FORM OF
DISTRIBUTION AGREEMENT
between
CONSOLIDATED FREIGHTWAYS, INC.
and
CONSOLIDATED FREIGHTWAYS CORPORATION
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS
1.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II THE DISTRIBUTION
2.1 Cooperation Prior to the Distribution . . . . . . . . . . . . . . 5
2.2 Conditions to Distribution. . . . . . . . . . . . . . . . . . . . . 5
2.3 The Distribution. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Sale of Fractional Shares . . . . . . . . . . . . . . . . . . . . 6
2.5 Odd-Lot Program . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III TRANSACTIONS RELATING TO THE DISTRIBUTION
3.1 The Reorganization. . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Company Board . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Company Charter and Bylaws. . . . . . . . . . . . . . . . . . . . 10
3.4 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Operation in the Ordinary Course of Business. . . . . . . . . . . 10
3.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Collections and Payments after the
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Certain Post-Distribution Transactions. . . . . . . . . . . . . . 11
ARTICLE IV INDEMNIFICATION
4.1 Indemnification by CFI. . . . . . . . . . . . . . . . . . . . . . 12
4.2 Indemnification by the Company. . . . . . . . . . . . . . . . . . 12
4.3 Limitations on Indemnification Obligations. . . . . . . . . . . . 13
4.4 Procedures for Indemnification. . . . . . . . . . . . . . . . . . 13
4.5 Releases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6 Environmental Liabilities . . . . . . . . . . . . . . . . . . . . 16
ARTICLE V ACCESS TO INFORMATION; SERVICES
5.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . 16
5.2 Production of Witnesses . . . . . . . . . . . . . . . . . . . . . 17
5.3 Provision of Services . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Retention of Records. . . . . . . . . . . . . . . . . . . . . . . 18
5.6 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.7 Provision of Corporate Records. . . . . . . . . . . . . . . . . . 19
5.8 Privileged Matters. . . . . . . . . . . . . . . . . . . . . . . . 20
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ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Form 10 and Information Statement . . . . . . . . . . . . . . . . 20
6.3 Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII SHARED CLAIMS
7.1 Acknowledgment. . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Notification. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.4 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.5 Non-Shared Liabilities . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII MISCELLANEOUS
8.1 Complete Agreement; Construction. . . . . . . . . . . . . . . . . 22
8.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.5 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . 23
8.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 23
8.8 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.9 No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . 24
8.10 Titles and Headings . . . . . . . . . . . . . . . . . . . . . . . 24
8.11 Legal Enforceability. . . . . . . . . . . . . . . . . . . . . . . 24
8.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 24
8.13 No Solicitation of Employees. . . . . . . . . . . . . . . . . . . 25
8.14 Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . . . 25
Schedule 3.1(b) LJSC Service Departments
Schedule 3.1(e) LJSC Real Property
Schedule 3.1(g) Administrative and Business
Operations
Schedule 3.1(h) Marks
Schedule 3.6(b) Insurance Policies
Schedule 4.1 CFI Indemnification
Schedule 4.2 Company Indemnification
ANNEX 1 Form of ADR Agreement
ANNEX 2 Form of Agreement on Employee Benefits Matters
ANNEX 3 Form of Reimbursement Agreement
ANNEX 4 Form of Services Agreement
ANNEX 5 Form of Tax Sharing Agreement
ANNEX 6 Form of Restated Certificate of Incorporation
ANNEX 7 Form of Restated Bylaws
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DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (the "Agreement") is made as of this
_____ of __________, 1996 by and between CONSOLIDATED FREIGHTWAYS, INC., a
Delaware corporation (together with its wholly owned subsidiaries, "CFI"),
and CONSOLIDATED FREIGHTWAYS CORPORATION, a Delaware corporation (together
with its wholly owned subsidiaries, the "Company").
RECITALS
WHEREAS, CFI is the holder of all of the issued and outstanding shares
of common stock, $.01 par value per share, of the Company (the "Company Common
Stock");
WHEREAS, the Board of Directors of CFI (the "CFI Board") has
determined that it is advisable to distribute (the "Distribution") all of the
shares of Company Common Stock to the holders of the common stock, $.01 par
value per share, of CFI (the "CFI Common Stock");
WHEREAS, CFI and the Company have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
the Distribution and certain other agreements that will govern certain matters
relating to the Distribution and the relationships thereafter between CFI and
the Company;
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth and other good and valuable consideration, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 GENERAL. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
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ACTION: any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
ADR AGREEMENT: the Alternative Dispute Resolution Agreement to be
entered into by CFI and the Company as of the Distribution Date, the form of
which is attached hereto as Annex 1.
AFFILIATE: as defined in Rule 12b-2 under the Exchange Act.
CFI GROUP: At any time following the Distribution, CFI and all
entities which are Affiliates of CFI at such time.
CODE: the Internal Revenue Code of 1986, as amended.
COMMISSION: the Securities and Exchange Commission.
COMPANY GROUP: At any time following the Distribution, the Company
and all entities which are Affiliates of the Company at such time.
DISTRIBUTION AGENT: First Chicago Trust Company of New York.
DISTRIBUTION DATE: the date as determined by the CFI Board or a
committee thereof on which the Distribution takes place by delivery of the
shares of Company Common Stock to the Distribution Agent.
DISTRIBUTION RATIO: the ratio of CFI Common Stock to Company Common
Stock to be distributed in the Distribution.
EMPLOYEE BENEFIT MATTERS AGREEMENT: the Agreement on Employee Benefit
Matters to be entered into by CFI and the Company as of the Distribution Date,
the form of which is attached hereto as Annex 2.
ENVIRONMENTAL LIABILITIES: means any Liabilities arising from, under
or relating to any environmen-
2
tal, health or safety law, rule, regulation, Action, threatened Action, order
or consent decree.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
FORM 10: the registration statement on Form 10 filed by the Company
with the Commission to effect the registration of the Company Common Stock under
the Exchange Act.
INFORMATION STATEMENT: the Information Statement on Form 14C filed by
the Company with the Commission and included in the Form 10 at the time of its
effectiveness.
INSURANCE PROCEEDS: those monies (i) received by an insured from an
insurance carrier on an insurance claim or (ii) paid by an insurance carrier on
behalf of an insured on an insurance claim, in either case net of any applicable
deductibles, retentions, or costs paid by such insured, but such term does not
refer to proceeds received from an insurer on an employee benefits group
insurance policy.
IRS: the Internal Revenue Service.
LIABILITIES: any and all debts, liabilities, obligations, absolute or
contingent, asserted or unasserted, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, direct or indirect,
whenever arising, including all costs and expenses relating thereto, and
including, without limitation, those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any governmental entity or any award of any arbitrator of any kind,
and those arising under any contract, commitment or undertaking including those
arising under this Agreement.
LJCS: Xxxxxx Xxxxx Xxxxxxx Corporation, a Delaware Corporation.
LOSSES: any and all debts, losses, Liabilities, claims, damages,
obligations, payments or costs and expenses, absolute or contingent, matured or
unma-
3
tured, liquidated or unliquidated, accrued or unaccrued, known or unknown,
direct or indirect (including, without limitation, the costs and expenses of
any and all Actions, threatened Actions, demands, assessments, judgments,
settlements and compromises relating thereto and attorneys' fees and any and
all expenses whatsoever reasonably incurred in investigating, preparing or
defending against any such actions or threatened actions).
NYSE: the New York Stock Exchange.
OTHER AGREEMENTS: the ADR Agreement, the Employee Benefit Matters
Agreement, the Reimbursement Agreement, the Services Agreement and the Tax
Sharing Agreement.
RECORD DATE: the close of business on the date to be determined by
the CFI Board or a committee thereof as the record date for the determination of
stockholders of record of CFI entitled to receive the Distribution.
REIMBURSEMENT AGREEMENT: the Reimbursement and Indemnification
Agreement to be entered into between CFI and Consolidated Freightways
Corporation of Delaware ("CFCD") as of October 1, 1996, the form of which is
attached hereto as Annex 3.
SECURITIES ACT: the Securities Act of 1933, as amended.
SERVICES AGREEMENT: the Transition Services Agreement to be entered
into by CNF Service Company, Inc. and the Company as of the Distribution Date,
the form of which is attached hereto as Annex 4.
SUBSIDIARIES: the term "Subsidiaries" as used herein with respect to
any entity shall, unless otherwise indicated, be deemed to refer to both direct
and indirect subsidiaries of such entity.
TAX SHARING AGREEMENT: the Tax Sharing Agreement to be entered into
by CFI and the Company as of the Distribution Date, the form of which is
attached hereto as Annex 5.
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ARTICLE II
THE DISTRIBUTION
2.1 COOPERATION PRIOR TO THE DISTRIBUTION. Prior to the
Distribution:
(a) CFI and the Company shall prepare, and the Company shall
file with the Commission, the Form 10. CFI and the Company shall prepare, and
CFI shall mail, promptly after the effectiveness of the Form 10, to the holders
of CFI Common Stock, the Information Statement, which shall set forth
appropriate disclosure concerning the Company, the Distribution and other
matters. The Company shall use reasonable efforts to cause the Form 10 to
become effective under the Exchange Act.
(b) CFI and the Company shall cooperate in preparing, filing
with the Commission and causing to become effective any registration statements
or amendments thereto that are appropriate to reflect the establishment of or
amendments to any employee benefit and other plans contemplated by the Employee
Benefit Matters Agreement.
(c) The Company shall prepare, file and pursue an application to
permit listing of the Company Common Stock on the NYSE (and/or such other
exchange as the Company deems appropriate), under the symbol "CFW" (or such
other symbol as the Company deems appropriate).
2.2 CONDITIONS TO DISTRIBUTION. The CFI Board shall in its
discretion establish the Record Date and the Distribution Date and all
appropriate procedures in connection with the Distribution. The Distribution
shall be subject to satisfaction of each of the following conditions, among
other things: (i) the consummation of certain internal corporate
reorganizations; (ii) the successful renegotiation of certain CFI credit
facilities and debt instruments, including the execution of certain consents,
waivers and amendments thereto by lenders; (iii) the establishment of separate
credit facilities for CFCD; (iv) the receipt of an opinion of Xxxxxxxx Xxxxx
Xxxxxx & Xxxxx; (v) the receipt of certain third-party consents relating to
certain contracts, licenses and other agreements; (vi) the receipt of rulings
from the IRS or an opinion of special tax counsel to CFI to the
5
effect that, among other things, the Distribution will qualify as a tax-free
distribution under Section 355 of the Internal Revenue Code of 1986, as
amended; (vii) the receipt of a letter from the staff of the Commission
confirming that it will take no action with respect to certain matters
relating to the Distribution; (viii) the Form 10 having become effective and
no stop order being in effect; (ix) there not being in effect any statute,
rule, regulation or order of any court, governmental or regulatory body that
prohibits or makes illegal the transactions contemplated by the Distribution;
(x) approval for listing of the Company Common Stock on the NYSE; and (xi)
declaration of the special dividend by the CFI Board. The CFI Board reserves
the right in its discretion, other than with respect to those set forth in
clauses (i), (vi), (vii) and (xi), to waive the satisfaction of any condition
to the Distribution; PROVIDED, HOWEVER, that the CFI Board may abandon, defer
or modify the Distribution and the related transactions at any time prior to
the Distribution Date.
2.3 THE DISTRIBUTION. On the Distribution Date or as soon thereafter
as practicable, subject to the conditions set forth in this Agreement, CFI shall
deliver to the Distribution Agent a certificate or certificates representing the
number of then outstanding shares of Company Common Stock to be distributed in
the Distribution, endorsed in blank, and shall instruct the Distribution Agent
to distribute to each holder of record of CFI Common Stock on the Record Date a
certificate or certificates representing one share of Company Common Stock for
every two shares of CFI Common Stock so held. The Company agrees to provide all
certificates for shares of Company Common Stock that the Distribution Agent
shall require in order to effect the Distribution.
2.4 SALE OF FRACTIONAL SHARES. The Distribution Agent shall not
distribute any fractional shares of Company Common Stock ("Fractional Shares")
to any holder of CFI Common Stock. The Distribution Agent shall be instructed
to aggregate all such Fractional Shares and sell them in an orderly manner after
the Distribution Date in the open market and, after completion of all such
sales, distribute a PRO RATA portion of the proceeds from such sales to each
holder of CFI Common Stock who would otherwise have received a Fractional
Share. CFI will
6
bear the cost of brokerage commissions incurred in connection with such sales.
2.5 ODD-LOT PROGRAM. In connection with the Distribution, the
Company shall offer to holders of CFI Common Stock who would otherwise receive
fewer than 100 shares of Company Common Stock in the Distribution a program by
which such holders may instruct the Distribution Agent to sell such shares of
Company Common Stock on their behalf. The Company shall cause such program to
be conducted in accordance with the terms and conditions described in the
Information Statement.
ARTICLE III
TRANSACTIONS RELATING TO THE DISTRIBUTION
3.1 THE REORGANIZATION. Prior to the Distribution Date:
(a) CFI shall take all steps necessary to establish CFCD as a
wholly owned subsidiary of the Company.
(b) CFI shall take all steps necessary to establish Xxxxxx Xxxxx
Xxxxxxx Corporation ("LJSC") as a wholly owned subsidiary of the Company;
PROVIDED, HOWEVER, that immediately prior to the Distribution or
simultaneously therewith, the LJSC administrative service departments
identified on Schedule 3.1(b) shall be transferred to CNF Service Company,
Inc., a wholly owned subsidiary of CFI.
(c) CFI shall take all steps necessary to merge Vantage Parts
into CFI.
(d) CFI shall take all steps necessary to establish Milne &
Xxxxxxxxx as a wholly owned, indirect subsidiary of CFCD.
(e) CFI shall take all steps necessary to effect the transfer of
all real property owned by CFCD and set forth on Schedule 3.1(e) to CF
Properties, Inc., a wholly owned subsidiary of CFI ("CF Properties"), and to
effect the transfer of CFI's Xxxxxxx terminal and land
7
under CFI's Santa Fe Springs and Hayward Terminals to CFC.
(f) The Company acknowledges that any and all rights in the
proprietary software programs (including without limitation all source and
object code and all documentation therefor, and all versions thereof) and
data developed by, or on behalf of, the Company, CFI or its affiliates prior
to the Distribution Date, and all intellectual property rights therein,
including without limitation all copyrights, patent rights, know-how and
trade secret rights, and including, without limitation, the right to xxx for
any past, present or future infringement of any of the foregoing, are vested
in CFI. The Company will execute and deliver any instruments or take such
other actions as CFI may reasonably request in order to confirm such
assignment and to otherwise effectuate the purposes and terms of this
Agreement.
(g) CFI hereby shall grant to the Company, effective as of
the termination of the Services Agreement, a royalty-free, worldwide,
perpetual and non-transferable, license without right of sublicense, to use
and create derivative works of the proprietary software programs (including
without limitation all source and object code and documentation therefor, and
all versions thereof) and data owned by CFI, in the form they exist as of the
termination of the Services Agreement, which the Company uses in its business
as of the Distribution Date as set forth on Schedule 3.1(g) hereto
(collectively, the "Licensed Materials"). CFI shall take such steps
necessary to provide to the Company, at CFI's expense, and with minimal
interruption of the operations of CFI or its affiliates, copies of the
Licensed Materials, together with any third party licenses, and reasonable
instruction as to their installation and use. CFI shall also provide the
Company, at CFI's expense, licenses for third party software programming,
which the Company uses in its business as of the date hereof. Third-party
licenses shall be at least as broad in scope as prior to the Distribution
Date unless commercially unreasonable. Where use of software is limited to a
specified number of users or otherwise restricted, an equitable division shall
be made as set forth on Schedule 3.1(g). To the extent that the purchase of
any third-party licenses is commercially unreasonable, CFI shall have the
right to substitute a comparable program.
8
Notwithstanding anything to the contrary set forth herein, the Company
acknowledges and agrees that:
i) The use of the Licensed Materials is to be limited
to the internal business use of the Company, or its affiliates and
their authorized customers who in the ordinary course of business
with the Company request access to the Licensed Materials in
connection with products or services otherwise provided by the
Company.
ii) The Company's, its affiliates' and authorized
customers' right to use the Licensed Materials which require a
third-party license is conditioned upon the Company's, its
affiliates and authorized customers observing the applicable
terms and conditions in any third party licenses relating to the
Licensed Materials and as to affiliates and authorized customers
the obtaining of any necessary consents or separate licenses from
such third party vendors. CFI shall make reasonable efforts to
obtain all consents or separate licenses from third party licensors
necessary for the Company to: have the right to use the Licensed
Materials to the extent contemplated herein and be able to receive
the services contemplated under the Services Agreement.
iii) The Company shall assume all Liabilities relating
to the Company's use, and use by any of the Company's affiliates
or authorized customers, of the Licensed Materials after the
Distribution Date and shall indemnify and hold harmless CFI
against all Liabilities and expenses (including reasonable
attorneys' fees and costs of litigation) which CFI may
incur, which arise out of the use of the Licensed Materials
by the Company, its affiliates or authorized customers after
the Distribution Date.
iv) Notwithstanding the immediately preceding paragraph,
CFI shall assume all liabilities relating to the use of software
requiring a third-party license where CFI has failed to provide the
Company with the applicable third-party licenses, and shall indemnify
and hold harmless the Company against all losses, liabilities and
expenses (including
9
reasonable attorneys' fees and cost of litigation) which the
Company may incur, which arise out of such failure of CFI to obtain
such third-party licenses for the Company.
v) The Licensed Materials constitute confidential
information and shall remain the property of CFI, subject to the
license granted herein. The Company agrees to hold the same in
confidence and not to disclose or distribute the same unless such
information subsequently becomes publicly available through no
fault of the Company.
vi) CFI shall assume all liabilities relating to CFI's
use, and use by CFI's affiliates or authorized customers, of the
Licensed Materials and any materials not licensed to the Company,
and shall indemnify and hold harmless the Company against all
losses, liabilities and expenses (including reasonable attorneys'
fees and cost of litigation) which the Company may occur, which arise
out of the use of the Licensed Materials or any of the materials
not licensed to the Company by CFI, its affiliates or authorized
customers.
vii) The Company may request additional worldwide,
perpetual and non-transferable licenses from CFI which are not
currently used by it in its business. CFI may grant such licenses
in its sole discretion. The licenses requested and granted as of
the date hereof are listed in Schedule 3.1(g) as "Additional
Licenses." The Company shall pay the costs of copying such
software and purchasing any required third-party licenses related
thereto. The Company shall assume all Liabilities relating to the
Company's use thereof and shall indemnify and hold harmless CFI
against all Liabilities and expenses whatsoever (including
reasonable attorneys' fees and costs of litigation) which CFI may
incur, which arise out of, or are in any way related to the use of
such software by the Company, its affiliates or authorized customers.
viii) The Company shall pay its proportional share of
the development costs of the Li-
10
censed Materials identified in Schedule 3.1(g) as "Under
Development" as incurred after the Distribution Date. Any cost of
"cloning" a second copy, if any, shall be part of the development
costs. The Company shall not, however, pay a proportional share of
the development costs where such Licensed Materials are part of
the services being provided to the Company under the Services
Agreement.
ix) Because of the extensive number of software
programs used by the parties, the parties expect that some
programs may inadvertently be omitted from Schedule 3.1(g). In
such event, the parties shall determine in good faith whether such
programs should be added as Licensed Materials and related
third-party software used by the Company as of the date hereof as,
"Additional Licenses" or "Under Development."
(h) Prior to the Distribution Date, CFI shall take all steps
necessary to assign to the Company the trademarks, trade names and service
marks set forth on Schedule 3.1(h) (collectively, the "Marks"); PROVIDED,
HOWEVER, that CFI and the Company shall each have the right to use the Marks
for the nine-month period beginning on the Distribution Date. CFI shall
assign the trademarks, trade names and service marks relating to "CF Air" and
"CF Air Freight" (and as stylized) on the third anniversary of the date of this
Agreement.
(i) Prior to the Distribution Date, CFI and the Company shall
take all steps necessary to increase the outstanding shares of Company Common
Stock so that, immediately prior to the Distribution, CFI will hold a number
of shares of Company Common Stock sufficient to enable it to complete the
Distribution based on the Distribution Ratio.
3.2 COMPANY BOARD. CFI and the Company shall take all steps
necessary to elect as directors of the Company, on or prior to the Distribution
Date, the persons named in the Form 10 to constitute the board of directors of
the Company on the Distribution Date.
3.3 COMPANY CHARTER AND BYLAWS. On or prior to the Distribution
Date, (a) CFI shall approve and cause the Amended and Restated Certificate of
Incorporation of
11
the Company substantially in the form of Annex 6 hereto to be
filed with the Secretary of State of Delaware and to be in effect on the
Distribution Date and (b) CFI shall adopt the Amended and Restated Bylaws of the
Company substantially in the form of Annex 7 hereto to be in effect on the
Distribution Date.
3.4 OTHER AGREEMENTS. On or prior to the Distribution Date, CFI
and the Company shall enter into, and/or (where applicable) shall cause their
respective Subsidiaries to enter into, the Other Agreements and any other
agreements necessary or appropriate in connection with the transactions
contemplated hereby and thereby. In the event of a conflict between the
terms of this agreement and the terms of any of the Other Agreements or any
such other agreements (including without limitation Section 5.04 of the Tax
Sharing Agreement), the terms of such Other Agreement or other agreement
shall govern.
3.5 OPERATION IN THE ORDINARY COURSE OF BUSINESS. Prior to the
Distribution Date, the Company shall, and shall cause each of its Subsidiaries
to, conduct its business and operations in the ordinary course of business,
consistent with past practice, and shall, and shall cause each of its
Subsidiaries to, continue to ship products, pay accounts payable and invoices,
deposit and accept payments, and make capital expenditures in the ordinary
course of business, all consistent with past practice. The Company shall not,
and shall cause each of its Subsidiaries not to, undertake any arrangement with
the intent to delay receipt of any funds by the Company or its Subsidiaries
until on or after the Distribution Date or to accelerate any payment to be made
by the Company or its Subsidiaries prior to the Distribution Date, except in
each case in the ordinary course of business consistent with past practice.
3.6 INSURANCE. The Company, for itself and on behalf of each
other member of the Company Group, does hereby release CFI and each other
member of the CFI Group from all Liabilities arising from or in connection
with the insurance policies described on Schedule 3.6(b), excluding
occurrences which commenced on or prior to October 1, 1996. The Company,
for itself and on behalf of each other member of the Company Group, does
hereby acknowledge that these policies are cancelled or terminated as to CFCD
and its subsidiaries as of October
12
1, 1996 except to the extent of claims referred to in the preceding sentence.
The Company expressly waives any and all rights under section 1542 of the
Civil Code of California, which provides as follows:
"A General Release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the Release, which if known by him
must have materially affected his settlement with the
debtor."
3.7 COLLECTIONS AND PAYMENTS AFTER THE DISTRIBUTION DATE. Except
as may be explicitly provided in this Agreement and the Other Agreements, any
cash receipts arising out of or relating to the assets, liabilities or
operations of the Company or its past or present Subsidiaries received on or
after the Distribution Date shall be retained by the Company and such
Subsidiaries and any liabilities or obligations, other than any liabilities
or obligations relating to LJSC and arising on or prior to the Distribution
Date, arising out of, relating to or asserted on the basis of the assets,
liabilities or operations of the Company or its past or present Subsidiaries
due and unpaid on and after the Distribution Date or incurred on and after
the Distribution Date shall be payable by the Company and such Subsidiaries.
3.8 CERTAIN POST-DISTRIBUTION TRANSACTIONS. THE COMPANY. (i) The
Company shall, and shall cause each of its Subsidiaries to, comply with each
representation and statement made, or to be made, to any taxing authority in
connection with the IRS Ruling or any other ruling obtained, or to be obtained,
by the Company and CFI acting together, from any such taxing authority with
respect to any transaction contemplated by this Agreement; and (ii) until the
third anniversary of the Distribution Date, neither the Company nor any of its
Subsidiaries shall (A) make a material disposition, by means of a sale or
exchange of assets or capital stock, a distribution to stockholders or
otherwise, of its assets, (B) repurchase or issue any Company capital stock
(other than stock issued pursuant to employee plans), or (C) cease the active
conduct of its businesses independently, with its own employees and without
material change, unless, in each of cases (A), (B) and (C), in the opinion of
counsel
13
to the Company, which opinion shall be reasonably satisfactory to CFI,
or pursuant to a favorable IRS supplemental ruling letter reasonably
satisfactory to CFI, such act or omission would not adversely affect the tax
consequences of the Distribution to CFI or the stockholders of CFI, as set forth
in any ruling issued by any taxing authority; and the Company has no present
intention to take any such actions.
ARTICLE IV
INDEMNIFICATION
4.1 INDEMNIFICATION BY CFI. Except as otherwise provided by any
of the Other Agreements or as contemplated by Section 4.5 or Article VII
hereof, effective as of the Distribution Date, CFI agrees to indemnify,
defend and hold harmless the Company, each other member of the Company Group,
and their present or former officers, directors, shareholders, agents,
employees, representatives, successors-in-interest, parents, Affiliates,
insurers, attorneys and assigns (the "Company Indemnitees") from and against
any and all Losses of the Company Indemnitees arising out of or related in
any manner to any item set forth on Schedule 4.1.
4.2 INDEMNIFICATION BY THE COMPANY. Except as otherwise provided
by any of the Other Agreements or as contemplated by Section 4.5 or Article
VII hereof, effective as of the Distribution Date, the Company agrees to
indemnify, defend and hold harmless CFI, each other member of the CFI Group,
and their present or former officers, directors, shareholders, agents,
employees, representatives, successors-in-interest, parents, Affiliates,
insurers, attorneys and assigns (the "CFI Indemnitees") from and against any
and all Losses of the CFI Indemnitees arising out of or related in any manner
to any item set forth on Schedule 4.2.
4.3 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. The amount that
either CFI or the Company (an "Indemnifying Party") is or may be required to pay
to an indemnified party ("Indemnitee") pursuant to Section 4.1 or 4.2 shall be
reduced by any Insurance Proceeds or other amounts actually recovered by or on
behalf of such Indemnitee, in reduction of the related Loss. If an
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Indemnitee shall have received the payment required by this Agreement from an
Indemnifying Party in respect of any Loss and shall subsequently actually
receive Insurance Proceeds or other amounts in respect of such Loss, then
such Indemnitee shall pay to such Indemnifying Party a sum equal to the
amount of such Insurance Proceeds or other amounts actually received (up to
but not in excess of the amount of any indemnity payment made hereunder). No
insurer or other third party shall: (a) be relieved of the responsibility to
pay any claims which it would otherwise be obligated to pay in the absence of
the foregoing indemnification provisions; (b) solely by virtue of the
indemnification provisions hereof, have any subrogation rights with respect
to any claims which it would otherwise be obligated to pay; or (c) be
entitled to a benefit it would not be entitled to receive in the absence of
the foregoing indemnification provisions. Any Indemnifying Party shall
succeed to the rights of any Indemnitee with respect to any matter
contemplated by this Section 4.3.
4.4 PROCEDURES FOR INDEMNIFICATION. (a)(i) If an Indemnitee shall
receive notice or otherwise learn of the assertion of any claim or commencement
of any proceeding (including any governmental investigation) by a person who is
not a party to this Agreement (or any Affiliate of either party) (a "Third-Party
Claim") with respect to which an Indemnifying Party may be obligated to provide
indemnification pursuant to this Agreement, such Indemnitee shall give such
Indemnifying Party written notice thereof promptly after becoming aware of such
Third-Party Claim setting forth the particulars as to such claim or proceeding
in reasonable detail; PROVIDED that the failure of any Indemnitee to give notice
as provided in this Section 4.4(a) shall not relieve the related Indemnifying
Party of its obligations under this Article IV, unless such Indemnifying Party
is actually prejudiced by such failure to give notice and then only to the
extent of such actual prejudice.
(ii) An Indemnifying Party may, to the extent it wishes
within thirty days of receipt of notice of a Third Party claim and at its
cost and expense, elect to defend or to seek to settle or compromise any
Third-Party Claim; PROVIDED that the Indemnitee may participate in such
settlement or defense through its chosen counsel at its sole cost and
expense. After notice from an
15
Indemnifying Party to an Indemnitee of its election to assume the defense of
a Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Article IV for any legal or other expenses (except
expenses approved in advance by the Indemnifying Party) subsequently incurred
by such Indemnitee in connection with the defense thereof; PROVIDED that if
the defendants in any such Third-Party Claim include both the Indemnifying
Party and one or more Indemnitees and in any Indemnitee's reasonable judgment
a conflict of interest between one or more of such Indemnitees and such
Indemnifying Party exists in respect of such claim, such Indemnitees shall
have the right to employ separate counsel to represent such Indemnitees and
in that event the reasonable fees and expenses of such separate counsel (but
not more than one separate counsel reasonably satisfactory to the
Indemnifying Party) shall be paid by such Indemnifying Party; PROVIDED
FURTHER if and to the extent that there is a conflict of defenses or
positions among the Indemnitees, the Indemnitees shall have the right to
retain such number of additional separate counsel, reasonably satisfactory to
the Indemnifying Party, as is reasonably necessary to avoid such conflicts,
and the Indemnifying Party shall be responsible for the reasonable fees and
expenses of such additional separate counsel; PROVIDED FURTHER that the
Indemnitee may participate in the settlement or defense of a Third-Party
Claim through counsel chosen by such Indemnitee if the fees and expenses of
such counsel shall be borne by such Indemnitee. If an Indemnifying Party
elects not to assume responsibility for defending a Third-Party Claim, such
Indemnitee may defend or seek to compromise or settle such Third-Party Claim
but shall not thereby waive any right to indemnity therefor pursuant to this
Agreement. Notwithstanding the foregoing, the Indemnifying Party shall not be
liable for any settlement of any Third-Party Claim effected without its
written consent. The Indemnifying Party shall not, except with the consent of
the Indemnitee, (i) enter into any such settlement that does not include as
an unconditional term thereof the giving by the person or persons asserting
such Third-Party Claim to all Indemnitees an unconditional release from all
liability with respect to such Third-Party Claim, or (ii) consent to entry of
any judgment.
(b) Any claim on account of a Loss that does not result from a
Third-Party Claim shall be asserted
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by written notice given by the Indemnitee to the Indemnifying Party. Such
Indemnifying Party shall have a period of thirty (30) days after the receipt
of such notice within which to respond thereto. If such Indemnifying Party
does not respond within such thirty-day period, such Indemnifying Party shall
be deemed to have refused to accept responsibility to make payment. If such
Indemnifying Party does not respond within such thirty-day period or rejects
such claim in whole or in part, such Indemnitee shall be free to pursue such
remedies as may be available to such party under this Agreement or under
applicable law (except as provided in the ADR Agreement).
(c) In addition to any adjustments required pursuant to Section
4.3, if the amount of any Loss shall, at any time subsequent to the payment
required by this Agreement, be reduced by recovery, settlement or otherwise, the
amount of such reduction that has been received by the Indemnitee, less any
expenses properly incurred in connection therewith, shall promptly be repaid by
the Indemnitee to the Indemnifying Party.
(d) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying Party
shall have all rights of subrogation and shall stand in the place of such
Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right or claim relating to such Third-Party Claim or
against any other person. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of
such Indemnifying Party, in prosecuting any subrogated right or claim.
(e) Notwithstanding anything to the contrary herein or in the
Other Agreements, the foregoing indemnification provisions and procedures
shall apply to any other indemnification agreements herein or in the Other
Agreements.
4.5 RELEASES.
(a) Subject to Article VII and effective on the Distribution
Date, the Company and each other member of the Company Group releases and
forever discharges CFI, each other member of the CFI Group, and their present
17
or former officers, directors, shareholders, agents, employees,
representatives, successors-in-interest, parents, Affiliates, insurers,
attorneys and assigns of and from any and all Liabilities (other than those
for which indemnification is available under (i) this Article IV or (ii) any
Other Agreement (subject to the provisions of Section 4.3)).
(b) Subject to Article VII and effective on the Distribution
Date, CFI and each other member of the CFI Group releases and forever
discharges the Company, each other member of the Company Group and their
present or former officers, directors, shareholders, agents, employees,
representatives, successors-in-interest, parents, Affiliates, insurers,
attorneys and assigns of and from any and all Liabilities (other than those
for which indemnification is available under this Article IV and any Other
Agreement (subject to the provisions of Section 4.3)).
(c) Each of the Company, for itself and on behalf of
each other member of the Company Group, and CFI, for itself and on behalf of
each other member of the CFI Group, expressly waives any and all rights under
section 1542 of the Civil Code of California, which provides as follows:
"A General Release does not extend to claims which the
creditor does not know or suspect to exist in his favor
at the time of executing the Release, which if known by
him must have materially affected his settlement with the
debtor."
4.6 ENVIRONMENTAL LIABILITIES. Notwithstanding anything
contained herein or in any Other Agreement to the contrary, neither party
shall have any obligation to indemnify the other party with respect to any
Environmental Liabilities.
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ARTICLE V
ACCESS TO INFORMATION; SERVICES
5.1 ACCESS TO INFORMATION. From and after the Distribution Date, CFI
and its Subsidiaries shall afford to the Company and its authorized accountants,
counsel and other designated representatives (collectively, "Representatives")
reasonable access (including using reasonable efforts to give access to the
person or firms possessing information) and duplicating rights during normal
business hours to all administrative records, books, contracts and
instruments, and all Company-owned computer software and computer data and
other Company-owned data and information (collectively, "Information") within
CFI's or any such Subsidiary's possession or control relating to the Company
or any Company Subsidiary and to any property owned by CFI that was leased or
operated by the Company or any Company Subsidiary, insofar as such access is
reasonably required by the Company or any Company Subsidiary. Similarly, the
Company and its Subsidiaries shall afford to CFI and its Representatives
reasonable access (including using reasonable efforts to give access to
persons or firms possessing information) and duplicating rights during normal
business hours to Information within the Company's or any such Subsidiary's
possession or control relating to CFI or any CFI Subsidiary or relating to
the Company prior to the Distribution Date and to any property owned by the
Company that was leased or operated by CFI or any CFI Subsidiary (other than
the Company and its Subsidiaries), insofar as such access is reasonably
required by CFI or any CFI Subsidiary. Information may be requested under
this Article V for, without limitation, audit, accounting, claim, litigation
and tax purposes, as well as for purposes of fulfilling disclosure and
reporting obligations and for performing this Agreement and the transactions
contemplated hereby.
5.2 PRODUCTION OF WITNESSES. After the Distribution Date, each of
CFI and the Company and its respective Subsidiaries shall use reasonable efforts
to make available to the other party and its Subsidiaries, upon written request,
its directors, officers, employees and agents as witnesses to the extent that
any such person may reasonably be required in connection with any
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legal, administrative or other proceedings in which the requesting party may
from time to time be involved.
5.3 PROVISION OF SERVICES. In addition to any services
contemplated to be provided following the Distribution Date by any Other
Agreement, each party, upon written request, shall make available to the
other party, during normal business hours and in a manner that will not
interfere unreasonably with such party's business, its financial, tax,
accounting, legal, employee benefits and similar staff services
(collectively, "Services") whenever and to the extent that they may be
reasonably required in connection with the preparation of tax returns,
audits, claims, litigation or administration of employee benefit plans, and
otherwise to assist in effecting an orderly transition following the
Distribution.
5.4 REIMBURSEMENT. Except to the extent otherwise provided in any
Other Agreement, each party providing Information, witnesses or Services under
Section 5.1, 5.2 or 5.3 to the other party shall be entitled to receive from the
recipient, upon the presentation of invoices therefor, payment for all out-of-
pocket costs and expenses as may be reasonably incurred in providing such
Information, witnesses or Services. For purposes of this Section 5.4,
salaries and other compensation payable to employees of either party shall be
deemed to be an out-of-pocket cost or expense reimbursable hereunder.
5.5 RETENTION OF RECORDS. Except as otherwise required by law or
agreed to in writing, each of CFI and the Company shall retain, and shall cause
its respective Subsidiaries to retain following the Distribution Date, all
significant information ("Information") relating to the business of the other
and the other's subsidiaries, for a period (a "Retention Period") consistent
with the document retention policies in effect at CFI and the Company,
respectively. In addition, such Information shall not be destroyed or otherwise
disposed of if during such period a party shall request in writing that any of
the Information be retained for additional specific and reasonable periods of
time at the expense of the party so requesting. After the applicable Retention
Period, any party may destroy or otherwise dispose of any Information at any
time, provided that, prior to such destruction or disposal, (a) such party shall
provide no less than ninety (90) days' prior written notice to the other
20
party, identifying the Information proposed to be destroyed or disposed of,
and (b) if the recipient of such notice shall request in writing prior to the
scheduled date for such destruction or disposal that any of the Information
proposed to be destroyed or disposed of be delivered to such requesting
party, the party proposing the destruction or disposal shall promptly arrange
for the delivery of such of the Information as was requested at the expense
of the requesting party.
5.6 CONFIDENTIALITY. Each of the CFI Group on the one hand, and the
Company Group on the other hand, shall use commercially reasonable efforts to
hold, and cause its Representatives to hold, in strict confidence, all
Information concerning the other in its possession or furnished by the other or
the other's Representatives pursuant to this Agreement or any of the Other
Agreements (except to the extent that such Information is (a) in the public
domain through no fault of such party or (b) later lawfully acquired on a non-
confidential basis from other sources which are not subject to any
confidentiality litigation with the subject party by such party or subsequently
developed by such party), and neither party shall release or disclose such
Information to any other person, except to its auditors, attorneys, financial
advisors, bankers and other consultants and advisors, and on terms and
conditions substantially the same as the terms and conditions on which such
party releases its own Information, unless compelled to disclose by judicial or
administrative process or, as advised by its counsel, by other requirements of
law.
5.7 PROVISION OF CORPORATE RECORDS.
(a) Except as may otherwise be provided in any Other
Agreement, CFI shall arrange as soon as practicable following the
Distribution Date, to the extent not previously delivered, for the
transportation (at the Company's cost) to the Company of the Company's books
and records in its possession, except to the extent such items are already in
the possession of the Company. Such books and records shall be the property
of the Company, but shall be available to CFI for review and duplication
until CFI shall notify the Company in writing that such records are no longer
of use to CFI.
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(b) Except as otherwise provided in any Other Agreement, the
Company shall arrange as soon as practicable following the Distribution Date, to
the extent not previously delivered, for the transportation (at CFI's cost) to
CFI of CFI's and its Subsidiaries' books and records in its possession, except
to the extent such items are already in the possession of CFI or a Subsidiary of
CFI. Such books and records shall be the property of CFI, but shall be
available to the Company for review and duplication until the Company shall
notify CFI in writing that such records are no longer of use to the Company.
5.8 PRIVILEGED MATTERS. The Company and CFI recognize that legal and
other professional services that have been and will be provided prior to the
Distribution Date have been and will be rendered for the benefit of both CFI and
the Company and that both CFI and the Company should be deemed to be the client
for the purposes of asserting all privileges related thereto. No party may
waive any privilege which could be asserted under any applicable law, and in
connection with which the other party has a material interest, without the
consent of the other party, except to the extent reasonably required in
connection with any litigation with third parties.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Company, for itself and on behalf of each other member of the
Company Group, makes the following representations and warranties to, and
covenants with, CFI, for its benefit and for the benefit of each other member
of the CFI Group, each and all of which shall survive the execution and
delivery of this Agreement and the Distribution Date.
6.1 FINANCIAL STATEMENTS. The consolidated balance sheets of the
Company and its Subsidiaries and the consolidated statements of earnings and
consolidated statement of cash flows for the Company and its Subsidiaries, each
in the form included in the Information Statement, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be
22
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its Subsidiaries as of the dates indicated
therein and the results of operations and cash flows for the periods
indicated therein.
6.2 FORM 10 AND INFORMATION STATEMENT. The Form 10 and the
Information Statement each do not misstate any material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, provided, however, there shall be excluded therefrom any
information provided by CFI.
6.3 MARKS. None of CFI's existing trademarks, trade names and
service marks that are not also Marks ("CFI marks" as set forth in Schedule
6.3) infringe in any manner any of the Marks or otherwise interfere with the
Company's expected use of the Marks, and none of the Company nor any other
member of the Company Group shall, at any time, bring or join in any suit,
claim or other proceeding or action adverse to CFI or any other member of the
CFI Group relating to the use of the CFI marks.
ARTICLE VII
SHARED CLAIMS
7.1 ACKNOWLEDGMENT. Each party acknowledges that, from and after
the Distribution Date, there may be claims and proceedings against such party
and its Subsidiaries (other than workers' compensation claims which pertain
to any persons who remain employed by LJSC on the day after the Distribution
Date ("Excluded Claims") which shall remain the sole responsibility of LJSC)
that relate (in whole or in part) to activities alleged to have transpired
prior to the Distribution Date and with respect to which it would be fair and
appropriate to apportion liability therefor between the parties ("Shared
Claims").
7.2 NOTIFICATION. If any party shall receive notice or otherwise
learn of the assertion of any claim or the commencement of any proceeding which
such party believes may constitute a Shared Claim (including, without
limitation, any such claim or proceeding that names or identifies the other
party or any of its Subsidiaries
23
as a responsible party), such party shall (i) immediately assume the defense
thereof and shall in all respects respond thereto in a timely manner and (ii)
promptly provide written notice thereof to the other party, setting forth the
particulars as to such claim or proceeding in reasonable detail; PROVIDED
that the failure of such party to give such notice shall not relieve the
other party of any obligation to accept liability unless it is actually
prejudiced by such failure and then only to the extent of such actual
prejudice.
7.3 COOPERATION. The parties shall cooperate with each other in the
defense or settlement of Shared Claims to the effect that (i) subject to the
provisions of Section 7.2, the party bearing the greater liability shall be
responsible for the control and administration of any Shared Claim and (ii) the
other party shall cooperate with such party with respect to such control and
administration.
7.4 LIABILITY. The parties shall seek to apportion liability between
them with respect to any Shared Claim, and in so doing shall take cognizance of
all relevant factors, including but not limited to, the time and duration of
any alleged activity giving rise thereto. If the parties are unable to agree
on an apportionment of liability within thirty days of receipt of
notification as provided in Section 7.2, they shall submit the matter for
resolution as provided in the ADR Agreement.
7.5 NON-SHARED LIABILITIES. Anything to the contrary contained in
this Article VII notwithstanding, claims or proceedings arising out of or
relating to LJSC, its employees and operations on or prior to the
Distribution Date (other than Excluded Claims) shall be allocated as
described below. The Company shall assume and indemnify CFI against all
Losses and Liabilities arising out of or related to personnel matters that
are caused by employees who are employed by LJSC immediately following the
Distribution Date. CFI shall assume and indemnify the Company against all
other Losses and Liabilities arising out of or related to LJSC on or prior to
the Distribution Date, including all other personnel matters. If employees
of both the Company and CFI cause any such Losses or Liabilities relating to
LJSC, then they shall be Shared Claims and dealt with as provided in this
Article VII.
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ARTICLE VIII
MISCELLANEOUS
8.1 COMPLETE AGREEMENT; CONSTRUCTION. This Agreement and the Other
Agreements, including any schedules and exhibits hereto or thereto, shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter.
8.2 EXPENSES. Except as otherwise set forth in this Agreement and
the Other Agreements, (i) CFI will pay all out-of-pocket costs and expenses
that are necessary to effect the Distribution and incurred prior to the
Distribution and (ii) each party shall bear its costs and expenses arising
after the Distribution in connection with the Distribution; provided,
however, CFI shall pay the reasonable moving and relocation costs of
separating employees of CFI and CFC in Portland into two buildings, excluding
design and architectural fees, phone and data connections infrastructure and
labor associated with the move, including any other capital improvements,
except that CFI shall pay for the costs of wheelchair ramp access, ADA required
upgrades and lobby expansion.
8.3 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without regard to the
principles of conflicts of laws thereof.
8.4 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered by hand,
mailed by registered or certified mail (return receipt requested), or sent by
cable, telegram, telecopy (confirmed by regular, first-class mail), to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and shall be deemed given on the date on
which such notice is received:
if to CFI:
Consolidated Freightways, Inc.
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0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: General Counsel
if to the Company:
Consolidated Freightways Corporation
000 Xxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: General Counsel
8.5 AMENDMENTS AND WAIVERS. This Agreement may not be altered or
amended, nor may rights hereunder be waived, except by an instrument in writing
executed by the party or parties to be charged with such amendment or waiver.
No waiver of any term, provision or condition of or failure to exercise or delay
in exercising any rights or remedies under this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, provision, condition, right or remedy or as a waiver of
any other term, provision or condition of this Agreement.
8.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same Agreement.
8.7 SUCCESSORS AND ASSIGNS. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
8.8 TERMINATION. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution Date by and in the
sole discretion of the CFI Board without the approval of the Company or the
shareholders of CFI. In the event of such termination, no party shall have any
liability of any kind to any other party on account of such termination except
that expenses incurred in connection with the transactions contemplated hereby
shall be paid as provided in Section 8.2.
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8.9 NO THIRD-PARTY BENEFICIARIES. Except for the provisions of
Article IV relating to Indemnitees, this Agreement is solely for the benefit of
the parties hereto and their respective Affiliates and should not be deemed to
confer upon third parties (including any employee of the CFI Group or the
Company Group) any remedy, claim, reimbursement, cause of action or other right
other than those existing without reference to this Agreement.
8.10 TITLES AND HEADINGS. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
8.11 LEGAL ENFORCEABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Without prejudice to
any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
8.12 FURTHER ASSURANCES. In addition to the actions specifically
provided for elsewhere in this Agreement, each of the parties hereto will use
its reasonable efforts to (i) execute and deliver such further documents and
take such other actions as any other party may reasonably request in order to
effectuate the purposes of this Agreement and to carry out the terms hereof, and
(ii) take, or cause to be taken, all actions, and to do, or cause to be done,
all things, reasonably necessary, proper or advisable under applicable laws,
regulations and agreements or otherwise to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using its reasonable efforts to obtain any consents and approvals and make any
filings and applications necessary or desirable in order to consummate the
transactions contemplated by this Agreement.
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8.13 NO SOLICITATION OF EMPLOYEES. For a period of three years
after the Distribution Date, neither CFI nor the Company, nor any of their
Subsidiaries, will directly solicit the employment of any employee of the
other company, or any of its Subsidiaries, without the prior written consent
of such other company; PROVIDED, HOWEVER, that if the Company shall cease to
receive services provided by CNF Service Company, Inc. pursuant to the
Services Agreement after the Distribution Date, it may solicit employees
(employed either at the time of notification by the Company of the
termination of services, or in the preceding six months) from the groups that
had been providing such services.
8.14 DISPUTE RESOLUTION. Any dispute between the parties concerning
the performance of this Agreement shall be resolved in accordance with the
provisions of the ADR Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
CONSOLIDATED FREIGHTWAYS, INC.
on behalf of itself and its
wholly owned subsidiaries
By:
------------------------------
Its:
CONSOLIDATED FREIGHTWAYS CORPORATION
on behalf of itself and its
wholly owned subsidiaries
By:
------------------------------
Its:
29
