EXHIBIT 10.A
KENAN TRANSPORT COMPANY
Senior Managers' Life Insurance Plan
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Purpose
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The purpose of the Senior Managers' Life Insurance Plan of Kenan Transport
Company is to provide life insurance benefits to a select number of senior
level Employees who contribute materially to the continued growth,
development, and future business of Kenan Transport Company.
Article I
Definitions
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For the purpose hereof, unless otherwise required by the context, the
following phrases or terms shall have the following meanings:
1.0 "Beneficiary" shall mean the person(s), trust(s), or the estate of a
Participant, entitled to receive any benefits under an Insurance
Policy obtained pursuant to this Plan upon the death of a
Participant.
1.1 "Board" shall mean the Board of Directors of Kenan Transport
Company.
1.2 "Committee" shall mean the Compensation Committee of the Board.
1.3 "Company" shall mean Kenan Transport Company, a North Carolina
corporation, and its subsidiaries or affiliates.
1.4 "Employee" shall mean any person who is in the regular full time
employment of the Company as determined by the personnel policies of
the Company.
1.5 "Insurance Policy" shall mean one or more life insurance contract(s)
issued by the Insurer on the life of a Participant.
1.6 "Insurer" shall mean the insurance company or companies to which
both a Participant and the Company shall apply for insurance on the
Participant's life, and which issues an Insurance Policy.
1.7 "Normal Plan Agreement Termination Date" shall mean the later of (i)
the date a Participant attains age 65, or (ii) the date a
Participant has participated in the Plan for ten (10) years.
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1.8 "Participant" shall mean an Employee who is eligible to participate
and elects to participate in this Plan as provided in Article II
hereof.
1.9 "Plan" shall mean the Senior Managers' Life Insurance Plan of Kenan
Transport Company, which shall be evidenced by this instrument, as
amended from time to time, and by each Participant's Plan Agreement.
1.10 "Plan Agreement" shall mean the form of written agreement, which is
entered into by and between the Company and a Participant.
Article II
Eligibility and Membership
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2.0 Certain senior level Employees of the Company, as selected by the
Board or the Committee, and actively employed by the Company on or
after January 1, 1996, shall be eligible to participate in this
Plan. Eligible Employees may elect to participate in this Plan but
are not required to do so.
2.1 A Participant continues to be eligible to participate in this Plan
regardless of job classification.
2.2 As a condition of participation, each eligible Employee shall
complete, execute, and return to the Company a Plan Agreement in the
form approved by the Committee and will comply with such further
conditions as may be established by the Committee.
2.3 A Participant in this Plan waives his or her right to insurance
coverage under any group term insurance program sponsored by the
Company.
2.4 Once a Participant has terminated participation in this Plan, he or
she may only again become eligible to participate in this Plan as
determined by the Committee.
2.5 In the event that a Participant becomes disabled, as defined by the
Company's long-term disability program, and such disability
continues until the Normal Plan Agreement Termination Date, then
subject to Section 6.0(E), his or her Plan Agreement shall remain in
effect until the Normal Plan Agreement Termination Date, provided
that the Participant continues to make the required premium
contributions, as provided in Section 3.4. If the Participant
subsequently ceases to be disabled prior to the Normal Plan
Agreement Termination Date, and the Participant does not resume
active employment by the Company, the Participant's Plan Agreement
shall terminate.
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Article III
Procurement of Insurance Policy
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3.0 The Company and a Participant shall apply to the Insurer for an
Insurance Policy on such Participant's life in the amount approved
by the Company. The Participant shall:
(A) furnish such information as the Insurer may require,
(B) take such physical examinations as may be requested by the
Insurer, and
(C) do any other act to comply with the underwriting and policy
issuance requirements which may reasonably be requested by the
Insurer.
3.1 If a Participant does not cooperate in the securing of such
insurance, or if he or she is for any reason unable to obtain
insurance in the specified amount on his or her life at standard
rates or rates otherwise acceptable to the Company, the Company
shall have no obligation to the Participant under this Plan and the
Participant's Plan Agreement shall terminate.
3.2 The sole source of benefits under this Plan to a Participant shall
be from the Insurance Policy in which the Participant has ownership
rights pursuant to his or her Plan Agreement.
3.3 The Company shall have no obligation of any nature whatsoever to a
Participant or his or her Beneficiary under this Plan or a
Participant's Plan Agreement, if the circumstances of the
Participant's death preclude payment of death proceeds under the
Insurance Policy.
3.4 The amount of annual premium attributable to or due from a
Participant hereunder for each year shall be an amount equal to the
Insurer's then current premium rate for annually renewable term
insurance for standard risks based on the Participant's age
multiplied by the Participant's amount of coverage. While a
Participant is actively employed by the Company, such required
premium attributable to the Participant shall be paid by the Company
and added to the Participant's annual W-2. A Participant not
actively employed by the Company, who is eligible to continue to
participate in this Plan pursuant to Sections 2.5 or 7.4 shall
either pay his or her annual premium amount directly to the Company,
or, if available, authorize the Company to withhold such payments
from post-retirement benefit payments to the extent permitted by
law. On or before the due date of each Insurance Policy premium
payable prior to termination of a Participant's Plan Agreement, or
within the grace period provided in the Insurance Policy, the
Company shall forward to the Insurer the full amount of the premium
then due.
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Article IV
Incidents of Ownership
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4.0 A Participant shall retain and may exercise all rights of ownership
with respect to the Insurance Policy except as otherwise hereinafter
provided. These rights include, but are not limited to, (i) the
right to designate and change the Beneficiary of death proceeds
under the Insurance Policy, but only to the extent of the amount of
proceeds indicated on Schedule A attached to his or her Plan
Agreement, (ii) the right to elect any optional mode of settlement
with respect to such death proceeds, and (iii) the right to
surrender or cancel the Insurance Policy subject to the Company's
interest in the Insurance Policy.
4.1 A Participant shall execute a collateral assignment of the Insurance
Policy to the Company as security for any and all liabilities
incurred arising with respect to premium payments made by the
Company.
4.2 This collateral assignment of the Insurance Policy shall grant to
the Company the following specific rights:
(A) The limited right to obtain one or more loans or advances on
the Insurance Policy to the extent of the Company's interest
under the terms of this Plan and to pledge or assign the
Insurance Policy as security for such loans or advances.
(B) The right to determine how the dividends in each Insurance
Policy will be applied, whether to reduce premiums or to
purchase paid-up addition or otherwise.
(C) The right to collect from the Insurance Policy the Company's
interest in the net proceeds of the Insurance Policy when it
becomes a claim by death (as provided in Section 5.1), or
termination of a Plan Agreement (as provided in Section 6.1).
4.3 The Company, as assignee, shall upon request forward without
unreasonable delay to a Participant or a Participant's Beneficiary,
as appropriate, the Insurance Policy for endorsement of any
designation or change of Beneficiary or any election of an optional
mode of settlement.
4.4 While a Plan Agreement is in force, a Participant may not borrow
either directly or indirectly against his or her Insurance Policy or
pledge his or her interest in the Insurance Policy.
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Article V
Death Proceeds Prior to Termination of Plan Agreement
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5.0 A Participant shall designate his or her Beneficiary to receive
death benefits under the Insurance Policy upon the death of the
Participant prior to the termination of his or her Plan Agreement,
but only to the extent of the amount of proceeds indicated on
Schedule A attached to his or her Plan Agreement. If more than one
Beneficiary is named, the shares and preference of each shall be
indicated. The Participant shall execute a Beneficiary designation
on the form approved by the Insurer. Such Beneficiary designation
shall not be terminated, altered or amended by the Company, without
the express written consent of the Participant. The Company and the
Participant shall take all action necessary to cause such
Beneficiary designation to conform to the provisions of this Plan
and the Participant's Plan Agreement.
5.1 Upon the death of a Participant prior to termination of his or her
Plan Agreement, death proceeds provided under the Insurance Policy
shall be allocated to the Participant's Beneficiary and the Company.
The Participant?s Beneficiary shall be entitled to death proceeds in
the amount indicated on Schedule A attached to his or her Plan
Agreement. The Company shall be entitled to the balance of death
proceeds in the Insurance Policy.
5.2 A Participant shall have the right at any time to submit a new
Beneficiary designation, on the form approved by the Insurer, to the
Company. The Company shall then promptly mail such form to the
Insurer.
5.3 No change in Beneficiary shall be effective until acknowledged in
writing by the Insurer. Thereafter, a copy of the written
acknowledgment shall be returned promptly by the Company to the
Participant.
5.4 Any payment made by the Insurer in accordance with the designation
of Beneficiary contained in the most recent Beneficiary designation
filed with the Insurer shall fully discharge the Insurer from all
further obligations with respect to such payment.
5.5 A Beneficiary may select any settlement option under the Insurance
Policy of his or her portion of the death benefit proceeds. The
Company agrees to co-execute and deliver to the Insurer the
necessary forms to select the requested settlement options.
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Article VI
Termination of a Plan Agreement
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6.0 A Plan Agreement entered into pursuant to this Plan shall terminate
upon the occurrence of any of the following events prior to the
death of a Participant:
(A) The Normal Plan Agreement Termination Date specified in
Section 1.7.
(B) Termination of a Participant's employment with the Company
prior to the Normal Plan Agreement Termination Date, except as
otherwise provided in Sections 2.5 or 7.4.
(C) Total cessation of the Company's business or the final
adjudication of bankruptcy, receivership or dissolution of the
Company, unless the Company's business is continued by a
successor company or business entity.
(D) Termination of the Plan Agreement by a Participant upon
written notice to the Company or by reason of a Participant's
failure to pay his or her required premium contribution as
provided in Section 3.4.
(E) Termination of this Plan by the Board in its sole discretion,
as provided in Section 7.0
6.1 If a termination of a Participant's Plan Agreement occurs, the
obligation of the Company to make any premium payments shall cease
and the rights of the Company and the Participants shall be
controlled by Sections 6.2 and 6.3.
6.2 Upon termination of a Plan Agreement prior to the death of a
Participant, the Company shall have the unqualified right to the
lesser of (i) the amount of cumulative premiums paid with respect to
such Insurance Policy, net of any cumulative premiums paid by the
Participant pursuant to Section 3.4 or (ii) the cash surrender value
of the Insurance Policy, less in either case any Insurance Policy
indebtedness to the Insurer incurred by the Company and any unpaid
interest on such indebtedness. After the Company has exercised this
right, it will no longer have any interest in the Insurance Policy.
6.3 At the termination of a Plan Agreement and after the Company
exercises its right under Section 6.2, a Participant shall be
entitled to all rights under the Insurance Policy. The Participant
agrees that he or she will not deal with the Insurance Policy other
than in a manner expressly provided for in this Plan and his or her
Plan Agreement until after his or her Plan Agreement is terminated.
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Article VII
Termination or Modification of the Plan; Change in Control of the Company
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7.0 The Company reserves the right to terminate this Plan at any time,
based on a decision made solely by the Board.
7.1 The Company reserves the right to totally or partially amend, modify
or supplement this Plan at any time, based on a decision made solely
by the Board.
7.2 No action to terminate, amend, modify or supplement the Plan shall
be taken except upon 30 days' prior written notice to each affected
Participant.
7.3 If a termination of this Plan occurs, the obligation of the Company
to make any premium payments shall cease and the rights of the
Company and the Participants shall be controlled by Article VI.
7.4 If a participant has been participating in this Plan for less than
ten (10) years and there is a Change in Control of the Company, as
defined in Section 7.5, and there is then a termination of the
Participant's employment within two years of the Change in Control
as a result of which the Participant would be deprived of benefits
under the Plan, the Participant's Plan Agreement (and the Company
premium payment obligation under Sections 3.4) will continue in
effect for a period of ten (10) years from the effective date of the
Participant's Plan Agreement, unless modified or terminated by
mutual consent, provided that the Participant continues to make the
required premium contributions as provided in Section 3.4.
7.5 For purposes of Section 7.4, a Change in Control of the Company
shall occur when, within a twelve (12) month period, there is either
a sale or transfer of all or substantially all of the assets of the
Company, or a 50% change in ownership of the Company through a
merger, the sale of shares by the shareholders, or the issuance of
new stock to new shareholders. Excepted from this definition shall
be sales of stock among the existing shareholder group or to an
employee stock ownership trust or similar employee stock ownership
vehicle, a change in relative stock ownership in the existing
shareholder group by redemption, a public or secondary offering, and
transfers outright or intrust by gift or inheritance.
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Article VIII
Retention of Services
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8.0 Nothing contained in this Plan or a Plan Agreement shall be
construed as a contract of employment between the Company and a
Participant, or as a right of any Participant to be continued in the
employment of the Company, or as a limitation of the right of the
Company to discharge any of its employees, with or without cause.
Article IX
Administration of the Plan
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9.0 The sole right of construction, interpretation and general
administration of this Plan shall be vested in the Committee.
9.1 The Committee shall establish rules, forms and procedures for the
administration of this Plan from time to time, including a claims
procedure. The Committee shall have the exclusive right to decide
any and all matters arising in connection with the administration of
this Plan.
9.2 The Committee may appoint an administrator and delegate its
administrative and fiduciary responsibilities to such administrator.
Article X
Miscellaneous
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10.0 Any notice which shall or may be given under this Plan or a Plan
Agreement shall be in writing and shall be mailed by United States
Mail, postage pre-paid. If notice is to be given to the Company,
such notice shall be marked as indicated below and mailed to the
Company at its general offices:
Kenan Transport Company
Post Office Box 2729
Chapel Hill NC 27515-2729
If notice is to be given to a Participant, such notice shall be
addressed to the address shown on such Participant's Plan Agreement.
10.1 Any party may change the address to which notices shall be mailed
from by giving written notice of such new address.
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10.2 This Plan shall be binding upon the Company and its successors and
assigns, and upon a Participant, his or her Beneficiary, heirs,
executors and administrators.
10.3 This Plan shall be construed and governed in all respects under and
by the laws of and in courts sitting in the State of North Carolina,
to the extent not pre-empted by Federal law. If any provision of
this Plan shall be held by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions hereof shall
continue to be fully effective.
10.4 Headings and subheadings in this Plan are inserted for convenience
and reference only and do not constitute any part of this Plan.
10.5 This Plan may be executed in an original or any number of
counterparts, each of which shall constitute an original of one and
the same instrument.
Article XI
Effective Date
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11.0 The effective date of this Plan shall be April 1, 1996.
IN WITNESS WHEREOF, the Senior Mangers' Life Insurance Plan of Kenan
Transport Company, having been duly approved and adopted by the
Board, is executed on behalf of the Company as of the first day of
April, 1996.
Kenan Transport Company:
By: /s/ Lee P. Shaffer
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President
Attest:
By: /s/ William L. Boone
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Vice President - Finance
[Corporate Seal]
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