As filed with the Securities and Exchange Commission on June 21, 1996
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
Registration Statement
Under The Securities Act of 1933
--------------------
EXPRESS AMERICA HOLDINGS CORPORATION
------------------------------------
(Exact name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 6282 86-0670679
- ------------------------------- ---------------- ---------------
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
Two Renaissance Square
40 North Central, 12th Floor
Phoenix, Arizona 85004
(602) 417-8100
---------------------------------------------------
(Address, including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive Offices)
Express America Holdings
Corporation 401(k) Plan
------------------------
(Full title of the plan)
Robert W. Stallings, President and
Chief Executive Officer
Express America Holdings Corporation
Two Renaissance Square
40 North Central, 12th Floor
Phoenix, Arizona 85004
(602) 417-8100
------------------------------------------------------------------------------
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Agent for Service)
Copies to:
Teresa M. Levy, Esq.
Michael Best & Friedrich
100 East Wisconsin Avenue
Suite 3300
Milwaukee, Wisconsin 53202
If any of the securities being registered on this Form S-8 are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. |X|
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
Title of Proposed Proposed
Securities Maximum Maximum Amount of
to be Amount to be Offering Price Aggregate Registration
Registered Registered(1)(2) Per Share(3) Offering(3) Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$0.01 par value 200,000 $4.32 $864,000.00 $297.93
per share
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents 200,000 shares reserved for issuance under the Express
America Holdings Corporation 401(k) Plan (the "401(k) Plan").
(2) Pursuant to Rule 416(c) under the Securities Act of 1933, as amended
(the "Securities Act"), this Registration Statement covers an
indeterminate amount of interests to be offered or sold pursuant to the
401(k) Plan (including any interests in the 401(k) Plan trust)
described herein.
(3) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(h)(1). The proposed maximum offering price per
share is based upon the average of the high and low prices ($4.50 and
$4.13, respectively) for the shares of Common Stock of $4.32 as
reported on the NASDAQ National Market System on June 17, 1996.
-2-
<PAGE>
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I will be included in documents sent
or given to participants in the Express America Holdings Corporation 401(k) Plan
(the "401(k) Plan"). Such documents are not being filed with the Securities and
Exchange Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424 in
reliance on Rule 428.
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
----------------------------------------
The following documents filed by Express America Holdings
Corporation (the "Company" or "Registrant") with the Commission are incorporated
herein by reference and made a part hereof:
(a) The Company's latest Annual Report on Form 10-K for the
fiscal year ended September 30, 1995, which includes the
consolidated financial statements of the Company as of
September 30, 1995, 1994 and 1993, the related consolidated
statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended
September 30, 1995, and the consolidated balance sheets at
September 30, 1995 and 1994, together with the related notes
and Report of Independent Auditors of the Company (dated
December 26, 1995).
(b) All other reports filed pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since the end of the last fiscal year for
which financial statements were included in the report
referred to in (a) above.
(c) The description of the Company's Common Stock included in
the Company's Registration Statement on Form S-1 (File No.
33-45038) which was declared effective by the Commission on
March 17, 1992.
All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
the filing of such documents.
Item 4. Description of Securities.
--------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
---------------------------------------
Not Applicable.
-3-
<PAGE>
Item 6. Indemnification of Directors and Officers.
------------------------------------------
The Company is incorporated under the laws of the State of
Delaware. Delaware law empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that that person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (including employee benefit plans)
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by that person in connection with
that action, suit or proceeding, to the extent that person: (i) acted in good
faith and in a manner that person reasonably believed to be in or not opposed to
the best interests of the corporation (including with respect to any employee
benefit plan actions in good faith and in a manner reasonably believed to be in
the interests of the beneficiaries of that employee benefit plan); and (ii) with
respect to any criminal action or proceeding, had no reasonable cause to believe
the conduct was unlawful.
Delaware law also empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that the
person acted in any of the capacities set forth above (that is, a derivative
action or suit) against expenses (including attorneys' fees) actually and
reasonably incurred by that person in connection with the defense or settlement
of such an action or suit if that person acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which that person has been adjudged to be liable to the corporation unless
and to the extent that the Court or Chancery or the court in which the action or
suit was brought determines that, despite the adjudication of liability but in
view of all the circumstances of the case, that person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
Delaware law further provides that: (i) to the extent a
director, officer, employee or agent of a corporation has been successful in the
defense of any action, suit or proceeding referred to above or in the defense of
any claim, issue or matter in any such action, suit or proceeding, that person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by that person in connection with that claim, issue or
matter; (ii) indemnification provided for by Delaware law shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and (iii) a corporation may purchase and maintain insurance on behalf of a
director, officer, employee or agent of a corporation against any liability
asserted against that person or incurred by that person in any such capacity or
arising out of that person's status as such whether or not the corporation would
have the power to indemnify against such liabilities under Delaware law.
Delaware law also provides that determinations with respect
to indemnification shall be made: (i) by the board of directors of a corporation
by a majority vote of a quorum consisting of directors who were not parties to
the action, suit or proceeding; (ii) by independent legal counsel in a written
opinion in cases where a quorum is not obtainable, or even if obtainable, when a
quorum if disinterested directors so directs; or (iii) by the stockholders of
the corporation.
Articles 8 and 9 of the Company's Articles of Incorporation
provide as follows:
"ARTICLE 8: Indemnification.
----------------
A. The Corporation shall, to the fullest extent permitted by
the Delaware General Corporation Law, as the same exists or may
hereinafter be amended, indemnify any and all persons who it shall have
power to indemnify under such law from and against any and all of the
expenses, liabilities or other matters referred to in or covered by
such law. Such
-4-
<PAGE>
indemnification may be provided pursuant to any Bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to
action in his director or officer capacity and as to action in another
capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such
a person.
B. If a claim under paragraph A. of this Article is not paid
in full by the Corporation within thirty (30) days after a written
claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the
claimant shall also be entitled to be paid the expense of prosecuting
such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation)
that the claimant has not met the standards of conduct which make it
permissible under the laws of the State of Delaware for the Corporation
to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard
of conduct set forth in the laws of the State of Delaware nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the Claimant has
not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the
applicable standard of conduct.
ARTICLE 9: Director's Liability. To the fullest extent
permitted by the Delaware General Corporation Law as the same exists or
may hereafter be amended, a director of the Corporation shall not be
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director."
Article VII of the Company's Bylaws provides as follows:
"Section 7.1 Indemnification. The Corporation shall
indemnify and advance expenses to, in the manner and to the full extent
permitted by law, any person (or the estate of any person) who was or
is a party to, or is threatened to be made a party to, any threatened,
pending or completed action, suit or proceedings, whether or not by or
in the right of the Corporation, and whether civil, criminal,
administrative, investigative, or otherwise, by reason of the fact that
such person is or was a director, officer, employee, fiduciary or agent
of the Corporation or is or was serving at the request of the
Corporation as a director, officer, trustee, fiduciary, employee or
agent of another corporation, partnership, joint venture or trust or
other enterprise. The indemnification and advancement of expenses
provided for herein shall be construed as a general authorization of
advancement of expenses, and such indemnification will not create an
obligation to repay unless a specific determination is made that the
person is not entitled to be indemnified as authorized by law. The
Corporation may, to the full extent permitted by law, purchase and
maintain insurance on behalf of any such person against any liability
which may be asserted against him or her. The indemnification and
advancement of expenses provided herein shall not be deemed to limit
the right of the Corporation to indemnify any other person for any such
expenses to the full extent permitted by law, nor shall it be deemed
exclusive of any other rights to which any person seeking
indemnification from the Corporation may be entitled under any
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to
action in another capacity while holding such office."
-5-
<PAGE>
The Company has obtained Directors' and Officers' Liability Insurance
which provides insurance against certain civil liabilities, including certain
liabilities under the federal securities laws. The Company also has entered into
separate indemnification agreements with its directors and officers which would
require the Company, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as directors or
officers, other than liabilities arising from fraud, actual dishonesty, willful
misconduct, or violation of Section 16(c) of the Exchange Act. The agreements
also would require the Company to advance directors' and officers' expenses in
certain circumstances.
Item 7. Exemption from Registration Claimed.
------------------------------------
Not Applicable.
Item 8. Exhibits.
---------
The Exhibits to this Registration Statement are listed in
the Exhibit Index on page 11 of this Registration Statement, which Exhibit Index
is incorporated herein by reference.
Pursuant to Item 8(b), in lieu of an opinion of counsel
regarding compliance with the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or an Internal Revenue Service
("IRS") determination letter that the 401(k) Plan is qualified under Section 401
of the Internal Revenue Code of 1986, as amended, the Registrant will submit the
401(k) Plan to the IRS in a timely manner and will make all changes required by
the IRS to qualify the 401(k) Plan.
Item 9. Undertakings.
-------------
The undersigned Registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any Prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the Registrant pursuant to Section 13 or 15(d) of the Exchange
Act that are incorporated by reference in the Registration
Statement.
-6-
<PAGE>
(2) For the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) For purposes of determining any liability under the Securities
Act, each filing of the Registrant's or the 401(k) Plan's
annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) The Registrant undertakes to deliver or cause to be delivered
with the prospectus, if not already delivered, the latest
annual report to security holders that is incorporated by
reference in the prospectus and furnished to and meeting the
requirements of Rule 14a-3 or 14c-3 under the Exchange Act,
unless such employee otherwise has received a copy of such
report, in which case the Registrant shall state in the
prospectus that it will promptly furnish, without charge, a
copy of such report on written or oral request of the
employee, and where interim financial information required to
be presented by Article 3 of Regulation S-X is not set forth
in the prospectus, to deliver or cause to be delivered to each
person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission, such
indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
-7-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Express America Holdings Corporation certifies that it has reasonable grounds to
believe that it meets all the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Phoenix, State of Arizona
on June 21, 1996.
EXPRESS AMERICA HOLDINGS CORPORATION
By: /s/ Robert W. Stallings
---------------------------
Robert W. Stallings, Chairman of the Board,
Chief Executive Officer and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Robert W. Stallings and James
R. Reis, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
pre-effective and post-effective amendments) to this registration statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them acting singly, full power and
authority to do and perform each and every act and thing necessary and requisite
to be done, as fully and to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them may lawfully do or cause to be done by virtue hereof.
-8-
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert W. Stallings Chairman of the Board, June 21, 1996
- ------------------------- Chief Executive Officer
Robert W. Stallings and President (Principal
Executive Officer)
/s/ James R. Reis Vice Chairman and Chief June 21, 1996
- -------------------------- Financial Officer
James R. Reis (Principal Financial Officer)
/s/ John C. Cotton Director June 21, 1996
- --------------------------
John C. Cotton
/s/ Roy A Herberger, Jr. Director June 21, 1996
- ---------------------------
Roy A Herberger, Jr.
/s/ John M. Holliman III Director June 21, 1996
- ----------------------------
John M. Holliman III
/s/ Stephen A McConnell Director June 21, 1996
- -----------------------------
Stephen A McConnell
/s/ Paul J. Renze Director June 21, 1996
- -----------------------------
Paul J. Renze
</TABLE>
-9-
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended
the trustees (or other persons who administer the employee benefit plan) have
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Phoenix and the State of
Arizona, on the 21 day of June, 1996.
EXPRESS AMERICA HOLDINGS CORPORATION
401(K) PLAN ADMINISTRATOR:
EXPRESS AMERICA HOLDINGS CORPORATION
By: /s/ James R. Reis
----------------------------------------
James R. Reis, Vice Chairman and
Chief Financial Officer
By: /s/ James M. Hennessy
----------------------------------------
James M. Hennessy, Senior Vice President
-10-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page Number in
Regulation S-K Sequentially
Exhibit No. Description of Document Numbered Copy
----------- ----------------------- -------------
<S> <C>
Exhibit 4.1 Restated Certificate of Incorporation of Registrant(1)
Exhibit 4.2 Amended and Restated Bylaws of Registrant(2)
Exhibit 4.3 Express America Holdings Corporation 401(k) Plan.......................
Exhibit 5 Opinion of Michael Best & Friedrich....................................
Exhibit 24.1 Consent of KPMG Peat Marwick LLP.......................................
Exhibit 24.2 Consent of Michael Best & Friedrich (included in Exhibit 5)
- ---------------
</TABLE>
(1) Incorporated by reference to Exhibit 3.1 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 30, 1993 (the
"1993 Form 10-K").
(2) Incorporated by reference to Exhibit 3.2 of the 1993 Form 10-K.
-11-
EXHIBIT 4.3
Express America Holdings Corporation
401(k) Plan
FIFTH AMENDMENT TO THE
EXPRESS AMERICA HOLDINGS
CORPORATION 401(K) PLAN
WHEREAS, Express America Holdings Corporation ("Company") previously
adopted the Express America Holdings Corporation 401(K) Plan ("Plan"); and
WHEREAS, the Company retained the right to amend the Plan pursuant to
Section 9.01 thereof; and WHEREAS, the Company desires to amend the Plan in it
entirety effective January 1, 1996; NOW, THEREFORE, effective January 1, 1996,
the Plan is amended in its entirety to read as follows:
<PAGE>
EXPRESS AMERICA HOLDINGS
CORPORATION 401(K) PLAN
TABLE OF CONTENTS
PAGE
SECTION 1 - NAME OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1 "Annuity Starting Date"
2.2 "Board"
2.3 "Break in Service"
2.4 "Code"
2.5 "Company"
2.6 "Compensation"
2.7 "Controlled Group"
2.8 "Distribution Notice Period"
2.9 "Employee"
2.10 "Employer"
2.11 "Entry Date"
2.12 "Execution Date"
2.13 "Five Percent Owner"
2.14 "Hours of Employment"
2.15 "Normal Retirement Date"
2.16 "Participant"
2.17 "Plan Administrator"
2.18 "Plan Year"
2.19 "Qualified Plan"
2.20 "Qualified Preretirement Survivor Annuity"
2.21 "Service"
2.22 "Trustee"
2.23 "Valuation Date"
SECTION 3 - ELIGIBILITY
3.1 Prior Participants
3.2 New Participants
3.3 Former Participants
3.4 Cessation of Participation
SECTION 4 - CONTRIBUTIONS
4.1 Basic Payroll Reduction Contributions
4.2 Additional Payroll Reduction Contributions
4.3 Maximum Payroll Reductions Contribution
4.4 Company Matching Contributions
4.5 Elections
4.6 Changes in and Suspension of Payroll Reductions
4.7 Tax Deductions
4.8 Rollover Contributions and Transfers
4.9 Loans
4.10 Hardship Withdrawals
SECTION 5 - DISTRIBUTIONS OF EXCESS AMOUNTS
5.1 Distribution of Excess Elective Deferrals
5.2 Limitations on Pre-Tax Constributions for Highly
Compensation Employees
5.3 Limitations on Matching Contributions For Highly
Compensated Employees
5.4 Limitations on Multiple Use of Alternative
Limitation
5.5 Definitions and Special Rules
5.6 Election to Treat Qualified Nonelective
Contributions and Qualfied Matching Contributions
as Elective Deferrals
5.7 Election to Treat Qualfied Nonelective
Contributions and Elective Deferrals as Matching
Contributions
SECTION 6 - ALLOCATION
6.1 Establishment of Accounts
6.2 404(c) Plan
6.3 Participant's Selection of Investment Fund
6.4 Transfers Between Investment Funds
6.5 Allocation of Earnings of Losses
6.6 Special Tranfer Rules
SECTION 7 - DISTRIBUTIONS AT RETIREMENT
7.1 Normal Retirement Distributions
7.2 Required Minimum Distributions
7.3 Required Beginning Date
SECTION 8 - DISTRIBUTIONS AT TERMINATION OF EMPLOYMENT
(VESTING)
8.1 Distributions Upon Termination of Employment
8.2 Determination of Vested Portion
8.3 Forfeitures
SECTION 9 - PAYMENT OF BENEFITS
9.1 Timing of Distributions
9.2 Form of Distribution
9.3 Spousal Consent to an Annuity Form of Benefit
or to an Alternate Beneficiary
9.4 Distribution Notice
SECTION 10 - DISTRIBUTIONS AT DEATH
10.1 Distributions Upon Death
10.2 Distribution to Spouse
10.3 Designation of Beneficiary
10.4 Beneficiary Not Designated
10.5 Spousal Consent to Designation of Beneficiary
SECTION 11 - LEAVES OF ABSENCE AND TRANSFERS
11.1 Military Leave of Absence
11.2 Maternity or Paternity Absence
11.3 Service During Maternity or Paternity Absence
11.4 Other Leaves of Absence
11.5 Transfers
SECTION 12 - TRUSTEE
SECTION 13 - ADMINISTRATION
13.1 Appointment of Plan Administrator
13.2 Construction
13.3 Decisions and Delegation
13.4 Duties of the Plan Administrator
13.5 Records of the Plan Adminstrator
13.6 Expenses
SECTION 14 - CLAIM PROCEDURE
14.1 Claim
14.2 Claim Decision
14.3 Rquest for Review
14.4 Review on Appeal
SECTION 15 - AMENDMENT AND TERMINATION
15.1 Amendment
15.2 Termination; Discontinuance of Contributions
SECTION 16 - MISCELLANEOUS
16.1 Participants' Rights
16.2 Spendthrift Clause
16.3 Delegation of Authority by Company
16.4 Distributions to Minors
16.5 Construction of Plan
16.6 Gender, Number and Headings
16.7 Separability of Provisions
16.8 Diversion of Assets
16.9 Service of Process
16.10 Merger
16.11 Benefit Limitation
16.12 Commencement of Benefits
16.13 Qualified Domestic Relations Order
16.14 Written Explanation of Rollover Treatment
16.15 Leased Employees
16.16 Special Distribution Option
16.17 Limitations on Special Distribution Option
SECTION 17 - TOP-HEAVY DEFINITIONS
17.1 "Accrued Benefits"
17.2 "Beneficiaries"
17.3 "Determination Date"
17.4 "Former Key Employee"
17.5 "Key Employee"
17.6 "Non-Key Employee"
17.7 "Permissive Aggregation Group"
17.8 "Required Aggregation Group"
17.9 "Super Top-Heavy Group"
17.10 "Top-Heavy Compensation"
17.11 "Top-Heavy Group"
SECTION 18 - TOP-HEAVY RULES
18.1 Special Top-Heavy Rules
18.2 Adjustments in Section 415 Limits
<PAGE>
EXPRESS AMERICA HOLDINGS
CORPORATION 401(K) PLAN
SECTION 1
NAME OF PLAN
This Plan shall be known as the "Express America Holdings Corporation
401(K) Plan." The Plan will be considered a profit sharing plan even though
contributions are not dependent on profits.
<PAGE>
SECTION 2
DEFINITIONS
2.1 "Annuity Starting Date" means the Valuation Ate as of which the
distribution is made. A Participant's Annuity Starting Date must be no less than
30 and no more than 90 days after the date the Participant receives the notice
described in Section 9.4.
2.2 "Board" means the board of directors of the Company.
2.3 "Break in Service" means a Plan Year in which a person completes
500 or fewer Hours of Employment.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Company" means Express America Holdings Corporation.
2.6 "Compensation" means the gross amount of wages, as shown on Form
W-2 provided by the Company, received during the Plan Year by an Employee after
he becomes a Participant for services rendered with respect to the Company, plus
amounts contributed through a salary reduction arrangement to a qualified plan
which meets the requirements of Code Section 401(k), but excluding any severance
pay.
The Compensation of each Participant taken into account under the Plan
for any Plan Year shall not exceed $150,000 (as adjusted in accordance with
Section 415(d) of the Code).
In determining the Compensation of a Participant for purposes of this
limit, the rules of Section 414(q)(6) of the Code shall apply, except that in
applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the Plan Year. If, as a result of the application of
such rules, the Compensation limit is exceeded, then the limit shall be pro
rated among the affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the application of this
limit.
2.7 "Controlled Group" means the Company and all other entities
required to be aggregated with the Company under Section 414(b), (c) or (m) of
the Code or regulations issued pursuant to Section 414(o) of the Code. The
purposes of Section 16.11, in determining which entities shall be aggregated
under Section 414(b) or (c) of the Code, the modifications made by Section
415(h) of the Code shall be applied.
2.8 "Distribution Notice Period" means the period beginning not more
than 90 days and ending not less than 30 days before any Valuation Date.
2.9 "Employee" means all persons classified as an employee by the
Employer.
2.10 "Employer" means the Company, Pilgrim America Group, Inc. or any
other member of the Controlled Group which has, with the consent of the Board,
adopted the Plan.
2.11 "Entry Date" means January 1, April 1, July 1 or October 1 of each
calendar year.
2.12 "Execution Date" means the date on which the Fifth Amendment is
executed, as shown on the signature page of such amendment.
2.13 "Five Percent Owner" means any person who owns (or is considered
as owning within the meaning of Section 318 of the Code) more than five percent
of the outstanding stock of any corporation in the Controlled Group of stock
possessing more than five percent of the total combined voting power of all
stock of any corporation in the Controlled Group or who owns more than five
percent of the capital or profits interest of any unincorporated entity in the
Controlled Group.
2.14 "Hours of Employment" for a person compensated on the basis of a
certain amount for each hour worked during a given period means:
(a) Each hour for which a person is directly or
indirectly paid, or entitled to payment, by the
Employer for the performance of duties and for
reasons other than the performance of duties;
provided that
(1) no more than 501 Hours of Employment shall be
credited on account of a single continuous
period during which no duties are performed, and
(2) no Hours of Employment shall be credited if
payment was made or due
(A) under a Plan maintained solely for the
purpose of complying with applicable
worker's compensation, or unemployment
compensation or disability insurance laws;
or
(B) solely as reimbursement for medical or
medically related expenses incurred by the
Employee.
(b) Each hour for which back pay, irrespective of
mitigation of damages, has been either awarded or
agreed to by the Employer. Such Hours of Employment
shall be credited for the periods to which the award
or agreement pertains rather than the periods in
which the award, agreement, or payment is made, an no
Hours of Employment shall be credited under this
paragraph which would duplicate any hours credited
above. For a person who is not compensated on the
basis of a certain amount for each hour worked during
a given period, credit shall be given at the rate of
10 Hours of Employment for each calendar day of
employment with the Employer for which he would be
credited with one or more Hours of Employment if (a)
or (b) above applied. For a person on a leave of
absence pursuant to Section 11.1 or 11.4, credit for
such leave shall be given for the number of regularly
scheduled working hours included in the period of
such leave.
Hours of Employment shall be calculated in accordance with Department
of Labor Regulation Section 2530.200b-2(b) and (c).
2.15 "Normal Retirement Date" means the date on which a Participant
terminates his employment with the Company (except by death) provided such date
is on or after such Participant's attainment of age 65.
2.16 "Participant" means an Employee who has satisfied the eligibility
requirements of Section 3 and who has not become a former Participant under
Section 3.4.
2.17 "Plan Administrator" means the Vice President Human Resources.
2.18 "Plan Year" mean the 12-month period commencing on January 1 and
ending on December 31.
2.19 "Qualified Plan" means any plan qualified under Section 401 of the
Code. For purposes of Sections 17 and 18 only, the term "Qualified Plan" also
means a simplified employee pension described in Section 408(k) of the Code.
2.20 "Qualified Preretirement Survivor Annuity" means a life annuity
payable to the surviving spouse of a Participant who dies to his Annuity
Starting Date.
2.21 "Service" means one year of Service for each 12-month period in
which a person completes 1,000 Hours of Employment measured from the date the
Participant first completes an Hour of Employment to the anniversary date which
is 12 months after such date. If a person has less than 1,000 Hours of
Employment in any 12-month period of employment with the Employer, measured from
the date the Participant first completes an Hour of Employment to the
anniversary date which is 12 months after such date, he shall receive a pro-rata
part of a year of Service based on the ratio of his Hours of Employment to
1,000. No more than one year of Service may be earned in any 12-month period for
any purpose of the Plan. Notwithstanding the foregoing, Participants who
participated in the Plan on May 1, 1995 and who would have less Service when
calculated under these rules than under the rules of Service which were in
effect under the Plan prior to May 1, 1995, shall have their Service calculated
under the rules for Service which were in effect prior to May 1, 1995.
2.22 "Trustee" means the trustee or any successor trustee appointed
pursuant to Section 12 hereof.
2.23 "Valuation Date" means each January 1, April 1, July 1 and October
1.
<PAGE>
SECTION 3
ELIGIBILITY
3.1 Prior Participants. Each period who was a Participant on December
31, 1995, shall continue to be a Participant on January 1, 1996.
3.2 New Participants. On and after January 1, 1996, each Employee not
described in Section 3.1 shall become a Participant hereunder as of the later
of:
(a) the first Entry Date after the Employee attains age 21,
and
(b) the first Entry Date following the calendar quarter in
which the Employee begins working for the Employer if he begins working
for the Employer during the first 15 days of a calendar quarter or the
second Entry Date immediately following the calendar quarter if the
Employee begins working for the Employer at any other time during a
calendar quarter.
If a person is not an Employee when satisfied one of the above
requirements, he shall not become a Participant until the day be becomes an
Employee.
3.3 Former Participants. A former Participant who is reemployed by the
Company shall become a Participant on the date he is reemployed as an Employee.
3.4 Cessation of Participation. A person shall cease to be a
Participant and shall become a former Participant when he (a) has ceased to be
employed by the Company, and (b) has no undistributed account balance under the
Plan.
<PAGE>
SECTION 4
CONTRIBUTIONS
4.1 Basic Payroll Reduction Contributions. A Participant may elect to
have up to 7% of his Compensation contribution by the Company to the Plan on a
pre-tax basis through payroll reductions. Each Participant shall elect on forms
provided by the Plan Administrator in increments of 1% the percentage of his
Compensation under this Section to be credited to his Salary Reduction Account
4.2 Additional Payroll Reduction Contributions. A Participant who has
elected to have 7% of his Compensation contributed by the Company to the Plan
under Section 4.1 may elect to have up to an additional 3% of this Compensation
contributed by the Company to the Plan on a pre-tax basis through payroll
reductions. Each Participant shall elect on forms provided by the Plan
Administrator in increments of 1% the percentage of his Compensation under this
Section to be credited to his Salary Reduction Account.
4.3 Maximum Payroll Reduction Contribution. The maximum amount which
may be contributed to the Plan by a Participant on a pre-tax basis under Section
4.1 and 4.2 and any other Qualified Plan maintained by the Company in any
calendar year is limited to $7,000 (or such higher amount prescribed by
applicable law). If the Participant's pre-tax contributions reach this maximum,
the Plan Administrator shall stop the Participant's payroll reduction
contributions for the remainder of the calendar year.
4.4 Company Matching Contributions. The Company will contribute to the
Plan an amount equal to 100% of the amount by which each Participant elects to
have his Compensation reduced under Section 4.1. Any such contributions shall be
paid to the Trustee when such salary reduction contributions are made. If a
Participant's pre-tax contributions for a calendar year reach the maximum amount
set out in Section 4.3 and, as a result, the Participant is no longer eligible
to make pre-tax contributions to the Plan, the Participant will continue to
receive matching contributions for each payroll period during the remainder of
the calendar year in an amount equal to:
(a) The lesser of (i) 100% of $7,000 (or such higher amount
prescribed by applicable law) or (ii) an amount equal to 100% of the
amount by which each Participant elected to have his Compensation
reduced under Section 4.1 from the beginning of the calendar year
through the end of such payroll period, minus
(b) The amount of matching contributions previously made on
behalf of the Participant from the beginning of the calendar year
through the end of such payroll period.
4.5 Elections. Each election by a Participant under Section 4.1 and 4.2
shall be effective until suspended or amended. Each election shall be effective
only when made on a form prescribed by the Plan Administrator or filed with the
Company.
4.6 Changes in and Suspension of Payroll Reductions.
(a) Changes in Payroll Reductions. Each Participant's payroll
reduction percentage under Sections 4.1 and 4.2 shall continue in
effect until the Participant shall change such percentage. As of the
first day of each calendar quarter, a Participant may in his discretion
change such percentage by written notice to the Company on forms
prescribed by the Plan Administrator before the first day of the
calendar quarter on which the change is to take effect.
(b) (1) Suspension of Payroll Reductions. A Participant may at
any time suspend his contributions effective on the 1st day of the
following month by giving written notice to the Company on forms
prescribed by the Plan Administrator.
(2) Suspension of Payroll Reductions During
Government or Military Service. Suspension of a Participant's
contributions shall be permitted during any period of military service,
or of government service approved by the Company, regardless of the
duration of such period.
(3) Resumption of Payroll Reductions After
Suspension. As of the first day of each calendar quarter, a Participant
who has suspended his contributions under Section 4.6(b)(1) may at any
time resume them by giving written notice to the Company on forms
prescribed by the Plan Administrator prior to the first day of the
payroll period in which such resumption is to take effect.
4.7 Tax Deductions. All Company contributions are made conditioned upon
their deductibility for Federal income tax purposes under Section 404 of the
Code. Amounts contributed by the Company shall be returned to the Company from
the Plan by the Trustee under the following circumstances:
(a) If the contribution was made by the Company by a mistake of fact,
the excess of the amount of such contribution over the amount that would have
been contributed had there been no mistake of fact shall be returned to the
Company within one year after the payment of the contribution; and
(b) If the Company makes a contribution which is not deductible under
Section 404 of the Code, such contribution (but only to the extent disallowed)
shall be returned to the Company within one year after the disallowance of the
deduction. Earnings attributable to the contribution shall not be returned to
the Company, but losses attributable to such excess contribution shall be
deducted from the amount to be returned. In the event (a) or (b) above apply,
the Company will distribute any salary reduction amounts returned to the Company
(less any losses) to the Employees who elected to reduce their salary by such
amounts.
4.8 Rollover Contributions and Transfers. The Plan Administrator may
direct the Trustee to accept from or on behalf of an Employee any cash or other
assets the receipt of which would constitute a rollover contribution as defined
in Section 408(d)(3)(A)(ii) of the Code or an eligible rollover contribution as
defined in Section 402(c)(4) of the Code which is excludible from income under
Section 402(c)(1) of the Code. The Plan Administrator may also direct the
Trustee to accept from the trustee of another Qualified Plan a direct transfer
of cash or other assets which does not constitute an eligible rollover
contribution. Notwithstanding the preceding sentence, the Trustee may not accept
the direct transfer of any assets from any Qualified Plan which would cause the
Plan to be subject to the requirements of Section 401(a)(11) of the Code. Any
contributions under this Section shall be segregated in a separate account and
shall be fully vested at all times. Unless accepted on a Valuation Date, the
assets of such account will be segregated from the other assets of the Plan
until the Valuation Date next following the date they are accepted, and
thereafter will share in the allocation of earnings and losses under Section
6.5. Such amounts shall not be considered as a contribution by a Participant for
purposes of Sections 4.1 or 16.11.
4.9 Loans. The Plan Administrator shall make loans available to
Participants who are employed with the Company on the date the loan is made (and
subject to the terms of this Section 4.9, to an interested party as defined in
Section 3(14) of the Employee Retirement Income Security Act of 1974, even if
such interested party is no longer an Employee) pursuant to a uniform and
non-discriminatory policy. Notwithstanding the above, loans shall not be made
available to highly compensated employees (as defined in Section 414(q) of the
Code) in an amount greater than the amount made available to other employees.
All loans shall comply with the following terms and conditions.
(a) Loan Applications. A Participant must file with the Plan
Administrator a loan application on forms which she will make available
for such purpose.
(b) Criteria for Approval. The Plan Administrator shall determine
whether a Participant qualifies for a loan, applying such criteria as a
commercial lender of funds would apply in like circumstances with
respect to the Participant and his general ability to repay the loan.
To assist the Plan Administrator in making this determination the
Participant shall be required to provide such supporting information
deemed necessary by the Plan Administrator.
(c) Loan Limits. No loan shall be made if immediately after the
loan the unpaid balance of all loans by this Plan and all other plans
maintained by the Controlled Group to the Participant would exceed the
lesser of
(1) $50,000, or
(2) 50% of the vested portion of the Participant's accounts
under this Plan.
Notwithstanding the foregoing:
(3) the $50,000 limitation in (1) above shall be reduced by
the highest outstanding loan balance for the one-year period
ending on the day before a new loan is made minus the outstanding
balance of existing loans to the Participant on the date of the
new loan.
(d) Repayment Period.A fixed period for repayment of
the loan not in excess of 5 years shall be specified in the
loan agreement; provided, that if the loan is used to acquire
any dwelling unit which within a reasonable time is used as a
principal residence of the Participant, the specified
repayment period may be longer than 5 years.
(e) Manner and Timing of Repayments. Loans will be
repaid (principal and interest) through substantially equal
payroll deductions; provided, that a Participant may at any
time prepay the entire amount due on the loan in one lump sum.
Upon a Participant's termination of employment, the entire
loan balance shall become due and payable immediately and
shall be set off against any distribution due to the
Participant.
(f) Security. Each loan shall be secured by
assignment of the Participant's accounts in the Plan and by
the Participant's collateral promissory note for the amount of
the loan, including interest thereon, payable to the order of
the Trustee. However, in no event shall more than 50% of the
Participant's vested interest in the Plan (determined
immediately after origination of the loan) be used security
for the loan.
(g) Interest. Each loan shall bear a reasonable rate
of interest commensurate with the prevailing interest rate
charged on similar commercial loans under like circumstances
by persons in the business of lending money.
(h) Investment of Account. Any loan made to a
Participant shall be treated as a segregated investment of his
accounts. As such, all payments of principal and interest made
by the Participant shall be credited only to the accounts of
such Participant.
(i) Minimum Loan. The minimum amount of any loan
shall be $1,000.00
(j) Order of Investment Liquidation. The Company
shall liquidate a portion of each Fund in which the
Participant's account are invested to provide the proceeds for
any loan to the Participant. The amount of each such Fund to
be liquidated shall be equal to the loan amount multiplied by
the percentage of the Participant's accounts which are
invested in such Fund as of the Valuation Date coinciding with
or proceeding the date as of which the loan is made. Provided,
however, that the closed-end funds shall not be liquidated
unless there are insufficient amounts in the other investment
funds to provide the proceeds for the loan.
Loan repayments must be made through payroll deduction.
(k) Loans Limited to Employees. Except as otherwise
provided in this Section 4.9, no loan shall be made to any
Participant who has terminated employment with the Company.
(l) Default.Generally, a default shall occur upon the
failure of a Participant to timely remit repayments under the
loan when due. In such event, the Trustee shall take such
reasonable actions which a prudent fiduciary in like
circumstances would take to protect and preserve Plan assets,
including foreclosing on any collateral and commencing such
other legal action for collection which the Trustee deems
necessary and advisable. However, the Trustee shall not be
required to commence such actions immediately upon a default.
Instead, the Trustee may grant the Participant reasonable
rights to cure any default, provided such actions would
constitute a prudent and reasonable course of conduct for a
professional lender in like circumstances. In addition, if no
risk of loss of principal or income would result to the Plan,
the Trustee may choose, in its discretion, to defer
enforcement proceedings. If the qualified status of the Plan
is not jeopardized, the Trustee and the Plan Administrator may
treat a loan that has been defaulted upon and not cured within
a reasonable period of time as a deemed distribution from the
Plan.
(m) Penalty. A participant who receives a loan will
be unable to make pre-tax contributions to the Plan for a
period of twelve months after the Valuation Date as of which
the loan is made. Moreover, the maximum amount of a
Participant's pre-tax contributions to the Plan or any other
plan maintained by the Controlled Group for the calendar year
following the calendar year of the loan may not exceed $7,000
(or such higher amount prescribed by applicable law) reduced
by the amount of such Participant's pre-tax contributions for
the calendar year of the loan.
4.10 Hardship Withdrawals.
(a) Requirements. A Participant in the employment of
the Company may withdraw as of any date all or any part of the
vested portion of his Matching Contribution Account, Rollover
Account or Salary Reduction Account (but not the earnings
credited to his Salary Reduction Account after such date as is
set forth in Treasury Regulations under Section 401(k) of the
Code) only upon a showing of substantial hardship to the Plan
Administrator. The Plan Administrator will grant a
distribution on account of hardship only if the distribution
is made on account of an immediate and heavy financial need of
the Participant and is necessary to satisfy such financial
need.
(b) Determination of Immediate and Heavy Financial
Need. A distribution will be deemed to be made on account of
an immediate and heavy financial need of the Participant only
if the distribution is on account of:
(1) expenses for medical care described in
Section 213(d) of the Code previously incurred by the
Participant, the Participant's spouse or any of the
Participant's dependents (as defined in Section 152 of
the Code) or necessary for these persons to obtain
medical care described in Section 213(d) of the Code;
(2) costs directly related to the purchase
(excluding mortgage payments) of a principal residence of
the Participant;
(3) the payment of tuition and related
educational fees (excluding expenses for room and board)
for the next 12 months of post-secondary education for
the Participant, the Participant's spouse, or the
Participant's children or dependents (as defined in
Section 152 or the Code); or
(4) payments necessary to prevent the eviction
of the Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence.
(c) Amount Necessary to Satisfy Financial Need. A
distribution will be deemed to be necessary to satisfy an
immediate and heavy financial need of a Participant if the
following requirements are satisfied:
(1) The distribution is not in excess of the amount
of the immediate and heavy financial need of the Participant
(which may include any amounts necessary to pay any federal,
state or local income tax or penalties reasonably anticipated
to result from the distribution); and
(2) The Participant has obtained all distributions,
other than hardship distributions, and all nontaxable (at the
time of the loan) loans currently available under all plans
maintained by the Controlled Group.
In addition a Participant who receives a hardship withdrawal will be
unable to make pre-tax contributions to the Plan or any other qualified
or nonqualfied plan or deferred compensation maintained by the
Controlled Group, including stock option and stock purchase plans and a
cash or deferred arrangement that is part of a cafeteria plan within
the meaning of Section 125 of the Code (but not the cafeteria plan
itself), for a period of twelve months after the Valuation Date as of
which the hardship distribution is made. Moreover, the maximum amount
of a Participant's pre-tax contributions to the Plan or any other plan
maintained by the Controlled Group for the calendar year following the
calendar year of the hardship withdrawal may not exceed $7,000 (or such
higher amount prescribed by applicable law) reduced by the amount of
such Participant's pre-tax contributions for the calendar year of the
hardship withdrawal.
(d) Deadlines for Submission of Withdrawal
Applications.An application for a withdrawal must be received by the
Plan Administrator at least 5 days preceding the date as of which the
withdrawal is to be made.
(e) Order of Investment Liquidation. The Company
shall liquidate a portion of each Fund in which the Participant's
accounts are invested to provide the proceeds for any withdrawal to the
Participant. The amount of each such fund to be liquidated shall be
equal to the withdrawal amount multiplied by the percentage of the
Participant's accounts which are invested in such fund as the
Validation Date coinciding with or preceding the date as of which the
withdrawal is made. Provided, however, that the closed-end funds shall
not be liquidated unless there are insufficient amounts in the other
investment funds to provide the proceeds for the withdrawal. 4.11
Vesting After Withdrawals. If a withdrawal under Section 4.10 is made
by a Participant whose matching Contribution Account was not 100%
vested at the time of such withdrawal, then the Company shall
separately record the portion of his Matching Contribution Account
which was not vested at the time of the withdrawal, and the vested
amount of such portion from time to time shall equal an amount ("X")
determined by the following formula:
X=P(AB + (R X D)) - (R X D)
For purposes of applying such formula: "P" is the vested percentage at the
relevant time; "AB" is the account balance at the relevant time; "D" is the
amount previously withdrawn by the Participant; and "R" is the ratio of the
account balance at the relevant time to the account balance after the
withdrawal. If a person who has received a withdrawal hereunder is subsequently
entitled to an allocation of Company contributions, the Company shall separately
record such contributions and vesting with respect to such contributions shall
be in accordance with Section 8.2
<PAGE>
SECTION 5
DISTRIBUTIONS OF EXCESS AMOUNTS
5.1 Distributions of Excess Elective Deferrals. If a Participant's
Elective Deferrals (as defined in Section 5.5 (f)) for any calendar year exceed
$7,000 (or such higher amount prescribed by applicable law), then the
Participant may file and election form prescribed by the Plan Administrator with
the Company designating in writing the amount of such excess Elective Deferrals
to be distributed from this Plan. Any such election form must be filed with the
Company no later than the March 1 following the close of such calendar year in
order for the Company to act on it. If such an election form is timely filed,
the Trustee shall distribute to the Participant the amount of such excess
Elective Deferrals which the Participant has allocated to this Plan together
with any income or less any loss allocable to such amount on or before the April
15 following the close of such calendar year. In the case of a Highly
Compensated Employee (as defined in Section 5.5(j)), the Trustee shall also
distribute to the Participant any Matching Contributions (as defined in Section
5.5(k)) which were contributed on account of the Elective Deferrals being
distributed, even if such Matching Contributions are vested. For purposes of the
preceding sentence, the income or loss allocable to such excess amount will be
determined under such reasonable method as the Plan Administrator shall
establish that does not discriminate in favor of Highly Compensated Employees
(as defined in Section 5.5(j)).
5.2 Limitations on Pre-Tax Contributions for Highly Compensated
Employees. The Plan Administrator is authorized to reduce to the extent
necessary the maximum deferral percentage under Sections 4.1 and 4.2 for Highly
Compensated Employees, prior to the close of the Plan Year if the Plan
Administrator reasonably believes that such reduction is necessary to prevent
the Plan from failing both tests in Section 5.2(a). Such adjustments shall be
made in accordance with rules prescribed by the Plan Administrator.
(a) Actual Deferral Percentage Tests.
(1) The Plan satisfies this subparagraph if
the Actual Deferral Percentage (as defined in Section 5.5(b))
for the group of Highly Compensated Employees is not greater
than 125% of the Actual Deferral Percentage for the group of
Non-Highly Compensated Employees (as defined in Section
5.5(m)).
(2) The Plan satisfies this subparagraph if:
(A) the excess of the Actual
Deferral Percentage for the group of Highly
Compensated Employees over the Actual Deferral
Percentage for the group of Non-Highly Compensated
Employees is not more than two percentage points, and
(B) the Actual Deferral Percentage
for the group of Highly Compensated Employees is not
more than twice the Actual Deferral Percentage of
Non-Highly Compensated Employees.
(b) Distributions of Excess Contributions if Tests are Failed. If
for any Plan Year the Plan satisfies neither of the tests set forth in
Section 5.2(a), within 12 month after the last day of such Plan Year
the Trustee shall return to each Highly Compensated Employee his
portion of the Excess Contribution (as defined in Section 5.5 (h)) for
such Plan Year (plus the income or less the loss allocable to such
Excess Contributions) plus any Matching Contributions which were
contributed on account of the Excess Contributions being distributed
even if such Matching Contributions are vested. The Excess
contributions returned to each Highly Compensated Employee shall be
taken, pro rata, from each of the investment funds in which such
Employee is invested at the time such contributions are returned.
Provided, however, that no refunds shall be made out of the closed-end
funds unless there are insufficient amounts in the other investments
funds to return the Excess Contributions. If such Excess Contributions
are not returned within the first 2-1/2 months after the last day of
such Plan Year, the Company shall timely file with respect to any and
all tax liability arising for failure to timely distribute the Excess
Contributions. The portion of each Highly Compensated Employee's
Excess Contributions for a Plan Year shall be determined by reducing
the pre-tax contributions made on behalf of Highly Compensated
Employees in a manner such that those Highly Compensated Employees
with the highest Actual Deferral Percentages shall each have their
pre-tax contributions reduced to the extent necessary but not below
the next highest level of Actual Deferral Percentages and then those
Highly Compensated Employees with Actual Deferral Percentages greater
than or equal to this level shall each have their pre-tax
contributions reduced (or further reduced, as the case may be) to the
extent necessary but not below the next highest level of Actual
Deferral Percentages, and this reduction process shall continue
through each successively lower level of Actual Deferral Percentages
until the Actual Deferral Percentage for the group of Highly
Compensated Employees satisfies one of the tests set forth in Section
5.2(a). Excess Contributions shall be allocated to Participants who
are subject to the family member aggregation rules of Section 414(q)
(6) of the Code in the manner prescribed by the regulations. The
income or loss allocable to a Highly Compensated Employee's portion of
the Excess Contribution will be determined under such reasonable
method as the Plan Administrator shall establish that does not
discriminate in favor of Highly Compensated Employees.
(c) Coordination with Distributions of Elective Deferrals. If the
Trustee is required to distribute both Elective Deferrals and Excess
Contributions for a Plan Year, the Trustee shall instruct the Plan
Administrator or recordkeeper to:
(1) calculate and distribute the Elective Deferrals before
determining the Excess Contributions to be distributed to Highly
Compensated Employees;
(2) calculate the Average Deferral Percentage in accordance
with Section 5.5(b) including the amount of excess Elective
Deferrals distributed pursuant to (1) above; and
(3) distribute Excess Contributions to Participants by
reducing the Excess Contributions distributed to a Participant by
the amount of excess Elective Deferrals distributed to such
Participant.
(d) Election to Make Additional Company
Contributions. Notwithstanding 5.2(b) and 5.2(c) above, the Company may
elect, in lieu of the distribution described in 5.2(b) above, to make
additional Qualified Nonelective Contributions (as defined in Section
5.5(o)) or Qualified Matching Contributions (as defined in Section 5.5
(n)) which are treated as Elective Deferrals under the Plan and that,
in combination with the Elective Deferrals, satisfy the Actual Deferral
Percentage test set forth in Section 5.2(a). Any such additional
Qualified Nonelective Contributions or Qualified Matching Contributions
will be credited to the Participants' Matching Contribution Account.
5.3 Limitations on Matching contributions for Highly
Compensated Employees. The Plan Administrator is authorized to reduce to the
extent necessary the maximum amount of matching contributions under Section 4.4
contributed on behalf of any Highly Compensated Employee prior to the close of
the Plan Year if the Plan Administrator reasonably believes that such adjustment
is necessary to prevent the Plan from failing both tests in Section 5.3(a). Such
reduction shall be made in accordance with rules prescribed by the Plan
Administrator.
(a) Actual Contribution Percentage Tests.
(1) The Plan satisfies this subparagraph if
the Actual Contribution Percentage (as defined in Section
5.5(a)) for the group of Highly Compensated Employees is not
greater than 125% of the Actual Contribution Percentage for
the group of all Non-Highly Compensated Employees.
(2) The Plan satisfies this subparagraph
if:
(A) the excess of the Actual
Contribution Percentage for the group of Highly Compensated
Employees over the Actual Contribution Percentage for the
group of Non-Highly Compensated Employees is not more than two
percentage points, and
(B) the Actual Contribution Percentage
for the group of Highly Compensated Employees is not more than
twice the Actual Contribution Percentage of Non-Highly
Compensated Employees.
(b) Distribution of Matching Contributions if Tests are
Failed. If for any Plan Year the Plan fails to satisfy either of the
tests set forth in Section 5.3(a), the Trustee shall return to each
Highly Compensated Employee the vested portion of his portion of the
Excess Aggregate Contributions (as defined in Section 5.5(g)) (plus the
income or less the losses allocable to such Excess Aggregate
Contributions) for such Plan Year within 12 months after the last day
of such Plan Year. The nonvested portion shall be forfeited. The Excess
contributions returned to each Highly Compensated Employee shall be
taken, pro rata, from each of the investment funds in which such
Employee is invested at the time such contributions are returned.
Provided, however, that no refunds shall be made out of the closed-end
funds unless there are insufficient amounts in the other investments
funds to return the Excess Contributions. If such Excess Aggregate
Contributions are not returned within the first 2-1/2 months after the
last day of such Plan Year, the Company shall timely file with respect
to any and all tax liability arising for failure to timely distribute
the Excess Aggregate Contributions. The portion of each Highly
Compensated Employee's Excess Aggregate Contributions for a Plan Year
which shall be distributed shall be determined first by reducing the
Matching Contributions on behalf of Highly Compensated Employees in a
manner such that those Highly Compensated Employees with the highest
Actual Contribution Percentages shall each have the Matching
Contributions on their behalf reduced to the extent necessary but not
below the next highest level of Actual Contribution Percentages and
then those Highly Compensated Employees with Actual Contribution
Percentages greater than or equal to this level shall each have the
Matching Contributions on their behalf reduced (or further reduced, as
the case may be) in the same manner to the extent necessary but not
below the next highest level of Actual Contribution Percentages, and
this reduction process shall continue through each successively lower
level of Actual Contribution Percentages until the Actual Contribution
Percentage for the group of Highly Compensated Employees satisfies one
of the tests set forth in Section 5.3(a). Excess Aggregate
Contributions shall be allocated to Participants who are subject to the
family member aggregation rules of Section 414(q) (6) of the Code in
the manner prescribed by the regulations. The income or loss allocable
to a Highly Compensated Employee's portion of the Excess Aggregate
Contributions will be determined under such reasonable method as the
Plan Administrator shall establish that does not discriminate in favor
of Highly Compensated Employees.
(c) Election to Make Additional Employer
Contributions. Notwithstanding 5.3(a) above, the Company may elect, in
lieu of the distribution described in 5.3(a) above, to make an
additional Qualified Nonelective Contribution that, in combination with
the Matching Contributions (as defined in Section 5.5(k)) for the Plan
Year, satisfies the Actual Contribution Percentage test set forth in
Section 5.3(a). Any such additional Qualified Nonelective Contributions
will be credited to the Participants' Matching Contribution Account.
5.4 Limitations on Multiple Use of Alternative Limitation:
(a) Determination of Multiple Use. The Plan
Administrator will determine whether or not multiple use of the
Alternative Limitation (as defined in Section 5.5 (e)) has occurred.
Such determination will be made in accordance with Section 401(m) (9)
of the Code.
(b) Correction of Multiple Use. If a multiple use of
the Alternative Limitation occurs, the Plan Administrator shall correct
such multiple use by reducing the Actual Contribution Percentages of
Highly Compensated Employees in the manner set forth in Section 5.3(b)
so that there is no multiple use of the Alternative Limitation.
5.5 Definitions and Special Rules. For purposes of this
Section 5:
(a) The Actual Contribution Percentage for a group
for a Plan Year means the average of the ratios (calculated separately
for each Employee in the group) of:
(1) the total amount of matching
contributions credited to the Employee's Matching Contribution Account
pursuant to Section 5.5(1) for the Plan Year plus any Qualified
Nonelective Contributions (as defined in Section 5.5(o)) and Elective
Deferrals which the Company elects to treat as Matching Contributions
in accordance with Section 5.7 to
(2) the Employee's Compensation for the
portion of such Plan Year while the individual is an Employee.
The Actual Contribution Percentage for each group will be calculated to
the nearest 100th of 1% of the Employee's Compensation.
(b) The Actual Deferral Percentage for a group for a
Plan Year means the average of the ratios (calculated separately for
each Employee in the group) of:
(1) the total amount of contributions
credited to the Employee's Salary Reduction Account for the Plan Year
plus any Qualified Nonelective Contributions (as defined in Section
5.5(o)) and Qualified Matching Contributions (as defined in Section
5.5(n)) which the Company elects to treat as Elective Deferrals in
accordance with Section 5.6 to
(2) the Compensation for the portion of
such Plan Year while the individual is an Employee.
The Actual Deferral Percentage for each group will be calculated to the
nearest 100th of 1% of the Employee's Compensation.
(c) For purposes of determining the Actual
Contribution Percentage of a Highly Compensated Employee who is subject
to the family aggregation rules of Section 414(q) (6) of the Code, the
combined Actual Contribution Percentage of the family group (which is
treated as one Highly Compensated Employee) shall be the Actual
Contribution Percentage determined by combining the Compensation,
Matching Contributions and amounts treated as Matching contributions of
all Family Members (as defined in Section 5.5(i)).
(d) For purposes of determining the Actual Deferral
Percentage of a Highly Compensated Employee who is subject to the
family aggregation rules of Section 414 (q) (6) of the Code, the
combined Actual Deferral Percentage of the family group (which is
treated as one Highly Compensated Employee) shall be the Actual
Deferral Percentage determined by combining the Compensation, Elective
Deferrals and amounts treated as Elective Deferrals of all Family
Members (as defined in Section 5.5 (i)).
(e) Alternative Limitation means the alternative
methods of compliance with Sections 401(k) (3) (A) (ii) (II) and 401
(m) (2) (A) (ii) of the Code as set forth in Sections 5.2 (a) (2) and
5.3(a) (2) respectively.
(f) The Elective Deferrals for a calendar year mean
the sum of any salary reduction amounts for the Plan Year which relate
to Compensation that would have been received in the Plan Year but for
the election to defer and which are pre-tax or deductible contributions
under:
(1) a qualified cash or deferred
arrangement as defined in Section 401(k) of the Code;
(2) a simplified employee pension as
defined in Section 408(k) of the Code;
(3) a plan under which such salary
reduction amounts are used to purchase an annuity contract under
Section 403(b) of the Code;
(4) any plan described in Section 501(c)
(18) of the Code.
(g) The Excess Aggregate Contributions for a Plan
Year means the excess of the aggregate amount of Matching Contributions
made on behalf of Highly Compensated Employees for such Plan Year over
the maximum amount of such contributions which could have been made for
such Plan Year without causing the Plan to fail both the tests in
Section 5.3(a).
(h) The Excess Contributions for a Plan Year means
the excess of the aggregate amount of pre-tax contributions under
Sections 4.1 and 4.2 made on behalf of Highly Compensated Employees for
such Plan Year over the maximum amount of such contributions which
could have been made for such Plan Year without causing the Plan to
fail both the tests in Section 5.2(a).
(i) Family Member means with respect to a Plan Year
any individual who at any time during such Plan Year bears one of the
following relationships to a Five Percent Owner or to one of the ten
Highly Compensated Employees paid the greatest Compensation during such
Plan Year:
(1) Spouse;
(2) Lineal ascendant;
(3) Lineal descendant;
(4) The spouse of a lineal ascendant; or
(5) The spouse of a lineal descendant.
(j) Highly Compensated Employee means a Participant
who, during the look-back year: (i) received compensation from the
Employer in excess of $75,000 (as adjusted pursuant to section 415(d)
of the Code); (ii) received compensation from the Employer in excess of
$50,000 (as adjusted pursuant to section 415(d) of the Code) and was a
member of the top-paid group for such year; or (iii) was an officer of
the Employer and received compensation during such year that is greater
than 50 percent of the dollar limitation in effect under section 415(b)
(1) (A) of the Code. The term highly compensated employee also includes
(i) a Participant who is both described in the preceding sentence if
the term "determination year" is substituted for the term "look-back
year" and is one of the 100 employees who received the most
compensation from the Employer during the determination year; and (ii)
a Participant who is a Five Percent Owner 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.
For this purpose, the determination year shall be the
Plan year. The look-back year shall be the twelve-month period
immediately preceding the determination year.
If an Employee is, during a determination year or
look-back year, a family member of either a Five Percent Owner who is
an active or former employee or a Highly Compensated Employee who is
one of the 10 most highly compensated employees ranked on the basis of
compensation paid by the Employer during such year, then the family
member and the Five Percent Owner or top-ten highly compensated
employee shall be aggregated. In such case, the family member and Five
Percent Owner or top-ten highly compensated employee shall be treated
as a single employee receiving compensation and Plan contributions or
benefits equal to the sum of such compensation and Plan contributions
or benefits equal to the sum or such compensation and contributions or
benefits of the family member and Five Percent Owner or top-ten highly
compensated employee. For purposes of this section, family member
includes the spouse, lineal ascendants and descendants of the employee
or former employee and the spouses of such lineal ascendants and
descendants.
The determination of who is a highly compensated
employee, including the determinations of the number and identity of
employees in the top-paid group, the top 100 employees, the number of
employees treated as officers and the compensation that is considered,
will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
(k) Matching Contributions means:
(1) Any company contribution made to a
Qualified Plan on account of an Employee contribution to a
Qualified Plan maintained by the Company;
(2) Any Company contribution made to a
Qualified Plan on account of an Elective Deferral to a Qualified
Plan maintained by the Company;
(3) Any discretionary Company contribution
that is allocated to Participants on account of an Employee
contribution or Elective Deferral to a Qualified Plan maintained
by the Company; and
(4) Any forfeiture allocated on the basis
of Employee contributions, Matching Contributions or Elective
Deferrals.
(1) Nonelective Contributions means Company
contributions (other than Matching Contributions) made to a Qualified
Plan maintained by the Company which the Employee may not elect to have
paid to him in cash or other benefits in lieu of being contributed to
such Qualified Plan.
(m) Non-Highly Compensated Employee means any
Employee who is not a Highly Compensated Employee and is not a Family
Member but who is eligible to participate in the Plan.
(n) Qualified Matching Contributions means any
Company Contribution made on account of an Employee's Elective
Deferral; provided that:
(1) such contributions are 100% vested and
nonforfeitable when made; and
(2) such contributions are not
distributable to a Participant or his beneficiaries earlier than:
(A) The Participant's retirement,
death, disability or separation from service.
(B) The Participant's attainment of
age 59-1/2.
(C) One of the following events:
(i) the termination of the
Plan without the establishment, within the
12-month period after the distribution of
all of the assets of the Plan, or
maintenance of another defined contribution
plan other than an employee stock ownership
plan as defined in Section 4975(e) (7) of
the Code or a simplified employee pension
plan as defined in Section 408(k) of the
Code; provided, however, that if fewer than
2% of the Participants of the Plan at the
time of the termination are eligible under
another defined contribution plan at any
time during the 24 month period beginning 12
months before the time of the termination
such other defined contribution plan will
not be considered to be a successor plan;
(ii) the disposition of
substantially all the assets (within the
meaning of Section 409(d) (2) of the Code)
used in a trade or business with respect to
a Participant who continues employment with
the unrelated corporation acquiring such
assets;
(iii) the disposition of
the interest in a subsidiary (within the
meaning of Section 409(d) (3) of the Code)
with respect to a Participant who continues
employment with such subsidiary.
Notwithstanding the foregoing, an
event shall not be treated as an event described in
(i), (ii) or (iii) above with respect to any
Participant unless he receives a lump sum
distribution (as defined in Section 402(d) (4) or the
Code without regard to clauses (i), (ii), (iii) and
(iv) of subparagraph (A), subparagraph (B) or
subparagraph (H) thereof); and an event shall not be
treated as an event described in (ii) or (iii) above
unless the transferor continues to maintain the Plan.
(o) Qualified Nonelective Contributions means any
Company Contribution other than a Matching
Contribution; provided that:
(1) such contributions are 100% vested and
nonforfeitable when made; and
(2) such contributions are not distributable
to a Participant or his beneficiaries earlier than:
(A) The Participant's retirement,
death, disability or separation from service.
(B) The Participant's attainment of
age 59-1/2.
(C) One of the following events:
(i) the termination of the
Plan without the establishment, within the 12-month
period after the distribution of all of the assets of
the Plan, or maintenance of another defined
contribution plan other than an employee stock
ownership plan as defined in Section 4975(e) (7) of
the Code or a simplified employee pension plan as
defined in Section 408(k) of the Code; provided,
however, that if fewer than 2% of the Participants of
the Plan at the time of the termination are eligible
under another defined contribution plan at any time
during the 24 month period beginning 12 months before
the time of the termination, such other defined
contribution plan will not be considered to be a
successor plan;
(ii) the disposition of
substantially all the assets (within the meaning of
Section 409(d) (2) of the Code) used in a trade or
business with respect to a Participant who continues
employment with the unrelated corporation acquiring
such assets;
(iii) the disposition of
the interest in a subsidiary (within the meaning of
Section 409(d) (3) of the Code) with respect to a
Participant who continues employment with such
subsidiary.
Notwithstanding the foregoing, and
event shall not be treated as an event described in
(i), (ii) or (iii) above with respect to any
Participant unless he receives a lump sum
distribution (as defined in Section 402(d) (4) of the
Code without regard to clauses (i), (ii), (iii) and
(iv) of subparagraph (A), subparagraph (B) or
subparagraph (H) thereof); and an event shall not be
treated as an event described in (ii) or (iii) above
unless the transferor continues to maintain the Plan.
(p) The Plan may be disaggregated under Section
1.410(b)-6(b) (3) and Section 1.410(b)-7(c)(3) of the
Treasury Regulations for any Plan Year in order to pass the Actual
Contribution Percentage and Actual Deferral Percentages tests set forth
in this Section.
5.6 Election to Treat Qualified Nonelective Contributions and
Qualified Matching Contributions as Elective Deferrals. Notwithstanding anything
to the contrary, the Company may elect to treat all or part of the Qualified
Nonelective Contributions and Qualified Matching Contributions as Elective
Deferrals provided that each of the following is satisfied:
(a) The Nonelective Contributions including Qualified
Nonelective Contributions treated as Elective Deferrals for purposes of
calculating the Actual Deferral Percentage satisfy the requirements of
Section 401(a) (4) or the Code;
(b) The Nonelective Contributions excluding:
(1) Qualified Nonelective Contributions
treated as Elective Deferrals for purposes of calculating the
Actual Deferral Percentage; and
(2) Qualified Nonelective Contributions
treated as Matching Contributions for purposes of calculating
the Actual Contribution Percentage satisfy the requirements of
Section 401(a)(4) of the Code;
(c) The Qualified Nonelective Contributions and
Qualified Matching Contributions for a Plan Year are allocated to
Participants as of a date within that Plan Year:
(d) The Qualified Nonelective Contributions and
Qualified Matching Contributions for a Plan Year relate to Compensation
that would have been received by the Employee in the Plan Year but for
the Employee's election to defer:
(e) If the Qualified Nonelective Contributions or
Qualified Matching Contributions are made to another plan or plans,
this Plan and such other plan(s) must be aggregated for purposes of
Section 410(b) of the Code (other than the average benefit percentage
test); and
(f) The Qualified Nonelective Contributions and
Qualified Matching Contributions for a Plan year are actually paid to
the trust on or before twelve (12) months after the end of the Plan
Year.
5.7 Election to Treat Qualified Nonelective Contributions and Elective
Deferrals as Matching Contributions. Notwithstanding anything to the contrary,
the Company may elect to treat all or part of the Qualified Nonelective
Contributions and Elective Deferrals as Matching Contributions provided that
each of the following is satisfied:
(a) The Nonelective Contributions including Qualified
Nonelective Contributions treated as Matching Contributions for
purposes of calculating the Actual Contribution Percentage satisfy the
requirements of Section 401(a) (4) of the Code;
(b) The Nonelective Contributions excluding:
(1) Qualified Nonelective Contributions treated as
Matching Contributions for purposes of calculating the Actual
Contribution Percentage; and
(2) Qualified Nonelective Contributions treated as
Elective Deferrals for purposes of calculating the Actual Deferral
Percentage satisfy the requirement of Section 401(a)(4) of the Code;
(c) The Elective Deferrals both including and excluding the
Elective Deferrals treated as Matching Contributions for purposes of
calculating the Actual Contribution Percentage satisfy the requirements
of Section 401(k)(3) of the Code;
(d) The Qualified Nonelective Contributions for a Plan Year
are allocated to Participants as of a date within that Plan Year;
(e) The Qualified Nonelective Contributions and Qualified
Matching Contributions for a Plan Year relate to Compensation that
would have been received by the Employee in the Plan Year or within
2-1/2 months after the Plan Year, but for the Employee's election to
defer; and
(f) If Qualified Nonelective Contributions and Elective
Deferrals are made to another plan or plans, this Plan and such other
plan(s) must be aggregated for purposes of Section 410(b) of the Code
(other than the average benefit percentage test).
<PAGE>
SECTION 6
ALLOCATION
6.1 Establishment of Accounts. The plan Administrator shall establish
and maintain for each Participant a Salary Reduction Account, and Matching
Contribution Account, and a Rollover Account. All amounts by which an Employee
elects to have his salary reduced under Sections 4.1 and 4.2 shall be credited
to his Salary Reduction Account, all Company contributions under Section 4.4
shall be credited to his Matching Contribution Account, and all direct transfer
and rollover amounts received on behalf of a Participant under Section 4.8 shall
be credited to his Rollover Accounts.
6.2 404(c) Plan. This Plan is intended to constitute a Plan described
in Section 404(c) of the employee Retirement Income Security Act. The Plan
fiduciaries shall be relieved of liability for any losses which are the direct
and necessary result of investment instructions given by Participants or
Beneficiaries.
6.3 Participant's Selection of Investment Fund. Each Participant shall
designate the percentage of contributions under Section 4 for each Plan Year
allocable to his accounts which are to be invested in such funds as selected by
the Company. Such a designation shall be made by the Participant on or prior to
the first day of any calendar quarter on a form made available to him by the
Plan Administrator. Any such designation shall continue in effect for
successive Plan Years unless changed in the same manner by the Participant. The
current investment choices available under the Plan will change effective
January 1, 1996. An elections made with respect to investment choices prior to
January 1, 1996 will no longer be effective. New choices need to be made with
respect to investments on and after January 1, 1996. If no designation is made,
the Participant's existing accounts which are not currently invested in Pilgrim
America funds shall be invested in the Pilgrim Money Market Fund, and all
contributions to the Plan shall cease. If no designation is made and
Participant's existing accounts are invested in Pilgrim America funds, the
Participant's accounts will continue to be invested in such funds in accordance
with the Participant's most recent investment elections and all contributions to
the Plan shall cease.
6.4 Transfers Between Investment Funds. As of each Valuation Date, a
Participant, other than a Participant whose employment or service with the
Company has terminated, may elect on forms to be provided by the Plan
Administrator, to transfer all or any portion of his accounts in such investment
funds as he has selected to any of the other such reasonable requirements as may
be established by the Plan Administrator.
6.5 Allocation of Earnings or Losses. As of each Valuation Date, all
appreciation or depreciation in the fair market value of the Plan assets since
the preceding Valuation Date shall be allocated to the accounts of each
Participant. The allocations shall be made by dividing the fair market value of
the Plan assets as of the prior Valuation Date into the value of each account as
of such date (reduced by any amounts distributed on or after such date) and
multiplying the quotient by the total appreciation or depreciation to be
allocated so as to determine the share of each such account. For purposes of
determining the share of each such account, valuation of the assets as of the
preceding Valuation Date shall equal:
(a) the assets as of the preceding Valuation Date,
including contributions allocated as of such preceding Valuation Date
and excluding assets distributed as of the preceding Valuation Date;
plus
(b) two-thirds of the contributions which are made to
the Plan during the first month after such preceding Valuation Date;
plus
(c) one-third of the contributions which are made to
the Plan during the second month after such preceding Valuation Date.
6.6 Special Transfer Rules. Effective on or about February 5, 1996, all
assets in the Plan will be transferred from investments with the Principal
Financial Group to new investments selected by the employer, pursuant to
instructions on the Participants' enrollment forms. Due to the magnitude of the
change, the investments will probably not actually be transferred on February 5,
1996. Assets which are not transferred on February 5, 1996, will continue to
share in the earnings of the funds in which they were invested on February 5,
1996, until such time as the transfer has been completed.
<PAGE>
SECTION 7
DISTRIBUTIONS AT RETIREMENT
7.1 Normal Retirement Distributions. Upon a Participant's Normal
Retirement Date, the Participant's accounts shall become fully vested (if not
already fully vested) and shall be distributed to him in accordance with Section
9.1(b).
7.2 Required Minimum Distributions. Notwithstanding anything to the
contrary contained in the Plan, the entire interest of a Participant will be
distributed in accordance with Section 401(a)(9) of the Code and the regulations
thereunder beginning no later than the Participant's Required Beginning Date as
determined under Section 7.3 below. Minimum distributions will be made based on
the life expectancy of such Participant. For purposes of determining the amount
of such minimum distribution the Participant's life expectancy will be
recalculated annually. Notwithstanding the preceding, a Participant who has
reached age 70-1/2 may elect, at any time prior to his Required Beginning Date,
to receive the entire amount of his accounts in a lump sum or in installments
over the joint life expectancy of the Participant and his spouse or designated
beneficiary. If the Participant elects a lump sum he will receive, on or before
December 31 or each subsequent calendar year, a lump sum distribution of any
subsequent amounts allocated to his accounts.
7.3 Required Beginning Date. The Required Beginning Date of a
Participant who attained age 70-1/2 before January 1, 1988 and who was not a
Five Percent Owner at any time after the first day of the Plan Year in which he
attained age 66-1/2 shall be April 1, following the calendar year in which he
terminates employment. The Required Beginning Date of a Five Percent Owner shall
be the later of December 31, 1987, or the April 1 following the calendar year in
which the Five Percent Owner attains age 70-1/2. The Required Beginning Date of
any other Participant shall be the later of April 1, 1990, or the April 1
following the calendar year in which the Participant attains age 70-1/2.
<PAGE>
SECTION 8
DISTRIBUTIONS AT TERMINATION OF EMPLOYMENT (VESTING)
8.1 Distributions Upon Termination of Employment. A Participant whose
employment with the Company is terminated prior to the earliest of his death or
Norman Retirement Date shall receive the vested portion of his accounts in
accordance with Section 9.1(a).
8.2 Determination of Vested Portion.
(a) A participant's Salary Reduction Account and Rollover
Account shall be 100% vested and nonforfeitable at all times.
(b) Participants who participated in the Plan on or before
December 31, 1994 shall be 100% vested in their Matching Contribution
Accounts at all times. For Participants who began participating in the
Plan after December 31, 1994, the portion of a Participant's Matching
Contribution Account which shall be vested and nonforfeitable shall be
determined in accordance with the following schedule:
Years of Percentage of
Service Account Vested
------- --------------
less than 1 0%
1 33 1/3%
2 66 2/3%
3 100%
(c) Notwithstanding any provision herein to the contrary, a
Participant's accounts shall be 100% vested and nonforfeitable upon
attainment of Normal Retirement Age.
8.3 Forfeitures. The nonvested portion of the Matching Contribution
Account of a Participant whose employment with the Company is terminated prior
to the earliest of his death or Normal Retirement Date shall be forfeited
immediately when such Participant incurs five consecutive one-year Breaks in
Service. The nonvested amounts shall be placed in a separate account until
forfeited and shall be credited with an allocation of earnings and losses
pursuant to Section 6.5. If the Participant is not employed again by the Company
on the date a forfeiture occurs under this Section, any forfeited amounts plus
earnings and losses thereon shall be used to reduce future Company
contributions. Following such forfeiture, the Participant shall be 100% vested
in the balance, if any, of his accounts. If a Participant terminates employment
with no vested interest in his Matching Contribution Account, such Participant
shall be treated as receiving a distribution of the vested portion of his
Matching Contribution Account on the last day of the Plan Year in which his
termination occurs, provided he is not employed by the Company on such date.
<PAGE>
SECTION 9
PAYMENT OF BENEFITS
9.1 Timing of Distributions.
(a) Termination Before Normal Retirement Date. If a
Participant's employment is terminated prior to his Normal Retirement Date for
any reason other than his death, and if the Participant's vested accounts exceed
(or at the time of any prior distribution exceeded) $3,500, the Participant
shall receive the notice described in Section 9.4 as well as benefit election
forms during the Distribution Notice Period coinciding with or next following
the dates he terminates employment. If the Participant properly completes his
benefit election forms and returns them to the Company on or before the
Valuation Date immediately following such Distribution Notice Period,
distribution of his vested accounts will commence in the form elected by the
Participant as of such Valuation Date, which shall be his Annuity Starting Date.
If a Participant fails to properly complete and timely return his election forms
when he is first eligible to receive a distribution, distribution of his
accounts will commence in the form of a lump sum within 60 days after his
attainment of age 65. Notwithstanding the preceding, the Participant may notify
the Company at any time after his termination of employment but prior to his
attaining age 65 that he wants to receive the notice described in Section 9.4.
The Plan Administrator shall distribute such notice and benefit election forms
during the first Distribution Notice Period following such request. If such
Participant properly completes and returns his benefit election forms on or
before the Valuation Date immediately following the receipt of such notice,
distribution of his accounts will commence in the form elected by the
Participant in accordance with Section 9.2 as of such Valuation Date, which
shall be his Annuity Starting Date.
(b) Distributions to Participants Terminating
Employment on or after Normal Retirement Date. If a Participant's employment is
terminated on or after his Normal Retirement Date but before his Required
Beginning Date for any reason other than his death, and if the Participant's
accounts exceed (or at the time of any previous distribution exceeded) $3,500 as
of his termination date, the Participant shall receive the notice described in
Section 9.4 as well as benefit election forms during the Distribution Notice
Period coinciding with or next following the date he terminates employment. If
the Participant properly completes his benefit election forms and returns them
before the Valuation Date immediately following such Distribution Notice Period,
the Participant's benefits will commence in the form elected by the Participant
as of such Valuation Date, which shall be his Annuity Starting Date. If the
Participant fails to properly complete and return his benefit election forms on
or before the Valuation Date immediately following such Distribution Notice
Period, distribution of his accounts will be made in the form of a lump sum
within 60 days after the Valuation Date immediately following such Distribution
Notice Period.
(c) Distributions to Participants Remaining Employed
Until Age 70-1/2. If a Participant remains employed by the Company until the
Distribution Notice Period immediately preceding the Valuation Date coinciding
with or immediately preceding his Required Beginning Date, the Participant shall
receive the notice described in Section 9.4 as well as benefit election forms
during such Distribution Notice Period. If the Participant completes his benefit
election forms and returns them before the Valuation Date immediately following
such Distribution Notice Period, the Participant's benefits will commence in the
form elected by the Participant as of such Valuation Date. If the Participant
fails to properly complete and return his benefit election forms on or before
the Valuation Date immediately following such Distribution Notice Period,
distribution of his accounts will be made in the form of a lump sum no later
than his Required Beginning Date.
9.2 Form of Distribution.
(a) Lump Sum. Subject to Section 9.3, if a
Participant has a termination of employment with the Employer for a reason other
than his death, unless such person was a Participant prior to the Execution
Date, and has elected one of the options available under the Plan in effect
prior to such date, in accordance with (b) below, the Participant shall have his
accounts distributed in the form of a lump sum.
(b) Optional Methods of Distribution. In lieu of the
distribution of his accounts in the form of a lump sum, an Employee who was a
Participant prior to the Execution Date may elect in accordance with Sections
9.2(c), 9.2(d) and 9.2(e) below, to have his accounts distributed in a form
available under the Plan in effect prior to such date.
(c) Timely Election. An option set forth in 9.2(b)
above must be elected on a form furnished by the Plan Administrator for that
purpose within the 90 day period ending on the Annuity Starting Date, but not
before the Participant receives the notice described in Section 9.4.
(d) Effective Date of Option. An option selected
under 9.2(b) above shall become effective on the Annuity Starting Date.
(e) Change or Revocation. An election made under this
Section may not be validly changed or revoked except as follows:
(1) Any election made by the Participant may
be changed or revoked without limitation if the Participant files with the
Company a written request before the Annuity Starting Date as of which benefits
are to commence.
(2) If the Participant dies before the date
an option becomes effective, any election made under Section 9.2 shall be
considered void.
(f) Small Benefits. Notwithstanding the foregoing, if
a Participant terminates employment prior to his Required Beginning Date, and if
the participant's vested accounts are less than or equal to $3,500 as of the
date he terminates employment (or were less than or equal to $3,500 at the time
of any previous distribution), his accounts shall be distributed in a lump sum
as soon as practicable following the Valuation Date coinciding with or next
following his termination of employment.
(g) Valuation of Accounts. Any distribution under
this Plan shall be based on the value of the Participant's accounts on the
Valuation Date which coincides with or immediately precedes the date as of which
distribution commences.
9.3 Spousal Consent to an Annuity Form of Benefit or to an Alternate
Beneficiary.
If a Participant (who participated in the Plan prior to the Execution
Date) elects an optional form of benefit in the form of an annuity other than a
joint and survivor annuity, or designates a beneficiary other than his spouse or
changes to a beneficiary other than his spouse, such election, designation or
change in designation will be effective only if the Participant's spouse
consents thereto in writing within the 90 day period ending on the Participant's
Annuity Starting Date. The spouse's consent must:
(a) designate a form of benefits which may not be
changed without further spousal consent;
(b) be irrevocable and acknowledge the effect of such
designation or election; and
(c) be witnessed by a Plan representative or a notary
public.
Any such consent must be filed with the Company in order to be
effective. No consent need be obtained in the event the Participant has no
spouse or the Participant's spouse cannot be located. In this event, the
Participant must certify on a form provided by the Plan Administrator that he
has no spouse or that his spouse cannot be located in order for his beneficiary
designation or election of an annuity to be effective.
9.4 Distribution Notice. During the Distribution Notice Periods
specified in Section 9.1, the Plan Administrator shall give to the participant a
written notification in nontechnical terms of:
(a) the material features and the relative values of
the optional forms of benefits under the Plan,
(b) the terms and conditions of the joint and
survivor annuity and the financial effect upon the Participant's benefit in
terms of dollars per benefit payment,
(c) the Participant's right to make, and the effect
of, an election out of the joint and survivor annuity,
(d) in the case of a married Participant, the rights
of the Participant's spouse with respect to any such election,
(e) the right of the Participant to make, and the
effect of, a revocation of any such election before the commencement of
benefits, and
(f) the right, if any, of the Participant to defer
receipt of a distribution.
<PAGE>
SECTION 10
DISTRIBUTIONS AT DEATH
10.1 Distribution Upon Death. Upon the death of a Participant while in
the employment of the Company, the Participant's accounts shall become fully
vested (if not already fully vested) and shall be distributed in a lump sum to
his spouse or beneficiaries in accordance with Sections 10.2, 10.3 and 10.4
within sixty (60) days after the Valuation Date coinciding with or next
following his date of death. Upon the death of a Participant after termination
of his employment with the Employer, the vested portion of the Participant's
remaining account balances shall be distributed in a lump sum to his spouse or
beneficiaries in accordance with Sections 10.2, 10.3 and 10.4 within sixty (60)
days after the Valuation Date coinciding with or next following his date of
death. Any distribution hereunder shall be based on the value of the
Participant's accounts as of the last Valuation Date before such distribution.
10.2 Distribution to Spouse. Upon the death of a Participant, the
entire balance of his account shall be distributed to his surviving spouse, if
any, unless the surviving spouse has consented in the manner required under
Section 10.5 to a designated beneficiary and one or more designated
beneficiaries survives the Participant.
10.3 Designation of Beneficiary. Each Participant shall have the right
to name and change primary and contingent beneficiaries under the Plan on a form
provided for that purpose by the Plan Administrator. If upon the death of the
Participant, the Participant has no surviving spouse or the Participant's
surviving spouse has consented to the designation of a beneficiary in the manner
required under Section 10.5, the entire balance of his account shall be divided
among the primary or contingent beneficiaries designated by such Participant who
survived the Participant.
10.4 Beneficiary Not Designated. In the event the Participant has no
surviving spouse and has either failed to designate a beneficiary or no
designated beneficiary survives him, the amount otherwise payable to a
beneficiary under the provisions of this Section shall be paid to the
participant's executor or administrator.
10.5 Spousal Consent to Designation of Beneficiary. The spouse of a
Participant may consent in writing to the designation of a beneficiary other
than the spouse or to a change in the designation of a beneficiary other than
the spouse. The spouse's consent must acknowledge the effect of such designation
of an alternate beneficiary (or change in the alternate beneficiary) and must be
witnessed by a notary public or Plan representative. Any such consent must be
filed with the Plan Administrator in order to be effective. No consent need be
obtained in the event the Participant has no spouse or the participant's spouse
cannot be located. In this event, the Participant must certify on a form
provided by the Plan Administrator that he has no spouse or that his spouse
cannot be located in order for his beneficiary designation to be effective.
<PAGE>
SECTION 11
LEAVES OF ABSENCE AND TRANSFERS
11.1 Military Leave of Absence. So long as The Vietnam Era Veterans
Readjustment Act of 1974 or any similar law shall remain in force, providing for
reemployment rights for all persons in military service, as therein defined, an
Employee who leaves the employment of the Company for military service in the
Armed Forces of the United States, as defined in such Act from time to time in
force, shall for all purposes of this Plan, be considered as having been in the
employment of the Company, with the time of his service in the military credited
to his Service; provided that upon such Employee being discharged from the
military service of the United States he applies for re-employment with the
Company and takes all other necessary action to be entitled to, and to be
otherwise eligible for, reemployment rights, as provided by The Vietnam Era
Veterans Readjustment Act of 1974, or any similar law from time to time in
force.
Notwithstanding any other provision of the Plan, a Participant who is
on a military leave of absence as defined in the preceding paragraph will share
in the allocations of Company contributions under Section 4.4 for the Plan Year
in which such military leave commences but will not share in such allocations
for any subsequent Plan Year ending before the Participant's return from such
military leave.
11.2 Maternity or Paternity Absence. In the case of any Employee who is
absent from work
(a) by reason of the pregnancy of the individual,
(b) by reason of the birth of a child of the
individual,
(c) by reason of the placement of a child with the
individual in connection with the adoption of such child by such individual, or
(d) for purposes of caring for such child for a
period beginning immediately following such birth or placement, the Employee
shall be credited with the number of Hours of Employment described in Section
11.3(a) solely for purposes of determining whether a Break in Service has
occurred. In order to receive credit under this Section, and Employee must
furnish to the Company establishing (I) that the absence from work is for one of
the reasons described in this Section and (ii) the number of days for which the
Employee was absent.
11.3 Service During Maternity or Paternity Absence. (a) Number of Hours
Credited. The Hours of Employment for which an Employee will receive credit for
purposes of determining whether a Break in Service has occurred under Section
2.21 are as follows:
(1) The Hours of Employment which otherwise
would normally have been credited to such Employee but for such absence, or
(2) in any case in which the Plan is unable
to determine the Hours of Employment described in paragraph (a), eight Hours of
Employment per day of such absence, provided that the total number of Hours of
Employment credited under this Section shall not exceed 501 Hours of Employment.
(b) Plan Year to Which Hours are Credited. The Hours
of Employment described in this Section shall be treated as Hours of Employment
(1) only in the Plan Year in which the
absence from work begins if the Employee would be prevented from incurring a
Break in Service in such year solely because the period of absence is treated as
Hours of Employment as provided in this Section, or
(2) in any other case, in the immediately
following Plan Year.
11.4 Other leaves of Absence. An Employee on a Company-approved leave
of absence not described in Section 11.1 above shall for all purposes of this
Plan be considered as having continued in the employment of the Company for the
period of such leave, provided that the Employee returns to the active
employment of the Company before or at the expiration of such leave. Such
approved leaves of absence shall be given on a uniform, non-discriminatory basis
in similar fact situations.
Notwithstanding any other provision of the Plan, a Participant who is
on a Company-approved leave of absence will share in the allocations of Company
contributions under Section 4.4 for the Plan Year in which such leave of absence
begins but will not share in such allocations for any subsequent Plan Year
ending before the Participant's return from such leave of absence.
11.5 Transfers.
(a) In the event that:
(1) a Participant is transferred to
employment with a member of the Controlled Group in a status as a non-Employee;
or
(2) a person is transferred from employment
with a member of the Controlled Group in a status as a non-Employee to
employment with the Company under circumstances making such a person an
Employee; or
(3) a person was employed by a member of the
Controlled Group in a status as a non-Employee, terminated his employment and
was subsequently employed by the Company as an Employee; or
(4) a Participant was employed by the
Company as an Employee, terminated his employment and was subsequently employed
by a member of the Controlled Group in a status as a non-Employee;
(b) then the following provisions of this Subsection
shall apply:
(1) transfer to employment with a member of
the Controlled Group as a non-Employee shall not be considered termination of
employment with the Company, and such transferred person shall continue to be
entitled to the benefits provided in the Plan, as modified by this Section;
(2) any employment with a member of the
Controlled Group by a non-Employee will be deemed to be employment by the
Company;
(3) amounts earned from a member of the
Controlled Group by a non-Employee shall not constitute Compensation hereunder;
(4) termination of employment with a member
of the Controlled Group which has not adopted the Plan by a person entitled to
benefits under this Plan (other than to transfer to employment with another
member of the Controlled Group) shall be considered as termination of employment
with the Company;
(5) all other terms and provisions of this
Plan shall fully apply to such person and to any benefits to which he may be
entitled hereunder. Notwithstanding anything in this Plan to the contrary, a
Participant who is no longer employed by a member of the Controlled Group which
includes the Company as a member shall be considered a terminated Employee.
<PAGE>
SECTION 12
TRUSTEE
The Company shall select a Trustee(s) or insurance company to hold and
administer the assets of the Plan and shall enter into a trust agreement(s) or
insurance contract with such Trustee(s) or insurance company. The Company may
change the Trustee(s) or insurance company from time to time subject to the
terms of the trust agreement(s) or insurance contract.
<PAGE>
SECTION 13
ADMINISTRATION
13.1 Appointment of Plan Administrator. The Trustee has appointed a
Plan Administrator who shall serve without remuneration at the pleasure of the
Trustee. Upon death, resignation, removal or inability of the Plan Administrator
to continue, the Trustee shall appoint a successor. If at any time, the Trustee
has not appointed a Plan Administrator, or there is no Plan Administrator, then
the Company shall have all of the duties, responsibilities, powers and
authorities given to the Plan Administrator.
13.2 Construction. The Plan Administrator shall have the discretionary
authority to construe, interpret and administer all provisions of the Plan and
to determine a Participant's eligibility for benefits on a uniform,
non-discriminatory basis in similar fact situations.
13.3 Decisions and Delegation. The Plan Administrator may appoint such
agents as it may deem necessary for the effective exercise of its duties, and
may, to the extent not inconsistent herewith, delegate to such agents any powers
and duties, both ministerial and discretionary, as the Plan Administrator may
deem expedient or appropriate.
The Plan Administrator shall not make any decision or take any action
covering exclusively his own benefits under the Plan. All such matters shall be
decided by the Board.
13.4 Duties of the Plan Administrator. The Plan Administrator shall, as
part of its general duty to supervise and administer the Plan, direct the
Trustee specifically in writing in regard to:
(a) distribution payments, including the names of the
payees, the amounts to be paid and the time or times when payments shall be
made;
(b) any other payments which the Trustee is not
authorized to make without direction in writing by the Plan Administrator;
(c) the purchase of annuity contracts, giving the
names of the persons for whose benefit they shall be purchased and the purchase
price; and
(d) preparation of an annual report for the Company,
as of the end of each Plan Year, in such form as the Company may require.
13.5 Records of the Plan Administrator. All acts and determinations of
the Plan Administrator and all such records, together with such other documents
as may be necessary for the proper administration of the Plan, shall be
preserved in the custody of such Plan Administrator. Such records and documents
shall at all times be open for inspection and copying by any person designated
by the Trustee.
13.6 Expenses. Any expense incurred by the Plan Administrator or the
Trustee with respect to employment of agents, attorneys or other persons,
including expenses incurred in maintaining the qualified status of the Plan and
the exempt status of the related trust shall be paid from the assets of such
trust unless paid by the Company.
<PAGE>
SECTION 14
CLAIM PROCEDURE
14.1 Claim. A Participant or beneficiary or other person who believes
that he is being denied a benefit to which he is entitled (hereinafter referred
to as "Claimant") may file a written request for such benefit with the Vice
President Human Resources ("Plan Administrator"), setting forth his claim. The
request must be addressed to: Vice President Human Resources, Express America
Holdings Corporation 401(k) Plan, Two Renaissance Sq., 40 N. Central Ave.; Suite
1200, Phoenix, Arizona 85004.
14.2 Claim Decision. Upon receipt of a claim, the Vice President Human
Resources shall advise the Claimant that a reply will be forthcoming within 90
days and shall in fact deliver such reply in writing within such period. The
Vice President Human Resources may, however, extend the reply period for an
additional 90 days for reasonable cause. If the claim is denied in whole or in
part, the Vice President Human Resources will adopt a written opinion using
language calculated to be understood by the Claimant setting forth:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which
the denial is based;
(c) a description of any additional material or information
necessary for the Claimant to perfect the claim and an explanation why
such material or such information is necessary;
(d) appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review; and
(e) the time limits for requesting a review under Section 14.3
and a review under Section 14.4.
14.3 Request for Review. Within 60 days after the receipt by the
Claimant of the written opinion described above, the Claimant may request in
writing that the Plan Administrator review the prior determination. The Claimant
or his duly authorized representative may, but need not, review the pertinent
documents and submit issues and comments in writing for reconsideration by the
Plan Administrator. If the claimant does not request a review of the Vice
President Human Resources' determination within such 60-day period, he shall be
barred and estopped from challenging the prior determination.
14.4 Review on Appeal. Within 60 days after the Plan Administrator's
receipt of a request for review, she will review her prior determination. After
considering all materials presented by the Claimant, the Plan Administrator will
render a written opinion, written in manner calculated to be understood by the
Claimant, setting forth the specific reasons for the decision and containing
specific reference to the pertinent Plan provisions on which the decision is
based. If special circumstances require that the 60-day time period be extended,
the Plan Administrator will so notify the Claimant and will render the decision
as soon as possible but not later than 120 days after receipt of the request for
review. The Plan Administrator shall possess and exercise discretionary
authority to make determinations as to a Participant's eligibility for benefits
and to construe the terms of the Plan. The decision of the Plan Administrator
shall be final and non-reviewable unless found to be arbitrary and capricious by
a court of competent review. Such decision will be binding the Company and the
Claimant.
<PAGE>
SECTION 15
AMENDMENT AND TERMINATION
15.1 Amendment. The Company shall have the right, by a resolution
adopted by action of the Board, at any time and from time to time to amend, in
whole or in part, any or all of the provisions of the Plan. No such amendment,
however, shall authorize or permit any part of the assets of the Plan (other
than such part as is required to pay taxes and administration expenses of the
Plan) to be used for or diverted to purposes other than for the exclusive
benefit of the Participants or their beneficiaries; no such amendment shall
cause any reduction in amount credited to any Participant's account or cause or
permit any portion of the assets of the Plan to revert to or become the property
of the Company.
15.2 Termination; Discontinuance of Contributions. The Company shall
have the right at any time to terminate this Plan. Upon termination, partial
termination, or complete discontinuance of contributions, all Participants'
accounts (or, in the case of a partial termination, the accounts of all affected
Participants) shall become fully vested, and shall not thereafter be subject to
forfeiture.
<PAGE>
SECTION 16
MISCELLANEOUS
16.1 Participants' Rights. Neither the establishment of the Plan hereby
created, nor any modification thereof, nor the creation of any fund or account,
nor the payment of any benefits, shall be construed as giving to any Participant
or other person any legal or equitable right against the Company, any officer or
Employee thereof, the Trustee or the Board except as herein provided. Under no
circumstances shall the terms of employment of any Participant be modified or in
any way terms of employment of any Participant be modified or in any way
affected hereby.
16.2 Spendthrift Clause. Except as provided in Section 4.9, no benefit
or beneficial interest provided under the Pan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, either voluntary or involuntary, and any attempt to so alienate,
anticipate, sell, transfer, assign, pledge, encumber or charge the same shall be
null and void. No such benefit or beneficial interest shall be liable for or
subject to the debts, contracts, liabilities, engagements, or torts of any
person to whom such benefits or funds are or may be payable.
16.3 Delegation of Authority by Company. Whenever the Company, under
the terms of this Plan, is permitted or required to do or perform any act, it
shall be done and performed by any officer duly authorized by the Board of
Directors of the Company.
16.4 Distribution to Minors. In the event that any portion of the Plan
becomes distributable to a minor or other person under legal disability (as
determined by the laws of the jurisdiction in which he or she then resides), the
Plan Administrator shall direct that such distribution be made to the legal
representative of such minor or other person.
16.5 Construction of Plan. This Plan shall be construed according to
the laws of the State of Arizona, and all provisions of the Plan shall be
administered according to the laws of such state.
16.6 Gender, Number and Headings. Whenever any words are used herein in
the masculine gender, they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form, they shall be construed as though
they were also used in the plural form in all cases where they would so apply.
Headings of Sections and Subsections are inserted for convenience of reference,
constitute no part of the Plan and are not to be considered in the construction
of the Plan.
16.7 Separability of Provisions. If any provisions of this Plan shall
be for any reason invalid or unenforceable, the remaining provisions shall
nevertheless be carried into effect.
16.8 Diversion of Assets. No part of the assets of the Plan shall be
use for, or diverted to, purposes other than the exclusive benefit of
Participants or their beneficiaries. Except as provided in Section 4.7, the
Company shall have no beneficial interest in the assets of the Plan and no part
of the assets of the Plan shall revert or be repaid to the Company, directly or
indirectly.
16.9 Service of Process. Plan Administrator shall constitute the Plan's
agent for service of process.
16.10 Merger. In the event of any merger or consolidation with, or
transfer of assets or liabilities to, any other plan, each Participant shall (as
if the Plan had then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit he would
have been entitled to receive immediately before the merger, consolidation or
transfer (if the Plan had then terminated).
16.11 Benefit Limitation.
(a) Notwithstanding any other provision hereof, the amounts
allocated to a Participant during the Limitation Year under the Plan and
allocated to the Participant under any other defined contribution Plan to which
the Company or any other member of the Controlled Group has contributed shall be
proportionately reduced, to the extent necessary, so that the Annual Addition
does not exceed the least of:
(1) $30,000; or
(2) 25% of the Participant's remuneration (as defined in
Treasury Regulation Section 1.415-2(d)) from the Company or any member
of the Controlled Group during the Limitation Year; or
(3) such other limits set forth in Section 415 of the Code.
The amount set forth in subparagraph (1) above shall automatically be
adjusted to reflect adjustments made by applicable law. (b) For purposes of this
Section, Limitation Year means the 12 monthly period commencing on January 1 and
ending on December 31.
(c) In addition, the amounts allocated to a Participant during the
Limitation Year under this Plan, and allocated to such Participant under any
other defined contribution plan to which the Company or any member of the
Controlled Group has contributed and which has the same Limitation Year as the
Plan, shall be proportionately reduced to the extent necessary, so that the sum
of the defined benefit plan fraction and the defined contribution Plan fraction
does not exceed the limits set forth in Section 415(e) of the Code.
(d) If as a result of the allocation of forfeitures, a reasonable error
in estimating a Participant's remuneration, a reasonable error in determining
the amount of elective deferrals (within the meaning of Section 402(g) (3) of
the Code) that may be made with respect to a Participant under the limits of
Section 415 of the Code or other limited facts and circumstances, the Annual
Additions under the Plan for a particular Participant exceed the limitations in
this Section, the excess amounts will not be deemed Annual Additions of the
Limitation Year and will be treated as follows:
(1) First, the portion of the excess attributable to amounts by which a
Participant elected to have his salary reduced under Sections 4.1 and 4.2
(together with any income or less any loss allocable to such amounts) shall be
returned to such Participant to the extent that the return would reduce the
excess amount in the Participant's Accounts, such amount to be returned on or
before the April 15 following the close of such Limitation Year.
(2) Second, any Company contributions under Section 4.4 which are
attributable to the contributions returned in (1) above shall be held in a
suspense account and used to reduce Company contributions otherwise due under
Section 4.
(3) Third, to the extent required to reduce the excess amount, other
Company contributions under Section 4 shall be held in a suspense account and
used to reduce Company contributions otherwise due under Section 4.
(e) For purposes of this Section, Annual Additions means the sum for
the Limitation Year of Company contributions, Employee contributions (determined
without regard to any rollover contributions as defined in Sections 402(a)(5),
403(a)(4), 403(b)(8) and 408(d)(3) of the Code and without regard to Employee
contributions to a simplified employee pension plan which are excludable from
gross income under Section 408(k)(6) of the Code) and forfeitures.
16.12 Commencement of Benefits.
(A) Notwithstanding any other Section of the Plan, the payment of
benefits under the Plan to the Participant will begin not later than the 60th
day after the close of the Plan Year in which the last of the following occurs:
(1) the date on which the Participant attains age 65; or
(2) the 10th anniversary of the date on which the Participant
commenced participation in the Plan; or
(3) the Participant's termination of employment with the
Company.
(B) Notwithstanding Subsection (a) or any other provision of the Plan,
if the amount of payment cannot be ascertained, or if it is not possible to make
payment because the Plan Administrator cannot locate the Participant after
making reasonable efforts to do so, a retroactive payment may be made no later
than sixty days after the earliest date on which the amount of such payment can
be ascertained or the date on which the Participant is located, whichever is
applicable.
(C) (1) If the Plan Administrator is unable to locate any person
entitled to receive distribution from an account hereunder, such account shall
be forfeited and used to reduce Company contributions on the date 2 years after
(A) the date the Plan Administrator sends by
certified mail a notice concerning the benefits to such person at his
last known address or
(B) the Plan Administrator determines that there is
no last known address.
(2) If an account is forfeited under (c)(1) and a person
otherwise entitled to the account subsequently files a claim with the Plan
Administrator during any Plan Year, before any allocations for such Plan Year
are made the account will be restored to the amount which was forfeited without
regard to any earnings or losses that would have been allocated. Such
restoration shall first be taken out of forfeitures which have not been
allocated and if such forfeitures are insufficient to restore such person's
account balance, restoration shall be made by the Company contribution to the
Plan.
16.13 Qualified Domestic Relations Order.
Notwithstanding anything in the Plan to the contrary, benefits may be
distributed in accordance with the terms of a Qualified Domestic Relations Order
("QDRO"). For this purpose a QDRO is any Domestic Relations Order determined by
the Company to be a Qualified Domestic Relations Order within the meaning of
Section 414(p) of the Code pursuant to this Section.
(A) A Domestic Relations Order means a judgment, decree, or order
(including the approval of a property settlement agreement) which
(1) relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse , child or other
dependent of a Participant,
(2) is made pursuant to a state domestic relations law, and
(3) creates or recognizes the existence of an Alternative
Payee's right, or assigns to the Alternate Payee the right, to receive all or a
portion of the benefits of the Participant under the Plan.
An "Alternate Payee" includes any spouse, former spouse , child or
other dependent of a Participant who is designated by the Domestic Relations
Order as having a right to receive all or a portion of the benefits payable
under the Plan with respect to he concerned Participant.
(B) To be a QDRO, the Domestic Relations Order must meet the
specification set forth in Section 414(p) of the Code and must clearly specify
the following:
(1) Name and last known mailing address of the Participant.
(2) Name and last known mailing address of each Alternate
Payee covered by the Domestic Relations Order.
(3) The amount or the percentage of the Participant's benefit
to be paid to each Alternate Payee, or the manner in which such amount
or percentage is to be determined.
(4) The number of payments or period to which the Domestic
Relations Order applies.
(5) Each plan to which the Domestic Relations Order applies.
(C) The status of any Domestic Relations Order as a QDRO shall be
determined under the following procedures: (1) Promptly upon
receiving a Domestic Relations Order, the Company will
(A) refer the Domestic Relations Order to legal
counsel for the Plan to render an opinion within 90 days (or
such earlier period as shall be provided by applicable law)
whether the Domestic Relations Order is a QDRO, and
(B) notify the affected Participant and any
Alternate Payee of the receipt by the Plan of the Domestic
Relations Order and of this procedure.
(2) Promptly upon receiving the determination made by the
Plan's legal counsel of the status of the Domestic Relations Order, the
affected Participant and each Alternate Payee (or any representative
designated by an Alternative Payee by written notice to the Company)
shall be furnished a copy of such determination. The notice of
determination shall state
(A) whether the Plan's legal counsel has determined
that the Domestic Relations Order is a QDRO, and
(B) once such legal counsel determines whether the
Domestic Relations Order constitutes a QDRO, that the Company
will commence any payments currently due under the Plan to the
person or persons entitled thereto after the expiration of a
period of 60 days commencing on the date of the mailing of the
notice unless prior thereto the Company receives notice of the
institution of legal proceedings disputing the determination.
The Company shall, as soon as practical after such 60 day
period, ascertain the dollar amount currently payable to each
payee pursuant to the Plan and the QDRO, and any such amounts
shall be disbursed by the Plan.
(3) If there is a dispute on the status of a
Domestic Relations Order as a QDRO, there shall be a delay in making
payments. The Company shall direct that the amounts otherwise payable
be held in a separate account within the Plan. If within 18 months
thereafter, the Domestic Relations Order is determined not to be a
valid QDRO, or the status of the Domestic Relations Order has not been
finally determined, the segregated or escrow amounts (including
interest thereon) shall be paid to the person or persons who Domestic
Relations Order. Any determination thereafter that the Domestic
Relations Order is a QDRO shall be applied prospectively only.
(D) If a domestic relations order requires payment to an Alternate
Payee in an immediate lump sum, the order shall not lose its status as a
qualified domestic relations order merely because of the immediate lump sum
provision.
16.14 Written Explanation of Rollover Treatment. The Company shall,
when making an eligible rollover distribution, provide a written explanation to
the recipient of such distribution of his right to roll over such distribution
to an eligible retirement plan and, if applicable, his right to the special five
or ten-year averaging and capital gains tax treatment in the Code. Such written
explanation will be provided to the recipient in accordance with rules
prescribed by the Internal Revenue Service.
16.15 Leased Employees. Any person who is a leased employee (within the
meaning of Section 414(n) of the Code) of any member of the Controlled Group
shall be treated for all purposes of the Plan as if he were employed by a member
of the Controlled Group which has not adopted the Plan.
16.16 Special Distribution Option. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a Distributee's (as hereinafter
defined) 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 (as hereinafter defined) paid directly to an
Eligible Retirement Plan (as hereinafter defined) specified by the Distributee
in a Direct Rollover.
(a) 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: (a) 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 Distributee and the
Distributee's designated beneficiary, or for a specified period of ten years or
more; (b) any distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and (c) 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) An Eligible Retirement Plan is (a) an individual
retirement account described Section 408(a) of the Code, (b) an individual
retirement annuity described in Section 408(b) of the Code, (c) an annuity plan
described in Section 403 (a) of the Code, or (d) 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 a
surviving spouse, an Eligible Retirement Plan is only an individual retirement
account or individual retirement annuity.
(c) A Distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are Distributees with regard to the interest of the spouse or
former spouse.
(d) A Direct Rollover payment is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
16.17 Limitations on Special Distribution Option.
(a) Notwithstanding the provisions of the immediately
preceding Section entitled Special Distribution Option, the amount which may be
paid directly to the trustee of another eligible retirement plan under such
Section shall be no less than the smaller of $500 or the total amount of the
eligible rollover distribution which would otherwise be includible in the
Participant's taxable income; and no amount shall be so paid unless the amount
of such distributions in any calendar year which are otherwise eligible for such
payment are reasonably expected to total $200 or more.
(b) The Company shall provide notice of the special
distribution option described in the preceding Section to the Participant in
accordance with rules prescribed by the Internal Revenue Service.
<PAGE>
SECTION 17
TOP-HEAVY DEFINITIONS
17.7 "Accrued Benefits" means "the present value of accrued benefits"
as that phrase is defined under regulations issued under Section 416 of the
Code. For purposes of Sections 17 and 18 hereof, the Accrued Benefits of any
Participant (other than a key employee) shall be determined under the single
accrual rate used by all Qualified Plans of the Company which are defined
benefit plans, or if there is no single accrual rate, Accrued Benefits shall be
determined as accruing no more rapidly than the slowest rate permitted under
Section 411(b)(1)(C) of the Code.
17.2 "Beneficiaries" means the person or persons to whom the share of a
deceased Participant's accounts are payable.
17.3 "Determination Date" means for a Plan Year the last day of the
preceding Plan Year.
17.4 "Former Key Employee" means any person presently or formerly
employed by the Controlled Group (and the Beneficiaries of such person) who
during the Plan Year is not classified as a Key Employee but who was classified
as a Key Employee in a previous Plan Year; provided, however, that a person who
has not performed any services for the Controlled Group at any time during the
five year period ending on the Determination Date (and the Beneficiaries of such
persons) shall not be considered a Former Key Employee.
17.5 "Key Employee" means any person presently or formerly employed by
the Controlled Group (and the Beneficiaries of such person) who is a "key
employee" as that term is defined in Section 416(i) of the Code and the
regulations thereunder; provided, however, that a person who has not performed
any services for the Controlled Group at any time during the five year period
ending on the Determination Date (and the Beneficiaries of such persons) shall
not be considered a Key Employee. For purposes of determining whether a person
is a Key Employee, the definition of Top Heavy Compensation shall be applied.
17.6 "Non-Key Employee" means any person presently or formerly employed
by the Controlled Group (and the Beneficiaries of such person) who is not a Key
Employee or a Former Key Employee; provided, however, that a person who has not
performed any services for the Controlled Group at any time during the five year
period ending on the Determination Date (and the Beneficiaries of such persons)
shall not be considered a Non-Key Employee.
17.7 "Permissive Aggregation Group" means each Qualified Plan of the
Controlled Group in the Required Aggregation Group plus each other Qualified
Plan which is not part of the Required Aggregation Group but which satisfies the
requirements of Sections 401(a)(4) and 410 of the Code when considered together
with the Required Aggregation Group.
17.8 "Required Aggregation Group" means each Qualified Plan (including
any terminated Qualified Plan) of the Controlled Group in which a Key Employee
participates during the Plan Year containing the Determination Date or any of
the four preceding Plan Years and each other Qualified Plan (including any
terminated Qualified Plan) of the Controlled Group which during this period
enables any Qualified Plan (including any terminated Qualified Plan) in which a
Key Employee participates to meet the requirements of Section 401(a)(4) or 410
of the Code.
17.9 "Super Top-Heavy Group" means, for a Plan Year, the Required
Aggregation Group if, and only if, the sum of the Accrued Benefits (valued as of
the Determination Date for such Plan Year) under all Qualified Plans (including
any terminated Qualified Plans) in the Required Aggregation Group for Key
Employees exceeds 90% of the sum of the Accrued Benefits (valued as of such
Determination Date) under all qualified Plans (including any terminated
Qualified Plans) in the Required Aggregation Group for all Key Employees and
Non-Key Employees; provided, however, that the Required Aggregation Group will
not be a Super Top-Heavy Group for a Plan Year if the sum of the Accrued
Benefits (valued as of the Determination Date for such Plan Year) under all
Qualified Plans (including any terminated Qualified Plans) in the Required
Aggregation Group for Key Employees does not exceed 90% of the sum of the
Accrued Benefits (valued as of such Determination Date) under all Qualified
Plans in the Permissive Aggregation Group for all Key Employees and Non-Key
Employees. If the Qualified Plans in the Required or Permissive Aggregation
Group have different Determination Dates, the Accrued Benefits under each such
Plan shall be calculated separately, and the Accrued Benefits as of
Determination Dates for such Plans that fall within the same calendar year shall
be aggregated.
17.10 "Top-Heavy Compensation" means compensation within the meaning of
Section 415 of the Code.
17.11 "Top-Heavy Group" means, for a Plan Year, the Required
Aggregation Group if, and only if, the sum of the Accrued Benefits (valued as of
the Determination Date for such Plan Year) under all Qualified Plans (including
any terminated Qualified Plans) in the Required Aggregation Group for Key
Employees exceeds 60% of the sum of the Accrued Benefits (valued as of such
Determination Date) under all Qualified Plans (including any terminated
Qualified Plans) in the Required Aggregation Group for all Key Employees and
Non-Key Employees; provided, however, that the Required Aggregation Group will
not be a Top-Heavy Group for a Plan Year if the sum of the Accrued Benefits
(valued as of the Determination Date for such Plan Year) under all Qualified
Plans (including any terminated Qualified Plans) in the Required Aggregation
Group for Key Employees does not exceed 60% of the sum of the Accrued Benefits
(valued as of such Determination Date) under all Qualified Plans in the
Permissive Aggregation Group for all Key Employees and Non-Key Employees. If the
Qualified Plans in the Required or Permissive Aggregation Group have different
Determination Dates, the Accrued Benefits under each such Plan shall be
calculated separately, and the Accrued Benefits as of Determination Dates for
such Plans that fall within the same calendar year shall be aggregated.
<PAGE>
SECTION 18
TOP-HEAVY RULES
18.1 Special Top-Heavy Rules. If for any Plan Year the Plan is part of
a Top-Heavy Group, then, effective as of the first day of such Plan Year the
following provisions shall apply to Participants who accrue an Hour of
Employment on or after the first day of such Plan Year. A new Section 6.5 is
added as follows:
6.5 Minimum Allocation if Plan is Part of Top-Heavy Group.
Notwithstanding the foregoing, for each Plan Year in which the Plan is part of a
Top-Heavy Group, the sum of the Company contributions and forfeitures allocated
under the Plan to the account of each Non-Key Employee who is both a Participant
and Employee on the last day of such Plan Year shall be at least equal to the
lesser of three percent of such Non-Key Employee's Top-Heavy Compensation for
such Plan Year or the largest percentage of Top-Heavy Compensation allocated to
the account of any Key Employee; provided, however, that if for any Plan Year a
Non-Key Employee is a Participant in both this Plan and one or more defined
contribution plans, the Company need not provide the minimum allocation
described in the preceding sentence for such Non-Key Employee if the Company
satisfies the minimum allocation requirement of Section 416(c)(2)(B) of the Code
for the Non-Key Employee in such other defined contribution plans. Amounts which
a Non-Key Employee or Key Employee elects to contribute on a pre-tax basis to a
Qualified Plan which meets the requirements of Section 401(k) of the Code shall
be considered a Company contribution for purposes of Section 17.11; provided,
however, that such pre-tax contributions made by Non-Key Employees may not be
taken into account in determining the minimum allocation provided under this
Section 6.5. In addition, matching contributions made on behalf of Non-Key
Employees may not be taken into account in determining the minimum allocation
provided under this Section 6.5.
18.2 Adjustments in Section 4l5 Limits. If for any Plan Year the Plan
is part of a Super Top-Heavy Group, or the Plan is part of a Top-Heavy Group and
fails to provide an allocation of Company contributions and forfeitures on
behalf of each Non-Key Employee who is both a Participant and Employee on the
last day of such Plan Year equal to at least the lesser of four percent of each
such Non-Key Employee's Top-Heavy Compensation or the largest percentage of
Top-Heavy Compensation allocated on behalf of any Key Employee for the Plan
Year, effective as of the first day of such Plan Year the adjustments to the
limits in Section 16.11 set forth in Section 416(h) of the Code shall be
applied.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed by one of its duly authorized officers this 3rd day of April, 1996.
EXPRESS AMERICA HOLDINGS
CORPORATION
By /s/ Robert W. Stallings
-------------------------
PILGRIM AMERICA GROUP, INC.
By /s/ Robert W. Stallings
-------------------------
<PAGE>
SIXTH AMENDMENT OF THE
EXPRESS AMERICA HOLDINGS CORPORATION 401(K) PLAN
WHEREAS, Express America Holdings Corporation ("Company")
previously adopted the Express America Holdings Corporation 401(k) Plan
("Plan"); and
WHEREAS, the Company retained the right to amend the Plan
pursuant to Section 15.1 thereof; and WHEREAS, the Company desires to amend the
Plan effective April 1, 1996;
NOW, THEREFORE, effective April 1, 1996, the Plan is amended
as follows:
1. Plan Section 6.5 is amended and replaced as follows:
6.5 Accounting. As of April 1, 1996, the Plan Administrator
shall establish the number of shares in each Participant's various accounts by
taking the amount credited to such account after allocation of earnings and
losses and dividing such amount by the share value as of March 31, 1996 of the
mutual fund in which the account is invested. On and after April 1, 1996, (1)
additional shares will be credited to the Participant's accounts based upon the
number of actual shares in the mutual funds purchased by the Plan with receipts
(including mutual fund distributions and transfer between investment funds)
attributable to the Participant's account and (2) the Participant's accounts
will be reduced by actual shares sold by the Plan attributable to disbursements
(including transfers between investment funds) with respect to the Participant's
account. As of each Valuation Date, the Plan Administrator shall determine the
value of each account by multiplying the number of shares in the account by the
value of the share value of the mutual fund.
2. Plan Section 9.1 is deleted and replaced as follows:
9.1 Timing of Distributions.
a. Termination Before Normal Retirement Date. If a
Participant's employment is terminated prior to his Normal Retirement Date for
any reason other than his death, and if the Participant's vested accounts exceed
(or at the time of any prior distribution exceeded) $3,500, the Participant
shall receive the notice described in Section 9.4 as well as benefit election
forms during the Distribution Notice Period coinciding with or next following
the date he terminates employment. If the Participant properly completes his
benefit election forms and returns them to the Company on or before the
Valuation Date immediately following such Distribution Notice Period,
distribution of his vested accounts will commence in the form elected by the
Participant as soon as administratively reasonable after the Valuation Date
immediately following such Distribution Notice Period, which shall be his
Annuity Starting Date, provided he is not an Employee on such date. If a
Participant fails to properly complete and timely return his election forms when
he is first eligible to receive a distribution, distribution of his accounts
will commence in the form of a lump sum as soon as administratively reasonable
after the Valuation Date coinciding with or next following his attainment of age
65. Notwithstanding the preceding, the Participant may notify the Company at any
time after his termination of employment but prior to his attaining age 65 that
he wants to receive the notice described in Section 9.4. The Plan Administrator
shall distribute such notice and benefit election forms during the first
Distribution Notice Period following such request. If such Participant properly
completes and returns his benefit election forms on or before the Valuation Date
immediately following the receipt of such notice, distribution of his accounts
will commence in the form elected by the Participant in accordance with Section
9.2 as soon as administratively reasonable after such Valuation Date, which
shall be his Annuity Starting Date.
b. Distributions to Participants Terminating
Employment on or after Normal Retirement Date. If a Participant's employment is
terminated on or after his Normal Retirement Date but before his Required
Beginning Date for any reason other than his death, and if the Participant's
accounts exceed (or at the time of any previous distribution exceeded) $3,500 as
of his termination date, the Participant shall receive the notice described in
Section 9.4 as well as benefit election forms during the Distribution Notice
Period coinciding with or next following the date he terminates employment. If
the Participant properly completes his benefit election forms and returns them
before the Valuation Date immediately following such Distribution Notice Period,
the Participant's benefits will commence in the form elected by the Participant
as soon as administratively reasonable after such Valuation Date, which shall be
his Annuity Starting Date. If the Participant fails to properly complete and
return his benefit forms on or before the Valuation Date immediately following
such Distribution Notice Period, distribution of his accounts will be made in
the form of a lump sum as soon as administratively reasonable after the
Valuation Date immediately following such Distribution Notice Period.
c. Distributions to Participants Remaining Employed
Until Age 70-1/2. If a Participant remains employed by the Company until the
Distribution Notice Period immediately preceding the Valuation Date coinciding
with or immediately preceding his Required Beginning Date, the Participant shall
receive the notice described in Section 9.4 as well as benefit election forms
during such Distribution Notice Period. If the Participant completes his benefit
election forms and returns them before the Valuation Date immediately following
such Distribution Notice Period, the Participant's benefits will commence in the
form elected by the Participant as soon as administratively reasonable after
such Valuation Date, which shall be his Annuity Starting Date. If the
Participant fails to properly complete and return his benefit election forms on
or before the Valuation Date immediately following such Distribution Notice
Period, distribution of his accounts will be made in the form of a lump sum no
later than his Required Beginning Date, which shall be his Annuity Starting
Date.
d. Valuation. A distribution hereunder (1) shall be
made in cash based on the proceeds of the surrender of shares in the mutual fund
attributable to the Participant's account or (2) at the election of the
Participant (or, if applicable, the Participant's surviving spouse or
beneficiary), may be made in kind by transferring to the Participant the number
of shares in the mutual fund attributable to the Participant's account.
3. Plan Section 9.2(g) is deleted and replaced as follows:
g. Valuation of Accounts. A distribution
hereunder (1) shall be made in cash based on the proceeds of the surrender of
shares in the mutual fund attributable to the Participant's account or (2) at
the election of the Participant (or, if applicable, the Participant's surviving
spouse or beneficiary), may be made in kind by transferring to the Participant
the number of shares in the mutual fund attributable to the Participant's
account.
4. Plan Section 10.1 is deleted and replaced as follows: 10.1
Distributions Upon Death. Upon the death of a Participant while in the
employment of the Company, the Participant's accounts shall become fully vested
(if not already fully vested) and shall be distributed in a lump sum to his
spouse or beneficiaries in accordance with Sections 10.2, 10.3 and 10.4 within
sixty (60) days after the Valuation Date coinciding with or next following his
date of death. Upon the death of a Participant after termination of his
employment with the Employer, the vested portion of the Participant's remaining
account balances shall be distributed in a lump sum to his spouse or
beneficiaries in accordance with Sections 10.2, 10.3 and 10.4 as soon as
administratively reasonable after the Valuation Date coinciding with or next
following his date of death. A distribution hereunder (1) shall be made in cash
based on the proceeds of the surrender of shares in the mutual fund attributable
to the Participant's account or (2) at the election of the Participant (or, if
application, the Participant's surviving spouse or beneficiary), may be made in
kind by transferring to the Participant the number of shares in the mutual fund
attributable to the Participant's account.
IN WITNESS WHEREOF, the Company has caused this amendment to
be executed by one of its duly authorized officers this 8th day of April, 1996.
EXPRESS AMERICA HOLDINGS
CORPORATION
By /s/ Robert W. Stallings
--------------------------
PILGRIM AMERICA GROUP, INC.
By /s/ Robert W. Stallings
--------------------------
<PAGE>
SEVENTH AMENDMENT
TO THE EXPRESS AMERICA
HOLDINGS CORPORATION 401(k)PLAN
(Effective June 30, 1996)
A. Section 4.4 of the Express America Holdings Corporation 401(k) Plan
(the "Plan") shall be amended as of June 30, 1996 to add the following at the
end of existing Section 4.4:
Company Matching Contributions may be made in the discretion
of the Company in the form of cash or in the form of Company stock.
B. Sections 6.3 and 6.4 of the Plan shall be amended as of June 30,
1996 to read as follows:
6.3 Participant's Selection of Investment Fund. Each
Participant shall designate the percentages of contributions under Section 4 for
such Plan Year allocable to his accounts which are to be invested in such funds
as selected by the Company and in Company stock. Such a designation shall be
made by the Participant on or prior to the first day of any calendar quarter on
a form made available to him by the Plan Administrator. Any such designation
shall continue in effect for successive Plan years unless changed in the same
manner by the Participant.
The current investment choices available under the Plan will
change effective January 1, 1996. Any elections made with respect to investment
choices prior to January 1, 1996 will no longer be effective. New choices need
to be made with respect to investments on and after January 1, 1996. If no
designation is made, the Participant's existing accounts which are not currently
invested in Pilgrim America funds shall be invested in the Pilgrim Money Market
Fund, and all contributions to the Plan shall cease. If no designation is made
and Participant's existing accounts are invested in Pilgrim America funds, the
Participant's accounts will continue to be invested in such funds in accordance
with the Participant's most recent investment elections and all contributions to
the Plan shall cease.
6.4 Transfers Between Investment Funds. As of each Valuation
Date, a Participant, other than a Participant whose employment or service with
the Company has terminated, may elect on forms to be provided by the Plan
Administrator, to transfer all or any portion of his accounts in Company stock
or such investment funds as he has selected to Company stock or any of the other
such funds. A Participant whose accounts are invested in Company stock may elect
to transfer all or any portion of his accounts invested in Company stock, on a
weekly basis, to be Pilgrim Money Market Fund. Any amounts the Participant
elects to transfer to the Pilgrim Money Market Fund from Company stock shall
remain invested in such fund until the next Valuation Date, at which time the
Participant may transfer such amounts to any of the other investment funds
available under the Plan or to Company stock. Such transfers shall be subject to
such reasonable requirements as may be established by the Plan Administrator.
C. Section 13.4 of the Plan shall be amended as of June 30,
1996, to add the following new paragraph at the end of existing Section 13.4:
The Plan Administrator shall also be responsible for: (i)
ensuring that information relating to the purchase, holding and sale of Company
stock and the exercise of voting, tender and similar rights with respect to
Company stock by Participants and beneficiaries is maintained in accordance with
procedures designed to safeguard the confidentiality of such information, except
to the extent necessary to comply with federal laws or state laws not pre-empted
by the Employee Retirement Income Security Act; (ii) that such confidentiality
procedures are being followed; and (iii) that an independent fiduciary is
appointed where the Plan Administrator determines that a potential for undue
Company influence exists with regard to the direct or indirect exercise of
shareholder rights.
EXHIBIT 5
[MICHAEL BEST & FRIEDRICH LETTERHEAD]
June 11, 1996
Express America Holdings Corporation
Two Renaissance Square
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004-44241
Re: Registration Statement on Form S-8
Gentlemen:
You have requested our opinion as to the legality of 200,000 shares of
common stock, $0.01 par value per share ("Common Stock"), of Express America
Holdings Corporation (the "Company") being registered with the Securities and
Exchange Commission pursuant to a Registration Statement on Form S-8. As your
counsel, we have examined such records and other documents as we deemed
necessary for the purposes of this opinion and considered such questions of law
as we believe to be involved. Based upon such examination and consideration, it
is our opinion that the shares of Common Stock will, when issued and sold in
accordance with the respective provisions of the Express America Holdings
Corporation 401(k) Plan, be validly issued, fully paid and nonassessable shares
of Common Stock of the Company.
We give our consent to the filing of this opinion as an Exhibit to the
Registration Statement on Form S-8 and the use of our name in connection
therewith.
Very truly yours,
MICHAEL BEST & FRIEDRICH
/s/ MICHAEL BEST & FRIEDRICH
EXHIBIT 24.1
[KPMG PEAT MARWICK LLP LETTERHEAD]
The Board of Directors
Express America Holdings Corporation:
We consent to incorporation by reference in the registration statement on Form
S-8 of Express America Holdings Corporation of our report dated December 26,
1995, relating to the consolidated balance sheets of Express America Holdings
Corporation and subsidiaries as of September 30, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended September 30, 1995, and all
related schedules, which report appears in the September 30, 1995, annual report
on Form 10-K of Express America Holdings Corporation.
/s/ KPMG Peat Marwick LLP
Phoenix, Arizona
June 19, 1996
