FORM OF
TAX SHARING AGREEMENT
This Tax Sharing Agreement (the "Agreement"), dated as of this ___ day of
_______, 1996, by and between Consolidated Freightways, Inc., a Delaware
corporation ("CFI"), and Consolidated Freightways Corporation, a Delaware
corporation ("Holdings").
WHEREAS, CFI and Holdings have entered into a Distribution Agreement dated
as of ______________, 1996 (the "Distribution Agreement"), providing for the
distribution by CFI of the common stock of Holdings to the holders of CFI common
stock as of the close of the day on the Distribution Date, and setting forth the
terms and conditions which will govern certain relationships between the
parties; and
WHEREAS, CFI and Holdings desire to set forth their agreement on the
proper allocation among CFI, Holdings and their subsidiaries of federal, state,
local and foreign taxes and to provide for future cooperation with respect to
tax matters;
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and the
plural forms of the terms defined):
"AFFILIATE" means any corporation which is a member of the Consolidated
Group.
CFI TAX SHARING AGREEMENT PAGE 2
"CFI AFFILIATE" means any corporation, partnership or other entity directly
or indirectly controlled by CFI, other than Holdings or any Holdings Affiliate.
"CFI BUSINESSES" means the present and future subsidiaries, divisions and
business of any member of the CFI Group, other than the present and future
subsidiaries, divisions and business of any member of the Holdings Group. CFI
Businesses shall include all former subsidiaries, divisions and businesses other
than the Holdings Businesses.
"CFI GROUP" means the group of corporations that immediately after the
Distribution Date are members of the affiliated group of which CFI is the common
parent (within the meaning of section 1504 of the Code).
"CODE" means the Internal Revenue Code of 1986 (or, if relevant, the
Internal Revenue Code of 1954), as amended, or any successor thereto, as in
effect for the taxable period in question.
"COMBINED JURISDICTION" means, for any taxable period, any jurisdiction in
which Holdings or a Holdings Affiliate could be or is included in a consolidated
or combined return with CFI or a CFI Affiliate for Other Tax purposes for such
period.
"CONSOLIDATED GROUP" means the affiliated group of corporations (within the
meaning of section 1504 of the Code) of which CFI is the common parent.
"DISTRIBUTION" means the transfer by CFI of its ownership of Holdings and
the Holdings Affiliates from CFI by means of a distribution of the stock of
Holdings to CFI shareholders.
CFI TAX SHARING AGREEMENT PAGE 3
"DISTRIBUTION DATE" means the date determined by the CFI Board of Directors
as of which the Distribution shall be effected.
"FINAL DETERMINATION" means the final resolution of liability for any Tax
for a taxable period (i) by the appropriate IRS form which binds the taxpayer on
the date of acceptance by or on behalf of the IRS, or by a comparable form under
the laws of other jurisdictions; except that any such form that reserves
(whether by its terms or by operation of law) the right of the taxpayer to file
a claim for refund and/or the right of the Taxing Authority to assert a further
deficiency shall not constitute a Final Determination; (ii) by a decision,
judgment, decree, or other order by a court of competent jurisdiction, which has
become final and unappealable; (iii) by a closing agreement or accepted offer in
compromise under section 7121 or section 7122 of the Code, or comparable
agreements under the laws of other jurisdictions; (iv) by any allowance of a
refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered (including
by way of offset) by the Tax imposing jurisdiction; or (v) by any other final
disposition, including by reason of the expiration of the applicable statute of
limitations.
"HOLDINGS AFFILIATE" means any former or current corporation, partnership
or other entity directly or indirectly controlled by Holdings.
"HOLDINGS BUSINESSES" means the present and future subsidiaries, divisions
and business of any member of the Holdings Group. Holdings Businesses shall
include all former subsidiaries, divisions and businesses.
"HOLDINGS GROUP" means the group of corporations that immediately after the
Distribution Date are members of the affiliated group of corporations of which
Holdings is the common parent (within the meaning of section 1504(a) of the
Code).
CFI TAX SHARING AGREEMENT PAGE 4
"IRS" means the Internal Revenue Service.
"OTHER TAXES" is defined in Section 3.05.
"REPRESENTATIVE" means with respect to any person or entity, any of such
person's or entity's directors, officers, employees, agents, consultants,
advisors, accountants, attorneys and representatives.
"RESTRUCTURING TAXES" means all Taxes resulting from the disposition of
Holdings stock undertaken to effect the Holdings Distribution.
"RULING REQUEST" means the private letter ruling request filed by CFI with
the IRS dated February 22, 1996, as supplemented from time to time, with respect
to certain tax aspects of the Distribution.
"TAX" means any of the Taxes.
"TAX CONTROVERSY" is defined in Section 4.02.
"TAX RETURN" means any return, filing, questionnaire or other document
required to be filed, including requests for extensions of time, filings made
with estimated Tax payments, claims for refund and amended returns that may be
filed, for any taxable period with any Taxing Authority (whether domestic or
foreign) in connection with any Tax (whether or not a payment is required to be
made with respect to such filing) or any information reporting requirement.
CFI TAX SHARING AGREEMENT PAGE 5
"TAXES" means any and all forms of taxation, whether created or imposed by
a national, municipal, state, federal, or other governmental body (a "Taxing
Authority") and, without limiting the generality of the foregoing, shall include
net income, alternative or add-on minimum, any special estimated tax payments
required pursuant to section 847 of the Code, gross income, sales, use, ad
valorem, gross receipts, value added, franchise, profits, license, transfer,
recording, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profit, custom duty, or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any related interest, penalties or other additions to tax, or
additional amounts imposed by any such Taxing Authority on the Consolidated
Group or any member thereof.
"TAXING AUTHORITY" is defined under the term "Taxes."
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
SECTION 2.01. MANNER OF FILING. All Tax Returns (relating to pre-
Distribution and post-Distribution taxable periods) filed by CFI and CFI
Affiliates and Holdings and Holdings Affiliates after the Distribution Date
shall be prepared on a basis which is consistent with the rulings of Taxing
Authorities or opinions of tax counsel retained or approved by CFI and which are
issued in connection or relate directly to the Distribution and shall be filed
on a timely basis (including extensions) by the party responsible for such
filing under this Agreement.
CFI TAX SHARING AGREEMENT PAGE 6
SECTION 2.02. PRE-DISTRIBUTION FEDERAL TAX RETURNS
(a) Holdings will join, and will cause each Holdings Affiliate to join, in
all pre-Distribution federal Tax Returns for the Consolidated Group to the
extent they are eligible to join in such returns under the provisions of the
Code and the regulations thereunder. Holdings will neither elect to file
separate returns for such periods nor will it cause or permit any of the
Holdings Affiliates to so elect.
(b) Holdings hereby irrevocably designates, and Holdings agrees to cause
each of the Holdings Affiliates to so designate, CFI as its agent to take any
and all actions necessary or incidental to the filing of Form 1122 (or any
amendment thereto) with respect to any taxable period in which Holdings or any
of the Holdings Affiliates is a member of the Consolidated Group, and Holdings
agrees to deliver, and to cause each Holdings Affiliate to deliver, executed
copies of Form 1122 (or any amendment thereto) to CFI, if required, with respect
to any such year.
(c) CFI shall timely prepare and file, or cause to be timely prepared and
filed, all pre-Distribution federal Tax Returns for the Consolidated Group. This
shall include all tax items required to be reported by the Holdings Group for
taxable periods ending before or including the Distribution Date. Holdings shall
provide CFI, with respect to Holdings and Holdings Affiliates, its federal Tax
Returns and supporting schedules and additional information requested by CFI for
the 1996 taxable period ending on the Distribution Date on a timely basis, as
reasonably determined by CFI, in order for CFI to timely file the Tax Returns
for the Consolidated Group. Upon request, CFI shall deliver to Holdings copies
of the relevant portions of the Consolidated Group Tax Return for 1996, as
determined by CFI, within 30 days after the day that it is filed.
CFI TAX SHARING AGREEMENT PAGE 7
(d) All Tax Returns relating to taxable periods ending before or including
the Distribution Date and submitted after the date of this Agreement by Holdings
shall be prepared, and all items of such Tax Returns shall be reported (in the
absence of a controlling change in law or circumstances, except with the consent
of CFI, which consent shall not be unreasonably withheld), in a manner that is
consistent with past practices, elections, accounting methods, conventions, and
principles of taxation (collectively, "Tax Practices") used for the most recent
taxable periods for which Tax Returns involving similar items have been filed
prior to the Distribution Date. All decisions relating to the preparation of Tax
Returns under Section 2.02 (including whether items are reported consistent with
past Tax Practices) shall be made in the reasonable discretion of CFI. However,
any decisions regarding intercompany transactions, as defined under Treas. Reg.
Section 1.1502-13, shall be made as mutually agreed upon by the parties or by
CFI if mutual agreement is not reached, with CFI's decision being subject to
arbitration under Section 5.04.
SECTION 2.03. POST-DISTRIBUTION FEDERAL TAX RETURNS. Holdings shall
prepare and file, or cause to be filed, all post-Distribution federal Tax
Returns for the Holdings Group for taxable periods beginning after the
Distribution Date. CFI shall prepare and file, or cause to be prepared and
filed, all post-Distribution federal Tax Returns for the CFI Group for taxable
periods beginning after the Distribution Date. CFI and Holdings agree to notify
each other within 60 days after such post-Distribution federal Tax Returns are
filed regarding any utilization by either party of minimum tax credits generated
in pre-Distribution taxable periods. In addition CFI agrees to provide to
Holdings periodic estimates of the amount of minimum tax credits generated in
pre-Distribution years which are expected to be utilized in post-Distribution
returns of the CFI Group. CFI agrees to provide such estimates within 60 days
after each quarterly federal estimated tax payment and within 60 days after an
application for automatic extension of time (Form
CFI TAX SHARING AGREEMENT PAGE 8
7004) is filed. Holdings acknowledges that such estimates are subject to change
and CFI shall have no liability for any changes or inaccuracies in such
estimates.
ARTICLE III
PAYMENT OF TAXES
SECTION 3.01. ALLOCATION OF TAX LIABILITY.
(a) For purposes of this Agreement, the Consolidated Group's federal
regular income tax liability for all periods ending before or including the
Distribution Date shall be allocated in accordance with section 1552(a)(2) of
the Code and Treasury Regulations sections 1.1552-1(a)(2) and 1.1502-33(d)(3).
Accordingly, the consolidated federal regular income tax liability to be
allocated to each Affiliate included in the federal Tax Return of the
Consolidated Group in the following manner:
(1) STEP 1. Each Affiliate shall first be allocated that percentage
of the consolidated federal regular income tax liability which is equal to the
percentage that the total federal regular income tax liability of such
Affiliate, if computed on a separate return basis (with the adjustments
provided by Treasury Regulation section 1.1552-1(a)(2)), would be to the total
amount of the federal regular income tax of all Affiliates so computed.
(2) STEP 2. An additional amount shall be allocated to each Affiliate
equal to one hundred percent (100%) of the excess, if any, of (A) the "separate
return tax liability" of such Affiliate for the taxable year (as computed
pursuant to Treasury Regulation section 1.1552-1(a)(2)), over (B) the tax
liability of such Affiliate in accordance with STEP 1 of this Section 3.01(a).
CFI TAX SHARING AGREEMENT PAGE 9
(3) STEP 3. The total of any additional amounts allocated to
Affiliates pursuant to STEP 2 of this Section 3.01(a) (including amounts
allocated as a result of a carryback) shall be paid by such Affiliates to those
other Affiliates which had such losses, deductions, or credits in proportion to
the tax benefit derived by the Consolidated Group from the losses, credits and
deductions of all Affiliates, as determined by CFI.
(4) For the purposes of this Agreement, Holdings' allocable share of
the consolidated federal regular income tax liability, as determined under this
Section, is the aggregate amount of liability allocated to Holdings and any
Holdings Affiliate. CFI's allocable share of the consolidated federal income tax
liability, as determined under this Section, is the aggregate amount of
liability allocated to CFI and any CFI Affiliate.
(b) For purposes of this Agreement, the Consolidated Group's federal
minimum tax liability and environmental tax liability for all periods ending
before or including the Distribution Date shall be allocated in accordance with
the allocation method set out in Proposed Regulations Sections 1.1502-55 and
1.1552-1(g) issued on December 30, 1992 (the "Proposed Regulations"). If
temporary or final regulations are issued which differ from the Proposed
Regulations, this Agreement will be amended to reflect such changes to the
extent and for an effective date deemed necessary or desirable by CFI.
SECTION 3.02. ALTERNATIVE MINIMUM TAX CREDITS. A portion of any
consolidated minimum tax credit of the Consolidated Group will be allocated to a
Holdings Affiliate which ceases to be a member of the Consolidated Group on the
Distribution Date in accordance with the allocation method set forth in the
Proposed Regulations. To the extent such Holdings Affiliate was not allocated a
corresponding amount of alternative minimum tax in an earlier or the same tax
year, Holdings shall pay to CFI an amount equal to the amount of any such credit
utilized by the Holdings Affiliate on an estimated basis on or before June 30
following the taxable year in which the credit is utilized by
CFI TAX SHARING AGREEMENT PAGE 10
such Holdings Affiliate. Subsequent thereto, a final settlement payment, if
necessary, will be made within 10 days of filing the Tax Return for such taxable
year or, if later, 10 days after receipt of notice of the amount of the
settlement payment required. Any payment required under this Section shall be
accompanied by a calculation setting forth the basis for the amount paid. In
calculating minimum tax credit utilization and payment responsibility under this
Section, minimum tax credits allocated to Holdings Affiliates under this Section
shall be deemed used first. If temporary or final regulations are issued which
differ from the Proposed Regulations, this Agreement will be amended to reflect
such changes to the extent and for an effective date deemed necessary or
desirable by CFI.
SECTION 3.03. PAYMENT OF CONSOLIDATED FEDERAL INCOME TAX.
(a) CFI shall pay all Taxes due with respect to the consolidated federal
income tax liability (including any minimum tax or environmental tax liability)
of the Consolidated Group for all taxable periods ending before or including the
Distribution Date. Holdings shall pay to CFI an amount equal to Holdings' and
Holdings Affiliates' share of such Taxes as determined in the manner provided in
Section 3.01. Furthermore, Holdings shall make estimated tax payments to CFI or
receive refunds on or before the statutory payment dates under a method
generally consistent with past practices as reasonably determined by CFI. CFI
hereby acknowledges that, upon resolution of the intercompany accounts as of the
Distribution Date, all federal Taxes have been paid by Holdings and Holdings
Affiliates with respect to federal consolidated Tax Returns that have been filed
for any period up to and including the year ended December 31, 1995, and
Holdings and Holdings Affiliates shall have no further liability in respect
thereof except as otherwise provided in this Agreement.
CFI TAX SHARING AGREEMENT PAGE 11
(b) Except as otherwise provided in this Agreement, Holdings shall pay all
Taxes due with respect to the federal income tax liability (including any
minimum tax or environmental tax liability) of the Holdings Group for periods
beginning after the Distribution Date.
SECTION 3.04. TAX DEFICIENCIES AND REFUNDS AS TO CFI FILED RETURNS.
(a) If as a result of any audit, amendment or other change in a federal
income Tax Return as filed by CFI or any CFI Affiliate with respect to any
taxable period ending before or including the Distribution Date, there is an
additional amount of federal income Taxes (including minimum tax and
environmental tax) due and payable, or a refund of federal income Taxes
previously paid (whether by payment, credit, offset against other federal income
Taxes due or otherwise), any such deficiency shall be paid by, and any such
refund shall be payable to, CFI.
(b) Holdings shall pay to CFI any federal income Taxes paid by CFI as a
result of any audit, amendment or other change in a Consolidated Group Tax
Return allocable to the Holdings' Businesses (as determined under Section 3.01)
with respect to any taxable periods ending before or including the Distribution
Date. In determining the amount due under this Section 3.04(b), the amount of
federal income Taxes paid by CFI shall include any additional tax payments or
deposits made by CFI for a taxable year subsequent to the filing of the federal
income tax return for the taxable year, it being expressly recognized by
Holdings that no portion of such payments were charged to Holdings or a Holdings
Affiliate through the intercompany accounts.
(c) CFI shall pay to Holdings, reduced by reasonable administrative costs
(including legal and accounting expenses) incurred by CFI or a CFI Affiliate,
the amount of any refund of federal income Taxes received (including by offset
against other federal Taxes
CFI TAX SHARING AGREEMENT PAGE 12
due) as a result of any audit, amendment or other change in a Consolidated Group
Tax Return allocable to the Holdings Businesses (as determined under Section
3.01) with respect to any taxable period ending before or including the
Distribution Date.
(d) For purposes of both (b) and (c) of this Section, the amount of any
federal Taxes paid or federal Taxes received (including by way of offset) as a
result of any audit, amendment or other change to a Consolidated Group Tax
Return shall be taken into account in the year to which they relate and the Tax
liability (including Other Taxes) for such year shall be recomputed and
allocated accordingly.
SECTION 3.05 PENALTIES AND INTEREST
(a) Any interest incurred by the Consolidated Group shall be paid by the
Affiliate to whom it is attributable. The total amount of interest incurred by
the Consolidated Group will be apportioned to and paid by each Affiliate
according to (1) the ratio of the interest incurred by each Affiliate so
computed, plus (2) the additional interest, if any, that such Affiliate would
have paid on a separate return basis over the allocated interest determined
under (1) above. Interest computed by an Affiliate on a separate return basis
shall be calculated using the interest rate or rates applicable to the
consolidated deficiency. Any additional amount allocated to an Affiliate
determined under (2) above shall be paid to the Affiliate whose income or
deduction would have given rise to a refund on a separate return basis, but in
no case shall an Affiliate which incurs interest under (2) above be required to
pay more interest to such receiving Affiliate than such receiving Affiliate
would have received on a separate return basis. In calculating the allocable
share of any interest payable by a Holdings Affiliate with respect to any
federal audit adjustments, only interest actually payable to the IRS, and not
interest abated as a result of tax deposits, shall be taken into account. CFI
shall have sole discretion to determine how tax deposits are allocated among
taxable periods and audit items. CFI shall act in good faith
CFI TAX SHARING AGREEMENT PAGE 13
in making such determination, with an intention to minimize the overall out-of-
pocket costs and financial reporting impacts on CFI and Holdings.
(b) Any interest received by the Consolidated Group as a result of any
refund of Tax shall be allocated to the Affiliate whose income or deductions
gave rise to the refund. The amount of interest received by the Consolidated
Group will be apportioned to and received by each Affiliate according to (1) the
ratio of the interest to be received by each Affiliate computed on a separate
return basis to the total of all the interest received by Affiliates so
computed, plus (2) the additional interest, if any, that such Affiliate would
have received on a separate return basis over the allocated interest determined
under (1) above. Any additional amount allocated to an Affiliate determined
under (2) above shall be received from the Affiliate whose income or deductions
caused such interest not to be received by the Consolidated Group, but in no
case shall an Affiliate which receives such interest receive more interest than
such Affiliate would have received on a separate return basis.
(c) Any penalties incurred by the Consolidated Group shall be paid by the
Affiliate whose actions, income or deductions caused such penalties. If a
penalty was caused by more than one Affiliate, such penalty shall be allocated
proportionately to those Affiliates that would have incurred a penalty on a
separate return basis. Any excess penalty will be allocated in proportion to the
actions, income or deductions of each Affiliate which caused or contributed to
the penalty regardless of whether such Affiliate's actions, income or deductions
exceeded the minimum threshold required for the penalty to be imposed.
(d) For purposes of this Agreement, Holdings' allocable share of any
interest or penalties, as determined under this Section, is the aggregate amount
of liability allocated to Holdings and any Holdings Affiliate. CFI's allocable
share of any interest or penalties,
CFI TAX SHARING AGREEMENT PAGE 14
as determined under this Section, is the aggregate amount of liability allocated
to CFI and any CFI Affiliate.
SECTION 3.06. OTHER TAX RETURNS OF HOLDINGS.
(a) Holdings shall prepare and file, or cause to be prepared and filed,
all appropriate Tax Returns or other filings relating to Taxes other than
federal income taxes ("Other Taxes") imposed on any member of the Holdings Group
or the Holdings Businesses except for returns and filings with respect to
Combined Jurisdictions.
(b) For any Combined Jurisdictions, CFI or a CFI Affiliate, as
appropriate, shall be responsible for the preparation and filing of all returns
and filings relating to any Other Taxes imposed upon any member of the Holdings
Group for the same taxable periods with respect to which CFI is responsible for
filing federal income tax returns under Section 2.02. For this purpose, Holdings
(or the appropriate Holdings Affiliate) shall provide CFI (or the appropriate
CFI Affiliate) such schedules and additional information requested by CFI for
any period for which such Tax Return has not been filed as of the date hereof by
the later of (i) 15 days after such request or (ii) 60 days prior to the date on
which such Tax Return shall be due. Unless required by law, as reasonably
determined by CFI, CFI shall file such Tax Return consistent with such schedules
and additional information provided by Holdings or Holdings Affiliates. CFI
shall deliver to Holdings copies of relevant portions of each Tax Return no
later than 60 days after the day that such Tax Return is filed. Unless required
by law, as reasonably determined by CFI, CFI shall not amend any such Tax Return
to reflect any change in information provided by Holdings Businesses without the
written consent of Holdings.
(c) CFI hereby acknowledges that all Other Taxes have been paid with
respect to Tax Returns that have been filed (in any Combined Jurisdiction in
which unitary or nexus
CFI TAX SHARING AGREEMENT PAGE 15
consolidation principles have been agreed upon by CFI and Holdings or a Holdings
Affiliate) on or before the Distribution Date. Liability for payment of all
Other Taxes imposed by any Combined Jurisdiction shall be allocated between the
CFI Group and the Holdings Group. The allocation shall be made in such manner as
CFI shall reasonably deem appropriate; provided, however, that the liability of
the Holdings Group shall not exceed the greater of (i) the total amount that the
Holdings Group would have paid if the members of the Holdings Group filed their
own return for Other Taxes not combined with any other member of the CFI Group,
or (ii) a pro rata share of the combined liability of the members of the
Holdings Group and the CFI Group. CFI shall be liable for the Other Taxes
remaining after payment of the Holdings Group's allocable share of the Other
Taxes.
(d) To the extent there is an Other Tax liability, but the Holdings Group
has a net aggregate loss in a Combined Jurisdiction, the Holdings Group shall be
entitled to the benefit of the net aggregate loss, to the extent reasonably
determined by CFI, except limited (i) to the extent of its nexus within the
state, and (ii) to the extent such benefit is eliminated or reduced by the fact
that Holding Group's inclusion in the Combined Jurisdiction increases the
liability of the combined group.
(e) To the extent that a refund is obtained by CFI Businesses or Holdings
Businesses and such refund relates to Other Taxes in Combined Jurisdictions,
Holdings or a Holdings Affiliate shall be entitled to receive its proportionate
share of such refunds as determined by CFI (or a member of the CFI Group, as
appropriate), in accordance with the principles of Section 3.06(c) or (d).
(f) CFI and Holdings shall be responsible for the filing of their
respective Tax Returns for (i) non-Combined Jurisdictions, and (ii)
jurisdictions outside the United
CFI TAX SHARING AGREEMENT PAGE 16
States that are due with respect to all taxable periods and for the payment of
all Taxes due or payable in connection therewith.
(g) If as a result of any audit, amendment or other change in a Combined
Jurisdiction Tax Return as filed by CFI or a CFI Affiliate with respect to any
taxable period ending before or including the Distribution Date, there is an
additional amount of Taxes due and payable, or a refund of Taxes previously paid
(whether by payment, credit, offset against other Taxes due or otherwise), any
such deficiency shall be paid by, and any such refund shall be payable to, CFI
or the CFI Affiliate. Holdings shall pay to CFI any Taxes incurred as a result
of any audit, amendment or other change in a Combined Jurisdiction Tax Return
with respect to any taxable period ending before or including the Distribution
Date in a manner consistent with the provisions outlined in Section 3.06(c) and
(d). CFI or a CFI Affiliate shall pay to Holdings the amount of any refund of
Other Taxes received (including by offset against Other Taxes due) as a result
of any audit, amendment or other change to a Tax Return attributable to the
Holdings Businesses with respect to any taxable period ending before or
including the Distribution Date in a manner consistent with the provisions
outlined in Section 3.06(e).
(h) Notwithstanding the provisions of Section 3.06(g), if Holdings or a
Holdings Affiliate wishes to make advance payment of, or enter into a cash bond
with respect to, any Taxes for which it would bear the burden under this
Agreement prior to the date that payment of such Taxes is required by the
relevant Taxing Authority, CFI shall permit Holdings to make such advance
payment or enter into such cash bond and shall take such reasonable actions as
may be necessary to effectuate the same.
CFI TAX SHARING AGREEMENT PAGE 17
SECTION 3.07. RESTRUCTURING TAXES.
(a) Notwithstanding any other provision of this Agreement to the
contrary, Holdings shall pay and shall indemnify and hold harmless CFI from
and against any and all Restructuring Taxes and from and against any costs
whatsoever connected with such taxes, including, but not limited to, fees,
interest, penalties and reasonable attorney's fees to the extent any portion
of such Restructuring Taxes would not have resulted: (i) but for a Ruling
Misrepresentation or Omission (as defined in Section 3.07(b)); or (ii) but
for the fact that, within three (3) years after the Distribution Date, either
Holdings or any member of the Holdings Group has (A) made a material
disposition outside the Holdings Group by means of a sale or exchange of
assets or capital stock (except (x) the issuance by Holdings of its own stock
in an amount which does not exceed 10% of Holding's issued and outstanding
stock immediately following the Distribution Date and (y) dispositions, if
any, disclosed in the Ruling Request), (B) made a distribution to its
stockholders or otherwise of any assets of the Holdings Group (other than
dividends paid in the ordinary course of business), (C) made any repurchase
of any Holdings Group capital stock (excluding repurchases in connection with
employee benefit plans which comply with Revenue Procedure 91-63), (D) has
voluntarily ceased to engage in the active conduct of a trade or business
within the meaning of section 355(b)(2) of the Code, or (E) Holdings has
liquidated or merged with any other corporation (including a member of the
Holdings Group) unless, prior to each of cases (A), (B), (C), (D) and (E),
Holdings has received an opinion of counsel to the Holdings Group (which
opinion shall be reasonably satisfactory to CFI) or a favorable supplemental
ruling letter satisfactory to CFI, that such act would not adversely affect
the tax consequences of the Distribution to CFI or the shareholders of CFI,
as set forth in any ruling issued by the IRS or in any opinion of counsel to
CFI obtained in lieu of such a ruling.
CFI TAX SHARING AGREEMENT PAGE 18
(b) For purposes of paragraph (a), a "Ruling Misrepresentation or
Omission" means with respect to Holdings or a Holdings Affiliate (i) the failure
of Holdings or a member of the Holdings Group to comply in all material respects
with each written representation and statement regarding Holdings or a Holdings
Affiliate made to the IRS in the Ruling Request or in a certificate provided to
counsel to the CFI Group for use in preparing its tax opinion with respect to
the Distribution, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Ruling Request (or certificate provided to
counsel) or the omission to state in the Ruling Request (or certificate provided
to counsel) a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only, in the case of both clause (i)
and (ii), insofar as any such statement or omission was made in reliance upon,
and in conformity with, written information furnished by Holdings, a Holdings
Affiliate, or a Representative of either specifically for use in the preparation
of the Ruling Request (or certificate provided to counsel).
SECTION 3.08. MANNER OF PAYMENT.
(a) Any payment required to be made pursuant to Sections 3.04, 3.05, 3.06,
3.07 or Section 3.10 with respect to any Tax Return shall be made by wire
transfer by the party obligated to make such payment (i) in the case of a refund
of Tax, within 10 days after receipt (whether by way of payment, credit, or
offset against any payments due or otherwise) of such refund or (ii) in the case
of the payment of Tax with respect to any such Tax Return, within 10 days after
the later of (x) such payment of Tax or (y) the delivery of written demand for
the payment hereunder to the party obligated to make such payment hereunder. Any
payment described in clause (i) and any demand for payment described in clause
(ii) shall be accompanied by a calculation consistent with past Tax Practices
setting forth the basis for the amount paid or demanded. Any payment not made
within the prescribed time period shall thereafter bear interest at the federal
CFI TAX SHARING AGREEMENT PAGE 19
underpayment rate established pursuant to section 6621(a)(2) (substituting "5
percentage points" for "3 percentage points" in the case any demand for payment
described in clause (ii) in an amount exceeding $100,000).
(b) Notwithstanding the foregoing, in the case of payments due from
Holdings as a result of any IRS audit adjustments for tax liability years
1984-1990 which result in a deferred tax asset for Holdings for taxable years
following the Distribution Date, at Holdings' request CFI shall enter into a
note agreement on reasonable commercial terms permitting Holdings to make
installment payments of the amounts due hereunder over a period not longer
than the lesser of (i) five years, or (ii) the period over which such deferred
tax asset is amortized by Holdings.
SECTION 3.09. LIABILITY FOR TAXES WITH RESPECT TO POST-DISTRIBUTION
TAXABLE PERIODS. Unless otherwise provided in this Agreement, the CFI Group and
the Holdings Group severally shall pay all Taxes and shall be entitled to
receive and retain all refunds of Taxes with respect to taxable periods
beginning after the Distribution Date which are attributable to the CFI
Businesses and the Holdings Businesses, respectively.
SECTION 3.10. CARRYBACKS AND CARRYFORWARDS.
(a) In the event that Holdings, any Holdings Affiliate or the Holdings
Group incurs a loss or realizes a tax credit in a Tax Return filed for periods
after the Distribution Date, loss or tax credit will not be carried back to any
Consolidated Group Tax Return without the specific consent of CFI. CFI need
consent only if the carryback of such loss or credit to the Consolidated Group
return will cause no detriment to CFI's tax position. In determining whether a
carryback is likely to cause a detriment to its tax position, CFI may take into
account audit risks resulting from claiming a carryback. If CFI agrees to
carryback such loss or credit, or is required by law to carryback such loss or
credit, Holdings shall be entitled to its allocable share of any refund of Tax
obtained by the
CFI TAX SHARING AGREEMENT PAGE 20
Consolidated Group (or any member of the Consolidated Group in a Combined
Jurisdiction) as a result of the carryback of losses or credits of any member of
the Holdings Group from any taxable period beginning after the Distribution Date
to any taxable period ending before or including the Distribution Date. Such
refund is limited to the net amount received by CFI (by refund, offset against
other Taxes or otherwise), net of any net Tax cost incurred by CFI or a CFI
Affiliate, which would include the reduction of minimum tax credits previously
utilized by CFI, resulting from such refund, and shall be paid in the manner and
at the time specified in Section 3.08. In determining the net amount received by
CFI as a result of a carryback of losses or tax credits by Holdings or a
Holdings Affiliate, amounts carried back by Holdings or a Holdings Affiliate
shall be considered to reduce the Consolidated Group's tax burden only to the
extent that such carrybacks reduce the Consolidated Group's tax burden after
first taking into account all other tax credits and carrybacks available to the
Consolidated Group. Holdings shall indemnify CFI for any interest, fines and
penalties resulting from the carryback of any item under this paragraph.
Notwithstanding this Section 3.10, Holdings and any member of the Holdings Group
shall have the right, in its sole discretion, to make the election under section
172(b)(3) of the Code, which would eliminate or limit the carryback of any loss
or credit of the Holdings Group to any taxable period ending before or including
the Distribution Date.
(b) If CFI has a carryback of losses or credits from any member of the CFI
Group from any taxable period beginning after the Distribution Date to any
taxable period ending before or including the Distribution, CFI shall be
entitled to any refund received from the Taxing Authority attributable to the
carryback. To the extent such refund is reduced as a result of the inclusion of
the Holdings Group in the Tax Return to which the item is carried back and
results in additional minimum tax credits or other credits being made available
to the Holdings Group, Holdings shall pay to CFI the amount of any tax savings
when and if the additional benefits are realized by Holdings.
CFI TAX SHARING AGREEMENT PAGE 21
(c) Within 180 days following the close of the CFI tax year in which the
Distribution Date occurs, CFI shall provide a schedule of the relevant
carryforward items allocable to Holdings for tax years following the
Distribution Date. CFI shall indemnify Holdings for any interest, fines or
penalties resulting from the overstatement of the carryforward items or CFI
shall reimburse Holdings for any Tax benefits (including interest at the rate
specified in Section 3.08) foregone by Holdings as a result of the
understatement of the carryforward items. Notwithstanding the foregoing, CFI
shall not be required to so indemnify or reimburse Holdings (i) with respect to
any overstated allocation of alternative minimum tax credits made by CFI on a
good faith basis, or (ii) to the extent the overstatement or understatement of
any carryforward items other than alternative minimum tax credits results (x)
from a change in law or regulation (including the retroactive effectiveness of
any such law or regulation), (y) from an audit or other adjustments to the Tax
Returns as filed, or (z) from incorrect information supplied by Holdings.
ARTICLE IV
COOPERATION AND EXCHANGE OF INFORMATION
SECTION 4.01. COOPERATION.
(a) CFI and Holdings shall cooperate (and shall cause any member of their
group to cooperate) fully at such time and to the extent reasonably requested by
the other party in connection with the preparation and filing of any return or
the conduct of any audit, dispute, proceeding suit or action concerning any
issues or any other matter contemplated hereunder. Such cooperation shall
include, without limitation, (i) the retention and provision on demand of books,
records, documentation or other information relating to any Tax Return until the
later of (x) the expiration of the applicable federal or state statute
CFI TAX SHARING AGREEMENT PAGE 22
of limitation (giving effect to any extension, waiver, or mitigation thereof)
and (y) in the event any claim has been made under this Agreement for which such
information is relevant, until a Final Determination with respect to such claim;
(ii) the provision of additional information with respect to and explanation of
Tax Practices and material provided under clause (i) of this section; (iii) the
execution of any document that may be necessary or reasonably helpful in
connection with the filing of any Tax Return by any member of the CFI Group or
the Holdings Group, or in connection with any audit, proceeding, suit or action
addressed in the preceding sentence; and (iv) the use of the parties' reasonable
best efforts to obtain any documentation from a governmental authority or third
party that may be necessary or helpful in connection with the foregoing. Each
party shall make its employees and facilities available on a mutually convenient
basis to facilitate such cooperation.
(b) CFI and Holdings shall use reasonable efforts to keep each other
advised as to the status of Tax audits and litigation involving any items
reportable on a consolidated federal income Tax Return or a combined Tax Return
with respect to the Holdings Businesses for pre-Distribution periods and which
(i) give rise to a Tax which could be assessed against Holdings (or any
Affiliate thereof) or (ii) could give rise to a liability of Holdings (or any
Affiliate thereof) under this Agreement (either of which constitutes a
"Liability Issue"). The primary person for dealing with the Holdings Liability
Issues in Tax audits shall be a Holdings Representative. CFI and Holdings shall
promptly furnish each other copies of any inquiries or requests for information
from any Taxing Authority or any other administrative, judicial or other
governmental authority concerning any Liability Issue. CFI shall notify Holdings
as to which inquiries or information requests it desires to monitor and, with
respect to such matters, Holdings will submit for CFI approval (which shall not
be unreasonably withheld) the information to be provided to a Taxing Authority
or any governmental authority in response to the inquiries or requests. Holdings
agrees to timely notify CFI regarding any proposed written communication
CFI TAX SHARING AGREEMENT PAGE 23
(I.E., communications not related to inquiries or requests for information) by
Holdings or a Holdings Affiliate to any such Taxing Authority or other
governmental authority with respect to such Liability Issue and CFI shall
subsequently notify Holdings as to which Liability Issues CFI desires to
monitor. Upon request by CFI, Holdings shall provide copies of such written
communications and documents to be submitted therewith and receive approval from
CFI to submit such communications (which approval shall not be unreasonably
withheld and shall be given on a timely basis) prior to submission to the Taxing
Authority or other governmental authority. CFI shall have the right to consult
with Holdings regarding any responses attributable to such requests. CFI shall
indemnify Holdings for any costs which would not have been incurred, but for
CFI's failure to grant approval to Holdings to submit information for which
CFI's approval is required by this section; provided, however, this
indemnification shall not apply to CFI actions or decisions made pursuant to
Section 2.02(b). Furthermore, CFI and Holdings, as the case may be, shall each
promptly furnish to the other upon receipt a copy of information document
requests, a notice of proposed adjustment, revenue agent's report or similar
report or notice of deficiency together with all relevant documents and memos
related to the foregoing documents, notices or reports, received by any member
of the CFI Group or any member of the Holdings Group, as the case may be,
relating to any Liability Issue.
(c) CFI shall advise Holdings with respect to items reported in a revenue
agent's report and provide periodic updates, as necessary, as to the resolution
of any such items relating to the Consolidated Group that may affect any member
of the Holdings Group after the Distribution Date.
(d) Holdings shall promptly notify CFI of any inquiries by any Taxing
Authority or other administrative, judicial or other governmental authority that
relates to any Other Taxes that may be imposed on CFI or a CFI Affiliate.
CFI TAX SHARING AGREEMENT PAGE 24
SECTION 4.02. CONTEST PROVISIONS.
(a) Subject to the cooperation provisions of Section 4.01, CFI shall have
full responsibility for and discretion in handling any Tax controversy,
including, without limitation, an audit, technical advice request, arbitration
or dispute resolution procedure, protest to the Appeals Division of the IRS,
and litigation in Tax Court or any other court of competent jurisdiction (a "Tax
Controversy"), involving a Tax Return of the Consolidated Group or a Tax Return
for a Combined Jurisdiction. However, upon request by Holdings, and subject to
CFI approval (which may not be unreasonably withheld) and the cooperation
provisions of Section 4.01, Holdings shall have full responsibility and
discretion in the handling, at Holdings' expense of any Tax Controversy with
respect to any item reported on a Holdings or Holdings Affiliate Tax Return that
would give rise to a payment of Tax for which Holdings would be liable, or a
refund of Tax for which Holdings would be entitled to receive payment, under
Article III hereof. If CFI approval is not granted to Holdings for the handling
of a Tax Controversy item, CFI shall provide Holdings with a timely written
response which sets out the reasons for not granting the approval. Furthermore,
CFI shall be subject to the cooperation provisions of Section 4.01 and shall
allow Holdings, at Holdings' expense, the right to consult with CFI with respect
to such Tax Controversy.
(b) In addition to the cooperation and contest provisions of Section 4.01
and Section 4.02(a), in the event that a notice of deficiency is received by CFI
from any Taxing Authority and such notice relates in whole or in part to
Restructuring Taxes for which Holdings would be liable to CFI pursuant to
Section 3.06 hereof (the "Holdings Restructuring Issue") then --
(1) CFI, upon receiving written request from Holdings, which shall be
given no later than a date reasonably necessary to permit preparation
and timely filing
CFI TAX SHARING AGREEMENT PAGE 25
of a petition in the Tax Court for redetermination of the deficiency,
shall timely file such petition at Holdings' expense; provided,
however, that upon the request of Holdings, CFI shall, at Holdings'
expense: (A) pay the amount of the deficiency (provided that Holdings
has loaned to CFI no later than three (3) business days before CFI
pays such deficiency, without interest and until a Final Determination
of the Holdings Restructuring Issue, 100 percent of the amount of the
portion of the deficiency relating to the Holdings Restructuring
Issue; (B) file a claim for refund of such Tax; and (C) if the claim
is denied, bring an action in a court of competent jurisdiction
seeking the refund of such Tax; and
(2) In the event that a judgment of the Tax Court or other court of
competent jurisdiction results in an adverse determination with
respect to the Holdings Restructuring Issue and CFI notifies Holdings
that it does not intend to appeal such Holdings Restructuring Issue,
then Holdings shall have the right to cause CFI to appeal such adverse
determination at Holdings' expense.
(3) Holdings and its Representatives, at Holding's expense, shall be
entitled to participate in all conferences, meetings, or proceedings
with any Tax Authority, the subject matter of which is or includes the
Holdings Restructuring Issue. Holdings and its Representatives, at
Holding's expense, shall be entitled to participate in all appearances
before any court, the subject matter of which includes the Holdings
Restructuring Issue.
(4) All actions taken under this Section 4.02(b) at Holding's request or
direction shall be at Holdings' expense.
CFI TAX SHARING AGREEMENT PAGE 26
(5) The right to participate referred to in Section 4.02(b)(3) hereof
shall include the submission and content of documentation, protests,
memoranda of fact and law and briefs, the conduct of oral arguments or
presentations, the selection of witnesses, and the negotiations of
stipulations of fact with respect to the Holdings Restructuring Issue.
(6) Within five (5) business days of the receipt by CFI of a refund of any
amounts loaned to it by Holdings under paragraph (b)(1) above
(including any interest received by CFI), CFI shall pay such refunded
amount and interest, if any to Holdings net of any net Tax detriment
(as determined by CFI) incurred by CFI or a CFI Affiliate resulting
from such refund.
SECTION 4.03. INFORMATION FOR SHAREHOLDERS. CFI shall provide each
shareholder which receives Holdings stock pursuant to the Distribution with the
information necessary for each such shareholder to comply with the requirements
of section 355 of the Code and the Treasury Regulations with respect to
statements that such shareholders must file with their federal income tax
returns demonstrating the applicability of section 355 to the Distribution.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. TAX INDEMNIFICATION.
(a) Holdings shall indemnify and hold harmless CFI and each CFI Affiliate
from and against any liability, cost or expense, including, without limitation,
any fine, penalty, interest, charge, attorney's fee or accountant's fee arising
out of fraudulent or negligent information, workpapers, documents and other
items prepared by Holdings or a Holdings
CFI TAX SHARING AGREEMENT PAGE 27
Affiliate used in the preparation of any Tax Return filed by CFI and/or the
Consolidated Group for any period during which Holdings or a Holdings Affiliate
was or has been a member of the Consolidated Group.
(b) Except as set forth in Section 5.01(a), CFI shall indemnify and hold
harmless Holdings and each Holdings Affiliate from and against any liability,
cost or expense, including, without limitation, any fine, penalty, interest,
charge, attorney's fee or accountant's fee arising out of fraudulent or
negligent preparation of any Tax Return filed by CFI and/or the Consolidated
Group for any period during which Holdings or a Holdings Affiliate was or has
been a member of the Consolidated Group.
SECTION 5.02. BREACH. CFI shall indemnify and hold harmless each member
of the Holdings Group and Holdings shall indemnify and hold harmless each member
of the CFI Group from and against any payment required to be made under this
Agreement as a result of the breach by a member of the CFI Group or the Holdings
Group, as the case may be, of any obligation under this Agreement.
SECTION 5.03. DISCLAIMERS.
(a) CFI disclaims all knowledge of or responsibility for the content or
accuracy of any separate returns or filings made by Holdings or Holdings
Affiliates except to the extent such returns include information provided by CFI
pursuant to Section 3.10(c).
(b) Holdings disclaims all knowledge of or responsibility for the content
or accuracy of any (i) separate returns or filings made by CFI or CFI
Affiliates, (ii) Tax Returns or filings made by or on behalf of the Consolidated
Group or any member thereof for any period except to the extent such federal Tax
Returns or filings reflect items of the
CFI TAX SHARING AGREEMENT PAGE 28
Holdings Businesses, and (iii) Tax Returns or filings in Combined Jurisdictions,
except to the extent such Tax Returns or filings reflect items of the Holdings
Businesses.
SECTION 5.04. RESOLUTION OF CERTAIN DISPUTES.
(a) Disagreements between CFI and Holdings with respect to amounts that
either claims is owed by the other (or by an Affiliate of the other) under this
Agreement or other matters under this Agreement that are not resolved by mutual
agreement shall be resolved by arbitration pursuant to this Section 5.04. Until
the time of a final resolution by the arbitrator selected pursuant to Section
5.04(b), the time period for any payments described in Section 3.08 (other than
loans required by Section 4.02(c)) shall be tolled. Such tolling, however, shall
not affect the accrual of interest.
(b) SELECTION OF THE ARBITRATOR. Any arbitrator selected pursuant to this
Section 5.04(b) shall have at least ten years of experience in the field of
corporate taxation, shall be an attorney licensed to practice law in any state
of the United States or a certified public accountant licensed to practice in
any state of the United States and shall not be or have been routinely employed
by, retained or affiliated with either party. The parties shall first attempt to
agree on a mutually satisfactory arbitrator. If the parties are unable to agree
on a mutually satisfactory arbitrator within 30 days after either party notifies
the other in writing of a disagreement requiring arbitration pursuant to this
Section 5.04 (15 days in the case of a disagreement with respect to Section 4.01
or Section 4.02), each party shall select an arbitrator. The two arbitrators
thus selected shall agree on and select a third arbitrator. If the two
arbitrators cannot agree on such third arbitrator within 30 days (15 days in the
case of a disagreement with respect to Section 4.01 or Section 4.02), the
parties shall each select a different arbitrator and renew the foregoing
procedure. If the position of arbitrator is vacated by virtue of events outside
the control of the parties, the person or persons who originally selected the
arbitrator to fill
CFI TAX SHARING AGREEMENT PAGE 29
such position shall select a new arbitrator to fill the position, unless the
parties agree to continue the arbitration with the remaining arbitrators. When
used hereafter, the term "arbitrator" may refer to the three arbitrators so
selected when appropriate and a decision of a majority of such arbitrators shall
constitute a decision by the arbitrator in the appropriate context.
(c) ARBITRATION PROCEDURES.
(1) The arbitration shall be conducted in accordance with the rules set
forth in Exhibit A. The arbitration shall not be conducted under the
auspices of the American Arbitration Association.
(2) Each party within 30 days after engagement of the arbitrator shall
submit to the arbitrator a written statement of the party's position
(including, where relevant, the total net amount it asserts is owed by
it or is due to it) regarding the total amount in dispute, together
with a copy of such calculation.
(3) The arbitrator shall base his or her decision on the following
standards. In the case of a factual dispute between the parties, the
arbitrator shall make a determination of the facts. In the case of a
dispute regarding a legal issue, including the proper application of
the Tax laws or the proper interpretation of this Agreement, the
arbitrator shall make a determination in accordance with his or her
best legal judgment. Upon making determinations with respect to all
factual and legal issues in dispute, the arbitrator shall determine
the amount due by one party to the other or such other matter with
respect to the matter subject to the arbitration. Where relevant, as
to each matter in dispute, the arbitrator shall find in favor of the
party whose statement submitted pursuant
CFI TAX SHARING AGREEMENT PAGE 30
to paragraph (2) above proposed the amount closest to the amount so
determined.
(4) The arbitrator shall render a written decision stating only the result
of such decision as soon as practicable. The arbitrator shall also
orally explain the bases of such decision to both parties as soon as
practicable. If and only if both parties request, the arbitrator shall
state the basis of such decision in writing. As to each matter in
dispute, the arbitrator's decision shall be in an amount equal to one
of the total amounts asserted by one of the parties in the written
statements submitted pursuant to paragraph (2) above. The arbitrator
shall not, and is not authorized, to render a decision in any other
amount.
(5) The arbitrator's decision shall be final and binding on the parties.
No appeal to any court is contemplated by this Agreement and each
party, to the maximum extent permissible by law, waives and
relinquishes all rights and entitlements to appeal such decision.
CFI TAX SHARING AGREEMENT PAGE 31
SECTION 5.05. NOTICES. Any notice, demand, claim or other communication
under this Agreement shall be in writing and shall be deemed given upon delivery
if delivered personally or by courier, upon mailing if sent by certified mail,
return receipt requested, postage prepaid, or upon completion of transmission if
sent by telecopy or facsimile, to the parties at the following address:
CFI at: 0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: General Counsel
Holdings at: 000 Xxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: General Counsel
SECTION 5.06. COMPLETE AGREEMENT. This Agreement and the Exhibit thereto
constitute the entire agreement of the parties concerning the subject matter
hereof, supersede all other agreements, whether or not written, in respect of
any Tax between or among CFI and CFI Affiliates, on the one hand, and Holdings
and Holdings Affiliates, on the other hand. This Agreement may not be amended
except by an agreement in writing, signed by the parties hereto.
SECTION 5.07. 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 conflict of laws of the State of California.
CFI TAX SHARING AGREEMENT PAGE 32
SECTION 5.08. SUCCESSORS AND ASSIGNS. A party's rights and obligations
under this Agreement may not be assigned without the prior written consent of
the other party. All of the provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns.
SECTION 5.09. NO THIRD-PARTY BENEFICIARIES. This Agreement is solely for
the benefit of the parties to this Agreement and their respective Affiliates and
should not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without the Agreement.
SECTION 5.10. LEGAL ENFORCEABILITY. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions. Any prohibition
or unenforceability of any provision of this Agreement in any jurisdiction shall
not invalidate or render unenforceable the provision in any other jurisdiction.
SECTION 5.11. EXPENSES. Unless otherwise provided in this Agreement, each
party shall bear any and all expenses that arise from their respective
obligations under this Agreement (including Arbitration). In the event either
party to this Agreement brings an action or proceeding for breach or enforcement
of this Agreement, the prevailing party in such action or proceeding, whether or
not such action or proceeding proceeds to final judgment, shall be entitled to
recover as an element of its costs, and not as damages, such reasonable
attorneys' fees as may be awarded in the action or proceeding in addition to
whatever other relief to which the prevailing party may be entitled.
CFI TAX SHARING AGREEMENT PAGE 33
SECTION 5.12. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signature thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
CONSOLIDATED FREIGHTWAYS, INC.
By:
--------------------------------
Its:
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CONSOLIDATED FREIGHTWAYS CORPORATION
By:
-------------------------------
Its:
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