Exhibit 10(a)
AIRBORNE FREIGHT CORPORATION
DIRECTOR STOCK BONUS PLAN
AIRBORNE FREIGHT CORPORATION, a Delaware corporation (the "Company"),
hereby establishes and sets forth the terms of the Airborne Freight
Corporation Director Stock Bonus Plan (the "Plan").
1. Purpose of Plan
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The purpose of the Plan is to enable the Company to attract and retain
outside persons of the highest caliber to serve on the Board of
Directors of the Company (the "Board"), as such persons can make
important contributions to the success of the Company. The Plan will
seek to achieve this purpose by means of automatic awards of Common
Stock of the Company, $1.00 par value per share (the "Common Stock").
The Plan will be effective as of April 26, 1996 (the "Effective
Date").
2. Administration of the Plan
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The Plan shall be administered by the Board, except as provided in
Section 8.2. Awards of Common Stock under the Plan shall be automatic
as described in Section 4. However, the Board shall, subject to the
provisions of the Plan, have the complete authority, in its sole and
absolute discretion, to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, and to make all of
the determinations necessary or advisable for the administration of
the Plan. All such interpretations, rules, regulations and
determinations shall, in the absence of fraud or patent mistake, be
conclusive and binding on all persons with any interest in the Plan.
The Board shall have all powers necessary or appropriate to accomplish
its duties under the Plan.
3. Eligibility to Participate
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Each individual who meets the following requirements on an Award Date
(as defined in Section 4.1) shall be eligible to participate in the
Plan (each such individual will be referred to as an "Eligible
Director"):
(a) The individual is a member of the Board; and
(b) The individual was not an employee of or consultant to the
Company or any of its direct or indirect subsidiaries at any time
during the calendar year in which the Award Date falls or during
the preceding calendar year.
An Eligible Director will cease to be eligible for further
participation in the Plan if he or she does not meet the foregoing
eligibility requirements on any Award Date. Such cessation of
participation shall not affect the Eligible Director's rights with
respect to the shares of Common Stock that are carried in his or her
Stock Account (as defined in Section 5.1).
4. Share Awards
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Effective on April 26, 1996, and effective on the third (3rd) business
day after the date of the Company's annual meeting of shareholders in
1997 and in each succeeding year during which shares of Common Stock
remain available under Section 9 (each such date will be referred to
as an "Award Date"), the Company hereby awards, to each individual who
is an Eligible Director on the Award Date, the number of shares of
Common Stock (which number, if not a whole number, shall be rounded
down to the nearest whole number) obtained by dividing (a) $3,000, by
(b) the closing sales price of a share of Common Stock on the New York
Stock Exchange on the Award Date (each such award to an Eligible
Director will be referred to as a "Share Award"). If on any Award Date
the number of shares of Common Stock available under Section 9 is
insufficient to permit Share Awards covering the number of shares of
Common Stock specified in the preceding sentence to be awarded to each
Eligible Director, then each Eligible Director shall instead be
granted a Share Award covering the largest whole number of shares of
Common Stock as can then be awarded without exceeding the number of
shares of Common Stock then available. All Share Awards shall occur
automatically without further action of the Board.
5. Deferral of Issuance of Shares
------------------------------
Issuance of the shares of Common Stock under each Share Award shall be
deferred as provided in this Section 5.
5.1. For each Eligible Director who has received a Share Award, the
Company shall maintain an unfunded account (the "Stock Account")
as follows:
(a) The Stock Account shall be credited with the number of
shares of Common Stock under each Share Award awarded to the
Eligible Director.
(b) Whenever cash dividends are declared on shares of Common
Stock of the Company, a dividend equivalent shall be
computed with respect to each Stock Account. The amount of
the dividend equivalent shall be the product of (i) the
number of shares of Common Stock in the Stock Account on the
date as of which the Company determines the holders of
record of its Common Stock who are entitled to receive the
dividend, and (ii) the per share dividend amount. The
dividend equivalent shall be deemed reinvested in additional
shares of Common Stock by crediting to the Stock Account,
effective on the date the cash dividend is paid, the number
of shares of Common Stock (which number may be fractional)
obtained by dividing (A) the amount of the dividend
equivalent, by (B) the closing sales price of a share of
Common Stock on the New York Stock Exchange on the dividend
payment date. Dividend equivalents shall be credited and
deemed reinvested under this Section 5.1(b) until all shares
of Common Stock carried in the Stock Account have been
issued to the Eligible Director or his or her estate.
(c) The Stock Account shall be debited for any shares of Common
Stock that are issued under Section 5.2 or Section 8.
(d) The Stock Account shall be subject to any adjustment
required or permitted pursuant to Section 8.
5.2. The shares of Common Stock carried in the Stock Account of an
Eligible Director (the "Account Shares") shall be issued to the
Eligible Director as provided in this Section 5.2.
(a) All of the Account Shares of an Eligible Director shall be
issued to the Eligible Director as soon as practicable after
the end of the calendar year in which he or she ceases to be
a director of the Company.
(b) Notwithstanding the provisions of Section 5.2(a), if an
Eligible Director ceases to be a director of the Company and
becomes a proprietor, officer, partner or employee of, or
otherwise becomes affiliated with, any business that is in
competition with the Company or any of its direct or
indirect subsidiaries, all of the Account Shares of the
Eligible Director shall be issued to the Eligible Director
as soon as practicable thereafter.
(c) Notwithstanding the provisions of Section 5.2(a), if an
Eligible Director should die prior to issuance of his or her
Account Shares, they shall be issued to the Eligible
Director's estate as soon as practicable thereafter.
(d) Notwithstanding the provisions of Section 5.2(a), the
Company shall have the right, exercisable at any time in its
sole and absolute discretion, to immediately issue to an
Eligible Director all of his or her Account Shares in full
satisfaction of all obligations to the Eligible Director
under the Plan, whether or not the Eligible Director has
ceased to be a director of the Company.
5.3. No fractional shares of Common Stock shall be issued under the
Plan. If a fractional share of Common Stock would be issuable
under the Plan in the absence of the preceding sentence, the
number of shares of Common Stock issuable to the person entitled
thereto shall instead be rounded down to the nearest whole
number.
6. Rights as Shareholder
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An Eligible Director shall have no voting or other rights as a
shareholder of the Company on account of shares of Common Stock for
which no certificate has been issued, regardless of the fact that the
shares may have been credited to his or her Stock Account or become
issuable under the provisions of the Plan. Except as expressly
provided in Section 5.1(b) and Section 8, no adjustment will be made
for dividends on, or other property or rights distributed with respect
to, the Common Stock.
7. Rights Nontransferable
----------------------
The rights of an Eligible Director under the Plan, including any
rights with respect to any Stock Account maintained pursuant hereto,
may not be transferred, assigned, pledged or hypothecated by the
Eligible Director during his or her lifetime, whether by operation of
law or otherwise, or be made subject to execution, attachment or
similar process, and any attempt so to do shall be void and of no
effect.
8. Adjustments
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8.1. If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into, or exchanged for a different
number or kind of shares or securities of the Company through
reorganization, merger, recapitalization, reclassification, stock
split-up, or other material alteration in the capital structure
of the Company, the Board shall make such adjustment to the Plan
(which adjustment may include, but shall not necessarily be
limited to, a change in the number of shares of Common Stock
available under Section 9) and to the shares of Common Stock
carried in the Stock Accounts at the time of the material
alteration (which adjustment may include, but shall not
necessarily be limited to, a change in the number of such shares
or in the securities thereafter to be carried in the Stock
Accounts) as the Board determines to be appropriate and equitable
under the circumstances. If the Board determines that the nature
of a material alteration in the capital structure of the Company
is such that it is not feasible or advisable to make any such
adjustment, such event shall be subject to Section 8.2. For
purposes of this Section 8.1, neither (a) the issuance of
additional shares of Common Stock or other securities of the
Company in exchange for adequate consideration (including
services), nor (b) the conversion into Common Stock of any
securities of the Company now or hereafter outstanding, shall
constitute a material alteration in the capital structure of the
Company.
8.2. Upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is
not the surviving corporation, upon the acquisition by any
person, partnership, or corporation of more than 25% of the
outstanding shares of Common Stock, upon a sale of substantially
all of the property of the Company, or upon a material change in
the capital structure of the Company that is subject to this
Section 8.2 in accordance with the last sentence of Section 8.1,
a majority of the Continuing Directors of the Company (as the
term "Continuing Director" is defined in Section 11.3(g) of the
Restated Certificate of Incorporation of the Company, as amended)
shall have the power to determine, in their sole discretion, upon
the effective date of such event or within thirty (30) days
thereafter, what effect, if any, such event shall have on the
Plan and the shares of Common Stock carried in the Stock Accounts
at the time of the event, including, but not limited to, the
power to cause the Stock Accounts to be terminated and the shares
of Common Stock carried in the Stock Accounts to be issued to the
Eligible Directors for whom the Stock Accounts are then held.
Upon the dissolution or liquidation of the Company, the Plan
shall terminate, and all shares of Common Stock carried in the
Stock Accounts shall, prior to any distribution of assets of the
Company pursuant to the dissolution or liquidation, be issued to
the Eligible Directors for whom the Stock Accounts are then held.
9. Term of the Plan
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The Plan shall become effective on the Effective Date and, if not
sooner terminated under Section 8.2, shall terminate at such time as
all Account Shares of all Eligible Directors have been issued to the
Eligible Directors or their estates in accordance with Section 5.
10. Shares Available for the Plan
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The aggregate number of shares of Common Stock that may be issued
under the Plan shall be twenty thousand (20,000). This number shall be
subject to any adjustment required or permitted pursuant to Section 8.
The Company's treasury stock shall be used for all issuances of shares
of Common Stock issuable under the Plan.
11. Amendment
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The Board may from time to time amend the Plan in any respect
whatsoever, except that (a) without the consent of each Eligible
Director affected thereby, no amendment shall materially alter or
impair any rights of Eligible Directors under the Plan with respect to
their respective Account Shares at the time of the amendment, and (b)
regardless of whether the consent of Eligible Directors is obtained,
the Plan may not be amended more than once every six (6) months to
change the designation of the class of directors eligible to receive
Share Awards, the timing of the Share Awards, or the number of shares
of Common Stock to be covered by Share Awards (except as provided in
Section 8), unless the purpose of such amendment or revision is to
comport with changes in the Internal Revenue Code or the rules
thereunder.
12. Governing Law
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The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Washington and construed
accordingly.
Adopted this 23rd day of April, 1996.
AIRBORNE FREIGHT CORPORATION
By /s/ Robert S. Cline
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Robert S. Cline
Chairman and Chief Executive Officer