Exhibit 10.27
CONSOLIDATED FREIGHTWAYS CORPORATION
EXECUTIVE SPLIT-DOLLAR LIFE INSURANCE PLAN
2001 RESTATEMENT
TABLE OF CONTENTS
ARTICLE 1 Effective Date; Qualification 1
1.01 Effective Date; Plan Year 1
1.02 Plan Status 1
ARTICLE 2 Application to Company and Affiliates 1
2.01 Eligible Employers 1
2.02 Adoption Procedure 2
ARTICLE 3 Eligibility and Participation 2
3.01 Eligibility 2
3.02 Enrollment; Agreement 2
ARTICLE 4 Life Insurance Policy and Collateral Assignment 3
4.01 Policy 3
4.02 Premium Payments 4
4.03 Collateral Assignment 4
ARTICLE 5 Duration of Coverage; Death Proceeds 5
5.01 Period of Employer Premiums 5
5.02 Retirement 5
5.03 Possession of Policy 5
5.04 Death Benefit Under Policy 6
ARTICLE 6 Amendment; Termination 6
6.01 Amendment 6
6.02 Termination 6
ARTICLE 7 Plan Administration 7
7.01 Administrative Committee 7
7.02 Committee Powers and Duties; Administrator 7
7.03 Claims Procedure 8
7.04 Authority to Act for the Company or Employer 9
7.05 Expenses 9
7.06 Indemnification and Bonding 9
ARTICLE 8 General Provisions 10
8.01 Information for Administrator 10
8.02 Applicable Law 10
8.03 Plan Binding on All Parties 10
8.04 Not Contract of Employment 10
8.05 Notices 10
8.06 Designation of Beneficiary 11
INDEX OF TERMS
A
Accumulated Premiums 5.03-3 6
Administrator 7.02-5 8
Affiliate 2.01-2 1
Agreement 3.02-2 2
Annual Compensation 4.01-3 3
B
Beneficiary 8.06-1 11
Board 3.01 2
C
Code 2.01-2(a) 1
Collateral Assignment 4.03-1 4
Committee 7.01-1 7
Company Preamble 1
D
Death Benefit 4.01-1 3
E
Early Retirement Date 5.02-1 5
Employer 2.01-3 2
ERISA 1.02 1
I
Insurer 4.01-1 3
N
Normal Retirement Date 5.02-1 5
P
Participant 3.02-3 3
Plan Preamble 1
Plan Year 1.01-2 1
Policy 4.01-1 3
R
Retirement 5.02-1 5
CONSOLIDATED FREIGHTWAYS CORPORATION
EXECUTIVE SPLIT-DOLLAR LIFE INSURANCE PLAN
2001 RESTATEMENT
Consolidated Freightways Corporation ("Company") established
the Executive Split-Dollar Life Insurance Plan ("Plan"),
effective January 1, 1994, to provide life insurance for certain
of its executive employees during their employment and into their
retirement. The Company adopts this 2001 Restatement to make
technical and clarifying changes and to put the Plan into a
document format similar to that of other employee benefit plans
of the Company.
ARTICLE 1
Effective Date; Qualification
1.01 Effective Date; Plan Year
1.01-1 The effective date of this Restatement is
January 1, 2001.
1.01-2 "Plan Year" means the fiscal year of the
Plan, which shall be the calendar year.
1.02 Plan Status
The Plan is intended to constitute a welfare benefit plan
under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") for the purpose of providing life insurance
benefits for a select group of executive employees. The Plan
meets the requirements of Department of Labor regulations 29
C.F.R. 2520.104-24 and, as such, is exempt from ERISA's
reporting and disclosure requirements.
ARTICLE 2
Application to Company and Affiliates
2.01 Eligible Employers
2.01-1 The Company sponsors the Plan and any
Affiliate approved by the Company may adopt the Plan for its
executive employees who are selected for eligibility.
2.01-2 "Affiliate" means a corporation, person or
other entity that is one of the following:
(a) A member, with an Employer, of a controlled
group under section 414(b) of the Internal Revenue
Code, as amended (the "Code").
(b) A member, with an Employer, of a group of
trades or businesses under common control under section
414(c) of the Code.
(c) A member, with an Employer, of an affiliated
service group under section 414(m) of the Code.
(d) A member, with an Employer, of a group of
employers required to be aggregated under section
414(o) of the Code.
2.01-3 "Employer" means the Company and any adopting
Affiliate. A list of Employers appears in Appendix A. The Plan
is a single plan maintained by multiple employers.
2.02 Adoption Procedure
An Affiliate may adopt the Plan by a statement in writing,
signed by the Affiliate and approved by the Company. The
statement shall include the effective date of adoption and any
special provisions that are to be applicable only to employees of
the adopting Affiliate.
ARTICLE 3
Eligibility and Participation
3.01 Eligibility
An employee of an Employer shall be eligible to enroll in
the Plan for a Plan Year if the employee is selected to
participate prior to the beginning of the Plan Year by the Board
of Directors of the Company (the "Board") or by a committee of
the Board or an officer to which the Board has delegated
authority to make such selections. Once selected, an employee
shall remain eligible until such selection is revoked by the
Board or by a committee of the Board or an officer that has such
delegated authority
3.02 Enrollment; Agreement
3.02-1 An employee who is selected under 3.01 may
enroll in the Plan by signing the Agreement and returning it to
the Administrator within any time limit prescribed by the
Administrator. The employee shall furnish such information and
complete such forms relating to the employee's health and Plan
coverage as are requested by the Administrator from time to time.
3.02-2 "Agreement" means a written agreement
between the selected employee and the employee's Employer in a
form prescribed by the Administrator. The Agreement shall state
the employee's election to participate in the Plan and agreement
to the terms and conditions on which benefits of the Plan are
provided.
3.02-3 "Participant" means an eligible employee who
has enrolled in the Plan. Participation shall begin on the
first day of the Plan Year and shall continue until 90 days after
an event described in 5.03-1.
ARTICLE 4
Life Insurance Policy and Collateral Assignment
4.01 Policy
4.01-1 The Employer shall purchase on behalf of each
Participant a split-dollar life insurance policy (a "Policy")
from an insurer selected by the Company (the "Insurer"). The
face value of the Policy shall be no less than the amount of the
death benefit prescribed in 4.01-2 through 4.01-4 (the "Death
Benefit").
4.01-2 In the first two Plan Years a Policy is in
force, the Death Benefit shall be equal to the Annual
Compensation of the Participant. In the fifth and subsequent
Plan Years the Policy is in force the Death Benefit shall be
equal to two times the Annual Compensation of the Participant.
In the third and fourth Plan Years a Policy is in force the Death
Benefit shall be the following percentage of Annual Compensation
for each of such Plan Years, rounded to the nearest whole $1,000.
Plan Year in Force Percentage
Third 133%
Fourth 167%
The Death Benefit shall be adjusted on May 1 of each Plan Year to
reflect changes in Annual Compensation as of May 1 of that Plan
Year.
4.01-3 "Annual Compensation" means the weekly salary
of the Participant on May 1 of the Plan Year, multiplied by 52.
Annual Compensation does not include any payments made under the
Employer's Incentive Compensation Plan or any other bonus plan of
the Employer.
4.01-4 During the first four Plan Years a Policy is
in force, the Employer will coordinate the Death Benefit under
the Policy with the level of coverage provided 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 a Participant. Such coordination will
be accomplished by offsetting the level of coverage of the
Company's Group Life Insurance Plan by the Death Benefit under
the Policy.
4.01-5 Each Participant will be the owner of the
Policy purchased on the Participant's life. As a result of such
ownership, the Participant may designate the Beneficiary to whom
the Death Benefit is payable.
4.02 Premium Payments
4.02-1 The Employer shall pay to the Insurer when
due the premiums required to keep each Policy purchased for its
Participants in force.
4.02-2 By weekly payroll deduction, the Participant
shall reimburse the Employer for a portion of the premium paid on
the participant's Policy as follows:
(a) 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.
(b) The value of the economic benefit referred to
in (a) shall be calculated by multiplying the Death
Benefit times the rates described in (1) or (2) below,
whichever produces the lower amount:
(1) Until December 31, 2001, the Internal
Revenue Service table P.S. 58 rates; or
(2) The Insurer's published annual renewable
term life insurance rates available for all
standard risks.
(c) If the Participant is off the Employer's
payroll system due to disability or an unpaid leave of
absence, the Participant shall be required to continue
reimbursement by payments to the Employer no less often
than quarterly as a condition of continued
participation in the Plan. The level of coverage
during such disability period or leave of absence shall
be based on the Participant's last Annual Compensation
rate prior to commencement of the disability or leave.
4.03 Collateral Assignment
4.03-1 To secure the rights of the Employer to
receive payment of the Accumulated Premiums under 5.03-2 and all
death proceeds in excess of the Death Benefit under 5.04, each
Participant shall assign the Participant's Policy to the Employer
as collateral using the Insurer's collateral assignment form
("Collateral Assignment").
4.03-2 The Employer's rights under the Collateral
Assignment are that of a mere lienholder for the payments the
Employer is entitled to receive under 5.03-2 and 5.04 unless a
Participant does not take possession of the Policy under 5.03.
In that event, the Employer is entitled to keep the Policy in
force or to surrender it in exchange for its full cash value.
4.03-3 While the Collateral Assignment is in effect,
the Company shall have the sole right to direct the investment of
policy cash value among the separate account funds offered under
the Policy.
ARTICLE 5
Duration of Coverage; Death Proceeds
5.01 Period of Employer Premiums
If a Participant continues to be selected for participation
in the Plan and furnishes in a timely manner all information,
documentation, or forms required by the Administrator, the
Employer shall continue paying premiums on the Participant's
Policy until the end of the 15th Plan Year the Policy has been in
force or the Retirement of the Participant, whichever is later.
5.02 Retirement
5.02-1 "Retirement" means a termination of all
employment of the Participant with the Company and its Affiliates
at or after Early Retirement Date or Normal Retirement Date.
"Early Retirement Date" and "Normal Retirement Date" are defined
in the Consolidated Freightways Corporation Pension Plan.
5.02-2 If the Employer continues to pay premiums
under 5.01 after a Retirement of the Participant, the
Participant's Death Benefit under the Policy shall be reduced to
one times Annual Compensation. The reduced Death Benefit shall
be determined on the basis of the Participant's Annual
Compensation determined as of May 1 of the Plan Year of
Retirement. The reduction shall take effect as of the January 1
following such Retirement and shall continue at that reduced
level for the remainder of the period described in 5.01.
5.03 Possession of Policy
5.03-1 A Participant shall have the right to take
possession of the Policy upon any of the following:
(a) Termination of employment with the Employer
and its Affiliates before a Retirement.
(b) Ceasing to be selected for participation in
the Plan.
(c) Reaching the end of the period for payment of
premiums by the Employer under 5.01.
(d) Termination of the Plan under 6.02.
5.03-2 For a period of 90 days after an event
described in 5.03-1, the Participant shall have the right to pay
the Employer the amount of its Accumulated Premiums. If such
payment is made, the Participant shall take possession of the
Policy, which shall become the unrestricted property of the
Participant. The Participant then may continue coverage by
paying all the premiums or may surrender it in exchange for any
remaining cash value. If the Participant does not pay the
Employer the amount of its Accumulated Premiums, at the end of
such 90 days the Policy shall become the unrestricted property of
the Employer. At the Employer's request, the Participant shall
execute any document(s) required by the Insurer to transfer
ownership of the Policy to the Employer. At any time thereafter
the Employer may surrender the Policy to the Insurer in exchange
for its cash value or exercise any other right of ownership of
the Policy. If the Participant dies after the Policy has become
the unrestricted property of the Employer and while it remains in
force, all the proceeds payable upon such death shall belong to
the Employer.
5.03-3 "Accumulated Premiums" means the total
amount paid by the Employer as premiums on the Policy and not
reimbursed by the Participant under 4.02-2, without any
adjustment for earnings or time value.
5.04 Death Benefit Under Policy
Upon the death of a Participant while the Policy is in
force, the amount of the Death Benefit shall be paid to the
Beneficiary. All death proceeds in excess of the Death Benefit
shall be paid to the Employer.
ARTICLE 6
Amendment; Termination
6.01 Amendment
The Company may amend the Plan at any time by a written
instrument. Notice shall be given to each Participant of any
amendment affecting the Participant's benefits under the Plan.
6.02 Termination
The Company may terminate the Plan as to all Participants at
any time. Notice of the termination shall be given to the
Participants at least 30 days before the effective date of the
termination. Upon termination, each Participant shall have the
right to take possession of the Participant's Policy as provided
in 5.03-2.
ARTICLE 7
Plan Administration
7.01 Administrative Committee
7.01-1 "Committee" means the committee of three or
more persons appointed by the chief executive officer of the
Company to administer the Plan. The Committee shall have a chair
chosen from among its members and a secretary who need not be a
member. Minutes shall be kept of all proceedings of the
Committee. The Committee may act at a meeting by a majority vote
of a quorum present or without a meeting by action recorded in a
memorandum signed by a majority of the members. A majority of
members shall constitute a quorum.
7.01-2 Any member of the Committee may resign on 15
days' notice to the Company, and the chief executive officer of
the Company may remove any Committee member without showing
cause. All vacancies on the Committee shall be filled as soon as
reasonably practicable. If a vacancy is not so filled, the
number of members shall be reduced by the vacancy, but not below
three. Until a new appointment is made, the remaining members of
the Committee may act although less than a quorum.
7.01-3 The Insurer shall be given the names and
specimen signatures of the Committee members, the chair and the
secretary. The Insurer shall accept and rely on the names and
signatures until notified of a change.
7.01-4 Documents may be signed for the Committee by
the chair, the secretary or other persons designated by the
Committee.
7.02 Committee Powers and Duties; Administrator
7.02-1 The Committee shall interpret the Plan, shall
decide any questions about the rights of Participants and
Beneficiaries and in general shall administer the Plan. Any
decision by the Committee within its authority shall be final and
bind all parties. The Committee shall have absolute discretion
to carry out its responsibilities.
7.02-2 The Committee shall be the plan administrator
under federal laws and regulations applicable to plan
administration and shall comply with such laws and regulations.
The secretary of the Committee shall be the agent for service of
process on the Plan at the Company's address.
7.02-3 The Committee shall keep records of all
relevant data about the rights of all persons under the Plan.
The Committee shall determine the time, manner, amount and
recipient of payment of benefits and the service of any employee
and instruct the Insurer on payments.
7.02-4 The Committee may delegate all or part of its
administrative duties to one or more agents and may retain
advisors to assist it. The Committee may consult with and rely
upon the advice of counsel who may be counsel for the Company.
7.02-5 "Administrator" means the Committee or
another fiduciary for the Plan to whom the Committee has
delegated duty and authority for the discretionary Plan functions
in question.
7.03 Claims Procedure
7.03-1 Any person claiming a benefit, requesting an
interpretation or ruling under the Plan or requesting information
under the Plan shall present the request in writing to the
Administrator, who shall respond in writing as soon as
practicable.
7.03-2 If the claim or request is denied, the
written notice of denial shall state:
(a) The reasons for denial, with specific
reference to the plan provisions on which the denial is
based.
(b) A description of any additional material or
information required and an explanation of why it is
necessary.
(c) An explanation of the Plan's claim review
procedure.
7.03-3 The notice of denial normally will be given
within 90 days after the claim or request is received by the
Administrator. If special circumstances require an extension of
time for processing the claim or request, the Administrator may
extend the time up to an additional 90 days and shall give notice
of the extension to the claimant.
7.03-4 Any person whose claim or request is denied
or who has not received a response within the time provided in
7.03-3 may request review by notice given in writing to the
Administrator. A request for review is required to be submitted
within 60 days after the date the notice of denial is given
unless the Committee waives such requirement. The claim or
request shall be reviewed by the Administrator, who may, but
shall not be required to, have the claimant appear in person. On
review, the claimant may have representation, examine pertinent
documents and submit issues and comments in writing.
7.03-5 The decision on review shall normally be made
within 60 days. If an extension is required for a hearing or
other special circumstances, the claimant shall be so notified
and the time limit shall be 120 days. The decision shall be in
writing and shall state the reasons and the relevant plan
provisions. All decisions on review shall be final and bind all
parties concerned.
7.04 Authority to Act for the Company or Employer
7.04-1 Except as provided in 7.04-2, all authority
of the Company or any Employer under this Plan shall be exercised
by the chief executive officer of the corporation, who may
delegate all or any part of such authority.
7.04-2 The power to amend or terminate the Plan may
be exercised only by the Board of Directors of the Company,
except as provided in 7.04-3.
7.04-3 Any officer of the Company may amend the Plan
to make technical, administrative or editorial changes on advice
of counsel to comply with applicable law or to simplify or
clarify the Plan.
7.04-4 The Board of Directors of the Company or of
an Employer shall have no administrative or investment authority
or function. Membership on the Board shall not make a person a
plan fiduciary.
7.05 Expenses
7.05-1 The Administrator shall not be compensated
for services. The Administrator shall be reimbursed for all
expenses.
7.05-2 The Company may elect to pay any
administrative fees or expenses. Otherwise the expenses and fees
shall be paid from the cash value of the Policy
7.06 Indemnification and Bonding
7.06-1 The Company shall indemnify and defend any
Plan fiduciary who is an officer, director or employee of an
Employer from any claim, loss, liability, or expense, including
attorneys' fees, arising from any action or inaction in
connection with the Plan, subject to the following:
(a) Coverage shall be limited to actions taken in
good faith that the fiduciary reasonably believed were
not opposed to the best interests of the Plan.
(b) Coverage shall be reduced to the extent of
any insurance proceeds.
7.06-2 Plan fiduciaries shall be bonded to the
extent required by applicable law for the protection of Plan
assets.
ARTICLE 8
General Provisions
8.01 Information for Administrator
8.01-1 The Administrator may accept as correct and
rely on any information furnished by the Company or an Employer.
The Administrator may not demand an audit, investigation or
disclosure of the records of the Company or any Employer.
8.01-2 The Administrator may require satisfactory
proof of data from a Participant. The Administrator may adjust
any benefit if an error in relevant data is discovered.
8.02 Applicable Law
This Plan shall be construed according to the laws of
Washington except as preempted by federal law.
8.03 Plan Binding on All Parties
This Plan shall be binding upon the heirs, personal
representatives, successors and assigns of all present and future
parties.
8.04 Not Contract of Employment
This Plan shall not be a contract of employment between any
Employer and any employee, and no employee may object to
amendment or termination of the Plan. The Plan shall not prevent
an Employer from discharging any employee at any time.
8.05 Notices
Except as otherwise required or permitted under other
provisions of this Plan or under applicable law, any notice under
this Plan shall be in writing and shall be effective when
actually delivered or, if mailed, when deposited postpaid as
first-class mail. Notices to the Company, Employer, or the
Administrator shall be directed to:
Corporate Benefits Office
Consolidated Freightways Corporation
1621 NW 21st
Portland, OR 97209
PO Box 3680
Portland, OR 97208
8.06 Designation of Beneficiary
8.06-1 "Beneficiary" means any death Beneficiary
named by the Participant in a designation of Beneficiary.
8.06-2 Each Participant shall on request file with
the Administrator a designation of Beneficiaries and may change
it from time to time. The designated Beneficiaries or other
recipient described below shall receive any residual benefit
after death of a Participant if no other person is entitled to it
as a contingent annuitant or spouse or in any other capacity.
8.06-3 If a Beneficiary dies after the death of a
Participant but before distribution to the Beneficiary, the
benefit to which the Beneficiary was entitled shall be paid to
the estate of the deceased Beneficiary.
8.06-4 If no Beneficiary has been named or no named
Beneficiary is living when the Participant dies, the benefit
shall be paid in the following order of priority:
(a) The Participant's surviving spouse.
(b) The Participant's surviving children in equal
shares.
(c) The Participant's surviving parents in equal
shares.
(d) The Participant's estate.
8.06-5 If the Participant was married at the time a
designation of the spouse as Beneficiary was made and is no
longer married to that spouse at the time of death, the benefit
shall be paid as though the former spouse predeceased the
Participant.
CONSOLIDATED FREIGHTWAYS CORPORATION
By S.D. Richards
Name: Stephen D. Richards
Title: Sr. Vice President and General
Counsel
Executed: March 5, 2001
CONSOLIDATED FREIGHTWAYS CORPORATION
EXECUTIVE SPLIT-DOLLAR LIFE INSURANCE PLAN
APPENDIX A
ADOPTING EMPLOYERS
(as of January 1, 2001)
CF AirFreight Corporation
Consolidated Freightways Corporation
Redwood Systems, Inc.