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
