EXHIBIT 10.33
CONSOLIDATED FREIGHTWAYS, INC.
EXECUTIVE SPLIT-DOLLAR LIFE INSURANCE PLAN
Effective January 1, 1994
Preamble
Consolidated Freightways, Inc. established the Executive
Split-Dollar Life Insurance Plan, effective January 1, 1994,
for the purpose of providing life insurance for certain
valuable employees of the Company while they are employed and
into their retirement years. The Company reserves the right
to determine those employees eligible to participate in the
Plan.
SECTION 1
Definitions
Annual Compensation means the weekly salary of a Participant
as determined by using week 1 payroll processing for the
calendar year multiplied by 52. Annual Compensation does not
include any payments made under the Employer's Incentive
Compensation Plan, or any other bonus plan. Annual
Compensation is used to determine the initial Face Value of
the Policy.
Beneficiary means the person or persons who are to receive
benefits after the death of the participant.
Board of Directors means the Board of Directors of the Company
or any committee to which the Board of Directors specifically
delegates any authority granted to it under the Plan.
Cash Surrender Value of the Policy means the cash value of the
Policy, plus the cash value of any paid-up additions, plus any
dividend accumulations and unpaid dividends, less any policy
loan balance.
Cash Value of the Policy means the cash value as illustrated
in the table of values shown in the Policy plus the cash value
of any paid up additions credited to the Policy.
Committee means the Pension and Employee Benefits Committee.
Company means Consolidated Freightways, Inc., a Delaware
corporation.
Current Loan Value of the Policy means the loan value of the
Policy reduced by any outstanding policy loan balance.
Disability means inability to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a
continuous period of not less than twelve months.
Early Retirement has the same meaning as defined in the
Retirement Plan.
Early Retirement Age means the day on which a Participant
attains age 55.
Effective Date means January 1, 1994 with respect to the
Executive Split-Dollar Life Insurance Plan.
Eligible Spouse means that spouse to whom a Participant is
married on the date of his death. To the extent provided
under a "qualified domestic relations order," the term
Eligible Spouse shall mean a former spouse in place of the
participant's current spouse.
Employee means a person employed by the Employer, any portion
of whose income is subject to withholding of income tax and/or
for whom Social Security contributions are made by an
Employer, as well as any other person qualifying as a common
law employee of an Employer.
Employer means the Company or any subsidiary thereof who has
adopted the Plan.
Employer's Interest in the Policy means the Employer's
accumulated premium payments less the accumulated amount
reimbursed by the Participant and less any Policy loan
balance.
Equivalent Compensation means Annual Compensation indexed by
5% compounded annually, except in the third through fifth
years where indexing is 33 1/3% annually.
ERISA means the Employee Retirement Income Security Act of
1974, as amended from time to time.
Face Value means the amount of life insurance indicated on an
individual Policy or as indexed within the Policy.
Incentive Compensation Plan means the short-term annual
incentive bonus plan or plans adopted by an Employer from time
to time.
Insurer means The Northwestern Mutual Life Insurance Company.
Loan Value of the Policy means the amount which with loan
interest will equal the Cash Value of the Policy and of any
paid-up additions on the next loan interest due date or on the
next premium due date whichever is the smaller amount.
Normal Retirement has the same meaning as defined in the
Retirement Plan.
Normal Retirement Age means the day on which the Participant
attains age 65.
Participant means an Employee selected by the Committee who
elects to enroll in the Plan.
Plan means the Consolidated Freightways, Inc. Executive Split-
Dollar Life Insurance Plan set forth herein, and as amended
from time to time.
Plan Year means the calendar year.
Policy means the split-dollar life insurance issued in the
name of a Participant.
Policy Loan Balance means the policy loans outstanding plus
interest accrued to date.
Retirement Plan means the Consolidated Freightways, Inc.
Retirement Plan, as it may be amended from time to time.
Severance Date means the earlier of the date a Participant
quits, retires, is discharged or dies.
Masculine pronouns used herein shall include the feminine, the
singular number shall include the plural, and the plural shall
be read as the singular.
SECTION 2
Eligibility and Participation
Only an Employee selected by the Board of Directors or the
Committee is eligible to participate in the Plan.
SECTION 3
Allocation of Payment of Premium and Dividends
Each premium on the policies shall be paid by the Employer as
it becomes due. By weekly payroll deduction (over the first
50 pay periods of the Plan Year) the Participant shall
reimburse the Employer for a portion of the premium paid by
the Employer. The amount of the reimbursement shall equal the
value of the economic benefit attributable to the life
insurance protection provided to the Participant under the
Plan. The value of the economic benefit shall be calculated
by using the lower of the Internal Revenue Service table P.S.
58 rates or the Insurer's term rates times the excess of the
current death benefit over the Employer's total value of its
share of the premium.
Dividends shall be applied as required according to the Policy
form chose by the Company.
SECTION 4
Assignment of Policy
The Employee shall be the sole owner of the Policy. The
Employee may exercise all rights, options, and privileges of
ownership in the Policy except those granted to the Employer
in the assignment.
However, to secure premiums paid by the Employer as described
above, the Participant shall execute an assignment of the
Policy to the Employer as collateral for amounts to be
advanced by the Employer by an instrument of assignment,
recorded with the Insurer. The Employer will have those
rights in the policy given to it in the assignment, except
that the Employer will not surrender the Policy for
cancellation except upon expiration of the thirty (30) day
period described in Section 11, and except that the Employer
will not, without written consent of the Employee, assign its
rights in the Policy, other than for the purpose of obtaining
a loan against the Policy, to anyone other than the Employee.
Any payments under the Policy to the Employer in connection
with the rights granted to the Employer in the assignment
referred to in the prior paragraph shall first be made from
Policy cash values attributable to the paid up additional life
insurance purchased by Policy dividends. The Employee shall
have no interest in the paid up additional life insurance
protection except to the extent the death benefit or cash
value thereof exceeds the total Employer's share of premiums
paid.
SECTION 5
Disability and Death
In the event a Participant in the Plan suffers a Disability,
the Employer will continue to make premium payments under the
Plan. The Participant's reimbursement obligations shall be
waived during such time of Disability.
In the event the Policy becomes a claim by reason of the
Participants death, the Employer shall have an interest in the
proceeds of the Policy to the total value of its share of the
premiums paid under Section 3 of this Plan less any Policy
indebtedness to the Insurer. The balance, if any, of the
proceeds of the Policy shall be paid directly by the Insurer
to the Beneficiary designated by the Participant.
SECTION 6
Approved Leaves of Absence
A participant on an approved leave of absence, from the
Employer shall be required to reimburse the Company, at least
monthly, an amount equal to the economic value of the benefit
as determined in Section 3.
SECTION 7
Possession of the Policy
A Participant who becomes ineligible to participate in the
Plan or who is not selected by the Committee for further
participation in the Plan, shall have the right to take
possession of his Policy and continue premium payments, if
any, directly to the Insurer. The Cash Surrender Value of the
Policy, if any, will be reduced by the Employer's Interest in
the Policy.
A Participant who retires from the Employer, as defined in the
Retirement Plan, shall be entitled to take possession of his
Policy. The Company will continue to make premium payments
under the terms of the Policy, if necessary. The
Participant's Cash Value of the Policy, if any, will be
reduced by the Employer's Interest in the Policy. The Face
Value of the Policy available to the retiree should equal the
Equivalent Compensation of the Participant calculated as of
the beginning of the most recent Plan Year. The Company
retains the sole right to maintain a lower amount of
insurance.
At all other times, the Policy will be assigned to the
Employer by the Participant in a collateral assignment
agreement provided for this purpose.
SECTION 8
Loans
The Employer shall have the right to borrow on the Policy up
to the lesser of (a) the Employer's Interest in the Policy or
(b) the Loan Value of the Policy.
SECTION 9
Face Value of the Split-Dollar Life Insurance
The Company will purchase on behalf of each Participant a Face
Value Policy equal to the Annual Compensation of the
Participant. In the third through fifth years of the Policy,
the face value of the Policy will be increased in
approximately equal increments to that the fifth year face
value of the Policy will equal twice the Equivalent
Compensation of the Participant. In all other years, the Face
Value of the Policy will increase at a rate of 5% per annum.
During the first four years of the Policy, the Company will
coordinate benefits under this plan with benefits payable
under the Company's Group Life Insurance Plan so that the
Participant will continually have a combined life insurance
benefit equal to twice the Annual Compensation of the
Participant. Upon reaching twice the Equivalent Compensation
on the face value of this policy, coverage in the Company's
Basic Group Life Insurance Plan will cease. This will not
affect the Employee's eligibility to participate in the
Company's Optional Group Life Insurance Plan.
SECTION 10
Obligations of the Insurer
The Insurer shall be bound only by the provisions of and
endorsements on the Policy, and any payments made or action
taken by it in accordance therewith shall fully discharge the
Insurer from all claims, suits and demands of all persons
whatsoever. It shall in no way be bound by or deemed to have
notice of the provisions of this Plan.
SECTION 11
Termination of Agreement
The agreement entered into between the Employer and the
Participant under this Plan may be terminated at any time
while the Participant is living by written notice thereof by
either the Employer or the Participant to the other; and, in
any event, said agreement will terminate at the Participant's
Severance Date.
This agreement may be terminated, by the Employee, subject to
the conditions expressed below, with or without the consent of
the Employer by giving notice in writing to the Employer. The
Employer acknowledges that its present intent is to maintain
this agreement with the Employee for the indefinite future but
expressly reserves the right to amend or terminate this Plan
at any time upon 30 days written notice to the employee if the
Employer in good faith determines that such continuation is no
longer in its best interest or consistent with its policies.
Such amendment or termination, however, shall not reduce or
eliminate any benefit or interest that the Employee may have
in such Policy subject to the Plan determined as of the
effective date of such amendment or termination. In the event
that either the Employer or Employee terminates the agreement
or it is terminated as of the Employee's Severance Date, the
Participant shall take possession of the Policy, and at his
discretion, can continue the Policy under the terms and
conditions prescribed by the Insurer. The Participant's
interest in the Cash Value of the Policy shall be reduced by
the Employer's Interest in the Policy in accordance with the
collateral assignment agreement.
In the event of termination of this agreement as provided
above, the Employee shall have the right to repay the Employer
within 90 days of the date of termination an amount equal to
the Employer's share of the premiums paid under the Policy
less and Policy indebtedness to the Insurer or other
indebtedness secured by the cash value of the Policies. The
Employee will be obligated for all future premium payments
under the Policy. If the Employee fails to repay the Employer
within 90 days of the date of termination of the agreement,
Employee shall execute any and all instruments that may be
required to vest ownership of said Policy in the Employer.
SECTION 12
Claiming Benefits
If the Participant should die while an active Employee, the
Retirement Plans Administration Office will notify the
Participant's Beneficiary of any necessary documents required.
The amount of life insurance payable under the Plan will be
paid when the necessary documents have been received and
approved. The Retirement Plans Administration Office will
file the claim, on behalf of the Beneficiary, with the
Insurer.
If the Participant should die after his Severance Date, but
while the Policy remains in force, his Beneficiary should
contact the Retirement Plans Administration Office. That
office will instruct the Beneficiary on the necessary
documents needed to file a claim against the Policy. The
Retirement Plan Administration Office will file the claim, on
behalf of the Beneficiary, with the Insurer.
SECTION 13
Denial of a Benefit
If for any reason a claim for benefits under this Plan is
denied by the Employer, the Committee shall deliver to the
claimant a written explanation setting forth the specific
reasons for the denial, pertinent to the Plan Section on which
the denial is based, such other data as may be pertinent and
information on the procedures to be followed by the claimant
in obtaining a review of his claim, all written in a manner
calculated to be understood by the claimant.
For this purpose the claimant's claim shall be deemed filed
when presented in writing to the Retirement Plans
Administration Office, P. O. Box 3680, Portland, OR 97208.
The committee's explanation of the denial shall be in writing,
delivered to the claimant within 90 days of the date the claim
was filed.
The claimant shall have 60 days following his receipt of the
denial of the claim to file with the Committee a written
request for review of the denial. For such review, the
claimant or his representative may submit pertinent documents
and written issues and comments.
The Committee shall decide the issue on review and furnish the
claimant's request for review of his claim. The decision on
review shall be in writing and shall include specific reasons
for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to
the pertinent Plan provisions on which the decision is based.
If a copy of the decision is not furnished to the claimant
within such 60 days, the claim shall be deemed denied on
review.