EXHIBIT 10.33
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EMPLOYEE BENEFIT MATTERS AGREEMENT
This EMPLOYEE BENEFIT MATTERS AGREEMENT (the
"Agreement") is made as of this 2nd of December, 1996 by and
between CONSOLIDATED FREIGHTWAYS, INC., a Delaware
corporation ("CFI") and CONSOLIDATED FREIGHTWAYS
CORPORATION, a Delaware corporation (the "Company").
RECITALS
WHEREAS, CFI is the holder of all of the issued
and outstanding shares of common stock of the Company;
WHEREAS, the employees of the Company and its
Subsidiaries are covered by various employee benefit plans
sponsored by CFI which are limited to employees of CFI and
its Subsidiaries; and
WHEREAS, CFI has determined that it will
distribute all of the shares of the Company's common stock
to the holders of the common stock of CFI, which will cause
the Company and its Subsidiaries to no longer be
Subsidiaries of CFI;
NOW, THEREFORE, CFI and the Company agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms
shall have the following meanings, such meanings to be
equally applicable to both the singular and plural forms of
the terms defined:
ADR Agreement. The Alternative Dispute Resolution
Agreement entered into between CFI and the Company dated the
same date as this Agreement, the form of which is attached
as Annex 1 to the Distribution Agreement.
Company Employee. A person described in 2.3.
Distribution. The distribution of Company common
stock pursuant to the Distribution Agreement.
Distribution Agreement. The Distribution
Agreement entered into between CFI and the Company dated
November 25, 1996 and governing the distribution of Company
common stock to the holders of CFI common stock.
Distribution Date. The date on which all the
shares of Company common stock are delivered to the
distribution agent pursuant to the Distribution Agreement.
Subsidiary. A corporation that is a member of a
controlled group of corporations, within the meaning of
Internal Revenue Code Section 1563, with CFI or with the
Company, except that the Company and its Subsidiaries shall
not be treated as Subsidiaries of CFI.
ARTICLE II
SEPARATION OF BENEFIT PLANS
2.1 Adoption of Company Plans. The Company and its
Subsidiaries shall, as of the Distribution Date, cease
participating in the employee benefit plans sponsored by
CFI. As of the Distribution Date, the Company shall adopt
employee benefit plans covering Company Employees that are
substantially the same as the employee benefit plans
sponsored by CFI covering Company Employees prior to the
Distribution Date except as follows. The Company shall not
be obligated to duplicate or replace the CFI employee
benefit plans that are limited to executive employees and
may adopt such new executive employee benefit plans as it
shall decide in its absolute discretion.
2.2 Separate Responsibilities. CFI and the Company
agree that CFI shall have sole responsibility for its
employee benefit plans, arrangements and policies for
employees of CFI and its Subsidiaries and that the Company
shall have sole responsibility for its employee benefit
plans, arrangements and policies for Company Employees. CFI
and the Company intend that, to the extent possible, Company
Employees shall look solely to the Company and its plans,
arrangements and policies for the provision of employee
benefits, except certain executive benefits discussed in
this Agreement, and that employees of CFI and its
Subsidiaries shall look solely to CFI and its plans,
arrangements and policies for the provision of employee
benefits.
2.3 Identification of Company Employees. "Company
Employees" shall be determined as follows:
(a) All persons actively employed by the
Company or a Subsidiary of the Company on the
Distribution Date shall be Company Employees,
unless described in (b).
(b) Persons who accept employment with CNF
Service Company, Inc. as of the Distribution Date
shall not be Company Employees.
(c) The persons formerly employed by the
Company or a Subsidiary of the Company who are
listed on a schedule attached hereto shall be
Company Employees.
ARTICLE III
TAX QUALIFIED RETIREMENT PLANS
3.1 Adoption of Company SASP. The Company shall adopt
a Stock and Savings Plan (the "Company SASP") as follows:
(a) The Company SASP shall be effective
as of the Distribution Date.
(b) Subject to Section 2.1, and to (c),
(d) and (e) below, the Company SASP shall be in
a form satisfactory to the Company in its sole
discretion.
(c) The Company SASP shall be qualified
under Sections 401(a) and 401(k) of the Code and
shall have a related trust qualified under Section
501(a) of the Code. The Company shall file, or
cause the administrator of the Company SASP to
file, with the Internal Revenue Service an
Application for Determination with respect to the
Company SASP within the remedial amendment period
prescribed by applicable law and regulations. The
Company shall amend the Company SASP as may be
required by the Internal Revenue Service as a
condition for receipt of a favorable determination
letter within the time required by the Internal
Revenue Service for adoption of such amendment.
(d) The Company SASP shall credit
service performed before the Distribution Date for
CFI and its Subsidiaries under applicable service
crediting rules as if such service were performed
for the Company.
(e) The Company SASP shall provide for
matching contributions invested in Company common
stock, but need not include an employee stock
ownership plan with Company stock purchased by
borrowing.
3.2 TASP Spinoff. The Consolidated Freightways, Inc.
Thrift and Stock Plan (the "TASP" consists of two plans: a
401(k) plan (the "TASP 401(k)") and an employee stock
ownership plan (the "TASP ESOP"). Accounts under the TASP
401(k) are invested at the direction of participants in
several funds, including a fund for common stock of CFI (the
"CFI Stock Fund"). The TASP ESOP is invested primarily in a
special class of convertible preferred stock of CFI (the
"Preferred Stock") and in common stock of CFI. The TASP
ESOP holds shares of Preferred Stock in a suspense account
that secures loans to the TASP ESOP. Preferred Stock is
converted to common stock of CFI before distribution to
participants or upon transfer to a person other than the
trustee of the TASP. On the Distribution Date, the TASP
will receive common stock of the Company with respect to its
shares of CFI common stock. As soon as practicable after
the Distribution Date, and in any event within 180 days
after such date, CFI and the Company shall cause the portion
of the TASP that covers Company Employees to be spun off
from the TASP and to be merged into the Company SASP. In
connection with the spinoff and merger, the following shall
apply:
(a) CFI shall direct the trustee of
the TASP to transfer assets held for the benefit
of Company Employees under the TASP to the trustee
of the Company SASP. The trustee of the TASP
shall make such transfer even though the Company
SASP has not yet received a favorable
determination letter from the Internal Revenue
Service with respect to the qualification of the
Company SASP under Section 401(a) of the Code if
the Company demonstrates to CFI's reasonable
satisfaction that the Company has preserved its
right to make remedial amendments required by the
Internal Revenue Service as a condition of a
favorable determination.
(b) CFI shall cause the fiduciaries of
the TASP to provide an accounting to the
fiduciaries of the Company SASP with respect to
all assets and accounts transferred to the Company
SASP. The accounting shall be reasonably
satisfactory to the Company for purposes of proper
allocation of assets, earnings, gains and losses
to the accounts of participants under the Company
SASP.
(c) CFI shall cause IRS Form 5310A to
be filed with the Internal Revenue Service, giving
notice of the spinoff and merger, at least 30 days
before the date of the spinoff and merger.
(d) The Company SASP shall include a
CFI Stock Fund and an investment fund for common
stock of the Company (the "Company Stock Fund")
for participant-directed investment of accounts.
Common stock of CFI held in accounts of Company
Employees in the TASP 401(k) and the TASP ESOP
shall be transferred in kind in the spinoff and
merger and shall be placed initially in the CFI
Stock Fund of the Company SASP, credited to the
participant-directed accounts of such Company
Employees. Common stock of the Company held in
accounts of Company Employees in the TASP 401(k)
as a result of the Distribution shall be
transferred in kind in the spinoff and merger and
shall be placed initially in the Company Stock
Fund of the Company SASP, credited to the
participant-directed accounts of such Company
Employees. Common stock of the Company held in
accounts of Company Employees in the TASP ESOP as
a result of the Distribution shall be transferred
in kind in the spinoff and merger and shall be
placed in the matching accounts of such Company
Employees in the Company SASP and shall not be
subject to participant-directed investment. The
Company SASP shall provide that participants may
direct the sale of shares out of the CFI Stock
Fund but may not direct investment of any
additional amounts into it. As of the next
calendar quarter end following the third
anniversary of the Distribution Date, the CFI
Stock Fund shall be closed and its assets moved
into another investment fund selected by each
participant or, for participants who fail to make
a selection, by the Administrative Committee for
the Company SASP.
(e) The TASP 401(k) shall include a
Company Stock Fund, in addition to the existing
CFI Stock Fund, for participant-directed
investment of accounts. The Company common stock
distributed on shares of CFI common stock held for
TASP participants who are not Company Employees in
the CFI Stock Fund and in the TASP ESOP shall
become the assets of the Company Stock Fund. The
TASP shall provide that participants may direct
the sale of shares out of the Company Stock Fund
but may not direct investment of any additional
amounts into it. As of the next calendar quarter
end following the third anniversary of the
Distribution Date, the Company Stock Fund shall
be closed and its remaining assets moved into
another investment fund selected by each
participant or, for participants who fail to make
a selection, by the Administrative Committee for
the TASP.
(f) The accounts to be transferred
from the TASP ESOP to the Company SASP will
include accounts holding Preferred Stock. Such
Preferred Stock will be automatically converted to
Common Stock of CFI upon transfer to the trustee
of the Company SASP and shall be placed in the CFI
Stock Fund of the Company SASP as provided in (d).
(g) After the spinoff and merger,
the TASP will allocate to Company Employees
dividends and distributions on CFI capital stock
that are paid after the spinoff to holders as of a
date before the spinoff and matching contributions
on their elective deferrals for the partial
quarter before the Distribution. For purposes of
determining the right to such matching
contributions, Company Employees shall be credited
with service for CFC and its Subsidiaries after
the Distribution as though it were performed for
CFI and its Subsidiaries. Post-spinoff
allocations of such dividends, distributions and
matching contributions shall be transferred to the
trustee of the Company SASP as soon as practicable
after they are made.
3.3 Adoption of Company Pension Plan. The Company
shall adopt a defined benefit pension plan (the "Company
Pension Plan") to cover Company Employees as follows:
(a) The Company Pension Plan shall be
effective as of the Distribution Date. Company
Employees shall start to accrue benefits under the
Company Pension Plan and shall cease to accrue
benefits under the Consolidated Freightways, Inc.
Retirement Plan (the "CFI Retirement Plan") as of
the Distribution Date.
(b) Subject to Section 2.1, and to (c),
(d) and (e) below, the Company Pension Plan shall
be in a form satisfactory to the Company in its
sole discretion.
(c) The Company Pension Plan shall be
qualified under Section 401(a) of the Code and
have a related trust qualified under Section
501(a) of the Code. The Company shall file, or
cause the administrator of the Company Pension
Plan to file with the Internal Revenue Service an
Application for Determination with respect to the
Company Pension Plan within the remedial amendment
period prescribed by applicable law and
regulations. The Company shall amend the Company
Pension Plan as may be required by the Internal
Revenue Service as a condition for receipt of a
favorable determination letter within the time
required by the Internal Revenue Service for
adoption of any such amendment.
(d) Benefits with respect to the
transfer described in Section 3.4 below shall be
preserved in accordance with applicable law,
including but not limited to the requirements of
Section 411(d)(6) of the Internal Revenue Code.
(e) Subject to the transfer of assets
and liabilities provided for under Section 3.4,
the Company Pension Plan shall credit service
performed before the Distribution Date for CFI and
its Subsidiaries under applicable service
crediting rules as if such service were performed
for the Company.
(f) After the transfer described in
Section 3.4, the CFI Retirement Plan shall have no
obligation to Company Employees. The Company
Pension Plan shall be a continuation of the CFI
Retirement Plan with respect to benefits accrued
by Company Employees under the CFI Retirement
Plan. The transfer described in Section 3.4 shall
not be a plan termination.
3.4 Retirement Plan Spinoff. On the Distribution
Date, CFI and the Company shall cause the portion of the CFI
Retirement Plan consisting of the liability for benefits of
Company Employees accrued through the Distribution Date to
be spun off from the CFI Retirement Plan along with related
assets, to become the initial liabilities and assets of the
Company Pension Plan. In connection with the spinoff and
merger, the following shall apply:
(a) The assets of the CFI Retirement
Plan to be transferred to the Company Pension Plan
will be equal to the lump sum present value of
such liability as of the date of the spinoff and
merger. Present value shall be based on the
accumulated benefit obligation for benefits
already accrued and on an interest rate selected
by CFI with the approval of the actuary who
performed the most recent annual valuation of the
CFI Retirement Plan. CFI shall direct the trustee
of the CFI Retirement Plan to transfer such assets
to the trustee of the Company Pension Plan.
(b) If the Pension Benefit Guaranty
Corporation ("PBGC") asserts that the interest
rate selected pursuant to (a) is not acceptable
for calculating the amount of assets to be
transferred from the CFI Retirement Plan to the
Company Pension Plan, the parties shall make
commercially reasonable efforts to reach an
agreement with the PBGC on the interest rate to be
used. In the event that a lower interest rate
than the rate selected pursuant to (a) is used in
response to such an agreement or to other actions
of the PBGC, the Company shall pay CFI an amount
equal to the increase in the amount of assets
transferred resulting from use of such lower
interest rate. The Company shall pay such amount
in cash in five equal annual installments
including interest at the prevailing commercial
prime lending rate of the bank with which CFI has
its principal banking relationship on the date of
the transfer of CFI Retirement Plan assets. Such
installments shall commence with the first
anniversary of the date of such transfer.
(c) CFI shall file IRS Form 5310A with
the Internal Revenue Service, giving notice of the
spinoff and merger, at least 30 days before the
date of the spinoff and merger.
(d) The trustee of the CFI Retirement
Plan shall make the transfer of assets under (a)
even though the Company Pension Plan has not yet
received a favorable determination letter with
respect to qualification under Section 401(a) of
the Internal Revenue Code if the Company
demonstrates to CFI's reasonable satisfaction that
the Company has preserved its right to make
remedial amendments required by the Internal
Revenue Service as a condition of a favorable
determination.
(e) The trustee of the CFI Retirement
Plan and any other fiduciary under the CFI
Retirement Plan with applicable responsibility
shall determine and identify the assets of the CFI
Retirement Plan that shall be transferred to the
Company Pension Plan. After the transfer, the
fiduciaries of the Company Pension Plan shall be
responsible for the custody and investment of
Company Pension Plan assets.
(f) If any employees of CNF Service
Company, Inc. (or an affiliate) become employed by
Leland James Service Corporation within three
years after the Distribution Date immediately
following termination of employment with CNF
Service Company, Inc. (or such affiliate), with no
intervening period, as a result of termination of
any services under the
Transition Services Agreement between CNF Service
Company, Inc. and the Company dated the same date
as this Agreement, an additional transfer of
assets and liabilities shall be made from the CFI
Retirement Plan to the Company Retirement Plan.
Such transfer shall consist of the liability for
benefits accrued for such employees under the CFI
Retirement Plan through the date of the employment
termination together with assets equal to the
present value of such liability determined on the
basis described in (a) above. Such transfer of
assets and liabilities shall be completed within
90 days after the end of such three year period.
(g) On the date of the transfer of
assets and liabilities, the trustee of the CFI
Retirement Plan shall transfer to the trustee of
the CFC Pension Plan assets equal to a
conservative estimate by the actuary for the CFI
Retirement Plan of the amount provided in (a)
above. When a final determination of the amount
of the transfer is made, the amount necessary to
adjust from the estimate to the final amount shall
be transferred between the trustees of the plans.
The investment risk with respect to the estimated
assets shall pass from the CFI Retirement Plan to
the CFC Pension Plan on the date they are
transferred. The amount to be transferred in an
adjustment to the final amount shall be credited
with interest for the period from the date of the
transfer of assets and liabilities to the date of
the adjustment transfer at the rate of interest
selected under (a) above.
3.5 Adoption of Company Common Stock Fund. The
Company shall adopt a frozen defined contribution plan (the
"Company Common Stock Fund") as follows:
(a) The Company Common Stock Fund shall
be effective as of the Distribution Date.
(b) Subject to Section 2.1, and to (c)
below, the Company Common Stock Fund shall be in a
form satisfactory to the Company in its sole
discretion.
(c) The Company Common Stock Fund shall
be qualified under Section 401(a) of the Code and
have a related trust qualified under section
501(a) of the Code. The Company shall file, or
cause the administrator of the Company Common
Stock Fund to file, with the Internal Revenue
Service an Application for Determination with
respect to the Company Common Stock Fund within
the remedial amendment period prescribed by
applicable law and regulations. The Company shall
amend the Company Common Stock Fund as may be
required by the Internal Revenue Service as a
condition for receipt of a favorable determination
letter within the time required by the Internal
Service for the adoption of any such amendment.
(d) Assets of the Company Common Stock Fund
shall be invested in accordance with provisions of the
plan document and the related trust.
3.6 Common Stock Fund Spinoff. On the Distribution
Date, CFI and the Company shall cause the accounts in the
Consolidated Freightways, Inc. Common Stock Fund (the "CFI
Common Stock Fund") to be spun off from the CFI Common Stock
Fund, to become the accounts of the Company Common Stock
Fund. In connection with the spinoff and merger, the
following shall apply:
(a) CFI shall direct the trustee of the
CFI Common Stock Fund to transfer assets equal in
value on the transfer date to the balance of the
accounts for the Company Employees to the trustee
for the Company Common Stock Fund. The trustee
shall transfer a combination of CFI common stock
and the Company common stock received on the
plan's shares of CFI common stock on the
Distribution Date. The CFI Common Stock Fund
shall sell the stock of the Company held after the
spinoff and merger at a time selected by the
appropriate fiduciary for such plan in its
absolute discretion and use the proceeds of sale
to acquire stock of CFI.
(b) CFI shall cause the fiduciaries of
the CFI Common Stock Fund to provide an accounting
to the fiduciaries of the Company Common Stock
Fund with respect to all assets and accounts
transferred to the Company Common Stock Fund. The
accounting shall be reasonably satisfactory to the
Company for purposes of proper allocation of
assets, earnings, gains and losses to the accounts
of participants under the Company Common Stock
Fund.
(c) CFI shall file IRS Form 5310A with
the Internal Revenue Service, giving notice of the
spinoff and merger, at least 30 days before the
date of the spinoff and merger.
ARTICLE IV
EXECUTIVE BENEFIT PLANS
4.1 Top-Hat Plans. CFI shall retain the obligation to
pay Company Employees the accounts in the Consolidated
Freightways, Inc. Executive Deferred Compensation Plan (the
"CFI Deferral Plan") accumulated from compensation deferred
up to the Distribution Date. CFI shall retain the
obligation to pay Company Employees benefits accrued under
the Consolidated Freightways, Inc. Supplemental Retirement
and Excess Benefit Plan (the "CFI SERP") as of the
Distribution Date based on service and compensation up to
that date and the offsetting CFI Retirement Plan benefits
accrued as of that date. Assets in the trust related to the
CFI Deferral Plan and the CFI SERP shall remain in such
trust. CFI shall amend the CFI Deferral Plan and the CFI
SERP to provide that events, such as termination of
employment or retirement, triggering distribution of
benefits from the CFI Deferral Plan and the CFI SERP shall
be determined for Company Employees on the basis of
employment with and retirement from the Company and its
Subsidiaries. The Company shall provide CFI with
information about such events after the Distribution Date to
assist CFI in the administration of the CFI Deferral Plan
and the CFI SERP.
4.2 Stock Option Plans. The existing stock options
on CFI common stock shall be handled as follows:
(a) Each outstanding option ("CFI Option")
as of the Distribution Date shall be adjusted with
respect to both the number of shares subject to such
option and the exercise price per share so that (i) the
ratio of exercise price to stock price remains constant
and (ii) the aggregate "spread" (i.e., the excess of
the fair market value of a share of CFI common stock
subject to such option and the per share exercise
price) inherent in such option after giving effect to
the Distribution, is equal to the aggregate "spread"
inherent in such option prior to giving effect to the
Distribution ("CFI Spread").
(b) Each outstanding option held by Company
Employees ("CFI-CFC Option") provides generally that
following a termination of employment from CFI or any
of its affiliates, an optionee will have 90 days to
exercise his or her options before they expire. Prior
to the Distribution Date, the stock option agreements
under the Consolidated Freightways, Inc. Stock Option
Plan of 1988 (the "CFI Stock Plan") that are held by
Company Employees shall be amended to provide that all
options shall become fully vested and exercisable 30
days prior to the Distribution. Accordingly, effective
as of the Distribution Date, each Company Employee who
will be considered a terminated employee under the CFI
Stock Plan shall have 90 days after such termination of
employment (the "90 Day Period") to exercise his or her
CFI-CFC Options to purchase CFI stock. After the 90
Day Period such options shall expire.
(c) For purposes of determining the CFI
Spread: (1) the fair market value of a share of CFI
common stock prior to the Distribution (the "CFI Pre-
Distribution Value") shall be deemed to be equal to the
average of the daily closing prices for a share of CFI
common stock on the NYSE for the five trading days
immediately preceding (and includingbut excluding) the
Distribution Date; (2) the fair market value of a share
of CFI common stock following the Distribution shall be
equal to (A) the CFI Pre-Distribution Value minus (B)
the fair market value of a share of Company common
stock; and (3) the fair market value of a share of
Company common stock shall be deemed to be equal to the
average of the daily closing prices for a share of
Company common stock in "when issued" trading on NASDAQ
for the five trading days immediately preceding (and
includingbut excluding) the Distribution Date.
ARTICLE V
Welfare Benefit Plans
5.1 Medical and Dependant Care Account Benefits. As
of the Distribution Date, the Company shall establish a
Welfare Benefits Plan (the "Company Welfare Plan") qualified
under Section 125 of the Code to provide medical and
dependent care account benefits to Company Employees covered
under the Consolidated Freightways, Inc. Welfare Benefits
Plan (the "CFI Welfare Plan") in 1996 before the
Distribution Date, and the following shall apply:
(a) Subject to 2.1, and to (b) and (c)
below, the Company Welfare Plan shall be in a form
satisfactory to the Company in its sole
discretion.
(b) The Company Welfare Plan shall have
a first plan year that is a short plan year
beginning on the Distribution Date and ending
December 31, 1996. Compensation reduction
elections by participants under the CFI Welfare
Plan for the 1996 plan year shall continue in
effect as to the Company Welfare Plan.
(c) For 1996, the Company Welfare Plan
shall provide for medical spending accounts and
dependent care spending accounts under
substantially the same terms as the CFI Welfare
Plan. CFI shall transfer to the Company the
unused account balances of Company Employees under
the CFI Welfare Plan. The Company shall credit
the amounts transferred with respect to each
participant and each account to corresponding
accounts under the Company Welfare Plan. Claims
for reimbursement from medical and dependent care
spending accounts under the CFI Welfare Plan by
Company Employees that have not been paid as of
the Distribution Date shall be paid by the Company
under the Company Welfare Plan. The fiduciary of
the Company Welfare Plan shall have the authority
to determine whether or not claims under the
Company Welfare Plan are properly submitted or are
payable. Upon request, CFI or the administrator
of the CFI Welfare Plan shall deliver or make
available to the Company and the administrator of
the Company Welfare Plan all records of
participants that are relevant to administration
of the Company Welfare Plan.
5.2 Health Plan Deductibles and Coverage Limits, COBRA
Coverage. The Company shall adopt health plans to cover
Company Employees effective as of the Distribution Date and
the following shall apply:
(a) On and after the Distribution Date
neither CFI nor any of the welfare benefit plans
sponsored by CFI shall provide coverage to Company
Employees.
(b) For the period from the
Distribution Date to December 31, 1996, Company
Employees who were participants under the
Consolidated Freightways, Inc. Health Plan (the
"CFI Health Plan") as of the Distribution Date
shall be credited with amounts paid under the CFI
Health Plan for plan deductibles against any
corresponding deductibles under a Company plan
health or medical plan. Benefits provided under
the CFI Health Plan to a Company Employee with
respect to 1996 claims will be counted toward any
coverage limits applicable to a Company Employee
under any Company health or medical plan for the
coverage period ending December 31, 1996. For
purposes of this paragraph (b), deductibles and
benefits paid for eligible dependants of Company
Employees shall be taken into account.
(c) The Company shall provide group
health plan continuation coverage as required
under Sections 601 through 607 of ERISA ("COBRA
coverage") for Company Employees and related
"qualified beneficiaries" for "qualifying events"
that occur before or after the Distribution Date.
5.3 Retiree Health Benefits. The Company and its
Subsidiaries shall be obligated to provide health benefits
to retired Company Employees, with the obligation applying
to the entity that employed the retiree at the time of
retirement. To the extent permitted by the Company's
Health Plan and applicable law, the Company may eliminate or
change retiree health benefits.
5.4 Long-Term Disability Benefits. The Company and
its Subsidiaries shall be obligated to provide long-term
disability benefits to disabled Company Employees, with the
obligation applying to the entity the disabled individual
was employed by at the time of disability.
5.5 Severance Benefits. A termination of employment
with the Company, CFI, or any subsidiary of the Company or
CFI immediately followed by employment with any other such
entity shall not be deemed a severance of employment for
purposes of any policy, plan, program or agreement that
provides for the payment of severance, salary continuation
or similar benefits. If any person employed by Leland
James Service Corporation immediately prior to the
Distribution Date loses such employment simultaneously with
the Distribution Date as a direct result of the transaction
provided for by the Distribution Agreement and for no other
reason and is not employed by CNF Service Company, Inc. or
another CFI Subsidiary, CFI shall be responsible for any
severance, salary continuation or similar benefits payable
upon such loss of employment.
5.6 Other Welfare Benefits. Except as otherwise
provided in 2.1 and this Article V, welfare benefits
provided by CFI and its Subsidiaries and by the Company and
its Subsidiaries for their respective employees after the
Distribution Date shall not be affected by each other and
each company may provide or elect not to provide benefits in
its sole discretion.
ARTICLE VI
Miscellaneous
6.1 Rights of Employees. This Agreement is not
intended to give any individual employee or former employee
of CFI or the Company or any of their Subsidiaries any
personal right or interest. No employee, shall have any
right under this Agreement to maintain employment with CFI,
the Company or any Subsidiary, become employed by CFI, the
Company or any Subsidiary or accrue any benefit with respect
to employment. No employee, former employee, beneficiary or
dependent shall have any right to be designated as a Company
Employee or to be retained as the responsibility of CFI.
6.2 Entire Agreement. This Agreement, together with
the Distribution Agreement, embodies the entire Agreement
and understanding of the parties with respect to the matters
provided for herein and shall supersede any and all prior
agreements, arrangements and understanding relating to such
matters. No amendment, waiver of compliance with any
provision or condition hereof or consent pursuant to this
Agreement shall be effective unless evidenced by an
instrument in writing signed by the parties.
6.3 Governing Law. The interpretation and performance
of the Agreement shall be governed by the laws of the state
of California without regard to the choice of law provisions
thereof.
6.4 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and
shall be delivered by hand, mailed by registered or
certified mail (return receipt requested), or sent by cable,
telegram, telecopy (confirmed by regular, first-class mail),
to the parties at the following addresses (or at such other
addresses for a party as shall be specified by like notice)
and shall be deemed given on the date on which such notice
is received:
if to CFI:
Consolidated Freightways, Inc.
3240 Hillview Avenue
Palo Alto, California 94304
Attn: General Counsel
if to the Company:
Consolidated Freightways Corporation
175 Linfield Drive
Menlo Park, California 94025
Attn: General Counsel
6.5 Counterparts. This Agreement may be executed in
one or more counterparts, each of which will be deemed an
original but all of which together will constitute one and
the same instrument.
6.6 Termination. This Agreement shall be terminated
if the Distribution Agreement is terminated or if the
distribution of Company stock fails to occur. If the
Agreement terminates under this Section 6.6, no party shall
have any liability to any person under the Agreement.
6.7 Successors and Assigns. This Agreement and all of
the provisions hereof shall be binding upon and inure to the
benefit of the parties and their respective successors and
permitted assigns.
6.8 Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of
reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
6.9 Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision
in any other jurisdiction. Without prejudice to any rights
or remedies otherwise available to any party hereto, each
party hereto acknowledges that damages would be an
inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
6.10 Further Assurances. In addition to the actions
specifically provided for elsewhere in this Agreement, each
of the parties hereto will use its reasonable efforts to:
(a) Execute and deliver such
further documents and take such other
actions as any other party may
reasonably request in order to
effectuate the purposes of this
Agreement and to carry out the terms
hereof, and
(b) Take, or cause to be taken, all
actions, and to do, or cause to be done,
all things, reasonably necessary, proper
or advisable under applicable laws,
regulations and agreements or otherwise
to consummate and make effective the
transactions contemplated by this
Agreement, including, without
limitation, using its reasonable efforts
to obtain any consents and approvals and
make any filings and applications
necessary or desirable in order to
consummate the transactions contemplated
by this Agreement.
6.11 Dispute Resolution. Any dispute between the
parties concerning the performance of this Agreement shall
be resolved in accordance with the provisions of the ADR
Agreement.
CFI CONSOLIDATED FREIGHTWAYS, INC.
By /S/D.E. MOFFIT
President and CEO
Executed: November 25, 1996
Company CONSOLIDATED FREIGHTWAYS
CORPORATION
By /S/S.D. RICHARDS
Executed: December 2, 1996