PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1994 Commission File Number 132-3
CONSOLIDATED FREIGHTWAYS, INC.
Incorporated in the State of Delaware
I.R.S. Employer Identification No. 94-1444798
3240 Hillview Avenue, Palo Alto, California 94304
Telephone Number (415) 494-2900
Securities Registered Pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
------------------------------ ------------------------
Common Stock ($.625 par value) New York Stock Exchange
Pacific Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
9-1/8% Notes Due 1999
Medium-Term Notes, Series A
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes ___X___ No _______
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes____X____ No__________
Aggregate market value of voting stock held by persons other than Directors,
Officers and those shareholders holding more than 5% of the outstanding
voting stock, based upon the closing price per share Composite Tape on
January 31, 1995: $599,276,244
Number of shares of Common Stock outstanding
as of January 31, 1995: 36,357,915
Effective March 15, 1995, all of the 690,000 shares of the Company's
Series C Preferred Stock converted to 6,900,000 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV
Consolidated Freightways, Inc. 1994 Annual Report to Shareholders (only those
portions referenced herein are incorporated in this Form 10-K).
Part III
Proxy Statement dated March 17, 1995, (only those portions referenced herein
are incorporated in this Form 10-K).
PAGE 2
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-K
Year Ended December 31, 1994
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
INDEX
-----
Item Page
- ---- ----
PART I
------
1. Business 3
2. Properties 11
3. Legal Proceedings 13
4. Submission of Matters to a Vote of Security Holders 13
PART II
-------
5. Market for the Company's Common Stock and
Related Security Holder Matters 13
6. Selected Financial Data 14
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
8. Financial Statements and Supplementary Data 14
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 14
PART III
--------
10. Directors and Executive Officers of the Company 14
11. Executive Compensation 16
12. Security Ownership of Certain Beneficial
Owners and Management 16
13. Certain Relationships and Related Transactions 16
PART IV
-------
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 17
SIGNATURES 18
INDEX TO FINANCIAL INFORMATION 20
PAGE 3
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-K
Year Ended December 31, 1994
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
PART 1
------
ITEM 1. BUSINESS
(a) General Development of Business
- -----------------------------------
Consolidated Freightways, Inc. is a company which participates through
subsidiaries in various forms of nationwide and regional trucking, truckload
and intermodal rail, domestic and international air cargo services, contract
logistics and related transportation activities. These operations are
organized into three primary business groups: nationwide, full-service
trucking (CF MotorFreight), regional trucking and full-service truckload
(Con-Way Transportation Services), and air freight (Emery Worldwide).
Consolidated Freightways, Inc. was incorporated in Delaware in 1958 as a
successor to a business originally established in 1929. It is herein
referred to as the "Registrant" or "Company".
(b) Financial Information About Industry Segments
- -------------------------------------------------
The operations of the Company are primarily conducted in the U.S. and Canada
and to a lesser extent in major foreign countries. An analysis by industry
group of revenues, operating income (loss), depreciation and capital
expenditures for the years ended December 31, 1994, 1993 and 1992, and
identifiable assets as of those dates is presented in Note 11 on pages 37 and
38 of the 1994 Annual Report to Shareholders and is incorporated herein by
reference. Geographic group information is also presented therein.
Intersegment revenues and earnings thereon have been eliminated.
(c) Narrative Description of Business
- -------------------------------------
The Company has designated three principal operating groups: the CF
MotorFreight Group provides intermediate and long-haul, less-than-truckload
freight service in the U.S. and portions of Mexico, Canada, the Caribbean,
Latin and Central America, Europe and Asia; the Con-Way Transportation
Services Group provides regional trucking and intermodal movements of
truckload freight, and the Emery Worldwide Group is responsible for all
domestic and international air freight activities and ocean container freight
services.
PAGE 4
CF MOTORFREIGHT
----------------
CF MotorFreight (CFMF), the Company's largest single operating unit, is based
in Menlo Park, California. The group is composed of Consolidated Freightways
Corporation of Delaware (CFCD), which includes CF MotorFreight and Canadian
operating units, and three non-carrier component operations. Its carrier
group provides general freight services nationwide and in portions of Canada,
Mexico, the Caribbean area, Latin and Central America, Europe and the Pacific
Rim countries. Operations consist of an extensive transportation network
moving freight that is typically shipments of manufactured or non-perishable
processed products having high value and requiring expedited service,
compared to the bulk raw materials characteristically transported by
railroads, pipelines and water carriers. The basic business of the general
freight industry is to transport freight that is less-than-truckload (LTL),
an industry designation for shipments weighing less than 10,000 pounds. CFMF
is one of the nation's largest motor carriers in terms of 1994 revenues.
Competition has increased with trends toward regionalization, continued
pricing pressures and new competitors moving into the small shipment segment
of the business. To address this, CFMF undertook major changes to its line-
haul operations and terminals beginning in the fourth quarter of 1994. These
changes are expected to create new efficiencies and flexibilities by reducing
freight handling and make greater use of lower cost rail. When combined with
innovative, value-added services, customer partnerships and sole-source
contracts, among other services, CFMF expects to offset competitive trends.
As a large carrier of LTL general commodity freight, CFMF has pick-up and
delivery fleets in each area served, and a fleet of intercity tractors and
trailers. It has a network of 437 U.S. and Canadian freight terminals, metro
centers and regional consolidation centers. Certain regional consolidation
centers have become metro centers. The metro centers reduce freight handling
by allowing more direct city to city service, thereby improving productivity.
CFMF operations are supported by a sophisticated data processing system for the
control and management of the business.
There is a broad diversity in the customers served, size of shipments,
commodities transported and length of haul. No single customer or commodity
accounts for more than a small fraction of total revenues.
CFMF operates daily schedules utilizing primarily relay drivers driving
approximately eight to ten hours each. Some schedules operate with sleeper
teams driving designated routes. Road equipment consists of one tractor
pulling two 28-foot double trailers or, to a limited extent, one semi-trailer
or three 28-foot trailers. Legislation enacted in 1982 has provided for the
use of 28-foot double trailers and 48-foot semi-trailers throughout the
United States. (See "State Regulation" below.) Trailers in double or triple
combination are more efficient and economical, and safer, than a tractor and
single semi-trailer combination. CFMF utilizes trailer equipment 102-inches
in width. In 1994, the Company operated in excess of 472 million linehaul
miles in North America, about 90% of which was conducted by equipment in
doubles and triples configuration. The accident frequency of the triples
configuration was better than all other types of vehicle combinations used by
the Company.
CFMF and other subsidiaries of CFCD serve Canada through terminals in the
PAGE 5
provinces of Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia,
Ontario, Quebec, Saskatchewan and in the Yukon Territory. The Canadian
operations utilize a fleet size of over 1,100 trucks, tractors and trailers.
Employees
---------
Approximately 85% of CFMF's domestic employees are represented by various
labor unions, primarily the International Brotherhood of Teamsters (IBT).
CFMF and the IBT are parties to a National Master Freight Agreement. The
current agreement with the IBT expires in April 1998.
Labor costs, including fringe benefits, average approximately 66% of
revenues. CFMF's domestic employment has declined to 20,700 employees at
December 31, 1994 from approximately 21,000 at December 31, 1993, primarily
the result of several programs during 1994 to streamline the handling and
movement of freight by restructuring its linehaul and terminal operations.
Fuel
----
Fuel prices have steadily declined during the last three years. CFMF's
average annual diesel fuel cost per gallon (without tax) declined from $.636
in 1992 to $.621 and $.578 in 1993 and 1994, respectively. These savings
have been somewhat mitigated by an increase in fuel taxes.
Federal and State Regulation
----------------------------
On July 1, 1980, the Motor Carrier Act of 1980 became effective. The Act
made substantial changes in federal regulation of the motor carrier industry.
It provided for easier access to the industry by new trucking companies and
eased restrictions on expansion of services by existing carriers. In
addition, CFMF's operations are subject to a variety of economic regulations
by state authorities. Historically, such regulations also covered, among
other things, size and weight of motor carrier equipment.
Federal legislation applies to the interstate highway system and to other
qualifying federal-aid primary system highways in all states. Full
implementation of the federal legislation has been hampered by regulations in
certain states, which have imposed trailer length, size and weight
limitations on access and intercity routes. These limitations do not conform
with the federal requirements and therefore are obstacles to efficient
operations. CFMF's mainline operations are designed to avoid locales with
these limitations. In August 1994, Federal legislation preempted intrastate
operating rights which eliminated certain restrictions on intrastate pricing
and operations. As a result, the Company wrote off all its unamortized
intrastate operating rights in the third quarter 1994.
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Canadian Regulation
-------------------
The provinces in Canada have regulatory authority over intra-provincial
operations of motor carriers and have been delegated by the federal authority
to regulate inter-provincial motor carrier activity. Federal legislation to
phase in deregulation of the inter-provincial motor carrier industry took
effect January 1, 1988. The new legislation relaxes economic regulation of
inter-provincial trucking by easing market entry regulations, and implements
effective safety regulations of trucking services under Federal jurisdiction.
The Company wrote-off substantially all of the unamortized cost of its
Canadian operating authority in 1992.
Menlo Logistics
---------------
Menlo Logistics Inc. (MLI), founded in 1990, provides customized single-
source logistics solutions for manufacturing, industrial and retail
businesses. These services include carrier management, dedicated fleet and
warehouse operations, just-in-time delivery programs, customer order
processing and freight bill payment and auditing. MLI has approximately
500 employees. As a relatively new industry, competition is expected to come
from new entrants into the markets it serves. MLI will address the increased
competition by utilizing technologies and its established experience.
Non-Carrier Operations
----------------------
Two non-carrier operations within the CF MotorFreight Group generate a
majority of their sales from other companies within the CF Group. Road
Systems, Inc. primarily manufactures trailers. Willamette Sales Co. serves as
a distributor of heavy-duty truck, marine and construction equipment parts.
CON-WAY TRANSPORTATION SERVICES
-------------------------------
Con-Way Transportation Services, Inc. (CTS) is an operating company
with business units that provide regional LTL freight trucking, full-service
truckload freight delivery utilizing highway over-the-road and intermodal
rail stack train resources for transcontinental, inter-regional and regional
transportation; local and interstate container drayage and international
shipping. CTS has four operating units and approximately 10,000 employees.
The regional companies face more competition as national LTL companies extend
into regional markets, and acquire and combine formerly independent regional
carriers into inter-regional groups. New service offerings, continued
expansion of regional carrier networks, extension of next-day and second-day
service standards and enhanced inter-regional network capabilities are
positioning the Con-Ways for growth opportunities. Refer to the CF
MotorFreight section for a discussion of federal and state regulations.
PAGE 7
Con-Way Regional Carriers
-------------------------
CTS has three regional motor carriers each of which operate dedicated
regional trucking networks principally serving core geographic territories
with next-day and second-day service. The regional carriers serve
manufacturing, industrial, commercial and retail business-to-business
customers with a fleet in excess of 16,700 trucks, tractors and trailers.
Con-Way Western Express, Inc. (CWX) was founded in May 1983 and today
operates in 11 western states and serves Canada and Mexico. In 1994, CWX
expanded operations to include Utah and Colorado. At December 31, 1994, CWX
operated 74 service centers. In January 1995, CWX expanded operations into
Oregon, Washington, Idaho and Vancouver, British Columbia, opening 22 new
service centers in the Pacific Northwest.
Con-Way Central Express, Inc. (CCX) was founded in June 1983 and today serves
22 states of the central and northeast U.S., and Ontario, Canada. CCX
expanded into the New England states in 1994 and at December 31 operated 187
service centers. In February 1995, CCX expanded into New Jersey and began
providing service for metropolitan New York City.
Con-Way Southern Express, Inc., and Con-Way Southwest Express, Inc., were
founded in April 1987 and November 1989, respectively. In December 1994, the
two carriers were combined into a single operating unit under the Con-Way
Southern Express, Inc., (CSE) name serving a 12-state southern market from
Texas to the Carolinas and Florida, and encompassing Puerto Rico and Mexico.
CSE operated 92 service centers at December 31, 1994.
A service expansion program initiated by CTS in 1994 allows the regional
carriers to provide next-day and second-day freight delivery between their
principal geographic regions, utilizing existing infrastructure. The program
generates additional business by allowing each carrier to compete for new
traffic and provide coverage of regional markets lanes not individually
serviced as part of the carrier's core territory.
Con-Way Truckload Service
-------------------------
Con-Way Truckload Services Inc., (CWT), formerly known as Con-Way Intermodal,
is a full-service, multi-modal truckload company. It provides door-to-door
transcontinental movement of truckload shipments by rail container stack
train and rail trailer, utilizing nationwide operating alliances with major
railroads. It also provides expedited inter-regional and regional over-the-
road truckload service with a fleet of company-owned trucks and trailers.
Additionally, the company provides rail freight forwarding with domestic
intermodal marketing services, assembly and distribution services, local and
interstate container drayage and international shipping.
PAGE 8
EMERY WORLDWIDE
---------------
Emery Worldwide (EWW), the Company's air freight unit, was formed when the
Company purchased Emery Air Freight Corporation in April 1989 and merged it
with its air freight operation, CF AirFreight, Inc. The combined companies
expanded EWW's ability to deliver air freight within North America and to 89
countries worldwide.
EWW provides global air cargo services through an integrated freight system
designed for the movement of parcels and packages of all sizes and weights.
In North America, EWW provides these services through a system of sales
offices and terminals, and overseas through foreign subsidiaries, branches
and agents.
EWW provides door-to-door service within North America by using its own
airlift system, supplemented with commercial airlines. International
services are performed by operating primarily as an air freight forwarder,
using commercial airlines, and with controlled lift, only when necessary.
Emery also operates approximately 1,300 trucks, vans and tractors.
As of December 31, 1994, EWW utilized a fleet of 69 aircraft, 42 of which are
leased on a long-term basis, 9 are owned and 18 are contracted on a short-
term basis to supplement nightly volumes and to provide feeder services. The
nightly lift capacity of the aircraft fleet, excluding charters, is
approximately 4.0 million pounds.
Emery Worldwide's hub-and-spoke system is centralized at the Dayton
International Airport where a leased air cargo facility (Hub) and related
support facilities are located. The Hub handles all types of shipments,
ranging from small packages to heavyweight cargo, with a total effective sort
capacity of approximately 1.2 million pounds per hour. The operation of the
Hub in conjunction with EWW's airlift system enables it to maintain a high
level of service reliability.
Through a separate subsidiary of the Company, Emery Worldwide Airlines, Inc.
(EWA), the Company provides nightly cargo airline services under a contract
with the U.S. Postal Service (USPS) to carry Express and Priority Mail, using
23 aircraft, 6 of which are leased on a long-term basis and 17 are owned.
The original contract for this operation was awarded to EWA in 1989 and had
been renewed and extended through early January 1994. A ten year USPS
contract was awarded to the Company during 1993 with service beginning in
January 1994.
The Company has recognized approximately $112 million, $138 million and $141
million of revenue in 1994, 1993 and 1992, respectively, from contracts to
carry Express and Priority Mail for the U.S. Postal Service.
PAGE 9
Customers
---------
EWW services, among others, the automotive, aviation, machinery, metals,
electronic and electrical equipment, chemical, apparel, film and technology
industries. Service industries and governmental entities also utilize EWW's
services. Both U.S. and International operations of EWW have wide customer
bases.
Competition
-----------
The heavy air-freight market within North American is highly competitive and
price sensitive. EWW has the largest market share in the heavy air-freight
segment. EWW competes with other integrated air freight carriers as well as
freight forwarders. The North Atlantic market is especially price sensitive
due to the abundance of airlift capacity. However, less competition is
expected from passenger airlines as many continue to downsize their widebody
aircraft.
Competition in the international markets is also service and price sensitive.
In these markets, which are more fragmented than the domestic market, EWW
competes with both United States and international airlines and air freight
forwarders.
Customers are seeking companies such as EWW with combined integrated carrier
and freight forwarding capabilities for flexible, cost effective service.
EWW believes this infrastructure and the convenience of its extensive network
of worldwide terminal, agent and service locations are its principal methods
of competing in the market in which it operates.
Regulation
----------
Regulation of Air Transportation
--------------------------------
The air transportation industry is subject to federal regulation by the
Federal Aviation Act of 1958, as amended (Aviation Act) and regulations
issued by the Department of Transportation (DOT) pursuant to the Aviation
Act. EWW, as an air freight forwarder, and EWA, as an airline, are subject
to different regulations. Air freight forwarders are exempted from most DOT
economic regulations and they are not subject to Federal Aviation
Administration (FAA) safety regulations so long as they do not have
operational control of aircraft. Airlines are subject to economic regulation
by DOT and maintenance, operating and other safety-related regulation by FAA.
Thus, EWA and other airlines conducting operations for EWW are subject to DOT
and FAA regulation while EWW, itself, is not covered by most DOT and FAA
regulations.
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Regulation of Ground Transportation
-----------------------------------
When EWW provides ground transportation of cargo having a prior or subsequent
air movement, the ground transportation is exempt from regulation by the
Interstate Commerce Commission (ICC). However, EWW holds ICC and intrastate
motor carrier authorities which can be utilized in providing non-exempt
ground transportation. Registration of ICC authorities is required in each
state where a motor carrier conducts non-exempt operations, and some states
also have required EWW to register as an exempt interstate operator.
Environmental Matters
---------------------
During recent years, operations at several airports have been subject to
restrictions or curfews on arrivals or departures during certain night-time
hours designed to reduce or eliminate noise for surrounding residential
areas. None of these restrictions have materially affected EWW's operations.
If such restrictions were to be imposed with respect to the airports at which
EWW's activities are centered and no alternative airports were available to
serve the affected areas, EWW's operations could be more adversely affected.
As provided in Section 611 of the Aviation Act, the FAA with the assistance
of the Environmental Protection Agency (EPA), is authorized to establish
aircraft noise standards. Under the National Emission Standards Act of 1967,
as amended by the Clean Air Act Amendments of 1970, the administrator of the
EPA is authorized to issue regulations setting forth standards for aircraft
emissions. EWW believes that its present fleet of owned, leased or chartered
aircraft is operating in compliance with the applicable noise and emission
laws.
The Aviation Noise and Capacity Act of 1990 was passed in November of 1990 to
establish a national aviation noise policy. The FAA has promulgated
regulations under this Act regarding the phase-in requirements for
compliance. This legislation and the related regulations will require all of
EWW's and EWA's owned and leased aircraft to either undergo modifications or
otherwise comply with Stage 3 noise restrictions by year-end 1999.
Fuel and Supplies Cost
----------------------
EWW purchases substantially all of its jet fuel from major oil companies,
refiners and trading companies on annual contracts with prepaid and/or volume
discounts. These contract purchases are supplemented by spot purchases. The
weighted average price of domestic jet fuel declined in 1994 and 1993,
respectively. The 1994 domestic cost per gallon was approximately $.59
compared with 1993 and 1992 weighted average prices of approximately $.64 and
$.67 per gallon, respectively.
EWW believes that it has the flexibility to continue its operations without
material interruption unless there are significant curtailments of its jet
fuel supplies. Neither EWW nor the operators of the aircraft it charters have
experienced or anticipate any fuel supply problems. There is
PAGE 11
a four-million gallon fuel storage facility at the Hub.
Employees
---------
As of December 31, 1994, EWW had approximately 8,000 full and permanent
part-time employees as compared to 7,500 in 1993 and 6,700 in 1992.
Approximately 14% of these employees are covered by union contracts.
GENERAL
- -------
The research and development activities of the Company are not significant.
During 1994, 1993 and 1992 there was no single customer of the Company that
accounted for more than 10% of consolidated revenues.
The total number of employees is presented in the "Ten Year Financial
Summary" on pages 40 and 41 of the 1994 Annual Report to Shareholders and is
incorporated herein by reference.
The Company has been designated a Potentially Responsible Party (PRP) by the
EPA with respect to the disposal of hazardous substances at various sites.
The Company expects its share of the clean-up cost to be immaterial. The
Company expects the costs of complying with existing and future federal,
state and local environmental regulations to continue to increase. On the
other hand, they do not anticipate that such cost increases will have any
materially adverse effects on capital expenditures, earnings or competitive
position.
(d) Financial Information About Foreign
and Domestic Operations and Export Sales
----------------------------------------
Information as to revenues, operating income (loss) and identifiable assets
for each of the Company's business segments and for its foreign operations
for 1994, 1993 and 1992 is contained in Note 11 on page 37 and 38 of the 1994
Annual Report to Shareholders and is incorporated herein by reference.
ITEM 2. PROPERTIES
The following summarizes the terminals and freight service centers operated
by the Company at December 31, 1994:
Owned Leased Total
----- ------ -----
CF MotorFreight 230 207 437
Con-Way Transportation Services 57 296 353
Emery Worldwide 9 174 183
PAGE 12
The following table sets forth the location and square footage of the
Company's principal freight handling facilities:
Location Square Footage
-------- --------------
CFMF - motor carrier LTL consolidation center terminals
Mira Loma, CA 280,672
Chicago, IL 231,159
* Columbus, OH 118,774
Memphis, TN 118,745
Nashville, TN 118,622
Orlando, FL 101,557
* Minneapolis, MN 94,890
St. Louis, MO 88,640
* Pocono, PA 86,285
Chicopee, MA 85,164
Akron, OH 82,494
Sacramento, CA 81,286
Atlanta, GA 77,920
Houston, TX 77,346
Dallas, TX 75,358
* Fremont, IN 73,760
* Peru, IL 73,760
Buffalo, NY 73,380
Cheyenne, WY 71,298
Milwaukee, WI 70,661
Salt Lake City, UT 68,480
Charlotte, NC 66,896
Seattle, WA 59,720
* York, PA 56,384
Kansas City, MO 55,288
* Indianapolis, IN 54,716
Portland, OR 47,824
Phoenix, AZ 20,237
CTS - freight assembly centers
Chicago, IL 113,116
Des Plains, IL 100,440
Oakland, CA 85,600
Dallas, TX 82,000
Atlanta, GA 56,160
Cincinnati, OH 55,618
Columbus, OH 48,527
Detroit, MI 46,240
Santa Fe Springs, CA 45,936
Aurora, IL 44,235
Ft. Wayne, IN 35,400
Pontiac, MI 34,450
St. Louis, MO 29,625
Milwaukee, WI 22,940
PAGE 13
Location Square Footage
-------- --------------
Emery - facilities
*Dayton, OH 620,000
Los Angeles, CA 78,264
Chicago, IL 59,976
Boston, MA 42,236
Indianapolis, IN 38,500
* Facility partially or wholly financed through the issuance of industrial
revenue bonds. Principal amount of debt is secured by the property.
ITEM 3. LEGAL PROCEEDINGS
The legal proceedings of the Company are summarized in Note 10 on page 37 of
the 1994 Annual Report to Shareholders and are incorporated herein by
reference. Discussions of certain environmental matters are presented in
Item 1 and Item 7.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
-------
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Company's common stock is listed for trading on the New York and Pacific
Stock Exchanges.
The Company's Common Stock Price is included in Note 12 on page 39 of the
1994 Annual Report to Shareholders and is incorporated herein by reference.
Cash dividends on common shares had been paid in every year from 1962 to
1990. In June 1990, however, the Company's Board of Directors suspended the
quarterly dividend to minimize the Company's cash requirements. In December
1994, the Board of Directors reinstated a $.10 per share quarterly cash
dividend on common stock. Under the terms of the restructured TASP Notes, as
set forth on page 29 of the 1994 Annual Report to Shareholders, the Company
is restricted from paying dividends in excess of $10 million plus 50% of the
cumulative net income applicable to common shareholders since the
commencement of the agreement.
As of December 31, 1994, there were 16,015 holders of record of the common
PAGE 14
stock ($.625 par value) of the Company. The number of shareholders is also
presented in the "Ten Year Financial Summary" on pages 40 and 41 of the
1994 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data is presented in the "Ten Year Financial
Summary" on pages 40 and 41 of the 1994 Annual Report to Shareholders and
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations is presented in the "Financial Review and Management Discussion"
on pages 18 through 20, inclusive, of the 1994 Annual Report to Shareholders
and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Auditors' Report are presented on
pages 21 through 41, inclusive, of the 1994 Annual Report to Shareholders and
are incorporated herein by reference. The unaudited quarterly financial data
is included in Note 12 on page 39 of the 1994 Annual Report to Shareholders
and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The identification of the Company's Directors is presented on pages 3 through
9, inclusive, of the Proxy Statement dated March 17, 1995 and those pages are
incorporated herein by reference.
The Executive Officers of the Company, their ages at December 31, 1994 and
their applicable business experience are as follows:
Donald E. Moffitt, 62, President and Chief Executive Officer. Mr. Moffitt
joined Consolidated Freightways Corporation of Delaware, the Company's
nationwide, full-service subsidiary, as an accountant in 1955 and advanced to
Vice President - Finance in 1973. In 1975, he transferred to the Company as
Vice President - Finance and Treasurer and in 1981, was elected Executive
Vice President - Finance and Administration. In 1983, he assumed the
additional duties of President, CF International and Air, Inc., where he
directed the Company's international and air freight businesses. Mr. Moffitt
was elected Vice Chairman of the Board of the Company in 1986. He retired as
an employee and as Vice Chairman of the Board of Directors in 1988 and
returned to the Company as Executive Vice President - Finance and Chief
Financial Officer in 1990. Mr. Moffitt was named President and Chief
Executive Officer of the Company and was elected to the Board of Directors in
PAGE 15
1991. Mr. Moffitt serves on the Executive Committee of the Board of
Directors of the Highway Users Federation and is a member of the Board of
Directors of the Bay Area Council, the Automotive Safety Foundation and the
American Red Cross. He is a member of the California Business Roundtable and
a member of the Business Advisory Council of the Northwestern University
Transportation Center. He also serves on the Advisory Council of the
Peninsula Conflict Resolution Center. Mr. Moffitt is a member of the
Advisory Nominating and the Executive Committees of the Company.
W. Roger Curry, 56, President and Chief Executive Officer of Consolidated
Freightways Corporation of Delaware and Senior Vice President of the Company.
Mr. Curry joined CFCD in 1969 as a Systems Analyst and became Coordinator,
On-Line Systems of the Company in 1970. In 1972, he was named Director of
Terminal Properties for CFCD. He became President of CF AirFreight in 1975
and Chief Executive Officer in 1984. Mr. Curry relinquished both offices
with CF AirFreight in 1986 when he was elected Senior Vice President-Marketing
of the Company. In 1991, he was elected President of Emery Air Freight
Corporation, relinquishing the position in 1994 to become President of CFCD.
David I. Beatson, 47, President and Chief Executive Officer of Emery Air
Freight Corporation and Senior Vice President of the Company. Mr. Beatson
joined CF AirFreight Corporation in 1977, advancing through several
increasingly responsible positions to Vice President of National Accounts.
After leaving the Company for a time, he returned to EWW in 1986 as Vice
President of Sales and Marketing. He became President and Chief Executive
Officer of Emery Air Freight Corporation in 1994.
Gregory L. Quesnel, 46, Executive Vice President and Chief Financial Officer.
Mr. Quesnel joined Consolidated Freightways Corporation of Delaware in 1975
as Director of Financial Accounting. Through several increasingly
responsible financial positions, he advanced to become the top financial
officer of CFCD. In 1989 he was elected Vice President-Accounting for the
Company and in 1990 was named Vice President and Treasurer. Mr. Quesnel
became Senior Vice President-Finance and Chief Financial Officer of the
Company in 1991 and Executive Vice President and Chief Financial Officer in
1993.
Robert T. Robertson, 53, President and Chief Executive Officer of Con-Way
Transportation Services, Inc. and Senior Vice President of the Company. Mr.
Robertson joined CFCD in 1970 as a sales representative and advanced to
Manager of Eastern Area Sales by 1973. He transferred to Texas in 1976 where
he became involved in CFCD's operations and was promoted to Division Manager
in 1978. In 1983, he was named Vice President and General Manager of Con-Way
Transportation Services, Inc. In 1986, Mr. Robertson was elected President
of CTS.
Eberhard G.H. Schmoller, 51, Senior Vice President and General Counsel of the
Company. Mr. Schmoller joined CFCD in 1974 as a staff attorney and in 1976
was promoted to CFCD assistant general counsel. In 1983, he was appointed
Vice President and General Counsel of CF AirFreight and assumed the same
position with EWW after the acquisition in 1989. Mr. Schmoller was named
Senior Vice President and General Counsel of the Company in 1993.
PAGE 16
ITEM 11. EXECUTIVE COMPENSATION
The required information for Item 11 is presented on pages 13 through 15,
inclusive, of the Proxy Statement dated March 17, 1995, and those pages are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The required information for Item 12 is included on pages 10 and 11 of the
Proxy Statement dated March 17, 1995 and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PAGE 17
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Exhibits Filed
---------------------------------------
1. Financial Statements
See Index to Financial Information.
2. Financial Statement Schedules
See Index to Financial Information.
3. Exhibits
See Index to Exhibits.
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed for the three months ended
December 31, 1994.
PAGE 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-K Annual
Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED FREIGHTWAYS, INC.
(Registrant)
March 27, 1995 /s/Donald E. Moffitt
--------------------------------------
Donald E. Moffitt
President and Chief Executive
Officer
March 27, 1995 /s/Gregory L. Quesnel
--------------------------------------
Gregory L. Quesnel
Executive Vice President and Chief
Financial Officer
March 27, 1995 /s/Gary D. Taliaferro
--------------------------------------
Gary D. Taliaferro
Vice President and Controller
PAGE 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
March 27, 1995 /s/Raymond F. O'Brien
-------------------------------------
Raymond F. O'Brien
Chairman of the Board
March 27, 1995 /s/Donald E. Moffitt
-------------------------------------
Donald E. Moffitt
President, Chief Executive Officer and
Director
March 27, 1995 /s/Earl F. Cheit
-------------------------------------
Earl F. Cheit, Director
March 27, 1995 /s/G. Robert Evans
-------------------------------------
G. Robert Evans, Director
March 27, 1995 /s/Robert Jaunich II
-------------------------------------
Robert Jaunich II, Director
March 27, 1995 /s/William D. Walsh
-------------------------------------
William D. Walsh, Director
March 27, 1995 /s/Robert P. Wayman
-------------------------------------
Robert P. Wayman, Director
PAGE 20
CONSOLIDATED FREIGHTWAYS, INC.
FORM 10-K
Year Ended December 31, 1994
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
INDEX TO FINANCIAL INFORMATION
------------------------------
Consolidated Freightways, Inc. and Subsidiaries
- -----------------------------------------------
The following Consolidated Financial Statements of Consolidated
Freightways, Inc. and Subsidiaries appearing on pages 21 through 41,
inclusive, of the Company's 1994 Annual Report to Shareholders are
incorporated herein by reference:
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1994 and 1993
Statements of Consolidated Operations - Years Ended December 31, 1994,
1993 and 1992
Statements of Consolidated Cash Flows - Years Ended December 31, 1994,
1993 and 1992
Statements of Consolidated Shareholders' Equity - Years Ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
In addition to the above, the following consolidated financial information
is filed as part of this Form 10-K:
Page
----
Consent of Independent Public Accountants 21
Report of Independent Public Accountants 21
Schedule II - Valuation and Qualifying Accounts 22
PAGE 21
The other schedules have been omitted because either (1) they are neither
required nor applicable or (2) the required information has been included in
the consolidated financial statements or notes thereto.
SIGNATURE
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation
of our reports included and incorporated by reference in this Form 10-K,
into the Company's previously filed Registration Statement File Nos.
2-81030, 33-29793, and 33-52599.
/s/Arthur Andersen LLP
-------------------------
ARTHUR ANDERSEN LLP
San Francisco, California
March 27, 1995
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Shareholders and Board of Directors of
Consolidated Freightways, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Consolidated Freightways,
Inc.'s 1994 Annual Report to Shareholders incorporated by reference in this
Form 10-K, and have issued our report thereon dated January 27, 1995. Our
audit was made for the purpose of forming an opinion on those statements
taken as a whole. The schedule on page 22 is the responsibility of the
Company's management and is presented for the purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required
to be set forth therein in relation to the basic financial statements taken
as a whole.
/s/Arthur Andersen LLP
--------------------------
ARTHUR ANDERSEN LLP
San Francisco, California
January 27, 1995
PAGE 22
SCHEDULE II
CONSOLIDATED FREIGHTWAYS, INC.
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1994
(In thousands)
DESCRIPTION
- -----------
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
---------- ---------- ---------- ---------- ----------
1994 $29,780 $ 6,676 $ - $ (9,518) (a) $26,938
------- ------- -------- --------- -------
1993 $26,198 $27,127 $ - $(23,545)(a) $29,780
------- ------- -------- --------- -------
1992 $25,742 $29,707 $ - $(29,251)(a) $26,198
------- ------- -------- --------- -------
a) Accounts written off net of recoveries.
PAGE 23
INDEX TO EXHIBITS
ITEM 14(a)(3)
Exhibit No.
- -----------
(3) Articles of incorporation and by-laws:
3.1 Consolidated Freightways, Inc. Certificates of Incorporation, as
amended. (Exhibit 3(a)(2) to the Company's Quarterly Report
Form 10-Q for the quarter ended March 31, 1987*)
3.2 Consolidated Freightways, Inc. By-laws, as amended, September 26,
1994
(4) Instruments defining the rights of security holders, including
debentures:
4.1 Consolidated Freightways, Inc. Stockholder Rights Plan. (Exhibit
1 on Form 8-A dated October 27, 1986*)
4.2 Certificate of Designations of the Series B Cumulative
Convertible Preferred Stock. (Exhibit 4.1 as filed on Form SE
dated May 25, 1989*)
4.3 Indenture between the Registrant and Security Pacific National
Bank, trustee, with respect to 9-1/8% Notes Due 1999 and Medium-
Term Notes, Series A. (Exhibit 4.1 as filed on Form SE dated
March 20, 1990*)
4.4 Form of Security for 9-1/8% Notes Due 1999 issued by Consolidated
Freightways, Inc. (Exhibit 4.1 as filed on Form SE dated August
25, 1989*)
4.5 Officers' Certificate dated as of August 24, 1989 establishing
the form and terms of debt securities issued by Consolidated
Freightways, Inc. (Exhibit 4.2 as filed on Form SE dated August
25, 1989*)
4.6 Form of Security for Medium-Term Notes, Series A to be issued by
Consolidated Freightways, Inc. (Exhibit 4.1 as filed on Form SE
dated September 18, 1989*)
4.7 Officers' Certificate dated September 18, 1989, establishing the
form and terms of debt securities to be issued by Consolidated
Freightways, Inc. (Exhibit 4.2 as filed on Form SE dated
September 19, 1989*)
Instruments defining the rights of security holders of long-term debt
of Consolidated Freightways, Inc., and its subsidiaries for which
financial statements are required to be filed with this Form 10-K,
of which the total amount of securities authorized under each such
instrument is less than 10% of the total assets of Consolidated
Freightways, Inc. and its subsidiaries on a consolidated basis, have
not been filed as exhibits to this Form 10-K. The Company agrees to
furnish a copy of each applicable instrument to the Securities and
Exchange Commission upon request.
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
PAGE 24
Exhibit No.
- -----------
(10) Material contracts:
10.1 Consolidated Freightways, Inc. Long-Term Incentive Plan of 1978,
as amended through Amendment No. 4. (Exhibit 10(e) to the
Company's Form 10-K for the year ended December 31, 1983*#)
10.2 Amendments 5, 6 and 7 to the Consolidated Freightways, Inc.
Long-Term Incentive Plan of 1978, as amended through Amendment No.
4. (Exhibit 10.1 as filed on Form SE dated March 25, 1991*#)
10.3 Consolidated Freightways, Inc. Long-Term Incentive Plan of 1988.
(Exhibit 10(g) to the Company's Form 10-K for the year ended
December 31, 1987*#)
10.4 Amendment 3 to the Consolidated Freightways, Inc. Long-Term
Incentive Plan of 1988. (Exhibit 10.2 as filed on Form SE dated
March 25, 1991*#)
10.5 Consolidated Freightways, Inc. Stock Option Plan of 1978, as
amended through Amendment No. 1. (Exhibit 10(e) to the Company's
Form 10-K for the year ended December 31, 1981*#)
10.6 Consolidated Freightways, Inc. Stock Option Plan of 1988 as
amended. (Exhibit 10(i) to the Company's Form 10-K for the year
ended December 31, 1987 as amended in Form S-8 dated
December 16, 1992*#)
10.7 Forms of Stock Option Agreement (with and without Cash Surrender
Rights) under the Consolidated Freightways, Inc. Stock Option Plan
of 1988. (Exhibit 10(j) to the Company's Form 10-K for
the year ended December 31, 1987*#)
10.8 Form of Consolidated Freightways, Inc. Deferred Compensation
Agreement. (Exhibit 10(i) to the Company's Form 10-K for the year
ended December 31, 1981*#)
10.9 Consolidated Freightways, Inc. Retirement Plan (formerly Emery Air
Freight Corporation Pension Plan), as amended effective through
January 1, 1985, and amendments dated as of October 30, 1987.
(Exhibit 4.22 to the Emery Air Freight Corporation Quarterly
Report on Form 10-Q dated November 16, 1987**)
10.10 Emery Air Freight Plan for Retirees, effective October 31, 1987.
(Exhibit 4.23 to the Emery Air Freight Corporation Quarterly
Report on Form 10-Q dated November 16, 1987**)
10.11 Consolidated Freightways, Inc. Common Stock Fund (formerly Emery
Air Freight Corporation Employee Stock Ownership Plan, as
effective October 1, 1987 ("ESOP"). (Exhibit 4.33 to the Emery
Air Freight Corporation Annual Report on Form 10-K dated March 28,
1988**)
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
** Incorporated by reference to indicated reports filed under the
Securities Act of 1934, as amended, by Emery Air Freight
Corporation File No. 1-3893.
# Designates a contract or compensation plan for Management or Directors.
PAGE 25
Exhibit No.
- -----------
10.12 Employee Stock Ownership Trust Agreement, dated as of October 8,
1987, as amended, between Emery Air Freight Corporation and Arthur
W. DeMelle, Daniel J. McCauley and Daniel W. Shea, as Trustees
under the ESOP Trust. (Exhibit 4.34 to the Emery Air Freight
Corporation Annual Report on Form 10-K dated March 28, 1988**)
10.13 Amended and Restated Subscription and Stock Purchase Agreement
dated as of December 31, 1987 between Emery Air Freight
Corporation and Boston Safe Deposit and Trust Company in its
capacity as successor trustee under the Emery Air Freight
Corporation Employee Stock Ownership Plan Trust ("Boston Safe").
(Exhibit B to the Emery Air Freight Corporation Current Report on
Form 8-K dated January 11, 1988**)
10.14 Supplemental Subscription and Stock Purchase Agreement dated as of
January 29, 1988 between Emery Air Freight Corporation and Boston
Safe. (Exhibit B to the Emery Air Freight Corporation Current
Report on Form 8-K dated February 12, 1988**)
10.15 Trust Indenture, dated as of November 1, 1988, between City of
Dayton, Ohio and Security Pacific National Trust Company (New
York), as Trustee and Bankers Trust Company, Trustee. (Exhibit
4.1 to Emery Air Freight Corporation Current Report on Form 8-K
dated December 2, 1988**)
10.16 Bond Purchase Agreement dated November 7, 1988, among the City of
Dayton, Ohio, the Emery Air Freight Corporation and Drexel Burnham
Lambert Incorporated. (Exhibit 28.7 to the Emery Air Freight
Corporation Current Report on Form 8-K dated December 2, 1988**)
10.17 Lease agreement dated November 1, 1988 between the City of Dayton,
Ohio and Emery Air Freight Corporation. (Exhibit 10.1 to the
Emery Air Freight Corporation Annual Report on Form 10-K for the
year ended December 31, 1988**)
10.18 Credit Agreement dated January 14, 1993, by and among Emery
Receivables Corporation as the borrower, Emery Air Freight
Corporation, Consolidated Freightways, Inc., individually and as
Servicer and various financial institutions. (Exhibit 10.19 to the
Company's Form 10-K for the year ended December 31, 1992*).
10.19 Purchase and Sale Agreement, dated January 14, 1993, among Emery
Air Freight Corporation and Emery Distribution Systems, Inc., as
Originators, Emery Receivables Corporation, and Consolidated
Freightways, Inc., as Servicer. (Exhibit 10.20 to the
Company's Form 10-K for the year ended December 31, 1992*).
10.20 Consolidated Freightways, Inc. Directors' Election Form for
deferral payment of director's fees. #
10.21 Consolidated Freightways, Inc. 1993 Executive Deferral Plan.
(Exhibit 10.22 to the Company's Form 10-K for the year ended
December 31, 1992*#).
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
** Incorporated by reference to indicated reports filed under the
Securities Act of 1934, as amended, by Emery Air Freight
Corporation File No. 1-3893.
# Designates a contract or compensation plan for Management or Directors.
PAGE 26
Exhibit No.
- -----------
10.22 Consolidated Freightways, Inc. Executive Incentive Plan for
1995. #
10.23 CF MotorFreight Incentive Plan for 1995. #
10.24 Con-Way Transportation Services, Inc. Incentive Plan for 1995. #
10.25 Emery Worldwide Incentive Plan for 1995. #
10.26 Leland James Service Corporation-CFI Executive Incentive Plan
for 1995. #
10.27 $300 million Amended and Restated Credit Agreement dated January
10, 1995 among Consolidated Freightways, Inc. and various
financial institutions.
10.28 Official Statement of the Issuer's Special Facilities Revenue
Refunding Bonds, 1993 Series E and F dated September 29, 1993
among the City of Dayton, Ohio and Emery Air Freight Corporation.
(Exhibit 10.1 to the Company's Form 10-Q for the quarterly period
ended September 30, 1993*).
10.29 Trust Indenture, dated September 1, 1993 between the City of
Dayton, Ohio and Banker's Trust Company as Trustee.
(Exhibit 10.2 to the Company's Form 10-Q for the quarterly period
ended September 30, 1993*).
10.30 Supplemental Lease Agreement dated September 1, 1993 between the
City of Dayton, Ohio, as Lessor, and Emery Air Freight
Corporation, as Lessee. (Exhibit 10.3 to the Company's Form 10-Q
for the quarterly period ended September 30, 1993*).
10.31 Supplemental Retirement Plan dated January 1, 1990. (Exhibit 10.31
to the Company's Form 10-K for the year ended December 31, 1993*#)
10.32 Directors' 24-Hour Accidental Death and Dismemberment Plan.
(Exhibit 10.32 to the Company's Form 10-K for the year ended
December 31, 1993*#)
10.33 Executive Split-Dollar Life Insurance Plan dated January 1, 1994.
(Exhibit 10.33 to the Company's Form 10-K for the year ended
December 31, 1993*#)
10.34 Board of Directors' Compensation Plan dated January 1, 1994.
(Exhibit 10.34 to the Company's Form 10-K for the year ended
December 31, 1993*#)
10.35 Excess Benefit Plan dated January 1, 1987. (Exhibit 10.35 to the
Company's Form 10-K for the year ended December 31, 1993*#)
10.36 Directors' Business Travel Insurance Plan. (Exhibit 10.36 to the
Company's Form 10-K for the year ended December 31, 1993*#)
10.37 Deferred Compensation Plan for Executives dated October 1, 1993.
(Exhibit 10.37 to the Company's Form 10-K for the year ended
December 31, 1993*#)
10.38 Amended and Restated 1993 Nonqualified Employee Benefit Plans
Trust Agreement dated January 1, 1995. #
10.39 Consolidated Freightways, Inc. Equity Incentive Plan for Non-
Employee Directors. (Attachment to the Company's 1994 Proxy
Statement dated March 18, 1994.*#)
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
# Designates a contract or compensation plan for Management or Directors.
PAGE 27
Exhibit No.
- ----------
10.40 Amended and Restated Retirement Plan for Directors of
Consolidated Freightways, Inc. dated January 1, 1994. #
(13) Annual report to security holders:
Consolidated Freightways, Inc. 1994 Annual Report to Shareholders
(Only those portions referenced herein are incorporated in this Form
10-K. Other portions such as "To Our Shareholders and Employees" are
not required and, therefore, are not "filed" as part of this Form
10-K.)
(22) Significant Subsidiaries of the Company.
(27) Financial Data Schedule
(28) Additional documents:
28.1 Consolidated Freightways, Inc. 1995 Notice of Annual Meeting and
Proxy Statement dated March 17, 1995. (Only those portions
referenced herein are incorporated in this Form 10-K. Other
portions are not required and, therefore, are not "filed" as a
part of this Form 10-K.*)
28.2 Note Agreement dated as of July 17, 1989, between the ESOP,
Consolidated Freightways, Inc. and the Note Purchasers named
therein. (Exhibit 28.1 as filed on Form SE dated July 21, 1989*)
28.3 Guarantee and Agreement dated as of July 17, 1989, delivered by
Consolidated Freightways, Inc. (Exhibit 28.2 as filed on Form SE
dated July 21, 1989*).
28.4 Form of Restructured Note Agreement between Consolidated
Freightways, Inc., Thrift and Stock Ownership Trust as Issuer
and various financial institutions as Purchasers named therein,
dated as of November 3, 1992. (Exhibit 28.4 to the Company's
Form 10-K for the year ended December 31, 1992*).
28.5 Form of Restructured Guarantee and Agreement between Consolidated
Freightways, Inc., as Issuer and various financial institutions
as Purchasers named therein, dated as of November 3, 1992.
(Exhibit 28.5 to the Company's Form 10-K for the year ended
December 31, 1992*).
The remaining exhibits have been omitted because either (1) they are
neither required nor applicable or (2) the required information has been
included in the consolidated financial statements or notes thereto.
* Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.
# Designates a compensation plan for Management or Directors.
CONSOLIDATED FREIGHTWAYS, INC.
BY-LAWS
As Amended September 26, 1994
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office of the
Corporation in the State of Delaware shall be
in the City of Wilmington, County of New Castle.
SECTION 2. Other Offices. The Corporation shall also have
and maintain a principal office or place of
business at such place as may be fixed by the Board of
Directors, and may also have other offices at such
other places both within and without the State of Delaware
as the Board of Directors may from time to
time determine or as the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 1. Place of Meetings. Meetings of the stockholders
of the Corporation shall be held at such
place, either within or without the State of Delaware, as
may be designated from time to time by the Board
of Directors or, if not so designated, then at the principal
office of the Corporation.
SECTION 2. Annual Meetings. The annual meetings of the
stockholders of the Corporation for the
purpose of election of directors and for such other business
as may lawfully come before the meetings shall
be held on a date and at a time designated from time to time
by the Board of Directors, or, if not so
designated, then at 10:00 a.m. on the last Monday in April
in each year, if not a legal holiday, or, if a
legal holiday at the same hour and place on the next
succeeding day not a holiday. At an annual meeting
of the stockholders, only such business shall be conducted
as shall have been properly brought before the
meeting. To be properly brought before an annual meeting,
business must have been (a) specified in the
notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (c)
otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable
requirements, for business to be properly brought before an
annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing
to the Secretary, Consolidated Freightways,
Inc. To be timely, a stockholder's notice must be delivered
to or mailed and received at the principal
executive offices of the Corporation not less than 30 days
nor more than 60 days prior to the meeting;
provided, however, that in the event that less than 40 days'
notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the
stockholder, to be timely, must be so received
not later than the close of business on the 10th day
following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was
made. A stockholder's notice to the
Secretary shall set forth as to each matter that the
stockholder proposes to bring before the annual meeting
(a) a brief description of the business desired to be
brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name
and record address of the stockholder
proposing such business, (c) the class and number of shares
of the Corporation that are beneficially owned
by the stockholder, and (d) any material interest of the
stockholder in such business.
Notwithstanding anything in the By-Laws to the contrary, no
business shall be conducted at the annual
meeting except in accordance with the procedures set forth
in this Section 2.
The Chairman of an annual meeting shall, if the facts
warrant, determine and declare to the meeting that
business was not properly brought before the meeting in
accordance with the provisions of this Section 2,
and if he should so determine, he shall so declare to the
meeting and any such business not properly
brought before the meeting shall not be transacted.
SECTION 3. Special Meetings. Special meetings of the
stockholders of the Corporation may be called,
for any purpose or purposes, by the Chief Executive Officer
or the Board of Directors at any time. Upon
written request of any stockholder or stockholders holding
in the aggregate a majority of the voting power
of all stockholders, the Secretary shall call a special
meeting of stockholders to be held at a place in San
Francisco, California specified in the request for call, at
such time as the Secretary may fix, such meeting
to be held not less than ten nor more than 60 days after the
receipt of the request, and if the Secretary shall
neglect or refuse to call the meeting, the stockholder or
stockholders making the request may do so.
SECTION 4. Notice of Meetings. Except as otherwise
provided by law or the Certificate of
Incorporation, written notice of each meeting of
stockholders shall be given not less than ten nor more
than 50 days before the date of the meeting to each
stockholder entitled to vote thereat, directed to his
address as it appears upon the books of the Corporation;
said notice to specify the place, date and hour and
purpose or purposes of the meeting. When a meeting is
adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which
the adjournment is taken unless the adjournment is for more
than thirty days, or unless after the
adjournment a new record date is fixed for the adjourned
meeting, in which event a notice of the
adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. Notice of
the time, place and purpose of any meeting of stockholders
may be waived in writing, either before or after
such meeting, and will be waived by any stockholder by his
attendance thereat in person or by proxy. Any
stockholder so waiving notice of such meeting shall be bound
by the proceedings of any such meeting in
all respects as if due notice thereof had been given.
SECTION 5. Quorum. At all meetings of stockholders, except
where otherwise provided by statute or by
the Certificate of Incorporation, or by the By-Laws, the
presence, in person or by proxy duly authorized, of
the holders of a majority of the outstanding shares of stock
entitled to vote shall constitute a quorum for
the transaction of business. Shares, the voting of which at
said meeting has been enjoined, or which for
any reason cannot be lawfully voted at such meeting shall
not be counted to determine a quorum at said
meeting. In the absence of a quorum any meeting of
stockholders may be adjourned, from time to time, by
vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted
at such meeting. At such adjourned meeting at which a quorum
is present or represented any business may
be transacted which might have been transacted at the
original meeting. The stockholders present at a
duly called or convened meeting, at which a quorum is
present, may continue to transact business until
adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. Except
as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, all action taken by the
holders of a majority of the voting power represented at any
meeting at which a quorum is present shall be
valid and binding upon the Corporation.
SECTION 6. Voting Rights. Except as otherwise provided by
law, only persons in whose names shares
entitled to vote stand on the stock records of the
Corporation on the record date for determining the
stockholders entitled to vote at said meeting shall be
entitled to vote at such meeting. Shares standing in
the names of two or more persons shall be voted or
represented in accordance with the determination of
the majority of such persons, or, if only one of such
persons is present in person or represented by proxy,
such person shall have the right to vote such shares and
such shares shall be deemed to be represented for
the purpose of determining a quorum. Every person entitled
to vote or execute consents shall have the
right to do so either in person or by an agent or agents
authorized by a written proxy executed by such
person or his duly authorized agent, which proxy shall be
filed with the Secretary of the Corporation at or
before the meeting at which it is to be used. Said proxy so
appointed need not be a stockholder. No proxy
shall be voted on after three years from its date unless the
proxy provides for a longer period.
SECTION 7. List of Stockholders. The officer who has
charge of the stock ledger of the Corporation
shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the
stockholders entitled to vote at said meeting, arranged in
alphabetical order, showing the address of and
the number of shares registered in the name of each
stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours,
for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the
meeting is to be held and which place shall be specified in
the notice of the meeting, or, if not specified, at
the place where said meeting is to be held, and the list
shall be produced and kept at the time and place of
meeting during the whole time thereof, and may be inspected
by any stockholder who is present.
SECTION 8. Action Without Meeting. Whenever the vote of
stockholders at a meeting thereof is
required or permitted to be taken in connection with any
corporate action by any provisions of the statutes
or of the Certificate of Incorporation, the meeting and vote
of stockholders may be dispensed with: (1) if
all of the stockholders who would have been entitled to vote
upon the action if such meeting were held
shall consent in writing to such corporate action being
taken; or (2) if the Certificate of Incorporation
authorizes the action to be taken with the written consent
of the holders of less than all of the stock who
would have been entitled to vote upon the action if a
meeting were held, then on the written consent of the
stockholders having not less than such percentage of the
number of votes as may be authorized in the
Certificate of Incorporation; provided that in no case shall
the written consent be by the holders of stock
having less than the minimum percentage of the vote required
by statute for the proposed corporate action,
and provided that prompt notice must be given to all
stockholders of the taking of corporate action without
a meeting and by less than unanimous written consent.
SECTION 9. Rules of Conduct. The Board of Directors of the
Company shall be entitled to make such
rules or regulations for the conduct of meetings of
stockholders as it shall deem necessary, appropriate or
convenient. Subject to such rules and regulations of the
Board of Directors, if any, the chairman of the
meeting shall have the right and authority to prescribe such
rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are
necessary, appropriate or convenient for the proper
conduct of the meeting, including, without limitation,
establishing an agenda or order of business for the
meeting, rules and procedures for maintaining order at the
meeting and the safety of those present,
limitations on participation in such meeting to stockholders
of record of the Corporation and their duly
authorized and constituted proxies, and such other persons
as the chairman shall permit, restrictions on
entry to the meeting after the time fixed for the
commencement thereof, limitations on the time allotted to
questions or comments by participants and regulation of the
opening and closing of the polls for balloting
on matters which are to be voted on by ballot. Unless, and
to the extent, determined by the Board of
Directors or the chairman of the meeting, meetings of
shareholders shall not be required to be held in
accordance with rules of parliamentary procedure.
ARTICLE III
DIRECTORS
SECTION 1. Powers. The powers of the Corporation shall be
exercised, its business conducted and its
property controlled by the Board of Directors.
SECTION 2. Number, Qualifications and Classification. (a)
A majority of the directors holding office
may by resolution increase or decrease the number of
directors, provided, however, that the number
thereof shall never be less than twelve nor greater than
fifteen. A director need not be a stockholder. The
directors shall be divided into three classes, designated
Class I, Class II and Class III, as nearly equal in
number as the then total number of directors permits. At the
1985 annual meeting of stockholders, Class I
directors shall be elected for a one-year term, Class II
directors for a two-year term and Class III directors
for a three-year term. At each succeeding annual meeting of
stockholders beginning in 1986, successors to
the class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If
the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly
equal as possible, and any additional directors
of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term
that shall coincide with the remaining term of that class,
but in no case will a decrease in the number of
directors shorten the term of any incumbent director. A
director shall hold office until the annual meeting
for the year in which his term expires and until his
successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement,
disqualification or removal from office. Any vacancy on
the Board of Directors, including any vacancy that results
from an increase in the number of directors,
may be filled by a majority of the Board of Directors then
in office, although less than a quorum, or by a
sole remaining director. Any director elected to fill a
vacancy shall have the same remaining term as that
of his predecessor.
(b) Notwithstanding the foregoing, whenever the holders of
any one or more classes or series of Preferred
Stock issued by the Corporation shall have the right, voting
separately by class or series, to elect directors
at an annual or special meeting of stockholders, the
election, term of office, filling of vacancies and other
features of such directorships shall be governed by the
terms of the Certificate of Incorporation applicable
thereto, and such directors so elected shall not be divided
into classes pursuant to these By-Laws unless
expressly provided by such terms.
(c) Any amendment, change or repeal of this Section 2 of
Article III, or any other amendment to these By-
Laws that will have the effect of permitting circumvention
of or modifying this Section 2 of Article III,
shall require the favorable vote, at a stockholders'
meeting, of the holders of at least 80\% of the then-
outstanding shares of stock of the Corporation entitled to
vote.
SECTION 3. Special Elections. If, for any cause, the Board
of Directors shall not have been elected at an
annual meeting, it may be elected as soon thereafter as is
convenient at a special meeting of the
stockholders called for that purpose in the manner provided
in these By-Laws.
SECTION 4. Vacancies. A vacancy in the Board of Directors
shall be deemed to exist in the case of the
death, resignation or removal of any director, or if the
number of directors constituting the whole Board be
increased, or if the stockholders, at any meeting of
stockholders at which directors are to be elected, fail to
elect the number of directors then constituting the whole
Board.
SECTION 5. Resignations. Any director may resign at any
time by delivering his written resignation to
the Secretary, such resignation to specify whether it will
be effective at a particular time, upon receipt by
the Secretary or at the pleasure of the Board of Directors.
If no such specification is made, it shall be
deemed effective at the pleasure of the Board of Directors.
SECTION 6. Meetings. (a) The annual meeting of the Board
of Directors shall be held not later than the
tenth day following the annual stockholders' meeting at such
time and place as the Board may determine.
No notice of the annual meeting of the Board of Directors
shall be necessary if such meeting is held
immediately after the annual stockholders' meeting and at
the place where such stockholders' meeting is
held. If the annual meeting of the Board of Directors is
held on a different date, or at a different time or
place, notice of the date, time and place of such annual
meeting of the Board of Directors shall be
furnished to each director in accordance with the procedures
of Article III, Section 6(c) of these By-Laws.
The annual meeting of the Board of Directors shall be held
for the purpose of electing officers and
transacting such other business as may lawfully come before
it.
(b) Regular meetings of the Board of Directors shall be held
at such place within or without the State of
Delaware, and at such times as the Board may from time to
time determine, and if so determined no
notice thereof need be given.
(c) Special meetings may be called at any time and place
within or without the State of Delaware upon the
call of the Chief Executive Officer or Secretary or any two
directors. Notice of the time, place and
purposes of each special meeting shall be sent by mail at
least seventy-two hours in advance of the time of
the meeting, or by telegram at least forty-eight hours in
advance of the time of the meeting, to the address
of each director. Notice of any special meeting may be
waived in writing at any time before or after the
meeting and will be waived by any director by attendance
thereat.
SECTION 7. Quorum and Voting. (a) A majority of the whole
Board of Directors shall constitute a
quorum for all purposes, provided, however, at any meeting
whether a quorum be present or otherwise, a
majority of the directors present may adjourn from time to
time and place to place, within or without the
State of Delaware, without notice other than by announcement
at the meeting.
(b) At each meeting of the Board at which a quorum is
present all questions and business shall be
determined by a vote of a majority of the directors present,
unless a different vote be required by law or by
the Certificate of Incorporation.
SECTION 8. Action Without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or
these By-Laws, any action required or permitted to be taken
at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all
members of the Board or of such committee,
as the case may be, consent thereto in writing, and such
writing or writings are filed with the minutes of
proceedings of the Board or committee.
SECTION 9. Fees and Compensation. Directors shall not
receive any stated salary for their services as
directors, but, by resolution of the Board, compensation in
a reasonable amount may be fixed by the
Board, including, without limitation, compensation in the
form of an annual retainer, a fee for each Board
or Board Committee meeting attended, reimbursement for
expenses of attendance at any such meeting, or
any combination of any of the foregoing. Nothing herein
contained shall be construed to preclude any
director from serving the Corporation in any other capacity
as an officer, agent, employee, or otherwise,
and receiving compensation therefor.
SECTION 10. Maximum Age of Directors. Directors who have
attained the age of 72 years shall be
ineligible to stand for election or re-election as a
director. Except as may otherwise be determined by the
Board of Directors, a director who has attained the age of
72 years whose term as a director continues
beyond the annual meeting of shareholders next following
attainment of 72 years shall retire and resign as
a director at the first directors' meeting following such
annual meeting of shareholders. Unless otherwise
determined by the Board of Directors in accordance with the
preceding sentence, for this purpose such
resignation will be automatic and need not meet the
requirements for resignation set forth in Section 5 of
this Article III.
SECTION 11. Nominations of Persons for Election to the
Board of Directors. Only persons who are
nominated in accordance with the following procedures shall
be eligible for election as directors.
Nominations of persons for election to the Board of
Directors of the Corporation may be made at a
meeting of stockholders by or at the direction of the Board
of Directors, by any nominating committee or
person appointed by the Board of Directors or by any
stockholder of the Corporation who is entitled to
vote for the election of directors at the meeting and who
complies with the notice procedures set forth in
this Section 11. Such nominations, other than those made by
or at the direction of the Board of Directors,
shall be made pursuant to timely notice in writing to the
Secretary, Consolidated Freightways, Inc. To be
timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices
of the Corporation not less than 30 days nor more than 60
days prior to the meeting; provided, however,
that in the event that less than 40 days' notice or prior
public disclosure of the date of the meeting is given
or made to stockholders, notice by the stockholder, to be
timely, must be so received not later than the
close of business on the 10th day following the day on which
such notice of the date of the meeting was
mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person
whom the stockholder proposes to nominate for election or re-
election as a director, (i) the name, age,
business address and residence address of the person, (ii)
the principal occupation or employment of the
person, (iii) the class and number of shares of the
Corporation that are beneficially owned by the person
and (iv) any other information relating to the person that
is required to be disclosed in solicitations for
proxies for election of directors pursuant to Regulation 14a
under the Securities Exchange Act of 1934;
and (b) as to the stockholder giving the notice, (i) the
name and record address of the stockholder and (ii)
the class and number of shares of the Corporation that are
beneficially owned by the stockholder. A signed
written consent of each proposed nominee to serve as a
director of the Corporation shall be appended to
the stockholder's notice. The Corporation may require any
proposed nominee to furnish any other
information that may reasonably be required by the
Corporation to determine the qualifications of such
proposed nominee to serve as a director of the Corporation.
No person shall be eligible for election as a
director of the Corporation unless nominated in accordance
with the procedures set forth herein. These
provisions shall not apply to nomination of any persons
entitled to be separately elected by holders of
Preferred Stock.
The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a
nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he
shall so declare to the meeting and the defective nomination
shall be disregarded.
ARTICLE IV
OFFICERS AND COMMITTEES
SECTION 1. Officers Designated. The executive officers of
the Corporation shall be chosen by the Board
of Directors and shall be the Chairman of the Board, the
President, one or more Vice Presidents, the
Secretary, one or more Assistant Secretaries, the Treasurer,
one or more Assistant Treasurers, and such
other executive officers as the Board of Directors from time
to time may designate. The Board of Directors
shall designate either the Chairman of the Board or the
President as the Chief Executive Officer of the
Corporation. The officer so designated shall have charge of
the actual conduct and operation of the
business of the Corporation, subject to the control and
direction of the Board of Directors. The Chief
Executive Officer shall, with the consent of the Board of
Directors, assign such additional titles to Vice
Presidents as he shall deem appropriate and designate the
succession of officers to act in his stead in his
absence or disability. He may appoint additional Vice
Presidents who shall not, however, be executive
officers. He shall assign all duties not otherwise specified
by these By-Laws to all officers and employees
of the Corporation.
SECTION 2. Election, Qualification, Tenure of Office, and
Duties of Executive Officers and Other
Officers. (a) At the annual meeting of the Board of
Directors following their election by the stockholders,
the directors shall elect all executive officers of the
Corporation. Any one person may hold any number of
offices of the Corporation at any one time unless
specifically prohibited therefrom by law. The Chairman
of the Board shall be a director but no other officer need
be a director.
(b) Each executive officer shall hold office from the date
of his election either until the date of his
voluntary resignation, or death, or until the next annual
meeting of the Board of Directors and until a
successor shall have been duly elected and qualified,
whichever shall first occur; provided that any such
officer may be removed by the Board of Directors whenever in
its judgment the best interest of the
Corporation will be served thereby, and the Board may elect
another in the place and stead of the person
so removed.
(c) Chairman of the Board: The Chairman of the Board shall
preside at all meetings of the stockholders,
of the Board of Directors, and of the Executive Committee.
He shall have the responsibility of keeping the
directors informed on all policy matters, and shall have
such other powers and perform such other duties
as may be prescribed by the Board.
(d) President: The President shall, in the absence of the
Chairman of the Board preside at all meetings of
the stockholders, the Board of Directors and the Executive
Committee. He shall exercise all of the powers
and discharge all of the other duties of the Chairman of the
Board in the absence of the Chairman of the
Board. He shall perform such other duties as may be
prescribed by the Chairman of the Board.
(e) Vice Presidents: The Vice Presidents shall have such
duties and have such other powers as shall be
prescribed by the Chief Executive Officer. Such Vice
President as may be designated by the Board of
Directors or the Chairman of the Board shall preside at all
meetings of the stockholders.
(f) Secretary: The Secretary shall record all the
proceedings of the meetings of the Corporation and of the
directors in a book or books kept for that purpose. He shall
attend to the giving and serving of all notices
on behalf of the Corporation. He shall have the custody of
the corporate seal and affix the same to such
instruments as may be required. He shall have such other
powers and perform such other duties as may be
prescribed by the Chief Executive Officer.
(g) Assistant Secretaries: Assistant Secretaries shall
assist the Secretary in the performance of his duties
and any one of the Assistant Secretaries may perform all of
the duties of the Secretary if at any time he
shall be unable to act. Assistant Secretaries shall have
such other powers and perform such other duties as
may be prescribed by the Chief Executive Officer.
(h) Treasurer: The Treasurer shall have charge of the
custody, control and disposition of all funds of the
Corporation and shall account for same. He shall have such
other powers and perform such other duties as
may be prescribed by the Chief Executive Officer.
(i) Assistant Treasurers: Assistant Treasurers shall assist
the Treasurer in the performance of his duties
and any one of the Assistant Treasurers may perform all of
the duties of the Treasurer if at any time he
shall be unable to act. Assistant Treasurers shall have such
other powers and perform such other duties as
may be prescribed by the Chief Executive Officer.
SECTION 3. Committees. (a) Executive Committee. The Board
of Directors shall, by resolution passed
by a majority of the whole Board, appoint an Executive
Committee of not less than three members, all of
whom shall be directors. The Executive Committee, to the
extent permitted by law, shall have and may
exercise when the Board of Directors is not in session all
powers of the Board in the management of the
business and affairs of the Corporation and may authorize
the seal of the Corporation to be affixed to all
papers which may require it. It shall be the duty of the
Secretary of the Corporation to record the minutes
of all actions of the Executive Committee.
(b) Other Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board,
from time to time appoint such other committees as may be
permitted by law. The Chief Executive Officer
may appoint such other committees as he finds necessary to
the conduct of the Corporation's business.
Such other committees appointed by the Board of Directors or
the Chief Executive Officer shall have such
powers and perform such duties as may be prescribed by the
body or person appointing such committee.
(c) The members of all committees of the Board of Directors
shall serve a term co-existent with that of the
Board of Directors which shall have appointed such
committee. The Board, subject to the provisions of
sub-section (a) or (b) of this Section 3 may at any time
increase or decrease the number of members of a
committee or terminate the existence of a committee;
provided, that no committee shall consist of less
than three members. The membership of a committee member
shall terminate on the date of his death or
voluntary resignation, but the Board may at any time for any
reason remove any individual committee
member and the Board may fill any committee vacancy created
by death, resignation, removal or increase
in the number of members of the committee. The Board of
Directors may designate one or more directors
as alternate members of any committee, who may replace any
absent or disqualified member at any
meeting of the committee. In the absence or disqualification
of any member of a committee, the member
or members thereof present at any meeting and not
disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the
meeting in the place of any such absent or disqualified
member.
ARTICLE V
CAPITAL STOCK
SECTION 1. Form and Execution of Certificates.
Certificates for the shares of stock of the Corporation
shall be in such form as are consistent with the Certificate
of Incorporation and applicable law. Every
holder of stock in the Corporation shall be entitled to have
a certificate signed by, or in the name of the
Corporation by, the Chairman of the Board, President or any
Vice President and by the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary,
certifying the number of shares owned by him
in the Corporation. Where such certificate is countersigned
by a transfer agent other than the Corporation
or its employee, or by a registrar other than the
Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent,
or registrar before such certificate is issued, it may be
issued by the Corporation with the same effect as if
he were such officer, transfer agent, or registrar at the
date of issue.
SECTION 2. Lost Certificates. The Board of Directors may
direct a new certificate or certificates to be
issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been
lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of
stock to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of
such lost or destroyed certificate or certificates, or his
legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation
with respect to the certificate alleged to have
been lost or destroyed.
SECTION 3. Transfers. Transfers of record of shares of the
capital stock of the Corporation shall be
made upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the
surrender of a certificate or certificates for a like number
of shares, properly endorsed or accompanied by a
properly endorsed stock power.
SECTION 4. Fixing Record Dates. In order that the
Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled
to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may
fix, in advance, a record date, which shall not be more than
sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other
action. If no record date is fixed: (1) the record
date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at
the close of business on the day next preceding the day on
which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on
which the meeting is held; and (2) the record
date for determining stockholders for any other purpose
shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of
record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned
meeting.
SECTION 5. Registered Stockholders. The Corporation shall
be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner,
and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on
the part of any other person, whether or not it shall have
express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VI
OTHER SECURITIES OF THE CORPORATION
All bonds, debentures and other corporate securities of the
Corporation, other than stock certificates, may
be signed by the Chairman of the Board, the President or any
Vice President, or such other person as may
be authorized by the Board of Directors, and the corporate
seal impressed thereon or a facsimile of such
seal imprinted thereon and attested by the signature of the
Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer, or such other person as
may be authorized by the Board of Directors;
provided, however, that where any such bond, debenture or
other corporate security shall be authenticated
by the manual signature of a trustee under an indenture
pursuant to which such bond, debenture or other
corporate securities shall be issued, the signatures of the
persons signing and attesting the corporate seal
on such bond, debenture or other corporate security may be
the imprinted facsimile of the signatures of
such persons. Interest coupons appertaining to any such
bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or an Assistant Treasurer of the
Corporation, or such other person as may be authorized by
the Board of Directors, or bear imprinted
thereon the facsimile signature of such person. In case any
person who shall have signed or attested any
bond, debenture or other corporate security, or whose
facsimile signature shall appear thereon or on any
such interest coupon, shall have ceased to be an officer
before the bond, debenture or other corporate
security so signed or attested shall have been delivered,
such bond, debenture or other corporate security
nevertheless may be adopted by the Corporation and issued
and delivered as though the person who signed
the same or whose facsimile signature shall have been used
thereon had not ceased to be such officer of
the Corporation.
ARTICLE VII
SECURITIES OWNED BY THE CORPORATION
Power to Vote. Unless otherwise ordered by the Board of
Directors, the Chief Executive Officer, or any
officer designated in writing by the Chief Executive
Officer, shall have full power and authority in the
name and on behalf of the Corporation, to vote and to act
either in person or by proxy at any meeting of
the holders of stock or securities in any corporation upon
and in respect of any securities therein which the
Corporation may hold, and shall possess and may exercise in
the name of the Corporation any and all
rights and powers incident to the ownership of such stock or
securities which, as the owner thereof, the
Corporation shall possess and might exercise including the
right to give written consents in respect to
action taken or to be taken. The Board of Directors may from
time to time confer like powers upon any
other person or persons.
ARTICLE VIII
CORPORATE SEAL
The corporate seal shall consist of a die bearing the
inscription, ``Consolidated Freightways, Inc.--
Corporate Seal--Delaware.''
ARTICLE IX
AMENDMENTS
These By-Laws may be repealed, altered or amended or new By-
Laws adopted by written consent of
stockholders in the manner authorized by Section 8 of
Article II or at any meeting of the stockholders,
either annual or special, by the affirmative vote of a
majority of the stock entitled to vote at such meeting.
The Board of Directors shall also have the authority to
repeal, alter or amend these By-Laws or adopt new
By-Laws by unanimous written consent or by the affirmative
vote of a majority of the whole Board at any
annual, regular, or special meeting subject to the power of
the stockholders to change or repeal such By-
Laws.
ARTICLE X
MISCELLANEOUS
SECTION 1. Definitions. As used in these By-Laws and
wherever the context shall require, the word
``person'' shall include associations, partnerships and
corporations as well as individuals; words in the
masculine gender shall include the feminine and
associations, partnerships and corporations; words in the
singular shall include the plural and words in the plural
may mean only the singular, and words
``additional compensation'' shall mean and include all
bonus, profit sharing, retirement, deferred
compensation, and all other additional compensation plans or
arrangements affecting persons individually
or as a group.
SECTION 2. Notices. Whenever, under any provisions of
these By-Laws, notice is required to be given
to any stockholder, the same shall be given in writing,
timely and duly deposited in the United States
Mail, postage prepaid, and addressed to his last known post
office address as shown by the stock record of
the Corporation or its transfer agent. Any notice required
to be given to any director may be given by the
method hereinabove stated, by personal delivery, or by
telegram, except that such notice, other than one
which is delivered personally, shall be sent to such address
as such director shall have filed in writing
with the Secretary of the Corporation, or, in the absence of
such filing, to the last known post office
address of such director. If no address of a stockholder or
director be known, such notice may be sent to
the principal office of the Corporation. An affidavit of
mailing, executed by a duly authorized and
competent employee of the Corporation or its transfer agent
appointed with respect to the class of stock
affected, specifying the name and address or the names and
addresses of the stockholder or stockholders,
director or directors, to whom any such notice or notices
was or were given, and the time and method of
giving the same, shall be conclusive evidence of the
statements therein contained. All notices given by
mail, as above provided, shall be deemed to have been given
as at the time of mailing and all notices
given by telegram shall be deemed to have been given as at
the sending time recorded by the telegraph
company transmitting the same. It shall not be necessary
that the same method of giving be employed in
respect of all directors, but one permissible method may be
employed in respect of any one or more, and
any other permissible method or methods may be employed in
respect of any other or others.
The period or limitation of time within which any
stockholder may exercise any option or right, or enjoy
any privilege or benefit, or be required to act, or within
which any directors may exercise any power or
right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be
affected or extended in any manner by the failure of such
stockholder or such director to receive such
notice. Whenever any notice is required to be given under
the provisions of the statutes or of the
Certificate of Incorporation, or of these By-Laws, a waiver
thereof in writing signed by the person or
persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent
thereto. Whenever notice is required to be given, under any
provision of law or of the Certificate of
Incorporation or By-Laws of the Corporation, to any person
with whom communication is unlawful, the
giving of such notice to such person shall not be required
and there shall be no duty to apply to any
governmental authority or agency for a license or permit to
give such notice to such person. Any action or
meeting which shall be taken or held without notice to any
such person with whom communication is
unlawful shall have the same force and effect as if such
notice had been duly given. In the event that the
action taken by the Corporation is such as to require the
filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall
state, if such is the fact and if notice is required,
that notice was given to all persons entitled to receive
notice except such persons with whom
communication is unlawful.
SECTION 3. Indemnification of Officers, Directors,
Employees and Agents. (a) Right to Indemnification.
Each person who was or is made a party or is threatened to
be made a party to or is involved in any
threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a ``Proceeding''), by reason of
the fact that he, or a person of whom he is the
legal representative, is or was a director, officer,
employee, or agent of the Corporation or is or was
serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation
or of a partnership, joint venture, trust, or other
enterprise, including service with respect to employee
benefit plans, whether the basis of the Proceeding is
alleged action in an official capacity as a director,
officer, employee, or agent or in any other capacity while
serving as a director, officer, employee, or agent,
shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment
permits the Corporation to provide broader
indemnification rights than were permitted prior to
amendment) against all expenses, liability, and loss
(including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties, and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such
person in connection therewith; provided,
however, that except as to actions to enforce
indemnification rights pursuant to paragraph (c) of this
Section, the Corporation shall indemnify any such person
seeking indemnification in connection with a
Proceeding (or part thereof) initiated by such person only
if the Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The
right to indemnification conferred in this
Article shall be a contract right for the benefit of the
Corporation's directors, officers, employees, and
agents.
(b) Authority to Advance Expenses. Expenses incurred
(including attorneys' fees) by an officer or director
(acting in his capacity as such) in defending a Proceeding
shall be paid by the Corporation in advance of
the final disposition of such Proceeding, provided, however,
that if required by the Delaware General
Corporation Law, as amended, such expenses shall be advanced
only upon delivery to the Corporation of
an undertaking by or on behalf of such director or officer
to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article or
otherwise. Such expenses incurred by other employees or
agents of the Corporation (or by the directors or
officers not acting in their capacity as such, including
service with respect to employee benefit plans) may
be advanced upon such terms and conditions as the Board of
Directors deems appropriate.
(c) Right of Claimant to Bring Suit. If a claim under
paragraph (a) or (b) of this Section is not paid in full
by the Corporation within sixty days after a written claim
has been received by the Corporation, the
claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the
claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense
(including attorneys' fees) of prosecuting such claim. It
shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred
in defending a Proceeding in advance of its
final disposition where the required undertaking has been
tendered to the Corporation) that the claimant
has not met the standards of conduct that make it
permissible under the Delaware General Corporation
Law for the Corporation to indemnify the claimant for the
amount claimed. The burden of proving such a
defense shall be on the Corporation. Neither the failure of
the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders)
to have made a determination prior to the
commencement of such action that indemnification of the
claimant is proper under the circumstances
because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law,
nor an actual determination by the Corporation (including
its Board of Directors, independent legal
counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a
defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.
(d) Provisions Nonexclusive. The rights conferred on any
person by this Section shall not be exclusive of
any other rights that such person may have or hereafter
acquire under any statute, provision of the
Certificate of Incorporation, By-Law, agreement, vote of
stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as
to action in another capacity while holding such
office.
(e) Authority to Insure. The Corporation may purchase and
maintain insurance to protect itself and any
person who is or was a director, officer, employee, or agent
of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee,
or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any
liability, expense, or loss asserted against or incurred
by such person, whether or not the Corporation would have
the power to indemnify him against such
liability, expense, or loss under applicable law or the
provisions of this Article.
(f) Survival of Rights. The rights provided by this Section
shall continue as to a person who has ceased to
be a director, officer, employee, or agent and shall inure
to the benefit of the heirs, executors, and
administrators of such a person.
(g) Effect of Amendment. Any amendment, repeal, or
modification of this Section shall not (a) adversely
affect any right or protection of any director, officer,
employee, or agent existing at the time of such
amendment, repeal, or modification, or (b) apply to the
indemnification of any such person for liability,
expense, or loss stemming from actions or omissions
occurring prior to such amendment, repeal, or
modification.
CERTIFICATE
The undersigned,Secretary of CONSOLIDATED FREIGHTWAYS, INC.,
does hereby certify that the
foregoing is a true and correct copy of the By-Laws of
CONSOLIDATED FREIGHTWAYS, INC., as
amended to date hereof.
In witness whereof the undersigned has hereunto set her hand
and affixed the seal of said corporation this
26th day of September, 1994 .
/s/Marlya R. Boonstoppel
Vice President and
Secretary of Consolidated Freightways, Inc.
CONSOLIDATED FREIGHTWAYS, INC.
INCORPORATED IN DELAWARE AUGUST 13, 1958
UNDER THE CORPORATE NAME OF
CONSOLIDATED FREIGHTWAYS COMPANY
BY-LAWS
As Amended September 26, 1994
PAGE 1
EXHIBIT 10.20
-------------
CONSOLIDATED FREIGHTWAYS, INC.
------------------------------
1995 Director's Election Form
-----------------------------
Indicate amount of deferral under (A), timing of deferral under (B),
or select (C) if no deferral is elected.
In the event I earn any Consolidated Freightways, Inc. director's fees
in 1995, I hereby elect to defer payment of such fees and any interest
equivalent as follows:
A. ( ) To defer annual retainer and all meeting fees and chair fees,
if applicable.
( ) To defer the annual retainer portion of such fees.
B. ( ) To be paid in the year following the year in which I cease to
be a director of Consolidated Freightways, Inc.
( ) To be paid in equal annual installments for _____ year(s) but
not to exceed five (5) years, commencing in the year following
the year in which I cease to be a director of Consolidated
Freightways, Inc.
( ) To be paid in the year following _____ year(s) (insert 1 or
any multiple of years) after the year in which fees are
deferred (but in no event later than the year following the
year I cease to be a director of Consolidated Freightways, Inc.).
( ) To be paid in equal annual installments for _____ year(s) but
not to exceed five (5) years, commencing in the year following
_______ year(s) (insert 1 or any multiple of years) after the
year in which fees are deferred (but in no event later than
the year I cease to be a director of Consolidated Freightways,
Inc.).
I understand that payment of any amount deferred hereunder will be
made by January 31st of the year in which such payment is to be made. I
further understand that any amount deferred will be credited with interest
equivalents at the end of each calendar quarter following the date of
deferral and continuing until such deferred amount is paid to me. Interest
equivalents shall be calculated at the published Bank of America NT & SA
prime rate as of the date credited and shall be paid on prior interest
equivalents credited on amounts deferred. I also understand that no trust
is created hereby and that in the event of my death, any amounts unpaid
shall be paid to my designated beneficiary in a lump sum.
I designate as my beneficiary ________________________________________
C. ( ) I do not elect to defer payments of any fees earned in 1995.
________________________ ________________________
Date of this Election Signature of Director
Exhibit 10.22
CONSOLIDATED FREIGHTWAYS, INC.
EXECUTIVE INCENTIVE PLAN FOR 1995
THE PLAN
In order to motivate certain of its employees more effectively and
efficiently, Consolidated Freightways, Inc. (CF, Inc.) establishes an
Incentive Plan (Plan) under which payments will be made to eligible
executive personnel out of calendar year 1995 Incentive Profits.
DESIGNATION OF PARTICIPANTS
Participants in this Plan shall be all full-time executive personnel
of CF, Inc. A master list of all Plan participants will be maintained
in the office of the Chief Executive Officer of CF, Inc.
ELIGIBILITY FOR PAYMENT
Participants will commence participation at the beginning of the first
full calendar quarter following becoming eligible. Calendar quarters
begin January 1, April 1, July 1, and October 1 or the first working
day thereafter. An employee who commences participation in the 1995
Plan during the 1995 Plan year, and who participates less than four
full quarters, will receive a pro rata payment based on the number of
full calendar quarters of Plan participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently (i) employed by
Consolidated Freightways, Inc. or any of its subsidiaries and (ii)
a Plan participant.
EXCEPTION 1. A Plan participant who is employed by CF, Inc. or
any of its subsidiaries through December 31, 1995 but leaves that
employment or otherwise becomes ineligible after December 31, 1995
but before the final payment is made relating to 1995, unless
terminated for cause, shall be entitled to receive payments under
this Plan resulting from 1995 Incentive Profits.
EXCEPTION 2. An appropriate pro rata payment will be made (1) to
a Plan participant who retires prior to December 31, 1995 pursuant
to the Consolidated Freightways, Inc. Retirement Plan or to the
provisions of the Social Security Act and who, at the time of
retirement, was an eligible participant in this Plan, (2) to the
heirs, legatees, administrators or executors of a Plan participant
who dies prior to December 31, 1995 and who, at the time of death,
was an eligible participant in this Plan, (3) to an eligible Plan
participant who is placed on an approved Medical, Sabbatical, or
Military Leave of Absence prior to December 31, 1995, or (4) to an
eligible Plan participant who is transferred to another subsidiary
of CF, Inc. and who remains an employee through December 31, 1995.
METHOD OF PAYMENT
Each Plan participant will be assigned an incentive participation
factor as a percent of Annual Salary. The Incentive Participation
Factor will be allocated 70% to the assigned profit goal and 30% to
the assigned Return on Capital Employed Goal (ROCE).
Incentive compensation for the assigned goals will be earned on a pro rata
basis for accomplishments between the Minimum level and the Incentive Factor
Goal. Once incentive earnings exceed the Incentive Factor Goal,
incentive compensation will be earned ratably at 70% of the previous
level.
No incentive will be earned by a participant until CF, Inc. has
achieved its Minimum Profit Goal.
PERSONAL DATA SHEET
A "Personal Data Sheet" for calculation of incentive earnings will be
prepared for each Plan participant which designates (1) the unit to
which the participant is assigned, (2) his assigned incentive
participation factor, (3) the minimum level of achievement required
for each assigned goal, (4) the incentive factor level of achievement
for each assigned goal, and (5) the incentive earnings at the
incentive factor level for each assigned goal.
DATE OF PAYMENT
The Chief Executive Officer of CF, Inc. may authorize a partial
payment of the estimated annual earned incentive, in December, 1995.
The final payment to eligible participants, less any previous partial
payment, will be made on or before March 15, 1996.
INCENTIVE PROFIT
Incentive Profit is defined as the earnings of CF, Inc. before
deducting any amounts expensed under any CF, Inc. and qualified LJSC
incentive plans and before deducting income taxes.
ANNUAL COMPENSATION
Annual Compensation for incentive purposes for each Plan participant
is his annualized salary before any incentive or other special
compensation as of the first pay period following the date the
participant becomes eligible to participate in this Plan. The term
"special compensation" used herein does not include deferred salary
arrangements wherein the participant could have chosen to receive the
deferred salary in the Plan year.
MAXIMUM PAYMENT
Payments under this Plan are limited to double each participant's
Participation Factor.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is
prohibited by law.
AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN
The Board of Directors of CF, Inc. may at any time amend, suspend, or
terminate the operation of this Plan, by thirty-day written notice to
the Plan participants, and will have full discretion as to the
administration and interpretation of this Plan. No participant in
this Plan shall at any time have any right to receive any payment
under this Plan until such time, if any, as any payment is actually
made.
DURATION OF PLAN
This Plan is for the calendar year 1995 only.
Exhibit 10.23
CF MOTORFREIGHT
INCENTIVE PLAN FOR 1995
THE PLAN
In order to motivate certain employees of CF MotorFreight (CFMF) more
effectively and efficiently, Consolidated Freightways Corporation of
Delaware (CFCD) establishes an Incentive Plan (Plan) under which
payments will be made to eligible supervisory, managerial and regular
full-time nonsalaried, noncontractual personnel out of calendar year
1995 Incentive Profits.
DESIGNATION OF PARTICIPANTS
Participants in the Plan shall be all full-time supervisory,
managerial and regular nonsalaried, noncontractual personnel of CFMF.
A master list of Plan participants will be maintained in the office of
the President of CFCD.
ELIGIBILITY FOR PARTICIPATION
Participants will commence participation at the beginning of the first
full calendar quarter following becoming eligible. Calendar quarters
begin January 1, April 1, July 1, and October 1 or the first working
day thereafter. An employee who commences participation in the 1995
Plan during the 1995 Plan year, and who participates less than four
full quarters, will receive a pro rata payment based on the number of
full calendar quarters of Plan participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently (i) employed by CFCD or
any of its subsidiaries and (ii) a Plan participant.
EXCEPTION 1. A Plan participant who is employed by CFCD or any of
its subsidiaries through December 31, 1995 but leaves that
employment or otherwise becomes ineligible after December 31,
1995, unless terminated for cause, shall be entitled to receive
payments under this Plan resulting from 1995 Incentive Profits.
EXCEPTION 2. An appropriate pro rata payment will be made (1) to
a Plan participant who retires prior to December 31, 1995 pursuant
to the Consolidated Freightways, Inc. Retirement Plan or to the
provisions of either the Social Security Act or the Old Age
Security Acts (of Canada), as applicable, and who, at the time of
retirement, was an eligible participant in this Plan, (2) to the
heirs, legatees, administrators or executors of a Plan participant
who dies prior to December 31, 1995 and who, at the time of death,
was an eligible participant in this Plan, (3) to an eligible Plan
participant who is placed on an approved Medical, Sabbatical, or
Military Leave of Absence prior to December 31, 1995, or (4) to an
eligible Plan participant who is transferred to another subsidiary
of Consolidated Freightways, Inc. and who remains an employee
through December 31, 1995.
METHOD OF PAYMENT
Each participant will be assigned an incentive Profit Sharing
Percentage (PSP) as a percent of profit earnings within range - Entry
to Factor. Participants will have their PSP based on CFMF Incentive
Profit.
Incentive compensation for the assigned profit goals will be earned on
a pro rata basis for accomplishments between the Minimum Level and the
Incentive Factor Goal. Once incentive earnings exceed the Incentive
Factor Goal, a participant's PSP will be increased by 47.88% and
incentive will be earned pro rata to the Maximum Profit Goal.
No incentive will be earned by a participant until CFMF has achieved
its Minimum Profit Goal.
PERSONAL DATA SHEET
A "Personal Data Sheet" for calculation of incentive earnings will be
prepared for each Plan participant which designates (1) the unit to
which the participant is assigned, (2) his profit-sharing percentage,
(3) the minimum level of achievement required for the profit goal, (4)
the incentive factor level of achievement for the profit goal, and (5)
the incentive earnings at the incentive factor level for the profit
goal.
DATE OF PAYMENT
The President of CFCD may authorize a partial payment of the estimated
annual earned incentive, in December 1995. The final payment to
eligible participants, less any previous partial payment, will be made
on or before March 15, 1996.
INCENTIVE PROFIT
Incentive Profit is defined as the operating earnings of CF
MotorFreight before deducting any amounts expensed under this or any
similar incentive or bonus plan, before deducting interest expense and
other non-operating expenses, before adding interest income, and
before deducting income taxes.
ANNUAL COMPENSATION
Annual Compensation for incentive purposes for each Plan participant
is his annualized salary or hourly base pay before any incentive,
overtime, shift premium, or other special compensation as of the first
pay period following the date the participant becomes eligible to
participate in this Plan.
MAXIMUM PAYMENT
Payments under this Plan are limited to each participant's profit
sharing percentage applied to earnings between minimum profit goal and
the maximum profit goal.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is prohi-
bited by law.
AMENDMENT, SUSPENSION AND ADMINISTRATION OF PLAN
The Board of Directors of CFCD may at any time amend, suspend, or
terminate the operation of this Plan, by thirty-day written notice to
the Plan participants, and will have full discretion as to the
administration and interpretation of this Plan. No participant in
this Plan shall at any time have any right to receive any payment
under this Plan until such time, if any, as any payment is actually
made.
DURATION OF PLAN
This Plan is for the calendar year 1995 only.
Exhibit 10.24
CON-WAY TRANSPORTATION SERVICES, INC.
INCENTIVE PLAN FOR 1995
THE PLAN
In order to motivate certain of its employees more effectively and
efficiently, Con-Way Transportation Services, Inc. (CTS) establishes
an Incentive Plan (Plan) under which payments will be made to
eligible supervisory, managerial, and regular full-time nonsalaried
personnel out of calendar year 1995 Incentive Profits.
DESIGNATION OF PARTICIPANTS
Participants in the Plan shall be all full-time supervisory,
managerial and regular nonsalaried personnel of CTS Administration.
A master list of all Plan participants will be maintained in the
office of the President of CTS.
ELIGIBILITY FOR PARTICIPATION
Participants will commence participation at the beginning of the
first full calendar quarter following becoming eligible. Calendar
quarters begin January 1, April 1, July 1, and October 1 or the
first working day thereafter. An employee who commences
participation in the 1995 Plan during the 1995 Plan year, and who
participates less than four full quarters, will receive a pro rata
payment based on the number of full calendar quarters of Plan
participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently (i) employed by CTS or
any of its subsidiaries and (ii) a Plan participant.
EXCEPTION 1. A Plan participant who is employed by CTS or any
of its subsidiaries through December 31, 1995 but leaves that
employment or otherwise becomes ineligible after December 31,
1995 but before the final payment is made relating to 1995,
unless terminated for cause, shall be entitled to receive
payments under this Plan resulting from 1995 Incentive Profits.
EXCEPTION 2. An appropriate pro rata payment will be made (1)
to a Plan participant who retires prior to December 31, 1995
pursuant to the Consolidated Freightways, Inc. Retirement Plan
or to the provisions of the Social Security Act and who, at the
time of retirement, was an eligible participant in this Plan,
(2) to the heirs, legatees, administrators or executors of a
Plan participant who dies prior to December 31, 1995 and who, at
the time of death, was an eligible participant in this Plan, (3)
to an eligible Plan participant who is placed on an approved
Medical, Sabbatical, or Military Leave of Absence prior to
December 31, 1995, or (4) to an eligible Plan participant who is
transferred to another subsidiary of Consolidated Freightways,
Inc. and who remains an employee through December 31, 1995.
METHOD OF PAYMENT
Each Plan participant will be assigned an incentive participation
factor as a percent of Annual Compensation in accordance with the
enclosed Personal Data Sheet.
Incentive for assigned goals will be earned on a pro rata basis for
accomplishment between the Minimum level and the Incentive Factor
Goal. Incentive earnings over the Incentive Factor Goal will
continue to earn at the same pro rata relationship that exists
between minimum level and factor goal.
No incentive will be earned by a participant until CTS has achieved
its Minimum Profit Goal.
PERSONAL DATA SHEET
A "Personal Data Sheet" for calculation of incentive earnings will
be prepared for each Plan participant which designates (1) the unit
to which the participant is assigned, (2) his assigned incentive par
ticipation factor, (3) the minimum level of achievement required for
the profit goal, (4) the incentive factor level of achievement for
the profit goal, and (5) the incentive earnings at the incentive
factor level for the profit goal.
DATE OF PAYMENT
The President of CTS may authorize a partial payment of the
estimated annual earned incentive, in December 1995. The final
payment to eligible participants, less any previous partial payment,
will be made on or before March 15, 1996.
INCENTIVE PROFIT
Incentive profit is defined as the consolidated earnings of all of
the companies comprising CTS, before deducting any amounts expensed
under this or any similar incentive or bonus plan and before
deducting income taxes and excluding interest income and expense.
ANNUAL COMPENSATION
Annual Compensation for incentive purposes for each Plan participant
is his annualized salary or hourly base pay before any incentive,
overtime, or other special compensation as of the first pay period
following the date the participant becomes eligible to participate
in this Plan.
MAXIMUM PAYMENT
Payments under this Plan are limited to double each participant's
Participation Factor.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is
prohibited by law.
AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN
The Board of Directors of CTS may at any time amend, suspend, or
terminate the operation of this Plan, by thirty-day written notice
to the Plan participants, and will have full discretion as to the
administration and interpretation of this Plan. No participant in
this Plan shall at any time have any right to receive any payment
under this Plan until such time, if any, as the payment is
actually made.
DURATION OF PLAN
This Plan is for the calendar year 1995 only.
Exhibit 10.25
EMERY WORLDWIDE
INCENTIVE PLAN FOR 1995
THE PLAN
In order to motivate certain employees more effectively and
efficiently, Emery Worldwide (EWW) establishes an Incentive Plan
(Plan) under which payments will be made to designated participants
out of calendar year 1995 Incentive Profits.
DESIGNATION OF PARTICIPANTS
Participants in the Plan shall be all supervisory, managerial, and
regular full-time and part-time non-contractual (time-sheet) personnel
of EWW. A master list of Plan participants will be maintained in the
office of the President of EWW.
ELIGIBILITY FOR PARTICIPATION
Participants will commence participation at the beginning of the first
full calendar quarter following becoming eligible. Calendar quarters
begin January 1, April 1, July 1 and October 1 or the first working
day thereafter. An employee who commences participation in the 1995
Plan during the 1995 Plan year, and who participates less than four
full quarters, will receive a pro rata payment based on the number of
full calendar quarters of Plan participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently (i) employed by EWW or any
of its subsidiaries and (ii) a Plan participant.
EXCEPTION 1. A Plan participant who is employed by EWW through
December 31, 1995 but leaves that employment or otherwise becomes
ineligible after December 31, 1995 but before the final payment is
made relating to 1995, unless terminated for cause, is entitled to
receive payments under this Plan resulting from 1995 Incentive
Profits.
EXCEPTION 2. An appropriate pro rata payment will be made (1) to
a Plan participant who retires prior to December 31, 1995 pursuant
to the Consolidated Freightways, Inc. Retirement Plan, The
Purolator Courier Corporation Hourly Employee Pension Plan or to
the provisions of the Social Security Act and who, at the time of
retirement, was an eligible participant in this Plan, (ii) to the
heirs, legatees, administrators or executors of a Plan participant
who dies prior to December 31, 1995 and who, at the time of death,
was an eligible participant in this Plan, (iii) to an eligible
Plan participant who is placed on approved Medical, Sabbatical, or
Military Leave of Absence prior to December 31, 1995, or (iv) to
an eligible Plan participant who is transferred to another
subsidiary of Consolidated Freightways, Inc. and who remains an
employee through December 31, 1995.
METHOD OF PAYMENT
Each Plan participant will be assigned an incentive participation
factor as a percent of annual compensation. The President of Emery
will assign each Plan participant to an operating unit (terminal,
division, total company, etc.) to earn incentive. The participation
factor may be further indexed to specific performance goals such as
revenue, profit, service, etc.
Incentive compensation will be paid from an ICP pool earned ratably
between the Minimum and Incentive Factor Profit Goals and will continue
to be earned ratably over the Incentive Factor Goal. Incentive Factor
Plan Goals and minimum levels of accomplishment will be established for
all performance goals.
No incentive will be earned by a participant until their terminal or
appropriate unit meets the entry level for the various Performance
Goals established.
Actual incentive payout is subject to the ICP pool. Incentive
Compensation will be adjusted proportionately to the amount in the ICP
pool, thus actual system incentive payout can never surpass the
percent of accomplishment for system profit. There is a maximum
percent of accomplishment for any performance goal of 200%.
PERSONAL DATA SHEET
A "Personal Data Sheet" for calculation of incentive earnings will be
prepared for each Plan participant which designates (1) the unit to
which the participant is assigned, (2) his assigned incentive par-
ticipation factor and the allocation of that factor to specific
Performance Goals, (3) the minimum level of achievement required for
each assigned goal, (4) the incentive factor level of achievement for
each assigned goal, and (5) the incentive earnings at the incentive
factor level for each assigned goal.
DATE OF PAYMENT
The President of EWW may authorize a partial payment of the estimated
annual earned incentive, in December 1995. The final payment to
eligible participants, less any previous partial payment, will be made
on or before March 15, 1996.
INCENTIVE PROFIT
Incentive Profit is defined as the earnings of Emery Worldwide, Emery
Custom Brokers, and Emery Worldwide Airlines before deducting any
amounts expensed under this or any similar incentive or bonus plan and
before deducting income taxes and excluding interest income and
expense.
ANNUAL COMPENSATION
Annual Compensation for incentive purposes for each Plan participant
is his annual earnings for 1995 before any incentive or bonus payments
earned during the period of Plan participation eligibility.
MAXIMUM PAYMENT
Payments under this plan are limited to double each participant's
Participation Factor.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is
prohibited by law.
AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN
The Board of Directors of EWW may at any time amend, suspend, or
terminate the operation of this Plan, by thirty-day written notice to
the Plan participants, and will have full discretion as to the
administration and interpretation of this Plan. No participant in
this Plan shall at any time have any right to receive any payment
under this Plan until such time, if any, as any payment is actually
made.
DURATION OF PLAN
This Plan is for the calendar year 1995 only.
Exhibit 10.26
LELAND JAMES SERVICE CORPORATION - CFI
EXECUTIVE INCENTIVE PLAN FOR 1995
THE PLAN
In order to motivate certain employees of Leland James Service
Corporation (LJSC) more effectively and efficiently, Consolidated
Freightways, Inc. (CF, Inc.) establishes an Incentive Plan (Plan)
under which payments will be made to eligible executive personnel of
LJSC out of calendar year 1995 Incentive Profits.
DESIGNATION OF PARTICIPANTS
Participants in this Plan shall be all full-time executive personnel
of LJSC. A master list of all Plan participants will be maintained in
the office of the President of LJSC.
ELIGIBILITY FOR PAYMENT
Participants will commence participation at the beginning of the first
full calendar quarter following becoming eligible. Calendar quarters
begin January 1, April 1, July 1, and October 1 or the first working
day thereafter. An employee who commences participation in the 1995
Plan during the 1995 Plan year, and who participates less than four
full quarters, will receive a pro rata payment based on the number of
full calendar quarters of Plan participation.
Subject to the following exceptions, no person shall receive any
payment under this Plan unless on the date that the payment is
actually made that person is then currently (i) employed by
LJSC and (ii) a Plan participant.
EXCEPTION 1. A Plan participant who is employed by LJSC through
December 31, 1995 but leaves that employment or otherwise becomes
ineligible after December 31, 1995 but before the final payment is
made relating to 1995, unless terminated for cause, shall be
entitled to receive payments under this Plan resulting from 1995
Incentive Profits.
EXCEPTION 2. An appropriate pro rata payment will be made (1) to
a Plan participant who retires prior to December 31, 1995 pursuant
to the Consolidated Freightways, Inc. Retirement Plan or to the
provisions of the Social Security Act and who, at the time of
retirement, was an eligible participant in this Plan, (2) to the
heirs, legatees, administrators or executors of a Plan participant
who dies prior to December 31, 1995 and who, at the time of death,
was an eligible participant in this Plan, (3) to an eligible Plan
participant who is placed on an approved Medical, Sabbatical, or
Military Leave of Absence prior to December 31, 1995, or (4) to an
eligible Plan participant who is transferred to another subsidiary
of CF, Inc. and who remains an employee through December 31, 1995.
METHOD OF PAYMENT
Each Plan participant will be assigned an incentive participation
factor as a percent of Annual Salary. The Incentive Participation
Factor will be allocated 70% to the assigned profit goal and 30% to
the assigned Return on Capital Employed Goal (ROCE).
Incentive compensation for the assigned goals will be earned on a pro rata
basis for accomplishments between the Minimum level and the Incentive
Factor Goal. Once incentive earnings exceed the Incentive Factor Goal,
incentive compensation will be earned ratably at 70% of the previous level.
No incentive will be earned by a participant until CF, Inc. has
achieved its Minimum Profit Goal.
PERSONAL DATA SHEET
A "Personal Data Sheet" for calculation of incentive earnings will be
prepared for each Plan participant which designates (1) the unit to
which the participant is assigned, (2) his assigned incentive
participation factor, (3) the minimum level of achievement required
for each assigned goal, (4) the incentive factor level of achievement
for each assigned goal, and (5) the incentive earnings at the
incentive factor level for each assigned goal.
DATE OF PAYMENT
The President of LJSC may authorize a partial payment of the estimated
annual earned incentive, in December, 1995. The final payment to
eligible participants, less any previous partial payment, will be made
on or before March 15, 1996.
INCENTIVE PROFIT
Incentive Profit is defined as the earnings of CF, Inc. before
deducting any amounts expensed under any CF, Inc. and qualified LJSC
incentive plans and before deducting income taxes.
ANNUAL COMPENSATION
Annual Compensation for incentive purposes for each Plan participant
is his annualized salary before any incentive or other special
compensation as of the first pay period following the date the
participant becomes eligible to participate in this Plan. The term
"special compensation" used herein does not include deferred salary
arrangements wherein the participant could have chosen to receive the
deferred salary in the Plan year.
MAXIMUM PAYMENT
Payments under this Plan are limited to double each participant's
Participation Factor.
LAWS GOVERNING PAYMENTS
No payment shall be made under this Plan in an amount which is
prohibited by law.
AMENDMENT, SUSPENSION, AND ADMINISTRATION OF PLAN
The Board of Directors of CF, Inc. may at any time amend, suspend, or
terminate the operation of this Plan, by thirty-day written notice to
the Plan participants, and will have full discretion as to the
administration and interpretation of this Plan. No participant in
this Plan shall at any time have any right to receive any payment
under this Plan until such time, if any, as any payment is actually
made.
DURATION OF PLAN
This Plan is for the calendar year 1995 only.
EXHIBIT 10.27
$300,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
January 10, 1995
among
Consolidated Freightways, Inc.
The Banks Listed Herein
ABN-AMRO Bank, N.V.,
Bank of America National Trust and Savings Association,
The First National Bank of Chicago
and
Morgan Guaranty Trust Company of New York,
as LC Issuing Banks
ABN-AMRO Bank, N.V.,
Bank of America National Trust and Savings Association
and
The First National Bank of Chicago,
as Co-Agents
and
Morgan Guaranty Trust Company of New York,
as Agent
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. 1
SECTION 1.02. Accounting Terms and
Determinations. 16
SECTION 1.03. Types of Borrowings 17
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. 17
SECTION 2.02. Notice of Committed Borrowing. 18
SECTION 2.03. Money Market Borrowings. 19
SECTION 2.04. Notice to Banks; Funding of Loans 23
SECTION 2.05. Notes. 24
SECTION 2.06. Maturity of Loans. 25
SECTION 2.07. Interest Rates. 25
SECTION 2.08. Fees. 29
SECTION 2.09. Optional Termination or Reduction
of Commitments. 29
SECTION 2.10. Mandatory Termination of
Commitments. 30
SECTION 2.11. Optional Prepayments. 30
SECTION 2.12. General Provisions as to Payments.
30
SECTION 2.13. Funding Losses. 31
SECTION 2.14. Computation of Interest and Fees.
31
SECTION 2.15. Letters of Credit. 32
SECTION 2.16. Maximum Interest Rate. 39
ARTICLE III
CONDITIONS
SECTION 3.01. Conditions to Effectiveness. 39
SECTION 3.02. Consequence of Effectiveness. 40
SECTION 3.03. Credit Extensions. 41
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power. 42
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention 42
SECTION 4.03. Binding Effect 42
SECTION 4.04. Financial Information. 42
SECTION 4.05. Litigation. 43
SECTION 4.06. Compliance with ERISA. 43
SECTION 4.07. Environmental Matters. 44
SECTION 4.08. Taxes. 44
SECTION 4.09. Subsidiaries. 45
SECTION 4.10. Not an Investment Company. 45
SECTION 4.11. Full Disclosure. 45
ARTICLE V
COVENANTS
SECTION 5.01. Information. 45
SECTION 5.02. Payment of Obligations. 48
SECTION 5.03. Maintenance of Property;
Insurance. 48
SECTION 5.04. Conduct of Business and Maintenance
of Existence. 49
SECTION 5.05. Compliance with Laws. 49
SECTION 5.06. Inspection of Property, Books and
Records. 49
SECTION 5.07. Debt. 50
SECTION 5.08. Minimum Consolidated Tangible Net
Worth. 50
SECTION 5.09. Negative Pledge 50
SECTION 5.10. Consolidations, Mergers and Sales
of Assets. 52
SECTION 5.11. Use of Proceeds. 53
SECTION 5.12. Fixed Charge Coverage. 53
SECTION 5.13. Transactions with Third Party
Affiliates and Emery
Subsidiaries. 53
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. 54
SECTION 6.02. Notice of Default. 57
SECTION 6.03. Cash Cover. 57
ARTICLE VII
THE AGENT AND THE CO-AGENTS
SECTION 7.01. Appointment and Authorization. 57
SECTION 7.02. Agent and Affiliates. 57
SECTION 7.03. Action by Agent. 58
SECTION 7.04. Consultation with Experts. 58
SECTION 7.05. Liability of Agent. 58
SECTION 7.06. Indemnification. 58
SECTION 7.07. Credit Decision. 59
SECTION 7.08. Successor Agent. 59
SECTION 7.09. Agent's Fee. 59
SECTION 7.10. Co-Agents. 59
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. 60
SECTION 8.02. Illegality. 60
SECTION 8.03. Increased Cost and Reduced Return. 61
SECTION 8.04. Taxes. 63
SECTION 8.05. Base Rate Loans Substituted for
Affected Fixed Rate Loans. 65
SECTION 8.06. Substitution of Banks 65
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. 66
SECTION 9.02. No Waivers. 67
SECTION 9.03. Expenses; Indemnification. 67
SECTION 9.04. Sharing of Set-Offs. 68
SECTION 9.05. Amendments and Waivers. 69
SECTION 9.06. Successors and Assigns. 69
SECTION 9.07. Collateral. 71
SECTION 9.08. Governing Law; Submission to
Jurisdiction. 71
SECTION 9.09. Counterparts; Integration. 71
SECTION 9.10. WAIVER OF JURY TRIAL. 72
SECTION 9.11. Confidentiality. 72
AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of January 10, 1995 among
CONSOLIDATED FREIGHTWAYS, INC., the BANKS listed on the
signature pages hereof, ABN-AMRO BANK, N.V., BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, THE FIRST NATIONAL
BANK OF CHICAGO and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as LC Issuing Banks, ABN-AMRO BANK, N.V., BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION and THE FIRST
NATIONAL BANK OF CHICAGO, as Co-Agents, and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Agent.
WHEREAS, the Borrower, the banks referred to
therein and Morgan Guaranty Trust Company of New York, as
Agent for such banks, are parties to a Credit Agreement
dated as of July 30, 1993 under which both loans and letters
of credit are available to the Borrower on the terms and
conditions provided therein;
WHEREAS, the parties hereto desire to amend and
restate said Credit Agreement as provided in this Agreement
and, upon satisfaction of the conditions specified in
Section 3.01, said Credit Agreement will be so amended and
restated;
WHEREAS, in order to induce the Banks, the LC
Issuing Banks, the Co-Agents and the Agent to enter into
this Agreement, certain Subsidiaries of the Borrower are
willing to guaranty the obligations of the Borrower under
this Agreement and the Notes issued pursuant hereto; and
WHEREAS, the Banks are willing to make loans to
the Borrower and the LC Issuing Banks are willing to issue
letters of credit at the request of the Borrower on the
terms and conditions provided herein;
NOW, THEREFORE, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms,
as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute
Rates pursuant to Section 2.03.
"Adjusted CD Rate" has the meaning set forth in
Section 2.07(b).
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.07(c).
"Administrative Questionnaire" means, with respect
to each Bank, an administrative questionnaire in the form
prepared by the Agent and submitted to the Agent (with a
copy to the Borrower) duly completed by such Bank.
"Agent" means Morgan Guaranty Trust Company of New
York in its capacity as agent for the Banks and the LC
Issuing Banks under the Financing Documents, and its
successors in such capacity.
"Aggregate Usage" means, at any time, the sum of
(i) the aggregate outstanding principal amount of the Loans
at such time plus (ii) the aggregate outstanding amount of
the LC Liabilities at such time.
"Agreement", when used with reference to this
Agreement, means this Amended and Restated Credit Agreement
dated as of January 10, 1995, as it may be amended from time
to time.
"Applicable Lending Office" means, with respect to
any Bank, (i) in the case of its Domestic Loans, its
Domestic Lending Office, (ii) in the case of its Euro-Dollar
Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"Assessment Rate" has the meaning set forth in
Section 2.07(b).
"Assignee" has the meaning set forth in Section
9.06(c).
"Bank" means each bank listed on the signature
pages hereof, each Assignee which becomes a Bank pursuant to
Section 9.06(c), and their respective successors.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate for such day and
(ii) the sum of 1/2 of 1% plus the Federal Funds Rate for
such day.
"Base Rate Loan" means a Committed Loan to be made
by a Bank as a Base Rate Loan in accordance with the
applicable Notice of Committed Borrowing or pursuant to
Article VIII.
"Base Rate Margin" means a rate per annum
determined in accordance with the Pricing Schedule.
"Benefit Arrangement" means at any time an
employee benefit plan within the meaning of Section 3(3) of
ERISA which is not a Plan or a Multiemployer Plan and which
is maintained or otherwise contributed to by any member of
the ERISA Group.
"Borrower" means Consolidated Freightways, Inc., a
Delaware corporation, and its successors.
"Borrowing" has the meaning set forth in Section
1.03.
"CD Base Rate" has the meaning set forth in
Section 2.07(b).
"CD Loan" means a Committed Loan to be made by a
Bank as a CD Loan in accordance with the applicable Notice
of Committed Borrowing.
"CD Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
"CD Reference Banks" means Bank of America
National Trust and Savings Association, The First National
Bank of Chicago and Morgan Guaranty Trust Company of New
York.
"Co-Agents" means ABN-AMRO Bank, N.V., Bank of
America National Trust and Savings Association and The First
National Bank of Chicago, in their capacities as co-agents
hereunder.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the
signature pages hereof, as such amount may be reduced from
time to time pursuant to Section 2.09.
"Committed Loan" means a loan made by a Bank
pursuant to Section 2.01.
"Consolidated Debt" means at any date the Debt of
the Borrower and its Consolidated Subsidiaries, determined
on a consolidated basis as of such date.
"Consolidated EBITDAR" means, for any period, the
sum of (i) the consolidated income before income taxes of
the Borrower and its Consolidated Subsidiaries for such
period plus (ii) to the extent deducted in determining such
consolidated income before income taxes, the sum of (A)
Consolidated Interest Expense, (B) depreciation and
amortization and (C) Consolidated Rental Expense.
"Consolidated Fixed Charges" means, for any
period, the sum of Consolidated Interest Expense and
Consolidated Rental Expense for such period.
"Consolidated Interest Expense" means, for any
period, the interest expense of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated
basis for such period.
"Consolidated Rental Expense" means, for any
period, the rental expense for operating leases of the
Borrower and its Consolidated Subsidiaries determined on a
consolidated basis for such period.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Borrower in its consolidated
financial statements if such statements were prepared as of
such date.
"Consolidated Tangible Net Worth" means at any
date the consolidated shareholders' equity of the Borrower
and its Consolidated Subsidiaries less their consolidated
Intangible Assets, all determined as of such date. For
purposes of this definition, "Intangible Assets" means the
amount (to the extent reflected in determining such
consolidated shareholders' equity) of (i) all write-ups
(other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern
business made within twelve months after the acquisition of
such business) subsequent to September 30, 1994 in the book
value of any asset owned by the Borrower or a Consolidated
Subsidiary, (ii) all equity investments in Persons which are
not Subsidiaries (except investments in publicly traded
marketable equity securities) and (iii) all unamortized debt
discount and expense, goodwill, patents, trademarks, service
marks, trade names, copyrights, organization or
developmental expenses and other intangible assets (it being
understood that unamortized deferred charges and deferred
income tax assets are not deemed to be intangible assets for
purposes hereof).
"Credit Extension" means the making of a Loan or
the issuance or extension of a Letter of Credit.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all
obligations of such Person as lessee which are capitalized
in accordance with generally accepted accounting principles,
(v) all obligations of such Person to reimburse banks for
drawings under letters of credit or payments with respect to
bankers' acceptances, which obligations remain unpaid for
more than three Domestic Business Days after they become
due, or, if later, after such Person is notified of the due
date thereof, (vi) all obligations of the types referred to
in clauses (i) to (v), inclusive, of this definition which
are secured by a Lien on any asset of such Person, whether
or not such obligations are otherwise obligations of such
Person, and (vii) all obligations of others of the types
referred to in clauses (i) to (v), inclusive, of this
definition which are Guaranteed by such Person.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in
New York City are authorized by law to close; provided that,
when used in Section 2.15 with reference to any LC Issuing
Bank, the term "Domestic Business Day" shall not include any
day on which commercial banks are authorized to close in the
jurisdiction where the LC Office of such LC Issuing Bank is
located.
"Domestic Lending Office" means, as to each Bank,
its office located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as
its Domestic Lending Office by notice to the Borrower and
the Agent; provided that any Bank may so designate separate
Domestic Lending Offices for its Base Rate Loans, on the one
hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such
Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate
Loans or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.07(b).
"Effective Date" means the date this Agreement
becomes effective in accordance with Section 3.01.
"Emery Group" means Emery Air Freight Corporation,
a Delaware corporation, Emery Worldwide Airlines, Inc., a
Nevada corporation, and each Subsidiary directly or
indirectly owned by either of such corporations.
"Emery Subsidiary" means any Subsidiary which is
included in the Emery Group.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental
restrictions relating to the environment, the effect of the
environment on human health or to emissions, discharges or
releases of pollutants, contaminants, Hazardous Substances
or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport
or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation
thereof.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary
and all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section
414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
international business (including dealings in dollar
deposits) in London.
"Euro-Dollar Lending Office" means, as to
each Bank, its office, branch or affiliate located at
its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or
affiliate of such Bank as it may hereafter designate as its
Euro-Dollar Lending Office by notice to the Borrower and the
Agent.
"Euro-Dollar Loan" means a Committed Loan to be
made by a Bank as a Euro-Dollar Loan in accordance with the
applicable Notice of Committed Borrowing.
"Euro-Dollar Margin" means a rate per annum
determined in accordance with the Pricing Schedule.
"Euro-Dollar Reference Banks" means the principal
London offices of ABN-AMRO Bank, N.V., The First National
Bank of Chicago and Morgan Guaranty Trust Company of New
York.
"Euro-Dollar Reserve Percentage" has the meaning
set forth in Section 2.07(c).
"Event of Default" has the meaning set forth in
Section 6.01.
"Existing Agreement" means the Credit Agreement
dated as of July 30, 1993 among the Borrower, the banks
referred to therein, and Morgan Guaranty Trust Company of
New York, as Agent, as in effect from time to time prior to
the Effective Date.
"Existing Bank" means a "Bank" (as such term is
defined in the Existing Agreement) that is a party to the
Existing Agreement immediately prior to the Effective Date.
"Existing Letters of Credit" means the letters of
credit issued on or before the Effective Date and listed in
Exhibit K hereto.
"Federal Funds Rate" means, for any day, the rate
per annum (rounded upward, if necessary, to the nearest
1/100 of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business
Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions
as determined by the Agent.
"Financing Documents" means this Agreement, the
Subsidiary Guaranty Agreement and the Notes.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or Money Market Loans (excluding Money Market LIBOR
Loans bearing interest at the Base Rate pursuant to Section
8.01(a)) or any combination of the foregoing.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt of any other Person and,
without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such
Debt of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has
a corresponding meaning.
"Hazardous Substances" means any toxic,
radioactive, caustic or otherwise hazardous substance,
including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section
9.03(b).
"Insignificant Subsidiaries" means Subsidiaries
which, if aggregated and considered as a single Subsidiary,
would not have total assets, shareholders' equity or
revenues in excess of 10% of the consolidated total assets,
consolidated shareholders' equity or consolidated revenues,
respectively, of the Borrower and its Consolidated
Subsidiaries, all calculated at the date of the most recent
financial statements delivered to the Banks pursuant to
Section 5.01 or, in the case of revenues, for the twelve
calendar months then ended.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of
such Borrowing and ending one, two, three or six months
thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
(2) with respect to each CD Borrowing, the period
commencing on the date of such Borrowing and ending 30, 60,
90 or 180 days thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date;
(4) with respect to each Money Market LIBOR Borrowing, the
period commencing on the date of such Borrowing and ending
one week, two weeks, three weeks or any whole number of
months thereafter, as the Borrower may elect in accordance
with Section 2.03; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall, subject to clause (c) below, end on the
last Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date; and
(5) with respect to each Money Market Absolute Rate
Borrowing, the period commencing on the date of such
Borrowing and ending such number of days thereafter (but not
less than seven days) as the Borrower may elect in
accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business
Day; and
(b) any Interest Period which would otherwise end
after the Termination Date shall end on the Termination
Date.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Investment" means any investment in any Person,
whether by means of share purchase, capital contribution,
loan or otherwise.
"LC Issuing Bank" means ABN-AMRO Bank, N.V., Bank
of America National Trust and Savings Association, The First
National Bank of Chicago and Morgan Guaranty Trust Company
of New York, in their capacities as issuers of Letters of
Credit.
"LC Liabilities" means, at any time, the sum,
without duplication, of (i) the aggregate amount available
for drawing under all Letters of Credit outstanding at such
time plus (ii) the aggregate unpaid amount at such time of
all Reimbursement Obligations in respect of previous
drawings made under Letters of Credit.
"LC Office" means, with respect to each LC Issuing
Bank, the office at which it books the Letters of Credit
issued by it hereunder.
"LC Payment Date" has the meaning set forth in
Section 2.15(f).
"LC Reimbursement Date" means, with respect to any
Letter of Credit, an LC Payment Date applicable to such
Letter of Credit, or, if later, the Domestic Business Day
next succeeding the Domestic Business Day on which the Agent
shall have notified the Borrower of such LC Payment Date and
of the amount payable by the LC Issuing Bank under such
Letter of Credit on such LC Payment Date.
"Letter of Credit" means (i) any Existing Letter
of Credit and (ii) any financial stand-by letter of credit
(including without limitation a Workers' Compensation Letter
of Credit) issued hereunder after the Effective Date.
"LIBOR Auction" means a solicitation of Money
Market Quotes setting forth Money Market Margins based on
the London Interbank Offered Rate pursuant to Section 2.03.
"Lien" means (i) with respect to any asset
(including without limitation any account receivable), any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, or any other type of preferential
arrangement that has the practical effect of creating a
security interest, in respect of such asset and (ii) with
respect to any account receivable, any sale of such account
receivable. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed (x) to own
subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement relating to such asset and (y) not to
own subject to a Lien any asset which it leases under a
lease that is classified as an operating lease under
generally accepted accounting principles.
"Loan" means a Domestic Loan, a Euro-Dollar Loan
or a Money Market Loan and "Loans" means Domestic Loans,
Euro-Dollar Loans or Money Market Loans or any combination
of the foregoing.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.07(c).
"Material Commitments" means commitments to extend
credit which, if extended, would constitute Debt of the
Borrower and/or one or more of its Subsidiaries in an
aggregate amount exceeding $25,000,000. For purposes of
this definition, any commitment for less than $1,000,000
shall be excluded, but commitments arising from one or more
related or unrelated transactions shall be aggregated if
each such commitment is for $1,000,000 or more.
"Material Debt" means Debt (other than the Notes)
of the Borrower and/or one or more of its Subsidiaries in an
aggregate outstanding principal amount exceeding
$25,000,000. For purposes of this definition, if the Debt
arising from any single transaction has an outstanding
principal amount less than $1,000,000, it shall be excluded,
but Debts arising from one or more related or unrelated
transactions shall be aggregated if the Debt arising from
each such transaction has an outstanding principal amount of
$1,000,000 or more.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of
$25,000,000.
"Money Market Absolute Rate" has the meaning set
forth in Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan to
be made by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each
Bank, its Domestic Lending Office or such other office,
branch or affiliate of such Bank as it may hereafter
designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from
time to time by notice to the Borrower and the Agent
designate separate Money Market Lending Offices for its
Money Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which case
all references herein to the Money Market Lending Office of
such Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made
by a Bank pursuant to a LIBOR Auction (including such a loan
bearing interest at the Base Rate pursuant to Section
8.01(a)).
"Money Market Loan" means a Money Market LIBOR
Loan or a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in
Section 2.03(d).
"Money Market Quote" means an offer by a Bank to
make a Money Market Loan in accordance with Section 2.03.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section
4001(a)(3) of ERISA to which any member of the ERISA Group
is then making or accruing an obligation to make
contributions or has within the preceding five plan years
made contributions, including for these purposes any Person
which ceased to be a member of the ERISA Group during such
five year period.
"Non-Emery Subsidiary" means any Subsidiary that
is not an Emery Subsidiary.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Loans, and
"Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Committed
Borrowing (as defined in Section 2.02) or a Notice of Money
Market Borrowing (as defined in Section 2.03(f)).
"Obligor" means each of the Borrower and the
Subsidiary Guarantors, and "Obligors" means all of the
foregoing.
"Outstanding Credit Exposure" means, as to any
Bank at any time, the sum of (i) the aggregate principal
amount of its Loans outstanding at such time plus (ii) its
Outstanding LC Exposure at such time.
"Outstanding LC Exposure" means, as to any Bank at
any time, an amount equal to its Percentage of the LC
Liabilities at such time.
"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in Section
9.06(b).
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Percentage" means, with respect to each Bank, the
percentage that such Bank's Commitment constitutes of the
aggregate amount of the Commitments.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension
benefit plan (other than a Multiemployer Plan) which is
covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Internal Revenue
Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the
ERISA Group or (ii) has at any time within the preceding
five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of
the ERISA Group.
"Pricing Schedule" means the Pricing Schedule
attached hereto.
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in
New York City from time to time as its Prime Rate.
"Reference Banks" means the CD Reference Banks or
the Euro-Dollar Reference Banks, as the context may require,
and "Reference Bank" means any one of such Reference Banks.
"Refunding Borrowing" means a Committed Borrowing
which, after application of the proceeds thereof, results in
no net increase in the outstanding principal amount of
Committed Loans made by any Bank.
"Reimbursement Obligations" means, at any time,
the aggregate of all obligations of the Borrower then
outstanding under Section 2.15 to reimburse an LC Issuing
Bank for amounts paid by such LC Issuing Bank in respect of
any drawing under any Letter of Credit.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Required Banks" means at any time Banks having at
least 60% of the aggregate amount of the Commitments or, if
the Commitments shall have been terminated, having at least
60% of the aggregate amount of the Outstanding Credit
Exposures.
"Subsidiary" means any corporation or other entity
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are
at the time directly or indirectly owned by the Borrower.
"Subsidiary Guarantors" means Consolidated
Freightways Corporation of Delaware, a Delaware corporation,
Con-Way Transportation Services, Inc., a Delaware
corporation, and each other Subsidiary which becomes a party
to the Subsidiary Guaranty Agreement pursuant to Article III
thereof, and their respective successors.
"Subsidiary Guaranty Agreement" means a Subsidiary
Guaranty Agreement among the Borrower, the Subsidiary
Guarantors and the Agent, as executed and delivered pursuant
to Section 3.01(c) and as the same may be amended from time
to time in accordance with the terms thereof.
"TASP Notes" means (i) $55,000,000 aggregate
principal amount of the 8.50% Series A Guaranteed ESOP Notes
due January 1, 2006 and $62,000,000 aggregate principal
amount of the 8.62% Series B Guaranteed ESOP Notes due
January 1, 2009, each issued pursuant to separate Note
Agreements, each dated as of July 17, 1989, among
Consolidated Freightways, Inc. Thrift and Stock Ownership
Trust ("TASP"), the Borrower and certain institutional
investors and (ii) $33,000,000 aggregate principal amount of
the 9.00% Restructured Notes due January 1, 2006, issued
under separate Restructured Note Agreements, each dated as
of November 3, 1992, among TASP, the Borrower and certain
institutional investors.
"Taxes" has the meaning set forth in Section
8.04(a).
"Termination Date" means January 10, 1999, or any
later date to which the Termination Date shall have been
postponed pursuant to Section 2.01(b), or, if any such day
is not a Euro-Dollar Business Day, the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case the
Termination Date shall be the next preceding Euro-Dollar
Business Day.
"Third Party Affiliate" means (i) any Person that
directly, or indirectly through one or more intermediaries,
controls the Borrower (a "Controlling Person") or (ii) any
Person (other than the Borrower or a Subsidiary) which is
controlled by or is under common control with a Controlling
Person. As used herein, the term "control" means
possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities,
by contract or otherwise.
"Unfunded Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the value
of all benefit liabilities under such Plan, determined on a
plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii)
the fair market value of all Plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued
but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the
extent that such excess represents a potential liability of
a member of the ERISA Group to the PBGC or any other Person
under Title IV of ERISA.
"United States" means the United States of
America, including the States and the District of Columbia,
but excluding its territories and possessions.
"Wholly-Owned Subsidiary" means any Subsidiary all
of the shares of capital stock or other ownership interests
of which (except directors' qualifying shares) are at the
time directly or indirectly owned by the Borrower.
"Workers' Compensation Letter of Credit" means
any letter of credit which is used to secure obligations of
the Borrower or its Subsidiaries under workers' compensation
or similar laws.
SECTION 1.02. Accounting Terms and
Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder
shall be prepared in accordance with generally accepted
accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred
in by the Borrower's independent public accountants) with
the most recent audited consolidated financial statements of
the Borrower and its Consolidated Subsidiaries delivered to
the Banks; provided that, if the Borrower notifies the Agent
that the Borrower wishes to amend any covenant in Article V
to eliminate the effect of any change in generally accepted
accounting principles on the operation of such covenant (or
if the Agent notifies the Borrower that the Required Banks
wish to amend Article V for such purpose), then the
Borrower's compliance with such covenant shall be determined
on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally
accepted accounting principles became effective, until
either such notice is withdrawn or such covenant is amended
in a manner satisfactory to the Borrower and the Required
Banks.
SECTION 1.03. Types of Borrowings. The term
"Borrowing" denotes the aggregation of Loans of one or more
Banks to be made to the Borrower pursuant to Article II on a
single date and for a single Interest Period. Borrowings
are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing
(e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans) or by reference to the provisions of
Article II under which participation therein is determined
(i.e., a "Committed Borrowing" is a Borrowing under Section
2.01 in which all Banks participate in proportion to their
Commitments, while a "Money Market Borrowing" is a Borrowing
under Section 2.03 in which the Bank participants are
determined on the basis of their bids in accordance
therewith).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. (a) Each
Bank severally agrees, on the terms and conditions set forth
in this Agreement, to make loans to the Borrower pursuant to
this Section from time to time prior to the Termination
Date; provided that, immediately after each such Loan is
made, the sum of (i) the aggregate outstanding principal
amount of all Committed Loans made by such Bank plus (ii)
its Outstanding LC Exposure shall not exceed its Commitment.
Each Borrowing pursuant to this Section shall be in an
aggregate principal amount of $10,000,000 or any larger
integral multiple of $1,000,000 (except that any such
Borrowing may be in the aggregate amount available in
accordance with Section 3.03(b)) and shall be made from the
several Banks ratably in accordance with their respective
Percentages. Within the foregoing limits, the Borrower may
borrow, repay, or to the extent permitted by Section 2.11,
prepay Loans and reborrow at any time prior to the
Termination Date.
(b) The Termination Date may be postponed, in the
manner and subject to the conditions set forth in this
subsection (b), on January 10, 1996 (the "Extension Date"),
for a period of one year (i.e., to January 10, 2000). If
the Borrower wishes to request a postponement of the
Termination Date on the Extension Date, it shall give
written notice to that effect to the Agent not less than 45
nor more than 90 days prior to the Extension Date, whereupon
the Agent shall notify each of the Banks, LC Issuing Banks
and Co-Agents of such notice. Each of the Banks, LC Issuing
Banks and Co-Agents will use its best efforts to respond to
such request, whether affirmatively or negatively, within 30
days. If all of the Banks, LC Issuing Banks and Co-Agents
respond affirmatively, then, subject to receipt by the Agent
prior to the Extension Date of instruments substantially in
the form of Exhibit H hereto signed by each of the Banks, LC
Issuing Banks and Co-Agents, respectively, and by the
Borrower and the Agent, the Termination Date shall be
postponed, effective on the Extension Date, for a period of
one year. Unless all of the Banks, LC Issuing Banks and Co-
Agents respond affirmatively within 30 days, the Borrower's
request to postpone the Termination Date shall be deemed to
have been denied.
SECTION 2.02. Notice of Committed Borrowing. The
Borrower shall give the Agent notice (a "Notice of Committed
Borrowing") not later than (x) 12:00 Noon (New York City
time) on the date of each Base Rate Borrowing, (y) 1:00 P.M.
(New York City time) on the second Domestic Business Day
before each CD Borrowing and (z) 1:00 P.M. (New York City
time) on the third Euro-Dollar Business Day before each
Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic
Borrowing or a Euro-Dollar Business Day in the case of
a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing
are to be CD Loans, Base Rate Loans or Euro-Dollar
Loans, and
(d) in the case of a Fixed Rate Borrowing, the
duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest
Period;
provided that the Borrower may not deliver a Notice of
Committed Borrowing if after giving effect to the requested
Borrowing there would be more than ten Committed Fixed Rate
Borrowings outstanding.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to
Committed Borrowings pursuant to Section 2.01, the Borrower
may, as set forth in this Section, request the Banks to make
offers to make Money Market Loans to the Borrower on any day
prior to the Termination Date. The Banks may, but shall
have no obligation to, make such offers and the Borrower
may, but shall have no obligation to, accept any such offers
in the manner set forth in this Section.
(b) Money Market Quote Request. When the
Borrower wishes to request offers to make Money Market Loans
under this Section, it shall transmit to the Agent by telex
or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit B hereto so as to be
received no later than (x) 1:00 P.M. (New York City time) on
the fifth Euro-Dollar Business Day prior to the date of
Borrowing proposed therein, in the case of a LIBOR Auction
or (y) 11:30 A.M. (New York City time) on the Domestic
Business Day next preceding the date of Borrowing proposed
therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the
Agent shall have mutually agreed and shall have notified to
the Banks not later than the date of the Money Market Quote
Request for the first LIBOR Auction or Absolute Rate Auction
for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall
be a Euro-Dollar Business Day in the case of a LIBOR
Auction or a Domestic Business Day in the case of an
Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which
shall be $10,000,000 or a larger integral multiple of
$1,000,000,
(iii) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of Interest Period, and
(iv) whether the Money Market Quotes requested are
to set forth a Money Market Margin or a Money Market
Absolute Rate.
The Borrower may request offers to make Money Market Loans
for more than one Interest Period in a single Money Market
Quote Request. No Money Market Quote Request shall be given
within five Euro-Dollar Business Days (or such other number
of days as the Borrower and the Agent may agree) of any
other Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly
upon receipt of a Money Market Quote Request, the Agent
shall send to the Banks by telex or facsimile transmission
an Invitation for Money Market Quotes substantially in the
form of Exhibit C hereto, which shall constitute an
invitation by the Borrower to each Bank to submit Money
Market Quotes offering to make the Money Market Loans to
which such Money Market Quote Request relates in accordance
with this Section.
(d) Submission and Contents of Money Market
Quotes. (i) Each Bank may submit a Money Market Quote
containing an offer or offers to make Money Market Loans in
response to any Invitation for Money Market Quotes. Each
Money Market Quote must comply with the requirements of this
subsection (d) and must be submitted to the Agent by telex
or facsimile transmission at its offices specified in or
pursuant to Section 9.01 not later than (x) 2:00 P.M. (New
York City time) on the fourth Euro-Dollar Business Day prior
to the proposed date of Borrowing, in the case of a LIBOR
Auction or (y) 10:15 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective); provided that Money Market Quotes submitted by
the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the
Agent or such affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x)
one hour prior to the deadline for the other Banks, in the
case of a LIBOR Auction or (y) 15 minutes prior to the
deadline for the other Banks, in the case of an Absolute
Rate Auction. Subject to Articles III and VI, any Money
Market Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of
the Borrower.
(ii) Each Money Market Quote shall be in
substantially the form of Exhibit D hereto and shall in any
case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan
for which each such offer is being made, which
principal amount (w) may be greater than or less than
the Commitment of the quoting Bank, (x) must be
$5,000,000 or a larger integral multiple of $1,000,000,
(y) may not exceed the principal amount of Money Market
Loans for which offers were requested and (z) may be
subject to an aggregate limitation as to the principal
amount of Money Market Loans for which offers being
made by such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin
above or below the applicable London Interbank Offered
Rate (the "Money Market Margin") offered for each such
Money Market Loan, expressed as a percentage (specified
to the nearest 1/10,000 of 1%) to be added to or
subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the
rate of interest per annum (specified to the nearest
1/10,000 of 1%) (the "Money Market Absolute Rate")
offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate
offers by the quoting Bank with respect to each Interest
Period specified in the related Invitation for Money Market
Quotes.
(iii) Any Money Market Quote shall be disregarded
if it:
(A) is not substantially in conformity with
Exhibit D hereto or does not specify all of the
information required by subsection (d)(ii);
(B) contains qualifying, conditional or similar
language;
(C) proposes terms other than or in addition to
those set forth in the applicable Invitation for Money
Market Quotes; or
(D) arrives after the time set forth in
subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly
notify the Borrower of the terms (x) of any Money Market
Quote submitted by a Bank that is in accordance with
subsection (d) and (y) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a
previous Money Market Quote submitted by such Bank with
respect to the same Money Market Quote Request. Any such
subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money
Market Quote. The Agent's notice to the Borrower shall
specify (A) the aggregate principal amount of Money Market
Loans for which offers have been received for each Interest
Period specified in the related Money Market Quote Request,
(B) the respective principal amounts and Money Market
Margins or Money Market Absolute Rates, as the case may be,
so offered and (C) if applicable, limitations on the
aggregate principal amount of Money Market Loans for which
offers in any single Money Market Quote may be accepted.
(f) Acceptance and Notice by Borrower. Not later
than 11:30 A.M. (New York City time) on (x) the third
Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) the
proposed date of Borrowing, in the case of an Absolute Rate
Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the
Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it
pursuant to subsection (e). In the case of acceptance, such
notice (a "Notice of Money Market Borrowing") shall specify
the aggregate principal amount of offers for each Interest
Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount
set forth in the related Money Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be $10,000,000 or a larger integral
multiple of $1,000,000,
(iii) acceptance of offers may only be made on the
basis of ascending Money Market Margins or Money Market
Absolute Rates, as the case may be, and
(iv) the Borrower may not accept any offer that is
described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this
Agreement.
(g) Allocation by Agent. If offers are made by
two or more Banks with the same Money Market Margins or
Money Market Absolute Rates, as the case may be, for a
greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related
Interest Period, the principal amount of Money Market Loans
in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as
possible (in multiples of $1,000,000, as the Agent may deem
appropriate) in proportion to the aggregate principal
amounts of such offers. Determinations by the Agent of the
amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the
Agent shall promptly notify each Bank of the contents
thereof and of such Bank's share (if any) of such Borrowing
and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than (x) 12:00 Noon (New York City
time) on the date of each Borrowing other than a Base Rate
Borrowing and (y) 1:00 P.M. (New York City time) on the date
of each Base Rate Borrowing, each Bank participating therein
shall (except as provided in subsection (c) of this Section)
make available its share of such Borrowing, in Federal or
other funds immediately available in New York City, to the
Agent at its address referred to in Section 9.01. Unless
the Agent determines that any applicable condition specified
in Article III has not been satisfied, the Agent will,
promptly upon receipt thereof, make the funds so received
from the Banks available to the Borrower at the Agent's
aforesaid address.
(c) If any Bank makes a new Loan hereunder on a
day on which the Borrower is to repay all or any part of an
outstanding Loan from such Bank, such Bank shall apply the
proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount
being borrowed and the amount being repaid shall be made
available by such Bank to the Agent as provided in
subsection (b), or remitted by the Borrower to the Agent as
provided in Section 2.12, as the case may be.
(d) Unless the Agent shall have received notice
from a Bank prior to the date of any Borrowing that such
Bank will not make available to the Agent such Bank's share
of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such
Borrowing in accordance with subsections (b) and (c) of this
Section 2.04 and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank
shall not have so made such share available to the Agent,
such Bank and the Borrower severally agree to repay to the
Agent, within one Domestic Business Day after demand, such
corresponding amount together with interest thereon, for
each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent,
at (i) in the case of the Borrower, a rate per annum equal
to the higher of the Federal Funds Rate and the interest
rate applicable thereto pursuant to Section 2.07 and (ii) in
the case of such Bank, the Federal Funds Rate. If such Bank
shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Loan included
in such Borrowing for purposes of this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office
in an amount equal to the aggregate unpaid principal amount
of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and
the Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such
Note shall be in substantially the form of Exhibit A hereto
with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant type. Each reference
in this Agreement to the "Note" of such Bank shall be deemed
to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall forward such Note to such
Bank. Each Bank shall record the date, amount, type and
maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with
any transfer or enforcement of its Note, endorse on the
schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such
Loan then outstanding; provided that the failure of any Bank
to make any such recordation or endorsement, or any error in
the making thereof, shall not affect the obligations of the
Borrower hereunder or under the Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its
Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Loan
included in any Borrowing shall mature, and the principal
amount thereof shall be due and payable, on the last day of
the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base
Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the sum
of the Base Rate for such day plus, if applicable, the Base
Rate Margin for such day. Such interest shall be payable
for each Interest Period on the last day thereof. Any
overdue principal of or interest on any Base Rate Loan shall
bear interest, payable on demand, for each day until paid at
a rate per annum equal to the sum of 2% plus the rate
otherwise applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for each day during
the Interest Period applicable thereto, at a rate per annum
equal to the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Interest Period;
provided that if any CD Loan or any portion thereof shall,
as a result of clause (2)(b) of the definition of Interest
Period, have an Interest Period of less than 30 days, such
portion shall bear interest during such Interest Period at
the rate applicable to Base Rate Loans during such period.
Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer
than 90 days, 90 days after the first day thereof. Any
overdue principal of or interest on any CD Loan shall bear
interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 2% plus the rate
applicable to Base Rate Loans for such day.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest
Period is the rate of interest determined by the Agent to be
the average (rounded upward, if necessary, to the next
higher 1/100 of 1%) of the prevailing rates per annum bid at
10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two
or more New York certificate of deposit dealers of
recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an
amount comparable to the principal amount of the CD Loan of
such CD Reference Bank to which such Interest Period applies
and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves)
for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York
City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Adjusted
CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. S 327.3(e) (or any successor
provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change
in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on
the outstanding principal amount thereof, for each day
during the Interest Period applicable thereto, at a rate per
annum equal to the sum of the Euro-Dollar Margin for such
day plus the Adjusted London Interbank Offered Rate
applicable to such Interest Period. Such interest shall be
payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months,
three months after the first day thereof.
The "Adjusted London Interbank Offered Rate"
applicable to any Interest Period means a rate per annum
equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i)
the applicable London Interbank Offered Rate by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to
any Interest Period means the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London
interbank market at approximately 11:00 A.M. (London time)
two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar
Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to
United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of
the effective date of any change in the Euro-Dollar Reserve
Percentage.
(d) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for
each day from and including the date payment thereof was due
to but excluding the date of actual payment, at a rate per
annum equal to the sum of 2% plus the higher of (i) the sum
of the Euro-Dollar Margin plus the Adjusted London Interbank
Offered Rate applicable to such Loan and (ii) the
Euro-Dollar Margin plus the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by
dividing (x) the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per
annum at which one day (or, if such amount due remains
unpaid more than three Euro-Dollar Business Days, then for
such other period of time not longer than three months as
the Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of
the Euro-Dollar Reference Banks are offered to such
Euro-Dollar Reference Bank in the London interbank market
for the applicable period determined as provided above by
(y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if
the circumstances described in clause (a) or (b) of Section
8.01 shall exist, at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day).
(e) Subject to Section 8.01(a), each Money Market
LIBOR Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto,
at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in
accordance with Section 2.07(c) as if the related Money
Market LIBOR Borrowing were a Committed Euro-Dollar
Borrowing) plus (or minus) the Money Market Margin quoted by
the Bank making such Loan in accordance with Section 2.03.
Each Money Market Absolute Rate Loan shall bear interest on
the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
Money Market Absolute Rate quoted by the Bank making such
Loan in accordance with Section 2.03. Such interest shall
be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof. Any
overdue principal of or interest on any Money Market Loan
shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the
Base Rate for such day.
(f) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give
prompt notice to the Borrower and the participating Banks of
each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest
error.
(g) Each Reference Bank agrees to use its best
efforts to furnish quotations to the Agent as contemplated
by this Section. If any Reference Bank does not furnish a
timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks or, if
none of such quotations is available on a timely basis, the
provisions of Section 8.01 shall apply.
SECTION 2.08. Fees.
(a) Commitment Fee. The Borrower shall pay to
the Agent, for the account of the Banks ratably in
accordance with their respective Percentages, a commitment
fee for each day at the Commitment Fee Rate for such day
(determined in accordance with the Pricing Schedule) on the
amount by which the aggregate amount of the Commitments
exceeds the Aggregate Usage on such day. Such commitment
fee shall accrue from and including January 10, 1995 to but
excluding the Termination Date (or earlier date of
termination of the Commitments in their entirety).
(b) Facility Fee. The Borrower shall pay to the
Agent, for the account of the Banks ratably in accordance
with their respective Percentages, a facility fee for each
day at the Facility Fee Rate for such day (determined in
accordance with the Pricing Schedule). Such facility fee
shall accrue for each day (i) from and including January 10,
1995 to but excluding the Termination Date (or earlier date
of termination of the Commitments in their entirety), on the
aggregate amount of the Commitments (whether used or unused)
on such day and (ii) if any Committed Loans or LC
Liabilities remain outstanding after the Commitments
terminate in their entirety, then for each day from and
including the date on which the Commitments terminate in
their entirety to but excluding the first day thereafter on
which no Committed Loans or LC Liabilities remain
outstanding, on the aggregate outstanding amount of the
Committed Loans and the LC Liabilities on such day.
(c) Payments. Accrued fees under subsections (a)
and (b) shall be payable quarterly on the last day of each
fiscal quarter of the Borrower and on the date on which the
Commitments terminate in their entirety (and, if later, the
first day thereafter on which no Committed Loans or LC
Liabilities remain outstanding).
SECTION 2.09. Optional Termination or Reduction
of Commitments. The Borrower may, upon at least three
Domestic Business Days' notice to the Agent, (i) terminate
the Commitments at any time, if no Loans or LC Liabilities
are outstanding at such time, or (ii) ratably reduce from
time to time by an aggregate amount of $5,000,000 or any
larger integral multiple of $1,000,000, the aggregate amount
of the Commitments in excess of the Aggregate Usage.
SECTION 2.10. Mandatory Termination of
Commitments. The Commitments shall terminate on the
Termination Date, and any Loans then outstanding (together
with accrued interest thereon) shall be due and payable on
such date.
SECTION 2.11. Optional Prepayments. (a) The
Borrower may, upon at least one Domestic Business Day's
notice to the Agent, prepay any Base Rate Borrowing (or any
Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) in whole at any time, or from
time to time in part in amounts aggregating $5,000,000 or
any larger integral multiple of $1,000,000, by paying the
principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such
optional prepayment shall be applied to prepay ratably the
Loans of the several Banks included in such Borrowing.
(b) Except as provided in Section 8.02 and
Section 8.05(b), the Borrower may not prepay all or any
portion of the principal amount of any Fixed Rate Loan prior
to the maturity thereof.
(c) Upon receipt of a notice of prepayment
pursuant to this Section, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable
share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of,
and interest on, the Loans and of fees hereunder, not later
than 1:00 P.M. (New York City time) on the date when due, in
Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section
9.01. The Agent will promptly distribute to each Bank its
ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal
of, or interest on, the Domestic Loans or of fees shall be
due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal
of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar
Business Day. Whenever any payment of principal of, or
interest on, the Money Market Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day. If the date for any payment of
principal is extended in accordance with this Section 2.12,
by operation of law or otherwise, interest thereon shall be
payable for such extended time.
(b) Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is
due to the Banks hereunder that the Borrower will not make
such payment in full, the Agent may assume that the Borrower
has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower
makes any payment of principal with respect to any Fixed
Rate Loan (pursuant to Article VI or VIII or otherwise) on
any day other than the last day of the Interest Period
applicable thereto, or the last day of an applicable period
fixed pursuant to Section 2.07(d), or if the Borrower fails
to borrow any Fixed Rate Loans after notice has been given
to any Bank in accordance with Section 2.04(a), the Borrower
shall pay to each Bank within 15 days after demand an amount
calculated as provided in Exhibit J hereto to compensate
such Bank for any loss incurred by it (or by an existing or
scheduled Participant in the related Loan) in obtaining,
liquidating or employing deposits from third parties,
provided that such Bank shall have delivered to the Borrower
a certificate setting forth such amount and the calculation
thereof in reasonable detail.
SECTION 2.14. Computation of Interest and Fees.
Interest based on the Prime Rate hereunder shall be computed
on the basis of a year of 365 days (or 366 days in a leap
year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All
other interest and all letter of credit fees, commitment
fees and facility fees shall be computed on the basis of a
year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last
day).
SECTION 2.15. Letters of Credit. (a) On the
Effective Date, each LC Issuing Bank that has issued an
Existing Letter of Credit on or before the Effective Date
shall be deemed, without further action by any party hereto,
to have sold to each Bank, and each Bank shall be deemed,
without further action by any party hereto, to have
purchased from such LC Issuing Bank, a participation in such
Existing Letter of Credit and the related LC Liabilities in
proportion to its Percentage. Concurrently with such sale,
the participations in the Existing Letters of Credit sold to
the Existing Banks under the Existing Agreement shall be
automatically cancelled without further action by any of the
parties thereto.
(b) Subject to the terms and conditions set forth
in this Agreement (including without limitation the
condition set forth in Section 3.03(b)),
(i) ABN-AMRO Bank, N.V., as LC Issuing Bank,
agrees to issue Letters of Credit hereunder from time
to time after the Effective Date and before the
Termination Date upon the request of the Borrower,
provided that immediately after each such Letter of
Credit is issued, the aggregate outstanding amount of
LC Liabilities in respect of all Letters of Credit
issued by ABN-AMRO Bank, N.V., as LC Issuing Bank,
shall not exceed $100,000,000;
(ii) Bank of America National Trust and Savings
Association, as LC Issuing Bank, agrees to issue
Letters of Credit hereunder from time to time after the
Effective Date and before the Termination Date upon the
request of the Borrower, provided that immediately
after each such Letter of Credit is issued, the
aggregate outstanding amount of LC Liabilities in
respect of all Letters of Credit issued by Bank of
America National Trust and Savings Association, as LC
Issuing Bank, shall not exceed $100,000,000;
(iii) The First National Bank of Chicago, as LC
Issuing Bank, agrees to issue Letters of Credit
hereunder from time to time after the Effective Date
and before the Termination Date upon the request of the
Borrower, provided that (x) immediately after each such
Letter of Credit is issued, the aggregate outstanding
amount of LC Liabilities in respect of all Letters of
Credit issued by The First National Bank of Chicago, as
LC Issuing Bank, shall not exceed $100,000,000 and (y)
The First National Bank of Chicago, as LC Issuing Bank,
shall not issue any Letter of Credit in respect of any
obligation under the Borrower's public debt or the TASP
Notes; and
(iv) Morgan Guaranty Trust Company of New York,
as LC Issuing Bank, agrees to issue Letters of Credit
hereunder from time to time after the Effective Date
and before the Termination Date upon the request of the
Borrower, provided that immediately after each such
Letter of Credit is issued, the aggregate outstanding
amount of LC Liabilities in respect of all Letters of
Credit issued by Morgan Guaranty Trust Company of New
York, as LC Issuing Bank, shall not exceed
$125,000,000.
Upon the issuance by an LC Issuing Bank of a Letter of
Credit in accordance with this subsection (b), such LC
Issuing Bank shall be deemed, without further action by any
party hereto, to have sold to each Bank, and each Bank shall
be deemed, without further action by any party hereto, to
have purchased from such LC Issuing Bank, a participation in
such Letter of Credit and the related LC Liabilities in
proportion to its Percentage.
(c) No Letter of Credit issued on or after the
Effective Date shall have an original expiry date later than
one year after the issuance thereof. No Letter of Credit
shall be extended on or after the Effective Date unless (i)
such extension is for a period not exceeding one year and
(ii) the LC Issuing Bank agrees to so extend such Letter of
Credit (or, in the case of an "evergreen" Letter of Credit,
its ability to give a notice to prevent such extension
expires) no earlier than three months before the then
existing expiry date. No Letter of Credit shall have an
original or extended expiry date later than the fifth
Domestic Business Day prior to the Termination Date.
(d) The Borrower shall give the relevant LC
Issuing Bank at least three Domestic Business Days' prior
notice of (x) the issuance of each Letter of Credit to be
issued by it after the Effective Date and (y) each extension
of a Letter of Credit issued by it, specifying in each case
(i) the date of such issuance or extension, (ii) the expiry
date or extended expiry date of such Letter of Credit (which
shall comply with subsection (c) above), (iii) the proposed
terms of such Letter of Credit and (iv) the nature of the
transactions proposed to be supported thereby. The issuance
of any Letter of Credit after the Effective Date shall be
subject to the conditions precedent set forth in Article III
(the LC Issuing Bank having no duty to ascertain whether
such conditions precedent are satisfied, other than to
confirm with the Agent on the date of issuance that such
issuance will not cause the Aggregate Usage to exceed the
aggregate amount of the Commitments) and subject to the
additional conditions precedent that such Letter of Credit
shall be satisfactory to such LC Issuing Bank and that the
Borrower shall have executed and delivered such other
instruments and agreements relating to such Letter of Credit
as such LC Issuing Bank shall have reasonably requested.
The extension of any Letter of Credit shall be subject to
the conditions precedent set forth in Article III (the LC
Issuing Bank having no duty to ascertain whether such
conditions precedent are satisfied). Upon issuing or
extending any Letter of Credit, the LC Issuing Bank shall
promptly notify the Agent of such issuance or extension, and
the Agent shall promptly notify each Bank thereof and of the
amount of such Bank's participation in such Letter of
Credit.
(e) The Borrower shall pay to the Agent, for the
account of the Banks ratably in accordance with their
respective Percentages, a letter of credit fee at (i) the LC
Fee Rate on the aggregate amount available for drawings
under each Letter of Credit (other than Workers'
Compensation Letters of Credit) outstanding from time to
time and (ii) the LC Fee Rate minus .125% per annum on the
aggregate amount available for drawings under each Workers'
Compensation Letter of Credit outstanding from time to time.
Each such fee shall be payable in arrears on the last day of
each fiscal quarter of the Borrower for so long as such
Letter of Credit is outstanding and on the expiry date
thereof. The Borrower shall pay to each LC Issuing Bank
additional fronting fees and expenses in the amounts and at
the times agreed between the Borrower and such LC Issuing
Bank. The LC Issuing Banks shall furnish to the Agent upon
request such information as the Agent shall require in order
to calculate the amount of any fee payable under this
subsection (e).
"LC Fee Rate" means, for any day, a rate per annum
equal to the Euro-Dollar Margin for such day.
(f) Upon receipt from the beneficiary of any
Letter of Credit of any demand for payment under such Letter
of Credit, the relevant LC Issuing Bank shall notify the
Agent and the Agent shall promptly notify the Borrower and
each other Bank as to the amount to be paid by the Issuing
Bank as a result of such demand and the proposed payment
date (the "LC Payment Date"). The responsibility of such LC
Issuing Bank to the Borrower and each Bank shall be only to
determine that the documents (including each demand for
payment) delivered under each Letter of Credit issued by it
in connection with such presentment shall be in conformity
in all material respects with such Letter of Credit. Each
LC Issuing Bank shall endeavor to exercise the same care in
the issuance and administration of the Letters of Credit
issued by it as it does with respect to letters of credit in
which no participations are granted, it being understood
that in the absence of any gross negligence or willful
misconduct by such LC Issuing Bank, each Bank shall be
unconditionally and irrevocably liable without regard to the
occurrence of any Event of Default or any condition
precedent whatsoever, to reimburse such LC Issuing Bank on
demand for (i) such Bank's Percentage of the amount of each
payment made by such LC Issuing Bank under each Letter of
Credit issued by it to the extent such amount is not
reimbursed by the Borrower pursuant to subsection (g) below
plus (ii) interest on the foregoing amount to be reimbursed
by such Bank, for each day from the date of such LC Issuing
Bank's demand for such reimbursement (or, if such demand is
made after 11:00 A.M. (New York City time) on such date,
from the next succeeding Domestic Business Day) to the date
on which such Bank pays the amount to be reimbursed by it,
at a rate of interest per annum equal to the Federal Funds
Rate for such day.
(g) The Borrower shall be irrevocably and
unconditionally obligated to reimburse each LC Issuing Bank
on or by the applicable LC Reimbursement Date for any
amounts paid by such LC Issuing Bank upon any drawing under
any Letter of Credit issued by it, without presentment,
demand, protest or other formalities of any kind; provided
that neither the Borrower nor any Bank shall hereby be
precluded from asserting any claim for direct (but not
consequential) damages suffered by the Borrower or such Bank
to the extent, but only to the extent, caused by (i) the
willful misconduct or gross negligence of such LC Issuing
Bank in determining whether a request presented under any
Letter of Credit issued by it complied with the terms of
such Letter of Credit or (ii) such LC Issuing Bank's failure
to pay under any Letter of Credit issued by it after the
presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit. All such
amounts paid by such LC Issuing Bank and remaining unpaid by
the Borrower shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to (x) the
rate applicable to Base Rate Loans for such day if such day
falls on or before the applicable LC Reimbursement Date and
(y) the sum of 2% plus the rate applicable to Base Rate
Loans for such day if such day falls after such LC
Reimbursement Date. Each LC Issuing Bank will pay to each
Bank ratably in accordance with its Percentage all amounts
received from the Borrower for application in payment, in
whole or in part, of the Reimbursement Obligations in
respect of any Letter of Credit issued by such LC Issuing
Bank, but only to the extent such Bank has made payment to
such LC Issuing Bank in respect of such Letter of Credit
pursuant to subsection (f).
(h) If, after the date hereof, the adoption of
any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance
by any Bank or LC Issuing Bank with any request or directive
(whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose,
modify or deem applicable any tax, reserve, special deposit
or similar requirement against or with respect to or
measured by reference to Letters of Credit issued or to be
issued hereunder or participations therein, and the result
shall be to increase the cost to any Bank or LC Issuing Bank
of issuing or maintaining any Letter of Credit or any
participation therein, or reduce any amount receivable by
any Bank or LC Issuing Bank hereunder in respect of any
Letter of Credit (which increase in cost, or reduction in
amount receivable, shall be the result of such Bank's or LC
Issuing Bank's reasonable allocation of the aggregate of
such increases or reductions resulting from such event),
then, upon demand by such Bank or LC Issuing Bank, the
Borrower agrees to pay to such Bank or LC Issuing Bank, from
time to time as specified by such Bank or LC Issuing Bank,
such additional amounts as shall be sufficient to compensate
such Bank or LC Issuing Bank for such increased costs or
reductions in amount incurred by such Bank or LC Issuing
Bank. A certificate of such Bank or LC Issuing Bank
submitted by such Bank or LC Issuing Bank to the Borrower
shall be conclusive as to the amount thereof in the absence
of manifest error.
(i) The Borrower's obligations under this Section
2.15 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim
or defense to payment which the Borrower may have or have
had against any LC Issuing Bank, any Bank or any beneficiary
of a Letter of Credit. The Borrower further agrees with the
LC Issuing Banks and the Banks that the LC Issuing Banks and
the Banks shall not be responsible for, and the Borrower's
Reimbursement Obligations in respect of any Letter of Credit
shall not be affected by, among other things, the validity
or genuineness of documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or
all respects invalid, fraudulent or forged, or any dispute
between or among the Borrower, any of its Subsidiaries, the
beneficiary of any Letter of Credit or any financing
institution or other party to whom any Letter of Credit may
be transferred or any claims or defenses whatsoever of the
Borrower or any of its Subsidiaries against the beneficiary
of any Letter of Credit or any such transferee. No LC
Issuing Bank shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection
with any Letter of Credit issued, extended or renewed by it.
The Borrower agrees that any action taken or omitted by an
LC Issuing Bank or any Bank under or in connection with each
Letter of Credit and the related drafts and documents, if
done in good faith and without gross negligence, shall be
binding upon the Borrower and shall not put such LC Issuing
Bank or any Bank under any liability to the Borrower.
(j) To the extent not inconsistent with
subsection (i) above, each LC Issuing Bank shall be entitled
to rely, and shall be fully protected in relying upon, any
Letter of Credit, draft, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement,
order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal
counsel, independent accountants and other experts selected
by such LC Issuing Bank. Each LC Issuing Bank shall be
fully justified in failing or refusing to take any action
under this Agreement unless it shall first have received
such advice or concurrence of the Required Banks as it
reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Banks
against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any
such action. Notwithstanding any other provision of this
Section 2.15, each LC Issuing Bank shall in all cases be
fully protected in acting, or in refraining from acting,
under this Agreement in accordance with a request of the
Required Banks, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the
Banks and all future holders of participations in any
Letters of Credit.
(k) The Borrower hereby agrees to indemnify and
hold harmless each Bank, each LC Issuing Bank and the Agent,
and their respective directors, officers, agents and
employees from and against any and all claims and damages,
losses, liabilities, costs or expenses which such Bank, such
LC Issuing Bank or the Agent may incur (or which may be
claimed against such Bank, such LC Issuing Bank or the Agent
by any Person whatsoever) by reason of or in connection with
the execution and delivery or transfer of or payment or
failure to pay under any Letter of Credit or any actual or
proposed use of any Letter of Credit, including, without
limitation, any claims, damages, losses, liabilities, costs
or expenses which an LC Issuing Bank may incur by reason of
or in connection with the failure of any other Bank to
fulfill or comply with its obligations to such LC Issuing
Bank hereunder (but nothing herein contained shall affect
any rights the Borrower may have against any defaulting
Bank); provided that the Borrower shall not be required to
indemnify any Bank, any LC Issuing Bank or the Agent for any
claims, damages, losses, liabilities, costs or expenses to
the extent, but only to the extent, caused by (i) the
willful misconduct or gross negligence of an LC Issuing Bank
in determining whether a request presented under any Letter
of Credit issued by it complied with the terms of such
Letter of Credit or (ii) an LC Issuing Bank's failure to pay
under any Letter of Credit issued by it after the
presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit; and provided
further that the foregoing indemnity shall not apply with
respect to any costs or expenses arising out of any claim by
any Person other than the beneficiary or account party under
the relevant Letter of Credit unless such costs and expenses
shall have been reasonably incurred. Nothing in this
subsection (k) is intended to limit the obligations of the
Borrower under any other provision of this Agreement.
(l) Each Bank shall, ratably in accordance with
its Percentage, indemnify each LC Issuing Bank, its
affiliates and their respective directors, officers, agents
and employees (to the extent not reimbursed by the Borrower)
against any cost, expense (including reasonable counsel fees
and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees' gross
negligence or willful misconduct or such LC Issuing Bank's
failure to pay under any Letter of Credit issued by it after
the presentation to it of a request strictly complying with
the terms and conditions of the Letter of Credit) that such
indemnitees may suffer or incur in connection with this
Section 2.15 or any action taken or omitted by such
indemnitees hereunder.
(m) In its capacity as a Bank, each LC Issuing
Bank shall have the same rights and obligations as any other
Bank. The obligations of the LC Issuing Banks under the
Financing Documents are several and not joint.
SECTION 2.16. Maximum Interest Rate. (a)
Nothing contained in this Agreement or the Notes shall
require the Borrower to pay interest for the account of any
Bank at a rate exceeding the maximum rate permitted by
applicable law.
(b) If the amount of interest payable for the
account of any Bank on any interest payment date in respect
of the immediately preceding interest computation period,
computed pursuant to Section 2.07, would exceed the maximum
amount permitted by applicable law to be charged by such
Bank, the amount of interest payable for its account on such
interest payment date shall be automatically reduced to such
maximum permissible amount.
(c) If the amount of interest payable for the
account of any Bank in respect of any interest computation
period is reduced pursuant to subsection (b) of this Section
and the amount of interest payable for its account in
respect of any subsequent interest computation period,
computed pursuant to Section 2.07, would be less than the
maximum amount permitted by applicable law to be charged by
such Bank, then the amount of interest payable for its
account in respect of such subsequent interest computation
period shall be automatically increased to such maximum
permissible amount; provided that at no time shall the
aggregate amount by which interest paid for the account of
any Bank has been increased pursuant to this subsection (c)
exceed the aggregate amount by which interest paid for its
account has theretofore been reduced pursuant to subsection
(b) of this Section.
ARTICLE III
CONDITIONS
SECTION 3.01. Conditions to Effectiveness. This
Agreement shall become effective on the date on which all of
the following conditions to effectiveness shall be satisfied
(but shall not become effective unless such date is before
February 15, 1995):
(a) the Agent shall have received counterparts
hereof signed by each of the parties hereto (or, in the
case of any party as to which an executed counterpart
shall not have been received, the Agent shall have
received in form satisfactory to it telegraphic, telex
or other written confirmation from such party of
execution of a counterpart hereof by such party);
(b) the Agent shall have received a duly executed
Note for the account of each Bank dated on or before
the Effective Date complying with the provisions of
Section 2.05;
(c) the Agent shall have received counterparts of
the Subsidiary Guaranty Agreement, duly executed by
each of the Obligors listed on the signature pages
thereof;
(d) the Borrower shall have paid (or made
arrangements satisfactory to the Agent for paying) on
the Effective Date all fees accrued under the Existing
Agreement to but excluding the Effective Date and all
other amounts (if any) then due and payable by the
Borrower thereunder;
(e) on the Effective Date no loans shall be
outstanding under the Existing Agreement;
(f) the Agent shall have received an opinion of
Eberhard G.H. Schmoller, Esq., general counsel for the
Borrower, substantially in the form of Exhibit E hereto
and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request;
(g) the Agent shall have received an opinion of
Davis Polk & Wardwell, special counsel for the Agent,
substantially in the form of Exhibit F hereto and
covering such additional matters relating to the
transactions contemplated hereby as the Required Banks
may reasonably request; and
(h) the Agent shall have received all documents
the Agent may reasonably request relating to the
existence of the Obligors, the corporate authority for
and the validity of the Financing Documents and any
other matters relevant hereto, all in form and
substance satisfactory to the Agent.
The Agent shall promptly notify the Borrower, the Banks and
the LC Issuing Banks of the Effective Date, and such notice
shall be conclusive and binding on all parties hereto.
SECTION 3.02. Consequence of Effectiveness. (a)
On the Effective Date, the Existing Agreement will be
automatically amended and restated to read as this Agreement
reads, without further action by any of the parties thereto.
(b) On and after the Effective Date, the rights
and obligations of the parties hereto shall be governed by
the provisions hereof, and the rights and obligations of the
parties to the Existing Agreement with respect to the period
prior to the Effective Date shall continue to be governed by
the provisions thereof as in effect prior to the Effective
Date, except that all fees accrued under the Existing
Agreement to but excluding the Effective Date shall be paid
on the Effective Date.
SECTION 3.03. Credit Extensions. The obligation
of any Bank to make a Loan on the occasion of any Borrowing
and the obligation of an LC Issuing Bank to issue or extend
a Letter of Credit on the occasion of a request therefor by
the Borrower are each subject to the satisfaction of the
following conditions:
(a) receipt (i) by the Agent of a Notice of
Borrowing as required by Section 2.02 or 2.03, as the
case may be, in the case of a Borrowing or (ii) by such
LC Issuing Bank of a notice as required by Section
2.15, in the case of a Letter of Credit;
(b) the fact that, after giving effect to such
Credit Extension, the Aggregate Usage will not exceed
the aggregate amount of the Commitments;
(c) the fact that, immediately before and after
such Credit Extension, no Default shall have occurred
and be continuing; and
(d) the fact that the representations and
warranties of the Borrower contained in this Agreement
(except, in the case of a Refunding Borrowing, the
representations and warranties set forth in Sections
4.04(c) and 4.05 as to any matter which has theretofore
been disclosed in writing by the Borrower to the Banks)
shall be true on and as of the date of such Credit
Extension.
Each Credit Extension hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of
such Credit Extension as to the facts specified in clauses
(b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware,
and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention. The execution, delivery
and performance by each Obligor of the Financing Documents
to which it is a party are within its corporate powers, have
been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene,
or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation or
by-laws of such Obligor or of any agreement, judgment,
injunction, order, decree or other instrument binding upon
such Obligor or any Subsidiaries or result in the creation
or imposition of any Lien on any asset of such Obligor or
any Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower
and the Notes, when executed and delivered in accordance
with this Agreement, will constitute valid and binding
obligations of the Borrower. The Subsidiary Guaranty
Agreement, when executed and delivered by each Obligor, will
constitute a valid and binding agreement of such Obligor.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of December
31, 1993 and the related statements of consolidated
operations, consolidated cash flows and consolidated
shareholders' equity for the fiscal year then ended,
reported on by Arthur Andersen & Co. and set forth in the
Borrower's 1993 Annual Report to Shareholders, a copy of
which has been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting
principles, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date
and their consolidated results of operations and cash flows
for such fiscal year.
(b) The unaudited condensed consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as
of September 30, 1994 and the related unaudited condensed
statements of consolidated operations and consolidated cash
flows for the nine months then ended, set forth in the
Borrower's quarterly report for the fiscal quarter ended
September 30, 1994 as filed with the Securities and Exchange
Commission on Form 10-Q, a copy of which has been delivered
to each of the Banks, fairly present, on a basis consistent
with the financial statements referred to in subsection (a)
of this Section, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date
and their consolidated results of operations and cash flows
for such nine-month period (subject to normal year-end
adjustments).
(c) Since September 30, 1994 there has been no
material adverse change in the business, financial position,
results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. There is no action,
suit or proceeding pending against, or to the knowledge of
the Borrower threatened against or affecting, the Borrower
or any of its Subsidiaries before any court or arbitrator or
any governmental body, agency or official (i) in which there
is a reasonable possibility that a final judgment in excess
of $30,000,000 will be entered or filed against the Borrower
or any of its Subsidiaries, (ii) in which there is a
reasonable possibility of an adverse decision which could,
in a manner not involving the payment of damages, materially
adversely affect the business of the Borrower and its
Subsidiaries, considered as a whole, or (iii) which in any
manner draws into question the validity of any Financing
Document.
SECTION 4.06. Compliance with ERISA. Each member
of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue
Code with respect to each Plan and is in compliance in all
respects with the presently applicable provisions of ERISA
and the Internal Revenue Code with respect to each Plan,
except to the extent that noncompliance could not materially
adversely affect the business, consolidated financial
position or consolidated results of operations of the
Borrower and its Consolidated Subsidiaries. No member of
the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Internal Revenue
Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement, or made any amendment
to any Plan or Benefit Arrangement, which has resulted or
could result in the imposition of a Lien or the posting of a
bond or other security under ERISA or the Internal Revenue
Code or (iii) incurred any liability under Title IV of ERISA
other than a liability to the PBGC for premiums under
Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the
ordinary course of its business, the Borrower conducts
periodic reviews of the effect of Environmental Laws on the
business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and
evaluates associated liabilities and costs (including,
without limitation, any capital or operating expenditures
required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures
required to achieve or maintain compliance with
environmental protection standards imposed by law or as a
condition of any license, permit or contract, any related
constraints on operating activities, including any periodic
or permanent shutdown of any facility or reduction in the
level of or change in the nature of operations conducted
thereat, any costs or liabilities in connection with
off-site disposal of wastes or Hazardous Substances, and any
actual or potential liabilities to third parties, including
employees, and any related costs and expenses). On the
basis of such reviews, the Borrower has reasonably concluded
that such associated liabilities and costs, including the
costs of compliance with Environmental Laws, are unlikely
(after taking into account the Borrower's reserves for such
liabilities and costs) to have a material adverse effect on
the business, financial condition, results of operations or
prospects of the Borrower and its Consolidated Subsidiaries,
considered as a whole.
SECTION 4.08. Taxes. United States Federal
income tax returns of the Borrower and its Subsidiaries have
been examined and closed through the fiscal year ended
December 31, 1986. The Borrower and its Subsidiaries have
filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by
them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by the Borrower or any
Subsidiary. The charges, accruals and reserves on the books
of the Borrower and its Subsidiaries in respect of taxes or
other governmental charges are, in the opinion of the
Borrower, adequate.
SECTION 4.09. Subsidiaries. Each of the
Borrower's corporate Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted. Each Subsidiary Guarantor is
a Wholly-Owned Subsidiary of the Borrower.
SECTION 4.10. Not an Investment Company. The
Borrower is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 4.11. Full Disclosure. All information
heretofore furnished by the Borrower to the Agent or any
Bank for purposes of or in connection with this Agreement or
any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Agent
or any Bank will be, true and accurate in all material
respects on the date as of which such information is stated
or certified. The Borrower has disclosed to the Banks in
writing any and all facts which materially and adversely
affect or may affect (to the extent the Borrower can now
reasonably foresee) the business, operations or financial
condition of the Borrower and its Consolidated Subsidiaries,
taken as a whole, or the ability of the Borrower to perform
its obligations under this Agreement.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has
any Commitment or any Outstanding LC Exposure hereunder or
any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will
deliver to each of the Banks:
(a) as soon as available and in any event within
120 days after the end of each fiscal year of the
Borrower, the audited consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the
end of such fiscal year and the related audited
statements of consolidated operations, consolidated
cash flows and consolidated shareholders' equity for
such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal
year, all reported on in a manner acceptable to the
Securities and Exchange Commission by Arthur Andersen &
Co. or other independent public accountants of
nationally recognized standing;
(b) as soon as available and in any event within
45 days after the end of each of the first three
quarters of each fiscal year of the Borrower,
commencing with the fiscal quarter ending March 31,
1995, the condensed consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the
end of such quarter, the related condensed statement of
consolidated operations for such quarter and the
related condensed statements of consolidated operations
and consolidated cash flows for the portion of the
Borrower's fiscal year ended at the end of such
quarter, setting forth in the case of such statements
of consolidated operations and consolidated cash flows
in comparative form the figures for the corresponding
periods of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as
to fairness of presentation and consistency by the
chief financial officer or the chief accounting officer
of the Borrower;
(c) simultaneously with the delivery of each set
of financial statements referred to in clauses (a) and
(b) above, a certificate of the chief financial officer
or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations
required to establish whether the Borrower was in
compliance with the requirements of Sections 5.07,
5.08, 5.09 and 5.12 on the date of such financial
statements and (ii) stating whether any Default exists
on the date of such certificate and, if any Default
then exists, setting forth the details thereof and the
action which the Borrower is taking or proposes to take
with respect thereto;
(d) simultaneously with the delivery of each set
of financial statements referred to in clause (a)
above, a statement of the firm of independent public
accountants which reported on such statements (i)
whether anything has come to their attention to cause
them to believe that any Default existed on the date of
such statements and (ii) confirming the calculations
set forth in the officer's certificate delivered
simultaneously therewith pursuant to clause (c) above;
(e) within five Domestic Business Days after any
officer of the Borrower obtains knowledge of any
Default, if such Default is then continuing, a
certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth the
details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so
mailed;
(g) promptly upon the filing thereof, copies of
all registration statements (other than the exhibits
thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K
(or their equivalents) which the Borrower shall have
filed with the Securities and Exchange Commission;
(h) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV
of ERISA, or knows that the plan administrator of any
Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such
reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice
that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, which could, when
aggregated with any liability incurred after January
10, 1995 by any member of the ERISA Group as a result
of any other such withdrawal liability, reorganization,
insolvency or termination, give rise to aggregate
liabilities of the ERISA Group in excess of $5,000,000,
a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate,
impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard
under Section 412 of the Internal Revenue Code, a copy
of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with
the PBGC; (vi) gives notice of withdrawal from any Plan
pursuant to Section 4063 of ERISA, which could, when
aggregated with any liability incurred after January
10, 1995 by any member of the ERISA Group as a result
of any other such withdrawal, give rise to aggregate
liabilities of the ERISA Group in excess of $5,000,000,
a copy of such notice; or (vii) fails to make any
payment or contribution to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement or makes
any amendment to any Plan or Benefit Arrangement which
has resulted or could result in the imposition of a
Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth
details as to such occurrence and action, if any, which
the Borrower or applicable member of the ERISA Group is
required or proposes to take; and
(i) from time to time such additional information
regarding the financial position or business of the
Borrower and its Subsidiaries as the Agent, at the
request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. The
Borrower will pay and discharge, and will cause each
Subsidiary to pay and discharge, at or before maturity, all
their respective material obligations and liabilities,
including, without limitation, tax liabilities, except where
the same are contested in good faith by appropriate
proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally
accepted accounting principles, appropriate reserves for the
accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each Subsidiary
to keep, all property useful and necessary in its business
in good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will maintain, and will cause
each Subsidiary to maintain, with financially sound and
reputable insurers, insurance against liabilities to third
parties, casualties affecting property used in its business
and other risks of the kinds customarily insured against by
corporations of established reputation engaged in the same
or similar business and similarly situated, of such types
and in such amounts as are customarily carried under similar
circumstances by such other corporations; provided that, in
lieu of any such insurance, the Borrower or any Subsidiary
may maintain a system or systems of self-insurance and
reinsurance which will accord with sound practices of
similarly situated corporations maintaining such systems and
with respect to which the Borrower or such Subsidiary will
maintain adequate insurance reserves, all in accordance with
generally accepted accounting principles and in accordance
with sound insurance principles or practice.
SECTION 5.04. Conduct of Business and Maintenance
of Existence. The Borrower will continue, and will cause
each Non-Emery Subsidiary to continue, to engage in business
of the same general type as now conducted by the Borrower
and its Non-Emery Subsidiaries, and will preserve, renew and
keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and
effect their respective corporate existence and their
respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; provided that
nothing in this Section 5.04 shall prohibit (i) any merger
or consolidation permitted by Section 5.10 or (ii) the
termination of the corporate existence of any Subsidiary
(other than a Subsidiary Guarantor) if the Borrower in good
faith determines that such termination is in the best
interest of the Borrower and is not materially
disadvantageous to the Banks.
SECTION 5.05. Compliance with Laws. The Borrower
will comply, and will cause each Subsidiary to comply, in
all material respects with all applicable laws, ordinances,
rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental
Laws and ERISA and the rules and regulations thereunder),
except where (i) the necessity of compliance therewith is
contested in good faith by appropriate proceedings or (ii)
failures to comply therewith could not, in the aggregate,
have a material adverse effect on the business, consolidated
financial position or consolidated results of operations of
the Borrower and its Consolidated Subsidiaries.
SECTION 5.06. Inspection of Property, Books and
Records. The Borrower will keep, and will cause each
Subsidiary to keep, proper books of record and account in
which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and
activities. The Borrower will permit, and will cause its
Subsidiaries (except Insignificant Subsidiaries) to permit,
representatives of any Bank, at such Bank's expense, to
visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective
books and records and to discuss their respective affairs,
finances and accounts with their respective officers,
employees and independent accountants, in each case to the
extent reasonably requested by such Bank to enable it to
evaluate the credit of the Borrower and the Subsidiary
Guarantors, confirm the Borrower's compliance with the
provisions of the Financing Documents, exercise and enforce
such Bank's rights under the Financing Documents or
otherwise make decisions relating thereto, but subject to
any limitations imposed by law or by confidentiality
agreements binding on the Borrower or the relevant
Subsidiary. Such visits, inspections, examinations and
discussions shall be conducted at such reasonable times and
as often as the relevant Bank or Banks may reasonably
request.
SECTION 5.07. Debt. (a) The ratio of
Consolidated Debt to Consolidated Tangible Net Worth shall
not exceed (1) 2 to 1 at any time during 1995 or (2) 1.75 to
1 at any time thereafter.
(b) Total Debt of all Non-Emery Subsidiaries will
at no time exceed $100,000,000; provided that, for purposes
of this subsection (b), such Total Debt shall not include
(i) Debt of a Non-Emery Subsidiary owing to the Borrower,
(ii) Debt of a Non-Emery Subsidiary owing to another Non-
Emery Subsidiary (except, in the case of Debt held by a Non-
Emery Subsidiary that is not wholly owned, directly or
indirectly, by the Borrower, the portion of such Debt
allocable, on a pro rata basis, to the minority interest),
(iii) Debt of the Borrower Guaranteed by a Subsidiary
Guarantor and (iv) Debt of an ESOP Trust which is Guaranteed
by a Non-Emery Subsidiary. "ESOP Trust" means a trust
created under an employee stock ownership plan as defined in
Section 407(d)(6) of ERISA which purchases the capital stock
of the relevant Non-Emery Subsidiary for the benefit of
employees of such Non-Emery Subsidiary and its subsidiaries.
SECTION 5.08. Minimum Consolidated Tangible Net
Worth. Consolidated Tangible Net Worth shall not be less
than $217,000,000; provided that such amount shall be
increased as of the last day of each fiscal year of the
Borrower (commencing with 1994) by an amount equal to 50% of
the consolidated net income of the Borrower and its
Consolidated Subsidiaries, if such consolidated net income
is positive, (i) for the fourth quarter of 1994 in the case
of 1994 and (ii) for the full fiscal year in the case of
each subsequent fiscal year.
SECTION 5.09. Negative Pledge. Neither the
Borrower nor any Non-Emery Subsidiary will create, assume or
suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except:
(a) Liens existing on the date of this Agreement
securing Debt outstanding on the date of this Agreement
in an aggregate principal amount not exceeding
$17,000,000;
(b) any Lien existing on any asset of any
corporation at the time such corporation becomes a
Subsidiary and not created in contemplation of such
event at the request of the Borrower or any of its
Subsidiaries or for the benefit of any of their
respective creditors;
(c) any Lien on any asset securing Debt incurred
or assumed for the purpose of financing all or any part
of the cost of acquiring such asset, provided that such
Lien attaches to such asset concurrently with or within
90 days after the acquisition thereof;
(d) any Lien on any asset of any corporation
existing at the time such corporation is merged or
consolidated with or into the Borrower or a Subsidiary
and not created in contemplation of such event at the
request of the Borrower or any of its Subsidiaries or
for the benefit of any of their respective creditors;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Subsidiary and
not created in contemplation of such acquisition at the
request of the Borrower or any of its Subsidiaries or
for the benefit of any of their respective creditors;
(f) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by
any Lien permitted by any of the foregoing clauses of
this Section, provided that such Debt is not increased
and is not secured by any additional assets;
(g) any Lien on (i) the common stock of any
Subsidiary Guarantor, but only if after giving effect
to such Lien, the Borrower would own, directly or
indirectly, at least 80% of the common stock of such
Subsidiary Guarantor free and clear of Liens or (ii)
the common stock of any Emery Subsidiary;
(h) Liens arising in the ordinary course of its
business which (i) do not secure Debt, (ii) do not
secure any obligation in an amount exceeding
$50,000,000 and (iii) do not in the aggregate
materially detract from the value of its assets or
materially impair the use thereof in the operation of
its business;
(i) any Lien on accounts receivable if,
immediately after such Lien arises, the aggregate
uncollected balance of all accounts receivable sold or
subjected to Liens by the Borrower and its Subsidiaries
(excluding accounts receivable charged off in
accordance with the charge-off policies applicable to
the unsold accounts receivable of the Borrower and its
Subsidiaries) would not exceed 10% of the consolidated
accounts receivable of the Borrower and its
Subsidiaries as of the end of its then most recently
ended fiscal quarter; and
(j) Liens not otherwise permitted by the
foregoing clauses of this Section securing Debt in an
aggregate principal amount at any time outstanding not
to exceed the sum of $25,000,000 plus 10% of
Consolidated Tangible Net Worth as of the end of the
immediately preceding fiscal quarter of the Borrower.
SECTION 5.10. Consolidations, Mergers and Sales
of Assets. The Borrower will not, and will not permit any
Subsidiary to, consolidate or merge with, or sell, lease or
otherwise transfer any of its assets to, any Person, except
that nothing in this Section 5.10 shall prohibit:
(a) the merger of a Non-Emery Subsidiary into the
Borrower,
(b) the merger or consolidation of a Non-Emery
Subsidiary with or into another Person (except an Emery
Subsidiary) if the corporation surviving such
consolidation or merger is a Non-Emery Subsidiary,
(c) the merger or consolidation of an Emery
Subsidiary with or into another Emery Subsidiary,
(d) the merger or consolidation of an Emery
Subsidiary with or into another Person (except the
Borrower or a Non-Emery Subsidiary) if the corporation
surviving such merger or consolidation is an Emery
Subsidiary,
(e) the sale, lease or other transfer of any
asset of the Borrower or the Non-Emery Subsidiaries (i)
in the ordinary course of business or (ii) for fair
value if after giving effect thereto, the aggregate
consideration received for all of their assets sold,
leased or otherwise transferred under this clause (ii)
during any fiscal year of the Borrower does not exceed
$100,000,000, or
(f) the sale, lease or other transfer of any
asset of the Emery Subsidiaries in the ordinary course
of business, or otherwise if the Borrower in good faith
determines that such sale, lease or other transfer is
in the best interest of the Borrower or any Emery
Subsidiary and is not materially disadvantageous to the
Banks;
provided that, in the case of (x) any such merger or
consolidation or (y) any such sale, lease or other transfer
of any asset not in the ordinary course of business, after
giving effect thereto, no Default shall have occurred and be
continuing.
SECTION 5.11. Use of Proceeds. The proceeds of
the Loans made under this Agreement will be used by the
Borrower for general corporate purposes. None of such
proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of
Regulation U.
SECTION 5.12. Fixed Charge Coverage. The ratio
of Consolidated EBITDAR to Consolidated Fixed Charges will
not, for any period of four consecutive fiscal quarters, be
less than (1) 1.75 to 1 if the fourth such fiscal quarter
ends in 1994, (2) 1.875 to 1 if the fourth such fiscal
quarter ends in 1995, or (3) 2 to 1 if the fourth such
fiscal quarter ends in 1996 or thereafter.
SECTION 5.13. Transactions with Third Party
Affiliates and Emery Subsidiaries. (a) The Borrower will
not, and will not permit any Subsidiary to, directly or
indirectly, pay any funds to or for the account of, make any
investment (whether by acquisition of stock or indebtedness,
by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or
indirectly, any Debt, or otherwise) in, lease, sell,
transfer or otherwise dispose of any assets, tangible or
intangible, to, or participate in, or effect any transaction
in connection with any joint enterprise or other joint
arrangement with, any Third Party Affiliate; provided that
nothing in this subsection (a) shall prohibit (i) the
Borrower from declaring or paying any lawful dividend so
long as, after giving effect thereto, no Default shall have
occurred and be continuing, (ii) the Borrower or any
Subsidiary from making sales to or purchases from any Third
Party Affiliate and, in connection therewith, extending
credit or making payments, or from making payments for
services rendered by any Third Party Affiliate, if such
sales or purchases are made or such services are rendered in
the ordinary course of business and on an arm's-length
basis, (iii) the Borrower or any Subsidiary from making
payments of principal, interest and premium on any Debt of
the Borrower or such Subsidiary held by a Third Party
Affiliate if the terms of such Debt are established on an
arm's-length basis or (iv) the Borrower or any Subsidiary
from participating in, or effecting any transaction in
connection with, any joint enterprise or other joint
arrangement with any Third Party Affiliate if the Borrower
or such Subsidiary participates in the ordinary course of
its business and on a basis no less advantageous than the
basis on which such Third Party Affiliate participates.
(b) The Borrower will not, and will not permit
any Non-Emery Subsidiary to, directly or indirectly, lease,
sell, transfer or otherwise dispose of any asset, tangible
or intangible, to any Emery Subsidiary, unless such lease,
sale, transfer or other disposal (i) is made in the ordinary
course of business and on an arm's-length basis or (ii) is
of an asset with a value (calculated at the greater of book
value or fair market value as of the date of such lease,
sale, transfer or other disposal) which, when aggregated
with the value so calculated of each other asset leased,
sold, transferred or otherwise disposed of in one or more
related transactions (if any), is $500,000 or less.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a) the Borrower shall fail to pay any principal
of any Loan when due, or shall fail to pay within three
Domestic Business Days of the due date thereof any
interest, fees or other amount payable hereunder;
(b) the Borrower shall fail to observe or perform
any covenant contained in Sections 5.07 to 5.12,
inclusive, or in Section 3.01 of the Subsidiary
Guaranty Agreement;
(c) the Borrower shall fail to observe or perform
any covenant or agreement contained in any Financing
Document (other than those covered by clause (a) or (b)
above) for 30 days after written notice thereof has
been given to the Borrower by the Agent at the request
of any Bank;
(d) any representation, warranty, certification
or statement made by the Borrower in any Financing
Document or in any certificate, financial statement or
other document delivered pursuant to any Financing
Document shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to
make any payment in respect of any Material Debt within
three Domestic Business Days after such payment is due
or, if longer, within any grace period otherwise
applicable to such payment;
(f) any event or condition shall occur which
results in the acceleration of the maturity of Material
Debt or enables the holders of Material Debt or any
Person acting on their behalf to accelerate the
maturity thereof, or any default by the Borrower or any
Subsidiary shall occur which results in the termination
of Material Commitments prior to the scheduled
termination thereof or enables Persons extending
Material Commitments to terminate such Material
Commitments prior to the scheduled termination thereof;
(g) the Borrower or any Subsidiary (except
Insignificant Subsidiaries) shall commence a voluntary
case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any
substantial part of its property, or shall consent to
any such relief or to the appointment of or taking
possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall
be commenced against the Borrower or any Subsidiary
(except Insignificant Subsidiaries) seeking
liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or any substantial part of its property,
and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against
the Borrower or any Subsidiary (except Insignificant
Subsidiaries) under the federal bankruptcy laws as now
or hereafter in effect;
(i) any member of the ERISA Group shall fail to
pay when due an amount or amounts aggregating in excess
of $25,000,000 which it shall have become liable to pay
under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV
of ERISA by any member of the ERISA Group, any plan
administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or
to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated;
or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment
obligation in excess of $25,000,000;
(j) a final judgment or order for the payment of
money in excess of $25,000,000 shall be entered or
filed against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied, unvacated
and unstayed for a period of 30 days;
(k) any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange
Act of 1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under said
Act) of 30% or more of the outstanding shares of common
stock of the Borrower; or, during any period of 15
consecutive calendar months, individuals who were
directors of the Borrower on the first day of such
period shall cease to constitute a majority of the
board of directors of the Borrower; or
(l) the Borrower shall cease to own, directly or
indirectly, at least 80% of the common stock of each
Subsidiary Guarantor free and clear of all Liens;
then, and in every such event, the Agent shall (i) if
requested by the Required Banks, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate
and (ii) if requested by Banks holding Notes evidencing at
least 60% in aggregate principal amount of the Loans
outstanding, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Obligors;
provided that in the case of any of the Events of Default
specified in clause (g) or (h) above with respect to any
Obligor, without any notice to the Obligors or any other act
by the Agent or the Banks, the Commitments shall thereupon
terminate and the Notes (together with accrued interest
thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Obligors.
SECTION 6.02. Notice of Default. The Agent shall
give notice to the Borrower under Section 6.01(c) promptly
upon being requested to do so by any Bank and shall
thereupon notify all the Banks thereof.
SECTION 6.03. Cash Cover. The Borrower agrees,
in addition to the provisions of Section 6.01 hereof, that
upon the occurrence and during the continuance of any Event
of Default, it shall, if requested by the Agent upon
instruction from Banks having at least 60% of the aggregate
amount of the Outstanding LC Exposures, pay (and, in the
case of any of the Events of Default specified in clause (g)
or (h) above with respect to any Obligor, forthwith, without
any demand or the taking of any other action by the Agent or
any Bank, it shall pay) to the Agent an amount in
immediately available funds equal to the then aggregate
amount of the LC Liabilities to be held as security therefor
for the benefit of the Banks and the LC Issuing Banks.
ARTICLE VII
THE AGENT AND THE CO-AGENTS
SECTION 7.01. Appointment and Authorization.
Each Bank irrevocably appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such
powers under the Financing Documents as are delegated to the
Agent by the terms thereof, together with all such powers as
are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan
Guaranty Trust Company of New York shall have the same
rights and powers under the Financing Documents as any other
Bank and may exercise or refrain from exercising the same as
though it were not the Agent, and Morgan Guaranty Trust
Company of New York and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or affiliate of
the Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations
of the Agent under the Financing Documents are only those
expressly set forth therein. Without limiting the
generality of the foregoing, the Agent shall not be required
to take any action with respect to any Default (except as
expressly provided in Article VI) and shall not have a
fiduciary relationship with any Bank.
SECTION 7.04. Consultation with Experts. The
Agent may consult with legal counsel (who may be counsel for
an Obligor), independent public accountants and other
experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or
experts.
SECTION 7.05. Liability of Agent. Neither the
Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for
any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks
or (ii) in the absence of its own gross negligence or
willful misconduct. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers,
agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with the
Financing Documents or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or
agreements of the Borrower; (iii) the satisfaction of any
condition specified in Article III, except receipt of items
required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of the Financing Documents or
any other instrument or writing furnished in connection
therewith. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex
or similar writing) believed by it to be genuine or to be
signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Percentage, indemnify the
Agent, its affiliates and their respective directors,
officers, agents and employees (to the extent not reimbursed
by the Borrower) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss
or liability (except such as result from such indemnitees'
gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this
Agreement or any action taken or omitted by such indemnitees
hereunder.
SECTION 7.07. Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon the Agent, the Co-Agents or any other Bank, and based
on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Bank also acknowledges that
it will, independently and without reliance upon the Agent,
the Co-Agents or any other Bank, and based on such documents
and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not
taking any action under the Financing Documents.
SECTION 7.08. Successor Agent. The Agent may
resign at any time by giving notice thereof to the Banks and
the Borrower. Upon any such resignation, the Required Banks
shall have the right, after consultation with the Borrower,
to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Banks, and shall have
accepted such appointment, within 30 days after the retiring
Agent gives notice of resignation, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent,
which shall be a commercial bank organized or licensed under
the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at
least $1,000,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested
with all the rights and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this
Article shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall
pay to the Agent for its own account fees in the amounts and
at the times previously agreed upon between the Borrower and
the Agent.
SECTION 7.10. Co-Agents. The Co-Agents, in their
capacities as such, shall have no rights, obligations or
duties of any kind under the Financing Documents and shall
not have a fiduciary relationship with any Bank.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of
any Interest Period for any Fixed Rate Borrowing:
(a) the Agent is advised by the Reference Banks
that deposits in dollars (in the applicable amounts)
are not being offered to the Reference Banks in the
relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks
having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted CD Rate
or the Adjusted London Interbank Offered Rate, as the
case may be, as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Dollar Loans, as the
case may be, for such Interest Period,
the Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Agent notifies
the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be,
shall be suspended. Unless the Borrower notifies the Agent
at least two Domestic Business Days before the date of any
Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such
date, (i) if such Fixed Rate Borrowing is a Committed
Borrowing, such Borrowing shall instead be made as a Base
Rate Borrowing and (ii) if such Fixed Rate Borrowing is a
Money Market LIBOR Borrowing, the Money Market LIBOR Loans
comprising such Borrowing shall bear interest for each day
from and including the first day to but excluding the last
day of the Interest Period applicable thereto at the Base
Rate for such day.
SECTION 8.02. Illegality. If, on or after the
date of this Agreement, the adoption of any applicable law,
rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of
law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or
its Euro-Dollar Lending Office) to make, maintain or fund
its Euro-Dollar Loans and such Bank shall so notify the
Agent, the Agent shall forthwith give notice thereof to the
other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Agent that the circumstances
giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant
to this Section, such Bank shall designate a different
Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such
Bank. If such Bank shall determine that it may not lawfully
continue to maintain and fund any of its outstanding
Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately prepay in full the
then outstanding principal amount of each such Euro-Dollar
Loan, together with accrued interest thereon. Concurrently
with prepaying each such Euro-Dollar Loan, the Borrower
shall borrow a Base Rate Loan in an equal principal amount
from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans
of the other Banks), and such Bank shall make such a Base
Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return.
(a) If on or after (x) the date hereof, in the case of any
Committed Loan or any obligation to make Committed Loans or
(y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable
law, rule or regulation, or any change in any applicable
law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
any Bank (or its Applicable Lending Office) with any request
or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall
impose, modify or deem applicable any reserve (including,
without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System, but
excluding (i) with respect to any CD Loan any such
requirement included in an applicable Domestic Reserve
Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar
Reserve Percentage), special deposit, insurance assessment
(excluding, with respect to any CD Loan, any such
requirement reflected in an applicable Assessment Rate) or
similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Bank (or its
Applicable Lending Office) or shall impose on any Bank (or
its Applicable Lending Office) or on the United States
market for certificates of deposit or the London interbank
market any other condition affecting its Fixed Rate Loans,
its Note or its obligation to make Fixed Rate Loans and the
result of any of the foregoing is to increase the cost to
such Bank (or its Applicable Lending Office) of making or
maintaining any Fixed Rate Loan, or to reduce the amount of
any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its
Note with respect thereto, by an amount deemed by such Bank
to be material, then, within 30 days after demand by such
Bank (with a copy to the Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after
the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any
such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with
the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank
or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by
such Bank to be material, then from time to time, within 30
days after demand by such Bank (with a copy to the Agent),
the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will use its best efforts promptly
to notify the Borrower and the Agent of any event of which
it has knowledge, occurring after the date hereof, which
will entitle such Bank to compensation pursuant to this
Section and will designate a different Applicable Lending
Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such
Bank. A certificate of any Bank claiming compensation under
this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount,
such Bank may use any reasonable averaging and attribution
methods.
SECTION 8.04. Taxes. (a) Any and all payments
by the Borrower to or for the account of any Bank or the
Agent hereunder or under any Note shall be made free and
clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Bank or the
Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Bank, taxes
imposed on its income, and franchise or similar taxes
imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all
such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under any Note to any Bank or
the Agent, (i) the sum payable shall be increased as
necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this Section 8.04) such Bank or the Agent (as the case
may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower
shall make such deductions, (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv)
the Borrower shall furnish to the Agent, at its address
referred to in Section 9.01, the original or a certified
copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes and any other
excise or property taxes, or charges or similar levies which
arise from any payment made hereunder or under any Note or
from the execution or delivery of, or otherwise with respect
to, this Agreement or any Note (hereinafter referred to as
"Other Taxes").
(c) The Borrower agrees to indemnify each Bank
and the Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable
under this Section 8.04) paid by such Bank or the Agent (as
the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 30 days
from the date such Bank or the Agent (as the case may be)
makes demand therefor.
(d) Each Bank organized under the laws of a
jurisdiction outside the United States, on or prior to the
date of its execution and delivery of this Agreement in the
case of each Bank listed on the signature pages hereof and
on or prior to the date on which it becomes a Bank in the
case of each other Bank, and from time to time thereafter if
requested in writing by the Borrower (but only so long as
such Bank remains lawfully able to do so), shall provide the
Borrower with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Bank is
entitled to benefits under an income tax treaty to which the
United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that
the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or
business in the United States. If the form provided by a
Bank at the time such Bank first becomes a party to this
Agreement indicates a United States interest withholding tax
rate in excess of zero, withholding tax at such rate shall
be considered excluded from "Taxes" as defined in Section
8.04(a).
(e) For any period with respect to which a Bank
has failed to provide the Borrower with the appropriate form
pursuant to Section 8.04(d) (unless such failure is due to a
change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, occurring subsequent to the date on which a form
originally was required to be provided), such Bank shall not
be entitled to indemnification under Section 8.04(a) with
respect to Taxes imposed by the United States; provided that
should a Bank, which is otherwise exempt from or subject to
a reduced rate of withholding tax, become subject to Taxes
because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such
Taxes.
(f) If the Borrower is required to pay additional
amounts to or for the account of any Bank pursuant to this
Section 8.04, then such Bank will change the jurisdiction of
its Applicable Lending Office so as to eliminate or reduce
any such additional payment which may thereafter accrue if
such change, in the judgment of such Bank, is not otherwise
disadvantageous to such Bank.
SECTION 8.05. Base Rate Loans Substituted for
Affected Fixed Rate Loans. (a) If (i) the obligation of
any Bank to make Euro-Dollar Loans has been suspended
pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03 or 8.04 with respect to its
CD Loans or Euro-Dollar Loans and the Borrower shall, by at
least five Euro-Dollar Business Days' prior notice to such
Bank through the Agent, have elected that the provisions of
this Section 8.05(a) shall apply to such Bank, then, unless
and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer exist:
(x) all Loans which would otherwise be made by
such Bank as CD Loans or Euro-Dollar Loans, as the case
may be, shall be made instead as Base Rate Loans (on
which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of
the other Banks), and
(y) after each of its CD Loans or Euro-Dollar
Loans, as the case may be, has been repaid, all
payments of principal which would otherwise be applied
to repay such Fixed Rate Loans shall be applied to
repay its Base Rate Loans instead.
(b) If (i) any Bank has demanded compensation
under Section 8.03 with respect to its CD Loans or Euro-
Dollar Loans or (ii) the Borrower has become obligated to
pay any Taxes or other amounts to or for the account of any
Bank pursuant to Section 8.04, and the Borrower shall, by at
least five Euro-Dollar Business Days' prior notice to the
Banks through the Agent, have elected that the provisions of
this Section 8.05(b) shall apply to all of the Banks, then
the Borrower shall, on the fifth Euro-Dollar Business Day
following such notice, prepay in full the then outstanding
principal amount of each outstanding Euro-Dollar Loan or CD
Loan, as the case may be, of each Bank, together with
accrued interest thereon.
SECTION 8.06. Substitution of Banks. If (i) any
Bank has demanded compensation under Section 8.03 or (ii)
the Borrower has become obligated to pay any Taxes or other
amounts to or for the account of any Bank pursuant to
Section 8.04 (such Bank, in either case, being called a
"Selling Bank"), the Borrower shall have the right, with the
assistance of the Agent, to seek one or more banks or other
institutions satisfactory to the Borrower, the LC Issuing
Banks and the Agent (collectively, the "Purchasing Banks")
willing to purchase the Selling Bank's Note and its share of
any unpaid Reimbursement Obligations and assume the
Commitment of the Selling Bank, all on the terms specified
in this Section 8.06. The Selling Bank shall be obligated
to sell its Note and its share of any unpaid Reimbursement
Obligations to such Purchasing Bank or Banks (which may
include one or more of the Banks) within 15 days after
receiving notice from the Borrower requiring it to do so, at
an aggregate price equal to the outstanding principal amount
thereof, plus unpaid interest accrued thereon to but
excluding the date of sale. In connection with any such
sale, and as a condition thereof, the Borrower shall pay to
the Selling Bank all fees accrued for its account hereunder
to but excluding the date of such sale, plus, if demanded by
the Selling Bank at least two Domestic Business Days prior
to such sale, (i) the amount of any compensation which would
be due to the Selling Bank under Section 2.13 if the
Borrower had prepaid the outstanding Fixed Rate Loans of the
Selling Bank on the date of such sale and (ii) any
additional compensation, Taxes or other amounts accrued for
its account under Section 8.03 or 8.04, as applicable, to
but excluding said date (it being understood that the
Selling Bank shall retain its right to be compensated after
the date of such sale for any such accrued amounts remaining
unpaid). Upon such sale, the Purchasing Bank or Banks shall
assume the Commitment of the Selling Bank, and the Selling
Bank shall be released from its obligations hereunder to a
corresponding extent. If any Purchasing Bank is not already
one of the Banks, the Selling Bank, as assignor, such
Purchasing Bank, as assignee, the Borrower, the LC Issuing
Banks and the Agent shall enter into an assignment and
assumption agreement substantially in the form of Exhibit G
hereto, whereupon such Purchasing Bank shall be a Bank party
to this Agreement, shall be deemed to be an Assignee
hereunder and shall have all the rights and obligations of a
Bank with a Commitment equal to its ratable share of the
Commitment of the Selling Bank. Upon the consummation of
any sale pursuant to this Section 8.06, the Selling Bank,
the Agent and the Borrower shall make appropriate
arrangements so that, if required, each Purchasing Bank
receives a new Note.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and
other communications to any party hereunder shall be in
writing (including bank wire, telex, facsimile transmission
or similar writing) and shall be given to such party: (x)
in the case of the Borrower, an LC Issuing Bank, a Co-Agent
or the Agent, at its address or telex number or facsimile
number set forth on the signature pages hereof, (y) in the
case of any Bank, at its address or telex number or
facsimile number set forth in its Administrative
Questionnaire or (z) in the case of any party, such other
address or telex number or facsimile number as such party
may hereafter specify for the purpose by notice to the Agent
and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received,
(ii) if given by facsimile transmission, when such facsimile
is transmitted to the facsimile transmission number
specified in or pursuant to this Section 9.01 and telephonic
confirmation of receipt thereof is received, (iii) if given
by mail, 72 hours after such communication is deposited in
the mails with first class postage prepaid, addressed as
aforesaid or (iv) if given by any other means, when
delivered at the address specified in this Section; provided
that notices to the Agent or the LC Issuing Banks under
Article II or Article VIII shall not be effective until
received.
SECTION 9.02. No Waivers. No failure or delay by
the Agent, any Bank or any LC Issuing Bank in exercising any
right, power or privilege under any Financing Document shall
operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Indemnification. (a)
The Borrower shall pay (i) all out-of-pocket expenses of the
Agent, including fees and disbursements of special counsel
for the Agent, in connection with the preparation and
administration of the Financing Documents, any waiver or
consent thereunder or any amendment thereof or any Default
thereunder or any event or condition reasonably alleged by
any Bank to be a possible Default thereunder and (ii) if an
Event of Default occurs, all out-of-pocket expenses incurred
by the Agent and each Bank, including fees and disbursements
of counsel, in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent,
each Co-Agent and each Bank, their respective affiliates and
the respective directors, officers, agents and employees of
the foregoing (each an "Indemnitee") and hold each
Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such
Indemnitee in connection with any investigative,
administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of the Financing
Documents (other than the provisions thereof relating to
Letters of Credit as to which indemnification is provided in
Section 2.15(k)) or any actual or proposed use of proceeds
of Loans hereunder; provided that no Indemnitee shall have
the right to be indemnified hereunder for such Indemnitee's
own gross negligence or willful misconduct as determined by
a court of competent jurisdiction.
SECTION 9.04. Sharing of Set-Offs. Each Bank
agrees that if it shall, by exercising any right of set-off
or counterclaim or otherwise, receive (i) payment of a
proportion of the aggregate amount of principal and interest
due with respect to any Note held by it which is greater
than the proportion received by any other Bank in respect of
the aggregate amount of principal and interest due with
respect to any Note held by such other Bank or (ii) payment
of a proportion of its participation in the LC Liabilities
which is greater that the proportion received by any other
Bank in respect of its participation in the LC Liabilities,
the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes or the LC
Liabilities (as the case may be) held by the other Banks,
and such other adjustments shall be made, as may be required
so that all such payments of principal and interest with
respect to the Notes held by the Banks shall be shared by
the Banks pro rata and all such payments with respect to the
LC Liabilities shall be shared pro rata by the Banks
participating therein; provided that nothing in this Section
shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of
the Borrower other than its indebtedness under the Notes and
the LC Liabilities. The Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that
any holder of a participation in a Note or the LC
Liabilities, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such
participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent or the LC Issuing
Banks are affected thereby, by the Agent or the LC Issuing
Banks, as the case may be); provided that no such amendment
or waiver shall, unless signed by all the Banks, (i)
increase or decrease the Commitment of any Bank (except for
a ratable decrease in the Commitments of all Banks) or
subject any Bank to any additional obligation, (ii) reduce
the principal of or rate of interest on any Loan or any fees
hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan, any Reimbursement
Obligation or any fees hereunder or for any termination of
any Commitment or (iv) change any provision of this Section
or change the percentage of the Commitments, the Outstanding
Credit Exposures or the Outstanding LC Exposures or of the
aggregate unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the Banks or
any of them to take any action under this Section or any
other provision of the Financing Documents.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of
its Loans or its Outstanding LC Exposure. Within five
Domestic Business Days after such grant, unless such grant
consists solely of a participating interest in the Money
Market Loans of such Bank, such Bank shall notify the
Borrower of the name of such Participant and the amount of
its participating interest. In the event of any such grant
by a Bank of a participating interest to a Participant,
whether or not upon notice to the Agent, such Bank shall
remain responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without
limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that
such participation agreement may provide that such Bank will
not agree to any modification, amendment or waiver of this
Agreement described in clause (i), (ii) or (iii) of Section
9.05 without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent provided
in its participation agreement, be entitled to the benefits
of Article VIII with respect to its participating interest.
An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a
participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or
more banks or other institutions (each an "Assignee") all,
or, subject to the next sentence, a proportionate part of
all, of its rights and obligations under this Agreement and
the Notes, and such Assignee shall assume such rights and
obligations, pursuant to an Assignment and Assumption
Agreement in substantially the form of Exhibit G hereto (an
"Assignment and Assumption Agreement") executed by such
Assignee and such transferor Bank, with (and subject to) the
subscribed consent of the Borrower (which shall not be
unreasonably withheld), the LC Issuing Banks and the Agent;
provided that if an Assignee is an affiliate of such
transferor Bank or another Bank, the consent of the Borrower
and the Agent shall not be required; and provided further
that such assignment may, but need not, include rights of
the transferor Bank in respect of outstanding Money Market
Loans. No assignment of a proportionate part of the rights
and obligations of a Bank under this Agreement and the Notes
may be made unless the "Assigned Amount" set forth in the
related Assignment and Assumption Agreement equals or
exceeds $5,000,000. Upon execution and delivery of an
Assignment and Assumption Agreement and payment by such
Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a
Bank with a Commitment as set forth in such Assignment and
Assumption Agreement, and the transferor Bank shall be
released from its obligations hereunder to a corresponding
extent, and no further consent or action by any party shall
be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the
Agent and the Borrower shall make appropriate arrangements
so that, if required, a new Note is issued to the Assignee.
In connection with any such assignment, the transferor Bank
shall pay to the Agent an administrative fee for processing
such assignment in the amount of $2,500. If the Assignee is
not incorporated under the laws of the United States of
America or a state thereof, it shall deliver to the Borrower
and the Agent certification as to exemption from deduction
or withholding of any United States federal income taxes in
accordance with Section 8.04.
(d) Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note to a
Federal Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee
of any Bank's rights shall be entitled to receive any
greater payment under Section 8.03 or 8.04 than such Bank
would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the
provisions of Section 8.02, 8.03 or 8.04 requiring such Bank
to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
SECTION 9.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to
Jurisdiction. This Agreement and each Note shall be
governed by and construed in accordance with the laws of the
State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New
York State court sitting in New York City for purposes of
all legal proceedings arising out of or relating to the
Financing Documents or the transactions contemplated
thereby. The Borrower irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in
an inconvenient forum.
SECTION 9.09. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes
any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE
BORROWER, THE AGENT, THE CO-AGENTS, THE LC ISSUING BANKS AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
SECTION 9.11. Confidentiality. The Agent, each
LC Issuing Bank and each Bank agrees to keep confidential
any proprietary or financial information obtained by the
Agent, such LC Issuing Bank or such Bank, as the case may
be, based on a review of the books and records of the
Borrower or any Subsidiary pursuant to Section 5.06 and any
other information to the extent such information has been
stated by the Borrower to be confidential; provided that
nothing herein shall prevent the Agent, any LC Issuing Bank
or any Bank from disclosing such information (i) to the
Agent, any LC Issuing Bank or any other Bank in connection
with the transactions contemplated by the Financing
Documents, (ii) to the officers, directors, employees,
agents, attorneys and accountants of such party and its
affiliates who have a need to know such information in
accordance with customary banking practices and who receive
such information having been made aware of the restrictions
set forth in this Section, (iii) upon the order of any court
or administrative agency, (iv) upon the request or demand of
any regulatory agency or authority having jurisdiction over
such party, (v) which has been publicly disclosed, (vi)
which has been obtained from any Person other than the
Borrower and its Subsidiaries, provided that such Person is
not known to it to be bound by a confidentiality agreement
with the Borrower or its Subsidiaries or known to it to be
otherwise prohibited from transmitting the information to it
by a contractual, legal or fiduciary obligation, (vii) in
connection with the exercise of any remedy under the
Financing Documents or (viii) to any actual or proposed
participant or assignee of all or any of its rights under
the Financing Documents, provided that such proposed
participant or assignee shall have agreed in writing, for
the benefit of the Borrower as a third-party beneficiary, to
be bound by the provisions of this Section.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
CONSOLIDATED FREIGHTWAYS, INC.
By /s/ R. Guy Kraines
Title: Assistant Treasurer
3240 Hillview Avenue
Palo Alto, California 94304
Telex number: (910) 373-2105
Facsimile number: (415) 813-0160
Telephone number: (415) 494-2900
Commitment:
$30,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Carl J. Mehldau, Jr.
Title: Associate
$30,000,000 ABN-AMRO BANK, N.V.
By /s/ Jeffrey A. French
Title: Vice President
By /s/ L.T. Osborne
Title: Group Vice President
$30,000,000 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Michael J. Dasher
Title: Vice President
$30,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Karen J. Andrews
Title: Vice President
$30,000,000 MELLON BANK, N.A.
By /s/ Harry F. Kusick, Jr.
Title: First Vice President and
Department Senior Credit
Officer
$25,000,000 THE INDUSTRIAL BANK OF JAPAN,
LIMITED, SAN FRANCISCO AGENCY
By /s/ Makoto Masuda
Title: Deputy General Manager
$25,000,000 THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY
By /s/ Curt Biren
Title: Vice President
$20,000,000 UNION BANK
By /s/ Jana P. Strycker
Title: Vice President
$20,000,000 UNITED STATES NATIONAL BANK OF
OREGON
By /s/ Ann C. Smith
Title: Vice President
$15,000,000 THE BANK OF CALIFORNIA, N.A.
By /s/ Robert J. Vernagallo
Title: Vice President
$15,000,000 CREDIT SUISSE
By /s/ David J. Worthington
Title: Member of Senior
Management
By /s/ Marilou Palenzuela
Title: Member of Senior
Management
$15,000,000 FIRST INTERSTATE BANK OF OREGON,
N.A.
By /s/ Dave Perry
Title: Vice President
$15,000,000 PNC BANK, NATIONAL ASSOCIATION
By /s/ J. Gregory Seibly
Title: Vice President
Total Commitments:
$300,000,000
============
ABN-AMRO BANK, N.V.,
as LC Issuing Bank
101 California Street
Suite 4550
San Francisco, CA 94111-5612
Attn: Jeffrey A. French,
Vice President
Telex number: 278137 ABNSF UR
Facsimile number: (415) 362-3524
Telephone number: (415) 984-3703
By /s/ Jeffrey A. French
Title: Vice President
By /s/ L.T. Osborne
Title: Group Vice President
BANK OF AMERICA
NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as LC Issuing Bank
By /s/ Michael J. Dasher
Title: Vice President
555 California Street
San Francisco, CA 94104
Attn: Michael J. Dasher,
Vice President
Credit Products 3838
Facsimile number: (415) 622-4585
Telephone number: (415) 622-2126
with a copy to:
Bank of America
National Trust and
Savings Association
1850 Gateway Boulevard
Concord, CA 94520
Attn: Cheryl Colombo
Customer Services Officer
Global Payment Operations
Domestic Account
Administration 5693
Facsimile number: (510) 885-7531
Telephone number: (510) 885-7040
THE FIRST NATIONAL BANK OF
CHICAGO, as LC Issuing Bank
By /s/ Karen J. Andrews
Title: Vice President
1 First National Plaza
10th Floor, Suite 0362
Chicago, Illinois 60670
Attention: Gerald F. Mackin,
Vice President
Facsimile number: (312) 732-3055
Telephone number: (312) 732-1905
with a copy to:
The First National Bank of
Chicago
1 North Dearborn
9th Floor
Chicago, Illinois 60670
Attention: Mark Klatt
Facsimile number: (312) 407-1065
Telephone number: (312) 407-3024
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as LC Issuing Bank
By /s/ Carl J. Mehldau, Jr.
Title: Associate
J.P. Morgan Delaware
Morgan Christiana Center
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Barbara Martel,
Associate
Facsimile number: (302) 634-1838
Telephone number: (302) 634-1925
with a copy to:
60 Wall Street
New York, New York 10260-0060
Attention: David Ellis,
Vice President
Telex number: 177615
Facsimile number: (212) 648-5014
Telephone number: (212) 648-7638
ABN-AMRO BANK, N.V.,
as Co-Agent
101 California Street
Suite 4550
San Francisco, CA 94111-5612
Attn: Jeffrey A. French,
Vice President
Telex number: 278137 ABNSF UR
Facsimile number: (415) 362-3524
Telephone number: (415) 984-3703
By /s/ Jeffrey A. French
Title: Vice President
By /s/ L.T. Osborne
Title: Group Vice President
BANK OF AMERICA
NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Co-Agent
555 California Street
San Francisco, CA 94104
Attn: Michael J. Dasher,
Vice President
Credit Products 3838
Facsimile number: (415) 622-4585
Telephone number: (415) 622-2126
By /s/ Michael J. Dasher
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO, as Co-Agent
By /s/ Karen J. Andrews
Title: Vice President
1 First National Plaza
10th Floor, Suite 0362
Chicago, Illinois 60670
Attention: Gerald F. Mackin,
Vice President
Facsimile number: (312) 732-3055
Telephone number: (312) 732-1905
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Carl J. Mehldau, Jr.
Title: Associate
J.P. Morgan Delaware
Morgan Christiana Center
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Jeannie Mattson,
Associate
Facsimile number: (302) 634-1092
Telephone number: (302) 634-1938
with a copy to:
60 Wall Street
New York, New York 10260-0060
Attention: David T. Ellis,
Vice President
Telex number: 177615
Facsimile number: (212) 648-5014
Telephone number: (212) 648-7638
EXHIBIT 10.38
AMENDED AND RESTATED
CONSOLIDATED FREIGHTWAYS, INC.
1993 NONQUALIFIED EMPLOYEE BENEFIT PLANS
TRUST AGREEMENT
(a) This Amended and Restated Agreement, effective this 1st
day of January, 1995, by and between CONSOLIDATED FREIGHTWAYS,
INC., a Delaware corporation (Company) and MELLON BANK, N.A.,
(Trustee);
(b) WHEREAS, Company has adopted the nonqualified deferred
compensation Plan(s) as listed in Appendix A;
(c) WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plan(s) with respect to the
individuals participating in such Plan(s);
(d) WHEREAS, Company now wishes to establish and contribute
to this trust (the "Trust") assets that shall be held therein,
subject to the claims of Company's creditors in the event of
Company's Insolvency, as herein defined, until paid to Plan
participants and their beneficiaries in such manner and at such
times as specified in the Plan(s);
(e) WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not affect
the status of the Plan(s) as an unfunded plan maintained for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees for purposes of Title I
of the Employee Retirement Income Security Act of 1974;
(f) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of funds
to assist it in the meeting of its liabilities under the Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust
(a) Company hereby deposits with Trustee in trust $100.00,
which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust
Agreement.2
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code of
1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company and
shall be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth. Plan
participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan(s) and this Trust
Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against Company. Any assets
held by the Trust will be subject to the claims of Company's
general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e) Within 90 days following the end of each Plan Year, and
within 30 days following any change in control, as defined in
Section 14(e), below, Company shall irrevocably deposit additional
cash or other property (which shall not be Company stock) to the
Trust in an appropriate amount sufficient to pay each Plan
participant or beneficiary the benefits payable pursuant to the
terms of the Plan(s) as of the close of such Plan Year based on the
distributions elected by Plan participants other than upon
termination of employment, or as of the date of such change in
control (as the case may be).
(f) Trustee accepts the Trust established under this Trust
Agreement on the terms and subject to the provisions set forth
herein, and it agrees to discharge and perform fully and faithfully
all of the duties and obligations imposed upon it under this Trust
Agreement.
Section 2. Payments to Plan Participants and Their
Beneficiaries
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each
Plan participant (and his or her beneficiaries), that provides a
formula or other instructions acceptable to Trustee for determining
the amounts so payable, the form in which such amount is to be paid
(as provided for or available under the Plan(s)), and the time of
commencement for payment of such amounts. Except as otherwise
provided in Section 2(c) below or elsewhere herein, Trustee shall
make payments to the Plan participants and their beneficiaries in
accordance with such Payment Schedule and shall make payments
of legal fees and expenses as required by the Plan(s). The Trustee
shall make provisions for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect to
the payment of benefits pursuant to the terms of the Plan(s) and
shall pay amounts withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld and paid
by the Company. Company shall provide Trustee with the rates at
which taxes are to be withheld and shall be responsible for
providing payees with all required state and federal notices
regarding withholding. Company shall also be responsible for
depositing all withheld amounts with the appropriate taxing
authorities and for providing each Plan participant (or
beneficiary) with the appropriate information evidencing such
withholding payments.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits or legal fees and expenses under the
Plan(s) shall be determined by Company or such party as it shall
designate under the Plan(s), and any claim for such benefits shall
be considered and reviewed under the procedures set out in the
Plan(s).
(c) Company may make payment of benefits and legal fees and
expenses directly to Plan participants or their beneficiaries as
they become due under the terms of the Plan(s). Company shall
notify Trustee of its decision to make payment of benefits or legal
fees and expenses directly prior to the time amounts are payable to
participants or their beneficiaries. In addition, if the principal
of the Trust, and any earnings thereon, are not sufficient to make
payments of benefits in accordance with the terms of the Plan(s),
Company shall make the balance of each such payment as it falls
due. Trustee shall notify Company when principal and earnings are
not sufficient.
(d) Trustee shall not be liable for any failure by Company
to provide contributions sufficient to pay all benefits and legal
fees and expenses under the Plan(s) in full.
Section 3. Trustee Responsibility Regarding Payments to Trust
Beneficiary When Company Is Insolvent
(a) Trustee shall cease payment of benefits and legal fees
and expenses to Plan participants and their beneficiaries if the
Company is Insolvent. Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) Company is unable to pay
its debts as they become due, or (ii) Company is subject to a
pending proceeding as a debtor under the United States Bankruptcy
Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of Company
under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform Trustee in writing
of Company's Insolvency. If a person claiming to be a creditor of
Company alleges in writing to Trustee that Company has become
Insolvent, Trustee shall determine whether Company is Insolvent
and, pending such determination, Trustee shall discontinue payment
of benefits and legal fees and expenses to Plan participants or
their beneficiaries. In all cases, Trustee shall be entitled to
conclusively rely upon the written certification of the Board of
Directors or the Chief Executive Officer of the Company when
determining whether the Company is solvent.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is Insolvent,
Trustee shall have no duty to inquire whether Company is Insolvent.
Trustee may in all events rely on such evidence concerning
Company's solvency as may be furnished to Trustee and that provides
Trustee with a reasonable basis for making a determination
concerning Company's solvency.
(3) If at any time Trustee has determined that Company
is Insolvent, Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the assets of
the Trust for the benefit of Company's general creditors. Nothing
in this Trust Agreement shall in any way diminish any rights of
Plan participants or their beneficiaries to pursue their rights as
general creditors of Company with respect to benefits due under the
Plan(s) or otherwise.
(4) Trustee shall resume the payment of benefits and
legal fees and expenses to Plan participants or their beneficiaries
in accordance with Section 2 of this Trust Agreement only after
Trustee has determined that Company is not Insolvent (or is no
longer Insolvent).
(5) Provided that there are sufficient assets, if
Trustee discontinues the payment of benefits and legal fees and
expenses from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following
such discontinuance shall include the aggregate amount of all
payments due to Plan participants or their beneficiaries under the
terms of the Plan(s) for the period of such discontinuance, less
the aggregate amount of any payments made to Plan participants or
their beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
Section 4. Payments to Company
(a) Except as provided in Section 3 hereof or in
subsection (b) below, Company shall have no right or power to
direct Trustee to return to Company or to divert to others any of
the Trust assets before all payment of benefits have been made to
Plan participants and their beneficiaries pursuant to the terms of
the Plan(s).
(b) If Company elects to make payment of benefits directly
to Plan participants or their beneficiaries pursuant to the terms
of Section 2(c), above, the Trustee shall distribute to Company
within 30 days of a request for payment an amount equal to each
such payment made by Company, excluding any legal fees or expenses.
Section 5. Investment and Administration of the Trust
(a) Trustee shall have the power:
(i) To invest the assets of the Trust as directed
by the Board of Directors of Company or a
Committee thereof. In no event, shall the
Trustee be instructed to invest in real
estate, options or future contracts. If the
Board wants to invest all or part of the
assets in collective funds, the Company shall
add to this Trust Agreement such collective
fund language as may from time to time be
required by the Trustee. Such Board reserves
the right to delegate this investment
authority to Trustee or an investment manager;
(ii) To collect and receive any and all money and
other property due to the Trust and to give
full discharge therefor;
(iii) To settle, compromise or submit to arbitration
any claims, debts or damages due or owing to
or from the Trust; to commence or defend suits
or legal proceedings to protect any interest
of the Trust; and to represent the Trust in
all suits or legal proceedings in any court or
before any other body or tribunal;
(iv) Generally to do all acts, whether or not
expressly authorized, which Trustee may
deem necessary or desirable for the protection
of the Trust.
(b) Persons dealing with Trustee shall be under no obligation
to see to the proper application of any money paid or property
delivered to Trustee or to inquire into Trustee's authority as to
any transaction.
(c) Company shall have the right at any time, and from time
to time in its sole discretion, to substitute assets of equal fair
market value for any asset held by the Trust. This right is
exercisable by Company in a nonfiduciary capacity without the
approval or consent of any person in a fiduciary capacity.
Section 6. Disposition of Income
During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and
reinvested.
Section 7. Accounting by Trustee
(a) Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. All such
accounts, books and records shall be open to inspection and audit
at all reasonable times by Company or Company's representatives or
agents. Within 120 days following the close of each calendar year
and within 120 days after the removal or resignation of Trustee,
Trustee shall deliver to Company a written account of its
administration of the Trust during such year or during the period
from the close of the last preceding year to the date of such
removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued
interest paid or receivable being shown separately), and showing
all cash, securities and other property held in the Trust at the
end of such year or as of the date of such removal or resignation,
as the case may be.
(b) The written approval of any accounting by Company shall
be final as to all matters and transactions stated or shown therein
and shall be binding upon Company and all beneficiaries of the
Trust and other persons who then shall be or thereafter become
interested in the Trust, except for Trustee's gross negligence or
willful misconduct. Failure of Company to notify Trustee within
180 days after receipt of any accounting of its disapproval of such
accounting shall be the equivalent of written approval.
(c) Trustee shall timely provide Company with such
information as Trustee possesses as Company may need for tax or
other reporting purposes. Trustee shall also furnish such
information to any participant so requesting in writing.
Section 8. Responsibility of Trustee
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with
like aims, provided, however, that Trustee shall incur no liability
to any person for any action taken pursuant to a direction, request
or approval given by Company, which is contemplated by, and in
conformity with, the terms of the Plan(s) or this Trust and is
given in writing by Company, and to that extent, Trustee shall be
relieved of liability for the prudent person rule for investments.
In the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(b) Trustee shall not be required to undertake or to defend
any litigation arising in connection with this Trust Agreement,
unless it be first indemnified by Company against its prospective
costs, expenses and liability, and Company hereby agrees to
indemnify Trustee for such costs, expenses and liability.
(c) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations
hereunder. Expenses of such persons shall be deemed to be expenses
of management and administration of the Trust within the meaning of
Section 9(b), below.
(d) Trustee shall have, without exclusion, all powers
conferred on Trustees by applicable law, unless expressly provided
otherwise herein, provided, however, that if an insurance policy is
held as an asset of the Trust, Trustee shall have no power to name
a beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
(e) However, notwithstanding the provisions of Section 8(d)
above, Trustee may loan to Company the proceeds of any borrowing
against an insurance policy held as an asset of the Trust.
(f) Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall not
have any power that could give this Trust the objective of carrying
on a business and dividing the gains therefrom, within the meaning
of section 301.7701-2 of the Procedure and Administrative
Regulations promulgated pursuant to the Internal Revenue Code.
Section 9. Taxes, Compensation and Expenses of Trustee
(a) Company shall from time to time pay taxes (references in
this Trust Agreement to the payment of taxes shall include interest
and applicable penalties) of any and all kind whatsoever which at
any time are lawfully levied or assessed upon or become payable in
respect of the Trust, the income or any property forming a part
thereof, or any security transaction pertaining thereto. To the
extent that any taxes levied or assessed upon the Trust are not
paid by Company or contested by Company pursuant to the last
sentence of this Section 9(a), Trustee shall pay such taxes out of
the Trust, and Company shall, upon notice by Trustee, deposit into
the Trust an amount equal to the amount paid from the Trust to
satisfy such tax liability. If requested by Company, and agreed to
by Trustee, Trustee shall at Company's expense, contest the
validity of such taxes in any manner deemed appropriate by Company
or its counsel, but only if it has received an indemnity bond or
other security satisfactory to it to pay any expenses of such
contest. Alternatively, Company may itself contest the validity of
any such taxes, but any such contest shall not affect Company's
obligation to reimburse the Trust for taxes paid from the Trust.
(b) Trustee may be paid compensation by Company in accordance
with any written agreement for this purpose between them. Trustee
shall be reimbursed by Company for its reasonable expenses of
management and administration of the Trust, including reasonable
compensation of any agent engaged by Trustee to assist it in such
management and administration. The fees for Legal Counsel, as
defined in Section 10(c), below, and other reasonable expenses,
will be paid by Company. Trustee shall be able to charge the Trust
for such compensation and for any reasonable expenses including
Legal Counsel, appraisal or accounting fees, and the same may be
deducted from the Trust unless paid by Company within 60 days after
Company receives written billing by Trustee; provided that this
paragraph shall not apply while a dispute over the amount of such
charges exists.
Section 10. For Protection of Trustee
(a) Company shall certify to Trustee the name or names of any
person or persons authorized to act for Company. Such
certification shall be signed by the Chief Executive Officer or other
officer of Company duly authorized by the Board of Directors
of Company. Until Company notifies Trustee, in a similarly signed
notice, that any such person is no longer authorized to act for
Company, Trustee may continue to rely upon the authority of such
person. Trustee may rely upon any certificate, notice or direction
of Company which Trustee reasonably believes to have been signed by
a duly authorized officer or agent of Company.
(b) Notices to Trustee shall be sent in writing to Trustee's
office at One Mellon Bank Center, Room 3346, Pittsburgh,
Pennsylvania 15258 or to such other address as Trustee may specify.
No communication shall be binding upon Trust or Trustee until it
is received by Trustee and unless it is in writing and signed by an
authorized person. Notices to Company shall be sent in writing,
attention General Counsel, to Company's principal office at 3240
Hillview Avenue, Palo Alto, California 94304 or to such other
address as Company may specify. No notice shall be binding upon
Company until it is received by Company.
(c) Trustee may consult with any legal counsel ("Legal
Counsel") for the purpose of obtaining advice on topics including
but not limited to the construction of this Trust Agreement, its
duties hereunder, or any act which it proposes to take or omit, and
shall not be liable for any action taken or omitted in good faith
pursuant to such advice. Expenses of Legal Counsel shall be deemed
to be an expense of management and administration of the Trust
within the meaning of Section 9(b), above.
(d) Trustee shall discharge its duties under this Trust
Agreement in a manner consistent with the objectives of this Trust
Agreement. Trustee shall not be liable for any loss sustained by
the Trust by reason of the purchase, retention, sale or exchange of
any investment in good faith and in accordance with the provisions
of this Trust Agreement. Trustee shall have no responsibility or
liability for any failure of Company to make contributions to the
Trust. Trustee shall not be liable hereunder for any act taken or
omitted, except for its own gross negligence or willful misconduct.
Trustee's duties and obligations shall be limited to those
expressly imposed upon it by this Trust Agreement, and Trustee
shall have no responsibility under the Plan(s), notwithstanding any
reference to the Plan(s).
(e) Company hereby indemnifies and holds Trustee harmless
from and against any and all losses, damages, costs, expenses or
liabilities (herein, "Liabilities"), including reasonable
attorneys' fees and other costs of litigation, to which Trustee may
become subject pursuant to, and arising out of, occasioned by,
incurred in connection with or in any way associated with this
Trust Agreement, except for any act or omission constituting gross
negligence or willful misconduct of Trustee.
(f) If one or more Liabilities shall arise, or if Company
fails to indemnify Trustee as provided herein, then Trustee may
engage Legal Counsel of Trustee's choice, but at Company's expense,
either to conduct the defense against such Liabilities or to
conduct such actions as may be necessary to obtain the indemnity
provided for herein, or to take both such actions. Trustee shall
notify Company within 15 days after Legal Counsel has been engaged
with the name and address of such Legal Counsel.
Section 11. Resignation and Removal of Trustee
(a) Trustee may resign at any time by written notice to
Company, which shall be effective 60 days after receipt of such
notice unless Company and Trustee agree otherwise.
(b) Trustee may be removed by Company on 60 days' notice or
upon shorter notice accepted by Trustee.
(c) If Trustee resigns or is removed within 2 years of a
change in control, as defined in Section 14(e), below, Trustee
shall select a successor Trustee in accordance with the provisions
of Section 12(b) hereof prior to the effective date of Trustee's
resignation or removal.
(d) Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within 60 days after receipt of notice of resignation,
removal or transfer, unless Company extends the time limit.
(e) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 12 hereof, by the effective
date of resignation or removal under paragraph(s) (a) or (b) of
this section. If no such appointment has been made, Trustee may
apply to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative
expenses of the Trust.
Section 12. Appointment of Successor
(a) If Trustee resigns or is removed in accordance with
Section 11(a) or (b) hereof, Company shall appoint a bank or trust
company in good standing, organized and doing business under the
laws of the United States or a state thereof, with a combined
capital and surplus of not less that $50,000,000 and authorized
under the laws governing its organization to exercise corporate
trustee powers, as a successor to replace Trustee upon resignation
or removal. The appointment shall be effective when accepted in
writing by the new Trustee, who shall have all of the rights and
powers of the former Trustee, including ownership
rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the
successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the
provisions of Section 11(c) hereof and selects a successor Trustee,
Trustee shall appoint a bank or trust company in good standing,
organized and doing business under the laws of the United States or
a state thereof, with a combined capital and surplus of not less
that $50,000,000 and authorized under the laws governing its
organization to exercise corporate trustee powers. The appointment
of a successor Trustee shall be effective when accepted in writing
by the new Trustee. The new Trustee shall have all the rights and
powers of the former Trustee, including ownership rights in Trust
assets. The former Trustee shall execute any instrument necessary
or reasonably requested by the successor Trustee to evidence the
transfer.
(c) The successor Trustee need not examine the records and
acts of any prior Trustee and may retain or dispose of existing
Trust assets, subject to Sections 5, 7 and 8 hereof. The successor
Trustee shall not be responsible for and Company shall indemnify
and defend the successor Trustee from any claim or liability
resulting from any action or inaction of any prior Trustee or from
any other past event, or any condition existing at the time it
becomes successor trustee.
Section 13. Amendment or Termination
(a) This Trust Agreement may be amended by a written
instrument executed by Trustee and Company, provided that no
amendment which would materially affect the likelihood that assets
of the Trust will be available to fund benefits payable under the
Plan(s) shall be made unless the prior written approval of 75% of
the Plan participants (or beneficiaries as the case may be) has
been obtained; and provided further, that no amendment shall
increase the duties or responsibilities of Trustee unless Trustee
consents thereto in writing.
(b) The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan(s). The Trust shall
terminate at the discretion of Company if the Internal Revenue
Service or any court rules that Company is not the owner of the
Trust, that Plan participants (or their beneficiaries) are taxable
on payment of Plan benefits prior to their becoming payable or that
Plan participants (or their beneficiaries) have greater rights to
assets of the Trust than other general creditors of Company.
(c) Upon written approval of 75 percent of the Plan
participants or beneficiaries entitled to payment of benefits
pursuant to the terms of the Plan(s), Company may terminate this
Trust prior to the time all benefit payments under the Plan(s) have
been made.
(d) Upon termination of the Trust, after its final
accounting, Trustee shall distribute the net balance of any assets
of the Trust remaining after all benefits, legal fees and expenses,
and management and administration expenses have been paid. Upon
making such a distribution, Trustee shall be relieved from all
further liability.
Section 14. Miscellaneous
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of such prohibition, without
invalidating the remaining provisions hereof.
(b) Any reference to Plan(s) provisions which require
knowledge of the Plan shall impose a duty on the Company to
communicate such knowledge to the Trustee by giving the Trustee
relevant portions of the Plan((s) and the Trustee shall be entitled
to rely upon such provisions until notified by the Company.
(c) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution
or other legal or equitable process.
(d) This Trust Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
(e) For purposes of this Trust, "change in control" shall
have the same meaning as provided in the Plan(s).
(f) The headings of sections of this Trust Agreement and
defined terms are used herein for convenience of reference only and
in case of any conflict the text of this Agreement shall control.
(g) This Agreement shall be binding upon and inure to the
benefit of any successor to Company or its business as the result
of merger, consolidation, reorganization, transfer of assets or
otherwise and any subsequent successor thereto, and any such
successor shall be deemed to be the "Company" under this Agreement.
In the event of any such merger, consolidation, reorganization,
transfer of assets or other similar transaction,
<PAGE>
the successor to Company or its business or any subsequent
successor thereto shall promptly notify Trustee in writing of its
successorship and furnish the Trustee with the information
specified in Section 10(a) of this Agreement. In no event shall
any such transaction described herein suspend or delay the rights
of Plan participants (or their beneficiaries) to receive benefits
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
CONSOLIDATED FREIGHTWAYS, INC. MELLON BANK, N.A.
By: /s/Eberhard G.H. Schmoleler By: ___________________
Name: /s/Eberhard G.H. Schmoleler Name: ___________________
Title: Senior Vice President Title: ___________________
and General Counsel
Exhibit 10.40
AMENDED AND RESTATED
RETIREMENT PLAN FOR DIRECTORS OF
CONSOLIDATED FREIGHTWAYS, INC.
January 1, 1994
I. PURPOSE
The Consolidated Freightways, Inc. Retirement Plan for
Directors (the "Plan") has been established to provide
retirement income to eligible directors and to assist
Consolidated Freightways, Inc. (the "Company") in attracting
and retaining individuals with the desired skills to serve
on the Board of Directors of the Company (the "Board") and
effectively carry out their duties in representing the
Company and its shareholders.
II. TERM
The Plan is effective as of May 1, 1989 and shall remain in
effect unless amended or terminated by the Board or ter-
minated by change of control, as described in Section V of
this Plan.
III. ELIGIBILITY AND VESTING
A director of the Company shall automatically participate in
the Plan by accruing a retirement benefit for each full
calendar month he or she is a non-employee director of the
Company.
The retirement benefit accrued vests when a participant
completes sixty months of service as a director, including
service as an employee and non-employee director. If a
participant terminates service as a director prior to that
time, such participant shall not be entitled to any
retirement benefit under the Plan.
IV. RETIREMENT BENEFIT
(a) Accrual of Retirement Benefit
For each full calendar month that a director
serves as a non-employee director of the Company
prior to January 1, 1994, the director will
accrue a retirement benefit equal to $2,500.
Each month after that date, a director will
accrue a retirement benefit equal to one-twelfth
of the annual cash retainer, whether paid or
deferred, then in effect. The maximum number of
months for which benefits may be accrued as a
non-employee director is two hundred-forty months
(twenty years).
(b) Timing of Benefit Payment and Form
Should a participant terminate service as a
director mid-quarter, the first benefit payment
shall be paid the first of the month following
termination, provided that the participant is not
then an employee of the Company or a subsidiary
on such date. If the participant is an employee
of the Company or a subsidiary on the first
payment date, benefit payments shall commence on
the first day of the next subsequent month as of
which the participant is not an employee of the
Company or a subsidiary. Otherwise, retirement
benefits shall be paid quarterly, commencing on
the first day of the calendar quarter following
termination of service as a director.
(c) Amount of Benefit Payments
Quarterly benefit payments shall equal three
months of accrued benefits, starting with the
earliest amounts accrued. If termination of
service occurs mid-quarter, the first payment
shall be prorated based on the number of full
calendar months remaining in the quarter.
Payments shall continue until all accrued
retirement benefits have been paid.
(d) Suspension of Benefits
If a participant resumes service as a director or
becomes an employee of the Company or a
subsidiary after payments begin under the terms
of this Plan, benefit payments shall cease during
the period of subsequent service or employment.
If a participant is a non-employee director, the
participant shall continue to accrue a retirement
benefit for each full month of service, subject
to limitation on accrual of a maximum of two
hundred forty months. In no event shall the
participant be credited with service for any
period in which the participant receives benefit
payments under this Plan, nor shall a participant
be entitled to payments for more than two-
hundred-forty months.
(e) Death Benefits
If a director dies after having vested in a
benefit under this Plan, but before all payments
due that director have been made, any remaining
payments shall be made to the director's
surviving spouse. If at any time after the
director is deceased, no surviving spouse exists,
or a surviving spouse should die before all
payments are made, a lump sum present value of
the remaining benefits shall be payable to the
director's or spouse's estate, as the case may
be. Present value shall be determined as of the
date of death using the published prime rate of
Bank of America N.T. & S.A. then in effect.
(f) Forfeiture
Any benefits payable under this Plan shall be
forfeited in their entirety by any director who
is terminated from service on the Board for cause
or who becomes an employee or consultant of a
competitor organization without the written
consent of the Compensation Committee of the
Board of Directors of the Company. In this Plan,
cause shall be used to mean acts of moral
turpitude. The Compensation Committee shall
determine whether or not termination is for cause
or if the participant becomes an employee or
consultant of a competitor, in its sole
discretion.
V. CHANGE OF CONTROL
If a change of control of the Company occurs, the Plan shall
be immediately terminated and all benefits accrued to the
date of the change of control shall become immediately
payable to the participants, without discount or offset.
A "change in control" shall be deemed to have occurred, (i)
if at any time (a) the Company shall cease to be a publicly
owned corporation having its outstanding common stock listed
on a nationally recognized stock exchange or traded over the
counter, or (b) more than 25% of the Company's outstanding
common stock (or the equivalent in voting power of any class
or classes of outstanding securities of the Company
ordinarily entitled to vote in the election of directors)
shall be beneficially held or acquired by any corporation or
person or group; or (ii) if during any period of two
consecutive years, individuals, who at the beginning of such
period constitute the Board of Directors of the Company,
cease for any reason to constitute a majority thereof,
unless the election, or nomination for election, by the
Company's shareholders of each new director was approved by
a vote of a majority of the directors then still in office
who were directors at the beginning of such period. "Group"
shall mean persons who act in concert as described in
Section 14-(d)(2) of the Securities Exchange Act of 1934, as
amended.
VI. ADMINISTRATION
The Plan shall be administered by the Compensation Committee
of the Board. The Compensation Committee shall have broad
discretion to administer and interpret the Plan and to take
any necessary actions not inconsistent with the terms
contained elsewhere in this plan document, in its sole
discretion.
The Committee shall act by majority vote and any decisions
of the Committee shall be final and binding on all parties.
VII. FUNDING
The Plan shall be unfunded and represent an unsecured
obligation of the Company. Benefits earned under this Plan
shall be paid from the general assets of the Company.
Neither the participants nor his or her estate or
beneficiaries have any right against the Company with
respect to benefits provided under this Plan except as a
general unsecured creditor of the Company.
VIII. LIMITATION OF RIGHTS/CREDITOR CLAIMS
No benefit under this Plan may be sold, assigned,
transferred, conveyed, hypothecated, encumbered, anticipated
or otherwise disposed of, and any attempt to do so shall be
void. No such benefit shall, prior to receipt thereof by
the director, be in any manner subject to debts, contracts,
liabilities or torts of such director. The Company will not
recognize any act by a participant or occurring by operation
of law (such as bankruptcy or garnishment) that attempts to
pledge, assign or otherwise encumber benefits earned under
this Plan, and any attempt to do so shall be null and void.
IX. AMENDMENT OR TERMINATION
The Board shall have the authority to amend or terminate the
Plan at any time. However, no amendment or termination of
the Plan shall unilaterally remove any benefit to which
the participant would have been entitled had he or she
actually terminated on the date immediately prior to the
effective date of such plan amendment or termination.
IX. GOVERNING LAW
The Plan shall be construed and administered in compliance
with the laws of the State of California, unless a
superseding Federal law applies.
CONSOLIDATED FREIGHTWAYS, INC.
By /s/Eberhard G.H. Schmoller
Eberhard G. H. Schmoller
Senior Vice President and
General Counsel
Dated as of October 1, 1994
The Company's 1994 operating profit increased by 18.4% to $142.2
million from 1993 despite losses related to the April Teamster's
strike at CF MotorFreight (CFMF), the Company's nationwide, full-
service carrier. This improvement reflects record profits at Emery
Worldwide (Emery) and Con-Way Transportation Services (CTS). Emery
posted record operating income of $77.6 million following profit
improvements of over $45 million for four consecutive years, while
CTS exceeded $100 million in operating income for the first time
since its founding in 1983. The Company's 1992 operating income
included certain non-recurring charges. Excluding these charges,
1993 operating income improved $54.3 million or 82.4% over 1992.
The Company's 1994 revenues increased 11.7% to a record $4.7
billion due primarily to significant growth at CTS and Emery.
Despite growth in the second half of the year, full-year revenues
from CFMF were down largely as a result of the strike and
subsequent recovery. Total Company revenues for 1993 increased
3.4% over 1992 as Emery regained revenues due to various successful
marketing programs and CTS continued to grow through expansion into
new markets.
Significant variations in segment revenue and operating income are
as follows.
CF MOTORFREIGHT
CF MotorFreight's 1994 revenues decreased 0.9% on a tonnage decline
of 5.8%. Higher rated less-than-truckload (LTL) tonnage declined
5.4% from 1993. Revenues were down in the first half of 1994 by
11.1% largely because of the Teamster strike in April. This
decline was mitigated in the second half of 1994 by tonnage growth
of 2.9% and revenue growth from the non-carrier logistics
operation. CFMF's 1993 revenues decreased 3.3% on a tonnage
decline of 3.1% with higher rated LTL tonnage declining 3.0%,
reflecting price erosion and market dilution from competitors.
The operating loss of $46.6 million for 1994 declined from a profit
of $31.7 million in 1993. The decline was attributable to losses
incurred during the April strike and the subsequent recovery
period. CFMF reported a $42.1 million loss in the second quarter.
Although revenue and tonnage increased in the latter half of 1994,
compared with the second half of 1993, operating income declined
$23.6 million. The decline is primarily attributable to
additional costs incurred due to capacity restraints from a system-
wide shortage of trailers, lost productivity and costs associated
with re-domiciling employees and equipment following changes in
linehaul operations. These operational changes, which began in the
fourth quarter, are scheduled to continue through the second
quarter of 1995. The programs are designed to take advantage of
flexibilities achieved in the new labor contract which will allow
CFMF to be more competitive. In 1993, operating income was $31.7
million compared to $27.5 million in 1992, and increase of 15.4%.
Management also expects to increase revenues by offering a full
range of services and increasing penetration of all markets.
Management believes that the implementation of these programs,
satisfying equipment requirements, combined with a 4.4% rate
increase announced for January, should restore profitability in
1995.
CON-WAY TRANSPORTATION SERVICES
Con-Way Transportation Services' (CTS) revenues surpassed the
billion dollar milestone with an increase of 24.5% from 1993. The
revenue growth is largely due to a tonnage gain of 21.0% over 1993,
attributable to geographic expansion and growth in existing markets
including expanded use of joint service agreements. Also
contributing to the tonnage growth was business obtained during the
strike of unionized LTL carriers. The higher rated LTL tonnage
increase was 23.7% over the prior year. In 1993, revenues
increased 13.0% on a tonnage increase of 26.3% from 1992 with the
higher rated LTL tonnage increasing 13.9%.
CTS's operating income set a record by exceeding the $100 million.
Operating income increased 54.8% with an operating margin of 10.9%
compared to 8.8% in 1993. CTS has been able to improve margins
despite costs associated with the geographic expansions by
enhancing yields and improving productivity. Also contributing to
the improved margins has been CTS's ability to retain a portion of
the strike-related business. CTS's 1993 operating income increased
33.7% over 1992. The 1993 operating margin of 8.8% compares with
a 7.4% margin in 1992.
CTS continues to respond to customer demands by expanding
geographic coverage. Beginning in 1995, CTS combined separate
operations in the Southwest and Southeast, enabling CTS to provide
a broader, more comprehensive service from Texas to the Carolinas.
In addition, CTS is expanding further into the Northeast, Pacific
Northwest and New Jersey. Utilizing joint-service agreements among
the Con-Way regional carriers will enable CTS to offer superior
services to all major areas and with other product offerings,
enhance their business levels.
Increased market growth, productivity improvements and the benefits
of a January rate increase should enable CTS to continue to earn a
satisfactory operating margin. However, CTS expects to incur costs
associated with its expansion into new markets and may experience
some erosion in rates with the deregulation of intrastate operating
rights.
EMERY WORLDWIDE
Emery Worldwide achieved record revenues of $1.6 billion, an
increase of 24.3% from 1993. This notable increase was
attributable to significant growth in the international area where
tonnage increased 45.2% combined with a 30.2% increase
domestically. All of the gains in tonnage and revenue came from
commercial business as revenues from the U.S. Postal Service (USPS)
contract declined 18.5%. Emery accomplished this significant
growth by providing a premium service at a time when commercial
airlines were curtailing availability of airlift capacity on wide-
bodied aircraft. Emery benefited from marketing programs that
increased market penetration of traditional industries domestically
and in the textile and electronic sectors, internationally. Emery
also benefited from the strike of unionized LTL carriers. Revenues
in 1993 increased 10.0% from 1992, also due entirely to gains in
commercial business as revenues from the USPS contract declined.
Operating income reached an all-time high of $77.6 million. This
represents a fourfold improvement from 1993 income of $16.6
million. Emery's 1994 operating results marked four consecutive
years of more than $45 million annual improvement since the loss in
1990 of $128.0 million. The operating margin in 1994 was 5.0%
compared to 1.3% in 1993. Operating income for 1993 was a $49.2
million improvement from the $32.7 million loss in 1992. These
improvements are attributed to stringent cost control measures
coupled with an increase in business levels resulting from the
success of Emery's marketing initiatives and renewed customer
confidence.
In 1995, management will focus on margin improvements with the same
cost reduction strategies that proved successful in the past.
Emphasis will be placed on international expansion and new services
that will enable Emery to distinguish itself from other carriers in
satisfying customer needs. Management expects improvements at its
Hub operation, savings associated with increased dedicated lift and
other operating efficiencies to yield continued improvements in
operating income.
OTHER INCOME (EXPENSE)
For the Company, other net expense increased marginally in 1994 due
to the following reasons. Interest expense decreased 7.9% from
1993 as the Company reduced borrowing costs with debt refinancing
and scheduled debt retirements. Offsetting the above was a
decrease in investment income of 60.5% as the Company liquidated
short-term investments to meet debt retirement and capital
expenditure needs as well as to supplement cash flows during the
Teamster's strike. The 1993 expenses declined from 1992, as other
income and expense in 1992 included non-recurring charges related
to the write-down of properties held for sale and certain other
intangible assets.
NET INCOME TO COMMON SHAREHOLDERS
The 1994 net income available to common shareholders of $35.7
million includes a $5.5 million charge for the write-off of
intrastate operating rights. Excluding this charge, net income
available to common shareholders improved 30.5% over 1993 despite
significant costs incurred at CFMF as a result of the strike,
subsequent recovery and changes in linehaul operations. A higher
effective income tax rate in 1994 was due primarily to restrictions
on realizing tax benefits of operating losses in certain states and
an increase in certain non-deductible expenses. Net income
available to common shareholders in 1993 was $31.6 million compared
to the 1992 net loss applicable to common shareholders of $97.7
million which included a $7.4 million extraordinary charge for
early retirement of debt, a $70.0 million one-time charge for the
adoption of SFAS 106 and $27.8 million in non-recurring charges net
of related tax benefits. Excluding these 1992 charges, the 1993 net
income available to common shareholders improved $34.0 million over
1992.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1994, the Company had $95.7 million in cash and
cash equivalents. Although the Company had positive cash flows
from operations, due primarily to net income and significant
depreciation and amortization, cash and investments decreased
because of scheduled debt repayments of $39.5 million and capital
expenditures. Capital expenditures in 1994 totaled $181.9 million
compared with $201.2 million in the prior year. 1993 capital
expenditures included approximately $72.2 million in purchases of
aircraft and equipment in connection with the USPS contract. In
1994, debt retirement, capital expenditures and preferred stock
dividend requirements were satisfied with cash from operations.
Certain equipment requirements were supplemented by lease
agreements. Capital expenditure in 1995 will come from cash flows
from operations supplemented by financing arrangements.
In December, 1994, the Board of Directors reinstated quarterly cash
dividends of $.10 per common share. The common dividend had been
suspended in June 1990. A portion of the funds required to satisfy
the dividend will come from the absence of the Series C preferred
stock dividend which ends with their conversion in the first
quarter of 1995.
In May 1994, the Company entered into a $50 million unsecured
revolving credit facility to provide for working capital needs. As
of December 31, 1994, no amounts were outstanding under this
agreement.
In 1994, the Company amended an agreement with several banks to
increase its Emery's receivables sales facility to $100 million and
reduce related fees by approximately one-half. At December 31,
1994, there were $71.7 million of letters of credit issued and
secured with receivables under this facility.
In January, 1995, the Company amended an agreement with several
banks to modify a $300 million unsecured credit facility. The
agreement effectively replaces facilities that provided an
aggregate capacity of $305 million. The new agreement provides for
letter of credit and working capital needs at rates more favorable
than the prior facilities. Outstanding letters of credit of $123.3
million at December 31, 1994 under prior facilities were
transferred to the new facility beginning in January 1995.
At December 31, 1994, the Company's ratio of long-term debt
obligations (including guarantees) to total capital (including
long-term obligations) was 37.1% compared with 39.6% at year end
1993. The improvement is primarily attributable to net income and
the retirement of debt in 1994. The current ratio at December 31,
1994 and 1993 was 1.1 to 1. The Company can successfully maintain
this current ratio because of a high turnover of accounts
receivable.
OTHER
The Company's operations necessitate the storage of fuel in
underground tanks as well as the disposal of substances regulated
by various federal and state laws. The Company adheres to a
stringent site-by-site tank testing and maintenance program
performed by a qualified independent third party to protect the
environment and comply with regulations. Where the need for
environmental cleanup is necessary, the Company takes appropriate
action.
The Company has been designated a Potentially Responsible Party
(PRP) by the U.S. Environmental Protection Agency with respect to
the disposal of hazardous substances at various sites. However,
based upon cost studies performed by independent parties, the
Company expects its share of the cleanup costs to be minimal.
REPORT OF INDEPENDENT PUBLIC ACCOUNTS
To the Shareholders and Board of Directors of
Consolidated Freightways, Inc.
We have audited the accompanying consolidated balance sheets of
Consolidated Freightways, Inc. (a Delaware Corporation) and
subsidiaries as of December 31, 1994 and 1993, and the related
statements of consolidated operations, cash flows and shareholders'
equity for each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express and opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Consolidated Freightways, Inc. and subsidiaries as of December 31,
1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994
in conformity with generally accepted accounting principles.
As discussed in Notes 5 and 7 to the consolidated financial
statements, effective January 1, 1992 the Company changed its
method of accounting for income taxes to reflect the adoption of
the Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," and its method of accounting for
post retirement benefits to reflect the adoption of the Statement
of Financial Accounting Standards No. 106, "Employers' Accounting
for Post Retirement Benefits Other than Pensions."
/s/Arthur Andersen LLP
San Francisco, California
January 27, 1995
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
(Dollars in thousands)
1994 1993
ASSETS
Current Assets
Cash and cash equivalents $95,711 $139,044
Trade accounts receivable, net of allowances 659,191 508,669
Other accounts receivable 37,021 24,261
Operating supplies, at lower of average cost 41,719 34,940
Prepaid expenses 71,277 69,009
Deferred income taxes (Note 5) 126,546 108,458
Total Current Assets 1,031,465 884,381
Property, Plant and Equipment, at cost
Land 163,965 152,402
Buildings and improvements 510,568 488,292
Revenue equipment 979,002 935,482
Other equipment and leasehold improvements 368,809 347,601
2,022,344 1,923,777
Accumulated depreciation and amortization (1,077,752) (1,013,333)
944,592 910,444
Other Assets
Restricted funds 12,861 13,954
Deposits and other assets 80,626 75,032
Unamortized aircraft maintenance, net (Note 1) 81,010 64,736
Costs in excess of net assets of businesses
acquired, net of accumulated amortization 322,169 354,076
Marketable securities, at lower of cost or
market -- 13,727
496,666 521,525
Total Assets $2,472,723 $2,316,350
The accompanying notes are an integral part of these statements.
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1993
Current Liabilities
Accounts payable and accrued liabilities (Note 2) $796,381 $634,107
Accrued claims costs 138,800 138,242
Current maturities of long-term debt and capital leases
(Notes 3 and 4) 3,712 39,246
Federal and other income taxes (Note 5) 6,275 15,855
Total Current Liabilities 945,168 827,450
Long-Term Liabilities
Long-term debt and guarantees (Note 3) 286,833 297,215
Long-term obligations under capital leases (Note 4) 111,024 111,194
Accrued claims costs 163,849 173,999
Deferred income taxes (Note 5) 38,034 22,085
Other liabilities and deferred credits (Note 7) 254,186 261,032
Total Liabilities 1,799,094 1,692,975
Shareholders' Equity (Note 6)
Preferred stock, no par value; authorized 5,000,000 shares:
Series A, designated 600,000 shares; none issued -- --
Series B, 8.5% cumulative, convertible, $.01 stated
value; designated 1,100,000 shares; issued 962,748
and 968,655 shares, respectively 10 10
Series C, 8.738% cumulative, convertible, $.01 stated
value; designated and issued 690,000 shares 7 7
Additional paid-in capital, preferred stock 264,284 265,182
Deferred TASP compensation (Note 8) (120,646) (129,276)
Total Preferred Shareholders' Equity 143,655 135,923
Common stock, $.625 par value; authorized 100,000,000
shares; issued 43,955,510 and 43,340,801 shares,
respectively 27,472 27,090
Additional paid-in capital, common stock 116,209 104,666
Cumulative translation adjustment (1,170) 1,229
Retained earnings 574,885 542,811
Cost of repurchased common stock
(7,601,382 and 7,638,809 shares, respectively) (187,422) (188,344)
Total Common Shareholders' Equity 529,974 487,452
Total Shareholders' Equity 673,629 623,375
Total Liabilities and Shareholders' Equity $2,472,723 $2,316,350
The accompanying notes are an integral part of these statements.
<TABLE>
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
Years Ended December 31,
(Dollars in thousands except per share data)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
REVENUES $ 4,680,479 $ 4,191,811 $ 4,055,589
COSTS AND EXPENSES
Operating expenses 3,824,141 3,407,996 3,306,732
Selling and administrative expenses 580,370 528,022 561,581
Depreciation 133,734 135,636 138,695
4,538,245 4,071,654 4,007,008
OPERATING INCOME 142,234 120,157 48,581
OTHER INCOME (EXPENSE)
Investment income 2,205 5,586 5,041
Interest expense (27,945) (30,333) (38,893)
Miscellaneous, net (4,574) (3,969) (25,462)
(30,314) (28,716) (59,314)
Income (loss) before income taxes (benefits),
extraordinary charges and cumulative effect
of accounting change 111,920 91,441 (10,733)
Income taxes (benefits) (Note 5) 51,625 40,867 (7,077)
Income (loss) before extraordinary charges
and cumulative effect of accounting change 60,295 50,574 (3,656)
Extraordinary charge from write-off of intrastate
operating rights, net of related income tax
benefits of $4,056 5,522 -- --
Extraordinary charge from early retirement of debt,
net of related income tax benefits of $4,561 -- -- 7,428
Cumulative effect of change in method of accounting
for post retirement benefits, net of related
income tax benefits of $42,899 (Note 7) -- -- 69,991
Net income (loss) 54,773 50,574 (81,075)
Preferred stock dividends 19,063 18,967 16,653
NET INCOME (LOSS) APPLICABLE TO
COMMON SHAREHOLDERS $ 35,710 $ 31,607 $ (97,728)
Primary average shares outstanding (Note 1) 37,216,044 36,187,682 35,195,743
PRIMARY EARNINGS (LOSS) PER SHARE:
Net income (loss) before extraordinary charges
and cumulative effect of accounting change $ 1.11 $ 0.87 $ (0.58)
Extraordinary charges (0.15) -- (0.21)
Cumulative effect of accounting change -- -- (1.99)
Net income (loss) $ 0.96 $ 0.87 $ (2.78)
FULLY DILUTED EARNINGS (LOSS) PER SHARE (Note 1) $ 0.87 $ 0.77 $ (2.78)
<FN>
The accompanying notes are an intergral part of these statements.
</TABLE>
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
YEARS ENDED DECEMBER 31
(In thousands)
1994 1993 1992
Cash and Cash Equivalents, Beginning
of Period $139,044 $152,064 $284,645
Cash Flows from Operating Activities
Income (loss) before extraordinary charges
and cumulative effect of accounting change 60,295 50,574 (3,656)
Adjustments to reconcile income (loss) to net
cash provided by operating activities:
Depreciation and amortization 145,765 146,297 166,917
Increase (decrease) in deferred income taxes 3,417 (20,298) (28,661)
Losses (gains) from property disposals, net 1,147 (607) 6,688
Changes in assets and liabilities:
Receivables (148,934) (194,320) (16,139)
Notes receivable from sale of trade accounts -- 166,399 15
Accrued claims costs (9,592) (7,400) 20,359
Accounts payable 46,557 17,225 (2,254)
Income taxes (10,873) (9,871) (7,313)
Accrued incentive compensation 27,074 7,396 3,686
Accrued liabilities and other 50,326 17,413 (7,863)
Net Cash Provided by Operating Activities 165,182 172,808 131,779
Cash Flows from Investing Activities
Capital expenditures (181,928) (201,210) (148,706)
Purchases of marketable securities -- (54,749) (47,865)
Sales of marketable securities 13,727 88,887 --
Proceeds from sales of property 10,325 12,270 4,097
Net Cash Used by Investing Activities (157,876) (154,802) (192,474)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt -- 32,000 --
Repayment of long-term debt and capital lease
obligations (39,486) (45,236) (164,008)
Premium on early retirement of debt -- -- (7,586)
Proceeds from issuance of preferred stock -- -- 117,867
Proceeds from issuance of common stock 11,949 5,387 2,808
Payments of preferred dividends (23,102) (23,177) (20,967)
Net Cash Used by Financing Activities (50,639) (31,026) (71,886)
Decrease in Cash and Cash Equivalents (43,333) (13,020) (132,581)
Cash and Cash Equivalents, End of Period $95,711 $139,044 $152,064
Supplemental Disclosure
Cash paid for income taxes $56,679 $71,036 $19,053
Cash paid for interest (net of amounts
capitalized) $24,401 $30,438 $39,035
The accompanying notes are an integral part of these statements.
<TABLE>
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(Dollars in thousands)
<CAPTION>
Preferred Stock Series B Preferred Stock Series C Common Stock
Number of Number of Number of
Shares Amount Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 978,686 $10 -- $-- 42,821,544 $26,765
Issuance of preferred stock -- -- 690,000 7 -- --
Exercise of stock options, net of tax
benefits of $157 -- -- -- -- 194,775 122
Recognition of deferred compensation -- -- -- -- -- --
Repurchased common stock issued for
conversion of preferred stock (4,534) -- -- -- -- --
Net loss -- -- -- -- -- --
Series B, Preferred dividends ($12.93 per
share) net of tax benefits of $4,315 -- -- -- -- -- --
Series C, Preferred dividends ($15.40
per share) -- -- -- -- -- --
Translation adjustment -- -- -- -- -- --
Balance, December 31, 1992 974,152 10 690,000 7 43,016,319 26,887
Exercise of stock options, net of tax
benefits of $708 -- -- -- -- 324,482 203
Recognition of deferred compensation -- -- -- -- -- --
Repurchased common stock issued for
conversion of preferred stock (5,497) -- -- -- -- --
Net income -- -- -- -- -- --
Series B, Preferred dividends ($12.93 per
share) net of tax benefits of $4,207 -- -- -- -- -- --
Series C, Preferred dividends ($15.40
per share) -- -- -- -- -- --
Translation adjustment -- -- -- -- -- --
Balance, December 31, 1993 968,655 10 690,000 7 43,340,801 27,090
Exercise of stock options, net of tax
benefits of $2,400 -- -- -- -- 614,709 382
Recognition of deferred compensation -- -- -- -- -- --
Repurchased common stock issued for
conversion of preferred stock (5,907) -- -- -- -- --
Net income -- -- -- -- -- --
Common dividends ($.10 per share) -- -- -- -- -- --
Series B, Preferred dividends ($12.93 per
share) net of tax benefits of $4,039 -- -- -- -- -- --
Series C, Preferred dividends ($15.40
per share) -- -- -- -- -- --
Translation adjustment -- -- -- -- -- --
Balance, December 31, 1994 962,748 $10 690,000 $7 43,955,510 $27,472
<FN>
The accompanying notes are an intergral part of these statements.
</TABLE>
<TABLE>
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY (continued)
(Dollars in thousands)
<CAPTION> Cost of
Additional Cumulative Repurchased Deferred TASP
Paid-in Translation Retained Common and EMSOP
Capital Adjustment Earnings Stock Compensation Total
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $246,417 $12,393 $608,935 ($190,643) ($156,794) $547,083
Issuance of preferred stock 117,860 -- -- -- -- 117,867
Exercise of stock options, net of tax
benefits of $157 2,686 -- -- -- -- 2,808
Recognition of deferred compensation -- -- -- -- 18,597 18,597
Repurchased common stock issued for
conversion of preferred stock (1,097) -- -- 1,097 -- --
Net loss -- -- (81,075) -- -- (81,075)
Series B, Preferred dividends ($12.93 per
share) net of tax benefits of $4,315 -- -- (8,303) -- -- (8,303)
Series C, Preferred dividends ($15.40 per
share) -- -- (8,350) -- -- (8,350)
Translation adjustment -- (9,466) -- -- -- (9,466)
Balance, December 31, 1992 365,866 2,927 511,207 (189,546) (138,197) 579,161
Exercise of stock options, net of tax
benefits of $708 5,184 -- -- -- -- 5,387
Recognition of deferred compensation -- -- -- -- 8,921 8,921
Repurchased common stock issued for
conversion of preferred stock (1,202) -- -- 1,202 -- --
Net income -- -- 50,574 -- -- 50,574
Series B, Preferred dividends ($12.93 per
share) net of tax benefits of $4,207 -- -- (8,343) -- -- (8,343)
Series C, Preferred dividends ($15.40
per share) -- -- (10,627) -- -- (10,627)
Translation adjustment -- (1,698) -- -- -- (1,698)
Balance, December 31, 1993 369,848 1,229 542,811 (188,344) (129,276) 623,375
Exercise of stock options, net of tax
benefits of $2,400 11,567 -- -- -- -- 11,949
Recognition of deferred compensation -- -- -- -- 8,630 8,630
Repurchased common stock issued for
conversion of preferred stock (922) -- -- 922 -- 0
Net income -- -- 54,773 -- -- 54,773
Common dividends ($.10 per share) -- -- (3,636) -- -- (3,636)
Series B, Preferred dividends ($12.93 per
share) net of tax benefits of $4,039 -- -- (8,436) -- -- (8,436)
Series C, Preferred dividends ($15.40
per share) -- -- (10,627) -- -- (10,627)
Translation adjustment -- (2,399) -- -- -- (2,399)
Balance, December 31, 1994 $380,493 ($1,170) $574,885 ($187,422) ($120,646) $673,629
<FN>
The accompanying notes are an intergral part of these statements.
</TABLE>
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Principal Accounting Policies
Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of Consolidated Freightways, Inc. (the
Company), its wholly owned subsidiaries and those of special-purpose
financing corporations.
Recognition of Revenues: Transportation freight charges are recognized
as revenue when freight is received for shipment. The estimated costs of
performing the total transportation service are then accrued.
Cash and Cash Equivalents: The Company considers highly liquid
investments with an original maturity of three months or less to be cash
equivalents.
Trade Accounts Receivable, Net: Trade accounts receivable are net of
allowances of $26,938,000 and $29,780,000 at December 31, 1994 and 1993,
respectively.
Property, Plant and Equipment: Property, plant and equipment are
depreciated on a straight-line basis over their estimated useful lives,
which are generally 25 years for buildings and improvements, 10 years or less
for aircraft, 6 to 10 years for tractor and trailer equipment and 3 to 10
years for most other equipment. Leasehold improvements are amortized over
the shorter of the terms of the respective leases or the useful lives of the
assets.
Expenditures for equipment maintenance and repairs, except for aircraft,
are charged to operating expenses as incurred; betterments are capitalized.
Gains (losses) on sales of equipment are recorded in operating expenses.
The costs to perform required maintenance inspections of engines and
aircraft frames for leased and owned aircraft are capitalized and amortized
to expense over the shorter of the period until the next scheduled
maintenance or the remaining term of the lease agreement. Accordingly, the
Company has recorded unamortized maintenance of $140,607,000 and $120,204,000
at December 31, 1994 and 1993, respectively. Under the Company's various
aircraft lease agreements, the Company is expected to return the aircraft
with a stipulated number of hours remaining on the aircraft and engines until
the next scheduled maintenance. The Company has recorded $59,597,000 and
$55,468,000, at December 31, 1994 and 1993, respectively, to accrue for this
obligation and any anticipated unusable maintenance expected at the date of
lease return or other disposal. The net amount, which represents the
difference between maintenance performed currently and that required or
remaining at the expiration of the lease or other disposal, is classified as
unamortized aircraft maintenance, net in the consolidated balance sheets.
Costs in Excess of Net Assets of Businesses Acquired: The costs in
excess of net assets of businesses acquired are capitalized and amortized on
a straight-line basis up to a 40-year period.
Income Taxes: The Company follows the liability method of accounting
for income taxes.
Accrued Claims Costs: The Company provides for the uninsured costs of
medical, casualty, liability, vehicular, cargo and workers' compensation
claims. Such costs are estimated each year based on historical claims and
unfiled claims relating to operations conducted through December 31. The
long-term portion of accrued claims costs relate primarily to workers'
compensation claims which are payable over several years.
Earnings Per Share: Primary earnings per common share are based upon
the weighted average number of common shares outstanding during each period
after consideration of the dilutive effect of stock options. Fully diluted
earnings per share are similarly computed, but include the dilutive effect of
the Company's Thrift and Stock Plan (TASP) shares. The 1994 computation
includes an addback to income of $478,000 representing the Series B preferred
stock dividend net of replacement funding. The number of shares used for the
computation of fully diluted earnings per share for 1994 and 1993 are
41,541,388 and 40,857,876, respectively. The fully diluted loss per share
computation for 1992 excludes stock options and TASP shares because their
inclusion would be anti-dilutive.
In November 1993, the Accounting Standards Division of the AICPA issued
Statement of Position 93-6, "Employers' Accounting for Employee Stock
Ownership Plans" (SOP 93-6). The Company is not required to adopt this
method of accounting as its existing ESOP (TASP) was established before
December 31, 1992. If this statement had been adopted January 1, 1994, both
the primary and fully diluted earnings per share for year-to-date ended
December 31, 1994 would have been $.94.
Reclassification: Certain amounts in prior year's financial statements
have been reclassified to conform to the current year presentation.
2. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consist of the following as of
December 31:
1994 1993
(Dollars in thousands)
Accounts payable $253,584 $206,499
Other accrued liabilities 204,738 157,432
Accrued holiday and vacation pay 95,219 80,661
Accrued pension costs 63,881 50,728
Accrued taxes other than income taxes 46,725 41,785
Accrued incentive compensation 42,344 15,270
Wages and salaries 41,517 38,409
Estimated revenue adjustments 28,157 26,651
Accrued interest 20,216 16,672
Total accounts payable and
accrued liabilities $796,381 $634,107
3. Long-Term Debt and Guarantees
As of December 31, long-term debt and guarantees consisted of the following:
(Dollars in thousands) 1994 1993
8.75% to 8.88% Medium-Term Notes due
1995 ($100 million authorized;
interest payable semi-annually) $ 2,000 $40,225
9 1/8% Notes Due 1999 (interest payable
semi-annually) 117,705 117,705
7.0% to 12.0% Industrial Revenue
Bonds due through 2014 19,900 19,900
Other debt 876 8,291
TASP Notes guaranteed due through 2009 150,000 150,000
290,481 336,121
Less current maturities (3,648) (38,906)
Total long-term debt and guarantees $286,833 $297,215
The 9 1/8% notes due 1999 contain certain covenants limiting the
incurrence of additional liens.
Of the $150 million Thrift and Stock Plan (TASP) Notes, $117.0 million
are subject to earlier repurchase by the Company at the option of the
holders, with a yield protection penalty, in the event the Company's long-
term senior unsecured indebtedness should be rated by both Moody's and S&P as
below investment grade. S&P rates the Company's long-term senior unsecured
indebtedness at a rating below investment grade. Moody's rating of such
indebtedness is investment grade. In November 1992, the terms of the other
$33.0 million of the TASP Notes were modified to exclude the holders' early
repurchase option. In exchange, the interest rates on the notes were
enhanced by .5% and additional financial covenants including a common
dividend restriction equal to $10.0 million plus one-half of the Company's
earnings since inception of the agreement.
The Company has a $100.0 million receivable sale facility under which
$71.1 million of letters of credit were issued. The agreement involves the
sale of eligible Emery receivables to a special-purpose corporation, Emery
Receivables Corporation (ERC), for use as collateral for cash or non-
transferrable promissory notes and related letters of credit. The letters of
credit may be issued only on behalf of Emery Air Freight Corporation and
Emery Worldwide Airlines Inc., for a term of one year with an option to
renew. The letters of credit bear a fee of .725% per annum. Under the terms
of the agreement, ERC's assets will be available to satisfy its obligations
prior to any distribution to its stockholders. The agreement contains
various covenants, the most restrictive of which requires the participating
companies to maintain specified amounts of tangible net worth.
The Company has a $50.0 million unsecured revolving credit facility to
provide for working capital needs. Loans bear interest at LIBOR plus a
margin dependent on the Company's credit rating. As of December 31, 1994,
no amounts were outstanding.
In January 1995, the Company entered into a $300.0 million four-year
unsecured credit facility to provide for the Company's letter of credit and
working capital needs. The agreement replaces prior facilities under which
$123.3 million of letters of credit were outstanding at December 31, 1994.
Borrowings under the agreement will bear interest at a rate based upon LIBOR
plus a margin dependent on the Company's credit rating. The agreement
contains various restrictive covenants which limit the incurrence of
additional indebtedness and require the Company to maintain minimum amounts
of tangible net worth and fixed charge coverage.
Based on interest rates currently available to the Company for debt with
similar terms and maturities, the fair value of long-term debt approximates
book value at December 31, 1994 and 1993.
The aggregate annual maturities and sinking fund requirements of long-
term debt for each of the next five years ending December 31 are: 1995,
$3,648,000; 1996, $2,328,000; 1997, $3,100,000; 1998, $4,200,000; and 1999,
$122,905,000.
The Company's consolidated interest expense as presented on the
statements of consolidated operations is net of interest capitalized of
$1,042,000, $1,224,000 and $543,000 for each of the three years in the period
ended December 31, 1994.
The 1992 statement of consolidated operations reflects $7.4 million of
expense for the early retirement of indebtedness under the Secured Note
Purchase Agreement. All other debt retirements were at or near par.
4. Leases
The Company and its subsidiaries are obligated under various non-
cancelable leases which expire at various dates through 2011.
The principal capital lease covers a sorting facility in Dayton, Ohio
(Facility) for a 30-year lease term. Included in other equipment and
leasehold improvements are $83,963,000 and $83,741,000 as of December 31,
1994 and 1993, respectively, related to this facility. The accumulated
depreciation at December 31, 1994 and 1993 was $30,426,000 and $30,351,000,
respectively. The Facility is financed by City of Dayton, Ohio revenue bonds
Series A, C, D, E and F (Bonds). The Series C, D, E and F Bonds bear
variable rates of interest, approximately 4.3% at December 31, 1994. The
Series A Bonds are due through 2009 with an effective interest rate of 8%.
Rental payments under this lease are equivalent to debt service on the Bonds.
The Bonds have various call provisions at Emery's option. Series A Bonds
are secured by a debt service reserve fund of $7 million which is classified
as restricted funds in the consolidated balance sheets, a first lien on the
leasehold interests of Emery in the Facility and the leased real property
pursuant to a mortgage, and a pledge agreement of the stock of a wholly owned
subsidiary of Emery, which is the lessee or sublessee of certain aircraft.
The Series C, D, E and F Bonds are secured by irrevocable letters of credit.
The Series E and F bonds are also secured by a junior lien on the Facility.
Future minimum lease payments under all leases with initial or remaining
non-cancelable lease terms in excess of one year, at December 31, 1994, are
as follows:
Capital Operating
(Dollars in thousands) Leases Leases
Year ending December 31
1995 $8,864 $156,916
1996 8,864 128,937
1997 8,864 78,085
1998 8,864 45,326
1999 8,864 39,454
Thereafter 197,563 52,253
Total minimum lease payments 241,883 $500,971
Less amount representing interest (130,795)
Present value of minimum lease
payments 111,088
Less current maturities of obligations
under capital leases (64)
Long-term obligations under capital
leases $111,024
Rental expense for operating leases is comprised of the following:
1994 1993 1992
(Dollars in thousands)
Minimum rentals $195,507 $185,425 $176,832
Less:
Sublease rentals (6,811) (10,886) (7,727)
Amortization of deferred
gains (1,785) (1,785) (1,785)
$186,911 $172,754 $167,320
5. Income Taxes
The components of pretax income (loss) and income taxes (benefits) are
as follows:
1994 1993 1992
(Dollars in thousands)
Pretax income (loss)
U.S. corporations $99,848 $ 84,700 $(10,736)
Foreign corporations 12,072 6,741 3
Total pretax income (loss) $111,920 $ 91,441 $(10,733)
Income taxes (benefits)
Current
U.S. federal $37,643 $63,956 $ 12,681
State and local 6,313 7,089 6,457
Foreign 5,855 5,475 6,090
49,811 76,520 25,228
Deferred
U.S. federal (766) (31,616) (14,648)
Tax credit benefits -- -- (7,600)
State and local 2,775 (3,642) (3,705)
Foreign (195) (395) (6,352)
1,814 (35,653) (32,305)
Total income taxes
(benefits) $ 51,625 $ 40,867 $ (7,077)
The Company prospectively adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109), effective
January 1, 1992. The adoption of SFAS 109 had an immaterial effect on the
Company's financial position and statements of consolidated operations.
During 1994, the Company utilized $62.0 million of net operating loss
carryforwards from an acquired subsidiary to reduce the income tax liability
of that subsidiary. The related tax benefit of approximately $22 million was
used to reduce costs in excess of net assets of businesses acquired. The
Company has remaining net operating loss carryforwards from acquired
subsidiaries of approximately $41 million, which expire in 2002 and 2003.
The net operating loss carryforwards are restricted to offsetting future
years' U.S. federal income tax liabilities of the subsidiary which generated
the losses. If realized, this benefit will be used to further reduce costs
in excess of net assets of businesses acquired.
The components of deferred tax assets and liabilities on the balance
sheets at December 31, relate to the following:
(Dollars in thousands)
Deferred tax assets 1994 1993
Reserves for accrued claims costs $ 78,890 $ 82,663
Reserves for post retirement health benefits 53,729 50,235
Other reserves not currently deductible 42,579 38,741
Reserves for employee benefits 47,644 35,311
Foreign tax and alternative minimum tax
credit carryovers 6,707 1,011
229,549 207,961
Deferred tax liabilities
Depreciation 105,393 87,971
Tax benefits from leasing transactions 18,477 20,013
Unearned revenue 12,676 9,171
Other 4,491 4,433
141,037 121,588
Net deferred tax asset $ 88,512 $ 86,373
Deferred tax assets and liabilities in the consolidated balance sheets
are classified based on the related asset or liability creating the deferred
tax. Deferred taxes not related to a specific asset or liability are
classified based on the estimated period of reversal.
Income taxes (benefits) vary from the amounts calculated by applying the
U.S. statutory income tax rate to the pretax income (loss) as set forth in
the following reconciliation:
1994 1993 1992
U.S. statutory tax rate 35.0% 35.0% (34.0)%
State income taxes (net of
federal income tax benefit) 6.3 2.5 5.1
Foreign taxes in excess of
U.S. statutory rate 1.3 3.0 (2.4)
Dividends paid to TASP (0.7) (0.7) (4.0)
Non-deductible operating
expenses 3.4 1.9 9.3
Amortization of costs in excess
of net assets of businesses
acquired 3.1 3.7 31.2
Tax rate change impact on
deferred expense -- (1.7) --
Foreign tax credit benefits, net (1.9) (1.0) (70.8)
Other, net (0.4) 2.0 (0.3)
Effective income tax rate 46.1% 44.7% (65.9)%
The cumulative undistributed earnings of the Company's foreign
subsidiaries (approximately $63 million at December 31, 1994), which if
remitted are subject to withholding tax, have been reinvested indefinitely in
the respective foreign subsidiaries' operations unless it becomes
advantageous for tax or foreign exchange reasons to remit these earnings.
Therefore, no withholding or U.S. taxes have been provided. The amount of
withholding tax that would be payable on remittance of the undistributed
earnings would approximate $6 million.
6. Shareholders' Equity
In 1986, the Board of Directors designated a series of 600,000 shares as
Series A Participating Preferred Stock from the Company's 5,000,000 shares of
preferred stock, no par value. The Board also declared a dividend of one
preferred stock purchase right for each outstanding share of the Company's
common stock. Under certain conditions, each right may be exercised to
purchase one one-hundredth share of the Company's Series A Participating
Preferred Stock at an exercise price of $140 per right. The rights may be
exercisable only after a party acquires beneficial ownership of 20% or more
of the Company's common stock or announces an offer for 30% or more of the
Company's common stock. The rights, which do not have voting rights, expire
November 7, 1996, and may be redeemed at the Company's option for $.01 per
right at any time prior to their expiration or the acquisition of 20% or more
of the Company's common stock. In the event that the Company is acquired in
a merger or other business combination transaction, each right that has not
previously been exercised will entitle its holder, upon exercise thereof at
the exercise price, that number of shares of common stock of the surviving
company which at the time of such transaction would have a market value of
two times the exercise price of the right. The Company intends to redeem
these rights on November 7, 1995.
In 1989, as part of an amendment to the TASP, the Board of Directors
authorized the expenditure of up to $150,000,000 to repurchase up to
7,500,000 shares of the Company's common stock. Under such authorization,
the Company repurchased 4,859,029 shares of its outstanding common stock in
open market transactions for an aggregate purchase price, including
commissions, of approximately $150 million.
In 1989, as part of an amendment to the TASP, the Board of Directors
designated a series of 1,100,000 preferred shares as Series B Cumulative
Convertible Preferred Stock, $.01 stated value. The Series B preferred stock
is convertible into common stock at the option of the holder at the rate of
four shares for each share of preferred stock subject to antidilution
adjustments in certain circumstances. Holders of the Series B preferred
stock are entitled to vote with the common stock as a single class on all
matters upon which the common stock is entitled to vote and are entitled to
a number of votes in such circumstances equal to the product of (a) 1.3
multiplied by (b) the number of shares of common stock into which the Series
B preferred stock is convertible (as described above) on the record date of
such vote. Holders of the Series B preferred stock are also entitled to vote
separately as a class on certain other matters. The TASP trustee is required
to vote the allocated shares based upon instructions from the participants;
unallocated shares are voted in proportion to the voting instructions
received from the participants with allocated shares. The Series B preferred
stock is senior to the Company's Series A and C preferred stock with respect
to dividends and liquidation. The Series B preferred stock is also subject
to automatic conversion into common stock in the manner described in Note 8.
In 1992, the Company issued 6,900,000 depository shares each
representing one-tenth of a share of Series C Conversion Preferred Stock, no
par value. The depository shares were sold at a price of $17.625. The net
capital proceeds of $117.9 million were used to retire debt. The depository
shares provide for cumulative quarterly dividends at a per share rate of
$1.54 per annum. Holders of the shares have no voting rights, except as
otherwise provided under designated circumstances. Each depository share
automatically converts into one share of common stock, plus unpaid dividends
in the form of cash or additional common stock, on March 15, 1995. The
Series C preferred stock is senior to the Company's Series A preferred stock
and common stock with respect to dividends and liquidation.
7. Employee Benefit Plans
The Company has a non-contributory defined benefit pension plan (the
Pension Plan) covering non-contractual employees in the United States.
Although it is the Company's funding policy to contribute the minimum
required tax-deductible contribution for the year, it may increase its
contribution above the minimum if appropriate to its tax and cash position
and the plan's funded status. Benefits under the Pension Plan are based on
a career average final five-year pay formula.
The Company's annual pension provision is based on an independent
actuarial computation that required a pension provision of $22,138,000 in
1994, $14,165,000 in 1993 and $18,045,000 in 1992. Approximately 88% of the
Pension Plan assets are invested in publicly traded stocks and bonds. The
remainder is invested in temporary cash investments, real estate funds and
investment capital funds.
Following is additional information relating to the Pension Plan at
December 31:
1994 1993
(Dollars in thousands)
Pension Plan assets at market
value $325,102 $326,915
Less actuarial present value of
projected benefit obligation
Vested benefits (242,638) (250,564)
Non-vested benefits (19,001) (27,299)
Accumulated benefit obligation (261,639) (277,863)
Effect of projected future
compensation levels (75,466) (88,922)
Projected benefit obligation (337,105) (366,785)
Pension Plan assets under
projected benefit obligation (12,003) (39,870)
Unrecognized prior service costs 24,676 29,897
Unrecognized net gain (46,673) (7,174)
Unrecognized net asset at
transition, being amortized
over 18 years (20,096) (22,329)
Pension Plan liability $(54,096) $(39,476)
Weighted average discount rate 8.5% 7.5%
Expected long-term rate of return
on assets 9.0% 9.5%
Rate of increase in future
compensation levels 5.5% 5.5%
Net pension cost includes the following:
1994 1993 1992
(Dollars in thousands)
Cost of benefits earned during
the year $ 23,767 $ 15,789 $ 18,236
Interest cost on projected
benefit obligation 28,736 26,378 24,857
Actual gain arising from
plan assets (4,056) (41,891) (12,976)
Amortization of unrecognized net
asset at transition (2,233) (2,233) (2,233)
Amortization of unrecognized
net (gain) loss 136 (111) --
Deferred investment gain (loss) (26,538) 13,658 (12,397)
Amortization of unrecognized prior
service cost 2,326 2,575 2,558
Net pension cost $ 22,138 $ 14,165 $ 18,045
The Company's Pension Plan includes programs to provide additional
benefits for compensation excluded from the basic Pension Plan. The annual
provision for these programs is based on independent actuarial computations
using assumptions consistent with the Pension Plan. In 1994 and 1993, the
total pension liability was $11,033,000 and $10,202,000, respectively, and
the total pension cost was $2,458,000 in 1994, $1,633,000 in 1993 and
$1,767,000 in 1992.
Approximately 51% of the Company's employees are covered by union-
sponsored, collectively bargained, multi-employer pension plans. The Company
contributed and charged to expense $93,933,000 in 1994, $98,090,000 in 1993,
and $97,048,000 in 1992 for such plans. Those contributions were made in
accordance with negotiated labor contracts and generally were based on time
worked.
The Company has a retiree health plan that provides benefits to all non-
contractual employees at least 55 years of age with 10 years or more of
service. In 1992, the plan was amended to modify benefits for all future
participants unless they were eligible to retire at January 1, 1993. The
most significant amendments limit the benefits for participants to a defined
dollar amount based on age and years of service and eliminate employer-
subsidized retiree health care benefits for employees hired on or after
January 1, 1993.
In the fourth quarter of 1992, the Company elected to prospectively
adopt, effective January 1, 1992, the Financial Accounting Standards Board
Statement No. 106, "Employer's Accounting for Post Retirement Benefits Other
Than Pensions" (SFAS 106). At adoption of SFAS 106 in 1992, the Company
elected to take $70.0 million as a one-time, non-cash charge, net of related
income tax benefits, in the statement of consolidated operations.
The following information sets forth the total post retirement
benefit amounts included in Other Liabilities and Deferred Credits in the
Company's consolidated balance sheets at December 31.
(Dollars in thousands)
1994 1993
Accumulated post retirement benefit obligation
Retirees and other inactives $ 50,720 $ 62,161
Participants currently eligible to retire 26,358 29,699
Other active participants 25,692 26,085
102,770 117,945
Unrecognized valuation gain 37,213 15,349
Accrued post retirement benefit cost $139,983 $133,294
Weighted average discount rate 8.5% 7.5%
Average health care cost trend rate
First year 11.0% 12.0%
Declining to (year 1999) 6.0% 6.0%
Net periodic post retirement benefit costs include the following
components:
1994 1993 1992
(Dollars in thousands)
Cost of benefits earned during
the year $ 3,593 $ 2,877 $ 3,340
Interest cost on accumulated post
retirement obligation 8,396 8,683 9,746
Amortization of unrecognized
prior service cost (86) -- --
Amortization of unrecognized
net gain (570) (411) --
Net periodic post retirement
benefit cost $ 11,333 $ 11,149 $13,086
The increase in the accumulated post retirement benefit obligation and
the net periodic post retirement benefit cost, given a 1 percent increase in
the health care cost trend rate assumption, would be 9.6% for the years ended
December 31, 1994 and 1993 and 10.8% for the year ended December 31, 1992.
In 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 112, "Employer's Accounting for Post-
employment Benefits" (SFAS 112). The adoption of this statement in 1994 did
not have a material impact on the financial statements.
The Company and each of its subsidiaries have adopted various plans
relating to the achievement of specific goals to provide incentive
compensation for designated employees. Total incentive compensation earned
by the participants of those plans is as follows:
(Dollars in thousands) 1994 1993 1992
Incentive compensation $81,700 $54,600 $22,500
Participants 22,300 17,200 8,900
8. Thrift and Stock Plan
On January 1, 1988, the Company adopted a 401(k) Plan for non-
contractual U.S. employees to which it makes contributions to be used to
purchase the Company's common stock. The Company's contribution vests
immediately with the employee and totaled $7,966,000 in 1994, $7,248,000 in
1993 and $6,852,000 in 1992. The Company's contributions were substantially
all in the form of preferred stock as described below.
On May 18, 1989, the Company issued 986,259 shares of Series B
Cumulative Convertible Preferred Stock to the Consolidated Freightways Thrift
and Stock Plan (TASP) for an aggregate purchase price of $150,010,000. The
Series B preferred stock is issuable only to the TASP trustee. Upon
termination of an employee's participation in the TASP, the Series B
preferred stock is automatically converted into common stock at a rate
generally equal to that number of shares of common stock that could be
purchased for $152.10, but not less than the minimum conversion rate of four
shares of common stock for each share of Series B preferred stock.
The preferred stock is allocated among participants by the Company
matching participants' contributions at a rate of 50% of the first three
percent of the participants' basic compensation. The total preferred shares
allocated annually are based upon the principal and interest method. If the
allocated preferred shares do not meet the Company's matching requirement, an
additional cash contribution is made to the TASP. Deferred compensation
expense is recognized as the preferred shares are allocated to participants;
the amount recognized is equivalent to the interest on the TASP debt plus
shares allocated to participants less preferred dividends paid to the TASP.
During 1994, 1993 and 1992, $5,780,000, $5,598,000 and $5,359,000,
respectively, of deferred compensation expense was recognized. The TASP
guarantees are reduced as principal is paid.
At December 31, 1994, the TASP owned 962,748 shares of Series B
preferred stock, of which 169,546 shares have been allocated to employees.
At December 31, 1994, the Company has reserved, authorized and unissued
common stock adequate to satisfy the conversion feature of the Series B
preferred stock.
9. Stock Option Plans
Officers and key employees have been granted options under the Company's
stock option plans to purchase common stock of the Company at prices not less
than the fair market value of the stock on the date of grant. Outstanding
options become fully exercisable one year after date of grant; any
unexercised options expire after 10 years.
A stock option plan under which options may be granted to purchase up to
3,000,000 shares of common stock of the Company became effective January 1,
1988. In 1992, the plan was amended to include authority to grant an
additional 3,000,000 options.
Following is a summary of stock option unit data:
1994 1993 1992
Outstanding at January 1 3,813,599 3,552,068 3,516,634
Granted 736,800 650,000 300,000
Exercised (614,709) (324,482) (194,775)
Expired, canceled or
surrendered (157,262) (63,987) (69,791)
Outstanding at December 31 3,778,428 3,813,599 3,552,068
Options which became exercisable
during the year 644,500 300,000 580,000
Options exercisable at
December 31 3,041,628 3,163,599 3,252,068
Shares reserved at December 31
For future option grants 1,485,275 2,119,200 2,725,975
For issuance (including future
option grants, if any) 5,263,703 5,932,799 6,278,043
Exercise prices related to options outstanding at December 31, 1994
ranged from $10.75 to $32.75 per share and aggregated $68,102,367. Exercise
prices related to options exercised during 1994 ranged from $10.75 to $26.38,
during 1993, $12.19 to $19.94 and during 1992, $12.19 to $16.40.
10. Commitments and Contingencies
The Company has entered into interest rate swap agreements that expire
in 1999. These agreements effectively convert $60 million of variable rate
debt to fixed rate debt. Interest rate differentials to be paid or received
are recognized over the life of each agreement as adjustments to interest
expense. The Company is exposed to credit loss on the interest rate swap in
the event of non-performance by counter parties, but the Company does not
anticipate nonperformance by any of these counter parties. The approximate
fair value of the interest rate swaps at December 31, 1994 was $838,000.
The Company and its subsidiaries are defendants in various lawsuits
incidental to their businesses. It is the opinion of management that the
ultimate outcome of these actions will not have a material impact on the
Company's financial position or results of operations.
11. Industry Group Analysis and Foreign Operations
The operations of the Company and its subsidiaries, which are conducted
primarily in the United States and Canada, encompass principally three
business segments: nationwide, full-service trucking (CF MotorFreight),
regional trucking and full-service truckload (Con-Way Transportation
Services), and air freight (Emery Worldwide). The activities of these groups
are fully described elsewhere in this Annual Report. Revenues and expenses
are allocated between the United States and international, depending on
whether the shipments are between locations within the United States or
between locations where one or both are outside the United States.
Following is an analysis by geographic and industry group. Operating
income is net of general corporate expenses, a portion of which has been
allocated to subsidiaries on a revenue and capital basis. Intersegment
revenues and earnings thereon have been eliminated. The identifiable assets
of the parent consist principally of cash, cash equivalents and receivables.
GEOGRAPHIC GROUP INFORMATION
(Dollars in thousands)
Consolidated U.S. International
Year Ended December 31, 1994
Revenues $4,680,749 $3,981,036 $699,713
Operating income 142,234 114,732 27,502
Identifiable assets 2,472,723 2,388,953 83,770
Year Ended December 31, 1993
Revenues $4,191,811 $3,665,654 $526,157
Operating income 120,157 113,179 6,978
Identifiable assets 2,316,350 2,231,469 84,881
Year Ended December 31, 1992
Revenues $4,055,589 $3,542,521 $513,068
Operating income (loss) 48,581 56,437 (7,856)
Identifiable assets 2,293,067 2,198,386 94,681
<TABLE>
Consolidated Freightways, Inc. and Subsidiaries
INDUSTRY GROUP INFORMATION
<CAPTION>
(Dollars in thousands) Industry Group
Adjustments Con-Way
Eliminations and CF Motor Transportation Emery
Consolidated the Parent Freight Services Worldwide
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994
Revenues $4,680,479 $2,094,081 $1,018,544 $1,567,854
Operating expenses 3,824,141 1,823,792 748,086 1,252,263
Selling and administrative expenses 580,370 243,810 124,719 211,841
Depreciation 133,734 73,081 34,519 26,134
Operating income (loss) 142,234 ($46,602) $111,220 $77,616
Other income (expense) (30,314)
Income before income taxes $111,920
Capital expenditures $181,928 ($961) $36,849 $97,392 $48,648
Identifiable assets $2,472,723 $193,733 $866,353 $420,744 $991,893
Year Ended December 31, 1993
Revenues $4,191,811 $2,112,237 $818,301 $1,261,273
Operating expenses 3,407,996 1,770,148 615,585 1,022,263
Selling and administrative expenses 528,022 226,405 101,144 200,473
Depreciation 135,636 83,972 29,718 21,946
Operating income 120,157 $31,712 $71,854 $16,591
Other income (expense) (28,716)
Income before income taxes $91,441
Capital expenditures $201,210 $2,789 $52,470 $63,823 $82,128
Identifiable assets $2,316,350 $205,280 $864,748 $338,567 $907,755
Year Ended December 31, 1992
Revenues $4,055,589 $2,184,190 $724,195 $1,147,204
Operating expenses 3,306,732 1,803,854 532,476 970,402
Selling and administrative expenses 561,581 269,849 105,001 186,731
Depreciation 138,695 83,002 32,971 22,722
Operating income (loss) 48,581 $27,485 $53,747 ($32,651)
Other income (expense) (59,314)
Loss before income tax benefits ($10,733)
Capital expenditures $148,706 $1,267 $91,026 $36,317 $20,096
Identifiable assets $2,293,067 $392,120 $803,300 $228,565 $869,082
</TABLE>
<TABLE>
CONSOLIDATED FREIGHTWAYS, INC. AND SUBSIDIARIES
12. Quarterly Financial Data (Unaudited)
(Dollars in thousands except per share data)
<CAPTION>
March 31 June 30 * September 30 December 31
1994 - Quarter Ended
<S> <C> <C> <C> <C>
Revenues $1,103,221 $1,059,775 $1,236,483 $1,281,000
Operating income 35,484 17,972 48,365 40,413
Income before income taxes 28,758 10,805 41,913 30,444
Income taxes 13,502 5,598 21,632 10,893
Extraordinary charge -- -- 5,522 --
Net income available to common
shareholders 10,522 444 9,991 14,753
Per share:
Primary net income 0.28 0.01 0.27 ** 0.40
Fully diluted net income 0.25 0.01 0.24 ** 0.37
Market price range $29.25-$23.25 $27.50-$21.75 $25.13-$20.75 $23.00-$18.00
Common dividends -- -- -- 0.10
March 31 June 30 September 30 December 31
1993 - Quarter Ended
Revenues $992,981 $1,020,224 $1,067,003 $1,111,603
Operating income 21,350 25,315 38,448 35,044
Income before income taxes 15,481 16,937 31,678 27,345
Income taxes 7,213 8,545 14,599 10,510
Net income available to common
shareholders 3,519 3,645 12,382 12,061
Per share:
Primary net income 0.10 0.10 0.35 0.33
Fully diluted net income 0.09 0.09 0.31 0.29
Market price range $20.38-$16.25 $18.75-$14.75 $16.88-$13.63 $24.00-$15.50
<FN>
* Results include the affects of the 24 day Teamster strike at CF MotorFreight.
** Includes losses per common share of $.15 primary and $.13 fully diluted for the extraordinary
charge, net of tax benefits, for the write-off of intrastate operating rights.
</TABLE>
<TABLE>
Ten Year Financial Summary
Consolidated Freightways, Inc. and Subsidiaries
Years Ended December 31
(Dollars in thousands except per share data)
<CAPTION>
1994 1993 1992 1991 1990
SUMMARY OF OPERATIONS
<S> <C> <C> <C> <C> <C>
Revenues $4,680,479 $4,191,811 $4,055,589 $4,082,257 $4,208,527
CF MotorFreight 2,094,081 2,112,237 2,184,190 2,142,603 2,185,271
Con-Way Transportation Services 1,018,544 818,301 724,195 639,443 638,098
Emery Worldwide 1,567,854 1,261,273 1,147,204 1,300,211 1,385,158
Operating income (loss) 142,234 120,157 48,581 1,736 6,044
CF MotorFreight (46,602) 31,712 27,485 (b) 51,991 108,462
Con-Way Transportation Services 111,220 71,854 53,747 33,318 25,547 (d)
Emery Worldwide 77,616 16,591 (32,651) (83,573) (127,965)
Depreciation and amortization 145,765 146,297 166,917 168,527 170,757
Investment income 2,205 5,586 5,041 10,558 2,531
Interest expense 27,945 30,333 38,893 46,703 40,178
Income (loss) before income taxes (benefits) 111,920 91,441 (10,733) (43,337) (32,678)
Income taxes (benefits) 51,625 40,867 (7,077) (2,916) (4,697)
Net income (loss) applicable to common
shareholders 35,710 (a) 31,607 (97,728)(c) (53,112) (40,727)
Cash from operations 165,182 172,808 131,779 192,356 194,821
PER SHARE
Net income (loss) applicable to common
shareholders .96 (a) .87 (2.78)(c) (1.52) (1.16)
Dividends on common stock .10 -- -- -- .53
Common shareholders' equity 14.58 13.65 12.64 15.30 16.50
FINANCIAL POSITION
Cash and cash equivalents 95,711 139,044 152,064 284,645 217,680
Property, plant and equipment, net 944,592 910,444 886,834 896,922 953,504
Total assets 2,472,723 2,316,350 2,293,067 2,285,466 2,412,003
Capital expenditures 181,928 201,210 148,706 98,073 141,784
Long-term debt and capital leases 397,857 408,409 505,320 646,655 673,611
Shareholders' equity 673,629 623,375 579,161 547,083 581,979
RATIOS AND STATISTICS
Current ratio 1.1 to 1 1.1 to 1 1.2 to 1 1.2 to 1 1.2 to 1
Income (loss) as % of revenues .76% .75% (2.4)% (1.3)% (1.0)%
Effective income tax rate 46.1% 44.7% (65.9%) (6.7%) (14.4)%
Long-term debt and capital leases as % of
total capitalization 37% 40% 47% 54% 54%
Return on average invested capital 6% 5% -- (3)% (2)%
Return on average shareholders' equity 9% 8% (1)% (7)% (7)%
Common dividends as % of net income (loss) 10% -- -- -- 46%
Average shares outstanding 37,216,044 36,187,682 35,195,743 35,033,738 34,988,778
Market price range $29.25-$18.00 $24.00-$13.63 $19.63-$12.50 $21.50-$9.50 $26.88-$10.75
Number of shareholders 16,015 15,785 15,260 14,300 14,500
Number of employees 40,500 39,100 37,900 37,700 41,300
</TABLE>
<TABLE>
Ten Year Financial Summary (continued)
<CAPTION>
1989 (e) 1988 1987 1986 1985
SUMMARY OF OPERATIONS
<S> <C> <C> <C> <C> <C>
Revenues $3,760,193 $2,689,075 $2,296,911 $2,124,467 $1,882,142
CF MotorFreight 1,996,681 1,836,141 1,621,148 1,524,336 1,382,637
Con-Way Transportation Services 558,517 463,918 370,940 318,841 233,930
Emery Worldwide 1,204,995 389,016 304,823 281,290 265,575
Operating income (loss) 50,855 162,727 101,248 135,045 112,235
CF MotorFreight 107,895 119,116 92,456 128,927 109,005
Con-Way Transportation Services 40,365 33,373 6,404 11,359 (731)
Emery Worldwide (97,405) 10,238 2,388 (5,241) 3,961
Depreciation and amortization 159,282 116,204 102,165 94,262 85,953
Investment income 5,418 13,950 25,182 16,942 22,468
Interest expense 38,471 6,324 6,016 7,298 6,159
Income (loss) before income taxes (benefits) 24,297 173,330 119,311 147,639 127,408
Income taxes (benefits) 15,685 60,177 44,741 58,530 48,117
Net income (loss) applicable to common
shareholders 12,048 (f) 113,153 74,570 89,109 79,291
Cash from operations 81,031 243,595 206,841 224,242 176,356
PER SHARE
Net income (loss) applicable to common
shareholders .33 (f) 3.00 1.93 2.31 2.06
Dividends on common stock 1.04 .96 .88 .80 .72
Common shareholders' equity 18.01 20.32 18.16 17.22 15.69
FINANCIAL POSITION
Cash and cash equivalents 111,081 134,783 161,590 153,334 119,614
Property, plant and equipment, net 1,016,325 760,349 622,181 573,092 537,659
Total assets 2,391,826 1,536,099 1,377,329 1,288,063 1,134,430
Capital expenditures 255,793 258,368 155,127 136,278 164,862
Long-term debt and capital leases 652,169 47,677 50,935 58,700 62,539
Shareholders' equity 630,122 766,248 687,857 665,048 603,794
RATIOS AND STATISTICS
Current ratio 1.2 to 1 1.3 to 1 1.4 to 1 1.5 to 1 1.6 to 1
Income (loss) as % of revenues .3% 4.2% 3.2% 4.2% 4.2%
Effective income tax rate 64.6% 34.7% 37.5% 39.6% 37.8%
Long-term debt and capital leases as % of
total capitalization 51% 6% 7% 8% 9%
Return on average invested capital 2% 12% 9% 11% 10%
Return on average shareholders' equity 2% 16% 11% 14% 14%
Common dividends as % of net income (loss) 315% 32% 46% 35% 35%
Average shares outstanding 36,791,182 37,712,402 38,579,572 38,586,375 38,428,242
Market price range $37.75-$25.25 $34.75-$25.25 $41.25-$22.75 $36.50-$23.67 $27.50-$18.67
Number of shareholders 13,427 12,789 12,202 11,622 10,901
Number of employees 40,800 29,400 26,300 24,600 21,700
<FN>
(a) Includes $5.5 million ($.15 per share primary and $.13 per share fully
diluted) extraordinary charge, net of related tax benefits, for the
write-off of intrastate operating rights.
(b) Includes special charges of $17.3 million related to CF MotorFreight
and write-off of Canadian operating authorities.
(c) Includes $70 million ($1.99 per share) cumulative effect of change in
method of accounting for post retirement benefits and $7.4 million
($.21 per share) extraordinary charge from early retirement of debt.
Also included are special charges of $17.3 million, $10.5 million of
charges for the write-down of properties held for sale and certain other
intangibles and related tax benefits
(d) Includes one-time subsidiary closure costs of $11.3 million.
(e) Includes the results of operations of Emery Air Freight Corporation
since its acquisition in April.
(f) Includes $11.3 million ($.31 per share) cumulative effect of change in
method of accounting for income taxes.
</TABLE>
PAGE 1
EXHIBIT 22
----------
CONSOLIDATED FREIGHTWAYS, INC.
SIGNIFICANT SUBSIDIARIES OF THE COMPANY
December 31, 1994
The Company and its significant subsidiaries were:
State or
Percent of Province or
Stock Owned Country of
Parent and Significant Subsidiaries by Company Incorporation
- ----------------------------------- --------------- ---------------
Consolidated Freightways, Inc. Delaware
Significant Subsidiaries of Consolidated Freightways, Inc.
- ----------------------------------------------------------
Consolidated Freightways
Corporation of Delaware 100 Delaware
Canadian Freightways, Limited 100 Alberta,
Canada
Milne & Craighead Customs Brokers
(Canada) Ltd. 100 Canada
Canadian Freightways Eastern Limited 100 Ontario,
Canada
United Terminals LTD. 100 Canada
Menlo Logistics, Inc. 100 California
Road Systems, Inc. 100 California
Willamette Sales Co. 100 Oregon
Con-Way Transportation Services, Inc. 100 Delaware
Con-Way Western Express, Inc. 100 Delaware
Con-Way Central Express, Inc. 100 Delaware
Con-Way Southern Express, Inc. 100 Delaware
Con-Way Truckload Services, Inc. 100 Delaware
Emery Air Freight Corporation 100 Delaware
Emery Worldwide Airlines, Inc. 100 Nevada
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 95,711
<SECURITIES> 0
<RECEIVABLES> 686,129
<ALLOWANCES> (26,938)
<INVENTORY> 41,719
<CURRENT-ASSETS> 1,031,465
<PP&E> 2,022,344
<DEPRECIATION> (1,077,752)
<TOTAL-ASSETS> 2,472,723
<CURRENT-LIABILITIES> 945,168
<BONDS> 397,857
<COMMON> 143,681
0
264,301
<OTHER-SE> 265,647
<TOTAL-LIABILITY-AND-EQUITY> 2,472,723
<SALES> 0
<TOTAL-REVENUES> 4,680,479
<CGS> 0
<TOTAL-COSTS> 4,538,245
<OTHER-EXPENSES> 30,314
<LOSS-PROVISION> 6,676
<INTEREST-EXPENSE> 27,945
<INCOME-PRETAX> 111,920
<INCOME-TAX> 51,625
<INCOME-CONTINUING> 41,232
<DISCONTINUED> 0
<EXTRAORDINARY> 5,522
<CHANGES> 0
<NET-INCOME> 35,710
<EPS-PRIMARY> .96
<EPS-DILUTED> .87
</TABLE>
