EXHIBIT 10.23
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is made to be
effective as of December 31, 2002, by and between Central Freight Lines, Inc., a
Nevada corporation ("Central Freight"), and Central Refrigerated Service, Inc.,
a Nebraska corporation ("Central Refrigerated").
WHEREAS, Central Freight and Central Refrigerated are parties to that
certain Separation Agreement dated November 30, 2002, and that certain Amendment
No. 1 to Separation Agreement dated December 23, 2002 (together, the "Separation
Agreement");
WHEREAS, pursuant to the terms of the Separation Agreement, Central
Refrigerated will cease to be the wholly-owned subsidiary of Central Freight
effective as of 12:00:01 a.m. Mountain Standard Time on January 1, 2003;
WHEREAS, the Separation Agreement contemplates that Central
Refrigerated will obtain separate policies of insurance on or before December
31, 2002; and
WHEREAS, notwithstanding the terms of the Separation Agreement, Central
Refrigerated will remain an insured party under Central Freight's workers'
compensation insurance policy (the "Workers' Compensation Policy") with Royal
Insurance ("Royal") from December 31, 2002, through June 28, 2003.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth herein, the parties hereto agree as follows:
1. Workers' Compensation Policy Indemnification.
(a) Central Refrigerated hereby agrees to indemnify, defend, and
hold harmless Central Freight, its successors, assigns, officers,
directors, employees, agents, and Affiliates (which for all purposes of
this Agreement means any person or entity controlling, controlled by,
or under common control with Central Freight) for any and all Losses
(as defined below) arising from workers' compensation claims brought,
or threatened to be brought, by Central Refrigerated employees. Such
indemnification shall be limited to the amount of such claims, if any,
that is not recovered by Central Freight from Royal pursuant to the
terms of the Workers' Compensation Policy, whether due to policy
deductibles, coverage limits, or otherwise. For purposes of the
foregoing, "Losses" includes any and all claims, causes of action,
suits, judgments, losses, damages, deficiencies, obligations, costs,
and expenses (including, without limitation, interest, penalties, and
reasonable fees and costs of attorneys and other experts) suffered by
Central Freight or its successors, assigns, officers, directors,
employees, agents, or Affiliates.
(b) Central Refrigerated and Central Freight shall cooperate in
the negotiation, defense, and settlement of workers' compensation
claims brought, or threatened to be brought, by Central Refrigerated
employees related to events occurring during the Co-Insurance Period.
Upon request, Central Refrigerated shall keep Central Freight fully
informed of all
aspects of such claims and shall have Central Freight copied on all
correspondence, where such can be made without compromising the
attorney-client privilege, and all filings. Upon request, Central
Freight shall have the right to participate in all meetings,
conferences, and discussions with claimants regarding such claims, and
Central Refrigerated shall not settle any such claims without the
consent of Central Freight, provided that such consent shall not be
unreasonably withheld.
(c) If Central Freight desires to claim indemnification
hereunder, it shall promptly notify Central Refrigerated thereof; 9
provided that the failure to so notify shall not affect the obligations
of indemnification unless and to the extent that the defense of a
third-party claim is actually prejudiced as a result of such failure.
Central Refrigerated shall have thirty (30) days' from delivery of
notice to remit payment to Central Freight for the indemnified Loss. In
the event that Central Refrigerated contests Central Freight's right to
indemnification hereunder, Central Freight and Central Refrigerated
shall negotiate in good faith to resolve the dispute. If the dispute is
not resolved within thirty (30) days' from the date of delivery of
notice by Central Freight, the dispute shall be submitted to binding
arbitration conducted by the American Arbitration Association on demand
of either party in Phoenix, Arizona. Any arbitration proceedings will
be heard by one arbitrator in accordance with the then-current
commercial arbitration rules of the American Arbitration Association.
2. Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date of service if served personally or by recognized overnight
courier service on the party to whom notice is to be given, or on the second day
after mailing if mailed to the party to whom notice is to be given by first
class mail, registered or certified, return receipt requested, postage prepaid
and properly addressed as follows:
If to Central Freight: Central Freight Lines, Inc.
0000 Xxxx Xxxx Xx.
Xxxx, XX 00000
Attn: Xxxx Xxxx
If to Central Refrigerated: Central Refrigerated Service, Inc.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attn: Xxx Xxxxxx
3. Miscellaneous.
(a) This Agreement may not be amended except by an instrument
signed by each of the parties hereto.
(b) If any term, provision, covenant, or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired, or
invalidated and the parties shall negotiate in good faith to modify the
Agreement to preserve such part's anticipated benefits under the
Agreement.
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(c) This Agreement (i) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written
and oral, among the parties with respect to the subject matter hereof;
(ii) is not intended to confer upon any other person any rights or
remedies hereunder; and (iii) shall not be assigned by operation of law
or otherwise without the prior written consent by the other parties
hereto.
(d) This Agreement may be executed via facsimile or otherwise in
one or more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date first above written.
CENTRAL FREIGHT LINES, INC.
a Nevada corporation
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: CFO
CENTRAL REFRIGERATED SERVICE, INC.,
a Nebraska corporation
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: CFO
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