Exhibit 10(J)
AIRBORNE FREIGHT CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (SERP)
Restated Effective January 1, 2000
Table of Contents
Table of Contents 1
Purpose 1
History and Effective Dates 1
Article 1. - Definitions 1
Article 2. - Eligibility and Participation 5
Article 3. - Retirement 6
Article 4. - Disability 7
Article 5. - Death Benefit 9
Article 6. - Termination of Employment 10
Article 7. - Demotions and Other Employment Status Changes 10
Article 8. - Company/Participant Liability 11
Article 9. - No Guarantee of Employment 11
Article 10. - Plan Amendment and Termination 11
Article 11. - Change of Control 12
Article 12. - Other Benefits and Agreements 14
Article 13. - Restrictions on Alienation of Benefits 15
Article 14. - Administration of the Plan 15
Article 15. - Claims Procedures 16
Article 16. - Trust 18
Article 17. - Miscellaneous 18
AIRBORNE FREIGHT CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Purpose
The purpose of the Airborne Supplemental Executive Retirement Plan is to
provide eligible employees of Airborne Express and its subsidiaries with
supplemental retirement benefits that will assist them in maintaining an
accustomed standard of living, and contribute to attracting and retaining
executives of the highest quality.
History and Effective Dates
This plan is a restatement of the Airborne Express Supplemental Executive
Retirement Plan (SERP), originally effective January 1, 1992. Unless
otherwise noted, the effective date of this restated program shall be
January 1, 2000 for all purposes.
The terms of this restated Plan and the benefits provided hereunder shall
supersede the predecessor plan in all respects for anyone separating from
service on or after the effective date of this restated program.
Participants that separated from service prior to the January 1, 2000
receive benefits determined under the terms of the prior document and shall
not be affected by this restatement.
Article 1. - Definitions
For purposes hereof, unless otherwise clearly apparent from the context,
the following phrases and terms shall have the indicated meanings:
1.1 "Actuarial Equivalent" shall mean an amount of a series of payments
that, at a given point in time, is determined to have the same or
equivalent value, at that point in time, as another given amount or
another given series of payments, taking into consideration the time
value of money, mortality and such other actuarial factors as may be
appropriate (such determination to be made, to the extent applicable,
on the basis of the same actuarial assumptions as used in the Basic
Plan for purposes of adjusting between alternate forms of annuity
distributions).
1.2 "Age at Retirement" shall mean the Participant's whole age as of his or
her last birthday that precedes or coincides with the Participant's
date of retirement.
1.3 "Airborne Express" shall mean Airborne Freight Corporation (d/b/a
Airborne Express).
1.4 "Alternate Benefit Forms" shall mean any Actuarial Equivalent alternate
form of payment that is available under the Basic Plan.
1.5 "Basic Plan" shall mean the Airborne Express Retirement Income Plan
(f.k.a. the Airborne Express Minimum Monthly Retirement Income Plan),
as now or hereafter amended.
1.6 "Board" shall mean the Board of Directors of Airborne Express.
1.7 "Cause" is defined in Section 6.4 of this Plan
1.8 "Change of Control" is defined in Article 11 of this Plan.
1.9 "Committee" shall mean the administrative committee appointed to manage
and administer this Plan in accordance with the provisions of Article
14.
1.10 "Company" shall mean Airborne Express and any of its subsidiaries
that are selected by the Board to participate in this Plan.
1.11 "Considered Compensation" shall mean the total of all payments
made to a Participant on account of employment with the Company for
services rendered, including any amounts of salary or bonus that the
Participant may from time to time elect to defer under the Company's
Capital Accumulation Plan (or any similar successor plan or plans) or
under any cafeteria plan (within the meaning of Section 125 of the
Internal Revenue Code of 1986, as amended) or any nonqualified deferred
compensation plan from time to time maintained by the Company, but
excluding:
(a) Payments arising from any stock bonus, stock option, stock
appreciation rights or restricted stock plan;
(b) Payments from any qualified or nonqualified employee benefit plan
of the Company (other than the Management Incentive Compensation
Plan or any similar successor bonus plan or plans); and
(c) Cost of living differentials, automobile allowances, payment for
moving expenses, expatriate premiums, shelter allowances and post
differentials.
Considered Compensation in a particular period shall include salary and
bonus payments actually received in that period as well as any amounts
of salary that would have been received in that period had payment not
been deferred through participation in the Company's Capital
Accumulation Plan (or any similar successor plan or plans) or in a
cafeteria plan or nonqualified deferred compensation plan of the
Company.
1.12 "Disability" shall mean a condition which qualifies for receipt of
disability income payments under the Disability Plan.
1.13"Disability Offset Amount" shall mean the sum of the following:
(a) "Retirement Offset Amount" as defined in this Article 1, with the
exception that "(b) The Participant's Primary Social Security
Benefits" shall be replaced with "the annual amount of any
disability income payments received by a Participant or his or her
family members under the Social Security Act"; and
(b) The annual amount of disability income payments received by the
Participant under the Disability Plan.
1.14 "Disability Plan" shall mean the long-term disability plan of the
Company, as now or hereafter amended, including any similar successor
plan.
1.15 "Early Retirement Date" shall mean the earliest date that a
Participant would be entitled to elect early retirement and receive an
immediate benefit under the terms of the Basic Plan.
1.16 "Final Average Earnings" shall mean the average annual Considered
Compensation of a Participant over the five consecutive calendar years
during the current and preceding ten calendar years where such average
is highest. At any point in time, Final Average Earnings shall be
computed to the date of determination by taking into account actual
year to date Considered Compensation during the current calendar year
(without being annualized) and the ten preceding calendar years.
1.17 "Normal Retirement Date" shall mean the first day of the month
following the month in which a Participant attains age 62.
1.18 "Participant" shall mean an Officer of the Company designated by
the Chief Executive Officer of Airborne Express and approved by the
Committee.
1.19 "Plan" shall mean this Airborne Express Supplemental Executive
Retirement Plan.
1.20 "Primary Social Security Benefit" shall mean the annual primary
insurance amount that a Participant would receive on retirement at age
65 under the Federal Social Security Act, determined as follows:
(a) At the retirement of the Participant on or after age 65, the
Primary Social Security Benefit shall be the Participant's primary
insurance amount as calculated under the Federal Social Security
Act.
(b) At the retirement of the Participant prior to age 65, the Primary
Social Security Benefit shall be calculated as the Participant's
age 65 primary insurance amount assuming he or she survived to age
65 and had no further earnings, adjusted for early commencement at
the rate of 5/9 of 1% per month.
In all cases, the Participant's current and prior wages will be assumed
to have been at or above the applicable wage base in each year and all
applicable amounts shall be calculated using the Social Security Act
laws and limits in effect for the year in which benefits commence. The
Primary Social Security Benefit amount shall be determined as described
above without regard to the Participant's actual timing of receipt of
the benefit amount.
1.21 "Retirement Offset Amount" shall mean the sum of the following:
(a) The annual benefit a Participant would be due to receive under the
terms of the Basic Plan if the Participant retired and elected
immediate commencement of his or her benefit in the form of a
single life annuity (such annual benefit to be computed before
reduction by the "Profit Sharing Plan Annuity Benefit," as that
term is defined in the Basic Plan);
(b) The Participant's Primary Social Security Benefit.
The amount to be offset under clause (a) above shall be determined
based on the Participant's Final Average Earnings and service as of the
date of the determination.
1.22 "Substantial Cause" is defined in Section 11.4 of this Plan.
1.23 "Target Benefit" shall mean the full potential formula benefit
available to Participants at each possible age of retirement, prior to
the application of any applicable offset amounts. Amounts are
expressed as a percentage of a Participant's Final Average Earnings.
Age at
Retirement Target Benefit
---------- --------------
62 + 65%
61 56%
60 45%
59 38%
58 31%
57 24%
56 17%
55 10%
54 or younger 0%
1.24 "Trust" shall mean the Airborne Express Executive Deferral Plan
and Supplemental Executive Retirement Plan Trust or any successor
thereof.
1.25"Vested Accrued Benefit" shall, at any point in time, mean the
Participant's Target Benefit multiplied by the applicable Vesting
Percent from the following table.
Vesting "Points" Vesting Percent
("Points" = Age +
Service)
--------------- ---------------
80 + 100%
79 98%
78 96%
77 94%
76 92%
75 90%
74 or lower Reduced an
additional 2% for
each Point below 75.
In determining Points for purposes of this section, Age shall mean the
Participant's "Age at Retirement" and Service shall mean "Years of
Service" as of the Participant's date of retirement. For purposes of
referencing the above schedule, fractional Points that result from
partial years of Credited Service shall be disregarded.
1.26 "Vesting Percent" shall mean the applicable percentage as
determined from the definition of "Vested Accrued Benefit".
1.27 "Year of Service" shall mean the Participant's Credited Service
as determined under the Basic Plan, and to the extent provided in
Section 4.3, shall include periods of deemed service during which a
Participant receives payments under the Disability Plan.
Article 2. - Eligibility and Participation
2.1 Eligibility. An employee shall become eligible to participate in this
Plan when he/she either (a) becomes an officer of the Company, performs
services in the USA or performs services outside the USA under an
expatriate agreement, and is designated by the CEO and approved by the
Committee, or (b) is specifically nominated for participation by the
Board. Participation shall be limited to a select group of management
and highly compensated employees of the Company.
2.2 Participation. Upon satisfaction of the eligibility requirements, and
approval by the Committee, an executive of the Company shall become a
Participant effective as of the date specified in the nomination
document.
2.3 Termination of Benefits. Notwithstanding any other provision of this
Plan, if a Participant under this Plan acts in a manner that the
Committee, in its sole and absolute discretion, determines to be
hostile to the best interests of the Company, all rights of the
Participant and his or her spouse, if any, to receive further benefits
under this Plan shall terminate, except to the extent such termination
may be prohibited by applicable law. Acts hostile to the best
interests of the Company shall include, without limitation, the
following: disclosure of any confidential information or trade secrets
to a competitor of the Company; employment by a competitor of the
Company within thirty-six (36) months following termination of the
Participant's employment with the Company; and commission of any act
that would constitute Cause for termination under Section 6.4. For
purposes of this Section, a participant shall include either a current
or a former employee of the Company.
Article 3. - Retirement
3.1 Normal Retirement Benefit. Upon retirement from the Company at or
after his or her Normal Retirement Date, a Participant shall be
entitled to receive an annual retirement benefit equal to his or her
Vested Accrued Benefit as of the date of retirement reduced by the
Retirement Offset Amount.
3.2 Early Retirement Benefit. A Participant who retires prior to his or
her Early Retirement Date shall not be entitled to any benefit under
this Plan. A Participant who retires after that date but prior to his
or her Normal Retirement Date shall, subject to Section 3.4, be
entitled to receive an annual retirement benefit equal to the Vested
Accrued Benefit as of the date of retirement reduced by the Retirement
Offset Amount.
3.3Form and Time of Retirement Payments. For all purposes under this
Plan, the normal form of benefit and the available alternate benefit
forms shall be those provided under the Basic Plan. Not later than 30
days prior to a Participant's actual retirement, a Participant may
request, by written application to the Committee, one of the following
special benefit forms which are also available under this Plan. If
married, the consent of the Participant's spouse shall be required for
a distribution in any form other than a qualified joint and 50%
survivor annuity. It is the sole discretion of the Committee to
determine whether to permit a requested alternate form of distribution.
Single Lump Sum Distribution - A single payment equal in value to the
Actuarial Equivalent present value of the benefit otherwise due to the
Participant.
A One Year or Five Year Deferred Lump Sum - The same as the Single Lump
Sum Distribution except such amount shall be paid to the Participant
(or his/her beneficiary in the event of death prior to receipt of the
payment) up to 1 year or 5 years following the date the benefit would
otherwise commence and will be adjusted for the passage of time at the
interest rate used for determining Actuarial Equivalent benefits.
Five Year Installment - The Single Lump Sum Distribution amount shall
be amortized and paid out in substantially equal annual payments to the
Participant (or his/her beneficiary in the event of death prior to full
payment) over the 5 year period beginning on the date the benefit would
otherwise commence, using the interest rate used for determining
Actuarial Equivalent benefits.
Subject to Sections 2.3 and 6.4, any payment shall commence on the
first day of the second month following the month in which the
Participant retires or is disabled. The Company may withhold from any
payment any income tax or other amounts as required by law or any other
amounts as mutually agreed by the Participant and the Committee.
Annuity payments shall not be adjusted on account of a Participant's
deferral of retirement past his or her Normal Retirement Date, except
to the extent such adjustment results from changes in a Participant's
Final Average Earnings, Vesting Percent or Retirement Offset Amount.
In the event the Participant does not affirmatively elect an
alternative benefit form in writing prior to retirement or disability,
the Participant shall receive a single life annuity, or, if married, a
qualified joint and 50% survivor annuity.
3.4 Early Retirement for the Convenience of the Company. In the event that
a Participant, at the written request of the Company, retires after his
or her Early Retirement Date but prior to his or her Normal Retirement
Date, the Committee, in its sole and absolute discretion, may elect to
accelerate the Vesting Percentage and/or the Age at Retirement for the
purpose of computing the Vested Accrued Benefit and the Target Benefit
.
Article 4. - Disability
4.1 Disability Benefit. If a Participant suffers a Disability after his or
her Early Retirement Date but prior to his or her Normal Retirement
Date for which he or she receives disability income payments under the
Disability Plan, the Participant shall be entitled to receive an annual
disability benefit under this Plan equal to his or her Vested Accrued
Benefit determined as of the date of the onset of the Disability,
reduced by the Disability Offset Amount. However, for purposes of this
Section, the Vested Accrued Benefit shall be determined as if the
Participant were retiring at his or her Normal Retirement Date.
4.2 Form and Duration of Disability Payments. The annual disability
benefit under Section 4.1 shall be payable in equal monthly
installments commencing with the month in which payments commence under
the Disability Plan and continuing until the earliest of the following
dates:
(a) The date the Participant returns to active employment with
either the Company or another employer;
(b) The date the disability income payments cease under the
Disability Plan; or
(c) The Participant's Normal Retirement Date or date of death.
The form of the benefit will be handled in the same manner as for a
retirement under Section 3.
4.3 Benefits on Cessation of Disability Payments. After a Participant's
disability benefits cease pursuant to Section 4.2, the Participant
shall be entitled to benefits under this Plan determined as follows:
(a) If the Participant's disability benefits cease because the
Participant returns to active employment with the Company, or if
they cease pursuant to Section 4.2(b) and the Participant returns
to active employment with the Company within six (6) months
following such cessation, then (i) the Participant shall be
credited with Years of Service for the period during which
disability benefits were provided under this Plan; and (ii) the
Participant shall thereafter be entitled to receive such benefits,
if any, as are available under the other provisions of this Plan.
(b) If the Participant's disability benefits cease because the
Participant returns to active employment with another employer, or
if they cease pursuant to Section 4.2(b) and the Participant does
not return to active employment with the Company within six (6)
months following such cessation, then (i) the Participant shall,
for purposes of this Plan, be considered to have terminated
employment as of the date of onset of his or her Disability and
shall be credited with no further Years of Service after that date;
and (ii) the Participant shall thereafter be entitled to receive
such benefits, if any, as are available under the other provisions
of this Plan.
(c) If the Participant's disability benefits cease because the
Participant reaches his or her Normal Retirement Date or dies, then
(i) the Participant shall be credited with Years of Service for the
period during which disability benefits were provided under this
Plan; and (ii) the Participant shall be entitled to receive the
benefit specified in Section 3.1, as if he or she had retired on
that date, or the Participant's spouse shall be entitled to receive
any death benefit specified in Section 5.1, as the case may be.
Such benefit shall be computed as of the Participant's Normal
Retirement Date or date of death, as the case may be, based on the
Participant's Final Average Earnings as of the date of onset of the
Participant's Disability, without reduction for disability benefits
paid under this Plan. Such benefit shall be paid at the time and
in the annuity form specified in Section 3.3 or Section 5.1, as the
case may be, except that, in the case of payments pursuant to
Section 3.3, if any Disability income payments continue to be paid
following the Participant's Normal Retirement Date, the annuity
payments shall be offset by such amounts so long as they continue
to be paid.
4.4 Disability After Normal Retirement Date. If a Participant suffers a
Disability after his or her Normal Retirement Date but prior to actual
retirement, the Participant shall be deemed to have retired as of the
date of onset of the Disability and shall thereafter be entitled to
receive the benefit specified in Section 3.1. Such benefit shall be
computed as of the Participant's deemed date of retirement. Such
benefit shall be paid at the time and in the annuity form specified in
Section 3.3, except that, if any Disability income payments are paid
following the Participant's deemed retirement, the annuity payments
shall be offset by such amounts so long as they continue to be paid.
4.5 Disability Prior to Early Retirement Date. A Participant who suffers a
Disability prior to his or her Early Retirement Date shall not be
entitled to receive any disability benefit under this Plan.
Article 5. - Death Benefit
5.1 Death After Early Retirement Date. If a Participant dies after
separating from service and has made an election to receive benefits
under Article 3 of this Plan, the benefits due upon the death of the
Participant shall be entirely based upon the form of benefit so
elected. If a Participant dies after his or her Early Retirement Date
but before electing to receive any benefits under Article 3 of this
Plan, and, if the Participant has a surviving spouse to whom the
Participant was married for at least twelve (12) months prior to the
Participant's death, such spouse shall be entitled to receive an annual
benefit, payable in equal monthly installments for the remainder of his
or her life, equal to 50% of the annual retirement benefit that the
Participant would have been entitled to receive under Section 3.2 if
the Participant had retired immediately prior to his or her death and
such benefit had been paid pursuant to Section 3.3 in the form of a 50%
joint and survivor annuity. If a Participant dies after his or her
Early Retirement Date and before receiving any benefits under Article 3
of this Plan, but the Participant does not have a surviving spouse to
whom the Participant was married for at least twelve (12) months prior
to the Participant's death, no benefit shall be paid under this Plan to
any person on account of the death of the Participant.
5.2 Death Before Early Retirement Date. If a Participant dies prior to his
or her Early Retirement Date, no benefit shall be paid to the surviving
spouse of the Participant under this Plan.
Article 6. - Termination of Employment
6.1 Termination Prior to Early Retirement Date. If a Participant's
employment with the Company is terminated voluntarily or involuntarily
prior to the Participant's Early Retirement Date, then, except as
expressly provided in Section 11.2 below, the Participant shall not be
entitled to receive any benefits under this Plan.
6.2 Termination Without Cause After Early Retirement Date. If, following
his or her Early Retirement Date, the Company terminates a
Participant's employment without Cause, the Participant shall be
entitled to receive (a) the benefits specified in Section 3.1, if such
termination occurs on or after the Participant's Normal Retirement
Date; or (b) the benefits specified in Section 3.2, if such termination
occurs prior to the Participant's Normal Retirement Date.
6.3 Termination With Cause After Early Retirement Date. If, following his
or her Early Retirement Date, the Company terminates a Participant's
employment with Cause, then, except as expressly provided in Section
11.2 below, the Participant shall not thereafter be entitled to any
benefits under this Plan.
6.4 Definition of Cause. As used in this Article 6 and in Section 2.3
above, the term "Cause" shall include, without limitation, disloyalty,
fraud, violation of any federal or state law involving the commission
of a crime against the Company, commission of a felony, or commission
of a gross misdemeanor which is determined by the Committee, in its
sole and absolute discretion, to be of such gravity as to cause
significant injury to the Company's business or reputation.
Article 7. - Demotions and Other Employment Status Changes
7.1Change in Employment Status. If a Participant becomes ineligible to
participate in this Plan as a result of a change in employment status
due to a demotion or other reason, the Participant's benefits under
this Plan, if any, shall be determined at the sole discretion of the
Committee.
Article 8. - Company/Participant Liability
8.1General Assets. Amounts payable to a Participant shall be paid from
the general assets of the Company exclusively.
8.1Company's Liability. The Company's liability for the payment of
benefits shall be defined only by this Plan.
8.2Limitation of Obligation. Except as expressly provided for in this
Plan, the Company shall have no obligation under this Plan to a
Participant or his or her spouse, if any.
8.3Participant Cooperation. A Participation must at all times cooperate
with the Company and the Committee and furnish all information
requested by the Company or the Committee in order to facilitate the
determination of benefits or the administration of this Plan. If a
Participant fails promptly to cooperate or furnish requested
information, the Committee, in its sole and absolute discretion, may
withhold benefits from the Participant.
8.4 Unsecured General Creditor. A Participant and his or her spouse, if
any, shall not have, by reason of this Plan, any legal or equitable
rights, claims or interests in any property or assets of the Company
nor shall they be beneficiaries of, or have any legal or equitable
rights, claims or interests in any life insurance policies or annuities
or the proceeds therefrom owned, or which may be acquired, by the
Company. Any and all of the Company's assets shall be, and remain, the
general, unpledged, unrestricted assets of the Company. The Company's
obligations under this Plan shall be merely those of an unfunded and
unsecured promise of the Company to pay money in the future.
Article 9. - No Guarantee of Employment
9.1 No Guarantee of Employment. Nothing in this Plan shall alter in any
manner the employment relationship with a Participant, which is hereby
acknowledged to be an "at will" employment relationship that can be
terminated at any time for any reason, with or without cause, or for no
reason, unless otherwise expressly provided in a written employment
agreement between the Company and a Participant.
Article 10. - Plan Amendment and Termination
10.1 Amendment. The Board may amend this Plan at any time so long as
the rights required to be preserved on termination under Section 10.2
are not reduced. The Committee shall have the authority to approve
Plan amendments that are administrative in nature. No amendment of
this Plan or waiver of any of the specific provisions of this Plan
shall be valid unless made pursuant to a duly executed written
document.
10.2 Termination. The Board may terminate this Plan at any time, for
any reason, as follows:
(a) The Board shall inform the Committee of the termination and
the effective date there of. The Committee shall give written
notice to Participants. The effective date of the termination
shall not be earlier than the first day of the month in which
notice is given.
(b) After the effective date of termination, no further
executives shall be selected for participation and no further
benefits shall accrue for existing Participants.
(c) In the event of termination, the retirement benefits of each
existing Participant shall be paid at the time and in the amount
and form specified under the terms of this Plan as in effect
before termination, except that the Participants' Vested Accrued
Benefits shall be based on their Final Average Earnings and Years
of Service as of the effective date of Plan termination.
Notwithstanding the foregoing, retirement benefits may be provided
in any alternative form that is the Actuarial Equivalent of the
form in which the retirement benefits were payable under the terms
of this Plan in effect before termination.
(d) Unless otherwise expressly provided at the time of
termination of the Plan, no Participant shall be entitled to any
benefit under this Plan on account of the onset of a Disability
that commences following the effective date of Plan termination.
Article 11. - Change of Control
11.1 Change of Control. For purposes of this Plan, the term "Change of
Control" means:
(a) The acquisition by any person or entity of the power,
directly or indirectly, to exercise a controlling influence over
the management or policies of Airborne Express (either alone or
pursuant to an arrangement or understanding with one or more other
persons or entities), whether through ownership of voting
securities, through one or more intermediaries, by contract, or
otherwise;
(b) The acquisition by a person who is not a U.S. citizen or an
entity that is not a U.S. entity (either alone or pursuant to an
arrangement or understanding with one or more other persons or
entities) of the ownership of or power to vote twenty-five percent
(25%) or more of the outstanding voting securities of Airborne
Express;
(c) The acquisition by a U.S. citizen or a U.S. entity (either
alone or pursuant to an arrangement or understanding with one or
more other persons or entities) of the ownership of or power to
vote thirty-five percent (35%) or more of the outstanding voting
securities of Airborne Express; or
(d) If, during a period of six (6) years after the acquisition by
any person or entity, directly or indirectly, of the ownership of
or power to vote ten percent (10%) or more of the outstanding
voting securities of Airborne Express, the composition of a
majority of the Board changes without majority consent or
acquiescence of those Directors who were Directors prior to such
acquisition.
(e) A Change of Control shall not be deemed to have occurred by
reason of the creation of a holding company, Airborne, Inc. as the
sole shareholder of Airborne Freight Corporation, and the exchange
of shares of Airborne Freight Corporation for Airborne, Inc.
11.2 Termination of Employment Following a Change of Control. If,
during the three-year period following a Change of Control, the
employment of a Participant terminates prior to his or her Normal
Retirement Date then, except as provided in the last sentence of this
Section 11.2, the Participant shall be deemed to have retired under the
provisions of this Plan, as of his or her date of termination, and
shall be entitled to receive a retirement benefit in an annual amount
equal to the Participant's Target Benefit (the Target Benefit to be
determined based on the Final Average Earnings of the Participant as of
the date of termination), reduced by the Retirement Offset Amount.
Such retirement benefit shall be paid in accordance with the provisions
of Section 3.3 of this Plan commencing effective as of the first month
following the Participant's termination. No benefits shall be payable
under this Section 11.2 if the Participant voluntarily terminates his
or her employment (unless such employment has been constructively
terminated within the meaning of Section 11.3 and the Participant
terminates within six (6) months thereafter following written notice to
the Company of the reason for such termination), if the Company
terminates the Participant's employment for Substantial Cause, or if
the Participant's employment terminates on account of Disability or
death.
11.3 Constructive Termination of Employment. A Participant's
employment shall be deemed to be constructively terminated if:
(a) The Participant's salary is either reduced by more than ten
percent, or not increased for a period of two years, unless the
salaries of all other Participants and officers of the Company are
reduced in equal proportions or are not increased during the same
period;
(b) The title, duties or responsibilities of the Participant's
job are substantially reduced from those existing prior to the
Change of Control;
(c) The Participant's place of employment is changed by a
distance of more than twenty-five miles without such Participant's
consent; or
(d) The Participant's salary is reduced by twenty-five percent or
more.
11.4. Definition of Substantial Cause. For purposes of this Plan, the
Company shall have "Substantial Cause" to terminate the employment of a
Participant if such termination is based upon --
(a) The Participant's willful and continuous failure to
substantially perform his or her duties with the Company (other
than any such failure resulting from incapacity due to physical or
mental illness) after a demand for substantial performance is
delivered to the Participant by the Board which specifically
identifies the manner in which the Board believes that the
Participant has not substantially performed his or her duties; or
(d) The Participant's willfully engaging in gross misconduct
demonstrably injurious to the Company.
For purposes of this Section 11.4, no act, or failure to act, on the
part of a Participant shall be considered "willful" if done, or omitted
to be done, by the Participant in good faith and in the reasonable
belief that the act or omission was in the best interests of the
Company. A Participant shall not be deemed to have been terminated for
Substantial Cause unless and until the Participant receives a copy of a
resolution duly adopted by the affirmative vote of not less than three-
fourths (3/4) of the entire membership of the Board called and held for
that purpose (after reasonable notice to the Participant and an
opportunity for the Participant, together with his or her counsel, to
be heard before the Board), finding that, in the good faith opinion of
the Board, the Participant was guilty of conduct set forth in clause
(a) or (b) above and specifying the particulars thereof.
Article 12. - Other Benefits and Agreements
12.1 Coordination with Other Benefits. The benefits under this Plan
for a Participant and his or her spouse, if any, are in addition to any
other benefits available under any other plan or program for employees
of the Company. This Plan shall supplement and shall not supersede,
modify or amend any other such plan or program.
Article 13. - Restrictions on Alienation of Benefits
13.1 Nonassignability. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate or
convey, in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof. No part of the amounts payable
hereunder shall, prior to actual payment, be subject to any claims of
creditors and, in particular, they shall not be subject to attachment,
garnishment, seizure or sequestration by any creditor for the payment
of any debts, judgments, obligations, alimony or separate maintenance
owed by a Participant or his or her spouse, if any.
Article 14. - Administration of the Plan
14.1 Committee Administration. The general administration of this
Plan, as well as construction and interpretation hereof, shall be the
responsibility of the Committee, the number of members of which shall
be designated from time to time by the Board and the members of which
shall be appointed from time to time by, and shall serve at the
pleasure of, the Board.
14.2 Committee Authority. The Committee shall have the exclusive right
and authority--
(a) To from time to time establish rules, forms and procedures
for the administration of this Plan;
(b) To interpret this Plan and to correct any defect, supply any
information and reconcile any inconsistency in such manner and to
such extent as the Committee, in its sole and absolute discretion,
shall deem necessary or advisable to carry out the purpose of this
Plan; and
(c) To make all other determinations that the Committee, in its
sole and absolute discretion, shall deem necessary or advisable in
connection with the administration of this Plan, including,
without limitation, determination of (i) the benefit amounts to
which a Participant is entitled (and the appropriate Final Average
Earnings, Retirement Offset Amount, Disability Offset Amount,
and/or Years of Service to be used in determining such benefit
amounts); (ii) whether Cause or Substantial Cause existed for the
termination of employment of a Participant; (iii) whether or not
to consent to a Participant's early retirement pursuant to Section
3.2, and (iv) whether benefits are to be withheld or terminated
pursuant to Section 6.4 and/or Section 10.3.
Subject to the claims procedures set forth in Article 15, all rules,
procedures, interpretations and determinations made by the Committee in
good faith shall be final, conclusive and binding upon all persons
having or claiming to have any right or interest under this Plan.
14.3 Committee Indemnity. No member of the Committee shall be liable
for any act or omission of any other member of the Committee, nor for
any act or omission on his or her own part, excepting his or her own
gross negligence. The Company shall indemnify and save harmless each
member of the Committee against any and all expenses and liabilities
arising out of his or her membership on the Committee, with the
exception of expenses and liabilities arising out of his or her own
gross negligence.
14.4 Company's Obligations to the Committee. To enable the Committee
to perform its functions, the Company shall supply full and timely
information to the Committee on all matters relating to the
compensation of Participants, their employment status, and such other
pertinent facts as the Committee may require.
14.5 Legal, Accounting, Clerical, Actuarial and Other Services. The
Committee may authorize one or more of its members or any agent to act
on its behalf and may contract for legal, accounting, clerical,
actuarial and other services to carry out this Plan. All expenses of
the Committee shall be paid by the Company.
Article 15. - Claims Procedures
15.1 Presentation of Claim. Any Participant or the surviving spouse,
if any, of a deceased Participant (such Participant or spouse being
referred to below as a "Claimant") may deliver to the Committee a
written claim for a determination with respect to the amounts
distributable to such Claimant from this Plan. If such a claim relates
to the contents of a notice received by the Claimant, the claim must be
made within sixty (60) days after such notice was received by the
Claimant. The claim must state with particularity the determination
desired by the Claimant.
15.2 Notification of Decision. The Committee shall consider a
Claimant's claim within a reasonable time and shall notify the Claimant
in writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and such
notice must set forth in a manner calculated to be understood by
the Claimant:
(i) the specific reason(s) for the denial of the claim, or
any part of it;
(ii) specific reference(s) to pertinent provisions of this
Plan upon which such denial was based;
(iii) a description of any additional material or
information necessary for the Claimant to perfect the claim,
and an explanation of why such material or information is
necessary; and
(iv) an explanation of the claim review procedure set forth in
Section 10.3.
15.3 Review of Denied Claim. Within sixty (60) days after receiving a
notice from the Committee that a claim has been denied, in whole or in
part, a Claimant (or the Claimant's duly authorized representative) may
file with the Committee a written request for a review of the denial of
the claim. Thereafter, but not later than ten (10) days after filing
of the written request for review, the Claimant (or the Claimant's duly
authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which request the Committee, in its
sole and absolute discretion, may grant.
15.4 Decision on Review. The Committee shall render its decision on
review promptly, and not later than sixty (60) days after the filing of
a written request for review of the denial, unless a hearing is held or
other special circumstances require additional time, in which case the
Committee's decision must be rendered within one hundred twenty (120)
days after such date. Such decision must be written in a manner
calculated to be understood by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which
the decision was
based; and
(c) such other matters as the Committee deems relevant.
Any decision on review made by the Committee in good faith shall be
final, conclusive and binding upon the Claimant, unless the decision is
determined to have been arbitrary and capricious.
Article 16. - Trust
16.1 Funding of Trust. The Company may from time to time transfer to
the trustee of the Trust such assets as the Committee determines, in
its sole and absolute discretion, should be transferred thereto.
16.2 Interrelationship of the Plan and the Trust. The provisions of
this Plan shall govern the rights of a Participant to receive
distributions pursuant to this Plan. The provisions of the Trust shall
govern the rights of the Company, Participants and the creditors of the
Company to the assets transferred to the Trust. The Company shall at
all times remain liable to carry out its obligations under this Plan.
The Company's obligations under this Plan may be satisfied with Trust
assets distributed pursuant to the terms of the Trust.
Article 17. - Miscellaneous
17.1 Notice. Any notice required or permitted to be given under this
Plan by a Participant or a Claimant shall be in writing and shall be
hand delivered, or mailed via registered or certified mail, return
receipt requested, to:
AIRBORNE EXPRESS
Senior Vice President, Human Resources
3101 Western Avenue
Seattle, Washington 98111
(206) 281-4812
Any notice to a Participant or his or her spouse, if any, required or
permitted to be given under this Plan by the Committee or the Board
shall be in writing and shall be hand delivered to the Participant or
spouse, or mailed via registered or certified mail, return receipt
requested, to the last known address for the Participant or spouse as
shown on the records of Airborne Express.
17.2 Successors. This Plan shall be binding upon Airborne Express and
its successors and assigns, and upon a Participant, the Participant's
spouse, if any, and their heirs, executors and administrators.
17.3 Governing Law. This Plan shall be governed by and construed under
the laws of the State of Washington.
17.4 Headings. The headings of the articles, sections and paragraphs
of this Plan are for convenience only and shall not control or affect
the meaning or construction of any of its provisions.
17.5 Validity. In the event any provision of this Plan shall be
illegal or invalid for any reason, the illegality or invalidity of that
provision shall not affect the remaining parts hereof, but this Plan
shall be construed and enforced as if such illegal and invalid
provision had never been inserted herein.
IN WITNESS WHEREOF, AIRBORNE FREIGHT CORPORATION has signed this Plan
this 6th day of March, 2000.
AIRBORNE FREIGHT CORPORATION
By /s/ Richard G. Goodwin
-------------------------
Richard G. Goodwin
Senior Vice President, Human Resource
