Exhibit 10.1
                              EMPLOYMENT AGREEMENT


         THIS  EMPLOYMENT  AGREEMENT (the  "Agreement") is made and entered into
effective as of the 5th day of June, 2000 (the "Effective Date"), by and between
USFreightways Corporation,  a Delaware corporation (the "Employer"),  and Samuel
K. Skinner (the "Executive").

                                    RECITALS

A. The Employer desires that the Executive  provide  services for the benefit of
the Employer and its  wholly-owned  subsidiaries and the Executive desires to
accept such employment with the Employer.

B. The Employer  and the  Executive  acknowledge  that the  Executive  will be a
senior  member  of the  management  team of the  Employer  and,  as  such,  will
participate in implementing the Employer's business plan.

C. In the course of employment with the Employer, the Executive will have access
to  certain  confidential  information  that  relates  to or will  relate to the
business of the Employer and its wholly-owned subsidiaries.

D. The Employer desires that any such information not be disclosed to other
parties or otherwise used for unauthorized purposes.

         NOW,  THEREFORE,  in  consideration  of  the  above  premises  and  the
following mutual covenants and conditions, the parties agree as follows:

1.  Employment.  The  Employer  shall  employ  the  Executive  beginning  on the
Effective  Date. On July 17, 2000, the Executive  shall become the President and
Chief  Executive  Officer of the  Employer.  In addition to the  foregoing,  the
Employer  covenants and agrees that (i) as soon as reasonably  practicable after
December 31,  2000,  the  Executive  will be elected as Chairman of the Board of
Directors of the Employer (the  "Board") and will remain  Chairman as long as he
is a member of the Board, and (ii) as long as the Executive  remains employed as
the President and Chief Executive  Officer of the Employer,  he will continue to
be slated as a nominee  for a director of the  Employer.  The  Executive  hereby
accepts such employment on the following terms and conditions.

2. Duties.  The Executive  shall work for the Employer  from the Effective  Date
through July 16, 2000 and perform such services from the Effective  Date through
July 16,  2000 as the  Board may from time to time  direct.  Beginning  July 17,
2000,  the Executive  shall work for the Employer in a full-time  capacity.  The
Executive  shall,  beginning July 17, 2000,  have the duties,  responsibilities,
powers, and authority customarily  associated with the position of President and
Chief Executive Officer. The Executive shall report to, and follow the direction
of, the Board.  In addition to the  foregoing,  the Executive also shall perform
such other and unrelated services and duties as may be assigned to him from time
to time by the  Board  consistent  with his  position  as  President  and  Chief
Executive Officer. The Executive shall diligently,  competently,  and faithfully
perform  all  duties,  and  shall  devote  his  entire  business  time,  energy,
attention,  and skill to the  performance  of  duties  for the  Employer  or its
wholly-owned subsidiaries and will use his best efforts to promote the interests
of the Employer. It shall not be considered a violation of the foregoing for the
Executive to serve on corporate, industry, civic, religious or charitable boards
or  committees,  so  long  as  such  activities  do not  individually  or in the
aggregate  significantly  interfere  with  the  performance  of the  Executive's
responsibilities  as an  employee  of  the  Employer  in  accordance  with  this
Agreement.  In addition, it shall not be considered a violation of the foregoing
for the  Executive,  through July 16, 2000, to conclude any business  affairs he
may have at his prior employer

3.  Executive  Loyalty.  Subject to the exceptions set forth in Paragraph 2, the
Executive shall devote all of his time, attention,  knowledge,  and skill solely
and exclusively to the business and interests of the Employer,  and the Employer
shall be entitled to all  benefits  and profits  arising from or incident to any
and all work,  services,  and advice of the Executive.  The Executive  expressly
agrees that during the term of this Agreement,  he shall not engage, directly or
indirectly,  as a partner,  officer,  director,  member,  manager,  stockholder,
advisor,  agent,  employee,  or in any  other  form or  capacity,  in any  other
business similar to that of the Employer. The foregoing notwithstanding, nothing
herein  contained  shall be deemed to prevent the Executive  from  investing his
money in the capital stock or other securities of any corporation whose stock or
securities are  publicly-owned  or are regularly  traded on any public exchange,
nor shall  anything  herein  contained be deemed to prevent the  Executive  from
investing  his  money  in real  estate,  or to  otherwise  manage  his  personal
investments and financial affairs.
<PAGE>
4.       Compensation.
---------------------

A.  Salary.  The  Employer  shall pay the  Executive  an annual  base  salary of
$600,000 (the "Base Salary"),  payable in  substantially  equal  installments in
accordance with the Employer's  payroll policy from time to time in effect.  The
Executive's  Base Salary shall commence on July 17, 2000 and shall be subject to
any payroll or other  deductions  as may be required to be made pursuant to law,
government order, or by agreement with, or consent of, the Executive. Changes to
the Base Salary, as adjusted, may be made following an annual salary review, the
first of which  shall take place in or around  July,  2001,  and all  subsequent
reviews  shall  occur  thereafter  at the same  time as  reviews  are  conducted
generally for executive  officers of the Employer.  The Base Salary shall not be
reduced,  and the term Base Salary shall refer thereafter to the Base Salary, as
it may be increased from time to time.

B. Performance Bonus. The Executive shall participate in a bonus program,  which
program shall provide the Executive  with an  opportunity  to achieve a targeted
calendar year bonus of up to one hundred percent (100%) of the Base Salary.  For
the calendar year ending  December 31, 2000, the Executive shall be guaranteed a
bonus of no less than one hundred fifty thousand dollars ($150,000).  The actual
terms and  conditions of the annual bonus program  shall be  established  by the
Employer,  with input from the  Executive,  shall be  memorialized  in a written
document to be prepared by the Employer and which will be incorporated herein by
reference,  and will provide for the payment of an annual bonus hereunder if the
Employer  achieves  specified  company-wide  objectives  and  if  the  Executive
achieves specified personal management objectives.  All such objectives shall be
agreed  upon by the  Executive  and the  Board  prior to the  beginning  of each
calendar  year (or,  for  calendar  year 2000,  within  ninety  (90) days of the
Effective  Date).  Any bonus  earned  hereunder  shall be  payable no later than
ninety (90) days  following  the end of the calendar year for which the bonus is
earned.

C. Stock Options.  On the Effective Date, the Employer shall grant the Executive
a non-qualified  option to purchase two hundred thousand (200,000) shares of the
common stock of the  Employer.  Such stock option shall be granted in accordance
with and pursuant to the terms of the Employer's  Long-Term  Incentive Plan. The
stock  option  shall be granted at an exercise  price equal to the "fair  market
value" of such common stock of the Employer on the Effective  Date. The grant of
such stock option,  and the terms thereof,  has been  memorialized in the Option
Agreement attached hereto as Exhibit A.

D. Stock Grant.  On the Effective  Date, the Executive  shall be provided with a
grant of $200,000 worth of common stock of the Employer. The number of shares of
such grant shall be based upon the "fair  market  value" of such common stock of
the Employer on the Effective  Date. The stock grant shall be made in accordance
with and pursuant to the terms of the Employer's  Long-Term  Incentive Plan. The
grant of such stock, and the terms thereof,  has been  memorialized in the Stock
Grant Agreement attached hereto as Exhibit B.

E.       Other Benefits.  During the term of this Agreement, the Employer shall:
-----------------------

(1)               include  the  Executive  in  any  life  insurance,  disability
                  insurance,  medical,  dental  or health  insurance,  vacation,
                  savings,  pension and retirement plans and other benefit plans
                  or programs (including,  if applicable,  any excess benefit or
                  supplemental  executive  retirement  plans)  maintained by the
                  Employer for the benefit of its executives; and

(2)               include the Executive in such  perquisites as the Employer may
                  establish  from  time to time that are  commensurate  with his
                  position and at least  comparable  to those  received by other
                  executives  of the  Employer  (including,  but not limited to,
                  reimbursement  of club dues for one (1)  downtown  club and an
                  automobile allowance of $1,000 per month).
<PAGE>
5. Expenses.  The Employer shall  reimburse the Executive for all reasonable and
approved  business  expenses,  provided the  Executive  submits paid receipts or
other  documentation  acceptable to the Employer and as required by the Internal
Revenue Service to qualify as ordinary and necessary business expenses under the
Internal Revenue Code of 1986, as amended (the "Code").

6. Termination. The Executive's services shall terminate upon the first to occur
of the following events:
--------------------

A.  Disability  or  Death.  Upon the  Executive's  date of death or the date the
Executive is given written notice that he has been  determined to be disabled by
the Employer.  For purposes of this Agreement,  the Executive shall be deemed to
be disabled if the  Executive,  as a result of illness or  incapacity,  shall be
unable to perform  substantially  his  required  duties for a period of four (4)
consecutive  months or for any aggregate  period of six (6) months in any twelve
(12) month period.  A termination of the Executive's  employment by the Employer
for  disability  shall be  communicated  to the Executive by written  notice and
shall be effective on the tenth (10th) business day after receipt of such notice
by the Executive,  unless the Executive returns to full-time  performance of his
duties before such tenth (10th) business day.

B. Cause. On the date the Board  provides  the  Executive  with  written  notice
that he is being  terminated  for  "cause." For purposes of this  Agreement, the
Executive  shall be deemed  terminated for cause if the Employer  terminates the
Executive  after the Executive:

(1)               shall have been indicted (or the  equivalent  thereof) for any
                  felony  including,  but not  limited  to, a  felony  involving
                  fraud, theft,  misappropriation,  dishonesty, or embezzlement;
                  or

(2)               shall  have  committed  intentional  acts of  misconduct  that
                  materially  impair the goodwill or business of the Employer or
                  cause material damage to its property,  goodwill, or business;
                  or

(3)               shall have  refused to, or  willfully  failed to,  perform his
                  material  duties   hereunder   provided,   however,   that  no
                  termination  under this  subparagraph  (3) shall be  effective
                  unless the Executive  does not cure such refusal or failure to
                  the Employer's reasonable  satisfaction as soon as practicable
                  after  the  Employer   gives  the  Executive   written  notice
                  identifying such refusal or failure (and, in any event, within
                  thirty  (30)  calendar  days  after  receipt  of such  written
                  notice).

No act or  failure  to act on the  part of the  Executive  shall  be  considered
"willful"  unless it is done,  or omitted to be done,  by the  Executive  in bad
faith or without  reasonable  belief that his action or omission was in the best
interests of the Employer. A termination of the Executive's employment for Cause
shall be effected in accordance with the following  procedures.  The Board shall
give the Executive  written notice  ("Notice of  Termination  for Cause") of its
intention to terminate the  Executive's  employment for Cause,  setting forth in
reasonable  detail the specific  conduct of the  Executive  that it considers to
constitute  Cause and the specific  provision(s)  of this  Agreement on which it
relies, and stating the date, time and place of the Board Meeting for Cause. The
"Board Meeting for Cause" means a meeting of the Board at which the  Executive's
termination  for Cause will be  considered,  that takes  place not less than ten
(10) and not more than twenty (20) business  days after the  Executive  receives
the  Notice  of  Termination  for  Cause.   The  Executive  shall  be  given  an
opportunity,  together with counsel, to be heard at the Board Meeting for Cause.
The  Executive's  termination  for  Cause  shall  be  effective  when  and  if a
resolution  is duly  adopted  at the Board  Meeting  for  Cause by a  two-thirds
majority  vote of the entire  membership  of the Board,  excluding the Executive
from the count of such membership, stating that in the good faith opinion of the
Board,  the  Executive  is  guilty of the  conduct  described  in the  Notice of
Termination  for  Cause,  and that such  conduct  constitutes  Cause  under this
Agreement.
<PAGE>
C.  On the date the Executive terminates his employment for "Good Reason."  For
purposes of this Agreement, "Good Reason" means:

(1)               the  assignment  to the  Executive  of any  duties  materially
                  inconsistent   in  any  respect  with   Paragraph  2  of  this
                  Agreement, or any other action by the Employer that results in
                  a diminution in the Executive's position, authority, duties or
                  responsibilities,  other than an isolated,  insubstantial  and
                  inadvertent  action  that is not  taken  in bad  faith  and is
                  remedied by the Employer  after receipt of notice thereof from
                  the Executive;

(2)               any requirement by the Employer that the Executive's  services
                  be rendered  primarily at a location or  locations  other than
                  within the  greater  Chicago  metropolitan  area and for other
                  than a de minimis period of time; or

(3)               any  breach  of this  Agreement  by the  Employer  that is not
                  remedied by the Employer  within five (5) business  days after
                  receipt  of  notice  thereof  from the  Executive,  or as soon
                  thereafter as may be commercially practicable.

A  termination  of  employment  by  the  Executive  for  Good  Reason  shall  be
effectuated by giving the Employer  written notice  ("Notice of Termination  for
Good  Reason")  of  the  termination  within  three  (3)  months  of  the  event
constituting  Good  Reason,  setting  forth in  reasonable  detail the  specific
conduct of the Employer that constitutes Good Reason and the specific provisions
of this Agreement on which Executive  relies. A termination of employment by the
Executive  for Good Reason shall be  effective  on the fifth (5th)  business day
following  the date when the  Notice of  Termination  for Good  Reason is given,
unless the notice sets forth a later date (which date shall in no event be later
than thirty (30) business days after the notice is given).

D. Without Cause. On the date the Employer terminates the Executive's employment
for any reason,  other than a reason otherwise set forth in this  Paragraph 6,
provided that the Employer shall give the Executive  sixty (60) days written
notice prior to such date of its intention to terminate such employment.

E. Resignation.  On the date the Executive terminates his employment for any
reason,  other than a reason otherwise set forth in this  Paragraph 6,  provided
that the  Executive  shall give the  Employer  sixty (60) days  written  notice
prior to such date of his intention to terminate this Agreement.

7.       Compensation Upon Termination.
--------------------------------------

A. Termination  Payment. If the Executive's  services are terminated pursuant to
Paragraph 6B or 6E, the Executive  shall be entitled to his Base Salary  through
his final date of active  employment  plus any accrued but unused  vacation pay.
The  Executive  also  shall be  entitled  to any  benefits  mandated  under  the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) or required under
the terms of any death,  insurance,  or retirement plan, or stock option program
or agreement,  provided by the Employer and to which the Executive is a party or
in which the  Executive  is a  participant,  including,  but not limited to, any
short-term or long-term disability plan or program, if applicable.
<PAGE>
B. Severance Payment.  Except as otherwise provided in this Paragraph 7B, if the
Executive's  services are  terminated  pursuant to Paragraph  6A, 6C, or 6D, the
Executive  shall be entitled to his Base Salary through his final date of active
employment,  plus any accrued but unused  vacation pay. The Executive also shall
be  entitled to a  severance  amount  equal to the sum of (i) two times the Base
Salary, plus (ii) one times the performance bonus, if any, paid to the Executive
for the most recently  completed  calendar year. Such severance payment shall be
payable to the  Executive  over  twenty-four  (24) months  following the date of
termination,  provided (a) the  Executive  signs an agreement  that releases the
Employer from actions,  suits,  claims,  proceedings  and demands related to the
period of employment and/or the termination of employment,  and (b) the Employer
shall be permitted to offset from the  severance  payment  hereunder  any salary
paid to the Executive  during the sixty (60) day written notice  period,  if the
Executive  performs no substantial  services  during such sixty (60) day written
notice  period.  Additionally,  the Executive  shall be entitled to any benefits
mandated  under  the  Consolidated  Omnibus  Budget  Reconciliation  Act of 1985
(COBRA) or required under the terms of any death, insurance, or retirement plan,
or stock option program or agreement,  provided by the Employer and to which the
Executive is a party or in which the  Executive is a  participant.  Any payments
made to the Executive under the foregoing  provisions of this Paragraph 7B shall
be reduced by any death or insurance  benefits  payable to the Executive (or his
beneficiary)  under the terms of this Agreement and, if employment is terminated
within  twelve  (12)  months  of  the  Effective   Date,  by  any  wages  and/or
compensation  earned by the Executive  through his performance of  substantially
full-time  employment during the duration of such twenty-four (24) month period.
The  foregoing  notwithstanding,  if,  following a "Change of Control,"  (1) the
Executive is terminated by the Employer or its successor,  pursuant to Paragraph
6D, within six (6) months following the Change of Control,  or (2) the Executive
elects within six (6) months  following  such Change of Control to terminate his
employment  pursuant to  Paragraph  6C, the  Executive  shall be entitled to the
following single sum payment,  in lieu of any payment otherwise set forth above,
and payable as soon as  practicable  following  termination:  an amount equal to
three (3) times the  average  of the  Executive's  prior  five (5) years of cash
compensation from the Employer (or for such lesser period, as annualized, as the
Executive may have been employed by the Employer  hereunder).  In addition,  all
options  to  purchase  common  stock  of  the  Employer,   which  are  otherwise
unexercisable at the time of the termination,  shall immediately vest and become
exercisable.  For purposes of this  Paragraph 7B, a "Change of Control" shall be
deemed to occur on the earliest of (1) the acquisition by any entity, person, or
group of beneficial  ownership,  as that term is defined in Rule 13d-3 under the
Securities  Exchange  Act of 1934,  of at least 51% of the  outstanding  capital
stock of the Employer  entitled to vote for the  election of directors  ("Voting
Stock"); (2) the effective time of (i) a merger or consolidation of the Employer
with  one  or  more  corporations  as a  result  of  which  the  holders  of the
outstanding  Voting Stock of the Employer  immediately prior to such merger hold
less than 50% of the Voting Stock of the surviving or resulting corporation,  or
(ii) a transfer of  substantially  all of the property or assets of the Employer
other than to an entity of which the Employer,  or an affiliate of the Employer,
owns at least 50% of the Voting Stock; or (3) the election to the Board, without
the recommendation or approval of the incumbent Board, of directors constituting
a majority of the number of directors of the Employer then in office.
<PAGE>
C. Change in Control.  If a change in control shall occur (as defined in Section
280G(b)(2)(a)(i)  of the  Code),  and a  determination  is made by  legislation,
regulation, ruling directed to the Executive or the Employer, or court decision,
that the  aggregate  amount of any payment made to the Executive  hereunder,  or
pursuant to any plan,  program, or policy of the Employer in connection with, on
account  of, or as a result  of,  such  change in  control  constitutes  "excess
parachute payments" under the Code that are subject to the excise tax provisions
of Section 4999 of the Code, or any successor  sections  thereof,  the Executive
shall be entitled to receive from the Employer, in addition to any other amounts
payable  hereunder,  an additional  payment (a "Gross-Up  Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes),  including,  without  limitation,
any income taxes (and any interest and penalties imposed thereon) and any excise
tax imposed upon the Gross-Up  Payment,  the Executive  retains an amount of the
Gross-Up  Payment  equal to the excise tax imposed;  provided,  however,  if the
aggregate  amount of payments to the  Executive,  without regard to the Gross-Up
Payment,  does not exceed one hundred ten percent  (110%) of the maximum  amount
that the Executive could receive without regard to the payments being subject to
the excise tax  provisions of Section 4999 of the Code (the "Tax  Limit"),  then
(i) no Gross-Up Payment shall be made hereunder,  and (ii) the payments shall be
reduced  to the Tax Limit.  All  determinations  required  to be made under this
Paragraph 7, including  whether and when a Gross-Up  Payment is required and the
amount of such Gross-Up  Payment and the  assumptions to be utilized in arriving
at such  determination,  shall be made by a  certified  public  accounting  firm
designated by the Employer and reasonably  acceptable to the Executive  which is
one of the five largest  accounting  firms in the United States (the "Accounting
Firm"),  which  shall  provide  detailed  supporting  calculations  both  to the
Employer and the Executive  within  fifteen (15) business days of the receipt of
notice from the Executive that there has been an excess  parachute  payment,  or
such earlier time as is requested by the Employer.  All fees and expenses of the
Accounting Firm shall be borne solely by the Employer.  Any Gross-Up Payment, as
determined  pursuant to this  Paragraph  7 shall be paid by the  Employer to the
Executive  within  five  (5)  days  of  the  receipt  of the  Accounting  Firm's
determination. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the  initial  determination  by the  Accounting  Firm
hereunder,  it is possible that Gross-Up  Payments which will not have been made
by the  Employer  should  have been made  ("Underpayment")  consistent  with the
calculations  required  to be made  hereunder.  In the event  that the  Employer
exhausts its remedies hereunder and the Executive thereafter is required to make
a payment of any excise tax, the Accounting  Firm shall  determine the amount of
the Underpayment that has occurred and any such  Underpayment  shall be promptly
paid by the Employer to or for the benefit of the Executive. The Executive shall
notify the  Employer  in writing of any claim by the  Internal  Revenue  Service
that, if  successful,  would require the payment by the Employer of the Gross-Up
Payment.  Such  notification  shall be given as soon as practicable but no later
than ten (10)  business  days after the Executive is informed in writing of such
claim and shall apprise the Employer of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall not pay such claim
prior to the  expiration  of the thirty  (30) day period  following  the date on
which he gives such notice to the Employer (or such shorter period ending on the
date that any  payment  of taxes  with  respect  to such  claim is due).  If the
Employer  notifies the  Executive  in writing  prior to the  expiration  of such
period that it desires to contest such claim, the Executive shall:
<PAGE>
(1)      give the Employer any information reasonably requested by the Employer
          relating to such claim;

(2)      take such  action  in  connection  with  contesting  such  claim as the
         Employer  shall  reasonably  request  in  writing  from  time to  time,
         including,  without  limitation,  accepting legal  representation  with
         respect  to  such  claim  by an  attorney  reasonably  selected  by the
         Employer;

(3)      cooperate with the Employer in good faith in order effectively to
         contest such claim; and

(4)      permit the Employer to participate in any proceedings relating to such
         claim;

provided,  however,  that the Employer shall bear and pay directly all costs and
expenses  (including  additional  interest and penalties) incurred in connection
with such contest and shall  indemnify  and hold the Executive  harmless,  on an
after-tax  basis,  for any  excise  tax or income tax  (including  interest  and
penalties with respect thereto) imposed as a result of such  representation  and
payment of costs and expenses.  Without limitation on the foregoing provision of
this  Paragraph  7C,  the  Employer  shall  control  all  proceedings  taken  in
connection  with such contest and, at its sole option,  may pursue or forego any
and all administrative appeals,  proceedings,  hearings and conferences with the
taxing  authority in respect of such claim and may, at its sole  option,  either
direct the  Executive to pay the tax claimed and sue for a refund or contest the
claim in any  permissible  manner,  and the Executive  agrees to prosecute  such
contest to a determination  before any  administrative  tribunal,  in a court of
initial  jurisdiction and in one or more appellate courts, as the Employer shall
determine.  Notwithstanding  anything  herein  to the  contrary,  if,  after the
receipt by the Executive of an amount advanced by the Employer  pursuant to this
Paragraph 7C, the Executive  becomes entitled to receive any refund with respect
to such  claim,  the  Executive  shall  (subject to the  Employer's  substantial
compliance  with the  requirements  of this  Paragraph  7C)  promptly pay to the
Employer the amount of such refund  (together with any interest paid or credited
thereon after taxes applicable thereto).  If, after the receipt by the Executive
of an amount advanced by the Employer  pursuant to Paragraph 7C, a determination
is made that the  Executive  shall not be entitled to any refund with respect to
such claim and the  Employer  does not notify  the  Executive  in writing of its
intent to contest such denial of refund prior to the  expiration  of thirty (30)
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such  advance  shall  offset,  to the
extent thereof, the amount of Gross-Up Payment required to be paid.

8. Protective  Covenants.  The Executive  acknowledges and agrees that solely by
virtue of his  employment  by,  and  relationship  with,  the  Employer,  he has
acquired and will acquire "Confidential Information", as hereinafter defined, as
well as special knowledge of the Employer's relationships with its customers and
suppliers,  and that, but for his association  with the Employer,  the Executive
would  not or will not have  had  access  to said  Confidential  Information  or
knowledge of said relationships.  The Executive further  acknowledges and agrees
(i) that the  Employer  has long  term,  near-permanent  relationships  with its
customers and suppliers,  and that those  relationships  were developed at great
expense  and  difficulty  to the  Employer  over  several  years  of  close  and
continuing  involvement;  and (ii) that the  Employer's  relationships  with its
customers and suppliers are and will continue to be valuable, special and unique
assets of the Employer and that the identity of its  customers  and suppliers is
kept under tight  security  with the Employer and cannot be readily  ascertained
from publicly available  materials or from materials available to the Employer's
competitors.  In return for the consideration  described in this Agreement,  and
other good and valuable  consideration,  the receipt and sufficiency of which is
hereby acknowledged,  and as a condition precedent to the Employer entering into
this  Agreement,  and as an  inducement  to the Employer to do so, the Executive
hereby represents, warrants, and covenants as follows:

A. The  Executive  has executed  and  delivered  this  Agreement as his free and
voluntary act, after having determined that the provisions  contained herein are
of a material benefit to him, and that the duties and obligations imposed on him
hereunder  are fair and  reasonable  and will not  prevent  him from  earning  a
comparable  livelihood  following the  termination  of his  employment  with the
Employer.

B. The Executive has read and fully  understands  the terms and  conditions  set
forth  herein,  has  had  time to  reflect  on and  consider  the  benefits  and
consequences  of entering into this  Agreement,  and has had the  opportunity to
review the terms  hereof  with an  attorney  or other  representative,  if he so
chooses.

C. The  execution  and  delivery of this  Agreement  by the  Executive  does not
conflict  with,  or result in a breach of or  constitute  a default  under,  any
agreement or  contract,  whether  oral or written,  to which the  Executive is a
party or by which the Executive may be bound.
<PAGE>
D.  The  Executive  agrees  that,  during  the time of his  employment  with the
Employer  and for a  period  of one (1)  year  following  the  later  of (i) the
termination of the Executive's  employment hereunder pursuant to Paragraph 6B or
6E, or (ii) one year  following the date of the last payment  provided for under
Paragraph 7B, the Executive will not, except on behalf of the Employer, anywhere
in North  America,  or in any other  place or venue  where the  Employer  or any
affiliate,  subsidiary,  or division  thereof now conducts or  operates,  or may
conduct  or  operate,  its  business  prior  to  the  date  of  the  Executive's
termination of employment:

(1)               directly or indirectly, contact, solicit or direct any person,
                  firm,  corporation,  association or other entity to contact or
                  solicit,   any  of  the  Employer's   customers,   prospective
                  customers,  or  suppliers  (as  hereinafter  defined)  for the
                  purpose of providing any products and/or services that are the
                  same as or similar to the products  and  services  provided by
                  the  Employer  to its  customers  during the term  hereof.  In
                  addition,  the Executive will not disclose the identity of any
                  such customers,  prospective customers,  or suppliers,  or any
                  part thereof, to any person, firm,  corporation,  association,
                  or other entity for any reason or purpose whatsoever; or

(2)               solicit or accept if offered to him, with or without
                  solicitation,  on his own behalf or on behalf of any other
                  person,  the services of any person who is a current  employee
                  of the Employer (or was an employee of the Employer during the
                  year preceding  such  solicitation),  nor solicit any of the
                  Employer's  current  employees (or an individual  who was an
                  employee of the Employer during the year preceding such
                  solicitation) to terminate employment with the Employer,  nor
                  agree to hire any current  employee (or an individual  who was
                  an employee of the Employer  during the year preceding such
                  hire) of the  Employer  into  employment  with  himself or any
                  company,  individual  or other entity  (provided,however,  and
                  notwithstanding  the foregoing,  the Executive shall not be
                  precluded from hiring any current employee (or an individual
                  who was an employee of the Employer  during the year preceding
                  such hire) of the Employer into any position of public service
                  with a federal,  state,  or local  governmental  entity or
                  agency so long as the Executive does not solicit the services
                  of such employee or former employee); or

(3)               directly  or  indirectly,  whether as an  investor  (excluding
                  investments  representing  less than one  percent  (1%) of the
                  common stock of a public company), lender, owner, stockholder,
                  officer, director, consultant, employee, agent, salesperson or
                  in any other capacity, whether part-time or full-time,  become
                  associated  with any business  involved in a business  similar
                  to, or  comparable  to, the  business  of the  Employer or any
                  affiliate of the Employer; or

(4)               act  as  a  consultant,   advisor,  officer,  manager,  agent,
                  director, partner, independent contractor,  owner, or employee
                  for  or  on  behalf  of  any  of  the  Employer's   customers,
                  prospective customers,  or suppliers (as hereinafter defined),
                  with respect to or in any way with regard to any aspect of the
                  Employer's  business  and/or any other business  activities in
                  which the Employer engages during the term hereof.

E. The  Executive  acknowledges  and agrees  that the scope  described  above is
necessary and  reasonable in order to protect the Employer in the conduct of its
business and that, if the Executive  becomes  employed by another  employer,  he
shall be required to disclose the existence of this Paragraph 8 to such employer
and the Executive hereby consents to and the Employer is hereby given permission
to disclose the existence of this Paragraph 8 to such employer.

F. For purposes of this Paragraph 8, "customer"  shall be defined as any person,
firm,  corporation,  association,  or entity that  purchased any type of product
and/or  service from the Employer or is or was doing  business with the Employer
or the  Executive  within the twelve  (12) month  period  immediately  preceding
termination  of the  Executive's  employment.  For purposes of this Paragraph 8,
"prospective  customer"  shall be  defined  as any  person,  firm,  corporation,
association,  or entity  contacted or solicited by the Employer or the Executive
(whether  directly or indirectly) or who contacted the Employer or the Executive
(whether directly or indirectly) within the twelve (12) month period immediately
preceding  termination of the  Executive's  employment for the purpose of having
such persons, firms, corporations,  associations,  or entities become a customer
of the Employer.  For purposes of this Paragraph 8, "supplier"  shall be defined
as any person,  firm,  corporation,  association,  or entity who is or was doing
business with the Employer or the Executive or who was contacted or solicited by
the Employer or the Executive  (whether directly or indirectly) or who contacted
or solicited  the Employer or the  Executive  (whether  directly or  indirectly)
within the twelve (12) month period  immediately  preceding  termination  of the
Executive's employment.
<PAGE>
G. The  Executive  agrees that both during his  employment  and  thereafter  the
Executive  will not, for any reason  whatsoever,  use for himself or disclose to
any person not employed by the Employer any  "Confidential  Information"  of the
Employer  acquired by the Executive during his  relationship  with the Employer,
both prior to and  during  the term of this  Agreement.  The  Executive  further
agrees to use  Confidential  Information  solely for the  purpose of  performing
duties with,  or for, the  Employer and further  agrees not to use  Confidential
Information  for  his  own  private  use or  commercial  purposes  or in any way
detrimental   to  the  Employer.   The  Executive   agrees  that   "Confidential
Information"  includes  but is not limited to: (1) any  financial,  engineering,
business,   planning,   operations,   services,  potential  services,  products,
potential products, technical information and/or know-how,  organization charts,
formulas,  business plans, production,  purchasing,  marketing,  pricing, sales,
profit, personnel,  customer, broker, supplier, or other lists or information of
the Employer;  (2) any papers, data, records,  processes,  methods,  techniques,
systems, models, samples, devices, equipment,  compilations,  invoices, customer
lists, or documents of the Employer;  (3) any confidential  information or trade
secrets of any third party  provided to the Employer in confidence or subject to
other  use  or  disclosure  restrictions  or  limitations;  and  (4)  any  other
information,  written, oral, or electronic, whether existing now or at some time
in the future, whether pertaining to current or future developments, and whether
previously  accessed  during the  Executive's  tenure with the Employer or to be
accessed during his future  employment with the Employer,  which pertains to the
Employer's  affairs or interests or with whom or how the Employer does business.
The Employer  acknowledges  and agrees that  Confidential  Information  does not
include (a)  information  properly in the public domain,  (b) information in the
Executive's  possession  prior to the date of his original  association with the
Employer,  or (c) information  which is required to be disclosed by law or legal
process  provided that the Executive  notifies the Employer prior to or, if such
advance  notification  is not  possible,  promptly  after  such  disclosure  and
cooperates  with the Employer in obtaining  any  protective  order  regarding or
other confidential treatment of such information.

H. In the event that the Executive  intends to  communicate  information  to any
individual(s), entity or entities (other than the Employer), to permit access by
any  individual(s),  entity or  entities  (other than the  Employer),  or to use
information  for  the  Executive's  own  account  or  for  the  account  of  any
individual(s), entity or entities (other than the Employer) and such information
would be  Confidential  Information  hereunder but for the exceptions set out at
(a) and (b) of Paragraph G of this  Agreement,  the  Executive  shall notify the
Employer of such intent in writing, including a description of such information,
no less than fifteen (15) days prior to such communication, access or use.

I. During and after the term of employment  hereunder,  the  Executive  will not
remove from the Employer's premises any documents,  records,  files,  notebooks,
correspondence, reports, video or audio recordings, computer printouts, computer
programs,  computer software, price lists, microfilm,  drawings or other similar
documents containing Confidential Information, including copies thereof, whether
prepared by him or others,  except as his duty shall require, and in such cases,
will  promptly  return  such  items to the  Employer.  Upon  termination  of his
employment  with the  Employer,  all such items  including  summaries  or copies
thereof, then in the Executive's  possession,  shall be returned to the Employer
immediately.
<PAGE>
J. The  Executive  recognizes  and agrees that all ideas,  inventions,  patents,
copyrights,   copyright   designs,   trade   secrets,   trademarks,   processes,
discoveries,  enhancements,  software, source code, catalogues, prints, business
applications,  plans,  writings,  and other developments or improvements and all
other intellectual property and proprietary rights and any derivative work based
thereon (the  "Inventions")  conceived by the  Executive,  alone or with others,
during the term of his employment, whether or not during working hours, that are
within the scope of the Employer's  business operations or that relate to any of
the Employer's work or projects  (including any and all inventions  based wholly
or in part upon ideas  conceived  during  the  Executive's  employment  with the
Employer),  are the sole and exclusive  property of the Employer.  The Executive
further agrees that (1) he will promptly disclose all Inventions to the Employer
and hereby  assigns to the Employer all present and future  rights he has or may
have in those Inventions, including without limitation those relating to patent,
copyright,  trademark or trade secrets;  and (2) all of the Inventions  eligible
under  the  copyright  laws are "work  made for  hire."  At the  request  of the
Employer,  the  Executive  will  do all  things  deemed  by the  Employer  to be
reasonably  necessary to perfect title to the  Inventions in the Employer and to
assist  in  obtaining  for  the  Employer  such  patents,  copyrights  or  other
protection as may be provided  under law and desired by the Employer,  including
but not limited to  executing  and signing  any and all  relevant  applications,
assignments or other instruments. Notwithstanding the foregoing, pursuant to the
Employee Patent Act,  Illinois  Public Act 83-493,  the Employer hereby notifies
the Executive  that the  provisions  of this  Paragraph 8 shall not apply to any
Inventions  for  which  no  equipment,   supplies,   facility  or  trade  secret
information  of the Employer was used and which were  developed  entirely on the
Executive's  own time,  unless (1) the Invention  relates (i) to the business of
the  Employer,  or  (ii) to  actual  or  demonstrably  anticipated  research  or
development  of the  Employer,  or (2)  the  Invention  results  from  any  work
performed by the Executive for the Employer.

K. The  Executive  acknowledges  and agrees that all  customer  lists,  supplier
lists, and customer and supplier  information,  including,  without  limitation,
addresses and telephone numbers,  are and shall remain the exclusive property of
the Employer,  regardless of whether such information was developed,  purchased,
acquired, or otherwise obtained by the Employer or the Executive.  The Executive
also agrees to furnish to the  Employer on demand at any time during the term of
this Agreement,  and upon the termination of this Agreement,  any other records,
notes, computer printouts,  computer programs,  computer software,  price lists,
microfilm, or any other documents related to the Employer's business,  including
originals and copies thereof.

L. The Executive  acknowledges that he may become aware of "material"  nonpublic
information  relating to customers whose stock is publicly traded. The Executive
acknowledges  that he is  prohibited  by law as well as by Employer  policy from
trading in the shares of such customers while in possession of such  information
or directly or indirectly  disclosing  such  information to any other persons so
that  they  may  trade  in these  shares.  For  purposes  of this  Paragraph  L,
"material" information may include any information,  positive or negative, which
might be of significance to an investor in determining whether to purchase, sell
or hold the stock of publicly traded  customers.  Information may be significant
for this purpose even if it would not alone  determine the investor's  decision.
Examples  include  a  potential   business   acquisition,   internal   financial
information  that  departs in any way from what the  market  would  expect,  the
acquisition or loss of a major contract, or an important financing transaction.

M. It is agreed that any breach or  anticipated  or threatened  breach of any of
the  Executive's  covenants  contained  in  this  Paragraph  8  will  result  in
irreparable  harm and  continuing  damages to the  Employer and its business and
that  the  Employer's  remedy  at law for any  such  breach  or  anticipated  or
threatened  breach will be inadequate and,  accordingly,  in addition to any and
all other  remedies that may be available to the Employer at law or in equity in
such event,  any court of competent  jurisdiction may issue a decree of specific
performance or issue a temporary and permanent injunction, without the necessity
of the Employer  posting bond or furnishing  other security and without  proving
special damages or irreparable injury,  enjoining and restricting the breach, or
threatened  breach,  of any such  covenant,  including,  but not limited to, any
injunction  restraining  the Executive  from  disclosing,  in whole or part, any
Confidential  Information.  The Executive  acknowledges  the truthfulness of all
factual  statements  in this  Agreement  and agrees that he is estopped from and
will not make any factual  statement in any proceeding  that is contrary to this
Agreement or any part thereof.
<PAGE>
9. Notices. Any and all notices required in connection with this Agreement shall
be deemed adequately given only if in writing and (a) personally  delivered,  or
sent by first class,  registered  or certified  mail,  postage  prepaid,  return
receipt requested,  or by recognized  overnight courier,  (b) sent by facsimile,
provided  a hard copy is mailed on that date to the party for whom such  notices
are intended,  or (c) sent by other means at least as fast and reliable as first
class mail. A written notice shall be deemed to have been given to the recipient
party  on the  earlier  of (a) the date it shall  be  delivered  to the  address
required by this Agreement; (b) the date delivery shall have been refused at the
address required by this Agreement;  (c) with respect to notices sent by mail or
overnight courier, the date as of which the Postal Service or overnight courier,
as the case may be, shall have indicated such notice to be  undeliverable at the
address required by this Agreement; or (d) with respect to a facsimile, the date
on which the  facsimile is sent and receipt of which is  confirmed.  Any and all
notices referred to in this Agreement,  or which either party desires to give to
the other, shall be addressed to his residence in the case of the Executive,  or
to its principal office in the case of the Employer.

10. Waiver of  Breach.  A waiver by the  Employer  of a breach of any  provision
of this  Agreement  by the  Executive  shall not operate or be  construed  as a
waiver or  estoppel  of any  subsequent  breach by the  Executive.  No waiver
shall be valid  unless in writing and signed by an authorized officer of the
Employer.

11. Assignment.  The  Executive  acknowledges  that the services to be rendered
by him are unique and personal.  Accordingly,  the
Executive  may not  assign  any of his  rights or  delegate  any of his duties
or  obligations  under  this  Agreement.  The rights and obligations  of the
Employer  under this  Agreement  shall inure to the benefit of and shall be
binding upon the successors and assigns of the Employer.

12. Entire  Agreement.  This Agreement sets forth the entire and final agreement
and understanding of the parties and contains all of the agreements made between
the parties with respect to the subject matter hereof. This Agreement supersedes
any and all other  agreements,  either oral or in  writing,  between the parties
hereto,  with respect to the subject matter hereof. No change or modification of
this  Agreement  shall be valid unless in writing and signed by the Employer and
the Executive.

13.  Severability.  If any provision of this Agreement shall be found invalid or
unenforceable  for any reason, in whole or in part, then such provision shall be
deemed  modified,  restricted,  or  reformulated to the extent and in the manner
necessary to render the same valid and  enforceable,  or shall be deemed excised
from  this  Agreement,  as the case may  require,  and this  Agreement  shall be
construed  and  enforced  to the  maximum  extent  permitted  by law, as if such
provision had been originally incorporated herein as so modified, restricted, or
reformulated  or as if such  provision  had  not  been  originally  incorporated
herein,  as the  case  may be.  The  parties  further  agree  to  seek a  lawful
substitute  for any  provision  found to be  unlawful;  provided,  that,  if the
parties are unable to agree upon a lawful  substitute,  the  parties  desire and
request that a court or other authority called upon to decide the enforceability
of this  Agreement  modify  those  restrictions  in this  Agreement  that,  once
modified,  will result in an agreement that is enforceable to the maximum extent
permitted by the law in existence at the time of the requested enforcement.

14. Headings. The headings in this Agreement are inserted for  convenience  only
and are not to be considered a  construction  of the provisions hereof.

15. Execution  of  Agreement.  This  Agreement  may be executed in several
counterparts,  each of which  shall be  considered  an original, but which when
taken together, shall constitute one agreement.

16. Recitals.  The recitals to this  Agreement  are  incorporated  herein as an
integral  part hereof and shall be  considered  as substantive and not precatory
language.
<PAGE>
17.  Arbitration.  Any  controversy  or claim arising out of or relating to this
Agreement or breach  thereof,  other than any controversy or claim arising under
Paragraph 8, shall be resolved by  arbitration  in accordance  with the National
Rules for the  Resolution  of  Employment  Disputes  ("Rules")  of the  American
Arbitration  Association through a single arbitrator selected in accordance with
the Rules.  The decision of the arbitrator  shall be rendered within thirty (30)
days of the close of the arbitration  hearing and shall include written findings
of fact and  conclusions  of law  reflecting the  appropriate  substantive  law.
Judgment upon the award  rendered by the  arbitrator may be entered in any court
having  jurisdiction  thereof in the State of  Illinois.  In reaching his or her
decision, the arbitrator shall have no authority (a) to authorize or require the
parties to engage in  discovery  (provided,  however,  that the  arbitrator  may
schedule  the time by which the parties  must  exchange  copies of the  exhibits
that, and the names of the witnesses  whom, the parties intend to present at the
hearing),  (b) to interpret or enforce  Paragraph 8 of the Agreement  (for which
Paragraph 19 shall  provide the  exclusive  venue),  (c) to change or modify any
provision of this Agreement,  (d) to base any part of his or her decision on the
common law principle of  constructive  termination,  or (e) to award any damages
not  otherwise  available  under the laws of the State of Illinois (or under any
applicable federal laws) and may not make any ruling, finding or award that does
not conform to this Agreement. Each party shall bear all of his or its own legal
fees,  costs and expenses of arbitration  and one-half (1/2) of the costs of the
arbitrator.

18. Indemnification. To the fullest extent permitted by law, the Employer agrees
to indemnify the Executive against,  and to hold the Executive harmless from any
and all claims, lawsuits,  losses, damages,  assessments,  penalties,  expenses,
costs and liabilities of any kind or nature, including without limitation, court
costs and attorneys'  fees, which the Executive may sustain directly as a result
of, or in connection  with, any act or omission by the Employer or its employees
or any suit or other  proceeding  brought by a third  party  (including  but not
limited to governmental or regulatory agencies or bodies) in connection with the
foregoing or in connection  with any act or omission of the  Executive  while he
was  employed  or  served as an  officer  or  director  of the  Employer  or any
wholly-owned  subsidiary  thereof,  unless such claim,  lawsuit,  loss,  damage,
assessment, penalty, expense, cost or liability is the result of the Executive's
gross negligence or willful misconduct.

19.  Governing  Law.  This  Agreement  shall be governed  by, and  construed  in
accordance  with,  the laws of the State of Illinois,  without  reference to its
conflict of law provisions.  Furthermore,  the Executive  agrees and consents to
submit to personal jurisdiction in the state of Illinois in any state or federal
court  of  competent  subject  matter  jurisdiction  situated  in  Cook  County,
Illinois. The Executive further agrees that the sole and exclusive venue for any
suit  arising  out of, or seeking to enforce,  the terms of  Paragraph 8 of this
Agreement  shall be in a state or  federal  court of  competent  subject  matter
jurisdiction  situated in Cook  County,  Illinois.  In addition,  the  Executive
waives any right to challenge in another court any judgment entered by such Cook
County court or to assert that any action instituted by the Employer in any such
court is in the improper  venue or should be  transferred  to a more  convenient
forum.

         IN WITNESS  WHEREOF,  the parties have set their signatures on the date
first written above.

EMPLOYER:                                                   EXECUTIVE:

USFREIGHTWAYS CORPORATION,                                  SAMUEL K. SKINNER
a Delaware corporation


By: /s/John W. Puth                                       /s/Samuel K. Skinner
       ------------                                       --------------------
Its: Compensation Committee, Chairman
     --------------------------------



<PAGE>

                                    EXHIBIT A

                            USFREIGHTWAYS CORPORATION
                       NONSTATUTORY STOCK OPTION AGREEMENT

         THIS AGREEMENT is made effective this 5th day of June, 2000 (the "Grant
Date"),   between  USFreightways   Corporation,   a  Delaware  corporation  (the
"Company"), and Samuel K. Skinner (the "Optionee").

         WHEREAS,  in  accordance  with  the  terms of that  certain  Employment
Agreement as executed by and between the Company and the  Optionee  effective of
even date herewith (the "Employment Agreement"), the Company desires to grant to
the  Optionee  an option to  purchase  shares of its common  capital  stock (the
"Shares") under the Company's Long-Term Incentive Plan (the "Plan"); and

         WHEREAS,  the Company and the  Optionee  understand  and agree that any
terms used herein  have the same  meanings  as in the Plan (the  Optionee  being
referred to in the Plan as a "Participant").

         NOW, THEREFORE,  in consideration of the following mutual covenants and
for other good and valuable consideration, the parties agree as follows:

1.       GRANT OF OPTION

         The Company grants to the Optionee the right and Option to purchase all
         or any part of an  aggregate  of 200,000  Shares (the  "Option") on the
         terms and  conditions  and  subject  to all the  limitations  set forth
         herein and in the Plan, which is incorporated herein by reference.  The
         Optionee  acknowledges  receipt of a copy of the Plan and  acknowledges
         that the definitive records pertaining to the grant of this Option, and
         exercises of rights  hereunder,  shall be retained by the Company.  The
         Option  granted  herein  is  intended  to be a  Nonstatutory  Option as
         defined in the Plan.

2.       PURCHASE PRICE

         The  purchase  price  of the  Shares  subject  to the  Option  shall be
         $25.9373  per Share,  the fair market  value of a Share as of the Grant
         Date.

3.       EXERCISE OF OPTION

         Subject to the Plan and this Agreement, the Option shall be exercisable
as follows:

             EXERCISE PERIOD
 ----------------------------------------------------------------------------

Number of Shares  Commencement Date                      Expiration Date

   40,000        Grant Date                       10th Anniversary of Grant Date
   40,000        1st Anniversary of Grant Date    10th Anniversary of Grant Date
   40,000        2nd Anniversary of Grant Date    10th Anniversary of Grant Date
   40,000        3rd Anniversary of Grant Date    10th Anniversary of Grant Date
   40,000        4th Anniversary of Grant Date    10th Anniversary of Grant Date

         Notwithstanding   the  foregoing,   if  the  Optionee's   services  are
         terminated by the Company (without  "cause," as such term is defined in
         the Employment  Agreement)  within six (6) months following a Change of
         Control, or the Optionee  voluntarily  terminates his employment within
         six (6) months  following a Change of Control,  all Shares,  whether or
         not exercisable in accordance with the Schedule set forth above,  shall
         become  immediately  exercisable.  For  purposes of this  Agreement,  a
         "Change  of  Control"  shall  be as  defined  in  Paragraph  7B of  the
         Employment Agreement.

4.       ISSUANCE OF STOCK

         The Option may be  exercised in whole or in part (to the extent that it
         is exercisable  in accordance  with its terms) by giving written notice
         (or any other  approved  form of notice) to the  Company.  Such written
         notice shall be signed by the person exercising the Option, shall state
         the  number  of  Shares  with  respect  to which  the  Option  is being
         exercised,  shall contain the warranty, if any, required under the Plan
         and  shall  specify  a date  (other  than a  Saturday,  Sunday or legal
         holiday)  not less than five (5) nor more than ten (10) days  after the
         date of such  written  notice,  as the date on which the Shares will be
         purchased,  at the  principal  office of the  Company  during  ordinary
         business  hours,  or at such  other hour and place  agreed  upon by the
         Company  and the person or persons  exercising  the  Option,  and shall
         otherwise  comply with the terms and  conditions of this  Agreement and
         the Plan. On the date  specified in such written notice (which date may
         be  extended  by the  Company  if any law or  regulation  requires  the
         Company to take any  action  with  respect  to the Shares  prior to the
         issuance thereof),  the Company shall accept payment for the Shares and
         shall   deliver  to  the  Optionee  an   appropriate   certificate   or
         certificates for the Shares as to which the Option was exercised.
<PAGE>
         The Option price of any Shares shall be payable at the time of exercise
as determined by the Company either:

(a)      in cash, by certified check or bank check, or by wire transfer; or

(b)            in whole shares of the Company's common stock, provided, however,
               that (i) if such shares were  acquired  pursuant to an  incentive
               stock option plan (as defined in Code Section 422) of the Company
               or Affiliate,  then the applicable holding period requirements of
               said Section 422 have been met with respect to such shares,  (ii)
               if the  Optionee  is subject  to the  reporting  requirements  of
               Section 16 of the  Securities  Exchange  Act of 1934,  as amended
               from time to time, and if such shares were granted pursuant to an
               option,  then such option must have been granted at least six (6)
               months prior to the exercise of the Option  hereunder,  and (iii)
               such shares were owned by the Optionee for six (6) or more months
               prior to the exercise of the Option hereunder; or

(c)            through  the  delivery  of cash or the  extension  of credit by a
               broker-dealer  to whom  the  Optionee  has  submitted  notice  of
               exercise or  otherwise  indicated an intent to exercise an Option
               (a so-called "cashless" exercise); or

(d)      in any combination of (a), (b), or (c) above.

         The fair market  value of the stock to be applied  toward the  purchase
         price shall be determined as of the date of exercise of the Option in a
         manner  consistent  with the  determination  of fair market  value with
         respect to the grant of an Option under the Plan. Any  certificate  for
         shares of  outstanding  stock of the Company  used to pay the  purchase
         price shall be  accompanied  by a stock power duly endorsed in blank by
         the registered holder of the certificate,  with signature guaranteed in
         the event the  certificate  shall also be accompanied  by  instructions
         from the  Optionee  to the  Company's  transfer  agent with  respect to
         disposition of the balance of the shares covered thereby.

         The Company  shall pay all  original  issue  taxes with  respect to the
         issuance  of Shares  pursuant  hereto and all other  fees and  expenses
         necessarily incurred by the Company in connection therewith. The holder
         of this Option shall have the rights of a stockholder only with respect
         to those Shares covered by the Option which have been registered in the
         holder's  name  in the  share  register  of the  Company  upon  the due
         exercise of the Option.

5.       NON-ASSIGNABILITY

         This Option  shall not be  transferable  by the  Optionee  and shall be
         exercisable  only by the  Optionee,  except  as the Plan may  otherwise
         provide.

6.       NOTICES

         Any notices required or permitted by the terms of this Agreement or the
         Plan shall be given by registered  or certified  mail,  return  receipt
         requested, addressed as follows:

         To the Company:   USFreightways Corporation
                                    8550 West Bryn Mawr Avenue
                                    Suite 700
                                    Chicago, Illinois 60631
                                    Attn:  Long-Term Incentive Plan Committee

         To the Optionee:  Samuel K. Skinner
                                    11 Indian Hill Road
                                    Winnetka, Illinois  60093

         or to such  other  address  or  addresses  of which  notice in the same
         manner has  previously  been given.  Any such notice shall be deemed to
         have  been  given  when  mailed  in   accordance   with  the  foregoing
         provisions.
<PAGE>
7.       GOVERNING LAW

         This Agreement  shall be construed and enforced in accordance  with the
laws of the State of Illinois.

8.       BINDING EFFECT

         This Agreement shall (subject to the provisions of Section 5 hereof) be
         binding  upon the  heirs,  executors,  administrators,  successors  and
         assigns of the parties hereto.

         IN WITNESS  WHEREOF,  the  Company  and the  Optionee  have caused this
Agreement   to  be  executed  on  their   behalf,   by  their  duly   authorized
representatives, all on the day and year first above written.

COMPANY:                                    OPTIONEE:

USFREIGHTWAYS CORPORATION


By: _______________________                 _____________________________
Its: _______________________                         Samuel K. Skinner




<PAGE>



                                    EXHIBIT B

                            USFREIGHTWAYS CORPORATION
                              STOCK GRANT AGREEMENT


         THIS AGREEMENT is made effective this 5th day of June, 2000 (the "Grant
Date")  between   USFreightways   Corporation,   a  Delaware   corporation  (the
"Company"), and Samuel K. Skinner (the "Recipient").

         WHEREAS,  in  accordance  with  the  terms of that  certain  Employment
Agreement as executed by and between the Company and the Recipient  effective of
even date herewith (the "Employment Agreement"), the Company desires to grant to
the Recipient certain shares of its common capital stock (the "Stock") under the
Company's Long-Term Incentive Plan (the "Plan"); and

         WHEREAS,  the Company and the Recipient  understand  and agree that any
terms used herein have the same  meanings  as in the Plan (the  Recipient  being
referred to in the Plan as a "Participant").

         NOW, THEREFORE,  in consideration of the following mutual covenants and
for other good and valuable consideration, the parties agree as follows:

1.       GRANT OF STOCK

         The Company hereby grants to the Recipient 7,711 Shares of Stock on the
         terms and  conditions  and  subject  to all the  limitations  set forth
         herein and in the Plan, which is incorporated herein by reference.  The
         Recipient  acknowledges  receipt of a copy of the Plan. The Company and
         the Recipient  acknowledge that the number of Shares granted  hereunder
         equals $200,000 of Stock on the Grant Date.

2.       CERTIFICATES AND SHAREHOLDER RIGHTS

         The Company's  Transfer  Agent and Registrar  shall prepare and issue a
         stock  certificate in the Recipient's  name  representing the Shares of
         Stock that the Recipient has been granted.  From and after the issuance
         of the  certificate,  the Recipient  shall be the holder of record with
         respect to the Stock.


3.       WITHHOLDING

         The Company  shall have the power and right to deduct or  withhold,  or
         require the Recipient to remit to the Company,  an amount sufficient to
         satisfy federal,  state, and local taxes required by law to be withheld
         with respect to any grant made under or as a result of this  Agreement.
         In the  alternative,  the  Recipient  may  elect,  subject  to  Company
         approval,  to satisfy the withholding  requirement in whole or in part,
         by  having  the  Company   withhold  Shares  that  would  otherwise  be
         transferred  to the Recipient  having a fair market value,  on the date
         the tax is to be  determined,  equal to the minimum  marginal  tax that
         could be imposed on the  transaction.  All  elections  shall be made in
         writing and signed by the Recipient.

<PAGE>
5.       NOTICES

         Any notices required or permitted by the terms of this Agreement or the
         Plan shall be given by registered  or certified  mail,  return  receipt
         requested, addressed as follows:

         To the Company:   USFreightways Corporation
                               8550 West Bryn Mawr Avenue
                               Suite 700
                               Chicago, IL 60631
                               Attn:  Long-Term Incentive Plan Award Committee

         To the Recipient: Samuel K. Skinner
                                    11 Indian Hill Road
                                    Winnetka, Illinois 60093

         or to such  other  address  or  addresses  of which  notice in the same
         manner has  previously  been given.  Any such notice shall be deemed to
         have  been  given  when  mailed  in   accordance   with  the  foregoing
         provisions.

6.       GOVERNING LAW

         This Agreement  shall be construed and enforced in accordance  with the
laws of the State of Illinois.

7.       BINDING EFFECT

         This   Agreement   shall  be  binding   upon  the   heirs,   executors,
administrators, successors and assigns of the parties hereto.

IN WITNESS WHEREOF,  the Company and the Recipient have caused this Agreement to
be  executed  on its and his  behalf  effective  the day and  year  first  above
written.


USFREIGHTWAYS CORPORATION                                    RECIPIENT


By:
   --------------------------------------------------
Its:                                                         Samuel K. Skinner
     ------------------------------------------------