made pursuant to a Deferral Agreement or other deferral mechanism. 2. Elective Deferral Account means an account maintained on the books of the Plan, in which are recorded a Participant's Elective Deferrals and the income, expenses, gains and losses incurred thereon. 2. Eligibility Period means a period of service with the Employer which an Employee is required to complete in order to commence participation in the Plan. A 12-month Eligibility Period is a period of 12 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, in which he is credited with at least 1,000 Hours of Service. A 6-month Eligibility Period is a period of 6 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, or on the 6-month anniversary of such Date of Employment or any anniversary thereof, in which he is credited with at least 500 Hours of Service. If the Employer has selected another period of service as the Eligibility Period under the Plan, Eligibility Period means the period so designated in the Plan Agreement in which the Employee is credited with a number of Hours of Service equal to the product of 1,000 multiplied by a fraction having a numerator equal to the number of months in the Eligibility Period designated in the Plan Agreement and a denominator of 12. Notwithstanding the foregoing, if an Employee is credited with 1,000 Hours of Service during a 12-consecutive-month period following his Date of Employment or any anniversary thereof, he shall be credited with an Eligibility Period. In the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service in the case of a 12-month Eligibility Period, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. 2. Employee means a common law Employee of an Affiliated Employer; in the case of an Affiliated Employer which is a sole proprietorship, the sole proprietor thereof; in the case of an Affiliated Employer which is a partnership, a partner thereof; and a Leased Employee of an Affiliated Employer. The term "Employee" includes an individual on Authorized Leave of Absence, a Self-Employed Individual and an Owner-Employee. 2. Employer means the Employer named in the Plan Agreement and any successor to all or the major portion of its assets or business which assumes the obligations of the Employer under the Plan Agreement. 2. Employer Matching Account means an account maintained on the books of the Plan, in which are recorded the Employer Matching Contributions made on behalf of a Participant and the income, expenses, gains and losses incurred thereon. 2. Employer Matching Contribution means a contribution made by the Employer (i) to the Plan pursuant to Section 4.8, or (ii) to another defined contribution plan on account of a Participant's "elective deferrals" or "employee contributions," as those terms are used in Section 401(m)(4) of the Code. 2. Employer Profit Sharing Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded the amounts allocated for his benefit from contributions by the Employer under Section 5.1 and the income, expenses, gains and losses incurred thereon. 2. Employer Profit Sharing Contribution means a contribution made for the benefit of a Participant by the Employer pursuant to Section 5.1. 2. Employer Stock means securities constituting "qualifying employer securities" of an Employer within the meaning of Section 407(d)(5) of ERISA. 2. ERISA means the Employee Retirement Income Security Act of 1974, as amended. 2. Forfeiture means a nonvested amount forfeited by a former Participant, pursuant to Section 8.3, or an amount forfeited by a former Participant or Beneficiary who cannot be located, pursuant to Section 9.5. 2. Highly Compensated Employee means an Employee if: (i) the Employee is a 5% owner during the Plan Year; (ii) the Employee's compensation for the Plan Year exceeds $75,000 (as adjusted pursuant to Section 415(d) of the Code); (iii) the Employee's compensation for the Plan Year exceeds $50,000 (as adjusted pursuant to Section 415(d) of the Code) and the Employee is in the top-paid group of Employees; or (iv) the Employee is an officer of the Employer and received compensation during the Plan Year that is greater than 50% of the dollar limitation under Code Section 415(b)(1)(A). The lookback provisions of Code Section 414(q) do not apply to determining Highly Compensated Employees. An Employer may choose to apply this test on the basis of the Employer's workforce as of a single day during the Plan Year ("snapshot day"). In applying this test on a snapshot basis, the Employer shall determine who is a Highly Compensated Employee on the basis of the data as of the snapshot day. If the determination of who is a Highly Compensated Employee is made earlier than the last day of the Plan Year, the Employee's compensation that is used to determine an Employee's status must be projected for the Plan Year under a reasonable method established by the Employer. Notwithstanding the foregoing, in addition to those Employees who are determined to be highly compensated on the Plan's snapshot day, as described above, where there are Employees who are not employed on the snapshot day but who are taken into account for purposes of testing under Section 4.6 or 4.9, the Employer must treat as a Highly Compensated Employee any Eligible Employee for the Plan Year who: (a) terminated prior to the snapshot day and was a Highly Compensated Employee in the prior year; (b) terminated prior to the snapshot day and (i) was a 5% owner, (ii) had compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) was an officer and had compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer; or (c) becomes employed subsequent to the snapshot day and (i) is a 5% owner, (ii) has compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) is an officer and has compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer. If during a Plan Year an Employee is a family member of either a 5% owner who is an Employee, or a Highly Compensated Employee who is one of the ten most highly paid Highly Compensated Employees ranked on the basis of compensation paid by the Employees during the year, then the family member and the 5% owner or top-ten-Highly-Compensated-Employee shall be treated as a single Employee receiving compensation and Plan contributions or benefits equal to the sum of the compensation and contributions or benefits of the family member and the 5% owner or top-ten-Highly-Compensated-Employee. For purposes of this Section 2.27, family members include the spouse, lineal ascendants and descendants of the Employee and the spouses of such lineal ascendants and descendants. The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the number of Employees treated as officers and the compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder. The Plan Administrator is responsible for identifying the Highly Compensated Employees and reporting such data to the Recordkeeper. 2. Hour of Service means each hour described in paragraphs (a), (b), (c), (d) or (e) below, subject to paragraphs (f) and (g) below. (a) Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Affiliated Employer. These hours shall be credited to the Employee for the computation period or periods in which the duties are performed. (b) Each hour for which an Employee is paid, or entitled to payment, by an Affiliated Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. No more than 501 Hours of Service shall be credited under this paragraph for any single continuous period of absence (whether or not such period occurs in a single computation period) unless the Employee's absence is not an Authorized Leave of Absence. Hours under this paragraph shall be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations, which are incorporated herein by this reference. (c) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Affiliated Employer. The same Hours of Service shall not be credited under both paragraph (a) or paragraph (b), as the case may be, and under this paragraph (c); and no more than 501 Hours of Service shall be credited under this paragraph (c) with respect to payments of back pay, to the extent that such pay is agreed to or awarded for a period of time described in paragraph (b) during which the Employee did not perform or would not have performed any duties. These hours shall be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made. (d) Each hour during an Authorized Leave of Absence. Such hours shall be credited at the rate of a customary full work week for an Employee. (e) Solely for purposes of determining whether a One- Year Vesting Break or a One-Year Eligibility Break has occurred, each hour which otherwise would have been credited to an Employee but for an absence from work by reason of: the pregnancy of the Employee, the birth of a child of the Employee, the placement of a child with the Employee in connection with the adoption of the child by the Employee, or caring for a child for a period beginning immediately after its birth or placement. If the Plan Administrator cannot determine the hours which would normally have been credited during such an absence, the Employee shall be credited with eight Hours of Service for each day of absence. No more than 501 Hours of Service shall be credited under this paragraph by reason of any pregnancy or placement. Hours credited under this paragraph shall be treated as Hours of Service only in the Plan Year or Eligibility Period or both, as the case may be, in which the absence from work begins, if necessary to prevent the Participant's incurring a One-Year Vesting Break or One-Year Eligibility Break in that period, or, if not, in the period immediately following that in which the absence begins. The Employee must timely furnish to the Employer information reasonably required to establish (i) that an absence from work is for a reason specified above, and (ii) the number of days for which the absence continued. (f) Hours of Service shall be determined on the basis of actual hours for which an Employee is paid or entitled to payment. (g) If the Employer maintains the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer. If the Employer does not maintain the plan of a predecessor Employer, service for the predecessor Employer shall not be treated as service for the Employer. (h) Hours of Service shall be credited to a Leased Employee as though he were an Employee. 2. Investment Company means an open-end registered investment company for which Putnam Mutual Funds Corp., or its affiliate acts as principal underwriter, or for which Putnam Investment Management, Inc. or its affiliate serves as an investment adviser; provided that its prospectus offers its shares under the Plan. 2. Investment Company Shares means shares issued by an Investment Company. 2. Investment Products means any of the investment products specified by the Employer in accordance with Section 13.2, from the group of those products sponsored, underwritten or managed by Putnam as shall be made available by Putnam under the Plan, and such other products as shall be expressly agreed to in writing by Putnam for availability under the Plan. 2. Leased Employee means any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with Section 414(n)(6) of the Code) on a substantially full time basis for a period of at least one year, and such services are of a type historically performed by Employees in the business field of the recipient Employer. The compensation of a Leased Employee for purposes of the Plan means the Compensation (as defined in Section 2.7) of the Leased Employee attributable to services performed for the recipient Employer. Contributions or benefits provided to a leased Employee by the leasing organization which are attributable to services performed for the recipient Employer shall be treated as provided by the recipient Employer. Provided that leased Employees do not constitute more than 20% of the recipient's nonhighly compensated workforce, a leased Employee shall not be considered an Employee of the recipient if he is covered by a money purchase pension plan providing: (1) a nonintegrated Employer contribution rate of at least 10% of compensation (as defined in Section 415(c)(3) of the Code, but including amounts contributed pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code), (2) immediate participation, and (3) full and immediate vesting. 2. Non-Highly Compensated Employee means an Employee who is not a Highly Compensated Employee. 2. One-Year Eligibility Break means a 12-month Eligibility Period during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations of the Secretary of Labor dealing with breaks in service. 2. One-Year Vesting Break means a Plan Year during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations of the Secretary of Labor dealing with breaks in service. 2. Owner-Employee means the sole proprietor of an Affiliated Employer that is a sole proprietorship, or a partner owning more than 10% of either the capital or profits interest of an Affiliated Employer that is a partnership. The Plan Administrator shall be responsible for identifying Owner-Employees to the Recordkeeper. 2. Participant means each Employee who has met the requirement for participation in Article 3. An Employee is not a Participant for any period before the entry date applicable to him. 2. Participant Contribution Account means an account maintained on the books of the Plan, in which are recorded after- tax contributions made by a Participant under a predecessor plan to which this Plan serves as an amendment or successor and any income, expenses, gains or losses incurred on such Contributions. No additional after-tax contributions may be made under the Plan or credited to this Account. All Participant Contribution Accounts will be fully vested at all times. 2. Plan means the form of defined contribution retirement plan and trust agreement adopted by the Employer, consisting of the Plan Agreement and the Putnam Basic Plan Document #06 as set forth herein, together with any and all amendments and supplements thereto. 2. Plan Administrator means the Employer or its appointee pursuant to Section 15.1. 2. Plan Agreement means the separate agreement entered into between the Employer and the Trustee and accepted by Putnam, under which the Employer adopts the Plan and selects among its optional provisions. 2. Plan Year means the period of 12 consecutive months specified by the Employer in the Plan Agreement, as well as any initial short plan year period specified by the Employer in the Plan Agreement. 2. Putnam means (i) Putnam Mutual Funds Corp., or a company affiliated with it which Putnam Mutual Funds Corp. has designated as its agent, performing specified actions or procedures in its capacity as sponsor of this prototype Plan, and (ii) Putnam Fiduciary Trust Company when performing in the capacity as Recordkeeper or Trustee. 2. Qualified Domestic Relations Order means any judgment, decree or order (including approval of a property settlement agreement) which constitutes a "qualified domestic relations order" within the meaning of Code Section 414(p). A judgment, decree or order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan. 2. Qualified Matching Account means an account maintained on the books of the Plan, in which are recorded the Qualified Matching Contributions made on behalf of a Participant and the income, expense, gain and loss attributable thereto. 2. Qualified Matching Contribution means a contribution made by the Employer that: (i) is allocated with respect to Elective Deferrals of a Participant who is a Non-Highly Compensated Employee, (ii) is fully vested at all times and (iii) is distributable only in accordance with Section 4.12. 2. Qualified Nonelective Contribution means a contribution (other than an Employer Matching Contribution or Qualified Matching Contribution) made by the Employer on behalf of a Participant who is a Non-Highly Compensated Employee, that: (i) a Participant may not elect to receive in cash until it is distributed from the Plan; (ii) is fully vested at all times; and (iii) is distributable only in accordance with Section 4.12. 2. Qualified Nonelective Contribution Account means an account maintained on the books of the Plan, in which are recorded the Qualified Nonelective Contributions made on behalf of a Participant and the income, expense, gain and loss attributable thereto. 2. Qualified Participant means any Participant who is an active Employee on the last day of the Plan Year in question or who is credited with more than 500 Hours of Service during the Plan Year in question or whose Retirement, death or disability occurred during the Plan Year in question. 2. Recordkeeper means Putnam and any successor thereto designated by the Employer to perform the duties described in Section 15.4. The terms and conditions of Putnam's service in the capacity as Recordkeeper will be as specified in the Service Agreement. 2. Retirement means ceasing to be an Employee in accordance with Section 7.1. 2. Rollover Account means an account established for an Employee who makes a rollover contribution to the Plan pursuant to Section 5.3. 2. Self-Employed Individual means an individual whose personal services are a material income-producing factor in the trade or business for which the Plan is established, and who has Earned Income for the taxable year from that trade or business, or would have Earned Income but for the fact that the trade or business had no net profits for the taxable year. 2. Service Agreement means the service agreement entered into between the Employer and Putnam or its successor as Recordkeeper. 2. Shareholder-Employee means any officer or Employee of an electing small business corporation, within the meaning of Section 1362 of the Code, who on any day during a taxable year of the Employer owns (or is considered as owning under Section 318(a)(1) of the Code) more than 5% of the outstanding stock of the Employer. The Plan Administrator shall be responsible for identifying Shareholder-Employees to the Recordkeeper. 2. Trust and Trust Fund mean the trust fund established under Section 13.1. 2. Trustee means the person, or the entity with trustee powers, named in the Plan Agreement as trustee, and any successor thereto. 2. Valuation Date means each day when the New York Stock Exchange is open, or such other date or dates as the Employer may designate by written agreement with the Recordkeeper. 2. Year of Service means a Plan Year in which an Employee is credited with at least 1,000 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. An Employee's Years of Service shall include service credited prior to the Effective Date under any predecessor plan. If the initial Plan Year is shorter than 12 months, each Employee who is credited with at least 1,000 Hours of Service in the 12-month period ending on the last day of the initial Plan Year shall be credited with a Year of Service with respect to the initial Plan Year. If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall not include service completed during a period in which the Employer did not maintain the Plan or any predecessor plan (as defined under regulations prescribed by the Secretary of the Treasury). Years of Service for vesting shall include service in any Plan Year (or comparable period prior to the Effective Date) completed before the Employee reached age 18. Years of Service for eligibility and vesting shall not include service for an employer that is not an Affiliated Employer, provided, however, Years of Service for eligibility and vesting shall include employment by a business acquired by the Employer, before the date of the acquisition, if the Plan is the amendment of a predecessor plan maintained by such acquired business. ARTICLE 3. PARTICIPATION 3.1. Initial Participation. Upon completion of the eligibility for Plan participation requirements specified in the Plan Agreement, an Employee shall begin participation in the Plan as of the later of (i) the first day of the first, fourth, seventh or tenth month of the Plan Year, whichever next follows or coincides with the date of completion of such eligibility requirements, or (ii) the Effective Date; provided, however, that: (a) if the Plan is adopted as an amendment of a predecessor plan of the Employer, every Employee who was participating under the predecessor plan when it was so amended shall become a Participant in the Plan as of the Effective Date, whether or not he has satisfied the age and service requirements specified in the Plan Agreement; and (b) if the Employer so specifies in the Plan Agreement, any individual who is (i) a nonresident alien receiving no earned income from an Affiliated Employer which constitutes income from sources within the United States, or (ii) included in a unit of Employees covered by a collective bargaining agreement between the Employer and Employee representatives (excluding from the term "Employee representatives" any organization of which more than half of the members are Employees who are owners, officers, or executives of an Affiliated Employer), if retirement benefits were the subject of good faith bargaining and no more than 2% of the Employees covered by the collective bargaining agreement are professionals as defined in Section 1.410(b)-9 of the Income Tax Regulations, shall not participate in the Plan until the later of the date on which he ceases to be described in clause (i) or (ii), whichever is applicable, or the entry date specified by the Employer in the Plan Agreement; and (c) if the Plan is not adopted as an amendment of a predecessor plan of the Employer, all Employees on the Effective Date who have satisfied the age requirement (versus the service requirement) designated in the Plan Agreement shall begin participation on the Effective Date, if the Employer so elects in the Plan Agreement; and (d) a Participant shall cease to participate in the Plan when he becomes a member of a class of Employees ineligible to participate in the Plan, and shall resume participation immediately upon his return to a class of Employees eligible to participate in the Plan. 3.2. Resumed Participation. A former Employee who incurs a One-Year Eligibility Break after having become a Participant shall participate in the Plan as of the date on which he again becomes an Employee, if (i) his Accounts had become partially or fully vested before he incurred a One-Year Vesting Break, or (ii) he incurred fewer than five consecutive One-Year Eligibility Breaks. In any other case, when he again becomes an Employee he shall be treated as a new Employee under Section 3.1. 3.3. Benefits for Owner-Employees. If the Plan provides contributions or benefits for one or more Owner-Employees who control both the trade or business with respect to which the Plan is established and one or more other trades or businesses, the Plan and plans established with respect to such other trades or businesses must, when looked at as a single plan, satisfy Sections 401(a) and (d) of the Code with respect to the Employees of this and all such other trades or businesses. If the Plan provides contributions or benefits for one or more Owner- Employees who control one or more other trades or businesses, the Employees of each such other trade or business must be included in a plan which satisfies Sections 401(a) and (d) of the Code and which provides contributions and benefits not less favorable than those provided for such Owner-Employees under the Plan. If an individual is covered as an Owner-Employee under the plans of two or more trades or businesses which he does not control and such individual controls a trade or business, then the contributions or benefits of the Employees under the plan of the trade or business which he does control must be as favorable as those provided for him under the most favorable plan of the trade or business which he does not control. For purposes of this Section 3.3, an Owner-Employee, or two or more Owner-Employees, shall be considered to control a trade or business if such Owner-Employee, or such two or more Owner-Employees together: (a) own the entire interest in an unincorporated trade or business, or (b) in the case of a partnership, own more than 50% of either the capital interest or the profits interest in such partnership. For purposes of the preceding sentence, an Owner-Employee or two or more Owner-Employees shall be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner-Employee or such two or more Owner-Employees are considered to control within the meaning of the preceding sentence. 3.4. Changes in Classification. If a Participant ceases to be a member of a classification of Employees eligible to participate in the Plan, but does not incur a One-Year Eligibility Break, he will continue to be credited with Years of Service for vesting while he remains an Employee, and he will resume participation as of the date on which he again becomes a member of a classification of Employees eligible to participate in the Plan. If such a Participant incurs a One-Year Eligibility Break, Section 3.2 will apply. If a Participant who ceases to be a member of a classification of Employees eligible to participate in the Plan becomes a member of a classification of Employees eligible to participate in another plan of the Employer, his Account, if any, under the Plan shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account. If an Employee who is not a member of a classification of Employees eligible to participate in the Plan satisfies the age and service requirements specified in the Plan Agreement, he will begin to participate immediately upon becoming a member of an eligible classification. If such an Employee has account balances under another plan of the Employer, such account balances shall be transferred to the Plan upon the Employee's commencement of participation in the Plan, if such other plan permits such transfer. ARTICLE 4. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k) (CODA) 4.1 General Provisions Applicable to Contributions Under Both Articles 4 and 5. (a) Payment and Crediting of Contributions. The Employer may specify that contributions will be made to the Plan only under the CODA, or that Employer Profit Sharing Contributions described in Section 5.1 may also be made. The Employer shall pay to the order of the Trustee the aggregate contributions to the Trust Fund for each Plan Year. Each contribution shall be accompanied by instructions from the Employer, in the manner prescribed by Putnam. Neither the Trustee nor Putnam shall be under any duty to inquire into the correctness of the amount or the timing of any contribution, or to collect any amount if the Employer fails to make a contribution as provided in the Plan. (b) Time for Payment. Elective Deferrals will be transferred to the Trustee as soon as such contributions can reasonably be segregated from the general assets of the Employer, but in any event within 90 days after the date on which the Compensation to which such contributions relate is paid. The aggregate of all other contributions with respect to a Plan Year shall be transferred to the Trustee no later than the due date (including extensions) for filing the Employer's federal income tax return for that Plan Year. (c) Allocations under CODA. Allocations to Participants' Accounts of contributions made pursuant to this Article 4 shall be made as soon as administratively feasible after their receipt by the Trustee, but in any case shall not be allocated as of a day later than the last day of the Plan Year for which the contributions were made. (d) Limitations on Allocations. All allocations shall be subject to the limitations in Article 6. (e) Establishment of Accounts. The Employer will establish and maintain (or cause to be established and maintained) for each Participant individual accounts adequate to disclose his interest in the Trust Fund, including such of the following separate accounts as shall apply to the Participant: Elective Deferral Account, Employer Matching Account, Qualified Nonelective Account, Qualified Matching Account, Employer Profit Sharing Account, Participant Contribution Account, Deductible Employee Contribution Account, and Rollover Account. The maintenance of such accounts shall be only for recordkeeping purposes, and the assets of separate accounts shall not be required to be segregated for purposes of investment. For purposes of the Plan, a Participant is treated as benefiting under the Plan for any Plan Year during which the Participant received or is deemed to receive an allocation to an Account in accordance with Treasury Regulation 1.410(b)-3(a). (f) Restoration of Accounts. Notwithstanding any other provision of the Plan, for any Plan Year in which it is necessary to restore any portion of a Participant's Account pursuant to Section 8.3(b) or 9.5, to the extent that the amount of Forfeitures available is insufficient to accomplish such restoration, the Employer shall contribute the amount necessary to eliminate the insufficiency, regardless of whether the contribution is currently deductible by the Employer under Section 404 of the Code. 4.2. CODA Participation. Each Employee who has met the eligibility requirements of Article 3 may make Elective Deferrals to the Plan by completing and returning to the Plan Administrator a Deferral Agreement which provides that the Participant's cash compensation from the Employer will be reduced by the amount indicated in the Deferral Agreement, and that the Employer will contribute an equivalent amount to the Trust on behalf of the Participant. The following rules will govern Elective Deferrals: (a) Subject to the limits specified in the Plan Agreement and set forth in Section 4.3, a Deferral Agreement may apply to any amount or percentage of the Earnings payable to a Participant in each year, including any bonuses payable to a Participant from time to time. (b) In accordance with such reasonable rules as the Plan Administrator shall specify, a Deferral Agreement will become effective as soon as is administratively feasible after the Deferral Agreement is returned to the Plan Administrator, and will remain effective until it is modified or terminated. No Deferral Agreement may become effective retroactively. (c) A Participant may modify his Deferral Agreement by completing and returning to the Plan Administrator a new Deferral Agreement as of the first business day of any of the first, fourth, seventh and tenth months of the Plan Year, and any such modification will become effective as described in paragraph (b). (d) A Participant may terminate his Deferral Agreement at any time upon advance written notice to the Plan Administrator, and any such termination will become effective as described in paragraph (b). 4.3. Annual Limit on Elective Deferrals. During any taxable year of a Participant, his Elective Deferrals under the Plan and any other qualified plan of an Affiliated Employer shall not exceed the dollar limit contained in Section 402(g) of the Code in effect at the beginning of the taxable year. With respect to any taxable year, a Participant's Elective Deferrals for purposes of this Section 4.3 include all Employer contributions made on his behalf pursuant to an election to defer under any qualified CODA as described in Section 401(k) of the Code, any simplified employee pension cash or deferred arrangement (SARSEP) as described in Section 402(h)(1)(B) of the Code, any eligible deferred compensation plan under Section 457 of the Code, any plan described under Section 501(c)(18) of the Code, and any Employer contributions made on behalf of the Participant for the purchase of an annuity contract under Section 403(b) of the Code pursuant to a salary reduction agreement. The limit under Section 402(g) of the Code on the amount of Elective Deferrals of a Participant who receives a hardship withdrawal pursuant to Section 12.2 shall be reduced, for the taxable year next following the withdrawal, by the amount of Elective Deferrals made in the taxable year of the hardship withdrawal. 4.4 Distribution of Certain Elective Deferrals. "Excess Elective Deferrals" means those Elective Deferrals described in Section 4.3 that are includible in a Participant's gross income under Section 402(g) of the Code, to the extent that the Participant's aggregate elective deferrals for a taxable year exceed the dollar limitation under that Code Section. Excess Elective Deferrals shall be treated as Annual Additions under the Plan, whether or not they are distributed under this Section 4.4. A Participant may designate to the Plan any Excess Elective Deferrals made during his taxable year by notifying the Employer on or before the following March 15 of the amount of the Excess Elective Deferrals to be so designated. A Participant who has Excess Elective Deferrals for a taxable year, taking into account only his Elective Deferrals under the Plan and any other plans of the Affiliated Employers, shall be deemed to have designated the entire amount of such Excess Elective Deferrals. Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose Account Excess Elective Deferrals were so designated or deemed designated for the preceding year. The income or loss allocable to Excess Elective Deferrals is the income or loss allocable to the Participant's Elective Deferral Account for the taxable year multiplied by a fraction, the numerator of which is the Participant's Excess Elective Deferrals for the year and the denominator of which is the Participant's Account balance attributable to Elective Deferrals without regard to any income or loss occurring during the year. To the extent that the return to a Participant of his Elective Deferrals would reduce an Excess Amount (as defined in Section 6.5(f)), such Excess Deferrals shall be distributed to the Participant in accordance with Article 6. 4.5. Satisfaction of ADP and ACP Tests. In each Plan Year, the Plan must satisfy the ADP test described in Section 4.6 and the ACP test described in Section 4.9. The Employer may cause the Plan to satisfy the ADP or ACP test or both tests for a Plan Year by any of the following methods or by any combination of them: (a) By the distribution of Excess Contributions in accordance with Section 4.7, or the distribution of Excess Aggregate Contributions in accordance with Section 4.10, or both; or (b) By making Qualified Nonelective Contributions or Qualified Matching Contributions or both, in accordance with Section 4.11. 4.6. Actual Deferral Percentage Test Limit. The Actual Deferral Percentage (hereinafter "ADP") for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (a) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or (b) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 2.0, provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-Highly Compensated Employees by more than two percentage points. The following special rules shall apply to the computation of the ADP: (c) "Actual Deferral Percentage" means, for a specified group of Participants for a Plan Year, the average of the ratios (calculated separately for each Participant in the group) of (1) the amount of Employer contributions actually paid over to the Trust on behalf of the Participant for the Plan Year to (2) the Participant's Earnings for the Plan Year. Employer contributions on behalf of any Participant shall include: (i) his Elective Deferrals, including Excess Elective Deferrals of Highly Compensated Employees, but excluding (A) Excess Elective Deferrals of Non-Highly Compensated Employees that arise solely from Elective Deferrals made under the Plan or another plan maintained by an Affiliated Employer, and (B) Elective Deferrals that are taken into account in the Average Contribution Percentage test described in Section 4.9 (provided the ADP test is satisfied both with and without exclusion of these Elective Deferrals), and excluding Elective Deferrals returned to a Participant to reduce an Excess Amount as defined in Section 6.5(f); (ii) such amount of Qualified Nonelective Contributions, if any, as shall be necessary to enable the Plan to satisfy the ADP test and not used to satisfy the ACP test; and (iii) such amount of Qualified Matching Contributions, if any, as shall be necessary to enable the Plan to satisfy the ADP test and not used to satisfy the ACP test. For purposes of computing Actual Deferral Percentages, an Employee who would be a Participant but for his failure to make Elective Deferrals shall be treated as a Participant on whose behalf no Elective Deferrals are made. (d) In the event that the Plan satisfies the requirements of Sections 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with the Plan, then this Section 4.6 shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year. (e) The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals allocated to his Accounts under two or more CODAs described in Section 401(k) of the Code that are maintained by the Affiliated Employers shall be determined as if such Elective Deferrals were made under a single CODA. If a Highly Compensated Employee participates in two or more CODAs that have different Plan Years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs. (f) For purposes of determining the ADP of a Participant who is a 5% owner or one of the ten most highly- paid Highly Compensated Employees, the Elective Deferrals and the Earnings of such a Participant shall include the Elective Deferrals and Earnings for the Plan Year of his Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the ADP both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees. (g) For purposes of the ADP test, Elective Deferrals, Qualified Nonelective Contributions and Qualified Matching Contributions must be made before the last day of the 12-month period immediately following the Plan Year to which those contributions relate. (h) The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in satisfying the test. (i) The determination and treatment of the ADP amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 4.7. Distribution of Excess Contributions. "Excess Contributions" means, with respect to any Plan Year, the excess of: (a) The aggregate amount of Employer contributions actually taken into account in computing the ADP of Highly Compensated Employees for the Plan Year, over (b) The maximum amount of Employer contributions permitted by the ADP test, determined by reducing contributions made on behalf of Highly Compensated Employees in order of their ADPs, beginning with the highest of such percentages. Notwithstanding any other provision of the Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose Accounts Excess Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Contributions is the income or loss allocable to the Participant's Elective Deferral Account for the Plan Year multiplied by a fraction, the numerator of which is the Participant's Excess Contributions for the year and the denominator is the Participant's account balance attributable to Elective Deferrals without regard to any income or loss occurring during the Plan Year. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which the excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Contributions attributable to each of them. Excess Contributions shall be allocated to a Participant who is a family member subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Elective Deferrals bear to the combined Elective Deferrals (and other amounts treated as Elective Deferrals) of all of the Participants aggregated to determine his family members' combined ADP. Excess Contributions shall be treated as Annual Additions under the Plan. 4.8. Employer Matching Contributions. If so specified in the Plan Agreement, the Employer will make Employer Matching Contributions to the Plan in accordance with the Plan Agreement, but no Employer Matching Contribution shall be made with respect to an Elective Deferral that is returned to a Participant because it represents an Excess Elective Deferral, an Excess Contribution, an Excess Aggregate Contribution or an Excess Amount (as defined in Section 6.5(f)); and if an Employer Matching Contribution has nevertheless been made with respect to such an Elective Deferral, the Employer Matching Contribution shall be forfeited, notwithstanding any other provision of the Plan. Employer Matching Contributions will be allocated among the Employer Matching Accounts of Participants in proportion to their Elective Deferrals as specified by the Employer in the Plan Agreement. Employer Matching Accounts shall become vested according to the vesting schedule specified in the Plan Agreement, but regardless of that schedule shall be fully vested upon the Participant's Retirement, or, if earlier, attainment of the normal retirement age specified in the Plan Agreement, his death during employment with an Affiliated Employer, and in accordance with Section 18.3. 4.9. Average Contribution Percentage Test Limit and Aggregate Limit. The Average Contribution Percentage (hereinafter "ACP") for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (a) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or (b) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by two (2), provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-Highly Compensated Employees by more than two percentage points. The following rules shall apply to the computation of the ACP: (c) "Average Contribution Percentage" means the average of the Contribution Percentages of the Eligible Participants in a group. (d) "Contribution Percentage" means the ratio (expressed as a percentage) of a Participant's Contribution Percentage Amounts to the Participant's Earnings for the Plan Year. (e) "Contribution Percentage Amounts" means the sum of the Participant Contributions, Employer Matching Contributions, and Qualified Matching Contributions (to the extent not taken into account for purposes of the ADP test) made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall include Forfeitures of Excess Aggregate Contributions or Employer Matching Contributions allocated to the Participant's Account, taken into account in the year in which the allocation is made. Qualified Nonelective Contributions, if any, necessary to enable the Plan to satisfy the ACP test and not used to satisfy the ADP test shall be included in the Contribution Percentage Amounts. Elective Deferrals shall also be included in the Contribution Percentage Amounts to the extent, if any, needed to enable the Plan to satisfy the ACP test, so long as the ADP test is met before the Elective Deferrals are used in the ACP test, and continues to be met following the exclusion of those Elective Deferrals that are used to meet the ACP test. (f) "Eligible Participant" means any Employee who is eligible to make an Elective Deferral, if Elective Deferrals are taken into account in the calculation of the Contribution Percentage, or to receive an Employer Matching Contribution (or a Forfeiture thereof) or a Qualified Matching Contribution. (g) "Aggregate Limit" means the sum of (i) 125% of the greater of the ADP of the Non-Highly Compensated Employees for the Plan Year, or the ACP of Non-Highly Compensated Employees under the Plan subject to Code Section 401(m) for the Plan Year beginning with or within the Plan Year of the CODA, and (ii) the lesser of 200% of, or two plus, the lesser of the ADP or ACP. "Lesser" is substituted for "greater" in clause (i) of the preceding sentence, and "greater" is substituted for "lesser" after the phrase "two plus the" in clause (ii) of the preceding sentence, if that formulation will result in a larger Aggregate Limit. (h) If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the ACP test maintained by an Affiliated Employer, and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the ACP of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with the Highly Compensated Employee whose ACP is the highest) so that the Aggregate Limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amount is reduced shall be treated as an Excess Aggregate Contribution. In determining the Aggregate Limit, the ADP and ACP of Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. The Aggregate Limit will be considered satisfied if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-Highly Compensated Employees. (i) For purposes of this section, the Contribution Percentage for any Participant who is a Highly Compensated Employee and who is eligible to have Contribution Percentage Amounts allocated to his account under two or more plans described in Section 401(a) of the Code, or CODAs described in Section 401(k) of the Code, that are maintained by an Affiliated Employer, shall be determined as if the total of such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participates in two or more CODAs that have different plan years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs. (j) In the event that the Plan satisfies the requirements of Sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with the Plan, then this Section 4.9 shall be applied by determining the Contribution Percentage of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(m) of the Code only if they have the same Plan Year. (k) For purposes of determining the Contribution Percentage of a Participant who is a 5% owner or one of the ten most highly-paid Highly Compensated Employers, the Contribution Percentage Amounts and Earnings of the Participant shall include the Contribution Percentage Amounts and Earnings for the Plan Year of Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the Contribution Percentage both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees. (l) For purposes of the ACP test, Matching Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions will be considered made for a Plan Year if made no later than the end of the 12-month period beginning on the day after the close of the Plan Year. (m) The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in the ACP test. (n) The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 4.10. Distribution of Excess Aggregate Contributions. Notwithstanding any other provision of the Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be forfeited if forfeitable, or if not forfeitable, distributed no later than the last day of each Plan Year to Participants to whose Accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Aggregate Contributions is the income or loss allocable to the Participant's Employer Matching Account, Qualified Matching Account (if any, and if all amounts therein are not used in the ADP test), and, if applicable, Qualified Nonelective Contribution Account, Participant Contribution Account and Elective Deferral Account for the Plan Year, multiplied by a fraction, the numerator of which is the Participant's Excess Aggregate Contributions for the year and the denominator of which is the Participant's account balance(s) attributable to Contribution Percentage Amounts without regard to any income or loss occurring during the Plan Year. Excess Aggregate Contributions shall be allocated to a Participant who is subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Employer Matching Contributions (and other amounts treated as his Employer Matching Contributions) bear to the combined Employer Matching Contributions (and other amounts treated as Employer Matching Contributions) of all of the Participants aggregated to determine its family members' combined ACP. If excess amounts attributable to Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Excess Aggregate Contributions shall be treated as Annual Additions under the Plan. Excess Aggregate Contributions shall be forfeited if forfeitable, or distributed on a pro-rata basis from the Participant's Participant Contribution Account, Employer Matching Account, and Qualified Matching Account (and, if applicable, the Participant's Qualified Nonelective Account or Elective Deferral Account, or both). Excess Aggregate Contributions means, with respect to any Plan Year, the excess of: (a) The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage and actually made on behalf of Highly Compensated Employees for the Plan Year, over (b) The maximum Contribution Percentage Amounts permitted by the ACP test and the Aggregate Limit (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages, beginning with the highest of such percentages). Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 4.4, and then determining Excess Contributions pursuant to Section 4.7. 4.11. Qualified Nonelective Contributions; Qualified Matching Contributions. The Employer may make Qualified Nonelective Contributions for a Plan Year which, if made, shall be allocated to the Qualified Nonelective Contribution Accounts of Qualified Participants who are Non-Highly Compensated Employees, in proportion to the Earnings of such Qualified Participants for the Plan Year. The Employer may make Qualified Matching Contributions for a Plan Year which, if made shall be allocated to the Qualified Matching Accounts of Participants who are Non-Highly Compensated Employees, in proportion to the Elective Deferrals of such Participants for the Plan Year. 4.12. Restriction on Distributions. Except as provided in Sections 4.4, 4.7 and 4.10, no distribution may be made from a Participant's Elective Deferral Account, Qualified Nonelective Account or Qualified Matching Account until the occurrence of one of the following events: (a) The Participant's Disability, death or termination of employment with the Affiliated Employers; (b) Termination of the Plan without the establishment of another defined contribution plan other than an employee stock ownership plan as defined in Section 4975(e) or Section 409 of the Code, or a simplified employee pension plan as defined in Section 408(k) of the Code; (c) The Participant's attainment of age 59 1/2; or (d) In the case of an Employer that is a corporation, the disposition by the Employer to an unrelated entity of (i) substantially all of the assets (within the meaning of Section 409(d)(2) of the Code) used in a trade or business of the Employer, if the Employer continues to maintain the Plan after the disposition, but only with respect to Employees who continue employment with the entity acquiring such assets; or (ii) the Employer's interest in a subsidiary (within the meaning of Section 409(d)(3) of the Code), if the Employer continues to maintain the Plan after the disposition, but only with respect to Employees who continue employment with such subsidiary. In addition, if the Employer has elected in the Plan Agreement to permit such distributions, a distribution may be made from a Participant's Elective Deferral Account in the event of his financial hardship as described in Section 12.2. All distributions upon any of the events listed above are subject to the conditions of Article 10, Joint and Survivor Annuity Requirements. In addition, distributions made after March 31, 1988, on account of an event described in subsection (b) or (d) above must be made in a lump sum. 4.13. Forfeitures of Employer Matching Contributions. Forfeitures of Employer Matching Contributions, other than Excess Aggregate Contributions, shall be made in accordance with Section 8.3. Forfeitures of Employer Matching Contributions in a Plan Year shall be applied to reduce other contributions required of the Employer. 4.14. Special Effective Dates. If the Plan is adopted as an amendment of an existing plan, the provisions of Sections 4.3 and Section 4.7 through 4.11 are effective as of the first day of the first Plan Year beginning after December 31, 1986. ARTICLE 5. OTHER CONTRIBUTIONS 5.1. Employer Profit Sharing Contributions. (a) Amount of Annual Contribution. If the Employer so elects in the Plan Agreement, the Employer may in each Plan Year contribute an amount to the Trust Fund determined in the Employer's own discretion, which contribution plus any amount reapplied for the Plan Year under Section 6.1(d) shall not exceed the amount deductible under Section 404 of the Code. Employer Profit Sharing Contributions may be made in any Plan Year whether or not the Employer has current or accumulated profits for that Plan Year. (b) Allocation of Employer Profit Sharing Contributions. The Employer Profit Sharing Contribution (and any amounts reapplied under Section 6.1(d)) for the Plan Year shall be allocated as of the last day of each Plan Year to the Employer Profit Sharing Accounts of each Qualified Participant in proportion to the Earnings of each such Qualified Participant for the Plan Year. 5.2. Forfeitures of Employer Profit Sharing Contributions. Forfeitures of Employer Profit Sharing Contributions shall be made in accordance with Section 8.3. Forfeitures of Employer Profit Sharing Contributions shall be applied to reduce other contributions required of the Employer. 5.3. Rollover Contributions. An Employee in an eligible class may contribute at any time cash or other property (which is not a collectible within the meaning of Section 408(m) of the Code) acceptable to the Trustee representing qualified rollover amounts under Sections 402, 403, or 408 of the Code. Amounts so contributed shall be credited to a Rollover Account for the Participant. 5.4. No After-Tax Participant Contributions or Deductible Employee Contributions. The Plan Administrator shall not accept either after-tax Participant Contributions or deductible employee contributions, other than those held in a Participant Contribution Account or a Deductible Employee Contribution Account transferred from a predecessor plan of the Employer. ARTICLE 6. LIMITATIONS ON ALLOCATIONS 6.1. No Additional Plan. If the Participant does not participate in and has never participated in another qualified plan, or a welfare benefit fund (as defined in Section 419(e) of the Code), or an individual medical account (as defined in Section 415(l)(2) of the Code) which provides an Annual Addition as defined in Section 6.5(a), maintained by an Affiliated Employer: (a) The amount of Annual Additions (as defined in Section 6.5(a)) which may be credited to the Participant's Accounts for any Limitation Year will not exceed the lesser of the Maximum Annual Additions or any other limitation contained in this Plan. If the Employer contribution that would otherwise be contributed or allocated to the Participant's Account would cause the Annual Additions for the Limitation Year to exceed the Maximum Annual Additions, the amount contributed or allocated will be reduced so that the Annual Additions for the Limitation Year will equal the Maximum Annual Additions. (b) Before determining a Participant's actual Section 415 Compensation for a Limitation Year, the Employer may determine the Maximum Annual Additions for the Participant on the basis of a reasonable estimation of the Participant's Section 415 Compensation for the Limitation Year, uniformly determined for all Participants similarly situated. (c) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Annual Additions for the Limitation Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Limitation Year. (d) If pursuant to paragraph (c), or as a result of a reasonable error in determining the amount of Elective Deferrals that may be made by a Participant, the Annual Additions exceed the Maximum Annual Additions, the Excess Amount will be disposed of as follows: (1) Elective Deferrals, to the extent they would reduce the Excess Amount, will be returned to the Participant. (2) If after the application of (1) above an Excess Amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the Excess Amount in the Participant's Accounts will be used to reduce Employer contributions (including any allocation of Forfeitures) for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary. (3) If after the application of (1) above an Excess Amount still exists, and the Participant is not covered by the Plan at the end of a Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer contributions (including allocation of any Forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary. (4) If a suspense account is in existence at any time during a Limitation Year pursuant to this Section 6.1(d), it will participate in the allocation of the Trust's investment gains and losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants' Accounts before any Employer or any Employee contributions may be made to the Plan for that Limitation Year. Excess amounts may not be distributed to Participants or former Participants. 6.2. Additional Master or Prototype Plan. If in addition to this Plan a Participant is covered under another qualified Master or Prototype defined contribution plan or a welfare benefit fund (as defined in Section 419(e) of the Code), or an individual medical account (as defined in Section 415(1)(2) of the Code) which provides an Annual Addition as defined in Section 6.5(a), maintained by an Affiliated Employer during any Limitation Year: (a) The Annual Additions which may be credited to a Participant's Accounts under this Plan for any such Limitation Year will not exceed the Maximum Annual Additions reduced by the Annual Additions credited to a Participant's accounts under the other plans and welfare benefit funds for the same Limitation Year. If the Annual Additions with respect to the Participant under other defined contribution plans and welfare benefit funds maintained by an Affiliated Employer are less than the Maximum Annual Additions, and the Employer contribution that would otherwise be contributed or allocated to the Participant's Accounts under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated to this Plan will be reduced so that the Annual Additions under all such plans and funds for the Plan Year will equal the Maximum Annual Additions. If the Annual Additions with respect to the Participant under such other defined contribution plans and welfare benefit funds in the aggregate are equal to or greater than the Maximum Annual Additions, no amount will be contributed or allocated to the Participant's Accounts under this Plan for the Limitation Year. (b) Before determining a Participant's actual Section 415 Compensation for a Limitation Year, the Employer may determine the Maximum Annual Additions for the Participant in the manner described in Section 6.1(b). (c) As soon as is administratively feasible after the end of the Plan Year, the Maximum Annual Additions for the Plan Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Plan Year. (d) If, pursuant to Section 6.2(c) or as a result of the allocation of Forfeitures, or of a reasonable error in determining the amount of Elective Deferrals that may be made by him, a Participant's Annual Additions under this Plan and such other plans would result in an Excess Amount for a Limitation Year, the Excess Amount will be deemed to consist of the Annual Additions last allocated under any qualified Master or Prototype defined contribution plan, except that Annual Additions to any welfare benefit fund or individual medical account will be deemed to have been allocated first regardless of the actual allocation date. (e) If an Excess Amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the Excess Amount attributed to this Plan will be the product of X and Y, where (X) is the total Excess Amount allocated as of such date, and (Y) is the ratio of: (1) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (2) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified Master or Prototype defined contribution plans. (f) Any Excess Amount attributed to this Plan will be disposed of in the manner described in Section 6.1(d). 6.3. Additional Non-Master or Non-Prototype Plan. If the Participant is covered under another qualified defined contribution plan maintained by an Affiliated Employer which is not a Master or Prototype plan, Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with Section 6.2 as though the other plan were a Master or Prototype plan. 6.4. Additional Defined Benefit Plan. If an Affiliated Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year. The Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with the Plan Agreement. 6.5. Definitions. (a) Annual Additions means the sum of the following amounts credited to a Participant's Accounts for the Limitation Year: (1) Employer contributions; (2) For any Limitation Year beginning after December 31, 1986, Participant Contributions; (3) Forfeitures; (4) Amounts allocated after March 31, 1984, to any individual medical account, as defined in Section 415(1)(2) of the Code, which is part of a pension or annuity plan maintained by an Affiliated Employer; (5) Amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post retirement medical benefits allocated to the separate account of a key Employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit fund as defined in Section 419(e) of the Code, maintained by an Affiliated Employer; and (6) Excess Elective Deferrals, Excess Contributions (including recharacterized Elective Deferrals) and Excess Aggregate Contributions. For this purpose, any Excess Amount applied under Sections 6.1(d) or 6.2(e) in the Limitation Year to reduce Employer contributions will be considered Annual Additions for such Limitation Year. Any rollover contribution will not be considered an Annual Addition. (b) Section 415 Compensation means, for a Self-Employed Individual, his Earned Income; and for any other Participant, his "Form W-2 earnings" as defined in Section 2.7. For purposes of applying the limitations of this Article 6, Section 415 Compensation for a Limitation Year is the Section 415 Compensation actually paid or made available during such Limitation Year. (c) Defined Benefit Fraction means a fraction, the numerator of which is the sum of the Participant's Projected Annual Benefits under all the defined benefit plans (whether or not terminated) maintained by the Affiliated Employers, and the denominator of which is the lesser of 125% of the dollar limitation in effect for the Limitation Year under Sections 415(b) and (d) of the Code, or 140% of the Participant's Highest Average Compensation including any adjustments under Section 415(b) of the Code. Notwithstanding the foregoing, if the Participant was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any change in the terms and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all Limitation Years beginning before January 1, 1987. (d) Defined Contribution Dollar Limitation means $30,000 or if greater, one-fourth of the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code as in effect for the Limitation Year. (e) Defined Contribution Fraction means a fraction, the numerator of which is the sum of the Annual Additions to the Participant's accounts under all the defined contribution plans (whether or not terminated) maintained by Affiliated Employers for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant's nondeductible Employee contributions to all defined benefit plans, whether or not terminated, maintained by the Affiliated Employers, and the Annual Additions attributable to all welfare benefit funds, as defined in Section 419(e) of the Code, and individual medical accounts, as defined in Section 415(l)(2) of the Code), and the denominator of which is the sum of the Maximum Annual Additions for the current and all prior Limitation Years of service with the Affiliated Employers (regardless of whether a defined contribution plan was maintained by any Affiliated Employer). The Maximum Annual Additions in any Plan Year is the lesser of 125% of the dollar limitation determined under Sections 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code, or 35% of the Participant's Section 415 Compensation for such year. If the Employee was a Participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986 in one or more defined contribution plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to product of the excess of the sum of the fractions over 1.0, multiplied by the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat 100% of nondeductible Employee contributions as Annual Additions. (f) Excess Amount means, with respect to any Participant, the amount by which Annual Additions exceed the Maximum Annual Additions. (g) Highest Average Compensation means the average compensation for the three consecutive Years of Service with the Employer that produces the highest average. A Year of Service with the Employer is determined based on the Plan Year. (h) Limitation Year means the Plan Year. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different period of 12 consecutive months, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. (i) Master or Prototype plan means a plan the form of which is the subject of a favorable opinion letter from the Internal Revenue Service. (j) Maximum Annual Additions, which is the maximum annual addition that may be contributed or allocated to a Participant's account under the plan for any Limitation Year, means an amount not exceeding the lesser of (a) the Defined Contribution Dollar Limitation or (b) 25% of the Participant's Section 415 Compensation for the Limitation Year. The compensation limitation referred to in (b) shall not apply to any contribution for medical benefits (within the meaning of Section 401(h) or Section 419A(f)(2) of the Code) which is otherwise treated as an Annual Addition under Section 415(l)(1) or Section 419A(d)(2) of the Code. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different period of 12 consecutive months, the Maximum Annual Additions will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction: number of months in the short Limitation Year 12 (k) Projected Annual Benefit means the annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or Qualified Joint and Survivor Annuity) to which the Participant would be entitled under the terms of the Plan assuming: (1) The Participant will continue employment until normal retirement age under the Plan (or current age, if later), and (2) The Participant's Section 415 Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the plan will remain constant for all future Limitation Years. ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS 7.1. Retirement. After his Retirement, the amount credited to a Participant's Accounts will be distributed to him in accordance with Article 9. The termination of a Participant's employment with the Affiliated Employers after he has (i) attained the normal retirement age specified in the Plan Agreement, (ii) fulfilled the requirements for early retirement (if any) specified in the Plan Agreement, or (iii) become Disabled will constitute his Retirement. Upon a Participant's Retirement (or, if earlier, his attainment of the normal retirement age specified in the Plan Agreement or fulfillment of the requirements for early retirement, if any, specified in the Plan Agreement), the Participant's Accounts shall become fully vested, regardless of the vesting schedule specified by the Employer in the Plan Agreement. A Participant who separates from service with any vested balance in his Accounts, after satisfying the service requirements for early retirement (if any is specified in the Plan Agreement) but before satisfying the age requirement for early retirement (if any is specified in the Plan Agreement), shall be entitled to a fully vested early retirement benefit upon his satisfaction of such age requirement. 7.2. Death. If a Participant dies before the distribution of his Accounts has been completed, his Beneficiary will be entitled to distribution of benefits in accordance with Article 9. A Participant's Accounts will become fully vested upon his death before termination of his employment with the Affiliated Employers, regardless of the vesting schedule specified by the Employer in the Plan Agreement. A Participant may designate a Beneficiary by completing and returning to the Plan Administrator a form provided for this purpose. The form most recently completed and returned to the Plan Administrator before the Participant's death shall supersede any earlier form. If a Participant has not designated any Beneficiary before his death, or if no Beneficiary so designated survives the Participant, his Beneficiary shall be his surviving spouse, or if there is no surviving spouse, his estate. A married Participant may designate a Beneficiary other than his spouse only if his spouse consents in writing to the designation, and the spouse's consent acknowledges the effect of the consent and is witnessed by a notary public or a representative of the Plan. The beneficiary or beneficiaries named in the designation to which the spouse has so consented may not be changed without further written spousal consent unless the terms of the spouse's original written consent expressly permit such a change, and acknowledge that the spouse voluntarily relinquishes the right to limit the consent to a specific beneficiary. The marriage of a Participant shall nullify any designation of a beneficiary previously executed by the Participant. If it is established to the satisfaction of the Plan Administrator that the Participant has no spouse or that the spouse cannot be located, the requirement of spousal consent shall not apply. Any spousal consent, or establishment that spousal consent cannot be obtained, shall apply only to the particular spouse involved. 7.3. Other Termination of Employment. A Participant whose employment terminates for any reason other than his Retirement or death will be entitled to distribution, in accordance with Article 9, or benefits equal to the amount of the vested balance of his Accounts as determined under Article 8. ARTICLE 8. VESTING 8.1. Vested Balance. The vested balance of a Participant's Accounts will be determined as follows: (a) General Rule. A Participant's Elective Deferral Account, Qualified Nonelective Contribution Account, Qualified Matching Account, Participant Contribution Account and Rollover Account shall be fully vested at all times. The vested portion of his Employer Matching Account and Employer Profit Sharing Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates. (b) Retirement. All of a Participant's Accounts shall become fully vested upon his Retirement or his earlier attainment of the normal retirement age elected by the Employer in the Plan Agreement. For so long as a former Employee does not receive a distribution (or a deemed distribution) of the vested portion of his Accounts, the undistributed portion shall be held in a separate account which shall be invested pursuant to Section 13.3 and shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants. 8.2. Vesting of Accounts of Returned Former Employees. The following rules apply in determining the vested portion of the Accounts of a Participant who incurs one or more consecutive One- Year Vesting Breaks and then returns to employment with an Affiliated Employer: (a) If the Participant incurred fewer than five consecutive One-Year Vesting Breaks, then all of his Years of Service will be taken into account in determining the vested portion of his Accounts, as soon as he has completed one Year of Service following his return to employment. (b) If the Participant incurred five or more consecutive One-Year Vesting Breaks, then: (1) no Year of Service completed after his return to employment will be taken into account in determining the vested portion of his Accounts as of any time before he incurred the first One-Year Vesting Break; (2) years of Service completed before he incurred the first One-Year Vesting Break will not be taken into account in determining the vested portion of his Accounts as of any time after his return to employment (i) unless some portion of his Employer Contribution Account or Employer Matching Account had become vested before he incurred the first One-Year Vesting Break, and (ii) until he has completed one Year of Service following his return to employment; and (3) separate sub-accounts will be maintained for the Participant's pre-break and post-break Employer Contribution Account and Employer Matching Account, until both sub-accounts become fully vested. Both sub-accounts will share in the earnings and losses of the Trust Fund. 8.3. Forfeiture of Non-Vested Amounts. The portion of a former Employee's Accounts that has not become vested under Section 8.1 shall become a Forfeiture in accordance with the following rules, and shall be applied in accordance with Section 4.13 or Section 5.2. (a) If Distribution Is Made. If any or all of the vested portion of a Participant's Accounts is distributed in accordance with Section 9.1 or 9.2 before the Participant incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture in the Plan Year in which the distribution occurs. For purposes of this Section 8.3, if the value of the vested portion of a Participant's Accounts is zero, the Participant shall be deemed to have received a distribution of the entire vested balance of his Accounts on the day his employment terminates. If the Participant elects to have distributed less than the entire vested portion of his Employer Contribution Account or Employer Matching Accounts, the part of the nonvested portion that will become a Forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator of which is the total value of the entire vested portion of such Accounts. (b) Right of Repayment. If a Participant who receives a distribution pursuant to paragraph (a) returns to employment with an Affiliated Employer, the balance of his Employer Contribution Account and Employer Matching Account will be restored to the amount of such balance on the date of distribution, if he repays to the Plan the full amount of the distribution, before the earlier of (i) the fifth anniversary of his return to employment or (ii) the date he incurs five consecutive One-Year Vesting Breaks following the date of distribution. If an Employee is deemed to receive a distribution pursuant to this Section 8.3, and he resumes employment covered under this Plan before the date he incurs five consecutive One-Year Vesting Breaks, upon his reemployment the Employer-derived account balance of the Employee will be restored to the amount on the date of such deemed distribution. Such restoration will be made, first, from the amount of any Forfeitures available for reallocation as of the last day of the Plan Year in which repayment is made, to the extent thereof; and to the extent that Forfeitures are not available or are insufficient to restore the balance, from contributions made by the Employer pursuant to Section 4.1(f). (c) If No Distribution Is Made. If no distribution (nor deemed distribution) is made to a Participant before he incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture at the end of the Plan Year that constitutes his fifth consecutive One-Year Vesting Break. (d) Adjustment of Accounts. Before a Forfeiture is incurred, a Participant's Accounts shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants. (e) Accumulated Deductible Contributions. For Plan Years beginning before January 1, 1989, a Participant's vested Account balance shall not include accumulated deductible contributions within the meaning of Section 72(o)(5)(B) of the Code. 8.4. Special Rule in the Event of a Withdrawal. If a withdrawal pursuant to Section 12.2 or 12.3 is made from a Participant's Employer Profit Sharing Account or Employer Matching Account before the Account is fully vested, and the Participant may subsequently increase the vested percentage in the Account, then a separate account will be established at the time of the withdrawal, and at any relevant time after the withdrawal the vested portion of the separate account will be equal to the amount "X" determined by the following formula: X = P(AB + D) - D For purposes of the formula, P is the Participant's vested percentage at the relevant time, AB is the account balance at the relevant time, and D is the amount of the withdrawal. 8.5. Vesting Election. If the Plan is amended to change any vesting schedule, or is amended in any way that directly or indirectly affects the computation of a Participant's vested percentage, each Participant who has completed not less than three Years of Service may elect, within a reasonable period after the adoption of the amendment or change, in a writing filed with the Employer to have his vested percentage computed under the Plan without regard to such amendment. For a Participant who is not credited with at least one Hour of Service in a Plan Year beginning after December 31, 1988, the preceding sentence shall be applied by substituting "five Years of Service" for "three Years of Service." The period during which the election may be made shall commence with the date the amendment is adopted, or deemed to be made, and shall end on the latest of (a) 60 days after the amendment is adopted; (b) 60 days after the amendment becomes effective; or (c) 60 days after the Participant is issued written notice of the amendment by the Employer. ARTICLE 9. PAYMENT OF BENEFITS 9.1. Distribution of Accounts. A Participant or Beneficiary who has become eligible for a distribution of benefits pursuant to Article 7 may elect to receive such benefits at any time, subject to the terms and conditions of this Article 9, Article 10 and Article 11. Unless a Participant or Beneficiary elects otherwise, distribution of benefits will begin no later than the 60th day after the end of the Plan Year in which the latest of the following events occurs: (a) The Participant attains age 65 (or if earlier, the normal retirement age specified by the Employer in the Plan Agreement); or (b) The tenth anniversary of the year in which the Participant commenced participation in the Plan; or (c) The Participant's employment with the Affiliated Employers terminates. A Beneficiary who is the surviving spouse of a Participant may elect to have distribution of benefits begin within the 90-day period following the Participant's death. For purposes of this Section 9.1, the failure of a Participant (and his spouse, if spousal consent is required pursuant to Article 10) to consent to a distribution while a benefit is "immediately distributable" within the meaning of Section 9.2 shall be considered an election to defer commencement of payment. The vested portion of a Participant's Accounts will be distributed in a lump sum in cash no later than 60 days after the end of the Plan Year in which his employment terminates, if at the time the Participant first became entitled to a distribution the value of such vested portion derived from Employer and Employee contributions does not exceed $3,500. Commencement of distributions in any case shall be subject to Section 9.4. 9.2. Restriction on Immediate Distributions. A Participant's account balance is considered "immediately distributable" if any part of the account balance could be distributed to the Participant (or his surviving spouse) before the Participant attains, or would have attained if not deceased, the later of the normal retirement age specified in the Plan Agreement or age 62. (a) If the value of a Participant's vested account balance derived from Employer and Employee contributions exceeds (or at the time of any prior distribution exceeded) $3,500, and the account balance is immediately distributable, the Participant and his spouse (or where either the Participant or the spouse has died, the survivor) must consent to any such distribution, unless an exception described in paragraph (b) applies. The consent of the Participant and his spouse shall be obtained in writing within the 90-day period ending on the annuity starting date, which is the first day of the first period for which an amount is paid as an annuity (or any other form). The Plan Administrator shall notify the Participant and the spouse, no less than 30 days and no more than 90 days before the annuity starting date, of the right to defer any distribution until the Participant's account balance is no longer immediately distributable. Such notification shall include a general description of the material features of the optional forms of benefit available under the Plan and an explanation of their relative values, in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code. If a distribution is one to which Sections 401(a)(11) and 417 of the Code do not apply, such distribution may commence less than 30 days after the required notification is given, provided that: (1) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); and (2) the Participant, after receiving the notice, affirmatively elects a distribution. (b) Notwithstanding paragraph (a), only the Participant need consent to the commencement of a distribution in the form of a Qualified Joint and Survivor Annuity while the account balance is immediately distributable. Furthermore, if payment in the form of a Qualified Joint and Survivor Annuity is not required with respect to the Participant pursuant to Section 10.1(b) of the Plan, only the Participant need consent to the distribution of an account balance that is immediately distributable. Neither the consent of the Participant nor the spouse shall be required to the extent that a distribution is required to satisfy Section 401(a)(9) or Section 415 of the Code. In addition, upon termination of the Plan, if the Plan does not offer an annuity option purchased from a commercial provider, and no Affiliated Employer maintains another defined contribution plan (other than an employee stock ownership plan as defined in Section 4975(e)(7) of the Code), a Participant's account balance shall be distributed to the Participant without his consent. If any Affiliated Employer maintains another defined contribution plan (other than an employee stock ownership plan as defined in Section 4975(e)(7) of the Code), a Participant's account balance shall be transferred to that defined contribution plan without his consent, unless he consents to an immediate distribution. For purposes of determining the applicability of the foregoing consent requirements to distributions made before the first day of the first Plan Year beginning after December 31, 1988, the Participant's vested account balance shall not include amounts attributable to accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code. 9.3. Optional Forms of Distribution. If at the time a Participant first becomes entitled to a distribution the value of his vested Account balance derived from Employer and Employee contributions does not exceed $3,500, distribution shall be made in a lump sum in cash. Subject to the preceding sentence and to the rules of Article 10 concerning joint and survivor annuities, a Participant or Beneficiary may elect to receive benefits in any of the following optional forms: (a) A lump sum payment in cash or in kind or in a combination of both; (b) A series of installments over a period certain that meets the requirements of Article 11; or (c) In the event that the Plan is adopted as an amendment to an existing plan, any optional form of distribution available under the existing plan. Such optional forms of distribution may be made available where necessary through the purchase by the Plan Administrator of an appropriate annuity contract from a commercial provider, with terms complying with the requirements of Article 11. If the Plan is a direct or indirect transferee of a defined benefit plan, money purchase plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code, the provisions of Article 10 shall apply. 9.4. Distribution Procedure. The Trustee shall make or commence distributions to or for the benefit of Participants only on receipt of an instruction from the Employer in writing or by such other means as shall be acceptable to the Trustee, certifying that a distribution of a Participant's benefits is payable pursuant to the Plan, and specifying the time and manner of payment. The amount to be distributed shall be determined as of the Valuation Date coincident with or next following the Employer's order. The Trustee shall be fully protected in acting upon the directions of the Employer in making benefit distributions, and shall have no duty to determine the rights or benefits of any person under the Plan or to inquire into the right or power of the Employer to direct any such distribution. The Trustee shall be entitled to assume conclusively that any determination by the Employer with respect to a distribution meets the requirements of the Plan. The Trustee shall not be required to make any payment hereunder in excess of the net realizable value of the assets of the Account in question at the time of such payment, nor to make any payment in cash unless the Employer has furnished instructions as to the assets to be converted to cash for the purposes of making payment. 9.5. Lost Distributee. In the event that the Plan Administrator is unable with reasonable effort to locate a person entitled to distribution under the Plan, the Accounts distributable to such a person shall become a Forfeiture at the end of the third Plan Year after the Plan Administrator's efforts to locate such person began; provided, however, that the amount of the Forfeiture shall be restored in the event that such person thereafter submits a claim for benefits under the Plan. Such restoration will be made, first, from the amount of Forfeitures available for reallocation as of the last day of the Plan Year in which the claim is made, to the extent thereof; and to the extent that Forfeitures are not available or are insufficient to restore the balance, from contributions made by the Employer pursuant to Section 4.1(f). A Forfeiture occurring under this Section 9.5 shall be used to reduce the amount of contributions required of the Employer as described in Section 4.13 and Section 5.2. 9.6. Direct Rollovers. This Section 9.6 applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. For purposes of this Section 9.6, the following definitions shall apply: (a) Eligible Rollover Distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributees and the distributee's Designated Beneficiary (as defined in Section 11.3), or for a specified period of ten years or more, any distribution to the extent such distribution is required under section 401(a)(9) of the Code, and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (b) Eligible Retirement Plan. An eligible retirement plan is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (c) Distributee. A distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a Qualified Domestic Relations Order are distributees with regard to the interest of the spouse or former spouse. (d) Direct Rollover. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. 9.7. Distributions Required by a Qualified Domestic Relations Order. To the extent required by a Qualified Domestic Relations Order, the Plan Administrator shall make distributions from a Participant's Accounts to any alternate payee named in such order in a manner consistent with the distribution options otherwise available under the Plan, regardless of whether the Participant is otherwise entitled to a distribution at such time under the Plan. ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS 10.1. Applicability. (a) Generally. The provisions of Sections 10.2 through 10.5 shall generally apply to a Participant who is credited with at least one Hour of Service on or after August 23, 1984, and such other Participants as provided in Section 10.6. (b) Exception for Certain Plans. The provisions of Sections 10.2 through 10.5 shall not apply to a Participant if: (i) the Participant does not or cannot elect payment of benefits in the form of a life annuity, and (ii) on the death of the Participant, his Vested Account Balance will be paid to his surviving spouse (unless there is no surviving spouse, or the surviving spouse has consented to the designation of another Beneficiary in a manner conforming to a Qualified Election) and the surviving spouse may elect to have distribution of the Vested Account Balance (adjusted in accordance with Section 13.4 for gains or losses occurring after the Participant's death) commence within the 90-day period following the date of the Participant's death. The Participant may waive the spousal death benefit described in this paragraph (b) at any time, provided that no such waiver shall be effective unless it satisfies the conditions applicable under Section 10.4(c) to a Participant's waiver of a Qualified Preretirement Survivor Annuity. The exception in this paragraph (b) shall not be operative with respect to a Participant if the Plan: (1) is a direct or indirect transferee of a defined benefit plan, money purchase pension plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code; or (2) is adopted as an amendment of a plan that did not qualify for the exception in this paragraph (b) before the amendment was adopted. For purposes of this paragraph (b), Vested Account Balance shall have the meaning provided in Section 10.4(f). The provisions of Sections 10.2 through 10.6 set forth the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code. (c) Exception for Certain Amounts. The provisions of Sections 10.2 through 10.5 shall not apply to any distribution made on or after the first day of the first Plan Year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible employee contributions as defined in Section 72(o)(5)(B) of the Code, and maintained on behalf of a Participant in a money purchase pension plan or a target benefit plan, provided that the exceptions applicable to certain profit sharing plans under paragraph (b) are applicable with respect to the separate account (for this purpose, Vested Account Balance means the Participant's separate account balance attributable solely to accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code). 10.2. Qualified Joint and Survivor Annuity. Unless an optional form of benefit is selected pursuant to a Qualified Election within the 90-day period ending on the Annuity Starting Date, a married Participant's Vested Account Balance will be paid in the form of a Qualified Joint and Survivor Annuity and an unmarried Participant's Vested Account Balance will be paid in the form of a life annuity. In either case, the Participant may elect to have such an annuity distributed upon his attainment of the Earliest Retirement Age under the Plan. 10.3. Qualified Preretirement Survivor Annuity. Unless an optional form of benefit has been selected within the Election Period pursuant to a Qualified Election, the Vested Account Balance of a Participant who dies before the Annuity Starting Date shall be applied toward the purchase of an annuity for the life of his surviving spouse (a "Qualified Preretirement Survivor Annuity"). The surviving spouse may elect to have such an annuity distributed within a reasonable period after the Participant's death. For purposes of this Article 10, the term "spouse" means the current spouse or surviving spouse of a Participant, except that a former spouse will be treated as the spouse or surviving spouse (and a current spouse will not be treated as the spouse or surviving spouse) to the extent provided under a qualified domestic relations order as described in Section 414(p) of the Code. 10.4. Definitions. The following definitions apply: (a) "Election Period" means the period beginning on the first day of the Plan Year in which a Participant attains age 35 and ending on the date of the Participant's death. If a Participant separates from service before the first day of the Plan Year in which he reaches age 35, the Election Period with respect to his account balance as of the date of separation shall begin on the date of separation. A Participant who will not attain age 35 as of the end of a Plan Year may make a special Qualified Election to waive the Qualified Preretirement Survivor Annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age 35. Such an election shall not be valid unless the Participant receives a written explanation of the Qualified Preretirement Survivor Annuity in such terms as are comparable to the explanation required under Section 10.5. Qualified Preretirement Survivor Annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35. Any new waiver on or after that date shall be subject to the full requirements of this article. (b) "Earliest Retirement Age" means the earliest date on which the Participant could elect to receive Retirement benefits under the Plan. (c) "Qualified Election" means a waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any such waiver shall not be effective unless: (1) the Participant's spouse consents in writing to the waiver; (2) the waiver designates a specific Beneficiary, including any class of beneficiaries or any contingent beneficiaries, which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent); (3) the spouse's consent acknowledges the effect of the waiver; and (4) the spouse's consent is witnessed by a plan representative or notary public. Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity shall not be effective unless the waiver designates a form of benefit payment which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent). If it is established to the satisfaction of a plan representative that there is no spouse or that the spouse cannot be located, a waiver will be deemed a Qualified Election. Any consent by a spouse obtained under these provisions (and any establishment that the consent of a spouse may not be obtained) shall be effective only with respect to the particular spouse involved. A consent that permits designations by the Participant without any requirement of further consent by the spouse must acknowledge that the spouse has the right to limit the consent to a specific Beneficiary and a specific form of benefit where applicable, and that the spouse voluntarily elects to relinquish either or both of those rights. A revocation of a prior waiver may be made by a Participant without the consent of the spouse at any time before the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in Section 10.5. (d) "Qualified Joint and Survivor Annuity" means an immediate annuity for the life of a Participant, with a survivor annuity for the life of the spouse which is not less than 50% and not more than 100% of the amount of the annuity which is payable during the joint lives of the Participant and the spouse, and which is the amount of benefit that can be purchased with the Participant's Vested Account Balance. The percentage of the survivor annuity under the Plan shall be 50%. (e) "Annuity Starting Date" means the first day of the first period for which an amount is paid as an annuity (or any other form). (f) "Vested Account Balance" means the aggregate value of the Participant's vested account balance derived from Employer and Employee contributions (including rollovers), whether vested before or upon death, including the proceeds of insurance contracts, if any, on the Participant's life. The provisions of this Article 10 shall apply to a Participant who is vested in amounts attributable to Employer contributions, Employee contributions or both at the time of death or distribution. (g) "Straight life annuity" means an annuity payable in equal installments for the life of the Participant that terminates upon the Participant's death. 10.5. Notice Requirements. In the case of a Qualified Joint and Survivor Annuity, no less than 30 days and no more than 90 days before a Participant's Annuity Starting Date the Plan Administrator shall provide to him a written explanation of (i) the terms and conditions of a Qualified Joint and Survivor Annuity, (ii) the Participant's right to make, and the effect of, an election to waive the Qualified Joint and Survivor Annuity form of benefit, (iii) the rights of the Participant's spouse, and (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity. In the case of a Qualified Preretirement Survivor Annuity, within the applicable period for a Participant the Plan Administrator shall provide to him a written explanation of the Qualified Preretirement Survivor Annuity, in terms and manner comparable to the requirements applicable to the explanation of a Qualified Joint and Survivor Annuity as described in the preceding paragraph. The applicable period for a Participant is whichever of the following periods ends last: (i) the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35; (ii) a reasonable period ending after an individual becomes a Participant; (iii) a reasonable period ending after this Article 10 first applies to the Participant. Notwithstanding the foregoing, in the case of a Participant who separates from service before attaining age 35, notice must be provided within a reasonable period ending after his separation from service. For purposes of applying the preceding paragraph, a reasonable period ending after the enumerated events described in (ii) and (iii) is the end of the two-year period beginning one year before the date the applicable event occurs, and ending one year after that date. In the case of a Participant who separates from service before the Plan Year in which he reaches age 35, notice shall be provided within the two-year period beginning one year before the separation and ending one year after the separation. If such a Participant thereafter returns to employment with the Employer, the applicable period for the Participant shall be redetermined. 10.6. Transitional Rules. (a) Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the preceding Sections of this Article 10, must be given the opportunity to elect to have those Sections apply if the Participant is credited with at least one Hour of Service under the Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and the Participant had at least ten years of vesting service when he or she separated from service. (b) Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under the Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his benefits paid in accordance with paragraph (d) of this Section 10.6. (c) The respective opportunities to elect (as described in paragraphs (a) and (b) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to be paid to those Participants. (d) Any Participant who has so elected pursuant to paragraph (b) of this Section 10.6, and any Participant who does not elect under paragraph (a), or who meets the requirements of paragraph (a) except that he does not have at least ten years of vesting service when he separates from service, shall have his benefits distributed in accordance with all of the following requirements, if his benefits would otherwise have been payable in the form of a life annuity: (1) Automatic joint and survivor annuity. If benefits in the form of a life annuity become payable to a married Participant who: (A) begins to receive payments under the Plan on or after normal retirement age; or (B) dies on or after normal retirement age while still working for the Employer; or (C) begins to receive payments on or after the qualified early retirement age; or (D) separates from service on or after attaining normal retirement age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits; then such benefits will be received under the Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the election period, which must begin at least six months before the Participant attains qualified early retirement age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time. (2) Election of early survivor annuity. A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect during the election period to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (i) the 90th day before the Participant attains the qualified early retirement age, or (ii) the date on which participation begins, and ends on the date the Participant terminates employment. (3) For purposes of this Section 10.6, qualified early retirement age is the latest of the earliest date under the Plan on which the Participant may elect to receive Retirement benefits, the first day of the 120th month beginning before the Participant reaches normal retirement age, or the date the Participant begins participation. ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS 11.1. General Rules. Subject to Article 10, Joint and Survivor Annuity Requirements, the requirements of this Article 11 shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provisions of the Plan. All distributions required under this Article 11 shall be determined and made in accordance with the Income Tax Regulations issued under Section 401(a)(9) of the Code (including proposed regulations, until the adoption of final regulations), including the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2 of the proposed regulations. 11.2. Required Beginning Date. The entire interest of a Participant must be distributed, or begin to be distributed, no later than the Participant's required beginning date, determined as follows. (a) General Rule. The required beginning date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age 70 1/2. (b) Transitional Rules. The required beginning date of a Participant who attains age 70 1/2 before January 1, 1988, shall be determined in accordance with (1) or (2) below: (1) Non-5% owners. The required beginning date of a Participant who is not a 5% owner is the first day of April of the calendar year following the calendar year in which the later of his Retirement or his attainment of age 70 1/2 occurs. (2) 5% owners. The required beginning date of a Participant who is a 5% owner during any year beginning after December 31, 1979, is the first day of April following the later of: (A) the calendar year in which the Participant attains age 70 1/2, or (B) the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a 5% owner, or the calendar year in which the Participant retires. The required beginning date of a Participant who is not a 5% owner, who attains age 70 1/2 during 1988 and who has not retired as of January 1, 1989, is April 1, 1990. (c) Rules for 5% Owners. A Participant is treated as a 5% owner for purposes of this Section 11.2 if he is a 5% owner as defined in Section 416(i) of the Code (determined in accordance with Section 416 but without regard to whether the Plan is top heavy) at any time during the Plan Year ending with or within the calendar year in which he attains age 66 1/2, or any subsequent Plan Year. Once distributions have begun to a 5% owner under this Section 11.2, they must continue, even if the Participant ceases to be a 5% owner in a subsequent year. 11.3. Limits on Distribution Periods. As of the first Distribution Calendar Year, distributions not made in a single sum may be made only over one or a combination of the following periods: (a) the life of the Participant, (b) the life of the Participant and his Designated Beneficiary, (c) a period certain not extending beyond the Life Expectancy of the Participant, or (d) a period certain not extending beyond the Joint and Last Survivor Expectancy of the Participant and his Designated Beneficiary. "Designated Beneficiary" means the individual who is designated as the Beneficiary under the Plan in accordance with Section 401(a)(9) of the Code and the regulations issued thereunder (including proposed regulations, until the adoption of final regulations) and Section 7.2. "Distribution Calendar Year" means a calendar year for which a minimum distribution is required under Section 401(a)(9) of the Code and this Section 11.3. For distributions beginning before the Participant's death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Participant's required beginning date. For distributions beginning after the Participant's death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin pursuant to Section 11.5. "Life Expectancy" and "Joint and Last Survivor Expectancy" are computed by use of the expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Unless otherwise elected by the Participant (or his spouse, in the case of distributions described in Section 11.5(b)) by the time distributions are required to begin, Life Expectancies shall be recalculated annually. Any such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The Life Expectancy of a nonspouse beneficiary may not be recalculated. 11.4. Determination of Amount to Be Distributed Each Year. If the Participant's interest is to be distributed in other than a single sum, the following minimum distribution rules shall apply on or after the required beginning date. Paragraphs (a) through (d) apply to distributions in forms other than the purchase of an annuity contract. (a) If a Participant's Benefit (as defined below) is to be distributed over (1) a period not extending beyond the Life Expectancy of the Participant or the Joint Life and Last Survivor Expectancy of the Participant and his Designated Beneficiary, or (2) a period not extending beyond the Life Expectancy of the Designated Beneficiary, the amount required to be distributed for each calendar year, beginning with distributions for the first Distribution Calendar Year, must at least equal the quotient obtained by dividing the Participant's Benefit by the Applicable Life Expectancy (as defined below). (b) For calendar years beginning before January 1, 1989, if the Participant's spouse is not the Designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the Life Expectancy of the Participant. (c) For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first Distribution Calendar Year, shall not be less than the quotient obtained by dividing the Participant's Benefit by the lesser of (1) the Applicable Life Expectancy or (2) if the Participant's spouse is not the Designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Distributions after the death of the Participant shall be distributed using the Applicable Life Expectancy in paragraph (a) above as the relevant divisor, without regard to Proposed Regulations Section 1.401(a)(9)-2. (d) The minimum distribution required for the Participant's first Distribution Calendar Year must be made on or before the Participant's required beginning date. The minimum distribution for other calendar years, including the minimum distribution for the Distribution Calendar Year in which the Employee's required beginning date occurs, must be made on or before December 31 of that Distribution Calendar Year. (e) If the Participant's Benefit is distributed in the form of an annuity contract purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of Section 401(a)(9) of the Code and the regulations issued thereunder (including proposed regulations, until the adoption of final regulations). "Applicable Life Expectancy" means the Life Expectancy (or Joint and Last Survivor Expectancy) calculated using the attained age of the Participant (or Designated Beneficiary) as of the Participant's (or Designated Beneficiary's) birthday in the applicable calendar year, reduced by one for each calendar year which has elapsed since the date Life Expectancy was first calculated. If Life Expectancy is being recalculated, the Applicable Life Expectancy shall be the Life Expectancy as so recalculated. The applicable calendar year shall be the first Distribution Calendar Year, and if Life Expectancy is being recalculated such succeeding calendar year. If annuity payments commence in accordance with Section 11.4(e) before the required beginning date, the applicable calendar year is the year such payments commence. If distribution is in the form of an immediate annuity purchased after the Participant's death with the Participant's remaining interest in the Plan, the applicable calendar year is the year of purchase. "Participant's Benefit" means the account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year), increased by the amount of any contributions or Forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. For purposes of the preceding sentence, if any portion of the minimum distribution for the first Distribution Calendar Year is made in the second Distribution Calendar Year on or before the required beginning date, the amount of the minimum distribution made in the second Distribution Calendar Year shall be treated as if it had been made in the immediately preceding Distribution Calendar Year. 11.5. Death Distribution Provisions. (a) Distribution Beginning before Death. If the Participant dies after distribution of his interest has begun, the remaining portion of his interest will continue to be distributed at least as rapidly as under the method of distribution being used before the Participant's death. (b) Distribution Beginning after Death. If the Participant dies before distribution of his interest begins, distribution of his entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death, except to the extent that an election is made to receive distributions in accordance with (1) or (2) below: (1) If any portion of the Participant's interest is payable to a Designated Beneficiary, distributions may be made over the Designated Beneficiary's life, or over a period certain not greater than the Life Expectancy of the Designated Beneficiary, commencing on or before December 31 of the calendar year immediately following the calendar year in which the Participant died; or (2) If the Designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant died, and (ii) December 31 of the calendar year in which the Participant would have attained age 70 1/2. If the Participant has not made an election pursuant to this Section 11.5 by the time of his death, the Participant's Designated Beneficiary must elect the method of distribution no later than the earlier of (i) December 31 of the calendar year in which distributions would be required to begin under this Section 11.5, or (ii) December 31 of the calendar year which contains the fifth anniversary of the date of death of the Participant. If the Participant has no Designated Beneficiary, or if the Designated Beneficiary does not elect a method of distribution, distribution of the Participant's entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (c) For purposes of paragraph (b), if the surviving spouse dies after the Participant, but before payments to the spouse begin, the provisions of paragraph (b), with the exception of subparagraph (2) therein, shall be applied as if the surviving spouse were the Participant. (d) For purposes of this Section 11.5, any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse of the Participant if the amount becomes payable to the surviving spouse when the child reaches the age of majority. (e) For the purposes of this Section 11.5, distribution of a Participant's interest is considered to begin on the Participant's required beginning date (or, if paragraph (c) above is applicable, the date distribution is required to begin to the surviving spouse pursuant to paragraph (b) above). If distribution in the form of an annuity contract described in Section 11.4(e) irrevocably commences to the Participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences. 11.6. Transitional Rule. Notwithstanding the other requirements of this Article 11, and subject to the requirements of Article 10, Joint and Survivor Annuity Requirements, distribution on behalf of any Participant, including a 5% owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences): (a) The distribution is one which would not have disqualified the Trust under Section 401(a)(9) of the Internal Revenue Code of 1954 as in effect before its amendment by the Deficit Reduction Act of 1984. (b) The distribution is in accordance with a method of distribution designated by the Employee whose interest in the Trust is being distributed or, if the Employee is deceased, by a Beneficiary of the Employee. (c) The designation specified in paragraph (b) was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984. (d) The Employee had accrued a benefit under the Plan as of December 31, 1983. (e) The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority. A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee or the Beneficiary to whom such distribution is being made will be presumed to have designated the method of distribution under which the distribution is being made, if the method of distribution was specified in writing and the distribution satisfies the requirements in paragraphs (a) and (e). If a designation is revoked, any subsequent distribution must satisfy the requirements of Section 401(a)(9) of the Code and the regulations thereunder. If a designation is revoked after the date distributions are required to begin, the Trust must distribute by the end of the calendar year following the calendar year in which the revocation occurs the total amount not yet distributed which would have been required to have been distributed to satisfy Section 401(a)(9) of the Code and the regulations thereunder, but for the designation described in paragraphs (b) through (e). For calendar years beginning after December 31, 1988, such distributions must meet the minimum distribution incidental benefit requirements in Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any changes in the designation generally will be considered to be a revocation of the designation, but the mere substitution or addition of another beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as the substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). In the case of an amount transferred or rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-l of the Proposed Income Tax Regulations shall apply. ARTICLE 12. WITHDRAWALS AND LOANS 12.1. Withdrawals from Participant Contribution Accounts. Subject to the requirements of Article 10, a Participant may upon written notice (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) to the Employer withdraw any amount from his Participant Contribution Account (if any). A withdrawn amount may not be repaid to the Plan. No Forfeiture will occur solely as a result of an Employee's withdrawal from a Participant Contribution Account. 12.2. Withdrawals on Account of Hardship. (a) If the Employer has so elected in the Plan Agreement, upon a Participant's written request (or in such other manner as shall be made available and agreed upon by the Employer and Putnam), the Plan Administrator may permit a withdrawal of funds from the vested portion of the Participant's Accounts on account of the Participant's financial hardship, which must be demonstrated to the satisfaction of the Plan Administrator, provided, that no hardship withdrawal shall be made from a Qualified Nonelective Contribution Account or Qualified Matching Account. In considering such requests, the Plan Administrator shall apply uniform standards that do not discriminate in favor of Highly Compensated Employees. If hardship withdrawals are permitted from more than one of the Elective Deferral Account, Rollover Account, Employer Matching Account, and Employer Profit Sharing Account, they shall be made first from a Participant's Elective Deferral Account, then from his Rollover Account, then from his Employer Matching Account, and finally from his Employer Profit Sharing Account. A withdrawn amount may not be repaid to the Plan. (b) The maximum amount that may be withdrawn on account of hardship from an Elective Deferral Account after December 31, 1988, shall not exceed the sum of (1) the amount credited to the Account as of December 31, 1988, and (2) the aggregate amount of the Elective Deferrals made by the Participant after December 31, 1988, and before the hardship withdrawal. (c) Hardship withdrawals shall be permitted only on account of the following financial needs: (1) Expenses for medical care described in Section 213(d) of the Code for the Participant, his spouse, children and dependents, or necessary for these persons to obtain such care; (2) Purchase of the principal residence of the Participant (excluding regular mortgage payments); (3) Payment of tuition and related educational fees and room and board expenses for the upcoming 12 months of post-secondary education for the Participant, his spouse, children or dependents; or (4) Payments necessary to prevent the Participant's eviction from, or the foreclosure of a mortgage on, his principal residence. (d) Hardship withdrawals shall be subject to the spousal consent requirements contained in Sections 411(a)(11) and 417 of the Code, to the same extent that those requirements apply to a Participant pursuant to Section 10.1. (e) A hardship distribution will be permitted to a Participant only upon satisfaction of the following conditions: (1) The Participant has obtained all nontaxable loans and all distributions other than hardship withdrawals available to him from all plans maintained by the Affiliated Employers; (2) The hardship withdrawal does not exceed the amount of the Participant's financial need as described in paragraph (b) plus any amounts necessary to pay federal, state and local income taxes and penalties reasonably anticipated to result from the withdrawal; (3) With respect to withdrawals from an Elective Deferral Account, all plans maintained by the Affiliated Employers provide that the Participant's Elective Deferrals and voluntary after-tax contributions will be suspended for a period of 12 months following his receipt of a hardship withdrawal; and (4) With respect to withdrawals from an Elective Deferral Account, all plans maintained by the Affiliated Employers provide that the amount of Elective Deferrals that the Participant may make in his taxable year immediately following the year of a hardship withdrawal will not exceed the applicable limit under Section 402(g) of the Code for the taxable year, reduced by the amount of Elective Deferrals made by the Participant in the taxable year of the hardship withdrawal. 12.3. Withdrawals After Reaching Age 59 1/2. A Participant who has reached age 59 1/2 may upon written request to the Employer (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) withdraw during his employment any amount not exceeding the vested balance of his Accounts. A withdrawn amount may not be repaid to the Plan. 12.4. Loans. If the Employer has so elected in the Plan Agreement, the Employer may direct the Trustee to make a loan to a Participant or Beneficiary from the vested portion of his Accounts, subject to the following terms and conditions and to such reasonable additional rules and regulations as the Plan Administrator may establish for the orderly operation of the program: (a) The Plan Administrator shall administer the loan program subject to the terms and conditions of this Section 12.4. (b) A Participant's or Beneficiary's request for a loan shall be submitted to the Plan Administrator by means of a written application on a form supplied by the Plan Administrator (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). Applications shall be approved or denied by the Plan Administrator on the basis of its assessment of the borrower's ability to collateralize and repay the loan, as revealed in the loan application. (c) Loans shall be made to all Participants and Beneficiaries on a reasonably equivalent basis. Loans shall not be made available to Highly Compensated Employees (as defined in Section 414(q) of the Code) in amounts greater than the amounts made available to other Employees (relative to the borrower's Account balance). (d) Loans must be evidenced by the Participant's promissory note for the amount of the loan payable to the order of the Trustee, and adequately secured by assignment of not more than fifty percent (50%) of the Participant's entire right, title and interest in and to the Trust Fund, exclusive of any asset as to which Putnam is not the Trustee. (e) Loans must bear a reasonable interest rate comparable to the rate charged by commercial lenders in the geographical area for similar loans. The Plan Administrator shall not discriminate among Participants in the matter of interest rates, but loans may bear different interest rates if, in the opinion of the Plan Administrator, the difference in rates is justified by conditions that would customarily be taken into account by a commercial lender in the Employer's geographical area. (f) The period for repayment for any loan shall not exceed five years, except in the case of a loan used to acquire a dwelling unit which within a reasonable time is to be used as the principal residence of the Participant, in which case the repayment period may exceed five years. The terms of a loan shall require that it be repaid in level payments of principal and interest not less frequently then quarterly throughout the repayment period, except that alternative arrangements for repayment may apply in the event that the borrower is on unpaid leave of absence for a period not to exceed one year. (g) To the extent that a Participant would be required under Article 10 to obtain the consent of his spouse to a distribution of an immediately distributable benefit other than a Qualified Joint and Survivor Annuity, the consent of the Participant's spouse shall be required for the use of his Account as security for a loan. The spouse's consent must be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured, and obtained in accordance with the requirements of Section 10.4(c) for a Qualified Election. Any such consent shall thereafter be binding on the consenting spouse and any subsequent spouse of the Participant. A new consent shall be required for use of the Account as security for any extension, renewal, renegotiation or revision of the original loan. (h) If valid spousal consent has been obtained in accordance with Section 12.4(g), then notwithstanding any other provision of the Plan the portion of the Participant's account balance used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than 100% of the Participant's vested account balance (determined without regard to the preceding sentence) is payable to the surviving spouse, then the account balance shall be adjusted by first reducing the vested account balance by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse. (i) In the event of default on a loan by a Participant who is an active Employee, foreclosure on the Participant's Account as security will not occur until the Employer has reported to the Trustee the occurrence of an event permitting distribution from the Plan in accordance with Article 9 or Section 4.12. (j) No loan shall be made to an Owner-Employee or a Shareholder-Employee unless a prohibited transaction exemption is obtained by the Employer. (k) No loan to any Participant or Beneficiary can be made to the extent that the amount of the loan, when added to the outstanding balance of all other loans to the Participant or Beneficiary, would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made, or (b) one-half the value of the vested account balance of the Participant. For the purpose of the above limitation, all loans from all qualified plans of the Affiliated Employers are aggregated. (1) Loans shall be considered investments directed by a Participant pursuant to Section 13.3. The amount loaned shall be charged solely against the Accounts of the Participant, and repaid amounts and interest shall be credited solely thereto. 12.5. Procedure; Amount Available. Withdrawals and loans shall be made subject to the terms and conditions applicable to distributions pursuant to Section 9.4, except that the amount of any withdrawal or loan shall be determined by reference to the vested balance of the Participant's Account as of the most recent Valuation Date preceding the withdrawal or loan, and shall not exceed the amount of the vested account balance. 12.6. Protected Benefits. Notwithstanding any provision to the contrary, if an Employer amends an existing retirement plan ("prior plan") by adopting this Plan, to the extent any withdrawal option or form of payment available under the prior plan is an optional form of benefit within the meaning of Code Section 411(d)(6), such option or form of payment shall continue to be available to the extent required by such Code Section. 12.7. Restrictions Concerning Transferred Assets. Notwithstanding any provision to the contrary, if an Employer amends an existing defined benefit or money purchase pension plan ("prior pension plan") by adopting this Plan, accrued benefits attributable to the assets and liabilities transferred from the prior pension plan (which accrued benefits include the account balance of such Participant in the Plan attributable to such accrued benefits as of the date of the transfer and any earnings on such account balance subsequent to the transfer) shall be distributable only on or after the events upon which distributions are or were permissible under the prior pension plan. ARTICLE 13. TRUST FUND AND INVESTMENTS 13.1. Establishment of Trust Fund. The Employer and the Trustee hereby agree to the establishment of a Trust Fund consisting of all amounts as shall be contributed or transferred from time to time to the Trustee pursuant to the Plan, and all earnings thereon. The Trustee shall hold the assets of the Trust Fund for the exclusive purpose of providing benefits to Participants and Beneficiaries and defraying the reasonable expenses of administering the Plan, and no such assets shall ever revert to the Employer, except that: (a) contributions made by the Employer by mistake of fact, as determined by the Employer, may be returned to the Employer within one (1) year of the date of payment, (b) contributions that are conditioned on their deductibility under Section 404 of the Code may be returned to the Employer, to the extent disallowed, within one (1) year of the disallowance of the deduction, (c) contributions that are conditioned on the initial qualification of the Plan under the Code, and all investment gains attributable to them, may be returned to the Employer within one (1) year after such qualification is denied by determination of the Internal Revenue Service, but only if an application for determination of such qualification is made within the time prescribed by law for filing the Employer's federal income tax return for its taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe, and (d) amounts held in a suspense account may be returned to the Employer on termination of the Plan, to the extent that they may not then be allocated to any Participant's Account in accordance with Article 6. All Employer contributions under the Plan other than those made pursuant to Section 4.1(f) are hereby expressly conditioned on the initial qualification of the Plan and their deductibility under the Code. Investment gains attributable to contributions returned pursuant to Subsections (a) and (b) shall not be returned to the contributing Employer, and investment losses attributable to such contributions shall reduce the amount returned. 13.2. Management of Trust Fund. The assets of the Trust Fund shall be held in trust by the Trustee and accounted for in accordance with this Article 13, and shall be invested in accordance with Section 13.3 in the Investment Products specified by the Employer in the Plan Agreement and from time to time thereafter in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). The Employer shall have the exclusive authority and discretion to select the Investment Products available under the Plan. In making that selection, the Employer shall use the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. The Employer shall cause the available Investment Products to be diversified sufficiently to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. It is especially intended that the Trustee shall have no discretionary authority to determine the investment of Trust assets. Notwithstanding the foregoing, assets of the Trust Fund shall also be invested in Employer Stock if so elected by the Employer and agreed to by Putnam under the Service Agreement. 13.3. Investment Instructions. All amounts held in the Trust Fund under the Plan shall be invested in Investment Products solely in accordance with the instructions of the Participant to whose Accounts they are allocable, as delivered to Putnam in accordance with the Service Agreement. Instructions shall apply to future contributions, past accumulations, or both, according to their terms, and shall be communicated by the Employer to Putnam in accordance with procedures prescribed in the Service Agreement. Instructions shall be effective prospectively, coincident with or within a reasonable time after their receipt in good order by Putnam. An instruction once received shall remain in effect until it is changed by the provision of a new instruction. New instructions shall be accepted by Putnam on any valuation date. In the event that the Employer adopts this Putnam prototype Plan as an amendment to or restatement of an existing plan, the Employer shall specify one or more Investment Products to serve as the sole investments for all Participants' Accounts during the period in which existing records of the Plan are transferred to the Recordkeeper. During that period, new investment instructions as to existing assets of the Plan cannot be carried out, nor can distributions be made from the Plan except to the extent permitted under the terms of the Service Agreement. The Employer and the Recordkeeper shall use their best efforts to minimize the duration of the period to which the preceding sentence applies. To the extent specifically authorized and provided in the Service Agreement, the Employer may direct the Trustee to establish as an Investment Product a fund all of the assets of which shall be invested in shares of stock of the Employer that constitute "qualifying employer securities" within the meaning of section 407(d)(5) of ERISA ("Employer Stock"). The Plan Administrator as named fiduciary shall continually monitor the suitability of acquiring and holding Employer Stock under the fiduciary duty rules of section 404(a)(1) of ERISA (as modified by section 404(a)(2) of ERISA) and the requirements of section 404(c) of ERISA, and shall be responsible for ensuring that the procedures relating to the purchase, holding and sale of Employer Stock, and the exercise of any and all rights with respect to such Employer Stock shall be in accordance with section 404(c) of ERISA unless the Employer retains voting, tender or similar rights with respect to the Employer Stock. The Trustee shall not be liable for any loss, or by reason of any breach, which arises from the direction of the Plan Administrator with respect to the acquisition and holding of Employer Stock. The Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Plan Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting and tender or retention of Employer Stock. Putnam shall be under no duty to question or review the directions given by the Employer or to make suggestions to the Employer in connection therewith. Putnam shall not be liable for any loss, or by reason of any breach, that arises from the Employer's exercise or non-exercise of rights under this Article 13, or from any direction of the Employer unless it is clear on the face of the direction that the actions to be taken under the direction are prohibited by the fiduciary duty rules of Section 404(a) of ERISA. All interest, dividends and other income received with respect to, and any proceeds received from the sale or other disposition of, securities or other property held in an investment fund shall be credited to and reinvested in such investment fund, and all expenses of the Trust that are properly allocated to a particular investment fund shall be so allocated and charged. The Employer may at any time direct Putnam to eliminate any investment fund or funds, and Putnam shall thereupon dispose of the assets of such investment fund and reinvest the proceeds thereof in accordance with the directions of the Employer. Neither the Employer nor the Trustee nor Putnam shall be responsible for questioning any instructions of a Participant or for reviewing the investments selected therein, or for any loss resulting from instructions of a Participant or from the failure of a Participant to provide or to change instructions. Neither Putnam nor the Trustee shall have any duty to question any instructions received from the Employer or a Participant or to review the investments selected thereby, nor shall Putnam or the Trustee be responsible for any loss resulting from instructions received from the Employer or a Participant or from the failure of the Employer or a Participant to provide or to change instructions. In the event that Putnam or the Trustee receives a contribution under the Plan as to which no instructions are delivered, or such instructions as are delivered are unclear to Putnam or the Trustee, such contribution shall be invested until clear instructions are received in the default investment option set forth in the Service Agreement or other written agreement between the Employer and Putnam, or if no such option is so set forth, the Employer, by execution of the Plan Agreement, shall affirmatively elect to have such contributions invested in the Putnam Money Market Fund. Neither Putnam nor the Trustee shall have any discretionary authority or responsibility in the investment of the assets of the Trust Fund. 13.4. Valuation of the Trust Fund. As of each Valuation Date, the Trustee shall determine the fair market value of the Trust Fund, and the net earnings or losses and expenses of the Trust Fund for the period elapsed since the most recent previous Valuation Date shall be allocated among the Accounts of Participants. Earnings, losses and expenses which pertain to investments which are specifically held for a given Participant's Account shall be allocated solely to that Account. In the event that an investment is not specifically held for a given Participant's Account, the earnings, losses and expenses pertaining to that investment shall be allocated among all Participants' Accounts in the ratio that each such Account bears to the total of all Accounts of all Participants. Each Participant's Accounts shall be adjusted pursuant to this Section 13.4 until such time as they are either fully distributed or forfeited, regardless of whether the Participant continues to be an Employee. 13.5. Distributions on Investment Company Shares. Subject to Section 9.3, all dividends and capital gains or other distributions received on any Investment Company Shares credited to Participant's Account will (unless received in additional Investment Company Shares) be reinvested in full and fractional shares of the same Investment Company at the price determined as provided in the then current prospectus of the Investment Company. The shares so received or purchased upon such reinvestment will be credited to such accounts. If any dividends or capital gain or other distributions may be received on such Investment Company Shares at the election of the shareholder in additional shares or in cash or other property, the Trustee will elect to receive such dividends or distributions in additional Investment Company Shares. 13.6. Registration and Voting of Investment Company Shares. All Investment Company Shares shall be registered in the name of the Trustee or its nominee. Subject to any requirements of applicable law, the Trustee will transmit to the Employer copies of any notices of shareholders' meetings, proxies and proxy-soliciting materials, prospectuses and the annual or other reports to shareholders, with respect to Investment Company Shares held in the Trust Fund. The Trustee shall act in accordance with directions received from the Employer with respect to matters to be voted upon by the shareholders of the Investment Company. Such directions must be in writing on a form approved by the Trustee, signed by the Employer and delivered to the Trustee within the time prescribed by it. The Trustee will not vote Investment Company Shares as to which it receives no written directions. 13.7. Investment Manager. The Employer, with the consent of Putnam, may appoint an investment manager, as defined in Section 3(38) of the ERISA, with respect to all or a portion of the assets of the Trust Fund. The Trustee shall have no liability in connection with any action or nonaction pursuant to directions of such an investment manager. 13.8. Employer Stock. (a) Voting Rights. Notwithstanding any other provision of the Plan, the provisions of this Section 13.8(a) shall govern the voting of Employer Stock held by Putnam as Trustee under the Plan. The Trustee shall vote Employer Stock in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the voting of Employer Stock and shall direct the Trustee as to the voting of Employer Stock in accordance with the provisions of this Section 13.8(a). In either case, the Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting of Employer Stock. The remainder of this Section 13.8(a) applies only if the Employer elects in the Plan Agreement that Participants shall direct the Trustee as to the voting of Employer Stock. For purposes of this Section 13.8(a), the term "Participant" includes any Beneficiary with an Account in the Plan which is invested in Employer Stock. When the issuer of Employer Stock files preliminary proxy solicitation materials with the Securities and Exchange Commission, the Employer shall cause a copy of all the materials to be simultaneously sent to the Trustee, and the Trustee shall prepare a voting instruction form based upon these materials. At the time of mailing of notice of each annual or special stockholders' meeting of the issuer of Employer Stock, the Employer shall cause a copy of the notice and all proxy solicitation materials to be sent to each Participant, together with the foregoing voting instruction form to be returned to the Trustee or its designee. The form shall show the number of full and fractional shares of Employer Stock credited to the Participant's accounts, whether or not vested. For purposes of this Section 13.8(a), the number of shares of Employer Stock deemed credited to a Participant's Accounts shall be determined as of the date of record determined by the Employer for which an allocation has been completed and Employer Stock has actually been credited to Participant's Accounts. Procedures for the execution of purchases and sales of Employer Stock shall be as set forth in the Service Agreement. The Employer shall provide the Trustee with a copy of any materials provided to Participants and shall certify to the Trustee that the materials have been mailed or otherwise sent to Participants. Each Participant shall have the right to direct the Trustee as to the manner in which to vote that number of shares of Employer Stock held under the Plan (whether or not vested) equal to a fraction, of which the numerator is the number of shares of Employer Stock credited to his Account and the denominator is the number of shares of Employer Stock credited to all Participants' Accounts. Such directions shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) and shall be held in confidence by the Trustee and not divulged to the Employer, or any officer or employee thereof, or any other persons. Upon its receipt of directions, the Trustee shall vote the shares of Employer Stock as directed by the Participant. The Trustee shall not vote those shares of Employer Stock credited to the Accounts of Participants for which no voting directions are received. With respect to shares of Employer Stock held in the Trust which are not credited to a Participant's Account, the Plan Administrator shall retain the status of named fiduciary and shall direct the voting of such Employer Stock. (b) Tendering Rights. Notwithstanding any other provision of the Plan, the provisions of this Section 13.8(b) shall govern the tendering of Employer Stock by Putnam as Trustee under the Plan. In the event of a tender offer, the Trustee shall tender Employer Stock in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the tendering of Employer Stock in accordance with the provisions of this Section 13.8(b). The remainder of this Section 13.8(b) applies only if the Employer elects in the Plan Agreement that Participants shall direct the Trustee as to the tendering of Employer Stock. For purposes of this Section 13.8(b), the term "Participant" includes any Beneficiary with an Account in the Plan which is invested in Employer Stock. Upon commencement of a tender offer for any Employer Stock, the Employer shall notify each Plan Participant, and use its best efforts to distribute timely or cause to be distributed to Participants the same information that is distributed to shareholders of the issuer of Employer Stock in connection with the tender offer, and after consulting with the Trustee shall provide at the Employer's expense a means by which Participants may direct the Trustee whether or not to tender the Employer Stock credited to their Accounts (whether or not vested). The Employer shall provide to the Trustee a copy of any material provided to Participants and shall certify to the Trustees that the materials have been mailed or otherwise sent to Participants. Each Participant shall have the right to direct the Trustee to tender or not to tender some or all of the shares of Employer Stock credited to his Accounts. Directions from a Participant to the Trustee concerning the tender of Employer Stock shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) as is agreed upon by the Trustees and the Employer. The Trustee shall tender or not tender shares of Employer Stock as directed by the Participant. A Participant who has directed the Trustee to tender some or all of the shares of Employer Stock credited to his Accounts may, at any time before the tender offer withdrawal date, direct the Trustee to withdraw some or all of the tendered shares, and the Trustee shall withdraw the directed number of shares from the tender offer before the tender offer withdrawal deadline. A Participant shall not be limited as to the number of directions to tender or withdraw that he may give to the Trustee. The Trustee shall not tender shares of Employer Stock credited to a Participant's Accounts for which it has received no directions from the Plan Participant. The Trustee shall tender that number of shares of Employer Stock not credited to Participants' Accounts determined by multiplying the total number of such shares by a fraction, the numerator of which is the number of shares of Employer Stock credited to Participants' Accounts for which the Trustee has received directions from Participants to tender (which directions have not been withdrawn as of the date of this determination), and the denominator of which is the total number of shares of Employer Stock credited to Participants' Accounts. A direction by a Participant to the Trustee to tender shares of Employer Stock credited to his Accounts shall not be considered a written election under the Plan by the Participant to withdraw or to have distributed to him any or all of such shares. The Trustee shall credit to each account of the Plan Participant from which the tendered shares were taken the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from that account. Pending receipt of directions through the Administrator from the Participant as to the investment of the proceeds of the tendered shares, the Trustee shall invest the proceeds as the Administrator shall direct. To the extent that any Participant gives no direction as to the tendering of Employer stock that he has the right to direct under this Section 13.8(a), the Trustee shall not tender such Employer Stock. (c) Other Rights. With respect to all rights in connection with Employer Stock other than the right to vote and the right to tender, Participants are hereby appointed named fiduciaries to the same extent (if any) as provided in the foregoing paragraphs of this Section 13.8 with regard to the right to vote, and the Trustee shall follow the directions of Participants and the Plan Administrator with regard to the exercise of such rights to the same extent as with regard to the right to vote. 13.9. Insurance Contracts. If so provided in the Plan Agreement or other agreement between the Employer and the Trustee, the Plan Administrator may direct the Trustee to receive and hold or apply assets of the Trust to the purchase of individual or group insurance or annuity contracts ("policies" or "contracts") issued by any insurance company and in a form approved by the Plan Administrator (including contracts under which the contract holder is granted options to purchase insurance or annuity benefits), or financial agreements which are backed by group insurance or annuity contracts ("financial agreements"). If such investments are to be made, the Plan Administrator shall direct the Trustee to execute and deliver such applications and other documents as are necessary to establish record ownership, to value such policies, contracts or financial agreements under the method of valuation selected by the Plan Administrator, and to record or report such values to the Plan Administrator or any investment manager selected by the Plan Administrator, in the form and manner agreed to by the Plan Administrator. The Plan Administrator may direct the Trustee to exercise or may exercise directly the powers of contract holder under any policy, contract or financial agreement, and the Trustee shall exercise such powers only upon direction of the Plan Administrator. The Trustee shall have no authority to act in its own discretion, with respect to the terms, acquisition, valuation, continued holding and/or disposition of any such policy, contract or financial agreement or any asset held thereunder. The Trustee shall be under no duty to question any direction of the Plan Administrator or to review the form of any such policy, contract or financial agreement or the selection of the issuer thereof, or to make recommendations to the Plan Administrator or to any issuer with respect to the form of any such policy, contract or financial agreement. The Trustee shall be fully protected in acting in accordance with written directions of the Plan Administrator, and shall be under no liability for any loss of any kind which may result by reason of any action taken or omitted by it in accordance with any direction of the Plan Administrator, or by reason of inaction in the absence of written directions from the Plan Administrator. In the event that the Plan Administrator directs that any monies or property be paid or delivered to the contract holder other than for the benefit of specific individual beneficiaries, the Trustee agrees to accept such monies or property as assets of the Trust subject to all the terms hereof. 13.10. Registration and Voting of Non-Putnam Investment Company Shares. All shares of registered investment companies other than Investment Companies shall be registered in the name of the Trustee or its nominee. Subject to any requirements of applicable law and to the extent provided in an agreement between Putnam and a third party investment provider, the Trustee shall transmit to the Employer copies of any notices of shareholders' meetings, proxies or proxy-soliciting materials, prospectuses or the annual or other reports to shareholders, with respect to shares of registered investment companies other than Investment Companies held in the Trust Fund. The Trustee shall vote shares of registered investment companies other than Investment Companies in accordance with the directions of the Employer. Directions as to voting such shares must be in writing on a form approved by the Trustee or such other manner acceptable to the Trustee, signed by the addressee and delivered to the Trustee within the time prescribed by it. The Trustee shall vote those shares of registered investment companies other than Investment Companies for which no voting directions are received in the same proportion as it votes those shares for which it has received voting directions. ARTICLE 14. TOP-HEAVY PLANS 14.1. Superseding Effect. For any Plan Year beginning after December 31, 1983, in which Plan is determined to be a Top- Heavy Plan under Section 14.2(b), the provisions of this Article 15 will supersede any conflicting provisions in the Plan or the Plan Agreement. 14.2. Definitions. For purposes of this Article 14, the terms below shall be defined as follows: (a) Key Employee means any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the determination period was: (i) an officer of the Employer having annual compensation greater than 50% of the amount in effect under Section 415(b)(1)(A) of the Code; (ii) an owner (or considered an owner under Section 318 of the Code) of one of the ten largest interests in the Employer having annual compensation exceeding the dollar limitation under Section 415(c)(1)(A) of the Code; (iii) a 5% owner of the Employer; or (iv) a 1% owner of the Employer having annual compensation of more than $150,000. Annual compensation means compensation satisfying the definition elected by the Employer in the Plan Agreement, but including amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of the Code. The determination period is the Plan Year containing the Determination Date and the four preceding Plan Years. The determination of who is a Key Employee will be made in accordance with Section 416(i)(1) of the Code and the Regulations thereunder. (b) Top-Heavy: The Plan is Top-Heavy for any Plan Year beginning after December 31, 1983, if any of the following conditions exists: (1) If the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans. (2) If this Plan is a part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the group of plans exceeds 60%. (3) If this plan is part of a Required Aggregation Group and part of a Permissive Aggregation Group of Plans and the Top-Heavy Ratio for the Permissive Aggregation group exceeds 60%. (c) Top-Heavy Ratio means the following: (1) If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer has not maintained any qualified defined benefit plan which during the 5-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-Heavy ratio for this Plan alone or for the Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date(s) (including any part of any account distributed in the 5-year period ending on the Determination Date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the 5-year period ending on the Determination Date(s)), both computed in accordance with Section 416 of the Code and the regulations thereunder. Both the numerator and denominator of the Top-Heavy Ratio are increased to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Section 416 of the Code and the regulations thereunder. (2) If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer maintains or has maintained one or more qualified defined benefit plans which during the 5-year period ending on the Determination Date(s) has or has had any accrued benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated qualified defined contribution plan or plans for all Key Employees, determined in accordance with (1) above, and the Present Value of accrued benefits under the aggregated qualified defined benefit plan or plans for all Key Employees as of the Determination Date(s), and the denominator of which is the sum of the account balances under the aggregated qualified defined contributions plan or plans for all Participants, determined in accordance with (1) above, and the Present Value of accrued benefits under the qualified defined benefit plan or plans for all Participants as of the Determination Date(s), all determined in accordance with Section 416 of the Code and the regulations thereunder. The accrued benefits under a defined benefit plan in both the numerator and denominator of the Top-Heavy Ratio are increased for any distribution of an accrued benefit made in the 5-year period ending on the Determination Date. (3) For purposes of (1) and (2) above, the value of account balances and the Present Value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12- month period ending on the Determination Date; except as provided in Section 416 of the Code and the regulations thereunder for the first and second Plan Years of a defined benefit plan. The account balances and accrued benefits of a Participant (A) who is not a Key Employee but who was a Key Employee in a prior Plan Year, or (B) who has not been credited with at least one Hour of Service for the Employer during the 5-year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. Deductible Employee contributions will not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year. The accrued benefit of a Participant other than a Key Employee shall be determined under (a) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employer, or (b) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Section 411(b)(1)(C) of the Code. (d) Permissive Aggregation Group means the Required Aggregation Group of plans plus any other qualified plan or plans (or simplified employee pension plan) of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the Code. (e) Required Aggregation Group means (i) each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the determination period (regardless of whether the Plan has terminated) and (ii) any other qualified plan of the Employer which enables a plan described in (i) to meet the requirements of Section 401(a)(4) or 410 of the Code. (f) Determination Date means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the Determination Date is the last day of that Plan Year. (g) Valuation Date means the last day of the Plan Year. (h) Present Value means present value based only on the interest and mortality rates specified by the Employer in the Plan Agreement. 14.3. Minimum Allocation. (a) Except as otherwise provided in paragraphs (c) and (d) below, the Employer contributions and Forfeitures (if any) allocated on behalf of any Participant who is not a Key Employee shall not be less than the lesser of 3% of such Participant's Earnings, or in the case where the Employer has no defined benefit plan which designates this Plan to satisfy Section 401 of the Code, the largest percentage of Employer contributions and Forfeitures, as a percentage of the Key Employee's Earnings, allocated on behalf of any Key Employee for that year. The minimum allocation is determined without regard to any Social Security contribution. This minimum allocation shall be made even though, under other Plan provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation of the Employer's contributions and Forfeitures for the Plan Year because of (1) the Participant's failure to be credited with at least 1,000 Hours of Service, or (2) the Participant's failure to make mandatory Employee contributions to the Plan, or (3) the Participant's receiving Earnings less than a stated amount. Neither Elective Deferrals, Employer Matching Contributions nor Qualified Matching Contributions for non- Key Employees shall be taken into account for purposes of satisfying the requirement of this Section 14.3(a). (b) For purposes of computing the minimum allocation, Earnings will mean Section 415 Compensation as defined in Section 6.5(b) of the Plan. (c) The provision in paragraph (a) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year. (d) The provision in paragraph (a) above shall not apply to any Participant to the extent he is covered under any other plan or plans of the Employer, and the Employer has provided in the Plan Agreement that the minimum allocation requirement applicable to Top-Heavy Plans will be met in the other plan or plans. (e) The minimum allocation required (to the extent required to be nonforfeitable under Section 416(b) of the Code) may not be forfeited under Sections 411(a)(3)(B) or (D) of the Code. 14.4. Adjustment of Fractions. For any Plan Year in which the Plan is Top-Heavy, the Defined Benefit Fraction and the Defined Contribution Fraction described in Article 6 shall each be computed using 100% of the dollar limitations specified in Sections 415(b)(1)(A) and 415(c)(1)(A) instead of 125%. The foregoing requirement shall not apply if the Top-Heavy Ratio does not exceed 90% and the Employer has elected in the Plan Agreement to provide increased minimum allocations or benefits satisfying Section 416(h)(2) of the Code. 14.5. Minimum Vesting Schedules. For any Plan Year in which this Plan is Top-Heavy and for any subsequent Plan Year, a minimum vesting schedule will automatically apply to the Plan, as follows: (a) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule 100% immediate vesting, the Three-Year Cliff, Five-Year Graded or Six-Year Graded schedule, then the schedule selected in the Plan Agreement shall continue to apply for any Plan Year to which this Section 14.5 applies. (b) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Five-Year Cliff schedule, then the Three-Year Cliff schedule shall apply in any Plan Year to which this Section 14.5 applies. (c) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Seven-Year Graded schedule, then the Six-Year Graded schedule shall apply in any Plan Year to which this Section 14.5 applies. (d) If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule a schedule other than those described in paragraphs (a), (b) and (c), then the Top- Heavy schedule specified by the Employer in the Plan Agreement for this purpose shall apply in any Plan Year to which this Section 14.5 applies. The minimum vesting schedule applies to all benefits within the meaning of Section 411(a)(7) of the Code except those attributable to Elective Deferrals, rollover contributions described in Section 5.3, Qualified Matching Contributions, Qualified Nonelective Contributions, or Participant Contributions, but including benefits accrued before the effective date of Section 416 of the Code and benefits accrued before the Plan became Top-Heavy. Further, no reduction in a Participant's nonforfeitable percentage may occur in the event the Plan's status as Top-Heavy changes for any Plan Year. However, the vested portion of the Employer Profit Sharing Account or Employer Matching Account of any Employee who does not have an Hour of Service after the Plan has initially become Top- Heavy will be determined without regard to this Section 14.5. ARTICLE 15. ADMINISTRATION OF THE PLAN 15.1. Plan Administrator. The Plan shall be administered by the Employer, as Plan Administrator and Named Fiduciary within the meaning of ERISA, under rules of uniform application; provided, however, that the Plan Administrator's duties and responsibilities may be delegated to a person appointed by the Employer or a committee established by the Employer for that purpose, in which case the committee shall be the Plan Administrator and Named Fiduciary. The members of such a committee shall act by majority vote, and may by majority vote authorize any one or ones of their number to act for the committee. The person or committee (if any) initially appointed by the Employer may be named in the Plan Agreement, but the Employer may remove any such person or committee member by written notice to him, and any such person or committee may resign by written notice to the Employer, without the necessity of amending the Plan Agreement. To the extent permitted under applicable law, the Plan Administrator shall have the sole authority to enforce the terms hereof on behalf of any and all persons having or claiming any interest under the Plan, and shall be responsible for the operation of the Plan in accordance with its terms. The Plan Administrator shall have discretionary authority to determine all questions arising out of the administration, interpretation and application of the Plan, all of which determinations shall be conclusive and binding on all persons. The Plan Administrator, in carrying out its responsibilities under the Plan, may rely upon the written opinions of its counsel and on certificates of physicians. Subject to the provisions of the Plan and applicable law, the Plan Administrator shall have no liability to any person as a result of any action taken or omitted hereunder by the Plan Administrator. 15.2. Claims Procedure. Claims for participation in or distribution of benefits under the Plan shall be made in writing to the Plan Administrator, or an agent designated by the Plan Administrator whose name shall have been communicated to all Participants and other persons as required by law. If any claim so made is denied in whole or in part, the claimant shall be furnished promptly by the Plan Administrator with a written notice: (a) setting forth the reason for the denial, (b) making reference to pertinent Plan provisions, (c) describing any additional material or information from the claimant which is necessary and why, and (d) explaining the claim review procedure set forth herein. Within 60 days after denial of any claim for participation or distribution under the Plan, the claimant may request in writing a review of the denial by the Plan Administrator. Any claimant seeking review hereunder shall be entitled to examine all pertinent documents and to submit issues and comments in writing. The Plan Administrator shall render a decision on review hereunder; provided, that if the Plan Administrator determines that a hearing would be appropriate, its decision on review shall be rendered within 120 days after receipt of the request for review. The decision on review shall be in writing and shall state the reason for the decision, referring to the Plan provisions upon which it is based. 15.3. Employer's Responsibilities. The Employer shall be responsible for: (a) Keeping records of employment and other matters containing all relevant data pertaining to any person affected hereby and his eligibility to participate, allocations to his Accounts, and his other rights under the Plan; (b) Periodic, timely filing of all statements, reports and returns required to be filed by ERISA; (c) Timely preparation and distribution of disclosure materials required by ERISA; (d) Providing notice to interested parties as required by Section 7476 of the Code; (e) Retention of records for periods required by law; and (f) Seeing that all persons required to be bonded on account of handling assets of the Plan are bonded. 15.4. Recordkeeper. The Recordkeeper is hereby designated as agent of the Employer under the Plan to perform directly or through agents certain ministerial duties in connection with the Plan, in particular: (a) To keep and regularly furnish to the Employer a detailed statement of each Participant's Accounts, showing contributions thereto by the Employer and the Participant, Investment Products purchased therewith, earnings thereon and Investment Products purchased therewith, and each redemption or distribution made for any reason, including fees or benefits; and (b) To the extent agreed between the Employer and the Recordkeeper, to prepare for the Employer or to assist the Employer to prepare such returns, reports or forms as the Employer shall be required to furnish to Participants and Beneficiaries or other interested persons and to the Internal Revenue Service or the Department of Labor; all as may be more fully set forth in the Service Agreement. If the Employer does not appoint another person or entity as Recordkeeper, the Employer itself shall be the Recordkeeper. 15.5. Prototype Plan. Putnam is the sponsor of the Putnam Basic Plan Document, a prototype plan approved as to form by the Internal Revenue Service. Provided that an Employer's adoption of the Plan is made known to and accepted by Putnam in accordance with the Plan Agreement, Putnam will inform the Employer of amendments to the prototype plan and provide such other services in connection with the Plan as may be agreed between Putnam and the Employer. Putnam may impose for its services as sponsor of the prototype plan such fees as it may establish from time to time in a fee schedule addressed to the Employer. Such fees shall, unless paid by the Employer, be paid from the Trust Fund, and shall in that case be charged pro rata against the Accounts of all Participants. The Trustee is expressly authorized to cause Investment Products to be sold or redeemed for the purpose of paying such fees. ARTICLE 16. TRUSTEE 16.1. Powers and Duties of the Trustee. The Trustee shall have the authority, in addition to any authority given by law, to exercise the following powers in the administration of the Trust: (a) To invest all or a part of the Trust Fund in Investment Products in accordance with the investment instructions delivered by the Employer pursuant to Section 13.3, without restriction to investments authorized for fiduciaries, including without limitation any common, collective or commingled trust fund maintained by the Trustee (or any other such fund, acceptable to Putnam and the Trustee, that qualifies for exemption from federal income tax pursuant to Revenue Ruling 81-100). Any investment in, and any terms and conditions of, any such common, collective or commingled trust fund available only to employee trusts which meet the requirements of the Code, or corresponding provisions of subsequent income tax laws of the United States, shall constitute an integral part of this Agreement; (b) If Putnam and the Trustee have consented thereto in writing, to invest without limit in stock of the Employer or any affiliated company; (c) To dispose of all or part of the investments, securities or other property which may from time to time or at any time constitute the Trust Fund in accordance with the written directions furnished by the Employer for the investment of Participants' separate Accounts or the payment of benefits or expenses of the Plan, and to make, execute and deliver to the purchasers thereof good and sufficient deeds of conveyance therefore, and all assignments, transfers and other legal instruments, either necessary or convenient for passing the title and ownership thereto, free and discharged of all trusts and without liability on the part of such purchasers to see to the application of the purchase money; (d) To hold cash uninvested to the extent necessary to pay benefits or expenses of the Plan; (e) To follow the directions of an investment manager appointed pursuant to Section 13.7; (f) To cause any investment of the Trust Fund to be registered in the name of the Trustee or the name of its nominee or nominees or to retain such investment unregistered or in a form permitting transfer by delivery; provided that the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund; (g) Upon written direction of or through the Employer, to vote in person or by proxy (in accordance with Sections 13.6 and 13.10 and, in the case of stock of the Employer, at the direction of the Employer or Participants in accordance with Section 13.8) with respect to all securities that are part of the Trust Fund; (h) To consult and employ any suitable agent to act on behalf of the Trustee and to contract for legal, accounting, clerical and other services deemed necessary by the Trustee to manage and administer the Trust Fund according to the terms of the Plan; (i) Upon the written direction of the Employer, to make loans from the Trust Fund to Participants in amounts and on terms approved by the Plan Administrator in accordance with the provisions of the Plan; provided that the Employer shall have the sole responsibility for computing and collecting all loan repayments required to be made under the Plan; and (j) To pay from the Trust Fund all taxes imposed or levied with respect to the Trust Fund or any part thereof under existing or future laws, and to contest the validity or amount of any tax assessment, claim or demand respecting the Trust Fund or any part thereof. 16.2. Limitation of Responsibilities. Except as may otherwise be required under applicable law, neither the Trustee nor any of its agents shall have any responsibility for: (a) Determining the correctness of the amount of any contribution for the sole collection or payment of contributions, which shall be the sole responsibility of the Employer; (b) Loss or breach caused by any Participant's exercise of control over his Accounts, which shall be the sole responsibility of the Participant; (c) Loss or breach caused by the Employer's exercise of control over Accounts pursuant to Section 13.3, which shall be the sole responsibility of the Employer; (d) Performance of any other responsibilities not specifically allocated to them under the Plan. 16.3. Fees and Expenses. The Trustee's fees for performing its duties hereunder shall be such reasonable amounts as shall be established by the Trustee from time to time in a fee schedule addressed to the Employer. Such fees, any taxes of any kind which may be levied or assessed upon or in respect of the Trust Fund and any and all expenses reasonably incurred by the Trustee shall, unless paid by the Employer, be paid from the Trust Fund and shall, unless allocable to the Accounts of specific Participants, be charged pro rata against the Accounts of all Participants. The Trustee is expressly authorized to cause Investment Products to be sold or redeemed for the purpose of paying such amounts. Charges and expenses incurred in connection with a specific Investment Product, unless allocable to the Accounts of specific Participants, shall be charged pro rata against the Accounts of all Participants for whose benefit amounts have been invested in the specific Investment Product. 16.4. Reliance on Employer. The Trustee and its agents shall rely upon any decision of the Employer, or of any person authorized by the Employer, purporting to be made pursuant to the terms of the Plan, and upon any information or statements submitted by the Employer or such person (including those relating to the entitlement of any Participant to benefits under the Plan), and shall not inquire as to the basis of any such decision or information or statements, and shall incur no obligation or liability for any action taken or omitted in reliance thereon. The Trustee and its agents shall be entitled to rely on the latest written instructions received from the Employer as to the person or persons authorized to act for the Employer hereunder, and to sign on behalf of the Employer any directions or instructions, until receipt from the Employer of written notice that such authority has been revoked. 16.5. Action Without Instructions. If the Trustee receives no instructions from the Employer in response to communications sent by registered or certified mail to the Employer at its last known address as shown on the books of the Trustee, then the Trustee may make such determinations with respect to administrative matters arising under the Plan as it considers reasonable, notwithstanding any prior instructions or directions given by or on behalf of the Employer, but subject to any instruction or direction given by or on behalf of the Participants. To the extent permitted by applicable law, any determination so made will be binding on all persons having or claiming any interest under the Plan or Trust, and the Trustee will incur no obligation or responsibility for any such determination made in good faith or for any action taken pursuant thereto. In making any such determination the Trustee may require that it be furnished with such relevant documents as it reasonable considers necessary. 16.6. Advice of Counsel. The Trustee may consult with legal counsel (who may, but need not be, counsel for the Employer) concerning any questions which may arise with respect to its rights and duties under the Plan, and the opinion of such counsel shall be full and complete protection to the extent permitted by applicable law in the respect of any action taken or omitted by the Trustee hereunder in accordance with the opinion of such counsel. 16.7. Accounts. The Trustee shall keep full accounts of all receipts and disbursements which pertain to investments in Investment Products, and of such other transactions as it is required to perform hereunder. Within a reasonable time following the close of each Plan Year, or upon its removal or resignation or upon termination of the Trust and at such other times as may be appropriate, the Trustee shall render to the Employer and any other persons as may be required by law an account of its administration of the Plan and Trust during the period since the last previous such accounting, including such information as may be required by law. The written approval of any account by the Employer and all other persons to whom an account is rendered shall be final and binding as to all matters and transactions stated or shown therein, upon the Employer and Participants and all persons who then are or thereafter become interested in the Trust. The failure of the Employer or any other person to whom an account is rendered to notify the party rendering the account within 60 days after the receipt of any account of his or its objection to the account shall be the equivalent of written approval. If the Employer or any other person to whom an account is rendered files any objections within such 60-day period with respect to any matters or transactions stated or shown in the account and the Employer or such other person and the party rendering the account cannot amicably settle the questions raised by such objections, the party rendering the account and the Employer or such person shall have the right to have such questions settled by judicial proceedings, although the Employer or such other person to whom an account is rendered shall have, to the extent permitted by applicable law, only 60 days from filing of written objection to the account to commence legal proceedings. Nothing herein contained shall be construed so as to deprive the Trustee of the right to have a judicial settlement of its accounts. In any proceeding for a judicial settlements of any account or for instructions, the only necessary parties shall be the Trustee, the Employer and persons to whom an account is required by law to be rendered. 16.8. Access to Records. The Trustee shall give access to its records with respect to the Plan at reasonable times and on reasonable notice to any person required by law to have access to such records. 16.9. Successors. Any corporation into which the Trustee may merge or with which it may consolidate or any corporation resulting from any such merger or consolidation shall be the successor of the Trustee without the execution or filing of any additional instrument or the performance of any further act. 16.10. Persons Dealing with Trustee. No person dealing with the Trustee shall be bound to see to the application of any money or property paid or delivered to the Trustee or to inquire into the validity or propriety of any transactions. 16.11. Resignation and Removal; Procedure. The Trustee may resign at any time by giving 60 days' written notice to the Employer and to Putnam. The Employer may remove the Trustee at any time by giving 60 days' written notice to the party removed and to Putnam. In any case of resignation or removal hereunder, the period of notice may be reduced to such shorter period as is satisfactory to the Trustee and the Employer. Notwithstanding anything to the contrary herein, any resignation hereunder shall take effect at the time notice thereof is given if the Employer may no longer participate in the prototype Plan and is deemed to have an individually designed plan at the time notice is given. 16.12. Action of Trustee Following Resignation or Removal. When the resignation or removal of the Trustee becomes effective, the Trustee shall perform all acts necessary to transfer the Trust Fund to its successor. However, the Trustee may reserve such portion of the Trust Fund as it may reasonably determine to be necessary for payment of its fees and any taxes and expenses, and any balance of such reserve remaining after payment of such fees, taxes and expenses shall be paid over to its successor. The Trustee shall have no responsibility for acts or omissions occurring after its resignation becomes effective. 16.13. Effect of Resignation or Removal. Resignation or removal of the Trustee shall not terminate the Trust. In the event of any vacancy in the position of Trustee, whether the vacancy occurs because of the resignation or removal of the Trustee, the Employer shall appoint a successor to fill the vacant position. If the Employer does not appoint such a successor who accepts appointment by the later of 60 days after notice of resignation or removal is given or by such later date as the Trustee and Employer may agree in writing to postpone the effective date of the Trustee's resignation or removal, the Trustee may apply to a court of competent jurisdiction for such appointment or cause the Trust to be terminated, effective as of the date specified by the Trustee in writing delivered to the Employer. Each successor Trustee so appointed and accepting a trusteeship hereunder shall have all of the rights and powers and all of the duties and obligations of the original Trustee, under the provisions hereof, but shall have no responsibility for acts or omissions before he becomes a Trustee. 16.14. Fiscal Year of Trust. The fiscal year of the Trust will coincide with the Plan Year. 16.15. Limitation of Liability. Except as may otherwise be required by law and other provisions of the Plan, no fiduciary of the Plan, within the meaning of Section 3(21) of ERISA, shall be liable for any losses incurred with respect to the management of the Plan, nor shall he or it be liable for any acts or omissions except those caused by his or its own negligence or bad faith in failing to carry out his or its duties under the terms contained in the Plan. 16.16. Indemnification. Subject to the limitations of applicable law, the Employer agrees to indemnify and hold harmless (i) all fiduciaries, within the meaning of ERISA Sections 3(21) and 404, and (ii) Putnam, for all liability occasioned by any act of such party or omission to act, in good faith and without gross negligence, and for all expenses incurred by any such party in determining its duty or liability under ERISA with respect to any question under the Plan. ARTICLE 17. AMENDMENT 17.1. General. The Employer reserves the power at any time or times to amend the provisions of the Plan and the Plan Agreement to any extent and in any manner that it may deem advisable. If, however, the Employer makes any amendment (including an amendment occasioned by a waiver of the minimum funding requirement under Section 412(d) of the Code) other than (a) a change in an election made in the Plan Agreement, (b) amendments stated in the Plan Agreement which allow the Plan to satisfy Section 415 and to avoid duplication of minimums under Section 416 of the Code because of the required aggregation of multiple plans, or (c) model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed, the Employer shall cease to participate in this prototype Plan and will be considered to have an individually designed plan. In that event, Putnam shall have no further responsibility to provide to the Employer any amendments or other material incident to the prototype plan, and Putnam may resign immediately as Trustee and as Recordkeeper. Any amendment shall be made by delivery to the Trustee (and the Recordkeeper, if any) of a written instrument executed by the Employer providing for such amendment. Upon the delivery of such instrument to the Trustee, such instrument shall become effective in accordance with its terms as to all Participants and all persons having or claiming any interest hereunder, provided, that the Employer shall not have the power: (1) to amend the Plan in such a manner as would cause or permit any part of the assets of the Trust to be diverted to purposes other than the exclusive benefit of Participants or their Beneficiaries, or as would cause or permit any portion of such assets to revert to or become the property of the Employer. (2) to amend the Plan retroactively in such a manner as would have the effect of decreasing a Participant's accrued benefit, except that a Participant's Account balance may be reduced to the extent permitted under Section 412(c)(8) of the Code. For purposes of this paragraph (2), an amendment shall be treated as reducing a Participant's accrued benefit if it has the effect of reducing his Account balance, or of eliminating an optional form of benefit with respect to amounts attributable to contributions made performed before the adoption of the amendment; or (3) to amend the Plan so as to decrease the portion of a Participant's Account balance that has become vested, as compared to the portion that was vested, under the terms of the Plan without regard to the amendment, as of the later of the date the amendment is adopted or the date it becomes effective. (4) to amend the Plan in such a manner as would increase the duties or liabilities of the Trustee or the Recordkeeper unless the Trustee or the Recordkeeper consents thereto in writing. 17.2. Delegation of Amendment Power. The Employer and all sponsoring organizations of the Putnam Basic Plan Document delegate to Putnam Mutual Funds Corp., the power to amend the Plan (including the power to amend this Section 17.2 to name a successor to which such power of amendment shall be delegated), for the purpose of adopting amendments which are certified to Putnam Mutual Funds Corp., by counsel satisfactory to it, as necessary or appropriate under applicable law, including any regulation or ruling issued by the United States Treasury Department or any other federal or state department or agency; provided that Putnam Mutual Funds Corp., or such successor may amend the Plan only if it has mailed a copy of the proposed amendment to the Employer at its last known address as shown on its books by the date on which it delivers a written instrument providing for such amendment, and only if the same amendment is made on said date to all plans in this form as to which Putnam Mutual Funds Corp., or such successor has a similar power of amendment. If a sponsoring organization does not adopt any amendment made by Putnam Mutual Funds Corp., such sponsoring organization shall cease to participate in this prototype Plan and will be considered to have an individually designed plan. If, upon the submission of this Putnam Basic Plan Document #07 to the Internal Revenue Service for a determination letter, the Internal Revenue Service determines that changes are required to the Basic Plan Document but not to the form of Plan Agreement, Putnam shall furnish a copy of the revised Basic Plan Document to the Employer and the Employer will not be required to execute a revised Plan Agreement. ARTICLE 18. TERMINATION OF THE PLAN AND TRUST 18.1. General. The Employer has established the Plan and the Trust with the bona fide intention and expectation that contributions will be continued indefinitely, but the Employer shall have no obligation or liability whatsoever to maintain the Plan for any given length of time and may discontinue contributions under the Plan or terminate the Plan at any time by written notice delivered to the Trustee, without any liability whatsoever for any such discontinuance or termination. 18.2. Events of Termination. The Plan will terminate upon the happening of any of the following events: (a) Death of the Employer, if a sole proprietor, or dissolution or termination of the Employer, unless within 60 days thereafter provision is made by the successor to the business with respect to which the Plan was established for the continuation of the Plan, and such continuation is approved by the Trustee; (b) Merger, consolidation or reorganization of the Employer into one or more corporations or organizations, unless the surviving corporations or organizations adopt the Plan by an instrument in writing delivered to the Trustee within 60 days after such a merger, consolidation and reorganization; (c) Sale of all or substantially all of the assets of the Employer, unless the purchaser adopts the Plan by an instrument in writing delivered to the Trustee within 60 days after the sale; (d) The institution of bankruptcy proceedings by or against the Employer, or a general assignment by the Employer to or for the benefit of its creditors; or (e) Delivery of notice of termination as provided in Section 18.1. 18.3. Effect of Termination. Notwithstanding any other provisions of this Plan, other than Section 18.4, upon termination of the Plan or complete discontinuance of contributions thereunder, each Participant's Accounts will become fully vested and nonforfeitable, and upon partial termination of the Plan, the Accounts of each Participant affected by the partial termination will become fully vested and nonforfeitable. The Employer shall notify the Trustee in writing of such termination, partial termination or complete discontinuance of contributions. In the event of the complete termination of the Plan or discontinuance of contributions, the Trustee will, after payment of all expenses of the Trust Fund, make distribution of the Trust assets to the Participants or other persons entitled thereto, in such form as the Employer may direct pursuant to Article 10 or, in the absence of such direction, in a single payment in cash or in kind. Upon completion of such distributions under this Article, the Trust will terminate, the Trustee will be relieved from its obligations under the Trust, and no Participant or other person will have any further claim thereunder. 18.4. Approval of Plan. Notwithstanding any other provision of the Plan, if the Employer fails to obtain or to retain the approval by the Internal Revenue Service of the Plan as a qualified plan under Section 401(a) of the Code, then (i) the Employer shall promptly notify the Trustee, and (ii) the Employer may no longer participate in the Putnam prototype plan, but will be deemed to have an individually designed plan. If it is determined by the Internal Revenue Service that the Plan upon its initial adoption does not qualify under Section 401(a) of the Code, all assets then held under the Plan will be returned within one year of the denial of initial qualification to the Participants and the Employer to the extent attributable to their respective contributions and any income earned thereon, but only if the application for qualification is made by the time prescribed by law for filing the Employer's federal income tax return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. Upon such distribution, the Plan will be considered to be rescinded and to be of no force or effect. ARTICLE 19. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS 19.1. General. Notwithstanding any other provision hereof, subject to the approval of the Trustee there may be transferred to the Trustee all or any of the assets held (whether by a trustee, custodian or otherwise) in respect of any other plan which satisfies the applicable requirements of Section 401(a) of the Code and which is maintained for the benefit of any Employee (provided, however, that the Employee is not a member of a class of Employees excluded from eligibility to participate in the Plan). Any such assets so transferred shall be accompanied by written instructions from the Employer naming the persons for whose benefit such assets have been transferred and showing separately the respective contributions made by the Employer and by the Participants and the current value of the assets attributable thereto. Notwithstanding the foregoing, if a Participant's employment classification changes under Section 3.4 such that he begins participation in another plan of the Employer, his Account, if any, shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account. 19.2. Amounts Transferred. The Employer shall credit any assets transferred pursuant to Section 19.1 or Section 3.4 to the appropriate Accounts of the persons for whose benefit such assets have been transferred. Any amounts credited as contributions previously made by an employer or by such persons under such other plan shall be treated as contributions previously made under the Plan by the Employer or by such persons, as the case may be. 19.3. Merger or Consolidation. The Plan shall not be merged or consolidated with any other plan, nor shall any assets or liabilities of the Trust Fund be transferred to any other plan, unless each Participant would receive a benefit immediately after the transaction, if the Plan then terminated, which is equal to or greater than the benefit he would have been entitled to receive immediately before the transaction if the Plan had then terminated. ARTICLE 20. MISCELLANEOUS 20.1. Notice of Plan. The Plan shall be communicated to all Participants by the Employer on or before the last day on which such communication may be made under applicable law. 20.2. No Employment Rights. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits shall be construed as giving to any Participant or any other person any legal or equitable right against the Employer, or the Trustee, except as provided herein or by ERISA; and in no event shall the terms of employment or service of any Participant be modified or in any way be affected hereby. 20.3. Distributions Exclusively From Plan. Participants and Beneficiaries shall look solely to the assets held in the Trust purchased pursuant to the Plan for the payment of any benefits under the Plan. 20.4. No Alienation. The benefits provided hereunder shall not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, and any attempt to cause such benefits to be so subjected shall not be recognized, except as provided in Section 12.4 or in accordance with a Qualified Domestic Relations Order. The Plan Administrator shall determine whether a domestic relations order is qualified in accordance with written procedures adopted by the Plan Administrator. Notwithstanding the foregoing, an order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan. 20.5. Provision of Information. The Employer and the Trustee shall furnish to each other such information relating to the Plan and Trust as may be required under the Code or ERISA and any regulations issued or forms adopted by the Treasury Department or the Labor Department or otherwise thereunder. 20.6. No Prohibited Transactions. The Employer and the Trustee shall, to the extent of their respective powers and authority under the Plan, prevent the Plan from engaging in any transaction known by that person to constitute a transaction prohibited by Section 4975 of the Code and any rules or regulations with respect thereto. 20.7. Governing Law. The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States, and to the extent permitted by such laws, by the laws of the Commonwealth of Massachusetts 20.8. Gender. Whenever used herein, a pronoun in the masculine gender includes the feminine gender unless the context clearly indicates otherwise. PUTNAM STREAMLINED STANDARD 401(k) AND PROFIT SHARING PLAN PLAN AGREEMENT #001 By executing this Plan Agreement, the Employer establishes a 401(k) and profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #06, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. Please consult a tax or legal advisor and review this entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Streamlined Standard 401(k) and Profit Sharing Plan. * * * * * Employer Information. The Employer adopting this Plan is: A. Employer Name: _____________________________________ B. Employer Identification Number: __________________________ C. Employer Address: _______________________________ _______________________________ _______________________________ D. SIC Code: _______ E. Employer Contact: Name: ___________________________________________ Title: __________________ Phone #: _______________ F. Fiscal Year: __________ through __________ (month/day) (month/day) G. Type of Entity (check one): _____ Corporation _____ Partnership _____ Subchapter S Corporation _____ Sole proprietorship _____ Other _______________________ H. Plan Name: __________________________________ I. Plan Number: 00__(complete) Plan Information. A. Plan Year. Check one: _____(1) The Calendar Year _____(2) The Plan Year will be the same as the Fiscal Year of the Employer shown in 1.F. above. If the Fiscal Year of the Employer changes, the Plan Year will change accordingly. _____(3) The Plan Year will be the period of 12 months beginning on the first day of __________ (month) and ending on the last day of __________ (month). B. Effective Date of Adoption of Plan. (1) Are you adopting this Plan to replace an existing plan? _____ a. Yes _____ b. No (2) If you answered Yes in 2.B.(1) above, please complete the following: a. Effective Date of Existing Plan: ____________________. b. Effective Date of Replacement Plan: _____ (i) The first day of the Plan Year in which this Replacement Plan is adopted. _____ (ii) The day as of which this Replacement Plan is adopted. If you answered No in 2.B.(1) above, the Effective Date of your adoption of this Plan will be the first day of the current Plan Year. Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B, C and D below. A. Classes of Eligible Employees. The Plan shall cover all employees who have met the age and service requirements with the following exclusions: _____ (1) No exclusions. All job classifications will be eligible. _____ (2) The Plan shall exclude employees in a unit of Employees covered by a collective bargaining agreement with respect to which retirement benefits were the subject of good faith bargaining, with the exception of the following collective bargaining units, which shall be included: ____________________. _____ (3) The Plan shall exclude employees who are non- resident aliens without U.S. source income. B. Age Requirement (check and complete (1) or (2) below): _____ (1) No minimum age required for participation _____ (2) Employees must reach age __ (not over 21) to participate C. Service Requirements. To become eligible, an employee must complete (choose one): _____ (1) No minimum service required. Skip to 4.A below. _____ (2) One 6- month Eligibility Period ____ (3) One 12-month Eligibility Period _____ (4) One __-month Eligibility Period (must be less than 12) D. (For New Plans Only) Will all eligible Employees be required to meet the age and service requirements specified in B and C above? _____ (1) Yes _____ (2) No; all Employees who meet the age requirement on the Effective Date will be eligible as of the Effective Date, even if they have not met the service requirements. Contributions A. Elective Deferrals (Plan Section 4.2). Your Plan will allow employees to elect pre-tax contributions under Section 401(k) of the Code. Indicate below the maximum percentage of Earnings that a Participant may elect as Elective Deferrals for each year: ___% of Earnings B. Employer Matching Contributions (Plan Section 4.8). Will you make matching contributions to the Plan? _____ (1) No _____ (2) Yes (if Yes, check a or b) _____ a. discretionary matching contributions _____ b. fixed matching contributions (check and complete i, ii or iii) _____ (i) ___% of Elective Deferrals _____ (ii) ___% of Elective Deferrals that do not exceed ___% of Earnings _____ (iii) ___% of Elective Deferrals that do not exceed $________ C. Employer Profit Sharing Contributions (Plan Section 5.1). Will you make Employer Profit Sharing Contributions to the Plan? _____ (1) Yes _____ (2) No Top-Heavy Minimum Contributions (Plan Section 14.3). Skip paragraphs A and B below if you do not maintain any other qualified plan that is not being replaced by this Plan. A. For any Plan Year in which the Plan is Top-Heavy, the Top-Heavy minimum contribution (or benefit) for Non-Key Employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in (check (1) or (2)): _____ (1) This Plan _____ (2) The other qualified plan B. If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 14.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 14.4. Specify your election by completing the statement below: The employer will provide and increased (specify contribution or benefit) __________________________________ in its (specify defined contribution or defined benefit) ______________________ plan as permitted under Plan Section 14.4. Other Plans. You must complete this section if you maintain or ever maintained a defined benefit plan in which any Participant in this Plan is (or was) a participant or could become a participant. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by you, the plans will meet the limits of Article 6 in the manner you describe below: _________________________________________________________________ _______ _________________________________________________________________ _______ If you have ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio: Interest rate: %__________________________ Mortality Table: __________________________ Compensation (Plan Section 2.7). Compensation for purposes of the Plan will be the amount of the following that is actually paid by your Business to an employee during the Plan Year (check (1) or (2)): _____ (1) Form W-2 earnings as defined in Section 2.7 of the Plan. _____ (2) Form W-2 earnings as defined in Section 2.7 of the Plan, plus any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. Distributions and Withdrawals. A. Retirement Distributions. 1. Normal Retirement Age (Plan Section 7.1). Normal retirement age will be _______ (not over age 65). 2. Early Retirement (Plan Section 7.1). Select one: _____ a. No Early Retirement will be permitted. _____ b. Early Retirement will be permitted at age ____. _____ c. Early Retirement will be permitted at age ____ with at least ________ Years of Service. 3. Annuities (Plan Section 9.3). This Plan will permit distributions in the form of a life annuity only if this Plan replaces or serves as a transferee plan for an existing Plan that permits distributions in a life annuity form. Did your prior plan offer a life annuity form of distribution? _____ a. Yes _____ b. No B. Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions? _____ (1) No _____ (2) Yes. Indicate below from which Accounts hardship withdrawals will be permitted: _____ a. Elective Deferral Account _____ b. Rollover Account _____ c. Employer Matching Account _____ d. Employer Profit Sharing Account C. Loans. (Plan Section 12.4). Will your Plan permit loans to employees from the vested portion of all their Accounts? _____ (1) Yes _____ (2) No Vesting (Plan Article 8). A. Time of Vesting (select (1) or (2) below and complete vesting schedule). _____ (1) Single Vesting Schedule: The vesting schedule selected below will apply to both Employer Matching Contributions and Employer Profit Sharing Contributions. _____ (2) Dual Vesting Schedules: The vesting schedule marked with an "MC" below will apply to Employer Matching Contributions and the vesting schedule marked with a "PS" below will apply to Employer Profit Sharing Contributions. (3) Vesting Schedules: _____ a. 100% vesting immediately upon participation in the Plan. _____ b. Five-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 1 2 3 4 5 _____ c. Seven-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 3 4 5 6 7 _____ d. Six-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 2 3 4 5 6 _____ e. Three-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-2 3 _____ f. Five-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-4 5 _____ g. Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five-Year Cliff Schedule): (i) Vested Percentage__% __% __% __% __% (ii) Years of Service ___ ___ ___ ___ ___ (4) Top Heavy Schedule: If you selected above an "Other Schedule," specify in the space below the schedule that will apply after the Plan is top-heavy. The schedule you specify must be at least as favorable to employees, at all years of service, as either the Six-Year Graded Schedule or the Three-Year Cliff Schedule. The top-heavy vesting schedule will be: _____ (i) the same "Other Schedule" selected above _____ (ii) the following schedule. (i) Vested Percentage __% __% __% __% __% (ii) Years of Service ___ ___ ___ ___ ___ _____ (iii) Six- Year Graded Schedule ______ (iv) Three- Year Cliff Schedule B. Service for Vesting (select (1) or (2)). _____ (1) All of an employee's service will be used to determine his Years of Service for purposes of vesting _____ (2) An employee's Years of Service for vesting will include all years except: ___ a. (New plan) service before the effective date of the plan ___ b. (Existing plan) service before the effective date of the existing plan Investments (Plan Sections 13.2 and 13.3). A. Available Investment Products (Plan Section 13.2). The investment options available under the Plan are identified in the Service Agreement or such other written instructions between the Employer and Putnam, as the case may be. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement, or such other written instruction as the case may be, as an available Investment Product for that purpose. B. Employer Stock. (Skip this paragraph if you did not designate Employer Stock as an investment under the Service Agreement.) 1. Voting. Employer Stock will be voted as follows: _____ a. In accordance with the Employer's instructions. _____ b. In accordance with the Participant's instructions. Participants are hereby appointed named fiduciaries for the purpose of the voting of Employer Stock in accordance with Section 13.8. 2. Tendering. Employer stock will be tendered as follows: _____ a. In accordance with the Employer's instructions. _____ b. In accordance with the Participant's instructions. Participants are hereby appointed named fiduciaries for the purpose of the tendering of Employer Stock in accordance with Section 13.8. Administration. Plan Administrator (Plan Section 15.1). You may appoint a person or a committee to serve as Plan Administrator. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator. The initial Plan Administrator will be (check one): _____ (1) This person: _______________________________ _____ (2) A committee composed of these people: __________________________________________________ _________ __________________________________________________ _________ __________________________________________________ _________ Reliance on Opinion Letter. If you ever maintained or you later adopt any plan in addition to this Plan (including a welfare benefit fund, as defined in Section 419(e) of the Code, which provides post-retirement medical benefits allocated to separate accounts for key employees, as defined in Section 419A(d)(3) of the Code; or an individual medical account, as defined in Section 415(l)(2) of the Code), you may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. If you maintain or adopt multiple plans, in order to obtain reliance with respect to plan qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties. It is the responsibility of the Employer to ascertain whether a determination letter is required with respect to qualification of the Plan and to request Putnam to prepare the application for such determination letter if such service is desired. Putnam will inform you of all amendments it makes to the prototype plan. Putnam will also inform you if it discontinues or abandons the prototype plan. This Plan Agreement #001 may be used only in conjunction with Putnam's Basic Plan Document #07. * * * * * If you have any questions regarding this Plan Agreement, contact Putnam at: Putnam Defined Contribution Plans One Putnam Place B2B 859 Willard Street Quincy, MA 02269 Phone: 1-800-752-5766 * * * * * EMPLOYER'S ADOPTION OF PUTNAM STREAMLINED STANDARD 401(k) AND PROFIT SHARING PLAN The Employer named below hereby adopts a PUTNAM STREAMLINED STANDARD 401(k) AND PROFIT SHARING PLAN, and appoints ______________________________ to serve as Trustee of the Plan. The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be recognized by Putnam as a Putnam Streamlined Standard 401(k) and Profit Sharing Plan only upon Putnam's acceptance of this Plan Agreement. Investment Options The Employer hereby elects the following as the investment options available under the Plan: _______________________ _______________________ _______________________ _______________________ _______________________ _______________________ _______________________ _______________________ ________________________ The following investment option shall be the default option: _________________________________ (select the default option from among the investment options listed above). Employer Signature Employer signature(s) to adopt Plan: Date of signature: ____________________________________________________ __________________________ ____________________________________________________ __________________________ Please print name(s) of authorized person(s) signing above: ____________________________________________________ ____________________________________________________ A new Plan Agreement must be signed by the last day of the Plan Year in which the Plan is to be effective. * * * * * ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY AS TRUSTEE The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above. Putnam Fiduciary Trust Company, Trustee By: _________________________________________________________________ _____________ * * * * * ACCEPTANCE BY PUTNAM Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #06. Putnam Mutual Funds Corp. By: ______________________________ * * * * * ACCEPTANCE OF OTHER TRUSTEE Complete this part only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. (Note: You may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission.) Note: Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Streamlined Standard 401(k) and Profit Sharing Plan. _________________________________, Trustee By: _________________________________ Trustee's Tax I.D. Number_______________ (Trustee) _________________________________________________________________ ___________________ Address of Trustee Person for Putnam to Contact: ________________________________ Telephone:______________ PUTNAM BASIC PLAN DOCUMENT #07 PUTNAM BASIC PLAN DOCUMENT #07 TABLE OF CONTENTS PAGE ARTICLE 1. INTRODUCTION 1 ARTICLE 2. DEFINITIONS 2 2.1. Account 2 2.2. Affiliated Employer 2 2.3. Authorized Leave of Absence 2 2.4. Base Contribution Percentage 2 2.5. Beneficiary 3 2.6. CODA 3 2.7. Code 3 2.8. Compensation 3 2.9. Date of Employment 3 2.10. Deductible Employee Contribution Account 3 2.11. Disabled 4 2.12. Earned Income 4 2.13. Earnings 4 2.14. Effective Date 4 2.15. Eligibility Period 4 2.16. Employee 5 2.17. Employer 5 2.18. Employer Contribution Account 5 2.19. Employer Stock 5 2.20. ERISA 5 2.21. Excess Earnings 5 2.22. Forfeiture 5 2.23. Hour of Service 5 2.24. Integration Level 7 2.25. Investment Company 7 2.26. Investment Company Shares 7 2.27. Investment Products 7 2.28. Leased Employee 7 2.29. One-Year Eligibility Break 8 2.30. One-Year Vesting Break 8 2.31. Owner-Employee 8 2.32. Participant 8 2.33. Participant Contribution 8 2.34. Participant Contribution Account 8 2.35. Plan 8 2.36. Plan Administrator 9 2.37. Plan Agreement 9 2.38. Plan Year 9 2.39. Profit Sharing Contribution 9 2.40. Putnam 9 2.41. Qualified Domestic Relations Order 9 2.42. Qualified Participant 9 2.43. Recordkeeper 9 2.44. Retirement 9 2.45. Rollover Account 10 2.46. Self-Employed Individual 10 2.47. Shareholder-Employee 10 2.48. Social Security Wage Base 10 2.49. Trust and Trust Fund 10 2.50. Trustee 10 2.51. Valuation Date 10 2.52. Year of Service 10 2.53. Deferral Agreement 11 2.54. Elective Deferral 11 2.55. Elective Deferral Account 11 2.56. Employer Matching Account 11 2.57. Employer Matching Contribution 11 2.58. Highly Compensated Employee 11 2.59. Non-Highly Compensated Employee 14 2.60. Qualified Matching Account 14 2.61. Qualified Matching Contribution 14 2.62. Qualified Nonelective Contribution 14 2.63. Qualified Nonelective Contribution Account 14 ARTICLE 3. PARTICIPATION 15 3.1. Initial Participation 15 3.2. Special Participation Rule 16 3.3. Resumed Participation 16 3.4. Benefits for Owner-Employees 16 3.5. Changes in Classification 17 ARTICLE 4. CONTRIBUTIONS 18 4.1. Provisions Applicable to All Plans 18 4.2. Provisions Applicable Only to Profit Sharing Plans 19 4.3. Provisions Applicable Only to Money Purchase Pension Plans 22 4.4. Forfeitures. 24 4.5. Rollover Contributions 24 4.6. Participant Contributions 24 4.7. No Deductible Employee Contributions 24 ARTICLE 5. CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k) (CODA) 25 5.1. Applicability; Allocations 25 5.2. CODA Participation 25 5.3. Annual Limit on Elective Deferrals 25 5.4. Distribution of Certain Elective Deferrals 26 5.5. Satisfaction of ADP and ACP Tests 26 5.6. Actual Deferral Percentage Test Limit 27 5.7. Distribution of Excess Contributions 29 5.8. Matching Contributions 30 5.9. Recharacterization of Excess Contributions 30 5.10. Average Contribution Percentage Test Limit and Aggregate Limit 31 5.11. Distribution of Excess Aggregate Contributions 33 5.12. Qualified Nonelective Contributions; Qualified Matching Contributions 34 5.13. Restriction on Distributions 34 5.14. Forfeitures of Employer Matching Contributions 35 5.15. Special Effective Dates 35 ARTICLE 6. LIMITATIONS ON ALLOCATIONS 36 6.1. No Additional Plan 36 6.2. Additional Master or Prototype Plan 37 6.3. Additional Non-Master or Non-Prototype Plan 38 6.4. Additional Defined Benefit Plan 38 6.5. Definitions 38 ARTICLE 7. ELIGIBILITY FOR DISTRIBUTION OF BENEFITS 43 7.1. Retirement 43 7.2. Death 43 7.3. Other Termination of Employment 43 ARTICLE 8. VESTING 45 8.1. Vested Balance 45 8.2. Vesting of Accounts of Returned Former Employees 45 8.3. Forfeiture of Non-Vested Amounts 46 8.4. Special Rule in the Event of a Withdrawal 47 8.5. Vesting Election 47 ARTICLE 9. PAYMENT OF BENEFITS 49 9.1. Distribution of Accounts 49 9.2. Restriction on Immediate Distributions 49 9.3. Optional Forms of Distribution 50 9.4. Distribution Procedure 51 9.5. Lost Distributee 51 9.6. Direct Rollovers 52 9.7. Distributions Required by a Qualified Domestic Relations Order 53 ARTICLE 10. JOINT AND SURVIVOR ANNUITY REQUIREMENTS 54 10.1. Applicability 54 10.2. Qualified Joint and Survivor Annuity 55 10.3. Qualified Preretirement Survivor Annuity 55 10.4. Definitions 55 10.5. Notice Requirements 57 10.6. Transitional Rules 57 ARTICLE 11. MINIMUM DISTRIBUTION REQUIREMENTS 60 11.1. General Rules 60 11.2. Required Beginning Date 60 11.3. Limits on Distribution Periods 61 11.4. Determination of Amount to Be Distributed Each Year 61 11.5. Death Distribution Provisions 63 11.6. Transitional Rule 64 ARTICLE 12. WITHDRAWALS AND LOANS 66 12.1. Withdrawals from Participant Contribution Accounts 66 12.2. Withdrawals on Account of Hardship 66 12.3. Withdrawals After Reaching Age 59 1/2 67 12.4. Other Withdrawals 67 12.5. Loans 68 12.6. Procedure; Amount Available 70 12.7. Protected Benefits 70 12.8. Restrictions Concerning Transferred Assets 70 ARTICLE 13. TRUST FUND AND INVESTMENTS 71 13.1. Establishment of Trust Fund 71 13.2. Management of Trust Fund 71 13.3. Investment Instructions 72 13.4. Valuation of the Trust Fund 74 13.5. Distributions on Investment Company Shares 74 13.6. Registration and Voting of Investment Company Shares 74 13.7. Investment Manager 74 13.8. Employer Stock 75 13.9. Insurance Contracts 77 13.10. Registration and Voting of Non-Putnam Investment Company Shares 78 ARTICLE 14. TOP-HEAVY PLANS 79 14.1. Superseding Effect 79 14.2. Definitions 79 14.3. Minimum Allocation 81 14.4. Adjustment of Fractions 82 14.5. Minimum Vesting Schedules 82 ARTICLE 15. ADMINISTRATION OF THE PLAN 84 15.1. Plan Administrator 84 15.2. Claims Procedure 84 15.3. Employer's Responsibilities 85 15.4. Recordkeeper 85 15.5. Prototype Plan 85 ARTICLE 16. TRUSTEE 87 16.1. Powers and Duties of the Trustee 87 16.2. Limitation of Responsibilities 88 16.3. Fees and Expenses 88 16.4. Reliance on Employer 89 16.5. Action Without Instructions 89 16.6. Advice of Counsel 89 16.7. Accounts 89 16.8. Access to Records 90 16.9. Successors 90 16.10. Persons Dealing with Trustee 90 16.11. Resignation and Removal; Procedure 90 16.12. Action of Trustee Following Resignation or Removal 90 16.13. Effect of Resignation or Removal 91 16.14. Fiscal Year of Trust 91 16.15. Limitation of Liability 91 16.16. Indemnification 91 ARTICLE 17. AMENDMENT 92 17.1. General 92 17.2. Delegation of Amendment Power 93 ARTICLE 18. TERMINATION OF THE PLAN AND TRUST 94 18.1. General 94 18.2. Events of Termination 94 18.3. Effect of Termination 94 18.4. Approval of Plan 95 ARTICLE 19. TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS 96 19.1. General 96 19.2. Amounts Transferred 96 19.3. Merger or Consolidation 96 ARTICLE 20. MISCELLANEOUS 97 20.1. Notice of Plan 97 20.2. No Employment Rights 97 20.3. Distributions Exclusively From Plan 97 20.4. No Alienation 97 20.5. Provision of Information 97 20.6. No Prohibited Transactions 97 20.7. Governing Law 97 20.8. Gender 97 PUTNAM BASIC PLAN DOCUMENT #07 ARTICLE INTRODUCTION By executing the Plan Agreement, the Employer has established a retirement plan (the "Plan") according to the terms and conditions of the Plan Agreement and this Putnam Basic Plan Document #07, for the purpose of providing a retirement fund for the benefit of Participants and Beneficiaries. A Plan established hereunder pursuant to a Plan Agreement is intended to qualify under Section 401(a) of the Code. ARTICLE DEFINITIONS The terms defined in Sections 2.1 through 2.52 appear generally throughout the document. Sections 2.53 through 2.63 and Article 5 contain definitions of terms used only in a CODA and Section 10.4 contains additional definitions related to distributions from the Plan. Articles 6 and 11 contain additional definitions of terms used only in those Articles. Account means any of, and Accounts means all of, a Participant's Employer Contribution Account, Participant Contribution Account, Rollover Account, Deductible Employee Contribution Account and if the Plan contains a CODA, the accounts maintained for the Participant pursuant to Article 5. Affiliated Employer, for purposes of the Plan other than Article 6, means the Employer and a trade or business, whether or not incorporated, which is any of the following: A member of a group of controlled corporations (within the meaning of Section 414(b) of the Code) which includes the Employer; or A trade or business under common control (within the meaning of Section 414(c) of the Code) with the Employer; or A member of an affiliated service group (within the meaning of Section 414(m) of the Code) which includes the Employer; or An entity otherwise required to be aggregated with the Employer pursuant to Section 414(o) of the Code. In determining an Employee's service for vesting and for eligibility to participate in the Plan, all employment with Affiliated Employers will be treated as employment by the Employer. For purposes of Article 6 only, the definitions in paragraphs (a) and (b) of this Section 2.2 shall be modified by adding at the conclusion of the parenthetical phrase in each such paragraph the words "as modified by Section 415(h) of the Code." Authorized Leave of Absence means a leave of absence from employment granted in writing by an Affiliated Employer. Authorized Leave of Absence shall be granted on account of military service for any period during which an Employee's right to re-employment is guaranteed by law, and for such other reasons and periods as an Affiliated Employer shall consider proper, provided that Employees in similar situations shall be similarly treated. Base Contribution Percentage means the percentage so specified in the Plan Agreement. Beneficiary means a person entitled to receive benefits under the Plan upon the death of a Participant, in accordance with Section 7.2 and Articles 10 and 11. CODA means a cash or deferred arrangement that meets the requirements of Section 401(k) of the Code, adopted as part of a profit sharing plan. Code means the Internal Revenue Code of 1986, as amended. Compensation means all of an Employee's compensation determined in accordance with the definition and for the purpose elected by the Employer in the Plan Agreement. For purposes of that election, "Form W-2 earnings" means "wages" as defined in Section 3401(a) of the Code in connection with income tax withholding at the source, and all other compensation paid to the Employee by the Employer in the course of its trade or business, for which the Employer is required to furnish the Employee with a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the Code, determined without regard to exclusions based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2) of the Code). Compensation shall include only amounts actually paid to the Employee during the Plan Year, except that if the Employer so elects in the Plan Agreement, in an Employee's initial year of participation in the Plan, Compensation shall include only amounts actually paid to the Employee from the Employee's effective date of participation pursuant to Section 3.1 to the end of the Plan Year. In addition, if the Employer so elects in the Plan Agreement, Compensation shall include any amount which is contributed to an employee benefit plan for the Employee by the Employer pursuant to a salary reduction agreement, and which is not includible in the gross income of the Employee under Section 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code. If the Employer so elects in the Plan Agreement, Compensation shall not include overtime pay, bonuses, commissions or other similar types of pay, or Compensation above a specified amount, all as designated in the Plan Agreement, provided, that such election may not be made if the Employer elects in the Plan Agreement to integrate the Plan with Social Security. (For a self-employed person, the relevant term is Earned Income, as defined in Section 2.12.) Date of Employment means the first date on which an Employee performs an Hour of Service; or, in the case of an Employee who has incurred one or more One-Year Eligibility Breaks and who is treated as a new Employee under the rules of Section 3.3, the first date on which he performs an Hour of Service after his return to employment. Deductible Employee Contribution Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded amounts contributed by him to the Plan on a tax-deductible basis under prior law, and the income, expenses, gains and losses thereon. Disabled means unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. The permanence and degree of such impairment shall be supported by medical evidence. Earned Income means a Self-Employed Individual's net earnings from self-employment in the trade or business with respect to which the Plan is established, excluding items not included in gross income and the deductions allocable to such items, and reduced by (i) contributions by the Employer to qualified plans, to the extent deductible under Section 404 of the Code, and (ii) the deduction allowed to the taxpayer under Section 164(f) of the Code for taxable years beginning after December 31, 1989. Earnings, for determining all benefits provided under the Plan, means the first $150,000 (as adjusted periodically by the Secretary of the Treasury for inflation) of the sum of the Compensation and Earned Income received by an Employee during a Plan Year. To calculate an allocation to a Participant's Account for any Plan Year shorter than 12 months, the dollar limit on Earnings must be multiplied by a fraction of which the denominator is 12 and the numerator is the number of months in the Plan Year. In determining the Earnings of a Participant, the rules of Section 414(q)(6) of the Code shall apply, except that in applying those rules the term "family" shall include only the Participant's spouse and the Participant's lineal descendants who have not reached age 19 by the last day of the Plan Year. If, as a result of the application of such rules, the applicable Earnings limitation described above is exceeded, then the limitation shall be prorated among the affected individuals in proportion to each such individual's Earnings as determined under this Section prior to the application of this limitation. Effective Date means the date so designated in the Plan Agreement. If the Plan Agreement indicates that the Employer is adopting the Plan as an amendment of an existing plan, the provisions of the existing plan apply to all events preceding the Effective Date, except as to specific provisions of the Plan which set forth a retroactive effective date in accordance with Section 1140 of the Tax Reform Act of 1986. Eligibility Period means a period of service with the Employer which an Employee is required to complete in order to commence participation in the Plan. A 12-month Eligibility Period is a period of 12 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, in which he is credited with at least 1,000 Hours of Service or the number of Hours of Services set forth in the Plan Agreement. A 6-month Eligibility Period is a period of 6 consecutive months beginning on an Employee's most recent Date of Employment or any anniversary thereof, or on the 6-month anniversary of such Date of Employment or any anniversary thereof, in which he is credited with at least 500 Hours of Service or the number of Hours of Service set forth in the Plan Agreement. If the Employer has selected another period of service as the Eligibility Period under the Plan, Eligibility Period means the period so designated in which the Employee is credited with the number of hours designated in the Plan Agreement. Notwithstanding the foregoing, if an Employee is credited with 1,000 Hours of Service during a 12-consecutive- month period following his Date of Employment or any anniversary thereof, he shall be credited with an Eligibility Period. In the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service in the case of a 12-month Eligibility Period, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. If the Employer so elects in the Plan Agreement, an Employee's most recent Date of Employment for purposes of this Section 2.15 shall be the first date on which he performed services for a business acquired by the Employer. Employee means a common law Employee of an Affiliated Employer; in the case of an Affiliated Employer which is a sole proprietorship, the sole proprietor thereof; in the case of an Affiliated Employer which is a partnership, a partner thereof; and a Leased Employee of an Affiliated Employer. The term "Employee" includes an individual on Authorized Leave of Absence, a Self-Employed Individual and an Owner-Employee. Employer means the Employer named in the Plan Agreement and any successor to all or the major portion of its assets or business which assumes the obligations of the Employer under the Plan Agreement. Employer Contribution Account means an account maintained on the books of the Plan on behalf of a Participant, in which are recorded the amounts allocated for his benefit from contributions by the Employer (other than contributions pursuant to Article 5 (i.e. the CODA provisions)), Forfeitures by former Participants (if the Plan provides for reallocation of Forfeitures), amounts reapplied under Section 6.1(d), and the income, expenses, gains and losses incurred thereon. Employer Stock means securities constituting "qualifying employer securities" of an Employer within the meaning of Section 407(d)(5) of ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as amended. Excess Earnings means a Participant's Earnings in excess of the Integration Level of the Plan. Forfeiture means a nonvested amount forfeited by a former Participant, pursuant to Section 8.3, or an amount forfeited by a former Participant or Beneficiary who cannot be located, pursuant to Section 9.5. Hour of Service means each hour described in paragraphs (a), (b), (c), (d) or (e) below, subject to paragraphs (f) and (g) below. Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Affiliated Employer. These hours shall be credited to the Employee for the computation period or periods in which the duties are performed. Each hour for which an Employee is paid, or entitled to payment, by an Affiliated Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. No more than 501 Hours of Service shall be credited under this paragraph for any single continuous period of absence (whether or not such period occurs in a single computation period) unless the Employee's absence is not an Authorized Leave of Absence. Hours under this paragraph shall be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations, which are incorporated herein by this reference. Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Affiliated Employer. The same Hours of Service shall not be credited under both paragraph (a) or paragraph (b), as the case may be, and under this paragraph (c); and no more than 501 Hours of Service shall be credited under this paragraph (c) with respect to payments of back pay, to the extent that such pay is agreed to or awarded for a period of time described in paragraph (b) during which the Employee did not perform or would not have performed any duties. These hours shall be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made. Each hour during an Authorized Leave of Absence. Such hours shall be credited at the rate of a customary full work week for an Employee. Solely for purposes of determining whether a One Year Vesting Break or a One-Year Eligibility Break has occurred, each hour which otherwise would have been credited to an Employee but for an absence from work by reason of: the pregnancy of the Employee, the birth of a child of the Employee, the placement of a child with the Employee in connection with the adoption of the child by the Employee, or caring for a child for a period beginning immediately after its birth or placement. If the Plan Administrator cannot determine the hours which would normally have been credited during such an absence, the Employee shall be credited with eight Hours of Service for each day of absence. No more than 501 Hours of Service shall be credited under this paragraph by reason of any pregnancy or placement. Hours credited under this paragraph shall be treated as Hours of Service only in the Plan Year or Eligibility Period or both, as the case may be, in which the absence from work begins, if necessary to prevent the Participant's incurring a One-Year Vesting Break or One-Year Eligibility Break in that period, or, if not, in the period immediately following that in which the absence begins. The Employee must timely furnish to the Employer information reasonably required to establish (i) that an absence from work is for a reason specified above, and (ii) the number of days for which the absence continued. Hours of Service shall be determined on the basis of actual hours for which an Employee is paid or entitled to payment, or as otherwise specified in the Plan Agreement. If the Employer maintains the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer. If the Employer does not maintain the plan of a predecessor Employer, service for the predecessor Employer shall be treated as service for the Employer only to the extent that the Employer so elects in the Plan Agreement. Hours of Service shall be credited to a Leased Employee as though he were an Employee. Integration Level means the Earnings amount selected by the Employer in the Plan Agreement. Investment Company means an open-end registered investment company for which Putnam Mutual Funds Corp., or its affiliate acts as principal underwriter, or for which Putnam Investment Management, Inc., or its affiliate serves as an investment adviser; provided that its prospectus offers its shares under the Plan. Investment Company Shares means shares issued by an Investment Company. Investment Products means any of the investment products specified by the Employer in accordance with Section 13.2, from the group of those products sponsored, underwritten or managed by Putnam as shall be made available by Putnam under the Plan, and such other products as shall be expressly agreed to in writing by Putnam for availability under the Plan. Leased Employee means any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with Section 414(n)(6) of the Code) on a substantially full time basis for a period of at least one year, and such services are of a type historically performed by Employees in the business field of the recipient Employer. The compensation of a Leased Employee for purposes of the Plan means the Compensation (as defined in Section 2.8) of the Leased Employee attributable to services performed for the recipient Employer. Contributions or benefits provided to a leased Employee by the leasing organization which are attributable to services performed for the recipient Employer shall be treated as provided by the recipient Employer. Provided that leased Employees do not constitute more than 20% of the recipient's nonhighly compensated workforce, a leased Employee shall not be considered an Employee of the recipient if he is covered by a money purchase pension plan providing: (1) a nonintegrated Employer contribution rate of at least 10% of compensation (as defined in Section 415(c)(3) of the Code, but including amounts contributed pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code), (2) immediate participation, and (3) full and immediate vesting. One-Year Eligibility Break means a 12-month Eligibility Period during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations of the Secretary of Labor dealing with breaks in service, and provided further that if the Employer has elected in the Plan Agreement to establish a number less than 500 as the requisite Hours of Service for crediting a 12-month Eligibility Period, that number shall be substituted for 500. One-Year Vesting Break means a Year of Service measuring period, as elected by the Employer in the Plan Agreement, during which an individual is not credited with more than 500 Hours of Service; provided, however, that in the case of an Employee in a seasonal industry, there shall be substituted for 500 the number of Hours of Service specified in any regulations for the Secretary of Labor dealing with breaks in service, and provided further that if the Employer has elected in the Plan Agreement to establish a number less than 500 as the requisite Hours of Service for crediting a Year of Service, that number shall be substituted for 500. Owner-Employee means the sole proprietor of an Affiliated Employer that is a sole proprietorship, or a partner owning more than 10% of either the capital or profits interest of an Affiliated Employer that is a partnership. The Plan Administrator shall be responsible for identifying Owner-Employees to the Recordkeeper. Participant means each Employee who has met the requirement for participation in Article 3. An Employee is not a Participant for any period before the entry date applicable to him. Participant Contribution means an after-tax contribution made by a Participant in accordance with Section 4.6. Participant Contribution Account means an account maintained on the books of the Plan, in which are recorded Participant Contributions by a Participant and any income, expenses, gains or losses incurred thereon. Plan means the form of defined contribution retirement plan and trust agreement adopted by the Employer, consisting of the Plan Agreement and the Putnam Basic Plan Document #07 as set forth herein, together with any and all amendments and supplements thereto. Plan Administrator means the Employer or its appointee pursuant to Section 15.1. Plan Agreement means the separate agreement entered into between the Employer and the Trustee and accepted by Putnam, under which the Employer adopts the Plan and selects among its optional provisions. Plan Year means the period of 12 consecutive months specified by the Employer in the Plan Agreement, as well as any initial short plan year period specified by the Employer in the Plan Agreement. Profit Sharing Contribution means a contribution made for the benefit of a Participant by the Employer pursuant to Section 4.2(a). Putnam means (i) Putnam Mutual Funds Corp., or a company affiliated with it which Putnam Mutual Funds Corp. has designated as its agent performing specified actions or procedures in its capacity as sponsor of this prototype Plan, and (ii) Putnam Fiduciary Trust Company when performing in its capacity as Recordkeeper or Trustee. Qualified Domestic Relations Order means any judgment, decree or order (including approval of a property settlement agreement) which constitutes a "qualified domestic relations order" within the meaning of Code Section 414(p). A judgment, decree or order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan. Qualified Participant means any Participant who satisfies the requirements for being a Qualified Participant as elected by the Employer in the Plan Agreement, for the purposes set forth in the Plan Agreement. If the Plan is not adopted to replace an existing plan, this Section 2.42 is effective on the Effective Date. If the Plan replaces an existing plan, this Section 2.42 is effective on the Effective Date, and the provision of the existing plan that this Section 2.42 replaces shall continue to apply until that time. Recordkeeper means the person or entity designated by the Employer in the Plan Agreement to perform the duties described in Section 15.4, and any successor thereto. If Putnam is the Recordkeeper, the terms and conditions of its service will be as specified in a service agreement between the Employer and Putnam. Retirement means ceasing to be an Employee in accordance with Section 7.1. Rollover Account means an account established for an Employee who makes a rollover contribution to the Plan pursuant to Section 4.5. Self-Employed Individual means an individual whose personal services are a material income-producing factor in the trade or business for which the Plan is established, and who has Earned Income for the taxable year from that trade or business, or would have Earned Income but for the fact that the trade or business had no net profits for the taxable year. Shareholder-Employee means any officer or Employee of an electing small business corporation, within the meaning of Section 1362 of the Code, who on any day during a taxable year of the Employer owns (or is considered as owning under Section 318(a)(1) of the Code) more than 5% of the outstanding stock of the Employer. The Plan administrator shall be responsible for identifying Shareholder-Employees to the Recordkeeper. Social Security Wage Base means the maximum amount considered as wages under Section 3121(a)(1) of the Code as in effect on the first day of the Plan Year. Trust and Trust Fund mean the trust fund established under Section 13.1. Trustee means the person, or the entity with trustee powers, named in the Plan Agreement as trustee, and any successor thereto. Valuation Date means each day when the New York Stock Exchange is open, or such other date or dates as the Employer may designate by written agreement with the Recordkeeper. Year of Service means a Plan Year or a 12-month Eligibility Period, as elected by the Employer in the Plan Agreement, in which an Employee is credited with at least 1,000 Hours of Service; provided, however, that if the Employer has elected in the Plan Agreement to establish a number less than 1,000 as the requisite for crediting a Year of Service, that number shall be substituted for 1,000, and provided further that in the case of an Employee in a seasonal industry (as defined under regulations prescribed by the Secretary of Labor) in which the customary extent of employment during a calendar year is fewer than 1,000 Hours of Service, the number specified in any regulations prescribed by the Secretary of Labor dealing with years of service shall be substituted for 1,000. An Employee's Years of Service shall include service credited prior to the Effective Date under any predecessor plan. If the initial Plan Year is shorter than 12 months, each Employee who is credited with at least 1,000 Hours of Service in the 12-month period ending on the last day of the initial Plan Year shall be credited with a Year of Service with respect to the initial Plan Year. If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall not include: Service in any Plan Year (or comparable period prior to the Effective Date) completed before the Employee reached age 18; Service completed during a period in which the Employer did not maintain the Plan or any predecessor plan (as defined under regulations prescribed by the Secretary of the Treasury). If the Employer has so elected in the Plan Agreement, Years of Service for vesting shall include employment by a business acquired by the Employer, before the date of the acquisition. The following definitions apply only to cash or deferred arrangements under Section 401(k) (CODA): Deferral Agreement means an Employee's agreement to make one or more Elective Deferrals in accordance with Section 5.2. Elective Deferral means any contribution made to the Plan by the Employer at the election of a Participant, in lieu of cash compensation, including contributions made pursuant to a Deferral Agreement or other deferral mechanism. Elective Deferral Account means an account maintained on the books of the Plan, in which are recorded a Participant's Elective Deferrals and the income, expenses, gains and losses incurred thereon. Employer Matching Account means an account maintained on the books of the Plan, in which are recorded the Employer Matching Contributions made on behalf of a Participant and the income, expenses, gains and losses incurred thereon. Employer Matching Contribution means a contribution made by the Employer (i) to the Plan pursuant to Section 5.8, or (ii) to another defined contribution plan on account of a Participant's "elective deferrals" or "employee contributions," as those terms are used in Section 401(m)(4) of the Code. Highly Compensated Employee means any highly compensated active Employee or highly compensated former Employee as defined in subsection (a) below; provided, however, that if the Employer so elects in the Plan Agreement, Highly Compensated Employee means any highly compensated Employee under the simplified method described in subsection (b) below. Regular Method. A highly compensated active Employee includes any Employee who performs service for the Employer during the determination year and who during the look-back year: (i) received compensation from the Employer in excess of $75,000 (as adjusted pursuant to Section 415(d) of the Code); (ii) received compensation from the Employer in excess of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a member of the top-paid group for such year; or (iii) was an officer of the Employer and received compensation during such year that is greater than 50% of the dollar limitation in effect under Section 415(b)(1)(A) of the Code. The term also includes (A) Employees who are both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year," and among the 100 Employees who received the most compensation from the Employer during the determination year; and (B) Employees who are 5% owners at any time during the look-back year or determination year. If no officer has satisfied the compensation requirement of (iii) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee. A highly compensated former Employee includes any Employee who separated from service (or was deemed to have separated) before the determination year, performed no service for the Employer during the determination year, and was a highly compensated active Employee for either the year of separation from service or any determination year ending on or after the Employee's 55th birthday. If during a determination year or look-back year an Employee is a family member of either a 5% owner who is an active or former Employee, or a Highly Compensated Employee who is one of the 10 most highly paid Highly Compensated Employees ranked on the basis of compensation paid by the Employer during the year, then the family member and the 5% owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving compensation and Plan contributions or benefits equal to the sum of the compensation and contributions or benefits of the family member and the 5% owner or top-ten Highly Compensated Employee. For purposes of this Section 2.58(a), family members include the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants. For purposes of this subsection (a), the "determination year" shall be the Plan Year, and the "look-back year" shall be the 12-month period immediately preceding the determination year; provided, however, that in a Plan for which the Plan Year is the calendar year, the current Plan Year shall be both the "determination year" and the "look-back year" if the Employer so elects in the Plan Agreement. Simplified Method. An Employee is a Highly Compensated Employee under this simplified method if (i) the Employee is a 5% owner during the Plan Year; (ii) the Employee's compensation for the Plan Year exceeds $75,000 (as adjusted pursuant to Section 415(d) of the Code); (iii) the Employee's compensation for the Plan Year exceeds $50,000 (as adjusted pursuant to Section 415(d) of the Code) and the Employee is in the top-paid group of Employees; or (iv) the Employee is an officer of the Employer and received compensation during the Plan Year that is greater than 50% of the dollar limitation under Code Section 415(b)(1)(A). The lookback provisions of Code Section 414(q) do not apply to determining Highly Compensated Employees under this simplified method. An Employer that applies this simplified method for determining Highly Compensated Employees may choose to apply this method on the basis of the Employer's workforce as of a single day during the Plan Year ("snapshot day"). In applying this simplified method on a snapshot basis, the Employer shall determine who is a Highly Compensated Employee on the basis of the data as of the snapshot day. If the determination of who is a Highly Compensated Employee is made earlier than the last day of the Plan Year, the Employee's compensation that is used to determine an Employee's status must be projected for the Plan Year under a reasonable method established by the Employer. Notwithstanding the foregoing, in addition to those Employees who are determined to be highly compensated on the Plan's snapshot day, as described above, where there are Employees who are not employed on the snapshot day but who are taken into account for purposes of testing under Section 5.6 or 5.10, the Employer must treat as a Highly Compensated Employee any Eligible Employee for the Plan Year who: terminated prior to the snapshot day and was a Highly Compensated Employee in the prior year; terminated prior to the snapshot day and (i) was a 5% owner, (ii) had compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) was an officer and had compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer; or becomes employed subsequent to the snapshot day and (i) is a 5% owner, (ii) has compensation for the Plan Year greater than or equal to the projected compensation of any Employee who is treated as a Highly Compensated Employee on the snapshot day (except for Employees who are Highly Compensated Employees solely because they are 5% owners or officers), or (iii) is an officer and has compensation greater than or equal to the projected compensation of any other officer who is a Highly Compensated Employee on the snapshot day solely because that person is an officer. If during a Plan Year an Employee is a family member of either a 5% owner who is an Employee, or a Highly Compensated Employee who is one of the ten most highly paid Highly Compensated Employees ranked on the basis of compensation paid by the Employees during the year, then the family member and the 5% owner or top-ten-Highly-Compensated- Employee shall be treated as a single Employee receiving compensation and Plan contributions or benefits equal to the sum of the compensation and contributions or benefits of the family member and the 5% owner or top-ten-Highly-Compensated- Employee. For purposes of this Section 2.58(b), family members include the spouse, lineal ascendants and descendants of the Employee and the spouses of such lineal ascendants and descendants. The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder. The Plan Administrator is responsible for identifying the Highly Compensated Employees and reporting such data to the Recordkeeper. Non-Highly Compensated Employee means an Employee who is not a Highly Compensated Employee. Qualified Matching Account means an account maintained on the books of the Plan, in which are recorded the Qualified Matching Contributions on behalf of a Participant and the income, expense, gain and loss attributable thereto. Qualified Matching Contribution means a contribution made by the Employer that: (i) is allocated with respect to a Participant's Elective Deferrals or Participant Contributions or both (as elected by the Employer in the Plan Agreement), (ii) is fully vested at all times and (iii) is distributable only in accordance with Section 5.13. Qualified Nonelective Contribution means a contribution (other than an Employer Matching Contribution or Qualified Matching Contribution) made by the Employer, that: (i) a Participant may not elect to receive in cash until it is distributed from the Plan; (ii) is fully vested at all times; and (iii) is distributable only in accordance with Section 5.13. Qualified Nonelective Contribution Account means an account maintained on the books of the Plan, in which are recorded the Qualified Nonelective Contributions on behalf of a Participant and the income, expense, gain and loss attributable thereto. ARTICLE PARTICIPATION Initial Participation. Upon completion of the eligibility for Plan participation requirements specified in the Plan Agreement, an Employee shall begin participation in the Plan as of the entry date specified in the Plan Agreement, or as of the Effective Date, whichever is later; provided, however, that: if the Plan is adopted as an amendment of a predecessor plan of the Employer, every Employee who was participating under the predecessor plan when it was so amended shall become a Participant in the Plan as of the Effective Date, whether or not he has satisfied the age and service requirements specified in the Plan Agreement; and if the Employer so specifies in the Plan Agreement, any individual who is (i) a nonresident alien receiving no earned income from an Affiliated Employer which constitutes income from sources within the United States, (ii) included in a unit of Employees covered by a collective bargaining agreement between the Employer and Employee representatives (excluding from the term "Employee representatives" any organization of which more than half of the members are Employees who are owners, officers, or executives of an Affiliated Employer), if retirement benefits were the subject of good faith bargaining and no more than 2% of the Employees covered by the collective bargaining agreement are professionals as defined in Section 1.410(b)-9 of the Income Tax Regulations, (iii) is an Employee of an Affiliated Employer specified by the Employer in the Plan Agreement, (iv) is a Leased Employee, or (v) is a member of such other class of Employees specified by the Employer in the Plan Agreement, shall not participate in the Plan until the later of the date on which he ceases to be described in clause (i), (ii), (iii), (iv) or (v), whichever are applicable, or the entry date specified by the Employer in the Plan Agreement; and if the Plan is not adopted as an amendment of a predecessor plan of the Employer, Employees on the Effective Date shall begin participation on the Effective Date, to the extent so elected by the Employer in the Plan Agreement; and a Participant shall cease to participate in the Plan when he becomes a member of a class of Employees ineligible to participate in the Plan, and shall resume participation immediately upon his return to a class of Employees eligible to participate in the Plan. In the case of a Plan to which the CODA provisions of Article 5 apply and for which the Employer has elected in the Plan Agreement to apply different minimum service requirements for purposes of participation in Profit Sharing Contributions, for purposes of participation in the CODA provisions and/or for purposes of participation in Employer Matching Contributions, this Article 3 shall be applied separately with regard to participation under Article 4, with regard to participation under the CODA provisions of Article 5 and/or with regard to participation in Employer Matching Contributions under Article 5. Special Participation Rule. With respect to a Plan in which the Employer has specified full and immediate vesting in the Plan Agreement, an Employee who incurs a One-Year Eligibility Break before completing the number of Eligibility Periods required under Section 3.1 shall not thereafter be credited with any Eligibility Period completed before the One-Year Eligibility Break. Resumed Participation. A former Employee who incurs a One-Year Eligibility Break after having become a Participant shall participate in the Plan as of the date on which he again becomes an Employee, if (i) his Accounts had become partially or fully vested before he incurred a One-Year Vesting Break, or (ii) he incurred fewer than five consecutive One-Year Eligibility Breaks. In any other case, when he again becomes an Employee he shall be treated as a new Employee under Section 3.1. Benefits for Owner-Employees. If the Plan provides contributions or benefits for one or more Owner-Employees who control both the trade or business with respect to which the Plan is established and one or more other trades or businesses, the Plan and plans established with respect to such other trades or businesses must, when looked at as a single plan, satisfy Sections 401(a) and (d) of the Code with respect to the Employees of this and all such other trades or businesses. If the Plan provides contributions or benefits for one or more Owner- Employees who control one or more other trades or businesses, the Employees of each such other trade or business must be included in a plan which satisfies Sections 401(a) and (d) of the Code and which provides contributions and benefits not less favorable than those provided for such Owner-Employees under the Plan. If an individual is covered as an Owner-Employee under the plans of two or more trades or businesses which he does not control and such individual controls a trade or business, then the contributions or benefits of the Employees under the plan of the trade or business which he does control must be as favorable as those provided for him under the most favorable plan of the trade or business which he does not control. For purposes of this Section 3.4, an Owner-Employee, or two or more Owner-Employees, shall be considered to control a trade or business if such Owner-Employee, or such two or more Owner-Employees together: own the entire interest in an unincorporated trade or business, or in the case of a partnership, own more than 50% of either the capital interest or the profits interest in such partnership. For purposes of the preceding sentence, an Owner-Employee or two or more Owner-Employees shall be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner-Employee or such two or more Owner-Employees are considered to control within the meaning of the preceding sentence. Changes in Classification. If a Participant ceases to be a member of a classification of Employees eligible to participate in the Plan, but does not incur a One-Year Eligibility Break, he will continue to be credited with Years of Service for vesting while he remains an Employee, and he will resume participation as of the date on which he again becomes a member of a classification of Employees eligible to participate in the Plan. If such a Participant incurs a One-Year Eligibility Break, Section 3.3 will apply. If a Participant who ceases to be a member of a classification of Employees eligible to participate in the Plan becomes a member of a classification of Employees eligible to participate in another plan of the Employer, his Account, if any, under the Plan shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account. If an Employee who is not a member of a classification of Employees eligible to participate in the Plan satisfies the age and service requirements specified in the Plan Agreement, he will begin to participate immediately upon becoming a member of an eligible classification. If such an Employee has account balances under another plan of the Employer, such account balances shall be transferred to the Plan upon the Employee's commencement of participation in the Plan, if such other plan permits such transfer. ARTICLE CONTRIBUTIONS Provisions Applicable to All Plans. Payment and Crediting of Contributions. The Employer shall pay to the order of the Trustee the aggregate contributions to the Trust Fund for each Plan Year. Each contribution shall be accompanied by instructions from the Employer, in the manner prescribed by Putnam. Neither the Trustee nor Putnam shall be under any duty to inquire into the correctness of the amount or the timing of any contribution, or to collect any amount if the Employer fails to make a contribution as provided in the Plan. Time for Payment. Elective Deferrals will be transferred to the Trustee as soon as such contributions can reasonably be segregated from the general assets of the Employer, but in any event within 90 days after the date on which the Compensation to which such contributions relate is paid. The aggregate of all other contributions with respect to a Plan Year shall be transferred to the Trustee no later than the due date (including extensions) for filing the Employer's federal income tax return for that Plan Year. Limitations on Allocations. All allocations shall be subject to the limitations in Article 6. Establishment of Accounts. The Employer will establish and maintain (or cause to be established and maintained) for each Participant individual accounts adequate to disclose his interest in the Trust Fund, including such of the following separate accounts as shall apply to the Participant: Employer Contribution Account, Participant Contribution Account, Deductible Employee Contribution Account, and Rollover Account; and in a Plan with a CODA, Elective Deferral Account, Qualified Nonelective Account, Qualified Matching Account and Employer Matching Account. The maintenance of such accounts shall be only for recordkeeping purposes, and the assets of separate accounts shall not be required to be segregated for purposes of investment. Restoration of Accounts. Notwithstanding any other provision of the Plan, for any Plan Year in which it is necessary to restore any portion of a Participant's Account pursuant to Section 8.3(b) or 9.5, to the extent that the amount of Forfeitures available is insufficient to accomplish such restoration, the Employer shall contribute the amount necessary to eliminate the insufficiency, regardless of whether the contribution is currently deductible by the Employer under Section 404 of the Code. Forfeitures shall be considered available for allocation pursuant to Sections 4.4 and 5.14 in a Plan Year only after all necessary restoration of Accounts has been accomplished. Provisions Applicable Only to Profit Sharing Plans. Amount of Annual Contribution. The Employer will contribute for each Plan Year as a Profit Sharing Contribution an amount determined in accordance with the formula specified by the Employer in the Plan Agreement, less any amounts reapplied for the Plan Year under Section 6.1(d), not to exceed the amount deductible under Section 404 of the Code. Allocation of Profit Sharing Contributions; General Rule. As of the last day of each Plan Year, the Profit Sharing Contribution (and any amounts reapplied under Section 6.1(d)) for the Plan Year shall be allocated as indicated by the Employer in the Plan Agreement. Plans Integrated with Social Security. If the Employer elects in the Plan Agreement an allocation formula integrated with Social Security, Profit Sharing Contributions (and any amounts reapplied under Section 6.1(d)) shall be allocated as of the last day of the Plan Year, as follows: Top-Heavy Integration Formula. If the Plan is required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 14, or if the Employer has specified in the Plan Agreement that this paragraph (1) will apply whether or not the Plan is Top-Heavy, then: First, among the Employer Contribution Accounts of all Qualified Participants, in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings. The total amount allocated in this manner shall be equal to three percent (3%) of all Qualified Participants' Earnings (or, if less, the entire amount to be allocated). Next, among the Employer Contribution Accounts of all Qualified Participants who have Excess Earnings, in the ratio that each Qualified Participant's Excess Earnings bears to all Qualified Participants' Excess Earnings. The total amount allocated in this manner shall be equal to three percent (3%) of all Qualified Participants' Excess Earnings (or, if less, the entire amount remaining to be allocated). In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, all of such Qualified Participant's Earnings shall be taken into account. Next, among the Employer Contribution Accounts of all Qualified Participants, in the ratio that the sum of each Qualified Participant's Earnings and Excess Earnings bears to the sum of all Qualified Participants' Earnings and Excess Earnings. The total amount allocated in this manner shall not exceed the lesser of (i) the sum of all Participants' Earnings and Excess Earnings multiplied by the Top-Heavy Maximum Disparity Percentage determined under subparagraph (1)(E), or (ii) the entire amount remaining to be allocated. In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, two times such Qualifying Participant's Earnings shall be taken into account. Finally, any amount remaining shall be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings. The Top-Heavy Maximum Disparity Percentage shall be the lesser of (i) 2.7% or (ii) the applicable percentage from the following table: If the Plan's Integration The Level is More But not more applicable than: than: percentage is: $0 The greater 2.7% of $10,000 or 20% of the Social Security Wage Base The greater 80% of the 1.3% of $10,000 or Social 20% of the Security Wage Social Base Security Wage Base 80% of the Less than the 2.4% Social Social Security Wage Security Wage Base Base If the Plan's Integration Level is equal to the Social Security Wage Base, the Top-Heavy Maximum Disparity Percentage is 2.7%. Non-Top-Heavy Integration Formula. If the Plan is not required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 14, and the Employer has not specified in the Plan Agreement that paragraph (1) will apply whether or not the Plan is Top-Heavy, then: An amount equal to (i) the Maximum Disparity Percentage determined under subparagraph (2)(C) multiplied by the sum of all Qualified Participants' Earnings and Excess Earnings, or (ii) if less, the entire amount to be allocated, shall be allocated among the Employer Contribution Account of all Participants in the ratio that the sum of each Qualified Participant's Earnings and Excess Earnings bears to the sum of all Qualified Participants' Earnings and Excess Earnings. In the case of any Qualified Participant who has exceeded the cumulative permitted disparity limit described in subparagraph (5) below, two times such Qualified Participant's Earnings shall be taken into account. Any amount remaining after the allocation in paragraph (2)(A) shall be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that each Qualified Participant's Earnings bears to all Qualified Participants' Earnings. The Maximum Disparity Percentage shall be the lesser of (i) 5.7% or (ii) the applicable percentage from the following table: If the Plan's Integration The Level is more But not more applicable than: than: percentage is: $0 The greater 5.7% of $10,000 or 20% of the Social Security Wage Base The greater 80% of the 4.3% of $10,000 or Social 20% of the Security Wage Social Base Security Wage Base 80% of the Less than the 5.4% Social Social Security Wage Security Wage Base Base If the Plan's Integration Level is equal to the Social Security Wage Base, the Maximum Disparity Percentage is 5.7%. In this Section 4.2, "Earnings" means Earnings as defined in Section 2.13. Annual overall permitted disparity limit. Notwithstanding subparagraphs (1) through (3) above, for any Plan Year this Plan benefits any Participant who benefits under another qualified plan or simplified employee pension (as defined in Section 408(k) of the Code) maintained by the Employer that provides for permitted disparity (or imputes disparity), Profit Sharing Contributions and Forfeitures will be allocated among the Employer Contribution Accounts of all Qualified Participants in the ratio that such Qualified Participant's Earnings bears to the Earnings of all Participants. For all purposes under the Plan, a Participant is treated as benefiting under a plan (including this Plan) for any plan year during which the Participant receives or is deemed to receive an allocation under a plan in accordance with Section 1.410(b)-3(a) of the Treasury Regulations. Cumulative Permitted Disparity Limit. Effective for Plan years beginning on or after January 1, 1995, the cumulative permitted disparity limit for a Participant is 35 cumulative permitted disparity years. Total cumulative permitted disparity years means the number of years credited to the Participant for allocation or accrual purposes under the Plan, any other qualified plan or simplified employee pension plan (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, all years ending in the same calendar year are treated as the same year. If the Participant has not benefitted under a defined benefit or target benefit plan for any year beginning on or after January 1, 1994, the Participant has no cumulative disparity limit. Provisions Applicable Only to Money Purchase Pension Plans. Amount of Annual Contributions. The Employer will contribute for each Plan Year an amount described in paragraph (b) or (c) below, whichever is applicable, less any amounts reapplied for the Plan Year under Section 6.1(d), not to exceed the amount deductible under Section 404(c) of the Code. Allocation of Contributions; General Rule. The Employer shall contribute an amount equal to the product of the Earnings of all Qualified Participants and the Base Contribution Percentage, and the contribution shall be allocated as of the last day of the Plan Year among the Employer Contribution Accounts of all Qualified Participants in the ratio that the Earnings of each Qualified Participant bears to the Earnings of all Qualified Participants. This general rule does not apply to a Plan that is integrated with Social Security. Plans Integrated with Social Security. If the Employer has elected in the Plan Agreement to integrate the Plan with Social Security, the Employer shall contribute an amount equal to the sum of the following amounts, and the contribution shall be allocated as of the last day of the Plan Year as follows: To the Employer Contribution Account of each Qualified Participant, an amount equal to the product of the Base Contribution Percentage and his Earnings, and To the Employer Contribution Account of each Qualified Participant who has Excess Earnings, the product of his Excess Earnings and the lesser of (i) the Base Contribution Percentage or (ii) the Money Purchase Maximum Disparity Percentage determined under paragraph (d). The Base Contribution Percentage shall be no less than three percent (3%) in either of the following circumstances: (i) any Plan Year of a Plan for which the Plan Agreement does not specify that the Employer will perform annual Top-Heavy testing, or (ii) any Plan Year in which the Plan is required to provide a minimum allocation for the Plan Year pursuant to the Top-Heavy Plan rules of Article 14. Notwithstanding subparagraphs (1) through (3) above, in the case of any Participant who has exceeded the cumulative permitted disparity limit described in paragraph (f) below, the amount shall be each Qualified Participant's Earnings multiplied by the percentage determined in subparagraph (2) above. The Money Purchase Maximum Disparity Percentage is equal to the lesser of (i) 5.7% or (ii) the applicable percentage from the following table: If the Plan's Integration The Level is more But not more applicable than: than: percentage is: $0 The greater 5.7% of $10,000 or 20% of the Social Security Wage Base The greater 80% of the 4.3% of $10,000 or Social 20% of the Security Wage Social Base Security Wage Base 80% of the Less than the 5.4% Social Social Security Wage Security Wage Base Base If the Plan's Integration Level is equal to the Social Security Wage Base, the Money Purchase Maximum Disparity Percentage is 5.7%. Annual overall permitted disparity limit. Notwithstanding the preceding paragraphs, for any Plan Year this Plan benefits any Participant who benefits under another qualified plan or simplified employee pension (as defined in Section 408(k) of the Code) maintained by the Employer that provides for permitted disparity (or imputes disparity), the Employer shall contribute for each Qualified Participant an amount equal to the Qualified Participant's Earnings multiplied by the lesser of (i) the Base Contribution Percentage or (ii) the Money Purchase Maximum Disparity Percentage determined under paragraph (d). For all purposes under the Plan, a Participant is treated as benefiting under a plan (including this Plan) for any plan year during which the Participant receives or is deemed to receive an allocation under a plan in accordance with Section 1.410(b)-3(a) of the Treasury Regulations. Cumulative Permitted Disparity Limit. Effective for Plan Years beginning on or after January 1, 1995, the cumulative permitted disparity limit for a Participant is 35 total cumulative permitted disparity years. Total cumulative permitted disparity years means the number of years credited to the Participant for allocation or accrual purposes under the Plan, any other qualified plan or simplified employee pension (whether or not terminated) ever maintained by the Employer. For purposes of determining the Participant's cumulative permitted disparity limit, all years ending in the same calendar year are treated as the same year. If the Participant has not benefited under a defined benefit plan or target benefit plan for any year beginning on or after January 1, 1994, the Participant has no cumulative disparity limit. Forfeitures. Forfeitures from Employer Contribution Accounts shall be used, as elected by the Employer in the Plan Agreement, either to reduce other contributions required of the Employer, as specified in the Plan Agreement, or shall be reallocated as additional contributions by the Employer. If the Employer elects to use Forfeitures from Employer Conribution Accounts to reduce other contributions required of the Employer, the amount of such Forfeitures in a Plan Year shall be treated as a portion of such required contribution. If the Employer elects to reallocate Forfeitures from Employer Contribution Accounts as additional contributions, such forfeitures shall be allocated (i) in the case of a profit sharing plan, in accordance with Section 4.2(b) (provided that such Forfeitures may be allocated under paragraphs (c)(1)(B), (c)(1)(C) and (c)(2)(C) of Section 4.2 only to the extent that the limitation described therein has not been fully utilized), and (ii) in the case of a money purchase plan, among the Employer Contribution Accounts of all Qualified Participants in proportion to their Earnings for the Plan Year. Rollover Contributions. An Employee in an eligible class may contribute at any time cash or other property (which is not a collectible within the meaning of Section 408(m) of the Code) acceptable to the Trustee representing qualified rollover amounts under Sections 402, 403, or 408 of the Code. Amounts so contributed shall be credited to a Rollover Account for the Participant. Participant Contributions. If so specified in the Plan Agreement, a Participant may make Participant Contributions to the Plan in accordance with the Plan Agreement. Such contributions, together with any matching contributions (as defined in section 401(m)(4) of the Code) if applicable, shall be limited so as to meet the nondiscrimination test of section 401(m) of the Code, as set forth in Section 5.10 of the Plan. Participant Contributions will be allocated to the Participant Contributions Account of the contributing Participant. All Participant Contribution Accounts will be fully vested at all times. No Deductible Employee Contributions. The Plan Administrator shall not accept deductible employee contributions, other than those held in a Deductible Employee Contribution Account transferred from a predecessor plan of the Employer. ARTICLE CASH OR DEFERRED ARRANGEMENT UNDER SECTION 401(k) (CODA) Applicability; Allocations. This Article 5 applies to any plan adopted pursuant to Plan Agreement #001, which Plan Agreement by its terms includes a CODA permitting Elective Deferrals to be made under the Plan. The Employer may specify in the Plan Agreement that contributions will be made to the Plan only under the CODA, or that contributions may be made under Section 4.2 as well as under the CODA. Allocations to Participants' Accounts of contributions made pursuant to this Article 5 shall be made as soon as administratively feasible after their receipt by the Trustee, but in any case no later than as of the last day of the Plan Year for which the contributions were made. CODA Participation. Each Employee who has met the eligibility requirements of Article 3 may make Elective Deferrals to the Plan by completing and returning to the Plan Administrator a Deferral Agreement form which provides that the Participant's cash compensation from the Employer will be reduced by the amount indicated in the Deferral Agreement, and that the Employer will contribute an equivalent amount to the Trust on behalf of the Participant. The following rules will govern Elective Deferrals: Subject to the limits specified in the Plan Agreement and set forth in Section 5.3, a Deferral Agreement may apply to any amount or percentage of the Earnings payable to a Participant in each year, and, if so specified by the Employer in the Plan Agreement, separately to bonuses payable to a Participant from time to time, even if such bonuses have otherwise been excluded from Compensation under the Plan Agreement. In accordance with such reasonable rules as the Plan Administrator shall specify, a Deferral Agreement will become effective as soon as is administratively feasible after the Deferral Agreement is returned to the Plan Administrator, and will remain effective until it is modified or terminated. No Deferral Agreement may become effective retroactively. A Participant may modify his Deferral Agreement by completing and returning to the Plan Administrator a new Deferral Agreement form as of any of the dates specified in the Plan Agreement, and any such modification will become effective as described in paragraph (b). A Participant may terminate his Deferral Agreement at any time upon advance written notice to the Plan Administrator, and any such termination will become effective as described in paragraph (b). Annual Limit on Elective Deferrals. During any taxable year of a Participant, his Elective Deferrals under the Plan and any other qualified plan of an Affiliated Employer shall not exceed the dollar limit contained in Section 402(g) of the Code in effect at the beginning of the taxable year. With respect to any taxable year, a Participant's Elective Deferrals for purposes of this Section 5.3 include all Employer contributions made on his behalf pursuant to an election to defer under any qualified CODA as described in Section 401(k) of the Code, any simplified employee pension cash or deferred arrangement (SARSEP) as described in Section 402(h)(1)(B) of the Code, any eligible deferred compensation plan under Section 457 of the Code, any plan described under Section 501(c)(18) of the Code, and any Employer contributions made on behalf of the Participant for the purchase of an annuity contract under Section 403(b) of the Code pursuant to a salary reduction agreement. The limit under Section 402(g) of the Code on the amount of Elective Deferrals of a Participant who receives a hardship withdrawal pursuant to Section 12.2 shall be reduced, for the taxable year next following the withdrawal, by the amount of Elective Deferrals made in the taxable year of the hardship withdrawal. Distribution of Certain Elective Deferrals. "Excess Elective Deferrals" means those Elective Deferrals described in Section 5.3 that are includible in a Participant's gross income under Section 402(g) of the Code, to the extent that the Participant's aggregate elective deferrals for a taxable year exceed the dollar limitation under that Code Section. Excess Elective Deferrals shall be treated as Annual Additions under the Plan, whether or not they are distributed under this Section 5.4. A Participant may designate to the Plan any Excess Elective Deferrals made during his taxable year by notifying the Employer on or before the following March 15 of the amount of the Excess Elective Deferrals to be so designated. A Participant who has Excess Elective Deferrals for a taxable year, taking into account only his Elective Deferrals under the Plan and any other plans of the Affiliated Employers, shall be deemed to have designated the entire amount of such Excess Elective Deferrals. Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose Account Excess Elective Deferrals were so designated or deemed designated for the preceding year. The income or loss allocable to Excess Elective Deferrals is the income or loss allocable to the Participant's Elective Deferral Account for the taxable year multiplied by a fraction, the numerator of which is the Participant's Excess Elective Deferrals for the year and the denominator of which is the Participant's Account balance attributable to Elective Deferrals without regard to any income or loss occurring during the year. To the extent that the return to a Participant of his Elective Deferrals would reduce an Excess Amount (as defined in Section 6.5(f)), such Excess Deferrals shall be distributed to the Participant in accordance with Article 6. Satisfaction of ADP and ACP Tests. In each Plan Year, the Plan must satisfy the ADP test described in Section 5.6 and the ACP test described in Section 5.10. The Employer may cause the Plan to satisfy the ADP or ACP test or both tests for a Plan Year by any of the following methods or by any combination of them: By the distribution of Excess Contributions in accordance with Section 5.7, or the distribution of Excess Aggregate Contributions in accordance with Section 5.11, or both; or By recharacterization of Excess Contributions in accordance with Section 5.9; or If the Employer has so elected in the Plan Agreement, by making Qualified Nonelective Contributions or Qualified Matching Contributions or both, in accordance with the Plan Agreement and Section 5.12. Actual Deferral Percentage Test Limit. The Actual Deferral Percentage (hereinafter "ADP") for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests: The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 2.0, provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-Highly Compensated Employees by more than two percentage points. The following special rules shall apply to the computation of the ADP: "Actual Deferral Percentage" means, for a specified group of Participants for a Plan Year, the average of the ratios (calculated separately for each Participant in the group) of (1) the amount of Employer contributions actually paid over to the Trust on behalf of the Participant for the Plan Year to (2) the Participant's Earnings for the Plan Year (or, provided that the Employer applies this method to all Employees for a Plan Year, the Participant's Earnings for that portion of the Plan Year during which he was eligible to participate in the Plan). Employer contributions on behalf of any Participant shall include: (i) his Elective Deferrals, including Excess Elective Deferrals of Highly Compensated Employees, but excluding (A) Excess Elective Deferrals of Non-Highly Compensated Employees that arise solely from Elective Deferrals made under the Plan or another plan maintained by an Affiliated Employer, and (B) Elective Deferrals that are taken into account in the Average Contribution Percentage test described in Section 5.10 (provided the ADP test is satisfied both with and without exclusion of these Elective Deferrals), and excluding Elective Deferrals returned to a Participant to reduce an Excess Amount as defined in Section 6.5(f); and (ii) if the Employer has elected to make Qualified Nonelective Contributions, such amount of Qualified Nonelective Contributions, if any, as shall be necessary to enable the Plan to satisfy the ADP test and not used to satisfy the ACP test; and (iii) if the Employer has elected to make Qualified Matching Contributions, such amount of Qualified Matching Contributions, if any, as shall be necessary to enable the Plan to satisfy the ADP test and not used to satisfy the ACP test. For purposes of computing Actual Deferral Percentages, an Employee who would be a Participant but for his failure to make Elective Deferrals shall be treated as a Participant on whose behalf no Elective Deferrals are made. In the event that the Plan satisfies the requirements of Sections 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with the Plan, then this Section 5.6 shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year. The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if these are treated as Elective Deferrals for purposes of the ADP test) allocated to his Accounts under two or more CODAs described in Section 401(k) of the Code that are maintained by the Affiliated Employers shall be determined as if such Elective Deferrals (and, if applicable, such Qualified Nonelective Contributions or Qualified Matching Contributions, or both) were made under a single CODA. If a Highly Compensated Employee participates in two or more CODAs that have different Plan Years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs. For purposes of determining the ADP of a Participant who is a 5% owner or one of the ten most highly- paid Highly Compensated Employees, the Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if these are treated as Elective Deferrals for purposes of the ADP test) and the Earnings of such a Participant shall include the Elective Deferrals (and, if applicable, Qualified Nonelective Contributions and Qualified Matching Contributions, or both) and Earnings for the Plan Year of his Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the ADP both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees. For purposes of the ADP test, Elective Deferrals, Qualified Nonelective Contributions and Qualified Matching Contributions must be made before the last day of the 12-month period immediately following the Plan Year to which those contributions relate. The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in satisfying the test. The determination and treatment of the ADP amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. Distribution of Excess Contributions. "Excess Contributions" means, with respect to any Plan Year, the excess of: The aggregate amount of Employer contributions actually taken into account in computing the ADP of Highly Compensated Employees for the Plan Year, over The maximum amount of Employer contributions permitted by the ADP test, determined by reducing contributions made on behalf of Highly Compensated Employees in order of their ADPs, beginning with the highest of such percentages. Notwithstanding any other provision of the Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose Accounts Excess Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Contributions is the income or loss allocable to the Participant's Elective Deferral Account (and, if applicable, his Qualified Nonelective Account or Qualified Matching Account or both) for the Plan Year multiplied by a fraction, the numerator of which is the Participant's Excess Contributions for the year and the denominator is the Participant's account balance attributable to Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if any of these are included in the ADP test) without regard to any income or loss occurring during the Plan Year. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which the excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Contributions attributable to each of them. Excess Contributions shall be allocated to a Participant who is a family member subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Elective Deferrals (and other amounts treated as his Elective Deferrals) bear to the combined Elective Deferrals (and other amounts treated as Elective Deferrals) of all of the Participants aggregated to determine his family members' combined ADP. Excess Contributions shall be treated as Annual Additions under the Plan. Excess Contributions shall be distributed from the Participant's Elective Deferral Account and Qualified Matching Account (if applicable) in proportion to the Participant's Elective Deferrals and Qualified Matching Contributions (to the extent used in the ADP test) for the Plan Year. Excess Contributions shall be distributed from the Participant's Qualified Nonelective Account only to the extent that such Excess Contributions exceed the balance in the Participant's Elective Deferral Account and Qualified Matching Account. Matching Contributions. If so specified in the Plan Agreement, the Employer will make Matching Contributions to the Plan in accordance with the Plan Agreement, but no Matching Contribution shall be made with respect to an Elective Deferral or a Participant Contribution that is returned to a Participant because it represents an Excess Elective Deferral, an Excess Contribution, and Excess Aggregate Contribution or an Excess Amount (as defined in Section 6.5(f)); and if a Matching Contribution has nevertheless been made with respect to such an Elective Deferral or Participant Contribution, the Matching Contribution shall be forfeited, notwithstanding any other provision of the Plan. Employer Matching Contributions will be allocated among the Employer Matching Accounts of Qualified Participants in proportion to their Elective Deferrals or Participant Contributions, if applicable, as specified in the Plan Agreement. Employer Matching Accounts shall become vested according to the vesting schedule specified in the Plan Agreement, but regardless of that schedule shall be fully vested upon the Participant's Retirement (or, if earlier, his fulfillment of the requirements for early retirement, if any, or attainment of the normal retirement age specified in the Plan Agreement), his death during employment with an Affiliated Employer, and in accordance with Section 18.3. Forfeitures of Employer Matching Contributions, other than Excess Aggregate Contributions, shall be made in accordance with Section 8.3. Recharacterization of Excess Contributions. Provided that the Plan Agreement permits all Participants to make Participant Contributions, the Employer may treat a Participant's Excess Contributions as an amount distributed to the Participant and then contributed by the Participant to the Plan as a Participant Contribution. Recharacterized amounts will remain nonforfeitable and subject to the same distribution requirements as Elective Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee to the extent that a recharacterized amount in combination with other Participant Contributions made by that Employee would exceed any stated limit under the Plan on Participant Contributions. Recharacterization must occur no later than two and one-half months after the last day of the Plan Year in which the Excess Contributions arose, and is deemed to occur no earlier than the date the last Highly Compensated Employee is informed in writing by the Employer of the amount recharacterized and the consequences thereof. Recharacterized amounts will be taxable to the Participant for his tax year in which the Participant would have received them in cash. Average Contribution Percentage Test Limit and Aggregate Limit. The Average Contribution Percentage (hereinafter "ACP") for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year must satisfy one of the following tests: The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by 1.25; or The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-Highly Compensated Employees for the same Plan Year multiplied by two (2), provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-Highly Compensated Employees by more than two percentage points. The following rules shall apply to the computation of the ACP: "Average Contribution Percentage" means the average of the Contribution Percentages of the Eligible Participants in a group. "Contribution Percentage" means the ratio (expressed as a percentage) of a Participant's Contribution Percentage Amounts to the Participant's Earnings for the Plan Year (or, provided that the Employer applies this method to all Employees for a Plan Year, the Participant's Earnings for that portion of the Plan Year during which he was eligible to participate in the Plan). "Contribution Percentage Amounts" means the sum of the Participant Contributions, Employer Matching Contributions, and Qualified Matching Contributions (to the extent not taken into account for purposes of the ADP test) made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall include Forfeitures of Excess Aggregate Contributions or Employer Matching Contributions allocated to the Participant's Account, taken into account in the year in which the allocation is made. If the Employer has elected in the Plan Agreement to make Qualified Nonelective Contributions, such amount of Qualified Nonelective Contributions, if any, as shall be necessary to enable the Plan to satisfy the ACP test and not used to satisfy the ADP test shall be included in the Contribution Percentage Amounts. Elective Deferrals shall also be included in the Contribution Percentage Amounts to the extent, if any, needed to enable the Plan to satisfy the ACP test, so long as the ADP test is met before the Elective Deferrals are used in the ACP test, and continues to be met following the exclusion of those Elective Deferrals that are used to meet the ACP test. "Eligible Participant" means any Employee who is eligible to make a Participant Contribution, or an Elective Deferral, if Elective Deferrals are taken into account in the calculation of the Contribution Percentage, or to receive an Employer Matching Contribution (or a Forfeiture thereof) or a Qualified Matching Contribution. "Aggregate Limit" means the sum of (i) 125% of the greater of the ADP of the Non-Highly Compensated Employees for the Plan Year, or the ACP of Non-Highly Compensated Employees under the Plan subject to Code Section 401(m) for the Plan Year beginning with or within the Plan Year of the CODA, and (ii) the lesser of 200% of, or two plus, the lesser of the ADP or ACP. "Lesser" is substituted for "greater" in clause (i) of the preceding sentence, and "greater" is substituted for "lesser" after the phrase "two plus the" in clause (ii) of the preceding sentence, if that formulation will result in a larger Aggregate Limit. If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the ACP test maintained by an Affiliated Employer, and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the ACP of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with the Highly Compensated Employee whose ACP is the highest) so that the Aggregate Limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amount is reduced shall be treated as an Excess Aggregate Contribution. In determining the Aggregate Limit, the ADP and ACP of Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. The Aggregate Limit will be considered satisfied if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-Highly Compensated Employees. For purposes of this section, the Contribution Percentage for any Participant who is a Highly Compensated Employee and who is eligible to have Contribution Percentage Amounts allocated to his account under two or more plans described in Section 401(a) of the Code, or CODAs described in Section 401(k) of the Code, that are maintained by an Affiliated Employer, shall be determined as if the total of such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participates in two or more CODAs that have different plan years, all CODAs ending with or within the same calendar year shall be treated as a single CODA, except that CODAs to which mandatory disaggregation applies in accordance with regulations issued under Section 401(k) of the Code shall be treated as separate CODAs. In the event that the Plan satisfies the requirements of Sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with the Plan, then this Section 5.10 shall be applied by determining the Contribution Percentage of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(m) of the Code only if they have the same Plan Year. For purposes of determining the Contribution Percentage of a Participant who is a 5% owner or one of the ten most highly-paid Highly Compensated Employers, the Contribution Percentage Amounts and Earnings of the Participant shall include the Contribution Percentage Amounts and Earnings for the Plan Year of Family Members (as defined in Section 414(q)(6) of the Code). Family Members of such Highly Compensated Employees shall be disregarded as separate employees in determining the Contribution Percentage both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees. For purposes of the ACP test, Employer Matching Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions will be considered made for a Plan Year if made no later than the end of the 12-month period beginning on the day after the close of the Plan Year. The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in the ACP test. The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. Distribution of Excess Aggregate Contributions. Notwithstanding any other provision of the Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be forfeited if forfeitable, or if not forfeitable, distributed no later than the last day of each Plan Year to Participants to whose Accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. The income or loss allocable to Excess Aggregate Contributions is the income or loss allocable to the Participant's Employer Matching Contribution Account, Qualified Matching Contribution Account (if any, and if all amounts therein are not used in the ADP test), and, if applicable, Qualified Nonelective Account, Participant Contribution Account and Elective Deferral Account for the Plan Year, multiplied by a fraction, the numerator of which is the Participant's Excess Aggregate Contributions for the year and the denominator of which is the Participant's account balance(s) attributable to Contribution Percentage Amounts without regard to any income or loss occurring during the Plan Year. Excess Aggregate Contributions shall be allocated to a Participant who is subject to the family member aggregation rules of Section 414(q)(6) of the Code in the proportion that the Participant's Employer Matching Contributions (and other amounts treated as his Employer Matching Contributions) bear to the combined Employer Matching Contributions (and other amounts treated as Employer Matching Contributions) of all of the Participants aggregated to determine its family members' combined ACP. If excess amounts attributable to Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, an excise tax equal to 10% of the excess amounts will be imposed on the Employer maintaining the Plan. Excess Aggregate Contributions shall be treated as Annual Additions under the Plan. Excess Aggregate Contributions shall be forfeited if forfeitable, or distributed on a pro-rata basis from the Participant's Participant Contribution Account, Employer Matching Account, and Qualified Matching Account (and, if applicable, the Participant's Qualified Nonelective Account or Elective Deferral Account, or both). Excess Aggregate Contributions means, with respect to any Plan Year, the excess of: The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage and actually made on behalf of Highly Compensated Employees for the Plan Year, over The maximum Contribution Percentage Amounts permitted by the ACP test and the Aggregate Limit (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages, beginning with the highest of such percentages). Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 5.4, and then determining Excess Contributions pursuant to Section 5.7. Qualified Nonelective Contributions; Qualified Matching Contributions. An Employer shall make Qualified Nonelective Contributions and/or Qualified Matching Contributions as provided by the Employer in the Plan Agreement. Qualified Nonelective Contributions and Qualified Matching Contributions shall be allocated to the Qualified Nonelective Contribution Accounts and Qualified Matching Accounts, respectively, of Participants as provided by the Employer in the Plan Agreement. Restriction on Distributions. Except as provided in Sections 5.4, 5.7 and 5.11, no distribution may be made from a Participant's Elective Deferral Account, Qualified Nonelective Contribution Account or Qualified Matching Account until the occurrence of one of the following events: The Participant's Disability, death or termination of employment with the Affiliated Employers; Termination of the Plan without the establishment of another defined contribution plan other than an employee stock ownership plan as defined in Section 4975(e) or Section 409 of the Code, or a simplified employee pension plan as defined in Section 408(k) of the Code; The Participant's attainment of age 59 1/2 (if the Employer has elected in the Plan Agreement to permit such distributions); or In the case of an Employer that is a corporation, the disposition by the Employer to an unrelated entity of (i) substantially all of the assets (within the meaning of Section 409(d)(2) of the Code) used in a trade or business of the Employer, if the Employer continues to maintain the Plan after the disposition, but only with respect to Employees who continue employment with the entity acquiring such assets; or (ii) the Employer's interest in a subsidiary (within the meaning of Section 409(d)(3) of the Code), if the Employer continues to maintain the Plan after the disposition, but only with respect to Employees who continue employment with such subsidiary. In addition, if the Employer has elected in the Plan Agreement to permit such distributions, a distribution may be made from a Participant's Elective Deferral Account in the event of his financial hardship as described in Section 12.2. All distributions upon any of the events listed above are subject to the conditions of Article 10, Joint and Survivor Annuity Requirements. In addition, distributions made after March 31, 1988, on account of an event described in subsection (b) or (d) above must be made in a lump sum. Forfeitures of Employer Matching Contributions. Forfeitures from Employer Matching Accounts shall be used, as elected by the Employer in the Plan Agreement, either to reduce other contributions required of the Employer, as specified in the Plan Agreement, or shall be reallocated as additional Employer Matching Contributions or Profit Sharing Contributions as specified in the Plan Agreement. If the Employer elects to use Forfeitures from Employer Matching Accounts to reduce other contributions required of the Employer, the amount of such Forfeitures in a Plan Year shall be treated as a portion of such contribution. If the Employer elects to reallocate Forfeitures from Employer Matching Contributions as additional Employer Matching Contributions, such Forfeitures shall be allocated in accordance with Section 5.8. If the Employer elects to reallocate Forfeitures from Employer Matching Accounts as additional Profit Sharing Contributions, such Forfeitures shall be allocated in accordance with Section 4.2(b) (provided that such Forfeitures may be allocated under paragraphs (c)(1)(B), (c)(1)(C) and (c)(2)(C) of Section 4.2 only to the extent that the limitation described therein has not been fully utilized). Forfeitures of Excess Aggregate Contributions determined under Section 5.10 that are Employer Matching Contributions shall be used as provided above in this Section 5.14. Special Effective Dates. If the Plan is adopted as an amendment of an existing plan, the provisions of Sections 5.3 and Section 5.7 through 5.10 are effective as of the first day of the first Plan Year beginning after December 31, 1986. ARTICLE LIMITATIONS ON ALLOCATIONS No Additional Plan. If the Participant does not participate in and has never participated in another qualified plan, or a welfare benefit fund (as defined in Section 419(e) of the Code), or an individual medical account (as defined in Section 415(l)(2) of the Code) which provides an Annual Addition as defined in Section 6.5(a), maintained by an Affiliated Employer: The amount of Annual Additions (as defined in Section 6.5(a)) which may be credited to the Participant's Accounts for any Limitation Year will not exceed the lesser of the Maximum Annual Additions or any other limitation contained in this Plan. If the Employer contribution that would otherwise be contributed or allocated to the Participant's Account would cause the Annual Additions for the Limitation Year to exceed the Maximum Annual Additions, the amount contributed or allocated will be reduced so that the Annual Additions for the Limitation Year will equal the Maximum Annual Additions. Before determining a Participant's actual Section 415 Compensation for a Limitation Year, the Employer may determine the Maximum Annual Additions for the Participant on the basis of a reasonable estimation of the Participant's Section 415 Compensation for the Limitation Year, uniformly determined for all Participants similarly situated. As soon as is administratively feasible after the end of the Limitation Year, the Maximum Annual Additions for the Limitation Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Limitation Year. If pursuant to paragraph (c), or as a result of the reallocation of Forfeitures, or as a result of a reasonable error in determining the amount of Elective Deferrals that may be made by a Participant, the Annual Additions exceed the Maximum Annual Additions, the Excess Amount will be disposed of as follows: Any Participant Contributions and Elective Deferrals, to the extent they would reduce the Excess Amount, will be returned to the Participant. If after the application of (1) above an Excess Amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the Excess Amount in the Participant's Accounts will be used to reduce Employer contributions (including any allocation of Forfeitures) for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary. If after the application of (1) above an Excess Amount still exists, and the Participant is not covered by the Plan at the end of a Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer contributions (including allocation of any Forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary. If a suspense account is in existence at any time during a Limitation Year pursuant to this Section 6.1(d), it will participate in the allocation of the Trust's investment gains and losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants' Accounts before any Employer or any Employee contributions may be made to the Plan for that Limitation Year. Excess amounts may not be distributed to Participants or former Participants. Additional Master or Prototype Plan. If in addition to this Plan a Participant is covered under another qualified Master or Prototype defined contribution plan or a welfare benefit fund (as defined in Section 419(e) of the Code), or an individual medical account (as defined in Section 415(1)(2) of the Code) which provides an Annual Addition as defined in Section 6.5(a), maintained by an Affiliated Employer during any Limitation Year: The Annual Additions which may be credited to a Participant's Accounts under this Plan for any such Limitation Year will not exceed the Maximum Annual Additions reduced by the Annual Additions credited to a Participant's accounts under the other plans and welfare benefit funds for the same Limitation Year. If the Annual Additions with respect to the Participant under other defined contribution plans and welfare benefit funds maintained by an Affiliated Employer are less than the Maximum Annual Additions, and the Employer contribution that would otherwise be contributed or allocated to the Participant's Accounts under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated to this Plan will be reduced so that the Annual Additions under all such plans and funds for the Plan Year will equal the Maximum Annual Additions. If the Annual Additions with respect to the Participant under such other defined contribution plans and welfare benefit funds in the aggregate are equal to or greater than the Maximum Annual Additions, no amount will be contributed or allocated to the Participant's Accounts under this Plan for the Limitation Year. Before determining a Participant's actual Section 415 Compensation for a Limitation Year, the Employer may determine the Maximum Annual Additions for the Participant in the manner described in Section 6.1(b). As soon as is administratively feasible after the end of the Plan Year, the Maximum Annual Additions for the Plan Year will be determined on the basis of the Participant's actual Section 415 Compensation for the Plan Year. If, pursuant to Section 6.2(c) or as a result of the allocation of Forfeitures, or of a reasonable error in determining the amount of Elective Deferrals that may be made by him, a Participant's Annual Additions under this Plan and such other plans would result in an Excess Amount for a Limitation Year, the Excess Amount will be deemed to consist of the Annual Additions last allocated under any qualified Master or Prototype defined contribution plan, except that Annual Additions to any welfare benefit fund or individual medical account will be deemed to have been allocated first regardless of the actual allocation date. If an Excess Amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the Excess Amount attributed to this Plan will be the product of X and Y, where (X) is the total Excess Amount allocated as of such date, and (Y) is the ratio of: (1) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (2) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified Master or Prototype defined contribution plans. Any Excess Amount attributed to this Plan will be disposed of in the manner described in Section 6.1(d). Additional Non-Master or Non-Prototype Plan. If the Participant is covered under another qualified defined contribution plan maintained by an Affiliated Employer which is not a Master or Prototype plan, Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with Section 6.2 as though the other plan were a Master or Prototype plan, unless the Employer provides other limitations in the Plan Agreement. Additional Defined Benefit Plan. If an Affiliated Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation Year. The Annual Additions which may be credited to the Participant's Accounts under this Plan for any Limitation Year will be limited in accordance with the Plan Agreement. Definitions. Annual Additions means the sum of the following amounts credited to a Participant's Accounts for the Limitation Year: Employer contributions; For any Limitation Year beginning after December 31, 1986, Participant Contributions; Forfeitures; Amounts allocated after March 31, 1984, to any individual medical account, as defined in Section 415(1)(2) of the Code, which is part of a pension or annuity plan maintained by an Affiliated Employer; Amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post retirement medical benefits allocated to the separate account of a key Employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit fund as defined in Section 419(e) of the Code, maintained by an Affiliated Employer; and In a Plan that includes a CODA, Excess Elective Deferrals, Excess Contributions (including recharacterized Elective Deferrals) and Excess Aggregate Contributions. For this purpose, any Excess Amount applied under Sections 6.1(d) or 6.2(e) in the Limitation Year to reduce Employer contributions will be considered Annual Additions for such Limitation Year. Any rollover contribution will not be considered an Annual Addition. Section 415 Compensation means, for a Self-Employed Individual, his Earned Income; and for any other Participant, his "Form W-2 earnings" as defined in Section 2.8, if the Employer has elected in item 4 of the Plan Agreement a definition of Compensation based on "Form W-2 earnings"; or if the Employer has not so elected, his wages, salaries, and fees for professional services and other amounts received for personal services actually rendered in the course of employment with the Employer maintaining the Plan (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits and reimbursements or other expense allowances under a nonaccountable plan as described in Income Tax Regulations Section 1.62-2(c)), and excluding the following: Employer contributions to a plan of deferred compensation which are not includible in the Participant's gross income for the taxable year in which contributed, or Employer contributions under a simplified employee pension plan to the extent such contributions are deductible by the Employee, or any distributions from a plan of deferred compensations; Amounts realized from the exercise of a non qualified stock option, or when restricted stock (or property) held by the Participant either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and Other amounts which received special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity contract described in Section 403(b) of the Code (whether or not the contributions are actually excludable from the gross income of the Participant). For purposes of applying the limitations of this Article 6, Section 415 Compensation for a Limitation Year is the Section 415 Compensation actually paid or made available during such Limitation Year. Defined Benefit Fraction means a fraction, the numerator of which is the sum of the Participant's Projected Annual Benefits under all the defined benefit plans (whether or not terminated) maintained by the Affiliated Employers, and the denominator of which is the lesser of 125% of the dollar limitation in effect for the Limitation Year under Sections 415(b) and (d) of the Code, or 140% of the Participant's Highest Average Compensation including any adjustments under Section 415(b) of the Code. Notwithstanding the foregoing, if the Participant was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any change in the terms and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all Limitation Years beginning before January 1, 1987. Defined Contribution Dollar Limitation means $30,000 or if greater, one-fourth of the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code as in effect for the Limitation Year. Defined Contribution Fraction means a fraction, the numerator of which is the sum of the Annual Additions to the Participant's accounts under all the defined contribution plans (whether or not terminated) maintained by Affiliated Employers for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant's nondeductible Employee contributions to all defined benefit plans, whether or not terminated, maintained by the Affiliated Employers, and the Annual Additions attributable to all welfare benefit funds, as defined in Section 419(e) of the Code, and individual medical accounts, as defined in Section 415(l)(2) of the Code), and the denominator of which is the sum of the Maximum Annual Additions for the current and all prior Limitation Years of service with the Affiliated Employers (regardless of whether a defined contribution plan was maintained by any Affiliated Employer). The Maximum Annual Additions in any Plan Year is the lesser of 125% of the dollar limitation determined under Sections 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code, or 35% of the Participant's Section 415 Compensation for such year. If the Employee was a Participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986 in one or more defined contribution plans maintained by an Affiliated Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to product of the excess of the sum of the fractions over 1.0, multiplied by the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan after May 5, 1986, but using the Section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat 100% of nondeductible Employee contributions as Annual Additions. Excess Amount means, with respect to any Participant, the amount by which Annual Additions exceed the Maximum Annual Additions. Highest Average Compensation means the average compensation for the three consecutive Years of Service with the Employer that produces the highest average. For this purpose, a Year of Service with the Employer is determined based on the Plan Year. Limitation Year means the Plan Year. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different period of 12 consecutive months, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. Master or Prototype plan means a plan the form of which is the subject of a favorable opinion letter from the Internal Revenue Service. Maximum Annual Additions, which is the maximum annual addition that may be contributed or allocated to a Participant's account under the plan for any Limitation Year, means an amount not exceeding the lesser of (a) the Defined Contribution Dollar Limitation or (b) 25% of the Participant's Section 415 Compensation for the Limitation Year. The compensation limitation referred to in (b) shall not apply to any contribution for medical benefits (within the meaning of Section 401(h) or Section 419A(f)(2) of the Code) which is otherwise treated as an Annual Addition under Section 415(l)(1) or Section 419A(d)(2) of the Code. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different period of 12 consecutive months, the Maximum Annual Additions will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction: number of months in the short Limitation Year 12 Projected Annual Benefit means the annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or Qualified Joint and Survivor Annuity) to which the Participant would be entitled under the terms of the Plan assuming: The Participant will continue employment until normal retirement age under the Plan (or current age, if later), and The Participant's Section 415 Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the plan will remain constant for all future Limitation Years. ARTICLE ELIGIBILITY FOR DISTRIBUTION OF BENEFITS Retirement. After his Retirement, the amount credited to a Participant's Accounts will be distributed to him in accordance with Article 9. The termination of a Participant's employment with the Affiliated Employers after he has (i) attained the normal retirement age specified in the Plan Agreement, (ii) fulfilled the requirements for early retirement (if any) specified in the Plan Agreement, or (iii) become Disabled will constitute his Retirement. Upon a Participant's Retirement (or, if earlier, his attainment of the normal retirement age specified in the Plan Agreement or fulfillment of the requirements for early retirement, if any, specified in the Plan Agreement) the Participant's Accounts shall become fully vested, regardless of the vesting schedule specified by the Employer in the Plan Agreement. A Participant who separates from service with any vested balance in his Accounts, after satisfying the service requirements for early retirement (if any is specified in the Plan Agreement) but before satisfying the age requirement for early retirement (if any is specified in the Plan Agreement), shall be entitled to a fully vested early retirement benefit upon his satisfaction of such age requirement. Death. If a Participant dies before the distribution of his Accounts has been completed, his Beneficiary will be entitled to distribution of benefits in accordance with Article 9. A Participant's Accounts will become fully vested upon his death before termination of his employment with the Affiliated Employers, regardless of the vesting schedule specified by the Employer in the Plan Agreement. A Participant may designate a Beneficiary by completing and returning to the Plan Administrator a form provided for this purpose. The form most recently completed and returned to the Plan Administrator before the Participant's death shall supersede any earlier form. If a Participant has not designated any Beneficiary before his death, or if no Beneficiary so designated survives the Participant, his Beneficiary shall be his surviving spouse, or if there is no surviving spouse, his estate. A married Participant may designate a Beneficiary other than his spouse only if his spouse consents in writing to the designation, and the spouse's consent acknowledges the effect of the consent and is witnessed by a notary public or a representative of the Plan. The beneficiary or beneficiaries named in the designation to which the spouse has so consented may not be changed without further written spousal consent unless the terms of the spouse's original written consent expressly permit such a change, and acknowledge that the spouse voluntarily relinquishes the right to limit the consent to a specific beneficiary. The marriage of a Participant shall nullify any designation of a beneficiary previously executed by the Participant. If it is established to the satisfaction of the Plan Administrator that the Participant has no spouse or that the spouse cannot be located, the requirement of spousal consent shall not apply. Any spousal consent, or establishment that spousal consent cannot be obtained, shall apply only to the particular spouse involved. Other Termination of Employment. A Participant whose employment terminates for any reason other than his Retirement or death will be entitled to distribution, in accordance with Article 9, of benefits equal to the amount of the vested balance of his Accounts as determined under Article 8. ARTICLE VESTING Vested Balance. The vested balance of a Participant's Accounts will be determined as follows: General Rule. A Participant's Participant Contribution Account and Rollover Account shall be fully vested at all times. The vested portion of his Employer Contribution Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates. Special Rules for CODA. In a Plan that includes a CODA, a Participant's Elective Deferral Account, Qualified Nonelective Account, and Qualified Matching Account shall be fully vested at all times. The vested portion of his Employer Matching Account shall be equal to the percentage that corresponds, in the vesting schedule specified in the Plan Agreement, to the number of Years of Service credited to the Participant as of the end of the Year of Service in which his employment terminates. Retirement. All of a Participant's Accounts shall become fully vested upon his Retirement or his earlier attainment of early retirement age (if any) or the normal retirement age elected by the Employer in the Plan Agreement. For so long as a former Employee does not receive a distribution (or a deemed distribution) of the vested portion of his Accounts, the undistributed portion shall be held in a separate account which shall be invested pursuant to Section 13.3 and shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants. Vesting of Accounts of Returned Former Employees. The following rules apply in determining the vested portion of the Accounts of a Participant who incurs one or more consecutive One- Year Vesting Breaks and then returns to employment with an Affiliated Employer: If the Participant incurred fewer than five consecutive One-Year Vesting Breaks, then all of his Years of Service will be taken into account in determining the vested portion of his Accounts, as soon as he has completed one Year of Service following his return to employment. If the Participant incurred five or more consecutive One-Year Vesting Breaks, then: no Year of Service completed after his return to employment will be taken into account in determining the vested portion of his Accounts as of any time before he incurred the first One-Year Vesting Break; years of Service completed before he incurred the first One-Year Vesting Break will not be taken into account in determining the vested portion of his Accounts as of any time after his return to employment (i) unless some portion of his Employer Contribution Account or Employer Matching Account had become vested before he incurred the first One-Year Vesting Break, and (ii) until he has completed one Year of Service following his return to employment; and separate sub-accounts will be maintained for the Participant's pre-break and post-break Employer Contribution Account and Employer Matching Account, until both sub-accounts become fully vested. Both sub-accounts will share in the earnings and losses of the Trust Fund. Forfeiture of Non-Vested Amounts. The portion of a former Employee's Accounts that has not become vested under Section 8.1 shall become a Forfeiture in accordance with the following rules, and shall be reallocated in accordance with Section 4.4 or Section 5.14 (whichever applies) no later than the end of the Plan Year in which it becomes a Forfeiture. If Distribution Is Made. If any or all of the vested portion of a Participant's Accounts is distributed in accordance with Section 9.1 or 9.2 before the Participant incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture in the Plan Year in which the distribution occurs. For purposes of this Section 8.3, if the value of the vested portion of a Participant's Accounts is zero, the Participant shall be deemed to have received a distribution of the entire vested balance of his Accounts on the day his employment terminates. If the Participant elects to have distributed less than the entire vested portion of his Employer Contribution Account or Employer Matching Accounts, the part of the nonvested portion that will become a Forfeiture is the total nonvested portion multiplied by a fraction, the numerator of which is the amount of the distribution and the denominator of which is the total value of the entire vested portion of such Accounts. Right of Repayment. If a Participant who receives a distribution pursuant to paragraph (a) returns to employment with an Affiliated Employer, the balance of his Employer Contribution Account and Employer Matching Account will be restored to the amount of such balance on the date of distribution, if he repays to the Plan the full amount of the distribution, before the earlier of (i) the fifth anniversary of his return to employment or (ii) the date he incurs five consecutive One-Year Vesting Breaks following the date of distribution. If an Employee is deemed to receive a distribution pursuant to this Section 8.3, and he resumes employment covered under this Plan before the date he incurs five consecutive One-Year Vesting Breaks, upon his reemployment the Employer-derived account balance of the Employee will be restored to the amount on the date of such deemed distribution. Such restoration will be made, first, from the amount of any Forfeitures available for reallocation as of the last day of the Plan Year in which repayment is made, to the extent thereof; and to the extent that Forfeitures are not available or are insufficient to restore the balance, from contributions made by the Employer pursuant to Section 4.1(e). If No Distribution Is Made. If no distribution (nor deemed distribution) is made to a Participant before he incurs five consecutive One-Year Vesting Breaks, the nonvested portion of his Accounts shall become a Forfeiture at the end of the Plan Year that constitutes his fifth consecutive One-Year Vesting Break. Adjustment of Accounts. Before a Forfeiture is incurred, a Participant's Accounts shall share in earnings and losses of the Trust Fund pursuant to Section 13.4 in the same manner as the Accounts of active Participants. Accumulated Deductible Contributions. For Plan Years beginning before January 1, 1989, a Participant's vested Account balance shall not include accumulated deductible contributions within the meaning of Section 72(o)(5)(B) of the Code. Special Rule in the Event of a Withdrawal. If a withdrawal pursuant to Section 12.2, 12.3 or 12.4 is made from a Participant's Employer Contribution Account or Employer Matching Account before the Account is fully vested, and the Participant may increase the vested percentage in the Account, then a separate account will be established at the time of the withdrawal, and at any relevant time after the withdrawal the vested portion of the separate account will be equal to the amount "X" determined by the following formula: X = P(AB + D) - D For purposes of the formula, P is the Participant's vested percentage at the relevant time, AB is the account balance at the relevant time, and D is the amount of the withdrawal. Vesting Election. If the Plan is amended to change any vesting schedule, or is amended in any way that directly or indirectly affects the computation of a Participant's vested percentage, each Participant who has completed not less than three Years of Service may elect, within a reasonable period after the adoption of the amendment or change, in a writing filed with the Employer to have his vested percentage computed under the Plan without regard to such amendment. For a Participant who is not credited with at least one Hour of Service in a Plan Year beginning after December 31, 1988, the preceding sentence shall be applied by substituting "five Years of Service" for "three Years of Service." The period during which the election may be made shall commence with the date the amendment is adopted, or deemed to be made, and shall end on the latest of (a) 60 days after the amendment is adopted; (b) 60 days after the amendment becomes effective; or (c) 60 days after the Participant is issued written notice of the amendment by the Employer. ARTICLE PAYMENT OF BENEFITS Distribution of Accounts. A Participant or Beneficiary who has become eligible for a distribution of benefits pursuant to Article 7 may elect to receive such benefits at any time, subject to the terms and conditions of this Article 9, Article 10 and Article 11. Unless a Participant or Beneficiary elects otherwise, distribution of benefits will begin no later than the 60th day after the end of the Plan Year in which the latest of the following events occurs: The Participant attains age 65 (or if earlier, the normal retirement age specified by the Employer in the Plan Agreement); or The tenth anniversary of the year in which the Participant commenced participation in the Plan; or The Participant's employment with the Affiliated Employers terminates. A Beneficiary who is the surviving spouse of a Participant may elect to have distribution of benefits begin within the 90-day period following the Participant's death. For purposes of this Section 9.1, the failure of a Participant (and his spouse, if spousal consent is required pursuant to Article 10) to consent to a distribution while a benefit is "immediately distributable" within the meaning of Section 9.2 shall be considered an election to defer commencement of payment. If the Employer has so specified in the Plan Agreement, the vested portion of a Participant's Accounts will be distributed in a lump sum in cash no later than 60 days after the end of the Plan Year in which his employment terminates, if at the time the Participant first became entitled to a distribution the value of such vested portion derived from Employer and Employee contributions does not exceed $3,500. Commencement of distributions in any case shall be subject to Section 9.4. Restriction on Immediate Distributions. A Participant's account balance is considered "immediately distributable" if any part of the account balance could be distributed to the Participant (or his surviving spouse) before the Participant attains, or would have attained if not deceased, the later of the normal retirement age specified in the Plan Agreement or age 62. If the value of a Participant's vested account balance derived from Employer and Employee contributions exceeds (or at the time of any prior distribution exceeded) $3,500, and the account balance is immediately distributable, the Participant and his spouse (or where either the Participant or the spouse has died), the survivor must consent to any such distribution, unless an exception described in paragraph (b) applies. The consent of the Participant and his spouse shall be obtained in writing within the 90-day period ending on the annuity starting date, which is the first day of the first period for which an amount is paid as an annuity (or any other form). The Plan Administrator shall notify the Participant and the spouse, no less than 30 days and no more than 90 days before the annuity starting date, of the right to defer any distribution until the Participant's account balance is no longer immediately distributable. Such notification shall include a general description of the material features of the optional forms of benefit available under the Plan and an explanation of their relative values, in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code. If a distribution is one to which Sections 401(a)(11) and 417 of the Code do not apply, such distribution may commence less than 30 days after the required notification is given, provided that: the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option); and the Participant, after receiving the notice, affirmatively elects a distribution. Notwithstanding paragraph (a), only the Participant need consent to the commencement of a distribution in the form of a Qualified Joint and Survivor Annuity while the account balance is immediately distributable. Furthermore, if payment in the form of a Qualified Joint and Survivor Annuity is not required with respect to the Participant pursuant to Section 10.1(b) of the Plan, only the Participant need consent to the distribution of an account balance that is immediately distributable. Neither the consent of the Participant nor the spouse shall be required to the extent that a distribution is required to satisfy Section 401(a)(9) or Section 415 of the Code. In addition, upon termination of the Plan, if the Plan does not offer an annuity option purchased from a commercial provider), and no Affiliated Employer maintains another defined contribution plan (other than an employee stock ownership plan as defined in Section 4975(e)(7) of the Code), a Participant's account balance shall be distributed to the Participant without his consent. If any Affiliated Employer maintains another defined contribution plan (other than an employee stock ownership plan as defined in Section 4975(e)(7) of the Code), a Participant's account balance shall be transferred to that defined contribution plan without his consent, unless he consents to an immediate distribution. For purposes of determining the applicability of the foregoing consent requirements to distributions made before the first day of the first Plan Year beginning after December 31, 1988, the Participant's vested account balance shall not include amounts attributable to accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code. Optional Forms of Distribution. Provided that the Employer has so elected in the Plan Agreement, if at the time a Participant first becomes entitled to a distribution the value of his vested Account balance derived from Employer and Employee contributions does not exceed $3,500, distribution shall be made in a lump sum in cash. Subject to the preceding sentence and to the rules of Article 10 concerning joint and survivor annuities, a Participant or Beneficiary may elect to receive benefits in any of the following optional forms: A lump sum payment. If a Participant's Accounts are invested in Employer Stock, a lump sum payment may be made in cash or in Employer Stock or in a combination of both; A series of installments over a period certain that meets the requirements of Article 11; A nontransferable annuity contract, purchased by the Plan Administrator from a commercial provider, with terms complying with the requirements of Article 11; provided, however, that an annuity for the life of any person shall be available as an optional form of distribution only if the Employer has so elected in the Plan Agreement; or In the event that the Plan is adopted as an amendment to an existing plan, any optional form of distribution available under the existing plan. Such optional forms of distribution may be made available where necessary through the purchase by the Plan Administrator of an appropriate annuity contract in accordance with paragraph (c). If the Plan is a direct or indirect transferee of a defined benefit plan, money purchase plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code, the provisions of Article 10 shall apply. Distribution Procedure. The Trustee shall make or commence distributions to or for the benefit of Participants only on receipt of an instruction from the Employer in writing or by such other means as shall be acceptable to the Trustee, certifying that a distribution of a Participant's benefits is payable pursuant to the Plan, and specifying the time and manner of payment. The amount to be distributed shall be determined as of the Valuation Date coincident with or next following the Employer's order. The Trustee shall be fully protected in acting upon the directions of the Employer in making benefit distributions, and shall have no duty to determine the rights or benefits of any person under the Plan or to inquire into the right or power of the Employer to direct any such distribution. The Trustee shall be entitled to assume conclusively that any determination by the Employer with respect to a distribution meets the requirements of the Plan. The Trustee shall not be required to make any payment hereunder in excess of the net realizable value of the assets of the Account in question at the time of such payment, nor to make any payment in cash unless the Employer has furnished instructions as to the assets to be converted to cash for the purposes of making payment. Lost Distributee. In the event that the Plan Administrator is unable with reasonable effort to locate a person entitled to distribution under the Plan, the Accounts distributable to such a person shall become a Forfeiture at the end of the third Plan Year after the Plan Administrator's efforts to locate such person began; provided, however, that the amount of the Forfeiture shall be restored in the event that such person thereafter submits a claim for benefits under the Plan. Such restoration will be made, first, from the amount of Forfeitures available for reallocation as of the last day of the Plan Year in which the claim is made, to the extent thereof; and to the extent that Forfeitures are not available or are insufficient to restore the balance, from contributions made by the Employer pursuant to Section 4.1(e). A Forfeiture occurring under this Section 9.5 shall be reallocated as though it were an Employer contribution. Direct Rollovers. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. For purposes of this Section 9.6, the following definitions shall apply: Eligible Rollover Distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributees and the distributee's Designated Beneficiary (as defined in Section 11.3), or for a specified period of ten years or more, any distribution to the extent such distribution is required under section 401(a)(9) of the Code, and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). Eligible Retirement Plan. An eligible retirement plan is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. Distributee. A distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a Qualified Domestic Relations Order are distributees with regard to the interest of the spouse or former spouse. Direct Rollover. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. Distributions Required by a Qualified Domestic Relations Order. To the extent required by a Qualified Domestic Relations Order, the Plan Administrator shall make distributions from a Participant's Accounts to any alternate payee named in such order in a manner consistent with the distribution options otherwise available under the Plan, regardless of whether the Participant is otherwise entitled to a distribution at such time under the Plan. ARTICLE JOINT AND SURVIVOR ANNUITY REQUIREMENTS Applicability. Generally. The provisions of Sections 10.2 through 10.5 shall generally apply to a Participant who is credited with at least one Hour of Service on or after August 23, 1984, and such other Participants as provided in Section 10.6. Exception for Certain Plans. The provisions of Sections 10.2 through 10.5 shall not apply to a Participant if: (i) the Participant does not or cannot elect payment of benefits in the form of a life annuity, and (ii) on the death of the Participant, his Vested Account Balance will be paid to his surviving spouse (unless there is no surviving spouse, or the surviving spouse has consented to the designation of another Beneficiary in a manner conforming to a Qualified Election) and the surviving spouse may elect to have distribution of the Vested Account Balance (adjusted in accordance with Section 13.4 for gains or losses occurring after the Participant's death) commence within the 90-day period following the date of the Participant's death. The Participant may waive the spousal death benefit described in this paragraph (b) at any time, provided that no such waiver shall be effective unless it satisfies the conditions applicable under Section 10.4(c) to a Participant's waiver of a Qualified Preretirement Survivor Annuity. The exception in this paragraph (b) shall not be operative with respect to a Participant in a profit sharing plan if the Plan: is a direct or indirect transferee of a defined benefit plan, money purchase pension plan, target benefit plan, stock bonus plan, or profit sharing plan which is subject to the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code; or is adopted as an amendment of a plan that did not qualify for the exception in this paragraph (b) before the amendment was adopted. For purposes of this paragraph (b), Vested Account Balance shall have the meaning provided in Section 10.4(f). The provisions of Sections 10.2 through 10.6 set forth the survivor annuity requirements of Sections 401(a)(11) and 417 of the Code. Exception for Certain Amounts. The provisions of Sections 10.2 through 10.5 shall not apply to any distribution made on or after the first day of the first Plan Year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible employee contributions as defined in Section 72(o)(5)(B) of the Code, and maintained on behalf of a Participant in a money purchase pension plan or a target benefit plan, provided that the exceptions applicable to certain profit sharing plans under paragraph (b) are applicable with respect to the separate account (for this purpose, Vested Account Balance means the Participant's separate account balance attributable solely to accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code). Qualified Joint and Survivor Annuity. Unless an optional form of benefit is selected pursuant to a Qualified Election within the 90-day period ending on the Annuity Starting Date, a married Participant's Vested Account Balance will be paid in the form of a Qualified Joint and Survivor Annuity and an unmarried Participant's Vested Account Balance will be paid in the form of a life annuity. In either case, the Participant may elect to have such an annuity distributed upon his attainment of the Earliest Retirement Age under the Plan. Qualified Preretirement Survivor Annuity. Unless an optional form of benefit has been selected within the Election Period pursuant to a Qualified Election, the Vested Account Balance of a Participant who dies before the Annuity Starting Date shall be applied toward the purchase of an annuity for the life of his surviving spouse (a "Qualified Preretirement Survivor Annuity"). The surviving spouse may elect to have such an annuity distributed within a reasonable period after the Participant's death. For purposes of this Article 10, the term "spouse" means the current spouse or surviving spouse of a Participant, except that a former spouse will be treated as the spouse or surviving spouse (and a current spouse will not be treated as the spouse or surviving spouse) to the extent provided under a qualified domestic relations order as described in Section 414(p) of the Code. Definitions. The following definitions apply: "Election Period" means the period beginning on the first day of the Plan Year in which a Participant attains age 35 and ending on the date of the Participant's death. If a Participant separates from service before the first day of the Plan Year in which he reaches age 35, the Election Period with respect to his account balance as of the date of separation shall begin on the date of separation. A Participant who will not attain age 35 as of the end of a Plan Year may make a special Qualified Election to waive the Qualified Preretirement Survivor Annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age 35. Such an election shall not be valid unless the Participant receives a written explanation of the Qualified Preretirement Survivor Annuity in such terms as are comparable to the explanation required under Section 10.5. Qualified Preretirement Survivor Annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35. Any new waiver on or after that date shall be subject to the full requirements of this article. "Earliest Retirement Age" means the earliest date on which the Participant could elect to receive Retirement benefits under the Plan. "Qualified Election" means a waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any such waiver shall not be effective unless: (1) the Participant's spouse consents in writing to the waiver; (2) the waiver designates a specific Beneficiary, including any class of beneficiaries or any contingent beneficiaries, which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent); (3) the spouse's consent acknowledges the effect of the waiver; and (4) the spouse's consent is witnessed by a plan representative or notary public. Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity shall not be effective unless the waiver designates a form of benefit payment which may not be changed without spousal consent (unless the spouse's consent expressly permits designations by the Participant without any further spousal consent). If it is established to the satisfaction of a plan representative that there is no spouse or that the spouse cannot be located, a waiver will be deemed a Qualified Election. Any consent by a spouse obtained under these provisions (and any establishment that the consent of a spouse may not be obtained) shall be effective only with respect to the particular spouse involved. A consent that permits designations by the Participant without any requirement of further consent by the spouse must acknowledge that the spouse has the right to limit the consent to a specific Beneficiary and a specific form of benefit where applicable, and that the spouse voluntarily elects to relinquish either or both of those rights. A revocation of a prior waiver may be made by a Participant without the consent of the spouse at any time before the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in Section 10.5. "Qualified Joint and Survivor Annuity" means an immediate annuity for the life of a Participant, with a survivor annuity for the life of the spouse which is not less than 50% and not more than 100% of the amount of the annuity which is payable during the joint lives of the Participant and the spouse, and which is the amount of benefit that can be purchased with the Participant's Vested Account Balance. The percentage of the survivor annuity under the Plan shall be 50%. "Annuity Starting Date" means the first day of the first period for which an amount is paid as an annuity (or any other form). "Vested Account Balance" means the aggregate value of the Participant's vested account balance derived from Employer and Employee contributions (including rollovers), whether vested before or upon death, including the proceeds of insurance contracts, if any, on the Participant's life. The provisions of this Article 10 shall apply to a Participant who is vested in amounts attributable to Employer contributions, Employee contributions or both at the time of death or distribution. "Straight life annuity" means an annuity payable in equal installments for the life of the Participant that terminates upon the Participant's death. Notice Requirements. In the case of a Qualified Joint and Survivor Annuity, no less than 30 days (or such other period permitted by law) and no more than 90 days before a Participant's Annuity Starting Date the Plan Administrator shall provide to him a written explanation of (i) the terms and conditions of a Qualified Joint and Survivor Annuity, (ii) the Participant's right to make, and the effect of, an election to waive the Qualified Joint and Survivor Annuity form of benefit, (iii) the rights of the Participant's spouse, and (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity. In the case of a Qualified Preretirement Survivor Annuity, within the applicable period for a Participant the Plan Administrator shall provide to him a written explanation of the Qualified Preretirement Survivor Annuity, in terms and manner comparable to the requirements applicable to the explanation of a Qualified Joint and Survivor Annuity as described in the preceding paragraph. The applicable period for a Participant is whichever of the following periods ends last: (i) the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35; (ii) a reasonable period ending after an individual becomes a Participant; (iii) a reasonable period ending after this Article 10 first applies to the Participant. Notwithstanding the foregoing, in the case of a Participant who separates from service before attaining age 35, notice must be provided within a reasonable period ending after his separation from service. For purposes of applying the preceding paragraph, a reasonable period ending after the enumerated events described in (ii) and (iii) is the end of the two-year period beginning one year before the date the applicable event occurs, and ending one year after that date. In the case of a Participant who separates from service before the Plan Year in which he reaches age 35, notice shall be provided within the two-year period beginning one year before the separation and ending one year after the separation. If such a Participant thereafter returns to employment with the Employer, the applicable period for the Participant shall be redetermined. Transitional Rules. Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the preceding Sections of this Article 10, must be given the opportunity to elect to have those Sections apply if the Participant is credited with at least one Hour of Service under the Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and the Participant had at least ten years of vesting service when he or she separated from service. Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under the Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his benefits paid in accordance with paragraph (d) of this Section 10.6. The respective opportunities to elect (as described in paragraphs (a) and (b) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to be paid to those Participants. Any Participant who has so elected pursuant to paragraph (b) of this Section 10.6, and any Participant who does not elect under paragraph (a), or who meets the requirements of paragraph (a) except that he does not have at least ten years of vesting service when he separates from service, shall have his benefits distributed in accordance with all of the following requirements, if his benefits would otherwise have been payable in the form of a life annuity: Automatic joint and survivor annuity. If benefits in the form of a life annuity become payable to a married Participant who: begins to receive payments under the Plan on or after normal retirement age; or dies on or after normal retirement age while still working for the Employer; or begins to receive payments on or after the qualified early retirement age; or separates from service on or after attaining normal retirement age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits; then such benefits will be received under the Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the election period, which must begin at least six months before the Participant attains qualified early retirement age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time. Election of early survivor annuity. A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect during the election period to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (i) the 90th day before the Participant attains the qualified early retirement age, or (ii) the date on which participation begins, and ends on the date the Participant terminates employment. For purposes of this Section 10.6, qualified early retirement age is the latest of the earliest date under the Plan on which the Participant may elect to receive Retirement benefits, the first day of the 120th month beginning before the Participant reaches normal retirement age, or the date the Participant begins participation. ARTICLE MINIMUM DISTRIBUTION REQUIREMENTS General Rules. Subject to Article 10, Joint and Survivor Annuity Requirements, the requirements of this Article 11 shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provisions of the Plan. All distributions required under this Article 11 shall be determined and made in accordance with the Income Tax Regulations issued under Section 401(a)(9) of the Code (including proposed regulations, until the adoption of final regulations), including the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2 of the proposed regulations. Required Beginning Date. The entire interest of a Participant must be distributed, or begin to be distributed, no later than the Participant's required beginning date, determined as follows. General Rule. The required beginning date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age 70 1/2. Transitional Rules. The required beginning date of a Participant who attains age 70 1/2 before January 1, 1988, shall be determined in accordance with (1) or (2) below: Non-5% owners. The required beginning date of a Participant who is not a 5% owner is the first day of April of the calendar year following the calendar year in which the later of his Retirement or his attainment of age 70 1/2 occurs. 5% owners. The required beginning date of a Participant who is a 5% owner during any year beginning after December 31, 1979, is the first day of April following the later of: the calendar year in which the Participant attains age 70 1/2, or the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a 5% owner, or the calendar year in which the Participant retires. The required beginning date of a Participant who is not a 5% owner, who attains age 70 1/2 during 1988 and who has not retired as of January 1, 1989, is April 1, 1990. Rules for 5% Owners. A Participant is treated as a 5% owner for purposes of this Section 11.2 if he is a 5% owner as defined in Section 416(i) of the Code (determined in accordance with Section 416 but without regard to whether the Plan is top heavy) at any time during the Plan Year ending with or within the calendar year in which he attains age 66 1/2, or any subsequent Plan Year. Once distributions have begun to a 5% owner under this Section 11.2, they must continue, even if the Participant ceases to be a 5% owner in a subsequent year. Limits on Distribution Periods. As of the first Distribution Calendar Year, distributions not made in a single sum may be made only over one or a combination of the following periods: the life of the Participant, the life of the Participant and his Designated Beneficiary, a period certain not extending beyond the Life Expectancy of the Participant, or a period certain not extending beyond the Joint and Last Survivor Expectancy of the Participant and his Designated Beneficiary. "Designated Beneficiary" means the individual who is designated as the Beneficiary under the Plan in accordance with Section 401(a)(9) of the Code and the regulations issued thereunder (including proposed regulations, until the adoption of final regulations) and Section 7.2. "Distribution Calendar Year" means a calendar year for which a minimum distribution is required under Section 401(a)(9) of the Code and this Section 11.3. For distributions beginning before the Participant's death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Participant's required beginning date. For distributions beginning after the Participant's death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin pursuant to Section 11.5. "Life Expectancy" and "Joint and Last Survivor Expectancy" are computed by use of the expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Unless otherwise elected by the Participant (or his spouse, in the case of distributions described in Section 11.5(b)) by the time distributions are required to begin, Life Expectancies shall be recalculated annually. Any such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The Life Expectancy of a nonspouse beneficiary may not be recalculated. Determination of Amount to Be Distributed Each Year. If the Participant's interest is to be distributed in other than a single sum, the following minimum distribution rules shall apply on or after the required beginning date. Paragraphs (a) through (d) apply to distributions in forms other than the purchase of an annuity contract. If a Participant's Benefit (as defined below) is to be distributed over (1) a period not extending beyond the Life Expectancy of the Participant or the Joint Life and Last Survivor Expectancy of the Participant and his Designated Beneficiary, or (2) a period not extending beyond the Life Expectancy of the Designated Beneficiary, the amount required to be distributed for each calendar year, beginning with distributions for the first Distribution Calendar Year, must at least equal the quotient obtained by dividing the Participant's Benefit by the Applicable Life Expectancy (as defined below). For calendar years beginning before January 1, 1989, if the Participant's spouse is not the Designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the Life Expectancy of the Participant. For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first Distribution Calendar Year, shall not be less than the quotient obtained by dividing the Participant's Benefit by the lesser of (1) the Applicable Life Expectancy or (2) if the Participant's spouse is not the Designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Distributions after the death of the Participant shall be distributed using the Applicable Life Expectancy in paragraph (a) above as the relevant divisor, without regard to Proposed Regulations Section 1.401(a)(9)-2. The minimum distribution required for the Participant's first Distribution Calendar Year must be made on or before the Participant's required beginning date. The minimum distribution for other calendar years, including the minimum distribution for the Distribution Calendar Year in which the Employee's required beginning date occurs, must be made on or before December 31 of that Distribution Calendar Year. If the Participant's Benefit is distributed in the form of an annuity contract purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of Section 401(a)(9) of the Code and the regulations issued thereunder (including proposed regulations, until the adoption of final regulations). "Applicable Life Expectancy" means the Life Expectancy (or Joint and Last Survivor Expectancy) calculated using the attained age of the Participant (or Designated Beneficiary) as of the Participant's (or Designated Beneficiary's) birthday in the applicable calendar year, reduced by one for each calendar year which has elapsed since the date Life Expectancy was first calculated. If Life Expectancy is being recalculated, the Applicable Life Expectancy shall be the Life Expectancy as so recalculated. The applicable calendar year shall be the first Distribution Calendar Year, and if Life Expectancy is being recalculated such succeeding calendar year. If annuity payments commence in accordance with Section 11.4(e) before the required beginning date, the applicable calendar year is the year such payments commence. If distribution is in the form of an immediate annuity purchased after the Participant's death with the Participant's remaining interest in the Plan, the applicable calendar year is the year of purchase. "Participant's Benefit" means the account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year), increased by the amount of any contributions or Forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. For purposes of the preceding sentence, if any portion of the minimum distribution for the first Distribution Calendar Year is made in the second Distribution Calendar Year on or before the required beginning date, the amount of the minimum distribution made in the second Distribution Calendar Year shall be treated as if it had been made in the immediately preceding Distribution Calendar Year. Death Distribution Provisions. Distribution Beginning before Death. If the Participant dies after distribution of his interest has begun, the remaining portion of his interest will continue to be distributed at least as rapidly as under the method of distribution being used before the Participant's death. Distribution Beginning after Death. If the Participant dies before distribution of his interest begins, distribution of his entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death, except to the extent that an election is made to receive distributions in accordance with (1) or (2) below: If any portion of the Participant's interest is payable to a Designated Beneficiary, distributions may be made over the Designated Beneficiary's life, or over a period certain not greater than the Life Expectancy of the Designated Beneficiary, commencing on or before December 31 of the calendar year immediately following the calendar year in which the Participant died; or If the Designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the Participant died, and (ii) December 31 of the calendar year in which the Participant would have attained age 70 1/2. If the Participant has not made an election pursuant to this Section 11.5 by the time of his death, the Participant's Designated Beneficiary must elect the method of distribution no later than the earlier of (i) December 31 of the calendar year in which distributions would be required to begin under this Section 11.5, or (ii) December 31 of the calendar year which contains the fifth anniversary of the date of death of the Participant. If the Participant has no Designated Beneficiary, or if the Designated Beneficiary does not elect a method of distribution, distribution of the Participant's entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. For purposes of paragraph (b), if the surviving spouse dies after the Participant, but before payments to the spouse begin, the provisions of paragraph (b), with the exception of subparagraph (2) therein, shall be applied as if the surviving spouse were the Participant. For purposes of this Section 11.5, any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse of the Participant if the amount becomes payable to the surviving spouse when the child reaches the age of majority. For the purposes of this Section 11.5, distribution of a Participant's interest is considered to begin on the Participant's required beginning date (or, if paragraph (c) above is applicable, the date distribution is required to begin to the surviving spouse pursuant to paragraph (b) above). If distribution in the form of an annuity contract described in Section 11.4(e) irrevocably commences to the Participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences. Transitional Rule. Notwithstanding the other requirements of this Article 11, and subject to the requirements of Article 10, Joint and Survivor Annuity Requirements, distribution on behalf of any Participant, including a 5% owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences): The distribution is one which would not have disqualified the Trust under Section 401(a)(9) of the Internal Revenue Code of 1954 as in effect before its amendment by the Deficit Reduction Act of 1984. The distribution is in accordance with a method of distribution designated by the Employee whose interest in the Trust is being distributed or, if the Employee is deceased, by a Beneficiary of the Employee. The designation specified in paragraph (b) was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984. The Employee had accrued a benefit under the Plan as of December 31, 1983. The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority. A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee or the Beneficiary to whom such distribution is being made will be presumed to have designated the method of distribution under which the distribution is being made, if the method of distribution was specified in writing and the distribution satisfies the requirements in paragraphs (a) and (e). If a designation is revoked, any subsequent distribution must satisfy the requirements of Section 401(a)(9) of the Code and the regulations thereunder. If a designation is revoked after the date distributions are required to begin, the Trust must distribute by the end of the calendar year following the calendar year in which the revocation occurs the total amount not yet distributed which would have been required to have been distributed to satisfy Section 401(a)(9) of the Code and the regulations thereunder, but for the designation described in paragraphs (b) through (e). For calendar years beginning after December 31, 1988, such distributions must meet the minimum distribution incidental benefit requirements in Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any changes in the designation generally will be considered to be a revocation of the designation, but the mere substitution or addition of another beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as the substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). In the case of an amount transferred or rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-l of the Proposed Income Tax Regulations shall apply. ARTICLE WITHDRAWALS AND LOANS Withdrawals from Participant Contribution Accounts. Subject to the requirements of Article 10, a Participant may upon written notice (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) to the Employer withdraw any amount from his Participant Contribution Account. A withdrawn amount may not be repaid to the Plan. No Forfeiture will occur solely as a result of an Employee's withdrawal from a Participant Contribution Account. Withdrawals on Account of Hardship. If the Employer has so elected in the Plan Agreement, upon a Participant's written request (or in such other manner as shall be made available and agreed upon by the Employer and Putnam), the Plan Administrator may permit a withdrawal of funds from the vested portion of the Participant's Accounts on account of the Participant's financial hardship, which must be demonstrated to the satisfaction of the Plan Administrator, provided, that no hardship withdrawal shall be made from a Qualified Nonelective Contribution Account or Qualified Matching Account. In considering such requests, the Plan Administrator shall apply uniform standards that do not discriminate in favor of Highly Compensated Employees. If hardship withdrawals are permitted from more than one of the Elective Deferral Account, Rollover Account, Employer Matching Account, and Employer Contribution Account, they shall be made first from a Participant's Elective Deferral Account, then from his Rollover Account, then from his Employer Matching Account, and finally from his Employer Contribution Account, as applicable. A withdrawn amount may not be repaid to the Plan. The maximum amount that may be withdrawn on account of hardship from an Elective Deferral Account after December 31, 1988, shall not exceed the sum of (1) the amount credited to the Account as of December 31, 1988, and (2) the aggregate amount of the Elective Deferrals made by the Participant after December 31, 1988, and before the hardship withdrawal. Hardship withdrawals shall be permitted only on account of the following financial needs: Expenses for medical care described in Section 213(d) of the Code for the Participant, his spouse, children and dependents, or necessary for these persons to obtain such care; Purchase of the principal residence of the Participant (excluding regular mortgage payments); Payment of tuition and related educational fees and room and board expenses for the upcoming 12 months of post-secondary education for the Participant, his spouse, children or dependents; or Payments necessary to prevent the Participant's eviction from, or the foreclosure of a mortgage on, his principal residence. Hardship withdrawals shall be subject to the spousal consent requirements contained in Sections 411(a)(11) and 417 of the Code, to the same extent that those requirements apply to a Participant pursuant to Section 10.1. A hardship withdrawal will be made to a Participant only upon satisfaction of the following conditions: The Participant has obtained all nontaxable loans and all distributions other than hardship withdrawals available to him from all plans maintained by the Affiliated Employers; The hardship withdrawals does not exceed the amount of the Participant's financial need as described in paragraph (c) plus any amounts necessary to pay federal, state and local income taxes and penalties reasonably anticipated to result from the withdrawals; With respect to withdrawals from an Elective Deferral Account, all plans maintained by the Affiliated Employers provide that the Participant's Elective Deferrals and voluntary after-tax contributions will be suspended for a period of 12 months following his receipt of a hardship withdrawal; and With respect to withdrawals from an Elective Deferral Account, all plans maintained by the Affiliated Employers provide that the amount of Elective Deferrals that the Participant may make in his taxable year immediately following the year of a hardship withdrawal will not exceed the applicable limit under Section 402(g) of the Code for the taxable year, reduced by the amount of Elective Deferrals made by the Participant in the taxable year of the hardship withdrawal. Withdrawals After Reaching Age 59 1/2. If so specified by the Employer in the Plan Agreement, a Participant who has reached age 59 1/2 may upon written request to the Employer (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) withdraw during his employment any amount not exceeding the vested balance of his Accounts. A withdrawn amount may not be repaid to the Plan. Other Withdrawals. If so elected by the Employer in the Plan Agreement, a Participant may make a withdrawal from his Employer Contribution Account or Employer Matching Account for any reason upon written request to the Employer (or in such other manner as shall be made available and agreed upon by the Employer and Putnam), provided that (a) the Participant has been a Participant for at least five years, or (b) the withdrawal from such Account is limited to the excess of the balance of such Account on the date of the withdrawal over the aggregate of the amounts credited to such Account during the two year period immediately preceding the date of such withdrawal. No such withdrawal shall exceed the vested portion of the Participant's Account from which the withdrawal is made. A withdrawn amount may not be repaid to the Plan. Loans. If the Employer has so elected in the Plan Agreement, the Employer may direct the Trustee to make a loan to a Participant or Beneficiary from the vested portion of his Accounts, subject to the following terms and conditions and to such reasonable additional rules and regulations as the Plan Administrator may establish for the orderly operation of the program: The Plan Administrator shall administer the loan program subject to the terms and conditions of this Section 12.5. A Participant's or Beneficiary's request for a loan shall be submitted to the Plan Administrator by means of a written application on a form supplied by the Plan Administrator (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). Applications shall be approved or denied by the Plan Administrator on the basis of its assessment of the borrower's ability to collateralize and repay the loan, as revealed in the loan application. Loans shall be made to all Participants and Beneficiaries on a reasonably equivalent basis. Loans shall not be made available to Highly Compensated Employees (as defined in Section 414(q) of the Code) in amounts greater than the amounts made available to other Employees (relative to the borrower's Account balance). Loans must be evidenced by the Participant's promissory note for the amount of the loan payable to the order of the Trustee, and adequately secured by assignment of not more than fifty percent (50%) of the Participant's entire right, title and interest in and to the Trust Fund, exclusive of any asset as to which Putnam is not the Trustee. Loans must bear a reasonable interest rate comparable to the rate charged by commercial lenders in the geographical area for similar loans. The Plan Administrator shall not discriminate among Participants in the matter of interest rates, but loans may bear different interest rates if, in the opinion of the Plan Administrator, the difference in rates is justified by conditions that would customarily be taken into account by a commercial lender in the Employer's geographical area. The period for repayment for any loan shall not exceed five years, except in the case of a loan used to acquire a dwelling unit which within a reasonable time is to be used as the principal residence of the Participant, in which case the repayment period may exceed five years. The terms of a loan shall require that it be repaid in level payments of principal and interest not less frequently then quarterly throughout the repayment period, except that alternative arrangements for repayment may apply in the event that the borrower is on unpaid leave of absence for a period not to exceed one year. To the extent that a Participant would be required under Article 10 to obtain the consent of his spouse to a distribution of an immediately distributable benefit other than a Qualified Joint and Survivor Annuity, the consent of the Participant's spouse shall be required for the use of his Account as security for a loan. The spouse's consent must be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured, and obtained in accordance with the requirements of Section 10.4(c) for a Qualified Election. Any such consent shall thereafter be binding on the consenting spouse and any subsequent spouse of the Participant. A new consent shall be required for use of the Account as security for any extension, renewal, renegotiation or revision of the original loan. If valid spousal consent has been obtained in accordance with Section 12.5(g), then notwithstanding any other provision of the Plan the portion of the Participant's account balance used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than 100% of the Participant's vested account balance (determined without regard to the preceding sentence) is payable to the surviving spouse, then the account balance shall be adjusted by first reducing the vested account balance by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse. In the event of default on a loan by a Participant who is an active Employee, foreclosure on the Participant's Account as security will not occur until the Employer has reported to the Trustee the occurrence of an event permitting distribution from the Plan in accordance with Article 9 or Section 5.13. No loan shall be made to an Owner-Employee or a Shareholder-Employee unless a prohibited transaction exemption is obtained by the Employer. No loan to any Participant or Beneficiary can be made to the extent that the amount of the loan, when added to the outstanding balance of all other loans to the Participant or Beneficiary, would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made, or (b) one-half the value of the vested account balance of the Participant. For the purpose of the above limitation, all loans from all qualified plans of the Affiliated Employers are aggregated. Loans shall be considered investments directed by a Participant pursuant to Section 13.3. The amount loaned shall be charged solely against the Accounts of the Participant, and repaid amounts and interest shall be credited solely thereto. Procedure; Amount Available. Withdrawals and loans shall be made subject to the terms and conditions applicable to distributions pursuant to Section 9.4, except that the amount of any withdrawal or loan shall be determined by reference to the vested balance of the Participant's Account as of the most recent Valuation Date preceding the withdrawal or loan, and shall not exceed the amount of the vested account balance. Protected Benefits. Notwithstanding any provision to the contrary, if an Employer amends an existing retirement plan ("prior plan") by adopting this Plan, to the extent any withdrawal option or form of payment available under the prior plan is an optional form of benefit within the meaning of Code Section 411(d)(6), such option or form of payment shall continue to be available to the extent required by such Code Section. Restrictions Concerning Transferred Assets. Notwithstanding any provision to the contrary, if an Employer amends an existing defined benefit or money purchase pension plan ("prior pension plan") by adopting this Plan, accrued benefits attributable to the assets and liabilities transferred from the prior pension plan (which accrued benefits include the account balance of such Participant in the Plan attributable to such accrued benefits as of the date of the transfer and any earnings on such account balance subsequent to the transfer) shall be distributable only on or after the events upon which distributions are or were permissible under the prior pension plan. ARTICLE TRUST FUND AND INVESTMENTS Establishment of Trust Fund. The Employer and the Trustee hereby agree to the establishment of a Trust Fund consisting of all amounts as shall be contributed or transferred from time to time to the Trustee pursuant to the Plan, and all earnings thereon. The Trustee shall hold the assets of the Trust Fund for the exclusive purpose of providing benefits to Participants and Beneficiaries and defraying the reasonable expenses of administering the Plan, and no such assets shall ever revert to the Employer, except that: contributions made by the Employer by mistake of fact, as determined by the Employer, may be returned to the Employer within one (1) year of the date of payment, contributions that are conditioned on their deductibility under Section 404 of the Code may be returned to the Employer, to the extent disallowed, within one (1) year of the disallowance of the deduction, contributions that are conditioned on the initial qualification of the Plan under the Code, and all investment gains attributable to them, may be returned to the Employer within one (1) year after such qualification is denied by determination of the Internal Revenue Service, but only if an application for determination of such qualification is made within the time prescribed by law for filing the Employer's federal income tax return for its taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe, and amounts held in a suspense account may be returned to the Employer on termination of the Plan, to the extent that they may not then be allocated to any Participant's Account in accordance with Article 6. All Employer contributions under the Plan other than those made pursuant to Section 4.1(e) are hereby expressly conditioned on the initial qualification of the Plan and their deductibility under the Code. Investment gains attributable to contributions returned pursuant to Subsections (a) and (b) shall not be returned to the contributing Employer, and investment losses attributable to such contributions shall reduce the amount returned. Management of Trust Fund. The assets of the Trust Fund shall be held in trust by the Trustee and accounted for in accordance with this Article 13, and shall be invested in accordance with Section 13.3 in the Investment Products specified by the Employer in the Plan Agreement and from time to time thereafter in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam). The Employer shall have the exclusive authority and discretion to select the Investment Products available under the Plan. In making that selection, the Employer shall use the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. The Employer shall cause the available Investment Products to be diversified sufficiently to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. It is especially intended that the Trustee shall have no discretionary authority to determine the investment of Trust assets. Notwithstanding the foregoing, assets of the Trust Fund shall also be invested in Employer Stock if so elected by the Employer and agreed to by Putnam under the service agreement executed by the Employer and Putnam pursuant to the establishment of the Plan. Investment Instructions. All amounts held in the Trust Fund under the Plan shall be invested in Investment Products. If the Employer has elected in the Plan Agreement to make investment decisions with respect to Elective Deferrals, Participant Contributions, Rollover Contributions, Profit Sharing and other Employer Contributions, Employer Matching Contributions, Deductible Employee Contributions, Qualified Matching Contributions and/or Qualified Nonelective Contributions, investment instructions as to the Accounts for such contributions shall be the fiduciary responsibility of the Employer, and each of such affected Accounts shall have a pro rata interest in all assets of the Trust to which the Employer's instructions apply. To the extent the Employer has not elected to make investment decisions for all of the Accounts of the Plan, then assets of the Trust over which the Employer has not elected to make investment decisions shall be invested solely in accordance with the instructions of the Participant to whose Accounts they are allocable, as delivered to Putnam in accordance with its service agreement with the Employer. Instructions shall apply to future contributions, past accumulations, or both, according to their terms, and shall be communicated by the Employer to Putnam in accordance with procedures prescribed in the service agreement between the Employer and Putnam. Instructions shall be effective prospectively, coincident with or within a reasonable time after their receipt in good order by Putnam. An instruction once received shall remain in effect until it is changed by the provision of a new instruction. New instructions shall be accepted by Putnam at the time and in the manner provided in the Plan Agreement. To the extent any assets of the Trust are to be invested solely in accordance with the instructions of the Participants, the Plan is intended to constitute a plan described in section 404(c) of ERISA and Title 29 of the Code of Federal Regulations section 2550.404c-1. In such case, the Employer shall be the Plan fiduciary responsible for providing the Participants with all information required to be given pursuant to ERISA section 404(c) and Title 29 of the Code of Federal Regulations section 2550.404c-1. In the event that the Employer adopts a Putnam prototype plan as an amendment to or restatement of an existing plan, the Employer shall specify one or more Investment Products to serve as the sole investments for all Participants' Accounts during the period in which existing records of the Plan are transferred to the Recordkeeper. During that period, new investment instructions as to existing assets of the Plan cannot be carried out, nor can distributions be made from the Plan except to the extent permitted under the terms of the service agreement between the Employer and Putnam. The Employer and the Recordkeeper shall use their best efforts to minimize the duration of the period to which the preceding sentence applies. To the extent specifically authorized and provided in the service agreement between the Employer and Putnam, the Employer may direct the Trustee to establish as an Investment Product a fund all of the assets of which shall be invested in shares of stock of the Employer that constitute "qualifying employer securities" within the meaning of section 407(d)(5) of ERISA ("Employer Stock"). The Plan Administrator as named fiduciary shall continually monitor the suitability of acquiring and holding Employer Stock under the fiduciary duty rules of section 404(a)(1) of ERISA (as modified by section 404(a)(2) of ERISA) and the requirements of section 404(c) of ERISA, and shall be responsible for ensuring that the procedures relating to the purchase, holding and sale of Employer Stock, and the exercise of any and all rights with respect to such Employer Stock shall be in accordance with section 404(c) of ERISA unless the Employer retains voting, tender or similar rights with respect to the Employer Stock. The Trustee shall not be liable for any loss, or by reason of any breach, which arises from the direction of the Plan Administrator with respect to the acquisition and holding of Employer Stock. The Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Plan Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting and tender or retention of Employer Stock. Putnam shall be under no duty to question or review the directions given by the Employer or to make suggestions to the Employer in connection therewith. Putnam shall not be liable for any loss, or by reason of any breach, that arises from the Employer's exercise or non-exercise of rights under this Article 13, or from any direction of the Employer unless it is clear on the face of the direction that the actions to be taken under the direction are prohibited by the fiduciary duty rules of Section 404(a) of ERISA. All interest, dividends and other income received with respect to, and any proceeds received from the sale or other disposition of, securities or other property held in an investment fund shall be credited to and reinvested in such investment fund, and all expenses of the Trust that are properly allocated to a particular investment fund shall be so allocated and charged. The Employer may at any time direct Putnam to eliminate any investment fund or funds, and Putnam shall thereupon dispose of the assets of such investment fund and reinvest the proceeds thereof in accordance with the directions of the Employer. Neither the Employer nor the Trustee nor Putnam shall be responsible for questioning any instructions of a Participant or for reviewing the investments selected therein, or for any loss resulting from instructions of a Participant or from the failure of a Participant to provide or to change instructions. Neither Putnam nor the Trustee shall have any duty to question any instructions received from the Employer or a Participant or to review the investments selected thereby, nor shall Putnam or the Trustee be responsible for any loss resulting from instructions received from the Employer or a Participant or from the failure of the Employer or a Participant to provide or to change instructions. In the event that Putnam or the Trustee receives a contribution under the Plan as to which no instructions are delivered, or such instructions as are delivered are unclear to Putnam or the Trustee, such contribution shall be invested until clear instructions are received in the default investment option set forth in the service agreement between the Employer and Putnam, or if no such option is so set forth, the Employer, by execution of the Plan Agreement, shall affirmatively elect to have such contributions invested in the Putnam Money Market Fund. Neither Putnam nor the Trustee shall have any discretionary authority or responsibility in the investment of the assets of the Trust Fund. Valuation of the Trust Fund. As of each Valuation Date, the Trustee shall determine the fair market value of the Trust Fund, and the net earnings or losses and expenses of the Trust Fund for the period elapsed since the most recent previous Valuation Date shall be allocated among the Accounts of Participants. Earnings, losses and expenses which pertain to investments which are specifically held for a given Participant's Account shall be allocated solely to that Account. In the event that an investment is not specifically held for a given Participant's Account, the earnings, losses and expenses pertaining to that investment shall be allocated among all Participants' Accounts in the ratio that each such Account bears to the total of all Accounts of all Participants. Each Participant's Accounts shall be adjusted pursuant to this Section 13.4 until such time as they are either fully distributed or forfeited, regardless of whether the Participant continues to be an Employee. Distributions on Investment Company Shares. Subject to Section 9.3, all dividends and capital gains or other distributions received on any Investment Company Shares credited to Participant's Account will (unless received in additional Investment Company Shares) be reinvested in full and fractional shares of the same Investment Company at the price determined as provided in the then current prospectus of the Investment Company. The shares so received or purchased upon such reinvestment will be credited to such accounts. If any dividends or capital gain or other distributions may be received on such Investment Company Shares at the election of the shareholder in additional shares or in cash or other property, the Trustee will elect to receive such dividends or distributions in additional Investment Company Shares. Registration and Voting of Investment Company Shares. All Investment Company Shares shall be registered in the name of the Trustee or its nominee. Subject to any requirements of applicable law, the Trustee will transmit to the Employer copies of any notices of shareholders' meetings, proxies and proxy- soliciting materials, prospectuses and the annual or other reports to shareholders, with respect to Investment Company Shares held in the Trust Fund. The Trustee shall act in accordance with directions received from the Employer with respect to matters to be voted upon by the shareholders of the Investment Company. Such directions must be in writing on a form approved by the Trustee, signed by the Employer and delivered to the Trustee within the time prescribed by it. The Trustee will not vote Investment Company Shares as to which it receives no written directions. Investment Manager. The Employer, with the consent of Putnam, may appoint an investment manager, as defined in Section 3(38) of ERISA with respect to all or a portion of the assets of the Trust Fund. The Trustee shall have no liability in connection with any action or nonaction pursuant to directions of such an investment manager. Employer Stock. Voting Rights. Notwithstanding any other provision of the Plan, the provisions of this Section 13.8(a) shall govern the voting of Employer Stock held by Putnam as Trustee under the Plan. The Trustee shall vote Employer Stock in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the voting of Employer Stock and shall direct the Trustee as to the voting of Employer Stock in accordance with the provisions of this Section 13.8(a). In either case, the Employer shall be responsible for determining whether, under the circumstances prevailing at a given time, its fiduciary duty to Participants and Beneficiaries under the Plan and ERISA requires that the Employer follow the advice of independent counsel as to the voting of Employer Stock. The remainder of this Section 13.8(a) applies only if the Employer elects in the Plan Agreement that Participants shall direct the Trustee as to the voting of Employer Stock. For purposes of this Section 13.8(a), the term "Participant" includes any Beneficiary with an Account in the Plan which is invested in Employer Stock. When the issuer of Employer Stock files preliminary proxy solicitation materials with the Securities and Exchange Commission, the Employer shall cause a copy of all the materials to be simultaneously sent to the Trustee, and the Trustee shall prepare a voting instruction form based upon these materials. At the time of mailing of notice of each annual or special stockholders' meeting of the issuer of Employer Stock, the Employer shall cause a copy of the notice and all proxy solicitation materials to be sent to each Participant, together with the foregoing voting instruction form to be returned to the Trustee or its designee. The form shall show the number of full and fractional shares of Employer Stock credited to the Participant's Accounts, whether or not vested. For purposes of this Section 13.8(a), the number of shares of Employer Stock deemed credited to a Participant's Accounts shall be determined as of the date of record determined by the Employer for which an allocation has been completed and Employer Stock has actually been credited to Participant's Accounts. Procedures for the execution of purchases and sales of Employer Stock shall be as set forth in the service agreement between the Employer and Putnam. The Employer shall provide the Trustee with a copy of any materials provided to Participants and shall certify to the Trustee that the materials have been mailed or otherwise sent to Participants. Each Participant shall have the right to direct the Trustee as to the manner in which to vote that number of shares of Employer Stock held under the Plan (whether or not vested) equal to a fraction, of which the numerator is the number of shares of Employer Stock credited to his Account and the denominator is the number of shares of Employer Stock credited to all Participants' Accounts. Such directions shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) and shall be held in confidence by the Trustee and not divulged to the Employer, or any officer or employee thereof, or any other persons. Upon its receipt of directions, the Trustee shall vote the shares of Employer Stock as directed by the Participant. The Trustee shall not vote those shares of Employer Stock credited to the Accounts of Participants for which no voting directions are received. With respect to shares of Employer Stock held in the Trust which are not credited to a Participant's Account, the Plan Administrator shall retain the status of named fiduciary and shall direct the voting of such Employer Stock. Tendering Rights. Notwithstanding any other provision of the Plan, the provisions of this Section 13.8(b) shall govern the tendering of Employer Stock by Putnam as Trustee under the Plan. In the event of a tender offer, the Trustee shall tender Employer Stock in accordance with the directions of the Employer unless the Employer has elected in the Plan Agreement that Participants shall be appointed named fiduciaries as to the tendering of Employer Stock in accordance with the provisions of this Section 13.8(b). The remainder of this Section 13.8(b) applies only if the Employer elects in the Plan Agreement that Participants shall direct the Trustee as to the tendering of Employer Stock. For purposes of this Section 13.8(b), the term "Participant" includes any Beneficiary with an Account in the Plan which is invested in Employer Stock. Upon commencement of a tender offer for any Employer Stock, the Employer shall notify each Plan Participant, and use its best efforts to distribute timely or cause to be distributed to Participants the same information that is distributed to shareholders of the issuer of Employer Stock in connection with the tender offer, and after consulting with the Trustee shall provide at the Employer's expense a means by which Participants may direct the Trustee whether or not to tender the Employer Stock credited to their Accounts (whether or not vested). The Employer shall provide to the Trustee a copy of any material provided to Participants and shall certify to the Trustees that the materials have been mailed or otherwise sent to Participants. Each Participant shall have the right to direct the Trustee to tender or not to tender some or all of the shares of Employer Stock credited to his Accounts. Directions from a Participant to the Trustee concerning the tender of Employer Stock shall be communicated in writing (or in such other manner as shall be made available and agreed upon by the Employer and Putnam) as is agreed upon by the Trustees and the Employer. The Trustee shall tender or not tender shares of Employer Stock as directed by the Participant. A Participant who has directed the Trustee to tender some or all of the shares of Employer Stock credited to his Accounts may, at any time before the tender offer withdrawal date, direct the Trustee to withdraw some or all of the tendered shares, and the Trustee shall withdraw the directed number of shares from the tender offer before the tender offer withdrawal deadline. A Participant shall not be limited as to the number of directions to tender or withdraw that he may give to the Trustee. The Trustee shall not tender shares of Employer Stock credited to a Participant's Accounts for which it has received no directions from the Plan Participant. The Trustee shall tender that number of shares of Employer Stock not credited to Participants' Accounts determined by multiplying the total number of such shares by a fraction, the numerator of which is the number of shares of Employer Stock credited to Participants' Accounts for which the Trustee has received directions from Participants to tender (which directions have not been withdrawn as of the date of this determination), and the denominator of which is the total number of shares of Employer Stock credited to Participants' Accounts. A direction by a Participant to the Trustee to tender shares of Employer Stock credited to his Accounts shall not be considered a written election under the Plan by the Participant to withdraw or to have distributed to him any or all of such shares. The Trustee shall credit to each Account of the Plan Participant from which the tendered shares were taken the proceeds received by the Trustee in exchange for the shares of Employer Stock tendered from that Account. Pending receipt of directions through the Administrator from the Participant as to the investment of the proceeds of the tendered shares, the Trustee shall invest the proceeds as the Administrator shall direct. To the extent that any Participant gives no direction as to the tendering of Employer stock that he has the right to direct under this Section 13.8(a), the Trustee shall not tender such Employer Stock. Other Rights. With respect to all rights in connection with Employer Stock other than the right to vote and the right to tender, Participants are hereby appointed named fiduciaries to the same extent (if any) as provided in the foregoing paragraphs of this Section 13.8 with regard to the right to vote, and the Trustee shall follow the directions of Participants and the Plan Administrator with regard to the exercise of such rights to the same extent as with regard to the right to vote. Insurance Contracts. If so provided in the Plan Agreement or other agreement between the Employer and the Trustee, the Plan Administrator may direct the Trustee to receive and hold or apply assets of the Trust to the purchase of individual or group insurance or annuity contracts ("policies" or "contracts") issued by any insurance company and in a form approved by the Plan Administrator (including contracts under which the contract holder is granted options to purchase insurance or annuity benefits), or financial agreements which are backed by group insurance or annuity contracts ("financial agreements"). If such investments are to be made, the Plan Administrator shall direct the Trustee to execute and deliver such applications and other documents as are necessary to establish record ownership, to value such policies, contracts or financial agreements under the method of valuation selected by the Plan Administrator, and to record or report such values to the Plan Administrator or any investment manager selected by the Plan Administrator, in the form and manner agreed to by the Plan Administrator. The Plan Administrator may direct the Trustee to exercise or may exercise directly the powers of contract holder under any policy, contract or financial agreement, and the Trustee shall exercise such powers only upon direction of the Plan Administrator. The Trustee shall have no authority to act in its own discretion, with respect to the terms, acquisition, valuation, continued holding and/or disposition of any such policy, contract or financial agreement or any asset held thereunder. The Trustee shall be under no duty to question any direction of the Plan Administrator or to review the form of any such policy, contract or financial agreement or the selection of the issuer thereof, or to make recommendations to the Plan Administrator or to any issuer with respect to the form of any such policy, contract or financial agreement. The Trustee shall be fully protected in acting in accordance with written directions of the Plan Administrator, and shall be under no liability for any loss of any kind which may result by reason of any action taken or omitted by it in accordance with any direction of the Plan Administrator, or by reason of inaction in the absence of written directions from the Plan Administrator. In the event that the Plan Administrator directs that any monies or property be paid or delivered to the contract holder other than for the benefit of specific individual beneficiaries, the Trustee agrees to accept such monies or property as assets of the Trust subject to all the terms hereof. Registration and Voting of Non-Putnam Investment Company Shares. All shares of registered investment companies other than Investment Companies shall be registered in the name of the Trustee or its nominee. Subject to any requirements of applicable law and to the extent provided in an agreement between Putnam and a third party investment provider, the Trustee shall transmit to the Employer copies of any notices of shareholders' meetings, proxies or proxy-soliciting materials, prospectuses or the annual or other reports to shareholders, with respect to shares of registered investment companies other than Investment Companies held in the Trust Fund. Notwithstanding any other provision of the Plan, the Trustee shall vote shares of registered investment companies other than Investment Companies in accordance with the directions of the Employer. Directions as to voting such shares must be in writing on a form approved by the Trustee or such other manner acceptable to the Trustee, signed by the Employer and delivered to the Trustee within the time prescribed by it. The Trustee shall vote those shares of registered investment companies other than Investment Companies for which no voting directions are received in the same proportion as it votes those shares for which it has received voting directions. ARTICLE TOP-HEAVY PLANS Superseding Effect. For any Plan Year in which Plan is determined to be a Top-Heavy Plan under Section 14.2(b), the provisions of this Article 14 will supersede any conflicting provisions in the Plan or the Plan Agreement. Definitions. For purposes of this Article 14, the terms below shall be defined as follows: Key Employee means any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the determination period was: (i) an officer of the Employer having annual compensation greater than 50% of the amount in effect under Section 415(b)(1)(A) of the Code; (ii) an owner (or considered an owner under Section 318 of the Code) of one of the ten largest interests in the Employer having annual compensation exceeding the dollar limitation under Section 415(c)(1)(A) of the Code; (iii) a 5% owner of the Employer; or (iv) a 1% owner of the Employer having annual compensation of more than $150,000. Annual compensation means compensation satisfying the definition elected by the Employer in the Plan Agreement, but including (i) amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of the Code, and (ii) amounts of special pay such as overtime, bonuses and commissions which are excluded from the definition of Compensation in the Plan Agreement. The determination period is the Plan Year containing the Determination Date and the four preceding Plan Years. The determination of who is a Key Employee will be made in accordance with Section 416(i)(1) of the Code and the Regulations thereunder. Top-Heavy: The Plan is Top-Heavy for any Plan Year if any of the following conditions exists: If the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans. If this Plan is a part of a Required Aggregation Group of plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the group of plans exceeds 60%. If this plan is part of a Required Aggregation Group and part of a Permissive Aggregation Group of Plans and the Top-Heavy Ratio for the Permissive Aggregation group exceeds 60%. Top-Heavy Ratio means the following: If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer has not maintained any qualified defined benefit plan which during the 5-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-Heavy ratio for this Plan alone or for the Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date(s) (including any part of any account distributed in the 5-year period ending on the Determination Date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the 5-year period ending on the Determination Date(s)), both computed in accordance with Section 416 of the Code and the regulations thereunder. Both the numerator and denominator of the Top-Heavy Ratio are increased to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Section 416 of the Code and the regulations thereunder. If the Employer maintains one or more qualified defined contribution plans (or any simplified employee pension plan) and the Employer maintains or has maintained one or more qualified defined benefit plans which during the 5-year period ending on the Determination Date(s) has or has had any accrued benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated qualified defined contribution plan or plans for all Key Employees, determined in accordance with (1) above, and the Present Value of accrued benefits under the aggregated qualified defined benefit plan or plans for all Key Employees as of the Determination Date(s), and the denominator of which is the sum of the account balances under the aggregated qualified defined contributions plan or plans for all Participants, determined in accordance with (1) above, and the Present Value of accrued benefits under the qualified defined benefit plan or plans for all Participants as of the Determination Date(s), all determined in accordance with Section 416 of the Code and the regulations thereunder. The accrued benefits under a defined benefit plan in both the numerator and denominator of the Top-Heavy Ratio are increased for any distribution of an accrued benefit made in the 5-year period ending on the Determination Date. For purposes of (1) and (2) above, the value of account balances and the Present Value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12- month period ending on the Determination Date; except as provided in Section 416 of the Code and the regulations thereunder for the first and second Plan Years of a defined benefit plan. The account balances and accrued benefits of a Participant (A) who is not a Key Employee but who was a Key Employee in a prior Plan Year, or (B) who has not been credited with at least one Hour of Service for the Employer during the 5-year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. Deductible Employee contributions will not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year. The accrued benefit of a Participant other than a Key Employee shall be determined under (a) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employer, or (b) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Section 411(b)(1)(C) of the Code. Permissive Aggregation Group means the Required Aggregation Group of plans plus any other qualified plan or plans (or simplified employee pension plan) of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the Code. Required Aggregation Group means (i) each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the determination period (regardless of whether the Plan has terminated) and (ii) any other qualified plan of the Employer which enables a plan described in (i) to meet the requirements of Section 401(a)(4) or 410 of the Code. Determination Date means, for any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the Determination Date is the last day of that Plan Year. Valuation Date means the last day of the Plan Year. Present Value means present value based only on the interest and mortality rates specified by the Employer in the Plan Agreement. Minimum Allocation. Except as otherwise provided in paragraphs (c) and (d) below, the Employer contributions and Forfeitures allocated on behalf of any Participant who is not a Key Employee shall not be less than the lesser of 3% of such Participant's Earnings, or in the case where the Employer has no defined benefit plan which designates this Plan to satisfy Section 401 of the Code, the largest percentage of Employer contributions and Forfeitures, as a percentage of the Key Employee's Earnings, allocated on behalf of any Key Employee for that year. The minimum allocation is determined without regard to any Social Security contribution. This minimum allocation shall be made even though, under other Plan provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation of the Employer's contributions and Forfeitures for the Plan Year because of (1) the Participant's failure to be credited with at least 1,000 Hours of Service, or (2) the Participant's failure to make mandatory Employee contributions to the Plan, or (3) the Participant's receiving Earnings less than a stated amount. Neither Elective Deferrals, Employer Matching Contributions nor Qualified Matching Contributions for non- Key Employees shall be taken into account for purposes of satisfying the requirement of this Section 14.3(a). For purposes of computing the minimum allocation, Earnings will mean Section 415 Compensation as defined in Section 6.5(b) of the Plan. The provision in paragraph (a) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year. The provision in paragraph (a) above shall not apply to any Participant to the extent he is covered under any other plan or plans of the Employer, and the Employer has provided in the Plan Agreement that the minimum allocation requirement applicable to Top-Heavy Plans will be met in the other plan or plans. Notwithstanding the foregoing, if the Employer has adopted Putnam paired plans (as described in Section 4.6) and the Participant is eligible to participate in both paired plans, the minimum allocation described in paragraph (a) shall be provided by the Putnam Money Purchase Pension Plan. The minimum allocation required (to the extent required to be nonforfeitable under Section 416(b) of the Code) may not be forfeited under Sections 411(a)(3)(B) or (D) of the Code. Adjustment of Fractions. For any Plan Year in which the Plan is Top-Heavy, the Defined Benefit Fraction and the Defined Contribution Fraction described in Article 6 shall each be computed using 100% of the dollar limitations specified in Sections 415(b)(1)(A) and 415(c)(1)(A) instead of 125%. The foregoing requirement shall not apply if the Top-Heavy Ratio does not exceed 90% and the Employer has elected in the Plan Agreement to provide increased minimum allocations or benefits satisfying Section 416(h)(2) of the Code. Minimum Vesting Schedules. For any Plan Year in which this Plan is Top-Heavy (and, if the Employer so elects in the Plan Agreement, for any subsequent Plan Year), a minimum vesting schedule will automatically apply to the Plan, as follows: If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule 100% immediate vesting, the Three-Year Cliff, Five-Year Graded or Six-Year Graded schedule, then the schedule selected in the Plan Agreement shall continue to apply for any Plan Year to which this Section 14.5 applies. If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Five-Year Cliff schedule, then the Three-Year Cliff schedule shall apply in any Plan Year to which this Section 14.5 applies. If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule the Seven-Year Graded schedule, then the Six-Year Graded schedule shall apply in any Plan Year to which this Section 14.5 applies. If the Employer has selected in the Plan Agreement as the Plan's regular vesting schedule a schedule other than those described in paragraphs (a), (b) and (c), then the Top- Heavy schedule specified by the Employer in the Plan Agreement for this purpose shall apply in any Plan Year to which this Section 14.5 applies. The minimum vesting schedule applies to all benefits within the meaning of Section 411(a)(7) of the Code except those attributable to Elective Deferrals, rollover contributions described in Section 4.5, Qualified Matching Contributions, Qualified Nonelective Contributions, or Participant Contributions, but including benefits accrued before the effective date of Section 416 of the Code and benefits accrued before the Plan became Top-Heavy. Further, no reduction in a Participant's nonforfeitable percentage may occur in the event the Plan's status as Top-Heavy changes for any Plan Year. However, the vested portion of the Employer Contribution Account or Employer Matching Account of any Employee who does not have an Hour of Service after the Plan has initially become Top-Heavy will be determined without regard to this Section 14.5. ARTICLE ADMINISTRATION OF THE PLAN Plan Administrator. The Plan shall be administered by the Employer, as Plan Administrator and Named Fiduciary within the meaning of ERISA, under rules of uniform application; provided, however, that the Plan Administrator's duties and responsibilities may be delegated to a person appointed by the Employer or a committee established by the Employer for that purpose, in which case the committee shall be the Plan Administrator and Named Fiduciary. The members of such a committee shall act by majority vote, and may by majority vote authorize any one or ones of their number to act for the committee. The person or committee (if any) initially appointed by the Employer may be named in the Plan Agreement, but the Employer may remove any such person or committee member by written notice to him, and any such person or committee may resign by written notice to the Employer, without the necessity of amending the Plan Agreement. To the extent permitted under applicable law, the Plan Administrator shall have the sole authority to enforce the terms hereof on behalf of any and all persons having or claiming any interest under the Plan, and shall be responsible for the operation of the Plan in accordance with its terms. The Plan Administrator shall have discretionary authority to determine all questions arising out of the administration, interpretation and application of the Plan, all of which determinations shall be conclusive and binding on all persons. The Plan Administrator, in carrying out its responsibilities under the Plan, may rely upon the written opinions of its counsel and on certificates of physicians. Subject to the provisions of the Plan and applicable law, the Plan Administrator shall have no liability to any person as a result of any action taken or omitted hereunder by the Plan Administrator. Claims Procedure. Claims for participation in or distribution of benefits under the Plan shall be made in writing to the Plan Administrator, or an agent designated by the Plan Administrator whose name shall have been communicated to all Participants and other persons as required by law. If any claim so made is denied in whole or in part, the claimant shall be furnished promptly by the Plan Administrator with a written notice: setting forth the reason for the denial, making reference to pertinent Plan provisions, describing any additional material or information from the claimant which is necessary and why, and explaining the claim review procedure set forth herein. Within 60 days after denial of any claim for participation or distribution under the Plan, the claimant may request in writing a review of the denial by the Plan Administrator. Any claimant seeking review hereunder shall be entitled to examine all pertinent documents and to submit issues and comments in writing. The Plan Administrator shall render a decision on review hereunder; provided, that if the Plan Administrator determines that a hearing would be appropriate, its decision on review shall be rendered within 120 days after receipt of the request for review. The decision on review shall be in writing and shall state the reason for the decision, referring to the Plan provisions upon which it is based. Employer's Responsibilities. The Employer shall be responsible for: Keeping records of employment and other matters containing all relevant data pertaining to any person affected hereby and his eligibility to participate, allocations to his Accounts, and his other rights under the Plan; Periodic, timely filing of all statements, reports and returns required to be filed by ERISA; Timely preparation and distribution of disclosure materials required by ERISA; Providing notice to interested parties as required by Section 7476 of the Code; Retention of records for periods required by law; and Seeing that all persons required to be bonded on account of handling assets of the Plan are bonded. Recordkeeper. The Recordkeeper is hereby designated as agent of the Employer under the Plan to perform directly or through agents certain ministerial duties in connection with the Plan, in particular: To keep and regularly furnish to the Employer a detailed statement of each Participant's Accounts, showing contributions thereto by the Employer and the Participant, Investment Products purchased therewith, earnings thereon and Investment Products purchased therewith, and each redemption or distribution made for any reason, including fees or benefits; and To the extent agreed between the Employer and the Recordkeeper, to prepare for the Employer or to assist the Employer to prepare such returns, reports or forms as the Employer shall be required to furnish to Participants and Beneficiaries or other interested persons and to the Internal Revenue Service or the Department of Labor; all as may be more fully set forth in a service agreement executed by the Employer and the Recordkeeper. If the Employer does not appoint another person or entity as Recordkeeper, the Employer itself shall be the Recordkeeper. Prototype Plan. Putnam is the sponsor of the Putnam Basic Plan Document, a prototype plan approved as to form by the Internal Revenue Service. Provided that an Employer's adoption of the Plan is made known to and accepted by Putnam in accordance with the Plan Agreement, Putnam will inform the Employer of amendments to the prototype plan and provide such other services in connection with the Plan as may be agreed between Putnam and the Employer. Putnam may impose for its services as sponsor of the prototype plan such fees as it may establish from time to time in a fee schedule addressed to the Employer. Such fees shall, unless paid by the Employer, be paid from the Trust Fund, and shall in that case be charged pro rata against the Accounts of all Participants. The Trustee is expressly authorized to cause Investment Products to be sold or redeemed for the purpose of paying such fees. ARTICLE TRUSTEE Powers and Duties of the Trustee. The Trustee shall have the authority, in addition to any authority given by law, to exercise the following powers in the administration of the Trust: To invest all or a part of the Trust Fund in Investment Products in accordance with the investment instructions delivered by the Employer pursuant to Section 13.3, without restriction to investments authorized for fiduciaries, including without limitation any common, collective or commingled trust fund maintained by the Trustee (or any other such fund, acceptable to Putnam and the Trustee, that qualifies for exemption from federal income tax pursuant to Revenue Ruling 81-100). Any investment in, and any terms and conditions of, any such common, collective or commingled trust fund available only to employee trusts which meet the requirements of the Code, or corresponding provisions of subsequent income tax laws of the United States, shall constitute an integral part of this Agreement; If Putnam and the Trustee have consented thereto in writing, to invest without limit in stock of the Employer or any affiliated company; To dispose of all or part of the investments, securities or other property which may from time to time or at any time constitute the Trust Fund in accordance with the written directions furnished by the Employer for the investment of Participants' separate Accounts or the payment of benefits or expenses of the Plan, and to make, execute and deliver to the purchasers thereof good and sufficient deeds of conveyance therefore, and all assignments, transfers and other legal instruments, either necessary or convenient for passing the title and ownership thereto, free and discharged of all trusts and without liability on the part of such purchasers to see to the application of the purchase money; To hold cash uninvested to the extent necessary to pay benefits or expenses of the Plan; To follow the directions of an investment manager appointed pursuant to Section 13.7; To cause any investment of the Trust Fund to be registered in the name of the Trustee or the name of its nominee or nominees or to retain such investment unregistered or in a form permitting transfer by delivery; provided that the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund; Upon written direction of or through the Employer, to vote in person or by proxy (in accordance with Sections 13.6 and 13.10 and, in the case of stock of the Employer, at the direction of the Employer or Participants in accordance with Section 13.8) with respect to all securities that are part of the Trust Fund; To consult and employ any suitable agent to act on behalf of the Trustee and to contract for legal, accounting, clerical and other services deemed necessary by the Trustee to manage and administer the Trust Fund according to the terms of the Plan; Upon the written direction of the Employer, to make loans from the Trust Fund to Participants in amounts and on terms approved by the Plan Administrator in accordance with the provisions of the Plan; provided that the Employer shall have the sole responsibility for computing and collecting all loan repayments required to be made under the Plan; and To pay from the Trust Fund all taxes imposed or levied with respect to the Trust Fund or any part thereof under existing or future laws, and to contest the validity or amount of any tax assessment, claim or demand respecting the Trust Fund or any part thereof. Limitation of Responsibilities. Except as may otherwise be required under applicable law, neither the Trustee nor any of its agents shall have any responsibility for: Determining the correctness of the amount of any contribution for the sole collection or payment of contributions, which shall be the sole responsibility of the Employer; Loss or breach caused by any Participant's exercise of control over his Accounts, which shall be the sole responsibility of the Participant; Loss or breach caused by the Employer's exercise of control over Accounts pursuant to Section 13.3, which shall be the sole responsibility of the Employer; Performance of any other responsibilities not specifically allocated to them under the Plan. Fees and Expenses. The Trustee's fees for performing its duties hereunder shall be such reasonable amounts as shall be established by the Trustee from time to time in a fee schedule addressed to the Employer. Such fees, any taxes of any kind which may be levied or assessed upon or in respect of the Trust Fund and any and all expenses reasonably incurred by the Trustee shall, unless paid by the Employer, be paid from the Trust Fund and shall, unless allocable to the Accounts of specific Participants, be charged pro rata against the Accounts of all Participants. The Trustee is expressly authorized to cause Investment Products to be sold or redeemed for the purpose of paying such amounts. Charges and expenses incurred in connection with a specific Investment Product, unless allocable to the Accounts of specific Participants, shall be charged pro rata against the Accounts of all Participants for whose benefit amounts have been invested in the specific Investment Product. Reliance on Employer. The Trustee and its agents shall rely upon any decision of the Employer, or of any person authorized by the Employer, purporting to be made pursuant to the terms of the Plan, and upon any information or statements submitted by the Employer or such person (including those relating to the entitlement of any Participant to benefits under the Plan), and shall not inquire as to the basis of any such decision or information or statements, and shall incur no obligation or liability for any action taken or omitted in reliance thereon. The Trustee and its agents shall be entitled to rely on the latest written instructions received from the Employer as to the person or persons authorized to act for the Employer hereunder, and to sign on behalf of the Employer any directions or instructions, until receipt from the Employer of written notice that such authority has been revoked. Action Without Instructions. If the Trustee receives no instructions from the Employer in response to communications sent by registered or certified mail to the Employer at its last known address as shown on the books of the Trustee, then the Trustee may make such determinations with respect to administrative matters arising under the Plan as it considers reasonable, notwithstanding any prior instructions or directions given by or on behalf of the Employer, but subject to any instruction or direction given by or on behalf of the Participants. To the extent permitted by applicable law, any determination so made will be binding on all persons having or claiming any interest under the Plan or Trust, and the Trustee will incur no obligation or responsibility for any such determination made in good faith or for any action taken pursuant thereto. In making any such determination the Trustee may require that it be furnished with such relevant documents as it reasonable considers necessary. Advice of Counsel. The Trustee may consult with legal counsel (who may, but need not be, counsel for the Employer) concerning any questions which may arise with respect to its rights and duties under the Plan, and the opinion of such counsel shall be full and complete protection to the extent permitted by applicable law in the respect of any action taken or omitted by the Trustee hereunder in accordance with the opinion of such counsel. Accounts. The Trustee shall keep full accounts of all receipts and disbursements which pertain to investments in Investment Products, and of such other transactions as it is required to perform hereunder. Within a reasonable time following the close of each Plan Year, or upon its removal or resignation or upon termination of the Trust and at such other times as may be appropriate, the Trustee shall render to the Employer and any other persons as may be required by law an account of its administration of the Plan and Trust during the period since the last previous such accounting, including such information as may be required by law. The written approval of any account by the Employer and all other persons to whom an account is rendered shall be final and binding as to all matters and transactions stated or shown therein, upon the Employer and Participants and all persons who then are or thereafter become interested in the Trust. The failure of the Employer or any other person to whom an account is rendered to notify the party rendering the account within 60 days after the receipt of any account of his or its objection to the account shall be the equivalent of written approval. If the Employer or any other person to whom an account is rendered files any objections within such 60-day period with respect to any matters or transactions stated or shown in the account and the Employer or such other person and the party rendering the account cannot amicably settle the questions raised by such objections, the party rendering the account and the Employer or such person shall have the right to have such questions settled by judicial proceedings, although the Employer or such other person to whom an account is rendered shall have, to the extent permitted by applicable law, only 60 days from filing of written objection to the account to commence legal proceedings. Nothing herein contained shall be construed so as to deprive the Trustee of the right to have a judicial settlement of its accounts. In any proceeding for a judicial settlements of any account or for instructions, the only necessary parties shall be the Trustee, the Employer and persons to whom an account is required by law to be rendered. Access to Records. The Trustee shall give access to its records with respect to the Plan at reasonable times and on reasonable notice to any person required by law to have access to such records. Successors. Any corporation into which the Trustee may merge or with which it may consolidate or any corporation resulting from any such merger or consolidation shall be the successor of the Trustee without the execution or filing of any additional instrument or the performance of any further act. Persons Dealing with Trustee. No person dealing with the Trustee shall be bound to see to the application of any money or property paid or delivered to the Trustee or to inquire into the validity or propriety of any transactions. Resignation and Removal; Procedure. The Trustee may resign at any time by giving 60 days' written notice to the Employer and to Putnam. The Employer may remove the Trustee at any time by giving 60 days' written notice to the party removed and to Putnam. In any case of resignation or removal hereunder, the period of notice may be reduced to such shorter period as is satisfactory to the Trustee and the Employer. Notwithstanding anything to the contrary herein, any resignation hereunder shall take effect at the time notice thereof is given if the Employer may no longer participate in the prototype Plan and is deemed to have an individually designed plan at the time notice is given. Action of Trustee Following Resignation or Removal. When the resignation or removal of the Trustee becomes effective, the Trustee shall perform all acts necessary to transfer the Trust Fund to its successor. However, the Trustee may reserve such portion of the Trust Fund as it may reasonably determine to be necessary for payment of its fees and any taxes and expenses, and any balance of such reserve remaining after payment of such fees, taxes and expenses shall be paid over to its successor. The Trustee shall have no responsibility for acts or omissions occurring after its resignation becomes effective. Effect of Resignation or Removal. Resignation or removal of the Trustee shall not terminate the Trust. In the event of any vacancy in the position of Trustee, whether the vacancy occurs because of the resignation or removal of the Trustee, the Employer shall appoint a successor to fill the vacant position. If the Employer does not appoint such a successor who accepts appointment by the later of 60 days after notice of resignation or removal is given or by such later date as the Trustee and Employer may agree in writing to postpone the effective date of the Trustee's resignation or removal, the Trustee may apply to a court of competent jurisdiction for such appointment or cause the Trust to be terminated, effective as of the date specified by the Trustee, in writing delivered to the Employer. Each successor Trustee so appointed and accepting a trusteeship hereunder shall have all of the rights and powers and all of the duties and obligations of the original Trustee, under the provisions hereof, but shall have no responsibility for acts or omissions before he becomes a Trustee. Fiscal Year of Trust. The fiscal year of the Trust will coincide with the Plan Year. Limitation of Liability. Except as may otherwise be required by law and other provisions of the Plan, no fiduciary of the Plan, within the meaning of Section 3(21) of ERISA, shall be liable for any losses incurred with respect to the management of the Plan, nor shall he or it be liable for any acts or omissions except those caused by his or its own negligence or bad faith in failing to carry out his or its duties under the terms contained in the Plan. Indemnification. Subject to the limitations of applicable law, the Employer agrees to indemnify and hold harmless (i) all fiduciaries, within the meaning of ERISA Sections 3(21) and 404, and (ii) Putnam, for all liability occasioned by any act of such party or omission to act, in good faith and without negligence, and for all expenses incurred by any such party in determining its duty or liability under ERISA with respect to any question under the Plan. ARTICLE AMENDMENT General. The Employer reserves the power at any time or times to amend the provisions of the Plan and the Plan Agreement to any extent and in any manner that it may deem advisable. If, however, the Employer makes any amendment (including an amendment occasioned by a waiver of the minimum funding requirement under Section 412(d) of the Code) other than a change in an election made in the Plan Agreement, amendments stated in the Plan Agreement which allow the Plan to satisfy Section 415 and to avoid duplication of minimums under Section 416 of the Code because of the required aggregation of multiple plans, or model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed, the Employer shall cease to participate in this prototype Plan and will be considered to have an individually designed plan. In that event, Putnam shall have no further responsibility to provide to the Employer any amendments or other material incident to the prototype plan, and Putnam may resign immediately as Trustee and as Recordkeeper. Any amendment shall be made by delivery to the Trustee (and the Recordkeeper, if any) of a written instrument executed by the Employer providing for such amendment. Upon the delivery of such instrument to the Trustee, such instrument shall become effective in accordance with its terms as to all Participants and all persons having or claiming any interest hereunder, provided, that the Employer shall not have the power: to amend the Plan in such a manner as would cause or permit any part of the assets of the Trust to be diverted to purposes other than the exclusive benefit of Participants or their Beneficiaries, or as would cause or permit any portion of such assets to revert to or become the property of the Employer. to amend the Plan retroactively in such a manner as would have the effect of decreasing a Participant's accrued benefit, except that a Participant's Account balance may be reduced to the extent permitted under Section 412(c)(8) of the Code. For purposes of this paragraph (2), an amendment shall be treated as reducing a Participant's accrued benefit if it has the effect of reducing his Account balance, or of eliminating an optional form of benefit with respect to amounts attributable to contributions made performed before the adoption of the amendment; or to amend the Plan so as to decrease the portion of a Participant's Account balance that has become vested, as compared to the portion that was vested, under the terms of the Plan without regard to the amendment, as of the later of the date the amendment is adopted or the date it becomes effective. to amend the Plan in such a manner as would increase the duties or liabilities of the Trustee or the Recordkeeper unless the Trustee or the Recordkeeper consents thereto in writing. Delegation of Amendment Power. The Employer and all sponsoring organizations of the Putnam Basic Plan Document delegate to Putnam Mutual Funds Corp., the power to amend the Plan (including the power to amend this Section 18.2 to name a successor to which such power of amendment shall be delegated), for the purpose of adopting amendments which are certified to Putnam Mutual Funds Corp., by counsel satisfactory to it, as necessary or appropriate under applicable law, including any regulation or ruling issued by the United States Treasury Department or any other federal or state department or agency; provided that Putnam Mutual Funds Corp., or such successor may amend the Plan only if it has mailed a copy of the proposed amendment to the Employer at its last known address as shown on its books by the date on which it delivers a written instrument providing for such amendment, and only if the same amendment is made on said date to all plans in this form as to which Putnam Mutual Funds Corp., or such successor has a similar power of amendment. If a sponsoring organization does not adopt any amendment made by Putnam Mutual Funds Corp., such sponsoring organization shall cease to participate in this prototype Plan and will be considered to have an individually designed plan. If, upon the submission of this Putnam Basic Plan Document #07 to the Internal Revenue Service for a determination letter, the Internal Revenue Service determines that changes are required to the Basic Plan Document but not to the form of Plan Agreement, Putnam shall furnish a copy of the revised Basic Plan Document to the Employer and the Employer will not be required to execute a revised Plan Agreement. ARTICLE TERMINATION OF THE PLAN AND TRUST General. The Employer has established the Plan and the Trust with the bona fide intention and expectation that contributions will be continued indefinitely, but the Employer shall have no obligation or liability whatsoever to maintain the Plan for any given length of time and may discontinue contributions under the Plan or terminate the Plan at any time by written notice delivered to the Trustee, without any liability whatsoever for any such discontinuance or termination. Events of Termination. The Plan will terminate upon the happening of any of the following events: Death of the Employer, if a sole proprietor, or dissolution or termination of the Employer, unless within 60 days thereafter provision is made by the successor to the business with respect to which the Plan was established for the continuation of the Plan, and such continuation is approved by the Trustee; Merger, consolidation or reorganization of the Employer into one or more corporations or organizations, unless the surviving corporations or organizations adopt the Plan by an instrument in writing delivered to the Trustee within 60 days after such a merger, consolidation and reorganization; Sale of all or substantially all of the assets of the Employer, unless the purchaser adopts the Plan by an instrument in writing delivered to the Trustee within 60 days after the sale; The institution of bankruptcy proceedings by or against the Employer, or a general assignment by the Employer to or for the benefit of its creditors; or Delivery of notice of termination as provided in Section 18.1. Effect of Termination. Notwithstanding any other provisions of this Plan, other than Section 18.4, upon termination of the Plan or complete discontinuance of contributions thereunder, each Participant's Accounts will become fully vested and nonforfeitable, and upon partial termination of the Plan, the Accounts of each Participant affected by the partial termination will become fully vested and nonforfeitable. The Employer shall notify the Trustee in writing of such termination, partial termination or complete discontinuance of contributions. In the event of the complete termination of the Plan or discontinuance of contributions, the Trustee will, after payment of all expenses of the Trust Fund, make distribution of the Trust asses to the Participants or other persons entitled thereto, in such form as the Employer may direct pursuant to Article 10 or, in the absence of such direction, in a single payment in cash or in kind. Upon completion of such distributions under this Article, the Trust will terminate, the Trustee will be relieved from their obligations under the Trust, and no Participant or other person will have any further claim thereunder. Approval of Plan. Notwithstanding any other provision of the Plan, if the Employer fails to obtain or to retain the approval by the Internal Revenue Service of the Plan as a qualified plan under Section 401(a) of the Code, then (i) the Employer shall promptly notify the Trustee, and (ii) the Employer may no longer participate in the Putnam prototype plan, but will be deemed to have an individually designed plan. If it is determined by the Internal Revenue Service that the Plan upon its initial adoption does not qualify under Section 401(a) of the Code, all assets then held under the Plan will be returned within one year of the denial of initial qualification to the Participants and the Employer to the extent attributable to their respective contributions and any income earned thereon, but only if the application for qualification is made by the time prescribed by law for filing the Employer's federal income tax return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. Upon such distribution, the Plan will be considered to be rescinded and to be of no force or effect. ARTICLE TRANSFERS TO OR FROM OTHER QUALIFIED PLANS; MERGERS General. Notwithstanding any other provision hereof, subject to the approval of the Trustee there may be transferred to the Trustee all or any of the assets held (whether by a trustee, custodian or otherwise) in respect of any other plan which satisfies the applicable requirements of Section 401(a) of the Code and which is maintained for the benefit of any Employee (provided, however, that the Employee is not a member of a class of Employees excluded from eligibility to participate in the Plan). Any such assets so transferred shall be accompanied by written instructions from the Employer naming the persons for whose benefit such assets have been transferred and showing separately the respective contributions made by the Employer and by the Participants and the current value of the assets attributable thereto. Notwithstanding the foregoing, if a Participant's employment classification changes under Section 3.5 such that he begins participation in another plan of the Employer, his Account, if any, shall, upon the Administrator's direction, be transferred to the plan in which he has become eligible to participate, if such plan permits receipt of such Account. Amounts Transferred. The Employer shall credit any assets transferred pursuant to Section 19.1 or Section 3.5 to the appropriate Accounts of the persons for whose benefit such assets have been transferred. Any amounts credited as contributions previously made by an employer or by such persons under such other plan shall be treated as contributions previously made under the Plan by the Employer or by such persons, as the case may be. Merger or Consolidation. The Plan shall not be merged or consolidated with any other plan, nor shall any assets or liabilities of the Trust Fund be transferred to any other plan, unless each Participant would receive a benefit immediately after the transaction, if the Plan then terminated, which is equal to or greater than the benefit he would have been entitled to receive immediately before the transaction if the Plan had then terminated. ARTICLE MISCELLANEOUS Notice of Plan. The Plan shall be communicated to all Participants by the Employer on or before the last day on which such communication may be made under applicable law. No Employment Rights. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits shall be construed as giving to any Participant or any other person any legal or equitable right against the Employer or the Trustee, except as provided herein or by ERISA; and in no event shall the terms of employment or service of any Participant be modified or in any way be affected hereby. Distributions Exclusively From Plan. Participants and Beneficiaries shall look solely to the assets held in the Trust for the payment of any benefits under the Plan. No Alienation. The benefits provided hereunder shall not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, and any attempt to cause such benefits to be so subjected shall not be recognized, except as provided in Section 12.4 or in accordance with a Qualified Domestic Relations Order. The Plan Administrator shall determine whether a domestic relations order is qualified in accordance with written procedures adopted by the Plan Administrator. Notwithstanding the foregoing, an order shall not fail to be a Qualified Domestic Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under the Plan. Provision of Information. The Employer and the Trustee shall furnish to each other such information relating to the Plan and Trust as may be required under the Code or ERISA and any regulations issued or forms adopted by the Treasury Department or the Labor Department or otherwise thereunder. No Prohibited Transactions. The Employer and the Trustee shall, to the extent of their respective powers and authority under the Plan, prevent the Plan from engaging in any transaction known by that person to constitute a transaction prohibited by Section 4975 of the Code and any rules or regulations with respect thereto. Governing Law. The Plan shall be construed, administered, regulated and governed in all respects under and by the laws of the United States, and to the extent permitted by such laws, by the laws of the Commonwealth of Massachusetts Gender. Whenever used herein, a pronoun in the masculine gender includes the feminine gender unless the context clearly indicates otherwise. PUTNAM FLEXIBLE 401(K) AND PROFIT SHARING PLAN PLAN AGREEMENT #001 This is the Plan Agreement for a Putnam nonstandardized prototype 401(k) plan with optional profit sharing plan provisions. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. By executing this Plan Agreement, the Employer establishes a 401(k) and profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #07, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Flexible 401(k) and Profit Sharing Plan. * * * * * Employer Information. The Employer adopting this Plan is: Employer Name: _____________________________________________________ Employer Identification Number: __________________________ Employer Address: _______________________________ _______________________________ _______________________________ SIC Code: _______ Employer Contact: Name: ___________________________________________ Title: __________________ Phone #: _______________ Fiscal Year: __________ through __________ (month/day) (month/day) Type of Entity (check one): _____ Corporation _____ Partnership _____ Subchapter S Corporation _____ Sole proprietorship _____ Other _______________________ Plan Name: __________________________________ Plan Number: 00__(complete) Plan Information. Plan Year. Check one: _____ (1) The Calendar Year _____ (2) The Plan Year will be the same as the Fiscal Year of the Employer shown in 1.F. above. If the Fiscal Year of the Employer changes, the Plan Year will change accordingly. _____ (3) The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month). The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan. Effective Date of Adoption of Plan. (1) Are you adopting this Plan to replace an existing plan? _____ (a) Yes _____ (b) No (2) If you answered Yes in 2.B(1) above, the Effective Date of your adoption of this Replacement Plan will be the first day of the current Plan Year unless you elect a later date in (2)(b) below. Please complete the following: (a) ______________________________________________________________ Original Effective Date of the Plan you are Replacing (b) ______________________________________________________________ Effective Date of this Replacement Plan (3) If you answered No in 2B(1) above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began): (a) The Effective Date is:_____________________________________ month/day/year Identifying Highly Compensated Employees. Check either (1) or (2). _____ (1) The Plan will use the regular method under Plan Section 2.58(a) for identifying Highly Compensated Employees. If you selected this option and your Plan Year is the calendar year, do you wish to make the regular method's "calendar year election" for identifying your Highly Compensated Employees? _____ (a) Yes _____ (b) No _____ (2) The Plan will use the simplified method under Plan Section 2.58(b) for identifying Highly Compensated Employees. Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B, C and D below. Classes of Eligible Employees. The Plan will cover all employees who have met the age and service requirements with the following exclusions: _____ (1) No exclusions. All job classifications will be eligible. _____ (2) The Plan will exclude employees in a unit of Employees covered by a collective bargaining agreement with respect to which retirement benefits were the subject of good faith bargaining, with the exception of the following collective bargaining units, which will be included: ____________________. _____ (3) The Plan will exclude employees who are non-resident aliens without U.S. source income. _____ (4) Employees of the following Affiliated Employers (specify): _______________________________ _______________________________ _____ (5) Leased Employees _____ (6) Employees in the following other classes (specify): _______________________________ _______________________________ Age Requirement (check and complete (1) or (2)): _____ (1) No minimum age required for participation _____ (2) Employees must reach age __ (not over 21) to participate Service Requirements. Elective Deferrals. To become eligible, an employee must complete (choose one): _____ (a) No minimum service required. _____ (b) One 6-month Eligibility Period _____ (c) One __- month Eligibility Period (must be less than 12) _____ (d) One 12- month Eligibility Period Employer Matching Contributions. To become eligible, an employee must complete (choose one): _____ (a) No minimum service required. _____ (b) One 6-month Eligibility Period _____ (c) One __-month Eligibility Period (must be less than 12) _____ (d) One 12-month Eligibility Period _____ (e) Two 12- month Eligibility Periods (may only be chosen if you adopt the vesting schedule under item 9.A(3)(a) to provide 100% full and immediate vesting of Employer Matching Contributions). _____ (f) Not applicable. The Employer will not make Employer Matching Contributions. Profit Sharing Contributions. To become eligible, an employee must complete (choose one): _____ (a) No minimum service required. _____ (b) One 6-month Eligibility Period _____ (c) One __- month Eligibility Period (must be less than 12) _____ (d) One 12- month Eligibility Period _____ (e) Two 12- month Eligibility Periods (may only be chosen if you adopt the vesting schedule under item 9.A(3)(a) to provide for 100% full and immediate vesting of Profit Sharing Contributions) _____ (f) Not applicable. The Employer will not make Profit Sharing Contributions. If the Employer acquires a business, the Eligibility Periods for an employee of the acquired business will be the periods selected in (1), (2) and (3) beginning on (check (a) or (b)): _____ (a) the date the employee began work with the acquired business. _____ (b) the date of the acquisition (i.e., the date the employee begins work for the Employer). Hours of Service for Eligibility Periods. (a) 6-Month Eligibility Period. To receive credit for a 6-month Eligibility Period, an employee must complete 6 months of service, during which he completes at least: _____ (i) 500 Hours of Service _____ (ii) ____________ Hours of Service (under 500) (b) 12- Month Eligibility Period. To receive credit for a 12- month Eligibility Period, an employee must complete 12 months of service, during which he completes at least: _____ (i) 1,000 Hours of Service _____ (ii) _____________ Hours of Service (under 1,000) (c) Other Eligibility Period. To receive credit for the Eligibility Period selected in 3.C(1)(c), 3.C(2)(c) and/or 3.C(3)(c) above, an employee must complete during it at least: _____ (i) _____________ Hours of Service (under 1000) Method of Crediting Hours of Service For Eligibility and Vesting. Hours of Service will be credited to an employee by the following method (check one): _____ (a) Actual hours for which an employee is paid _____ (b) Any employee who has one actual paid hour in the following period will be credited with the number of Hours of Service indicated (check one): _____ (i) Day (10 Hours of Service) _____ (ii) Week (45 Hours of Service) _____ (iii) Semi-monthly payroll period (95 Hours of Service) _____ (iv) Month (190 Hours of Service) Entry Dates. Each employee in an eligible class who completes the age and service requirements specified above will begin to participate in the Plan on (check one): _____ (a) The first day of the month in which he fulfills the requirements. _____ (b) The first of the following dates occurring after he fulfills the requirements (or, if earlier, the first day of the first Plan Year that begins after the date he fulfills the requirements) (check one): _____ (i) The first day of the month following the date he fulfills the requirements (monthly). _____ (ii) The first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly). _____ (iii) The first day of the first month and the seventh month in a Plan Year (semiannually). _____ (c) Other: _____________________________________ ___ (May be no later than (i) the first day of the Plan Year after which he fulfills the requirements, and (ii) the date six months after the date on which he fulfills the requirements, which ever occurs first.) (For New Plans Only) Will all eligible Employees as of the Effective Date be required to meet the age and service requirements for participation specified in B and C above? _____ (a) Yes _____ (b) No. Eligible Employees will be eligible to become Participants as of the Effective Date even if they have not satisfied (check one or both): _____ (i) the age requirement. _____ (ii) the service requirement. Contributions. Elective Deferrals (Plan Section 5.2). Your Plan will allow employees to elect pre-tax contributions under Section 401(k) of the Code. You must complete this part A. A Participant may make Elective Deferrals for each year in an amount not to exceed (check one): _____ (a) ___% of his Earnings _____ (b) ___% of his Earnings not to exceed $_______ (specify a dollar amount) _____ (c) $_______ (specify a dollar amount) Will a Participant be required to make a minimum Elective Deferral in order to make Elective Deferrals under the Plan? (check one and complete as applicable) _____ (a) No. _____ (b) Yes. The minimum Elective Deferral will be ____% of the Participant's Earnings. A Participant may begin to make Elective Deferrals, or change the amount of his Elective Deferrals, as of the following dates (check one): _____ (a) First business day of each month (monthly). _____ (b) First business day of the first, fourth, seventh and tenth months of the Plan Year (quarterly). _____ (c) First business day of the first and seventh months of the Plan Year (semiannually). _____ (d) First business day of the Plan Year only (annually). _____ (e) Other: __________________________ Will Participants be permitted to make separate Elective Deferrals of bonuses, even if bonuses have otherwise been excluded from Compensation for the purpose of Elective Deferrals under 7.A(1)? ____________ (a) Yes ____________ (b) No Employer Matching Contributions. (Plan Section 5.8). Complete this part B only if you will make Employer Matching Contributions under the Plan. The Employer will contribute and will allocate to each Qualified Participant's Employee Matching Account an Employer Matching Contribution on the basis set forth below: _____ (a) Discretionary matching contributions. (The Employer may select this option in addition to option (b) if the Employer wishes to have the option to make discretionary matching contributions in addition to fixed matching contributions.) _____ (b) Fixed matching contributions. _____ (i) based on Elective Deferrals: _____ (A)____% of Elective Deferrals _____ (B)____% of Elective Deferrals up to ____% of Earnings. _____ (C)____% of Elective Deferrals up to ____% of Earnings and __% of Elective Deferrals over that percentage of Earnings and up to ___% of Earnings. (The third percentage number must be less than the first percentage number.) _____ (D) ____% of Elective Deferrals up to $__________ of Elective Deferrals. _____ (E) ____% of Elective Deferrals up to $___________ of Elective Deferrals and ____% of Elective Deferrals over that dollar amount and up to $_________ of Elective Deferrals. (The last percentage must be less than the first percentage). _____ (ii) based on after-tax Participant Contributions: ____ (A)____% of Participant Contributions ____ (B)____% of Participant Contributions up to ____% of Earnings. ____ (C)____% of Participant Contributions up to ____% of Earnings and ____% of Participant Contributions over that percentage of Earnings and up to ___% of Participant Contributions. (The third percentage must be less than the first percentage) _____ (D)____% of Participant Contributions up to $_____________ of Participant Contributions. _____ (E)____% of Participant Contributions up to $_____________ of Participant Contributions and ____% of Participant Contributions over that dollar amount and up to $____________ of Participant Contributions. (The last percentage must be less than the first percentage). Qualified Participant. In order to receive an allocation of Employer Matching Contributions for a Plan Year, an Employee must be a Qualified Participant for that purpose. Select below either (a) alone, or any combination of (b), (c) and (d). _____ (a) To be a Qualified Participant eligible to receive Employer Matching Contributions for a Plan Year, an Employee must (check (i) or (ii)): _____ (i) Either be employed on the last day of the Plan Year, complete more than 500 Hours of Service in the Plan Year, retire, die or become disabled in the Plan Year. _____ (ii) Either be employed on the last day of the Plan Year or complete more than 500 Hours of Service in the Plan Year. Stop here if you checked (a). If you did not check (a), check (b), (c) or (d), or any combination of (b), (c) and (d). To be a Qualified Participant eligible to receive Employer Matching Contributions for a Plan Year, an Employee must: _____ (b) Be credited with _____ (choose 1, 501 or 1,000) Hours of Service in the Plan Year. _____ (c) Be an Employee on the last day of the Plan Year. _____ (d) Retire, die or become disabled during the Plan Year. (3) Will the Employer have the option of making all or any portion of its Employer Matching Contributions in Employer Stock? _____ (a) Yes _____ (b) No Profit Sharing Contributions. (Plan Sections 4.1 and 4.2) Profit Limitation. Will Profit Sharing Contributions to the Plan be limited to the current and accumulated profits of your Business? Check one: _____ (a) Yes _____ (b) No Amount. The Employer will contribute to the Plan for each Plan Year (check one): _____ (a) An amount chosen by the Employer from year to year _____ (b) ____% of the Earnings of all Qualified Participants for the Plan Year _____ (c) $____ for each Qualified Participant per__ _________(enter time period, e.g. payroll period, plan year) Allocations to Participants (a) Allocation to Participants. Profit Sharing Contributions will be allocated: _______ (i) Pro rata (percentage based on compensation) _______ (ii) Uniform Dollar amount _______ (iii) Integrated With Social Security (complete (b) and (c) below) (b) Integration with Social Security. (Complete only if you have elected in 4.C(3)(a) to integrate your Plan with Social Security.) Profit Sharing Contributions will be allocated to Qualified Participants as you check below: _____ (i) Profit Sharing Contributions will be allocated according to the Top-Heavy Integration Formula in Plan Section 4.2(c)(1) in every Plan Year, whether or not the Plan is top-heavy. _____ (ii) Profit Sharing Contributions will be allocated according to the Top-Heavy Integration Formula in Plan Section 4.2(c)(1) only in Plan Years in which the Plan is top-heavy. In all other Plan Years, contributions will be allocated according to the Non-Top- Heavy Integration Formula in Plan Section 4.2(c)(2). (c) Integration Level. (Complete only if you have elected in 4.C(3)(a) to integrate your Plan with Social Security.) The Integration Level will be (check one): _____ (i) The Social Security Wage Base in effect at the beginning of the Plan Year. ____ (ii) __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year. ____ (iii) $__________ (not more than the Social Security Wage Base). Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living. Qualified Participants. In order to receive an allocation of Profit Sharing Contributions for a Plan Year, an Employee must be a Qualified Participant for this purpose. Select below either (a) alone, or any combination of (b), (c) and (d). _____ (a) To be a Qualified Participant eligible to receive an allocation of Profit Sharing Contributions for a Plan Year, an Employee must (check (i) or (ii)): _____ (i) Either be employed on the last day of the Plan Year, complete more than 500 Hours of Service in the Plan Year, retire, die or become disabled in the Plan Year. _____ (ii) Either be employed on the last day of the Plan Year or complete more than 500 Hours of Service in the Plan Year. Stop here if you checked (a). If you did not check (a), check (b), (c) or (d), or any combination of (b), (c) and (d). To be a Qualified Participant eligible to receive an allocation of Profit Sharing Contributions for a Plan Year, an Employee must: _____ (b) Be credited with _____ (choose 1, 501 or 1,000) Hours of Service in the Plan Year. _____ (c) Be an Employee on the last day of the Plan Year. _____ (d) Retire, die or become disabled during the Plan Year. Participant Contributions (Plan Section 4.6). Will your Plan allow Participants to make after-tax contributions? (1) Yes _____ (2) No Qualified Matching Contributions (Plan Section 2.61). Skip this part E if you will not make Qualified Matching Contributions. Qualified Matching Contributions will be made with respect to (check one): _____ (a) Elective Deferrals made by all Qualified Participants _____ (b) Elective Deferrals made only by Qualified Participants who are not Highly Compensated Participants The amount of Qualified Matching Contributions made with respect to a Participant will be: _____ (a) discretionary _____ (b) fixed (check and complete (i), (ii) or (iii)) _____ (i) _____% of Elective Deferrals _____ (ii) _____% of Elective Deferrals that do not exceed ____% of Earnings _____ (iii) _____% of Elective Deferrals that do not exceed $_____. Qualified Nonelective Contributions (Plan Section 2.62): Skip this part F if you will not make Qualified Nonelective Contributions. (1) Qualified Nonelective Contributions will be made on behalf of (check one): _____ (a) All Qualified Participants _____ (b) Only Qualified Participants who are not Highly Compensated Employees (2) The amount of Qualified Nonelective Contributions for a Plan Year will be (check one): _____ (a) ___% (not over 15%) of the Earnings of Participants on whose behalf Qualified Nonelective Contributions are made _____ (b) An amount determined by the Employer from year to year, to be shared in proportion to their Earnings by Participants on whose behalf Qualified Nonelective Contributions are made Forfeitures (1) Employer Matching Contributions. Forfeitures of Employer Matching Contributions will be used as follows (check and complete (a) or (b)): _____ (a) Applied to reduce the following contributions required of the Employer (check (i) and/or (ii)): _____ (i) Employer Matching Contributions _____ (ii) Profit Sharing Contributions _____ (b) Reallocated as follows (check (i) or (ii)): _____(i) As additional Employer Matching Contributions _____(ii) As additional Profit Sharing Contributions (2) Profit Sharing Contributions. Forfeitures of Profit Sharing Contributions will be used as follows (check (a) or (b)): _____ (a) Applied to reduce the following contributions required of the Employer (check (i) and/or (ii)): _____ (i) Profit Sharing Contributions _____ (ii) Employer Matching Contributions _____ (b) Reallocated as additional Profit Sharing Contributions Top-Heavy Minimum Contributions (Plan Section 14.3). Skip paragraphs A and B below if you do not maintain any other qualified plan in addition to this Plan. For any Plan Year in which the Plan is Top-Heavy, the Top-Heavy minimum contribution (or benefit) for Non-Key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in (check one): _____ (1) This Plan ______ (2) The other qualified plan If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 14.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 14.4. Specify your election by completing the statement below: The Employer will provide an increased (specify contribution or benefit) __________________________________ in its (specify defined contribution or defined benefit) ______________________ plan as permitted under Plan Section 14.4. Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant. The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below: If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one): _____ (1) The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan. _____ (2) The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below. _________________________________________________________ _________________________________________________________ B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below: _________________________________________________________________ _______ _________________________________________________________________ _______ If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio: Interest rate: %__________________________ Mortality Table: __________________________ Compensation (Plan Section 2.8). Amount. Elective Deferrals and Employer Matching Contributions. Compensation for the purposes of determining the amount and allocation of Elective Deferrals and Employer Matching Contributions will be determined as follows (choose either (a) or (b), and (c) and/or (d) as applicable). _____ (a) Compensation will include Form W-2 earnings as defined in Section 2.8 of the Plan. _____ (b) Compensation will include all compensation included in the definition of Code Section 415 Compensation in Plan Section 6.5(b) of the Plan. _____ (c) In addition to the amount provided in either (a) or (b) above, Compensation will also include any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. _____ (d) Compensation will also exclude the following amount (choose each that applies): _____ (i) overtime pay. _____ (ii) bonuses. _____ (iii) commissions. _____ (iv) other pay (describe):__________ _____ (v) compensation in excess of $_________ Profit Sharing Contributions. Compensation for the purposes of determining the amount and allocation of Profit Sharing Contributions shall be determined as follows (choose either (a) or (b), and (c) and/or (d), as applicable). _____ (a) Compensation will include Form W-2 earnings as defined in Section 2.8 of the Plan. _____ (b) Compensation will include all compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan. _____ (c) In addition to the amount provided in either (a) or (b) above, compensation will also include any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. _____ (d) Compensation will also exclude the following amounts (choose each that applies): _____ (i) overtime pay _____ (ii) bonuses _____ (iii) commissions _____ (iv) other pay describe: ___________ _____ (v) compensation in excess of $________ Note: No exclusion under (d) may be selected if Profit Sharing Contributions will be integrated with Social Security under 4.C(3)(a)(iii). In addition, no exclusion under (d) will apply for purposes of determining the top-heavy minimum contribution if the Plan is top-heavy. Measuring Period. Compensation will be based on the Plan Year. However, for an Employee's initial year of participation in the Plan, Compensation will be recognized as of: _______ (1) the first day of the Plan Year. _______ (2) the date the Participant enters the Plan. Distributions and Withdrawals. Retirement Distributions. Normal Retirement Age (Plan Section 7.1). Normal retirement age will be the later of _______ (not over age 65) or ______ (not more than 5) years of participation in the Plan. Early Retirement (Plan Section 7.1). Select one: _____ (a) No early retirement will be permitted. _____ (b) Early retirement will be permitted at age ____. _____ (c) Early retirement will be permitted at age ____ with at least ________ Years of Service. Annuities (Plan Section 9.3). Will your Plan permit distributions in the form of a life annuity? You must check Yes if this Plan replaces or serves as a transferee plan for an existing Plan that permits distributions in a life annuity form. _____ (a) Yes _____ (b) No Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions? _____ (1) No _____ (2) Yes. Indicate below from which Accounts hardship withdrawals will be permitted (check all that apply): _____ (a) Elective Deferral Account _____ (b) Rollover Account _____ (c) Employer Matching Account _____ (d) Employer Contribution Account (i.e. Profit Sharing Contributions) Withdrawals after Age 59 1/2 (Plan Section 12.3). Will your Plan permit employees over age 59 1/2 to withdraw amounts upon request? You must check Yes if this Plan replaces an existing Plan that permits withdrawals after age 59 1/2. _____ (1)Yes _____ (2) No Withdrawals following Five Years of Participation or Two Years after Contribution (Plan Section 12.4). Will your Plan permit employees to withdraw amounts from the vested portion of their Employer Matching Contribution Accounts and Employer Contribution Accounts (i.e., Profit Sharing Contributions) if either (i) the Participant has been a Participant for at least five years, or (ii) the amount withdrawn from each of these Accounts is limited to the amounts that were credited to that Account prior to the date two years before the withdrawal? You must check yes if this Plan replaces a Plan which permits withdrawals in these circumstances. _____ (1)Yes _____ (2) No Loans (Plan Section 12.5). Will your Plan permit loans to employees from the vested portion for their Accounts? _____ (1)Yes _____ (2) No Automatic Distribution of Small Accounts (Plan Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment? _____ (1)Yes _____ (2) No Vesting (Plan Article 8). Time of Vesting (select (1) or (2) below and complete vesting schedule). _____ (1) Single Vesting Schedule: The vesting schedule selected below will apply to both Employer Matching Contributions and Profit Sharing Contributions. _____ (2) Dual Vesting Schedules: The vesting schedule marked with an "MC" below will apply to Employer Matching Contributions and the vesting schedule marked with a "PS" below will apply to Profit Sharing Contributions. (3) Vesting Schedules: _____ (a) 100% vesting immediately upon participation in the Plan. _____ (b) Five-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 1 2 3 4 5 _____ (c) Seven-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 3 4 5 6 7 _____ (d) Six-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 2 3 4 5 6 _____ (e) Three-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-2 3 _____ (f) Five-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-4 5 _____ (g) Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five-Year Cliff Schedule): (i) Vested Percentage __% __% __% __% __% (ii) Years of Service ___ ___ ___ ___ ___ (4) Top Heavy Schedule: (a) If you selected above an "Other Schedule," specify in the space below the schedule that will apply in Plan Years that the Plan is top- heavy. The schedule you specify must be at least as favorable to employees, at all years of service, as either the Six-Year Graded Schedule or the Three-Year Cliff Schedule. The top-heavy vesting schedule will be: _____ (i) the same "Other Schedule" selected above _____ (ii) the following schedule: Vested Percentage __% __% __% __% __% Years of Service ___ ___ ___ ___ ___ _____ (iii) Six-Year Graded Schedule ______ (iv) Three-Year Cliff Schedule (b) If the Plan becomes top-heavy in a Plan Year, will the top-heavy vesting schedule apply for all subsequent Plan Years? _____ (i) Yes _____ (ii) No Service for Vesting (select (1) or (2)). _____ (1) All of an employee's service will be used to determine his Years of Service for purposes of vesting _____ (2) An employee's Years of Service for vesting will include all years except (check all that apply): ___ (a) (New plan) service before the effective date of the plan ___ (b) (Existing plan) service before the effective date of the existing plan _____ (c) Service before the Plan Year in which an employee reached age 18 _____ (d) Service for a business acquired by the Employer, before the date of acquisition Hours of Service for Vesting. The number of Hours of Service required for crediting a Year of Service for vesting will be (check one): _____ (1) 1,000 Hours of Service _____ (2) ___________________ Hours of Service (under 1,000) Hours of Service for vesting will be credited according to the method selected under 3.C(6). Year of Service Measuring Period for Vesting (Plan Section 2.52). The periods of 12 months used for measuring Years of Service will be (check one): _____ (1) Plan Years _____ (2) 12-month Eligibility Periods Note: If you are adopting this Plan to replace an existing plan, employees will be credited under this Plan with all service credited to them under the plan you are replacing. Investments (Plan Sections 13.2 and 13.3). Available Investment Products (Plan Section 13.2). The investment options available under the Plan are identified in the Service Agreement or such other written instructions between the Employer and Putnam, as the case may be. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam, or such other written instructions as the case may be, until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement, or such other written instructions as the case may be, as an available Investment Product for that purpose. Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.) _____ (1) The Employer will make all investment decisions with respect to all employee contributions, including Elective Deferrals, Participant Contributions, Deductible Employee Contributions and Rollover Contributions. _____ (2) The Employer will make all investment decisions with respect to all Employer contributions, including Profit Sharing Contributions, Employer Matching Contributions, Qualified Matching Contributions and Qualified Nonelective Contributions. _____ (3) The Employer will make investment decisions with respect to Employer Matching Contributions and Qualified Matching Contributions. _____ (4) The Employer will make investment decisions with respect to Qualified Nonelective Contributions. _____ (5) The Employer will make investment decisions with respect to Profit Sharing Contributions. _____ (6) Other (Describe. An Employer may elect to make investment decisions with respect to a specified portion of a specific type of contribution to the Plan.): _______________________________________ _____________________________________________ ____ _____________________________________________ ____ Changes. Investment instructions may be changed (check one): _____ (1) on any Valuation Date (daily) _____ (2) on the first day of any month (monthly) _____ (3) on the first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly) Employer Stock. (Skip this paragraph if you did not designate Employer Stock as an investment under the Service Agreement.) Voting. Employer Stock will be voted as follows: _____ (a) In accordance with the Employer's instructions. _____ (b) In accordance with the Participant's instructions. Participants are hereby appointed named fiduciaries for the purpose of the voting of Employer Stock in accordance with Plan Section 13.8. Tendering. Employer stock will be tendered as follows: _____ (a) In accordance with the Employer's instructions. _____ (b) In accordance with the Participant's instructions. Participants are hereby appointed named fiduciaries for the purpose of the tendering of Employer Stock in accordance with Plan Section 13.8. Administration. Plan Administrator (Plan Section 15.1). You may appoint a person or a committee to serve as Plan Administrator. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator. The initial Plan Administrator will be (check one): _____ This person: _______________________________ _____ A committee composed of these people: _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ Recordkeeper (Plan Section 15.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and the Employer. The initial Record keeper will be: _______________________________________________________ ___ Name _______________________________________________________ ___ Address Determination Letter Required. You may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. In order to obtain reliance with respect to qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties. Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #001 may be used only in conjunction with Putnam's Basic Plan Document #07. * * * * * If you have any questions regarding this Plan Agreement, contact Putnam at: Putnam Defined Contribution Plans One Putnam Place B2B 859 Willard Street Quincy, MA 02269 Phone: 1-800-752-5766 * * * * * EMPLOYER'S ADOPTION OF PUTNAM FLEXIBLE 401(k) AND PROFIT SHARING PLAN The Employer named below hereby adopts a PUTNAM FLEXIBLE 401(k) AND PROFIT SHARING PLAN, and appoints __________________ to serve as Trustee of the Plan. The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Flexible 401(k) and Profit Sharing Plan only upon Putnam's acceptance of this Plan Agreement. Investment Options The Employer hereby elects the following as the investment options available under the Plan: ________________________ __________________________ ________________________ ________________________ __________________________ ________________________ ________________________ __________________________ ________________________ The following investment option shall be the default option: ___________________________________ (select the default option from among the investment options listed above). Employer signature(s) to adopt Plan: Date of signature: ____________________________________________________ __________________________ ____________________________________________________ __________________________ Please print name(s) of authorized person(s) signing above: ____________________________________________________ ____________________________________________________ A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective. * * * * * ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY AS TRUSTEE The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above. Putnam Fiduciary Trust Company, Trustee By: _________________________________________________________________ ______________ * * * * * ACCEPTANCE OF OTHER TRUSTEE Complete this part only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. (Note: You may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission, and Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Prototype 401(k) and Profit Sharing Plan.) _________________________________, Trustee By: ______________________________ ___ Trustee's Tax I.D. Number _______________ (Trustee) _________________________________________________________________ ___________________ Address of Trustee Person for Putnam to Contact: ________________________________ Telephone: _______________ * * * * * ACCEPTANCE BY PUTNAM Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #07. Putnam Mutual Funds Corp. By: ______________________________ PUTNAM FLEXIBLE MONEY PURCHASE PENSION PLAN PLAN AGREEMENT #002 This is the Plan Agreement for a Putnam nonstandardized prototype money purchase plan. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. By executing this Plan Agreement, the Employer establishes a money purchase plan and trust upon the terms and conditions of Putnam Basic Plan Document #07, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Flexible Money Purchase Pension Plan. * * * * * Employer Information. The Employer adopting this Plan is: Employer Name: _____________________________________________________ Employer Identification Number: __________________________ Employer Address: _______________________________ _______________________________ _______________________________ SIC Code: _______ Employer Contact: Name: ___________________________________________ Title: __________________ Phone #: _______________ Fiscal Year: __________ through __________ (month/day) (month/day) Type of Entity (check one): _____ Corporation _____ Partnership _____ Subchapter S Corporation _____ Sole proprietorship _____ Other _______________________ Plan Name: __________________________________ Plan Number: 00__(complete) Plan Information. Plan Year. Check one: _____ (1) The Calendar Year _____ (2) The Plan Year will be the same as the Fiscal Year of the Employer shown in 1.F. above. If the Fiscal Year of the Employer changes, the Plan Year will change accordingly. _____ (3) The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month). The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan. Effective Date of Adoption of Plan. (1) Are you adopting this Plan to replace an existing plan? _____ (a) Yes _____ (b) No (2) If you answered Yes in 2.B(1) above, the Effective Date of your adoption of this Replacement Plan will be the first day of the current Plan Year unless you elect a later date in (2)(b) below. Please complete the following: (a) ______________________________________________________________ Original Effective Date of the Plan you are Replacing (b) ______________________________________________________________ Effective Date of this Replacement Plan (3) If you answered No in 2B(1) above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began): (a) The Effective Date is:_____________________________________ month/day/year Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B, C and D below. Classes of Eligible Employees. The Plan will cover all employees who have met the age and service requirements with the following exclusions: _____ (1) No exclusions. All job classifications will be eligible. _____ (2) The Plan will exclude employees in a unit of Employees covered by a collective bargaining agreement with respect to which retirement benefits were the subject of good faith bargaining, with the exception of the following collective bargaining units, which will be included: ____________________. _____ (3) The Plan will exclude employees who are non-resident aliens without U.S. source income. _____ (4) Employees of the following Affiliated Employers (specify): _______________________________ _______________________________ _____ (5) Leased Employees _____ (6) Employees in the following other classes (specify): _______________________________ _______________________________ Age Requirement (check and complete (1) or (2)): _____ (1) No minimum age required for participation _____ (2) Employees must reach age __ (not over 21) to participate C. Service Requirements: To become eligible, an employee must complete (choose one): _____ (a) No minimum service required. _____ (b) One 6-month Eligibility Period _____ (c) One __- month Eligibility Period (must be less than 12) _____ (d) One 12- month Eligibility Period _____ (e) Two 12- month Eligibility Periods (may only be chosen if you adopt the vesting schedule under item 9.A(1)(a) to provide for 100% full and immediate vesting). If the Employer acquires a business, the Eligibility Period for an employee of the acquired business will be the period selected in (1), beginning on (check (a) or (b)): _____ (a) the date the employee began work with the acquired business. _____ (b) the date of the acquisition (i.e., the date the employee begins work for the Employer). Hours of Service for Eligibility Periods. (a) 6-Month Eligibility Period. To receive credit for a 6-month Eligibility Period, an employee must complete 6 months of service, during which he completes at least: _____ (i) 500 Hours of Service _____ (ii) ____________ Hours of Service (under 500) (b) 12- Month Eligibility Period. To receive credit for a 12- month Eligibility Period, an employee must complete 12 months of service, during which he completes at least: _____ (i) 1,000 Hours of Service _____ (ii) _____________ Hours of Service (under 1,000) (c) Other Eligibility Period. To receive credit for the Eligibility Period selected in 3.C(1)(c), an employee must complete during it at least: _____ (i) _____________ Hours of Service (under 1000) Method of Crediting Hours of Service For Eligibility and Vesting. Hours of Service will be credited to an employee by the following method (check one): _____ (a) Actual hours for which an employee is paid _____ (b) Any employee who has one actual paid hour in the following period will be credited with the number of Hours of Service indicated (check one): _____ (i) Day (10 Hours of Service) _____ (ii) Week (45 Hours of Service) _____ (iii) Semi-monthly payroll period (95 Hours of Service) _____ (iv) Month (190 Hours of Service) Entry Dates. Each employee in an eligible class who completes the age and service requirements specified above will begin to participate in the Plan on (check one): _____ (a) The first day of the month in which he fulfills the requirements. _____ (b) The first of the following dates occurring after he fulfills the requirements (or, if earlier, the first day of the first Plan Year that begins after the date he fulfills the requirements) (check one): _____ (i) The first day of the month following the date he fulfills the requirements (monthly). _____ (ii) The first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly). _____ (iii) The first day of the first month and the seventh month in a Plan Year (semiannually). _____ (c) Other: _____________________________________ ___ (May be no later than (i) the first day of the Plan Year after which he fulfills the requirements, and (ii) the date six months after the date on which he fulfills the requirements, which ever occurs first.) D. (For New Plans Only) Will all eligible Employees as of the Effective Date be required to meet the age and service requirements for participation specified in B and C above? _____ (a) Yes _____ (b) No. Eligible Employees will be eligible to become Participants as of the Effective Date even if they have not satisfied (check one or both): _____ (i) the age requirement. _____ (ii) the service requirement. Contributions. Employer Contributions. (Plan Sections 4.1 and 4.3) Amount. The Employer will contribute to the Plan for each Plan Year a Base Contribution Percentage of ___% (not more than 25%) of the Earnings of all Qualified Participants for the Plan Year. Allocations. (a) Allocations to Qualified Participants. Contributions under 4.A(1) will be allocated to Qualified Participants in proportion to their Earnings, unless you choose to integrate the Plan with Social Security. If the Plan is integrated with Social Security, the Base Contribution Percentage you choose under 4.A(1) may not be less than 3% unless you will perform annual top-heavy testing for the Plan. Will the Plan be integrated with Social Security? ______ (i) Yes ______ (ii) No (b) Integration Level. (Complete only if you have elected in 4.A(2)(a) to integrate your Plan with Social Security.) The Integration Level will be (check one): _____ (i) The Social Security Wage Base in effect at the beginning of the Plan Year. ____ (ii) __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year. ____ (iii) $__________ (not more than the Social Security Wage Base). Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living. Qualified Participants. In order to receive an allocation for a Plan Year, an Employee must be a Qualified Participant. Select below either (a) alone, or any combination of (b), (c) and (d). _____ (a) To be a Qualified Participant, an Employee must (check (i) or (ii)): _____ (i) Either be employed on the last day of the Plan Year, complete more than 500 Hours of Service in the Plan Year, retire, die or become disabled in the Plan Year. _____ (ii) Either be employed on the last day of the Plan Year or complete more than 500 Hours of Service in the Plan Year. Stop here if you checked (a). If you did not check (a), check (b), (c) or (d), or any combination of (b), (c) and (d). To be a Qualified Participant, an Employee must: _____ (b) Be credited with _____ (choose 1, 501 or 1,000) Hours of Service in the Plan Year. _____ (c) Be an Employee on the last day of the Plan Year. _____ (d) Retire, die or become disabled during the Plan Year. Participant Contributions (Plan Section 4.6). Will your Plan allow Participants to make after-tax contributions? (1) Yes _____ (2) No Forfeitures (Plan Section 4.4). Forfeitures will be used as follows (check (1) or (2)): _____ (1) Applied to reduce contributions required of the Employer under 4.A(1). _____ (2) Reallocated as additional contributions under 4.A(1). Top-Heavy Minimum Contributions (Plan Section 14.3). Skip paragraphs A and B below if you do not maintain any other qualified plan in addition to this Plan. For any Plan Year in which the Plan is Top-Heavy, the Top-Heavy minimum contribution (or benefit) for Non-Key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in (check one): _____ (1) This Plan ______ (2) The other qualified plan If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 14.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 14.4. Specify your election by completing the statement below: The Employer will provide an increased (specify contribution or benefit) __________________________________ in its (specify defined contribution or defined benefit) ______________________ plan as permitted under Plan Section 14.4. Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant. The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below: If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one): _____ (1) The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan. _____ (2) The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below. _________________________________________________________ _________________________________________________________ B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below: _________________________________________________________________ _______ _________________________________________________________________ _______ If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio: Interest rate: %__________________________ Mortality Table: __________________________ Compensation (Plan Section 2.8). Amount. Compensation for the purposes of determining the amount and allocation of contributions shall be determined as follows (choose either (1) or (2), and (3) and/or (4), as applicable). _____ (1) Compensation will include Form W-2 earnings as defined in Section 2.8 of the Plan. _____ (2) Compensation will include all compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan. _____ (3) In addition to the amount provided in either (1) or (2) above, compensation will also include any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. _____ (4) Compensation will also exclude the following amounts (choose each that applies): _____ (a) overtime pay _____ (b) bonuses _____ (c) commissions _____ (d) other pay describe: ___________ _____ (e) compensation in excess of $________ Note: No exclusion under (4) may be selected if contributions will be integrated with Social Security under 4.A(2)(a). In addition, no exclusion under (4) will apply for purposes of determining the top-heavy minimum contribution if the Plan is top-heavy. Measuring Period. Compensation will be based on the Plan Year. However, for an Employee's initial year of participation in the Plan, Compensation will be recognized as of: _______ (1) the first day of the Plan Year. _______ (2) the date the Participant enters the Plan. Distributions and Withdrawals. Retirement Distributions. Normal Retirement Age (Plan Section 7.1). Normal retirement age will be the later of _______ (not over age 65) or _____ (not more than 5) years of participation in the Plan. Early Retirement (Plan Section 7.1). Select one: _____ (a) No early retirement will be permitted. _____ (b) Early retirement will be permitted at age ____. _____ (c) Early retirement will be permitted at age ____ with at least ________ Years of Service. Loans (Plan Section 12.5). Will your Plan permit loans to employees from the vested portion for their Accounts? _____ (1) Yes _____ (2) No Automatic Distribution of Small Accounts (Plan Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment? _____ (1) Yes _____ (2) No Vesting (Plan Article 8). Time of Vesting. (1) Vesting Schedules: _____ (a) 100% vesting immediately upon participation in the Plan. _____ (b) Five-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 1 2 3 4 5 _____ (c) Seven-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 3 4 5 6 7 _____ (d) Six-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 2 3 4 5 6 _____ (e) Three-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-2 3 _____ (f) Five-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-4 5 _____ (g) Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five-Year Cliff Schedule): (i) Vested Percentage __% __% __% __% __% (ii) Years of Service ___ ___ ___ ___ ___ (2) Top Heavy Schedule: (a) If you selected above an "Other Schedule," specify in the space below the schedule that will apply in Plan Years that the Plan is top- heavy. The schedule you specify must be at least as favorable to employees, at all years of service, as either the Six-Year Graded Schedule or the Three-Year Cliff Schedule. The top-heavy vesting schedule will be: _____ (i) the same "Other Schedule" selected above _____ (ii) the following schedule: Vested Perce ntage __% __% __% __% __% Years of Service ___ ___ ___ ___ ___ _____ (iii) Six-Year Graded Schedule ______ (iv) Three-Year Cliff Schedule (b) If the Plan becomes top-heavy in a Plan Year, will the top-heavy vesting schedule apply for all subsequent Plan Years? _____ (i) Yes _____ (ii) No Service for Vesting (select (1) or (2)). _____ (1) All of an employee's service will be used to determine his Years of Service for purposes of vesting _____ (2) An employee's Years of Service for vesting will include all years except (check all that apply): _____ (a) (New plan) service before the effective date of the plan _____ (b) (Existing plan) service before the effective date of the existing plan _____ (c) Service before the Plan Year in which an employee reached age 18 _____ (d) Service for a business acquired by the Employer, before the date of acquisition Hours of Service for Vesting. The number of Hours of Service required for crediting a Year of Service for vesting will be (check one): _____ (1) 1,000 Hours of Service _____ (2) ___________________ Hours of Service (under 1,000) Hours of Service for vesting will be credited according to the method selected under 3.C(6). Year of Service Measuring Period for Vesting (Plan Section 2.52). The periods of 12 months used for measuring Years of Service will be (check one): _____ (1) Plan Years _____ (2) 12-month Eligibility Periods Investments (Plan Sections 13.2 and 13.3). Available Investment Products (Plan Section 13.2). The investment options available under the Plan are identified in the Service Agreement or such other written instructions between the Employer and Putnam, as the case may be. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam, or such other written instructions as the case may be, until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement, or such other written instructions as the case may be, as an available Investment Product for that purpose. Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.) _____ (1) The Employer will make all investment decisions with respect to all employee contributions, including Participant Contributions, Deductible Employee Contributions and Rollover Contributions. _____ (2) The Employer will make all investment decisions with respect to all Employer contributions. _____ (3) Other (Describe. An Employer may elect to make investment decisions with respect to a specified portion of a specific type of contribution to the Plan.): _______________________________________ _____________________________________________ ____ _____________________________________________ ____ Changes. Investment instructions may be changed (check one): _____ (1) on any Valuation Date (daily) _____ (2) on the first day of any month (monthly) _____ (3) on the first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly) Employer Stock. (Skip this paragraph if you did not designate Employer Stock as an investment under the Service Agreement.) Voting. Employer Stock will be voted as follows: _____ (a) In accordance with the Employer's instructions. _____ (b) In accordance with the Participant's instructions. Participants are hereby appointed named fiduciaries for the purpose of the voting of Employer Stock in accordance with Plan Section 13.8. Tendering. Employer stock will be tendered as follows: _____ (a) In accordance with the Employer's instructions. _____ (b) In accordance with the Participant's instructions. Participants are hereby appointed named fiduciaries for the purpose of the tendering of Employer Stock in accordance with Plan Section 13.8. Administration. Plan Administrator (Plan Section 15.1). You may appoint a person or a committee to serve as Plan Administrator. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator. The initial Plan Administrator will be (check one): _____ This person: _______________________________ _____ A committee composed of these people: _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ Recordkeeper (Plan Section 15.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and the Employer. The initial Record keeper will be: _______________________________________________________ ___ Name _______________________________________________________ ___ Address Determination Letter Required. You may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. In order to obtain reliance with respect to qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties. Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #002 may be used only in conjunction with Putnam's Basic Plan Document #07. * * * * * If you have any questions regarding this Plan Agreement, contact Putnam at: Putnam Defined Contribution Plans One Putnam Place B2B 859 Willard Street Quincy, MA 02269 Phone: 1-800-752-5766 * * * * * EMPLOYER'S ADOPTION OF PUTNAM FLEXIBLE MONEY PURCHASE PENSION PLAN The Employer named below hereby adopts a PUTNAM FLEXIBLE MONEY PURCHASE PENSION PLAN, and appoints __________________ to serve as Trustee of the Plan. The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Flexible Money Purchase Pension Plan only upon Putnam's acceptance of this Plan Agreement. Investment Options The Employer hereby elects the following as the investment options available under the Plan: ________________________ __________________________ ________________________ ________________________ __________________________ ________________________ ________________________ __________________________ ________________________ The following investment option shall be the default option: ___________________________________ (select the default option from among the investment options listed above). Employer signature(s) to adopt Plan: Date of signature: ____________________________________________________ __________________________ ____________________________________________________ __________________________ Please print name(s) of authorized person(s) signing above: ____________________________________________________ ____________________________________________________ A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective. * * * * * ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY AS TRUSTEE The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above. Putnam Fiduciary Trust Company, Trustee By: _________________________________________________________________ ______________ * * * * * ACCEPTANCE OF OTHER TRUSTEE Complete this part only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. (Note: You may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission, and Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Prototype Money Purchase Pension Plan.) _________________________________, Trustee By: ______________________________ ___ Trustee's Tax I.D. Number _______________ (Trustee) _________________________________________________________________ ___________________ Address of Trustee Person for Putnam to Contact: ________________________________ Telephone: _______________ * * * * * ACCEPTANCE BY PUTNAM Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #07. Putnam Mutual Funds Corp. By: ______________________________ 2057121.01 PUTNAM FLEXIBLE PROFIT SHARING PLAN PLAN AGREEMENT #003 This is the Plan Agreement for a Putnam nonstandardized prototype profit sharing plan. Please consult a tax or legal advisor and review the entire form before you sign it. If you fail to fill out this Putnam Plan Agreement properly, the Plan may be disqualified. By executing this Plan Agreement, the Employer establishes a profit sharing plan and trust upon the terms and conditions of Putnam Basic Plan Document #07, as supplemented and modified by the provisions elected by the Employer in this Plan Agreement. This Plan Agreement must be accepted by Putnam in order for the Employer to receive future amendments to the Putnam Flexible Profit Sharing Plan. * * * * * Employer Information. The Employer adopting this Plan is: Employer Name: _____________________________________________________ Employer Identification Number: __________________________ Employer Address: _______________________________ _______________________________ _______________________________ SIC Code: _______ Employer Contact: Name: ___________________________________________ Title: __________________ Phone #: _______________ Fiscal Year: __________ through __________ (month/day) (month/day) Type of Entity (check one): _____ Corporation _____ Partnership _____ Subchapter S Corporation _____ Sole proprietorship _____ Other _______________________ Plan Name: __________________________________ Plan Number: 00__(complete) Plan Information. Plan Year. Check one: _____ (1) The Calendar Year _____ (2) The Plan Year will be the same as the Fiscal Year of the Employer shown in 1.F. above. If the Fiscal Year of the Employer changes, the Plan Year will change accordingly. _____ (3) The Plan Year will be the period of 12 months beginning on the first day of __________________________ (month) and ending on the last day of __________________________ (month). The Plan Year will also be your Plan's Limitation Year for purposes of the contribution limitation rules in Article 6 of the Plan. Effective Date of Adoption of Plan. (1) Are you adopting this Plan to replace an existing plan? _____ (a) Yes _____ (b) No (2) If you answered Yes in 2.B(1) above, the Effective Date of your adoption of this Replacement Plan will be the first day of the current Plan Year unless you elect a later date in (2)(b) below. Please complete the following: (a) ______________________________________________________________ Original Effective Date of the Plan you are Replacing (b) ______________________________________________________________ Effective Date of this Replacement Plan (3) If you answered No in 2B(1) above, the Effective Date of your adoption of this Plan will be the day you select below (not before the first day of the current Plan Year, and not before the day your Business began): (a) The Effective Date is:_____________________________________ month/day/year Eligibility for Plan Participation (Plan Section 3.1). Employees will be eligible to participate in the Plan when they complete the requirements you select in A, B, C and D below. Classes of Eligible Employees. The Plan will cover all employees who have met the age and service requirements with the following exclusions: _____ (1) No exclusions. All job classifications will be eligible. _____ (2) The Plan will exclude employees in a unit of Employees covered by a collective bargaining agreement with respect to which retirement benefits were the subject of good faith bargaining, with the exception of the following collective bargaining units, which will be included: ____________________. _____ (3) The Plan will exclude employees who are non-resident aliens without U.S. source income. _____ (4) Employees of the following Affiliated Employers (specify): _______________________________ _______________________________ _____ (5) Leased Employees _____ (6) Employees in the following other classes (specify): _______________________________ _______________________________ Age Requirement (check and complete (1) or (2)): _____ (1) No minimum age required for participation _____ (2) Employees must reach age __ (not over 21) to participate Service Requirements: To become eligible, an employee must complete (choose one): _____ (a) No minimum service required. _____ (b) One 6-month Eligibility Period _____ (c) One __- month Eligibility Period (must be less than 12) _____ (d) One 12- month Eligibility Period _____ (e) Two 12- month Eligibility Periods (may only be chosen if you adopt the vesting schedule under item 9.A(1)(a) to provide for 100% full and immediate vesting of Profit Sharing Contributions) If the Employer acquires a business, the Eligibility Period for an employee of the acquired business will be the period selected in (1), beginning on (check (a) or (b)): _____ (a) the date the employee began work with the acquired business. _____ (b) the date of the acquisition (i.e., the date the employee begins work for the Employer). Hours of Service for Eligibility Periods. (a) 6-Month Eligibility Period. To receive credit for a 6-month Eligibility Period, an employee must complete 6 months of service, during which he completes at least: _____ (i) 500 Hours of Service _____ (ii) ____________ Hours of Service (under 500) (b) 12- Month Eligibility Period. To receive credit for a 12- month Eligibility Period, an employee must complete 12 months of service, during which he completes at least: _____ (i) 1,000 Hours of Service _____ (ii) _____________ Hours of Service (under 1,000) (c) Other Eligibility Period. To receive credit for the Eligibility Period selected in 3.C(1)(c), an employee must complete during it at least: _____ (i) _____________ Hours of Service (under 1000) Method of Crediting Hours of Service For Eligibility and Vesting. Hours of Service will be credited to an employee by the following method (check one): _____ (a) Actual hours for which an employee is paid _____ (b) Any employee who has one actual paid hour in the following period will be credited with the number of Hours of Service indicated (check one): _____ (i) Day (10 Hours of Service) _____ (ii) Week (45 Hours of Service) _____ (iii) Semi-monthly payroll period (95 Hours of Service) _____ (iv) Month (190 Hours of Service) Entry Dates. Each employee in an eligible class who completes the age and service requirements specified above will begin to participate in the Plan on (check one): _____ (a) The first day of the month in which he fulfills the requirements. _____ (b) The first of the following dates occurring after he fulfills the requirements (or, if earlier, the first day of the first Plan Year that begins after the date he fulfills the requirements) (check one): _____ (i) The first day of the month following the date he fulfills the requirements (monthly). _____ (ii) The first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly). _____ (iii) The first day of the first month and the seventh month in a Plan Year (semiannually). _____ (c) Other: _____________________________________ ___ (May be no later than (i) the first day of the Plan Year after which he fulfills the requirements, and (ii) the date six months after the date on which he fulfills the requirements, which ever occurs first.) (For New Plans Only) Will all eligible Employees as of the Effective Date be required to meet the age and service requirements for participation specified in B and C above? _____ (a) Yes _____ (b) No. Eligible Employees will be eligible to become Participants as of the Effective Date even if they have not satisfied (check one or both): _____ (i) the age requirement. _____ (ii) the service requirement. Contributions. Profit Sharing Contributions. (Plan Sections 4.1 and 4.2) Profit Limitation. Will Profit Sharing Contributions to the Plan be limited to the current and accumulated profits of your Business? Check one: _____ (a) Yes _____ (b) No. Amount. The Employer will contribute to the Plan for each Plan Year (check one): _____ (a) An amount chosen by the Employer from year to year _____ (b) ____% of the Earnings of all Qualified Participants for the Plan Year _____ (c) $____ for each Qualified Participant per ___________ (enter time period, e.g. payroll period, plan year) Allocations. (a) Allocation to Qualified Participants. Profit Sharing Contributions will be allocated: _______ (i) Pro rata (percentage based on compensation) _______ (ii) Uniform Dollar amount _______ (iii) Integrated With Social Security (complete (b) and (c) below) (b) Integration with Social Security. (Complete only if you have elected in 4.A(3)(a) to integrate your Plan with Social Security.) Profit Sharing Contributions will be allocated to Qualified Participants as you check below: _____ (i) Profit Sharing Contributions will be allocated according to the Top-Heavy Integration Formula in Plan Section 4.2(c)(1) in every Plan Year, whether or not the Plan is top-heavy. _____ (ii) Profit Sharing Contributions will be allocated according to the Top-Heavy Integration Formula in Plan Section 4.2(c)(1) only in Plan Years in which the Plan is top-heavy. In all other Plan Years, contributions will be allocated according to the Non-Top- Heavy Integration Formula in Plan Section 4.2(c)(2). (c) Integration Level. (Complete only if you have elected in 4.A(3)(a) to integrate your Plan with Social Security.) The Integration Level will be (check one): _____ (i) The Social Security Wage Base in effect at the beginning of the Plan Year. ____ (ii) __% (not more than 100%) of the Social Security Wage Base in effect at the beginning of the Plan Year. ____ (iii) $__________ (not more than the Social Security Wage Base). Note: The Social Security Wage Base is indexed annually to reflect increases in the cost of living. Qualified Participants. In order to receive an allocation of Profit Sharing Contributions for a Plan Year, an Employee must be a Qualified Participant. Select below either (a) alone, or any combination of (b), (c) and (d). _____ (a) To be a Qualified Participant, an Employee must (check (i) or (ii)): _____ (i) Either be employed on the last day of the Plan Year, complete more than 500 Hours of Service in the Plan Year, retire, die or become disabled in the Plan Year. _____ (ii) Either be employed on the last day of the Plan Year or complete more than 500 Hours of Service in the Plan Year. Stop here if you checked (a). If you did not check (a), check (b), (c) or (d), or any combination of (b), (c) and (d). To be a Qualified Participant, an Employee must: _____ (b) Be credited with _____ (choose 1, 501 or 1,000) Hours of Service in the Plan Year. _____ (c) Be an Employee on the last day of the Plan Year. _____ (d) Retire, die or become disabled during the Plan Year. Participant Contributions (Plan Section 4.6). Will your Plan allow Participants to make after-tax contributions? (1) Yes _____ (2) No Forfeitures (Plan Section 4.4). Forfeitures of Profit Sharing Contributions will be used as follows (check (1) or (2)): _____ (1) Applied to reduce Profit Sharing Contributions required of the Employer. _____ (2) Reallocated as additional Profit Sharing Contributions. Top-Heavy Minimum Contributions (Plan Section 14.3). Skip paragraphs A and B below if you do not maintain any other qualified plan in addition to this Plan. For any Plan Year in which the Plan is Top-Heavy, the Top-Heavy minimum contribution (or benefit) for Non-Key employees participating both in this Plan and another qualified plan maintained by the Employer will be provided in (check one): _____ (1) This Plan ______ (2) The other qualified plan If you maintain a defined benefit plan in addition to this Plan, and the Top-Heavy Ratio (as defined in Plan Section 14.2(c)) for the combined plans is between 60% and 90%, you may elect to provide an increased minimum allocation or benefit pursuant to Plan Section 14.4. Specify your election by completing the statement below: The Employer will provide an increased (specify contribution or benefit) __________________________________ in its (specify defined contribution or defined benefit) ______________________ plan as permitted under Plan Section 14.4. Other Plans. You must complete this section if you maintain or ever maintained another qualified plan in which any Participant in this Plan is (or was) a participant or could become a participant. The Plan and your other plan(s) combined will meet the contribution limitation rules in Article 6 of the Plan as you specify below: If a Participant in the Plan is covered under another qualified defined contribution plan maintained by your Business, other than a master or prototype plan (check one): _____ (1) The provisions of Section 6.2 of the Plan will apply as if the other plan were a master or prototype plan. _____ (2) The plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in the manner you describe below. _________________________________________________________ _________________________________________________________ B. If a Participant in the Plan is or has ever been a participant in a defined benefit plan maintained by your Business, the plans will meet the limits of Article 6 in the manner you describe below: _________________________________________________________________ _______ _________________________________________________________________ _______ If your Business has ever maintained a defined benefit plan, state below the interest rate and mortality table to be used in establishing the present value of any benefit under the defined benefit plan for purposes of computing the top-heavy ratio: Interest rate: %__________________________ Mortality Table: __________________________ Compensation (Plan Section 2.8). Amount. Compensation for the purposes of determining the amount and allocation of Profit Sharing Contributions shall be determined as follows (choose either (1) or (2), and (3) and/or (4), as applicable). _____ (1) Compensation will include Form W-2 earnings as defined in Section 2.8 of the Plan. _____ (2) Compensation will include all compensation included in the definition of Code Section 415 Compensation in Section 6.5(b) of the Plan. _____ (3) In addition to the amount provided in either (1) or (2) above, compensation will also include any amounts withheld from the employee under a 401(k) plan, cafeteria plan, SARSEP, tax sheltered 403(b) arrangement, or Code Section 457 deferred compensation plan, and contributions described in Code Section 414(h)(2) that are picked up by a governmental employer. _____ (4) Compensation will also exclude the following amounts (choose each that applies): _____ (a) overtime pay _____ (b) bonuses _____ (c) commissions _____ (d) other pay describe: ___________ _____ (e) compensation in excess of $________ Note: No exclusion under (4) may be selected if Profit Sharing Contributions will be integrated with Social Security under 4.A(3)(a)(iii). In addition, no exclusion under (4) will apply for purposes of determining the top-heavy minimum contribution if the Plan is top-heavy. Measuring Period. Compensation will be based on the Plan Year. However, for an Employee's initial year of participation in the Plan, Compensation will be recognized as of: _______ (1) the first day of the Plan Year. _______ (2) the date the Participant enters the Plan. Distributions and Withdrawals. Retirement Distributions. Normal Retirement Age (Plan Section 7.1). Normal retirement age will be the later of _______ (not over age 65) or _______ (not more than 5) years of participation in the Plan. Early Retirement (Plan Section 7.1). Select one: _____ (a) No early retirement will be permitted. _____ (b) Early retirement will be permitted at age ____. _____ (c) Early retirement will be permitted at age ____ with at least ________ Years of Service. Annuities (Plan Section 9.3). Will your Plan permit distributions in the form of a life annuity? You must check Yes if this Plan replaces or serves as a transferee plan for an existing Plan that permits distributions in a life annuity form. _____ (a) Yes _____ (b) No Hardship Distributions (Plan Section 12.2). Will your Plan permit hardship distributions? _____ (1) No _____ (2) Yes. Indicate below from which Accounts hardship withdrawals will be permitted (check all that apply): _____ (a) Rollover Account _____ (b) Employer Contribution Account (i.e. Profit Sharing Contributions) Withdrawals after Age 591/2 (Plan Section 12.3). Will your Plan permit employees over age59 1/2 to withdraw amounts upon request? You must check Yes if this Plan replaces an existing Plan that permits withdrawals after age 59 1/2. _____ (1)Yes _____ (2) No Withdrawals following Five Years of Participation or Two Years after Contribution (Plan section 12.4). Will your Plan permit employees to withdraw amounts from the vested portion of their Employer Contribution Accounts if either (i) the Participant has been a Participant for at least five years, or (ii) the amount withdrawn from the Employer Contribution Account is limited to the amounts that were credited to that Account prior to the date two years before the withdrawal? You must check yes if this Plan replaces a Plan which permits withdrawals in these circumstances. _____ (1) Yes _____ (2) No Loans (Plan Section 12.5). Will your Plan permit loans to employees from the vested portion for their Accounts? _____ (1)Yes _____ (2) No Automatic Distribution of Small Accounts (Plan Section 9.1). Will your Plan automatically distribute vested account balances not exceeding $3,500, within 60 days after the end of the Plan Year in which a Participant separates from employment? _____ (1)Yes _____ (2) No Vesting (Plan Article 8). Time of Vesting. (1) Vesting Schedules: _____ (a) 100% vesting immediately upon participation in the Plan. _____ (b) Five-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 1 2 3 4 5 _____ (c) Seven-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 3 4 5 6 7 _____ (d) Six-Year Graded Schedule: Vested Percentage 20% 40% 60% 80% 100% Years of Service 2 3 4 5 6 _____ (e) Three-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-2 3 _____ (f) Five-Year Cliff Schedule: Vested Percentage 0% 100% Years of Service 0-4 5 _____ (g) Other Schedule (must be at least as favorable as Seven-Year Graded Schedule or Five-Year Cliff Schedule): (i) Vested Percentage __% __% __% __% __% (ii) Years of Service ___ ___ ___ ___ ___ (2) Top Heavy Schedule: (a) If you selected above an "Other Schedule," specify in the space below the schedule that will apply in Plan Years that the Plan is top- heavy. The schedule you specify must be at least as favorable to employees, at all years of service, as either the Six-Year Graded Schedule or the Three-Year Cliff Schedule. The top-heavy vesting schedule will be: _____ (i) the same "Other Schedule" selected above _____ (ii) the following schedule: Vested Perce ntage __% __% __% __% __% Years of Service ___ ___ ___ ___ ___ _____ (iii) Six-Year Graded Schedule ______ (iv) Three-Year Cliff Schedule (b) If the Plan becomes top-heavy in a Plan Year, will the top-heavy vesting schedule apply for all subsequent Plan Years? _____ (i) Yes _____ (ii) No Service for Vesting (select (1) or (2)). _____ (1) All of an employee's service will be used to determine his Years of Service for purposes of vesting _____ (2) An employee's Years of Service for vesting will include all years except (check all that apply): _____ (a) (New plan) service before the effective date of the plan _____ (b) (Existing plan) service before the effective date of the existing plan _____ (c) Service before the Plan Year in which an employee reached age 18 _____ (d) Service for a business acquired by the Employer, before the date of acquisition Hours of Service for Vesting. The number of Hours of Service required for crediting a Year of Service for vesting will be (check one): _____ (1) 1,000 Hours of Service _____ (2) ___________________ Hours of Service (under 1,000) Hours of Service for vesting will be credited according to the method selected under 3.C(6). Year of Service Measuring Period for Vesting (Plan Section 2.52). The periods of 12 months used for measuring Years of Service will be (check one): _____ (1) Plan Years _____ (2) 12-month Eligibility Periods Investments (Plan Sections 13.2 and 13.3). Available Investment Products (Plan Section 13.2). The investment options available under the Plan are identified in the Service Agreement or such other written instructions between the Employer and Putnam, as the case may be. All Investment Products must be sponsored, underwritten, managed or expressly agreed to in writing by Putnam. If there is any amount in the Trust Fund for which no instructions or unclear instructions are delivered, it will be invested in the default option selected by the Employer in its Service Agreement with Putnam, or such other written instructions as the case may be, until instructions are received in good order, and the Employer will be deemed to have selected the option indicated in its Service Agreement, or such other written instructions as the case may be, as an available Investment Product for that purpose. Instructions (Plan Section 13.3). Investment instructions for amounts held under the Plan generally will be given by each Participant for his own Accounts and delivered to Putnam as indicated in the Service Agreement between Putnam and the Employer. Check below only if the Employer will make investment decisions under the Plan with respect to the following contributions made to the Plan. (Check all applicable options.) _____ (1) The Employer will make all investment decisions with respect to all employee contributions, including Participant Contributions, Deductible Employee Contributions and Rollover Contributions. _____ (2) The Employer will make all investment decisions with respect to all Profit Sharing Contributions. _____ (3) Other (Describe. An Employer may elect to make investment decisions with respect to a specified portion of a specific type of contribution to the Plan.): _______________________________________ _____________________________________________ ____ _____________________________________________ ____ Changes. Investment instructions may be changed (check one): _____ (1) on any Valuation Date (daily) _____ (2) on the first day of any month (monthly) _____ (3) on the first day of the first, fourth, seventh and tenth months in a Plan Year (quarterly) Employer Stock. (Skip this paragraph if you did not designate Employer Stock as an investment under the Service Agreement.) Voting. Employer Stock will be voted as follows: _____ (a) In accordance with the Employer's instructions. _____ (b) In accordance with the Participant's instructions. Participants are hereby appointed named fiduciaries for the purpose of the voting of Employer Stock in accordance with Plan Section 13.8. Tendering. Employer stock will be tendered as follows: _____ (a) In accordance with the Employer's instructions. _____ (b) In accordance with the Participant's instructions. Participants are hereby appointed named fiduciaries for the purpose of the tendering of Employer Stock in accordance with Plan Section 13.8. Administration. Plan Administrator (Plan Section 15.1). You may appoint a person or a committee to serve as Plan Administrator. If you do not appoint a Plan Administrator, the Plan provides that the Employer will be the Plan Administrator. The initial Plan Administrator will be (check one): _____ This person: _______________________________ _____ A committee composed of these people: _________________________________________________________________ _ _________________________________________________________________ _ _________________________________________________________________ _ Recordkeeper (Plan Section 15.4). Unless Putnam expressly permits otherwise, you must appoint Putnam as Recordkeeper to perform certain routine services determined upon execution of a written Service Agreement between Putnam and the Employer. The initial Record keeper will be: _______________________________________________________ ___ Name _______________________________________________________ ___ Address Determination Letter Required. You may not rely on an opinion letter issued to Putnam by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Internal Revenue Code. In order to obtain reliance with respect to qualification of the Plan, you must receive a determination letter from the appropriate Key District Office of Internal Revenue. Putnam will prepare an application for such a letter upon your request at a fee agreed upon by the parties. Putnam will inform you of all amendments it makes to the prototype plan. If Putnam ever discontinues or abandons the prototype plan, Putnam will inform you. This Plan Agreement #003 may be used only in conjunction with Putnam's Basic Plan Document #07. * * * * * If you have any questions regarding this Plan Agreement, contact Putnam at: Putnam Defined Contribution Plans One Putnam Place B2B 859 Willard Street Quincy, MA 02269 Phone: 1-800-752-5766 * * * * * EMPLOYER'S ADOPTION OF PUTNAM FLEXIBLE PROFIT SHARING PLAN The Employer named below hereby adopts a PUTNAM FLEXIBLE PROFIT SHARING PLAN, and appoints __________________ to serve as Trustee of the Plan. The Employer acknowledges that it has received copies of the current prospectus for each Investment Product available under the Plan, and represents that it will deliver copies of the then current prospectus for each such Investment Product to each Participant before each occasion on which the Participant makes an investment instruction as to his Account. The Employer further acknowledges that the Plan will be acknowledged by Putnam as a Putnam Flexible Profit Sharing Plan only upon Putnam's acceptance of this Plan Agreement. Investment Options The Employer hereby elects the following as the investment options available under the Plan: ________________________ __________________________ ________________________ ________________________ __________________________ ________________________ ________________________ __________________________ ________________________ The following investment option shall be the default option: ___________________________________ (select the default option from among the investment options listed above). Employer signature(s) to adopt Plan: Date of signature: ____________________________________________________ __________________________ ____________________________________________________ __________________________ Please print name(s) of authorized person(s) signing above: ____________________________________________________ ____________________________________________________ A new Plan must be signed by the last day of the Plan Year in which the Plan is to be effective. * * * * * ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY AS TRUSTEE The Trustee accepts appointment in accordance with the terms and conditions of the Plan, effective as of the date of execution by the Employer set forth above. Putnam Fiduciary Trust Company, Trustee By: _________________________________________________________________ ______________ * * * * * ACCEPTANCE OF OTHER TRUSTEE Complete this part only if you have appointed a Trustee other than Putnam Fiduciary Trust Company. (Note: You may appoint a trustee other than Putnam Fiduciary Trust Company only with Putnam's express permission, and Putnam may impose an annual maintenance fee as a condition of its acceptance of this plan as a Putnam Prototype Profit Sharing Plan.) _________________________________, Trustee By: ______________________________ ___ Trustee's Tax I.D. Number _______________ (Trustee) _________________________________________________________________ ___________________ Address of Trustee Person for Putnam to Contact: ________________________________ Telephone: _______________ * * * * * ACCEPTANCE BY PUTNAM Putnam hereby accepts this Employer's Plan as a prototype established under Putnam Basic Plan Document #07. Putnam Mutual Funds Corp. By: ______________________________ 2057121.01 EX-99.B1512B1PLAN 13 PUTNAM FUNDS TRUST CLASS A DISTRIBUTION PLAN AND AGREEMENT This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class A shares of the portfolio series (each a "Fund" and collectively the "Funds") of Putnam Funds Trust, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"), the principal underwriter of the Trust's shares. During the effective term of this Plan, the Trust may make payments to PMF upon the terms and conditions hereinafter set forth: SECTION 1. The Trust may make payments to PMF, in the form of fees or reimbursements, to compensate PMF for services provided and expenses incurred by it for purposes of promoting the sale of Class A shares of the Funds, reducing redemptions of shares, or maintaining or improving services provided to shareholders by PMF and investment dealers. The amount of such payments and the purposes for which they are made shall be determined by the Qualified Trustees (as defined below). Payments under this Plan shall not exceed in any fiscal year the annual rate of 0.35% of the average net asset value of the Class A shares of each Fund, as determined at the close of each business day during the year. A majority of the Qualified Trustees may, at any time and from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine. SECTION 2. This Plan shall not take effect with respect to a Fund until: (a) it has been approved by a vote of a majority of the outstanding Class A shares of the Fund; (b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and (c) the Fund has received the proceeds of the initial public offering of its Class A shares. SECTION 3. This Plan shall continue in effect with respect to a Fund for a period of more than one year after it takes effect only so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Section 2(b). SECTION 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. SECTION 5. This Plan may be terminated at any time with respect to a Fund by vote of a majority of the Qualified Trustees, or by vote of a majority of the outstanding Class A shares of the Fund. SECTION 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide: (a) that such agreement may be terminated with respect to a Fund at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class A shares of the Fund, on not more than 60 days' written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment. SECTION 7. This Plan may not be amended to increase materially the amount of distribution expenses with respect to a Fund permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class A shares of the Fund, and all material amendments to this Plan with respect to a Fund shall be approved in the manner provided for approval of this Plan in Section 2(b). SECTION 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class A shares of the Fund" means the affirmative vote, at a duly called and held meeting of Class A shareholders of the relevant Fund, (i) of the holders of 67% or more of the Class A shares of such Fund present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class A shares of such Fund entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class A shares of such Fund entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. SECTION 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the relevant Fund. Executed as of June 7, 1996. PUTNAM MUTUAL FUNDS CORP. PUTNAM FUNDS TRUST By: /s/ William N. Shiebler By: /s/ Charles E. Porter ----------------------- --------------------- - --- William N. Shiebler Charles E. Porter President Executive Vice President EX-99.B1512B1PLAN 14 PUTNAM FUNDS TRUST CLASS B DISTRIBUTION PLAN AND AGREEMENT This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class B shares of the portfolio series (each a "Fund" and collectively the "Funds") of Putnam Funds Trust, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"). During the effective term of this Plan, the Trust may incur expenses primarily intended to result in the sale of its Class B shares upon the terms and conditions hereinafter set forth: SECTION 1. The Trust shall pay to PMF a monthly fee at the annual rate of 1.00% of the average net asset value of the Class B shares of the Funds, as determined at the close of each business day during the month, to compensate PMF for services provided and expenses incurred by it in connection with the offering of Class B shares, which may include, without limitation, the payment by PMF to investment dealers of commissions on the sale of Class B shares, as set forth in the then current Prospectus or Statement of Additional Information of the Trust, and the payment of a service fee of up to 0.25% of such net asset value for the purposes of maintaining or improving services provided to shareholders by PMF and investment dealers. Such fees shall be payable for each month within 15 days after the close of such month. A majority of the Qualified Trustees, as defined below, may, from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine. SECTION 2. This Plan shall not take effect with respect to a Fund until: (a) it has been approved by a vote of a majority of the outstanding Class B shares of the Fund; (b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and (c) the Fund has received the proceeds of the initial public offering of its Class B shares. SECTION 3. This Plan shall continue in effect with respect to a Fund for a period of more than one year after it takes effect only so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Section 2(b). SECTION 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. SECTION 5. This Plan may be terminated with respect to a Fund at any time by vote of a majority of the Qualified Trustees or by vote of the majority of the outstanding Class B shares of the Fund. SECTION 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide: (a) that such agreement may be terminated with respect to a Fund at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class B shares of the Fund, on not more than 60 days' written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment. SECTION 7. This Plan may not be amended to increase materially the amount of distribution expenses with respect to a Fund permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class B shares of the Fund and all material amendments to this Plan with respect to a Fund shall be approved in the manner provided for approval of this Plan in Section 2(b). SECTION 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class B shares of the Fund" means the affirmative vote, at a duly called and held meeting of Class B shareholders of the relevant Fund, (i) of the holders of 67% or more of the Class B shares of the Fund present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class B shares of such Fund entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class B shares of such Fund entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. SECTION 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the relevant Fund. Executed as of June 7, 1996. PUTNAM MUTUAL FUNDS CORP. PUTNAM FUNDS TRUST By: /s/ William N. Shiebler By: /s/ Charles E. Porter ----------------------- -------------------- - ---- William N. Shiebler Charles E. Porter President Executive Vice President EX-99.B1512B1PLAN 15 PUTNAM FUNDS TRUST CLASS M DISTRIBUTION PLAN AND AGREEMENT This Plan and Agreement (the "Plan") constitutes the Distribution Plan for the Class M shares of the portfolio series (each a "Fund" and collectively the "Funds") of Putnam Funds Trust, a Massachusetts business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the Investment Company Act of 1940 (the "Act") and the related agreement between the Trust and Putnam Mutual Funds Corp. ("PMF"). During the effective term of this Plan, the Trust may incur expenses primarily intended to result in the sale of its Class M shares upon the terms and conditions hereinafter set forth: SECTION 1. The Trust shall pay to PMF a monthly fee at the annual rate of 1.00% of the average net asset value of the Class M shares of the Funds, as determined at the close of each business day during the month, to compensate PMF for services provided and expenses incurred by it in connection with the offering of Class M shares, which may include, without limitation, payments by PMF to investment dealers with respect to Class M shares, as set forth in the then current Prospectus or Statement of Additional Information of the Trust, including the payment of a service fee of up to 0.25% of such net asset value for the purpose of maintaining or improving services provided to shareholders by PMF and investment dealers. Such fees shall be payable for each month within 15 days after the close of such month. A majority of the Qualified Trustees, as defined below, may, from time to time, reduce the amount of such payments, or may suspend the operation of the Plan for such period or periods of time as they may determine. SECTION 2. This Plan shall not take effect with respect to a Fund until: (a) it has been approved by a vote of a majority of the outstanding Class M shares of the Fund; (b) it has been approved, together with any related agreements, by votes of the majority (or whatever greater percentage may, from time to time, be required by Section 12(b) of the Act or the rules and regulations thereunder) of both (i) the Trustees of the Trust, and (ii) the Qualified Trustees of the Trust, cast in person at a meeting called for the purpose of voting on this Plan or such agreement; and (c) the Fund has received the proceeds of the initial public offering of its Class M shares. SECTION 3. This Plan shall continue in effect with respect to a Fund for a period of more than one year after it takes effect only so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in Section 2(b). SECTION 4. PMF shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. SECTION 5. This Plan may be terminated with respect to a Fund at any time by vote of a majority of the Qualified Trustees or by vote of the majority of the outstanding Class M shares of the Fund. SECTION 6. All agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide: (a) that such agreement may be terminated with respect to a Fund at any time, without payment of any penalty, by vote of a majority of the Qualified Trustees or by vote of a majority of the outstanding Class M shares of the Fund, on not more than 60 days' written notice to any other party to the agreement; and (b) that such agreement shall terminate automatically in the event of its assignment. SECTION 7. This Plan may not be amended to increase materially the amount of distribution expenses with respect to a Fund permitted pursuant to Section 1 hereof without the approval of a majority of the outstanding Class M shares of the Fund and all material amendments to this Plan with respect to a Fund shall be approved in the manner provided for approval of this Plan in Section 2(b). SECTION 8. As used in this Plan, (a) the term "Qualified Trustees" shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the term "majority of the outstanding Class M shares of the Fund" means the affirmative vote, at a duly called and held meeting of Class M shareholders of the relevant Fund, (i) of the holders of 67% or more of the Class M shares of such Fund present (in person or by proxy) and entitled to vote at such meeting, if the holders of more than 50% of the outstanding Class M shares of such Fund entitled to vote at such meeting are present in person or by proxy, or (ii) of the holders of more than 50% of the outstanding Class M shares of such Fund entitled to vote at such meeting, whichever is less, and (c) the terms "assignment" and "interested person" shall have the respective meanings specified in the Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. SECTION 9. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually, and that the obligations of or arising out of this instrument are not binding upon any of the Trustees, officers or shareholders individually but are binding only upon the assets and property of the relevant Fund. Executed as of June 7, 1996. PUTNAM MUTUAL FUNDS CORP. PUTNAM FUNDS TRUST By: /s/ William N. Shiebler By: /s/ Charles E. Porter ----------------------- ----------------------- - - William N. Shiebler Charles E. Porter President Executive Vice President EX-99.B1512B1PLAN 16 DEALER SERVICE AGREEMENT Between: and PUTNAM MUTUAL FUNDS CORP. General Distributor of The Putnam Family of Mutual Funds One Post Office Square Boston, MA 02109 We are pleased to inform you that, pursuant to the terms of this Dealer Service Agreement, we are authorized to pay you service fees in connection with the accounts of your customers that hold shares of certain Putnam Funds listed in SCHEDULE 1 that have adopted distribution plans pursuant to Rule 12b-1 (the "12b- 1 Funds"). Payment of the service fees is subject to your initial and continuing satisfaction of the following terms and conditions which may be revised by us from time to time: 1. QUALIFICATION REQUIREMENTS (a) You have entered into a Sales Contract with us with respect to the Putnam Family of Mutual Funds (the "Putnam Funds"). (b) You are the dealer of record for accounts in Putnam Funds having an aggregate average net asset value of at least the minimum amount set forth in SCHEDULE 2 (DEALER FIRM REQUIREMENTS) during the period for which a service fee is to be paid. Putnam Fund accounts are accounts in any open-end Putnam Fund, but excluding any accounts for your firm's own retirement plans. (c) One or more of your current employees must be the designated registered representative(s) on accounts in Putnam Funds having an aggregate average net asset value of at least the minimum amount set forth in SCHEDULE 2 (REGISTERED REPRESENTATIVE REQUIREMENTS) during the period for which a service fee is to be paid. (d) You will provide the following information and agree that we will be entitled to rely on the accuracy of such information in updating our records for determining the levels of service fees payable to you under the terms of this Agreement. You understand that such payments will be based solely on Putnam's records. For each Putnam Fund account registered in the name of one of your customers, you will advise us, preferably by electronic means, before the end of the second month in each calendar quarter, of the registered representative's name, identification number, branch number, and telephone number. 2. SERVICE FEES (a) If you meet the qualification requirements set forth above in Paragraph 1, you will be paid a service fee on assets in the 12b-1 Funds for which you are the dealer of record and which are serviced by a registered representative of your firm meeting the Registered Representative Requirements, if any, at the annual rates specified (excluding any accounts for your firm's own retirement plans). (b) You understand and agree that: (i) all service fee payments are subject to the limitations contained in each 12b-1 Fund's Distribution Plan, which may be varied or discontinued at any time; (ii) your failure to provide the services described in Paragraph 4 below as may be amended by us from time to time, or otherwise comply with the terms of this Agreement, will render you ineligible to receive service fees; and (iii) failure of an assigned registered representative to provide services required by this Agreement will render that representative's accounts ineligible as accounts on which service fees are paid. 3. PAYMENTS AND COMMUNICATIONS TO REGISTERED REPRESENTATIVES (a) You will pass through to your registered representatives a significant share of the service fees paid to you pursuant to this Agreement. (b) You will assist us in distributing to your registered representatives periodic statements which we will have prepared showing the aggregate average net asset value of shares in Putnam Funds with which they are credited on our records. 4. REQUIRED SERVICES (a) You will assign one of your registered representatives to each Putnam Fund account on your records and reassign the Putnam Fund account should that representative leave your firm. (b) You and your registered representatives will assist us and our affiliates in providing the following services to shareholders of the Putnam Funds: (i) Maintain regular contact with shareholders in assigned accounts and assist in answering inquiries concerning the Putnam Funds. (ii) Assist in distributing sales and service literature provided by us, particularly to the beneficial owners of accounts registered in your name (nominee name accounts). (iii) Assist us and our affiliates in the establishment and maintenance of shareholder accounts and records. (iv) Assist shareholders in effecting administrative changes, such as changing dividend options, account designations, address, automatic investment programs or systematic investment plans. (v) Assist in processing purchase and redemption transactions. (vi) Provide any other information or services as the customer or we may reasonably request. (c) You will support our marketing efforts by granting reasonable requests for visits to your offices by our wholesalers and by including all Putnam Funds on your "approved" list. (d) Your compliance with the service requirements set forth in this Agreement will be evaluated by us from time to time by surveying shareholder satisfaction with service, by monitoring redemption levels of shareholder accounts assigned to you and by such other methods as we deem appropriate. (e) The provisions of this Paragraph 4 may be amended by us from time to time upon notice to you. 5. AMENDMENT This Agreement, including any Schedule hereto, shall be deemed amended as provided in any written notice delivered by us to you. 6. EFFECTIVE PERIOD AND TERMINATION The provisions of this Agreement shall remain in effect for not more than one year from the date of its execution or adoption and thereafter for successive annual periods only so long as such continuance is specifically approved at least annually by the Trustees of each of the 12b-1 Funds in conformity with Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"). This Agreement shall automatically terminate in the event of its assignment (as defined by the 1940 Act). In addition, this Agreement may be terminated at any time, without the payment of any penalty, by either party upon written notice delivered or mailed by registered mail, postage prepaid, to the other party, or, as provided in Rule 12b-1 under the 1940 Act, by the Trustees of any 12b-1 Fund or by the vote of the holders of the outstanding voting securities of any 12b-1 Fund. 7. WRITTEN REPORTS Putnam Mutual Funds Corp. shall provide the Trustees of each of the 12b-1 Funds, and such Trustees shall review at least quarterly, a written report of the amounts paid to you under this Agreement and the purposes for which such expenditures were made. 8. MISCELLANEOUS (a) All communications mailed to us should be sent to the address listed below. Any notice to you shall be duly given if mailed or delivered to you at the address specified by you below. (b) The provisions of this Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. Very truly yours, PUTNAM MUTUAL FUNDS CORP. By: -------------------------- - ---- William N. Shiebler, President and Chief Executive Officer We accept and agree to the foregoing Agreement as of the date set forth below. Dealer: --------------------- - ---- By: -------------------------- - -- Authorized Signature, Title -------------------------- - ---- -------------------------- - ---- Address Dated: --------------------- - ---- Please return the signed Putnam copy of this Agreement to Putnam Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940- 1203. SCHEDULE 1: THE 12B-1 FUNDS Service fees will be paid on the following Putnam Funds at the rates set forth in the Prospectus of that Fund: Putnam Adjustable Rate U.S. Government Fund Putnam American Government Income Fund Putnam Arizona Tax Exempt Income Fund Putnam Asia Pacific Growth Fund Putnam Asset Allocation Funds -Putnam Asset Allocation: Growth Portfolio -Putnam Asset Allocation: Balanced Portfolio -Putnam Asset Allocation: Conservative Portfolio Putnam Balanced Retirement Fund Putnam California Tax Exempt Income Trust -Putnam California Intermediate Tax Exempt Fund -Putnam California Tax Exempt Income Fund Putnam Capital Appreciation Fund Putnam Convertible Income-Growth Trust Putnam Diversified Equity Trust Putnam Diversified Income Trust Putnam Equity Income Fund Putnam Europe Growth Fund Putnam Federal Income Trust Putnam Florida Tax Exempt Income Fund The George Putnam Fund of Boston Putnam Global Governmental Income Trust Putnam Global Growth Fund The Putnam Fund for Growth and Income Putnam Growth and Income Fund II Putnam Health Sciences Trust Putnam High Yield Advantage Fund Putnam High Yield Trust Putnam Income Fund Putnam Intermediate Tax Exempt Fund Putnam Intermediate U.S. Government Fund Putnam Investment Funds -Putnam International New Opportunities Fund Putnam Investors Fund Putnam Massachusetts Tax Exempt Income Fund Putnam Michigan Tax Exempt Income Fund Putnam Minnesota Tax Exempt Income Fund Putnam Money Market Fund Putnam Municipal Income Fund Putnam Natural Resources Fund Putnam New Jersey Tax Exempt Income Fund Putnam New Opportunities Fund Putnam New York Tax Exempt Income Trust -Putnam New York Intermediate Tax Exempt Fund -Putnam New York Tax Exempt Income Fund Putnam New York Tax Exempt Opportunities Fund Putnam Ohio Tax Exempt Income Fund Putnam OTC Emerging Growth Fund Putnam Overseas Growth Fund Putnam Pennsylvania Tax Exempt Income Fund Putnam Preferred Income Trust Putnam Tax Exempt Income Fund Putnam Tax-Free Income Trust -Putnam Tax-Free High Yield Fund -Putnam Tax-Free Insured Fund Putnam U.S. Government Income Trust Putnam Utilities Growth and Income Fund Putnam Vista Fund Putnam Voyager Fund Putnam Voyager Fund II SCHEDULE 2: MINIMUM ASSETS DEALER FIRM REQUIREMENTS. The minimum aggregate average net asset value of all accounts in Putnam Funds specified by Paragraph 1(b) is $250,000. We will review this requirement prior to the start of each year and inform you of any changes. REGISTERED REPRESENTATIVE REQUIREMENTS. With respect to Paragraph 1(c), there is no minimum asset qualification requirement in the Putnam Funds applicable to each of your representatives. We will review this requirement prior to the start of each year and inform you of any changes. NF-57 10/2/95 EX-99.B1512B1PLAN 17 FINANCIAL INSTITUTION SERVICE AGREEMENT Between: and PUTNAM MUTUAL FUNDS CORP. General Distributor of The Putnam Family of Mutual Funds One Post Office Square Boston, MA 02109 We are pleased to inform you that, pursuant to the terms of this FINANCIAL INSTITUTION SERVICE AGREEMENT, we are authorized to pay you service fees in connection with the accounts of your customers that hold shares of certain Putnam funds listed in SCHEDULE 1 that have adopted distribution plans pursuant to Rule 12b-1 (the "12b-1 Funds"). Payment of the service fees is subject to your initial and continuing satisfaction of the following terms and conditions which may be revised by us from time to time: 1. QUALIFICATION REQUIREMENTS (a) You have entered into a Financial Institution Sales Contract with us with respect to the Putnam Family of Mutual Funds (the "Putnam Funds"), whose shares you have agreed to make available to your customers on an agency basis. (b) You are the financial institution of record for accounts in Putnam Funds having an aggregate average net asset value of at least the minimum amount set forth in SCHEDULE 2 (FINANCIAL INSTITUTION REQUIREMENTS) during the period for which a service fee is to be paid. Putnam Fund accounts are accounts in any open-end Putnam Fund but excluding any accounts for your organization's own retirement plans. (c) One or more of your current employees must be the designated registered representative(s) in the case of a bank affiliated dealer, or agent representative(s) in the case of a bank (both referred to as "representatives"), on accounts in Putnam Funds having an aggregate average net asset value of at least the minimum amount set forth in SCHEDULE 2 (REPRESENTATIVE REQUIREMENTS) during the period for which a service fee is to be paid. (d) You will provide the following information and agree that we will be entitled to rely on the accuracy of such information in updating our records for determining the levels of service fees payable to you under the terms of this Agreement. You understand that such payments will be based solely on Putnam's records: For each Putnam Fund account registered in the name of one of your customers, you will advise us, preferably by electronic means, before the end of the second month in each calendar quarter, of the representative's name, identification number, branch number, and telephone number. 2. SERVICE FEES (a) If you meet the qualification requirements set forth above in Paragraph 1, you will be paid, at the end of each calendar quarter, a service fee on assets of your customers in the 12b-1 Funds for which you are the financial institution of record and which are serviced by a representative of your organization meeting the Representative Requirements, if any at the annual rates specified (excluding any accounts for your organization's own retirement plans), provided that you have evaluated such service fees and have concluded that it is consistent with applicable laws, rules, regulations and regulatory interpretations for you to receive such service fees. (b) You understand and agree that: (i) all service fee payments are subject to the limitations contained in each 12b-1 Fund's Distribution Plan, which may be varied or discontinued at any time; (ii) your failure to provide the services described in Paragraph 4 below as may be amended by us from time to time, or otherwise comply with the terms of this Agreement, will render you ineligible to receive service fees; and (iii) failure of an assigned representative to provide services required by this Agreement will render that representative's accounts ineligible as accounts on which service fees are paid. 3. PAYMENTS AND COMMUNICATIONS TO REPRESENTATIVES (a) Where consistent with applicable laws, rules, regulations and regulatory interpretations, you will pass through to your representatives a significant share of the service fees paid to you pursuant to this Agreement, or you will otherwise use the payments of service fees to advance the objective of providing and improving service to shareholders of the Putnam Funds in a manner specifically approved by Putnam Mutual Funds (for example, via training courses for representatives or shareholder seminars). (b) You will assist us in distributing to your representatives periodic statements which we will have prepared showing the aggregate average net asset value of shares in Putnam Funds with which they are credited on our records. 4. REQUIRED SERVICES (a) You will assign one of your representatives to each Putnam Fund account on your records and reassign the Putnam Fund account should that representative leave your organization. (b) You and your representatives will assist us and our affiliates in providing the following services to shareholders of the Putnam Funds: (i) Maintain regular contact with shareholders in assigned accounts and assist in answering inquiries concerning the Putnam Funds. (ii) Assist in distributing sales and service literature provided by us, particularly to the beneficial owners of accounts registered in your name (nominee name accounts). (iii) Assist us and our affiliates in the establishment and maintenance of shareholder accounts and records. (iv) Assist shareholders in effecting administrative changes, such as changing dividend options, account designations, address, automatic investment programs or systematic investment plans. (v) Assist in processing purchase and redemption transactions. (vi) Provide any other information or services as the customer or we may reasonably request. (c) You will grant reasonable requests for visits to your offices by our wholesalers and include all Putnam Funds on your menu or list of investments made available by you to your customers. (d) Your compliance with the service requirements set forth in this Agreement will be evaluated by us from time to time by surveying shareholder satisfaction with service, by monitoring redemption levels of shareholder accounts assigned to you and by such other methods as we deem appropriate. (e) The provisions of this Paragraph 4 may be amended by us from time to time upon notice to you. 5. AMENDMENT This Agreement, including any Schedule hereto, shall be deemed amended as provided in any written notice delivered by us to you. 6. EFFECTIVE PERIOD AND TERMINATION The provisions of this Agreement shall remain in effect for one year from the date of its execution or adoption and thereafter for successive annual periods only so long as such continuance is specifically approved at least annually by the Trustees of each of the 12b-1 Funds in conformity with Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"). This Agreement shall automatically terminate in the event of its assignment (as defined by the 1940 Act). In addition, this Agreement may be terminated at any time, without the payment of any penalty, by either party upon written notice to the other party, or, as provided in Rule 12b-1 under the 1940 Act, by the Trustees of any 12b-1 Fund or by the vote of the holders of the outstanding voting securities of any 12b-1 Fund. 7. WRITTEN REPORTS Putnam Mutual Funds Corp. shall provide the Trustees of each of the 12b-1 Funds, and such Trustees shall review at least quarterly, a written report of the amounts paid to you under this Agreement and the purposes for which such expenditures were made. 8. COMPLIANCE WITH LAWS With respect to the receipt of service fees under the terms of this Agreement, you will comply with all applicable federal and state laws and rules, and all applicable regulations and interpretations of regulatory agencies or authorities, which may affect your business practices, including any requirement of written authorization or consent by your customers to your receipt of service fees, and any requirement to provide disclosure to your customers of such service fees. 9. MISCELLANEOUS (a) All communications mailed to us should be sent to the address listed below. Any notice to you shall be duly given if mailed or delivered to you at the address specified by you below. (b) The provisions of this Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. Very truly yours, PUTNAM MUTUAL FUNDS CORP. By: -------------------------- William N. Shiebler, President and Chief Executive Officer We accept and agree to the foregoing Agreement as of the date set forth below. Financial Institution: -------------------------- By: -------------------------- Authorized Signature, Title -------------------------- -------------------------- Address Dated: -------------------------- Please return the signed Putnam copy of this Agreement to Putnam Mutual Funds Corp., P.O. Box 41203, Providence, RI 02940- 1203. SCHEDULE 1: THE 12B-1 FUNDS Service fees will be paid on the following Putnam Funds at the rates set forth in the Prospectus of that Fund: Putnam Adjustable Rate U.S. Government Fund Putnam American Government Income Fund Putnam Arizona Tax Exempt Income Fund Putnam Asia Pacific Growth Fund Putnam Asset Allocation Funds -Putnam Asset Allocation: Growth Portfolio -Putnam Asset Allocation: Balanced Portfolio -Putnam Asset Allocation: Conservative Portfolio Putnam Balanced Retirement Fund Putnam California Tax Exempt Income Trust -Putnam California Intermediate Tax Exempt Fund -Putnam California Tax Exempt Income Fund Putnam Capital Appreciation Fund Putnam Convertible Income-Growth Trust Putnam Diversified Equity Trust Putnam Diversified Income Trust Putnam Equity Income Fund Putnam Europe Growth Fund Putnam Federal Income Trust Putnam Florida Tax Exempt Income Fund The George Putnam Fund of Boston Putnam Global Governmental Income Trust Putnam Global Growth Fund The Putnam Fund for Growth and Income Putnam Growth and Income Fund II Putnam Health Sciences Trust Putnam High Yield Advantage Fund Putnam High Yield Trust Putnam Income Fund Putnam Intermediate Tax Exempt Fund Putnam Intermediate U.S. Government Fund Putnam Investment Funds -Putnam International New Opportunities Fund Putnam Investors Fund Putnam Massachusetts Tax Exempt Income Fund Putnam Michigan Tax Exempt Income Fund Putnam Minnesota Tax Exempt Income Fund Putnam Money Market Fund Putnam Municipal Income Fund Putnam Natural Resources Fund Putnam New Jersey Tax Exempt Income Fund Putnam New Opportunities Fund Putnam New York Tax Exempt Income Trust -Putnam New York Intermediate Tax Exempt Fund -Putnam New York Tax Exempt Income Fund Putnam New York Tax Exempt Opportunities Fund Putnam Ohio Tax Exempt Income Fund Putnam OTC Emerging Growth Fund Putnam Overseas Growth Fund Putnam Pennsylvania Tax Exempt Income Fund Putnam Preferred Income Trust Putnam Tax Exempt Income Fund Putnam Tax-Free Income Trust -Putnam Tax-Free High Yield Fund -Putnam Tax-Free Insured Fund Putnam U.S. Government Income Trust Putnam Utilities Growth and Income Fund Putnam Vista Fund Putnam Voyager Fund Putnam Voyager Fund II SCHEDULE 2: MINIMUM ASSETS FINANCIAL INSTITUTION REQUIREMENTS. The minimum aggregate average net asset value of all accounts in Putnam Funds specified by Paragraph 1(b) is $250,000. We will review this requirement prior to the start of each year and inform you of any changes. REPRESENTATIVE REQUIREMENTS. With respect to Paragraph 1(c), there is no minimum asset qualification requirement in the Putnam Funds applicable to each of your representatives. We will review this requirement prior to the start of each year and inform you of any changes. We reserve the right to set a minimum at any time. NF-58 10/2/95 -----END PRIVACY-ENHANCED MESSAGE-----