Exhibit 2.1
DISTRIBUTION AGREEMENT
between
CONSOLIDATED FREIGHTWAYS, INC.
and
CONSOLIDATED FREIGHTWAYS CORPORATION
TABLE OF CONTENTS
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 13
3.3 Company Charter and Bylaws 13
3.4 Other Agreements 13
3.5 Operation in the Ordinary Course of Business 13
3.6 Insurance 14
3.7 Collections and Payments after the
Distribution Date 14
3.8 Certain Post-Distribution Transactions 14
ARTICLE IV INDEMNIFICATION
4.1 Indemnification by CFI 15
4.2 Indemnification by the Company 15
4.3 Limitations on Indemnification Obligations 16
4.4 Procedures for Indemnification 17
4.5 Releases 19
4.6 Environmental Liabilities 20
ARTICLE V ACCESS TO INFORMATION; SERVICES
5.1 Access to Information 20
5.2 Production of Witnesses 21
5.3 Provision of Services 21
5.4 Reimbursement 21
5.5 Retention of Records 22
5.6 Confidentiality 22
5.7 Provision of Corporate Records 23
5.8 Privileged Matters 23
ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 Financial Statements 24
6.2 Form 10 and Information Statement 24
6.3 Marks 24
ARTICLE VII SHARED CLAIMS
7.1 Acknowledgment. 25
7.2 Notification. 25
7.3 Cooperation. 25
7.4 Liability. 26
7.5 Non-Shared Liabilities. 26
ARTICLE VIII MISCELLANEOUS
8.1 Complete Agreement; Construction 26
8.2 Expenses 26
8.3 Governing Law 27
8.4 Notices 27
8.5 Amendments and Waivers 27
8.6 Counterparts 28
8.7 Successors and Assigns 28
8.8 Termination 28
8.9 No Third-Party Beneficiaries 28
8.10 Titles and Headings 28
8.11 Legal Enforceability 28
8.12 Further Assurances 29
8.13 No Solicitation of Employees 29
8.14 Dispute Resolution 30
Schedule 3.1(b) LJSC Service Departments
Schedule 3.1(e) Real Property
Schedule 3.1(g) Licensed Materials
Schedule 3.1(h)(i) Marks
Schedule 3.1(h)(ii) Additional Marks
Schedule 3.1(h)(iii)Patents and Copyrights
Schedule 3.6(b) Insurance Policies
Schedule 4.1 CFI Indemnification
Schedule 4.2 Company Indemnification
Schedule 6.3 CFI marks
Schedule X Omitted Programs
ANNEX 1 Form of ADR Agreement
ANNEX 2 Form of Employee Benefit Matters Agreement
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
ANNEX 8 Form of Maintenance, License and Easement Agreement
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (the "Agreement")
is made as of this 25th of November, 1996 by and between
CONSOLIDATED FREIGHTWAYS, INC., a Delaware corporation
("CFI"), and CONSOLIDATED FREIGHTWAYS CORPORATION, a Xxxx
xxxx corporation (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 dis
tribute (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 valu
able consideration, the parties hereto hereby agree as
follows:
I
DEFINITIONS
I.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):
Page 1
Action: any action, suit, arbitration, inqui
ry, 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 Resolu
tion Agreement to be entered into by CFI and the Company
as of the Distribution Date, the form of which is at
tached hereto as Annex 1.
Affiliate: as defined in Rule 12b-2 under the
Exchange Act.
CFI Group:At any time following the Distribu
tion, 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 Commis
sion.
Company Group: at any time following the Dis
tribution, the Company and all entities which are Affili
ates of the Company at such time.
Distribution Agent: The Bank of New York.
Distribution Date: the date as determined by
the CFI Board or a committee thereof on which the Distri
bution 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 Em
ployee Benefit Matters Agreement to be entered into by
CFI and the Company as of the Distribution Date, the form
of which is attached hereto as Annex 2.
Page 2
Environmental Liabilities: means any Liabil
ities arising from, under or relating to any environmen
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 thereun
der.
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 Ex
change Act.
Information Statement: the Information State
ment on Form 14C filed by the Company with the Commission
and included in the Form 10 at the time of its effective
ness.
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 re
ceived 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 unliqui
dated, accrued or unaccrued, known or unknown, direct or
indirect, whenever arising, including all costs and
expenses relating thereto, and including, without limita
tion, 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 undertak
ing including those arising under this Agreement.
Page 3
LJSC: Xxxxxx Xxxxx Xxxxxxx Corporation, a
Delaware Corporation.
Losses: any and all debts, losses, Liabil
ities, claims, damages, obligations, payments or costs
and expenses, absolute or contingent, matured or unma
tured, liquidated or unliquidated, accrued or unaccrued,
known or unknown, direct or indirect (including, without
limitation, the costs and expenses of any and all Ac
tions, threatened Actions, demands, assessments, judg
ments, settlements and compromises relating thereto and
attorneys' fees and any and all expenses whatsoever
reasonably incurred in investigating, preparing or de
fending against any such Actions or threatened Actions).
Other Agreements: the ADR Agreement, the
Employee Benefit Matters Agreement, the Reimbursement
Agreement, the Services Agreement, the Tax Sharing Agree
ment and the Maintenance, License and Easement Agreement
to be entered into by CFCD (as defined) and CF Properties
(as defined) as of the Distribution Date, the form of
which is attached hereto as Annex 8.
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 at
tached 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.
Page 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 Agree
ment to be entered into by CFI and the Company as of the
Distribution Date, the form of which is attached hereto
as Annex 5.
II
THE DISTRIBUTION
II.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 State
ment, which shall set forth appropriate disclosure con
cerning 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.
a) CFI and the Company shall cooperate in preparing,
filing with the Commission and causing to become effec
tive any registration statements or amendments thereto
that are appropriate to reflect the establishment of or
amendments to any employee benefit and other plans contem
plated by the Employee Benefit Matters Agreement.
b) The Company shall prepare, file and pursue an
application to permit listing of the Company Common Stock
on the Nasdaq National Market (and/or such other exchange
as the Company deems appropriate), under the symbol
"CFWY" (or such other symbol as the Company deems
appropriate).
Page 5
II.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, and
the maintenance of CFI's investment grade debt ratings;
(iii) the establishment of a separate credit facility for
CFCD; (iv) the receipt of certain third-party consents
relating to certain contracts, licenses and other agree
ments; (v) the receipt of rulings from the IRS or an opin
ion of special tax counsel to CFI to the effect that,
among other things, the Distribution will generally
qualify as a tax-free distribution under Section 355 of
the Internal Revenue Code of 1986, as amended; (vi) the
receipt of a letter from the staff of the Commission con
firming that it will take no action with respect to
certain matters relating to the Distribution; (vii) the
Form 10 having become effective and no stop order being
in effect; (viii) 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; (ix) ap
proval for listing of the Company Common Stock on the
Nasdaq National Market; and (x) declaration of the spe
cial 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), (v), (vi), (vii) and (x),
to waive the satisfaction of any condition to the Distri
bution; provided, however, that the CFI Board may aban
don, defer or modify the Distribution and the related
transactions at any time prior to the Distribution Date.
Page 6
II.3 The Distribution. On the Distribution Date,
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 dis
tributed 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.
II.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 at then-prevailing prices 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 bear the cost of brokerage commissions
incurred in connection with such sales.
II.5 Odd-Lot Program. In connection with the Distribu
tion, 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.
III
TRANSACTIONS RELATING TO THE DISTRIBUTION
III.1 The Reorganization.
a) Prior to the Distribution Date, CFI shall take
all steps necessary to establish CFCD as a wholly owned
subsidiary of the Company.
Page 7
b) Prior to the Distribution Date, CFI shall take
all steps necessary to establish 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) Prior to the Distribution Date, CFI shall take
all steps necessary to merge Vantage Parts into CFI.
d) Prior to the Distribution Date, CFI shall take
all steps necessary to establish Milne & Xxxxxxxxx as a
wholly owned, indirect subsidiary of CFCD.
e) Prior to the Distribution Date, CFI shall take
all steps necessary to effect the transfer of all real
property owned by CFCD and/or LJSC 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 under CFI's
Santa Fe Springs and Hayward Terminals to CFCD. In
consideration of such transfers, the Company hereby
agrees to continue to use Con-Way rail services until
January 1, 1997.
f) The Company acknowledges that any and all rights
in the software programs (including without limitation
all source and object code and all documentation there
for, and all versions thereof) developed by, or on behalf
of, the Company, CFI or its Affiliates prior to the
Distribution Date, and all other intellectual property
rights, including without limitation all copyrights,
patent rights, know-how and trade secret rights, and in
cluding, without limitation, the right to xxx for any
past, present or future infringement of any of the fore
going, 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 assign
ment and to otherwise effectuate the purposes and terms
of this Agreement.
Page 8
g) CFI hereby grants 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, (except as to subsidiaries
who agree in writing to be bound by the terms of this
license), to use and create derivative works of the soft
xxxx programs (including without limitation all source
and object code and documentation therefor) owned by CFI
which pertain to the Company's administrative and busi
ness functions and activities, 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 neces
sary to provide to the Company, at CFI's expense, and
with minimal interruption of the operations of CFI and
its Affiliates, copies of the Licensed Materials, togeth
er with copies of any related third-party licenses (sub
ject to the proviso set forth in the immediately follow
ing sentence), and reasonable instruction as to their in
stallation and use. In addition, CFI shall, as soon as
practicable after the Distribution Date, make reasonable
efforts to obtain on behalf of the Company, at CFI's ex
pense with respect to initial purchase, acquisition and
original installation fees only, all consents or separate
licenses for third-party software which the Company uses
in its business as of the Distribution Date, or which are
incorporated into the Licensed Materials, or which are
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, and such third-party licenses shall
be at least as broad in scope and term as were similar
licenses for CFI prior to the Distribution Date; provid
ed, however, that if CFI determines that the terms upon
which any such license may be obtained are commercially
unreasonable, CFI shall have the right to obtain a li
cense for reasonably comparable software in full satis
faction of the above-mentioned obligation. Where use of
third-party software is limited to a specified number of
users or similarly restricted, an equitable division
shall be made as set forth on Schedule 3.1(g). Each of
CFI and the Company further acknowledges and agrees that:
Page 9
(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 cus
tomers 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 au
thorized customers' right to use the Licensed Mate
rials which require a third-party license is condi
tioned upon the Company's, its Affiliates and autho
rized 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 Agree
ment.
(iii) The Company shall assume all Liabili
ties 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 (including, without limitation, as relates to
maintenance costs) and shall indemnify and hold harm
less CFI against all Liabilities and expenses (in
cluding reasonable attorneys' fees and costs of liti
gation) 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.
Page 10
(iv) CFI shall assume all Liabilities
relating to the Company's use of software requiring
a third-party license where CFI has taken a license
from such third party and (A) a license for the
Company is available at a commercially reasonable
cost but CFI has failed to provide the Company with
the applicable third-party license to the extent
required by this Agreement, or (B) in the event that
CFI is not able to obtain such a license at a commer
cially reasonable cost, CFI has failed to provide
the Company with reasonably comparable software and
shall indemnify and hold harmless the Company
against all Losses, Liabilities and expenses (includ
ing reasonable attorneys' fees and cost of litiga
tion) which the Company may incur, which arise out
of claims by owners of the third party software
arising out of such failure of CFI to obtain such
third-party licenses for the Company. The Company
shall assume all Liabilities relating to the use of
third- party software obtained on its behalf by CFI
including, without limitation, as relates to mainte
xxxxx costs.
(v) The Licensed Materials constitute
confidential information and shall remain the prop
erty 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 (includ
ing reasonable attorneys' fees and cost of litiga
tion) which the Company may incur, 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.
Page 11
(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 (including, without limita
tion, as relates to maintenance costs) and shall
indemnify and hold harmless CFI against all Liabili
ties 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 propor
tional share of the development costs of the Li
censed Materials identified in Schedule 3.1(g) as
"Under Development" as incurred after the Distribu
tion 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 Materi
als are used in connection with the provision of
services to the Company under the Services Agree
ment, to the extent that the Company has already
paid such proportional share in accordance with 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, or included on, Schedule 3.1(g). In
such event, the parties shall determine in good
faith whether such programs should be added or
deleted as Licensed Materials and related third-
party software used by the Company as of the date
hereof, "Additional Licenses" or "Under Develop
ment"; provided, however, that the parties acknowl
edge that the programs listed on Schedule X have
been intentionally omitted from Schedule 3.1(g).
Page 12
h) CFI hereby grants to the Company and its
Subsidiaries a limited, non-exclusive, non-transferable,
royalty-free worldwide right and license, without right
of sublicense (except to subsidiaries who agree in
writing to be bound by the terms of this license) to use
the trademarks, trade names and service marks set forth
on Schedule 3.1(h)(i) (collectively, the "Marks") for the
nine-month period beginning on the Distribution Date. On
or prior to the Distribution Date, CFI and the Company
shall enter into a Trademark License Agreement, substan
tially in the form included on Schedule 3.1(h)(ii) in
order to effect the license from CFI to the Company (and
its Subsidiaries) of the marks (the "Additional Marks")
set forth on Schedule 3.1(h)(ii). The Company agrees to
comply and to cause its Subsidiaries to comply with rea
sonable quality standards set by CFI, and subject to
CFI's reasonable rights of inspection as to compliance
with such quality standards, as relates to the use of the
Marks and the Additional Marks, and CFI acknowledges that
the Company and its Subsidiaries currently meet all such
standards. On or prior to the Distribution Date, CFI
shall assign to the Company, pursuant to a Trademark
Assignment in the form included on Schedule 3.1(h)(i) (X)
the Marks, effective as of the end of the nine-month
period commencing on the Distribution Date, (Y) the
trademarks, trade names and service marks relating to "CF
Air" and "CF Air Freight" (and as stylized), effective as
of the third anniversary of the Distribution Date. On or
prior to the Distribution Date, CFI shall assign to the
Company, pursuant to the Copyright Assignment and the
Patent Assignment in the forms included on Schedule
3.1(h)(iii), the patents and copyrights set forth on
Schedule 3.1(h)(iii), effective as of the Distribution
Date.
i) Company shall indemnify and hold CFI, and its
subsidiaries, Affiliates, officers, directors and
subsidiaries, harmless from and against any and all
Liabilities arising out of the Company's activities under
the Marks and the Additional Marks.
j) 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. 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.
Page 13
III.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
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 Compa
ny substantially in the form of Annex 7 hereto to be in
effect on the Distribution Date.
III.4 Other Agreements. On or prior to the Distri
bution Date, CFI and the Company shall enter into, and/or
(where applicable) shall cause their respective Subsid
iaries 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.
III.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 busi
ness, 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.
Page 14
III.6 Insurance. The Company and 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, except the
policies covering underground storage tank liability,
which shall be released as of the Distribution Date. The
Company and 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
1, 1996, except to the extent of claims referred to in
the preceding sentence. The Company and each other
member of the Company Group expressly waives any and all
rights under section 1542 of the Civil Code of Califor
nia, 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."
III.7 Collections and Payments after the Distri
bution Date. Except as may be explicitly provided in
this Agreement and the Other Agreements, any cash re
ceipts arising out of or relating to the assets, Liabili
ties 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 Lia
bilities or obligations relating to LJSC and arising on
or prior to the Distribution Date, arising out of, relat
ing to or asserted on the basis of the assets, Liabil
ities 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. The
Company and CFI shall settle all payments received from
account debtors of either of them to the effect that
amounts properly owing to the Company are received by the
Company and amounts properly owing to CFI are received by
CFI, with such settlements to occur by wire transfer (a)
daily, for the three-month period beginning on the Dis
tribution Date and (b) weekly, thereafter.
Page 15
III.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 the IRS in connection
with the IRS private letter ruling issued to CFI on
September 23, 1996 (the "Ruling") or any other ruling to
be obtained by the Company and CFI acting together from
any 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 other
wise, of its assets, (B) repurchase or issue any Company
capital stock (other than stock issued pursuant to em
ployee plans), or (C) cease the active conduct of its
businesses independently, with its own employees and with
out material change, unless, in each of cases (A), (B)
and (C), in the opinion of counsel to the Company, which
opinion shall be reasonably satisfactory to CFI, or pursu
ant to a supplemental IRS private letter ruling reason
ably 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 the
Ruling or any other ruling issued by any taxing authori
ty; and the Company has no present intention to take any
such actions.
Page 16
IV
INDEMNIFICATION
IV.1 Indemnification by CFI. Except as otherwise pro
vided by any of the Other Agreements or as contemplated
by Section 4.5 or Article VII hereof, effective as of the
Distribution Date, CFI and each other member of the CFI
Group agree to indemnify, defend and hold harmless the
Company, each other member of the Company Group, and
their present or former officers, directors, sharehold
ers, 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 Sched
ule 4.1.
IV.2 Indemnification by the Company. Except as other
wise provided by any of the Other Agreements or as con
templated by Section 4.5 or Article VII hereof, effective
as of the Distribution Date, the Company and each other
member of the Company Group agree 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, succes
sors-in-interest, parents, Affiliates, insurers, attor
neys 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 Sched
ule 4.2.
IV.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, or
any other Section of this Agreement providing for
indemnification, shall be reduced by any Insurance Pro
ceeds or other amounts actually recovered by or on behalf
of such Indemnitee, in reduction of the related Loss. If
an Indemnitee shall have received the payment required by
this Agreement from an Indemnifying Party in respect of
any Loss and shall subsequently actually receive Insur
ance 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.
Page 17
IV.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 pro
vided in this Section 4.4(a) shall not relieve the relat
ed Indemnifying Party of its obligations under this Arti
cle IV, unless such Indemnifying Party is actually preju
diced by such failure to give notice and then only to the
extent of such actual prejudice.
Page 18
(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 Indem
nifying 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 ex
penses 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 Indemnify
ing 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 Indemni
fying Party exists in respect of such claim, such Indem
nitees shall have the right to employ separate counsel to
represent such Indemnitees and in that event the reason
able 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 Indemnify
ing 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 re
tain such number of additional separate counsel, reason
ably satisfactory to the Indemnifying Party, as is rea
sonably necessary to avoid such conflicts, and the Indem
nifying 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 expens
es 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 uncondi
tional 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.
Page 19
a) Any claim on account of a Loss that does not
result from a Third-Party Claim shall be asserted by
written notice given by the Indemnitee to the Indemnify
ing 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 Agree
ment).
b) 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 Agree
ment, 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.
c) 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 Indemni
tee 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.
d) 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.
Page 20
IV.5 Releases.
(a) Subject to Article VII and effective
on the Distribution Date, the Company and each other mem
ber of the Company Group releases and forever discharges
CFI, each other member of the CFI Group, and their pres
ent or former officers, directors, shareholders, agents,
employees, representatives, successors-in-interest, par
ents, 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)).
a) Subject to Article VII and effective on the Dis
tribution 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, employ
ees, representatives, successors-in-interest, parents,
Affiliates, insurers, attorneys and assigns of and from
any and all Liabilities (other than those for which indem
nification is available under this Article IV and any
Other Agreement (subject to the provisions of Section
4.3)).
b) The Company and each other member of the Company
Group, and CFI and each other member of the CFI Group,
expressly waive 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."
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 Environ
mental Liabilities.
Page 21
V
ACCESS TO INFORMATION; SERVICES
V.1 Access to Information. From and after the Distri
bution Date, CFI shall, and shall cause its Subsidiaries
to, afford to the Company and its authorized accountants,
counsel and other designated representatives (collective
ly, "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, but excluding
all software not owned by the Company, "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, inso
far as such access is reasonably required by the Company
or any Company Subsidiary. Similarly, the Company shall,
and shall cause its Subsidiaries to, afford to CFI and
its Representatives reasonable access (including using
reasonable efforts to give access to persons or firms pos
sessing 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 Sub
sidiary (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, account
ing, claim, litigation and tax purposes, as well as for
purposes of fulfilling disclosure and reporting obliga
tions and for performing this Agreement and the transac
tions contemplated hereby.
Page 22
V.2 Production of Witnesses. After the Distribution
Date, each of CFI and the Company shall, and shall cause
its respective Subsidiaries to, 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
legal, administrative or other proceedings in which the
requesting party may from time to time be involved.
V.3 Provision of Services. In addition to any servic
es 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 inter
fere unreasonably with such party's business, its
financial, tax, accounting, legal, employee benefits and
similar staff services (collectively, "Services") whenev
er and to the extent that they may be reasonably required
in connection with the preparation of tax returns, au
dits, claims, litigation or administration of employee
benefit plans, and otherwise to assist in effecting an
orderly transition following the Distribution.
V.4 Reimbursement. Except to the extent otherwise pro
vided in any Other Agreement, each party providing Infor
mation, 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 there
for, 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.
Page 23
V.5 Retention of Records. Except as otherwise re
quired 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
party, identifying the Information proposed to be de
stroyed 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.
V.6 Confidentiality. CFI and each other member of the
CFI Group on the one hand, and the Company and each other
member of the Company Group on the other hand, shall use
commercially reasonable efforts to hold, and cause their
Representatives to hold, in strict confidence, all Infor
mation concerning the other in their possession or fur
nished by the other or the other's Representatives pursu
ant 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 subse
quently 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 Informa
tion, unless compelled to disclose by judicial or admin
istrative process or, as advised by its counsel, by other
requirements of law.
Page 24
V.7 Provision of Corporate Records.
(a) Except as may otherwise be provided in
any Other Agreement, CFI shall arrange as soon as practi
cable 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.
a) Except as otherwise provided in any Other Agree
ment, the Company shall arrange as soon as practicable
following the Distribution Date, to the extent not previ
ously 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 al
ready 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 duplica
tion until the Company shall notify CFI in writing that
such records are no longer of use to the Company.
V.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 privi
lege which could be asserted under any applicable law,
and in connection with which the other party has a mate
rial interest, without the consent of the other party,
except to the extent reasonably required in connection
with any litigation with third parties.
Page 25
VI REPRESENTATIONS, WARRANTIES AND COVENANTS
The Company and each other member of the Compa
ny Group make the following representations and warran
ties 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.
VI.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 Subsid
iaries, each in the form included in the Information
Statement, have been prepared in accordance with general
ly accepted accounting principles applied on a consistent
basis during the periods involved (except as may be
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 re
sults of operations and cash flows for the periods indi
cated therein.
VI.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 to the extent that such information relates solely to
CFI and not to the Company ("CFI Information").
VI.3 Marks. None of CFI's existing trademarks, trade
names and service marks that are not also Marks or
Additional Marks ("CFI marks" as set forth in Schedule
6.3) infringe in any manner any of the Marks or Addition
xx Xxxxx or otherwise interfere with the Company's ex
pected use of the Marks or Additional 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.
Page 26
VII SHARED CLAIMS
VII.1 Acknowledgment. Each party acknowledges
that, from and after the Distribution Date, there may be
claims and proceedings against such party and its Subsid
iaries (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 xxxx
spired 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").
VII.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, with
out limitation, any such claim or proceeding that names
or identifies the other party or any of its Subsidiaries
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 pro
vide 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.
VII.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 coop
erate with such party with respect to such control and
administration.
Page 27
VII.4 Liability. The parties shall seek to appor
tion 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
is provided in Section 7.2, they shall submit the matter
for resolution as provided in the ADR Agreement.
VII.5 Non-Shared Liabilities. Anything to the con
trary 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 Distribu
tion Date (other than Excluded Claims) shall be allocated
as described below. The Company shall assume and indem
nify 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.
VIII MISCELLANEOUS
VIII.1 Complete Agreement; Construction. This
Agreement and the Other Agreements, including any sched
ules 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.
Page 28
VIII.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,
including design and architectural fees, phone and data
connections infrastructure and labor associated with the
move, excluding any other capital improvements, except
that CFI shall pay for the costs of wheelchair ramp ac
cess, ADA required upgrades and lobby expansion.
VIII.3 Governing Law. This Agreement shall be gov
erned by and construed in accordance with the laws of the
State of California without regard to the principles of
conflicts of laws thereof.
VIII.4 Notices. All notices, requests, claims, de
mands and other communications hereunder shall be in writ
ing 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.
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
Page 29
VIII.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 in
stances, shall be deemed to be, or construed as, a fur
ther 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.
VIII.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.
VIII.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.
VIII.8 Termination. This Agreement may be termi
nated 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.
VIII.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.
Page 30
VIII.10 Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of refer
ence only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
VIII.11 Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffec
tive to the extent of such prohibition or unenforce
ability 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 preju
dice 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 provi
sions of this Agreement and agrees that the obligations
of the parties hereunder shall be specifically
enforceable.
VIII.12 Further Assurances. In addition to the
actions specifically provided for elsewhere in this Agree
ment, 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 rea
sonably 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 effec
tive 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 Agree
ment. The parties hereto further agree to cooperate with
respect to the facilities in Portland, Oregon to be used
by the parties or their respective Subsidiaries in accor
dance with the Services Agreement to the effect of mini
mizing any disruptions that a party (or its Subsidiaries)
may experience as a result of the technical and logisti
cal interdependencies of such facilities.
Page 31
VIII.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 ser
vices 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 servic
es, or in the preceding six months) from the groups that
had been providing such services.
VIII.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.
Page 32
VIII.15
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.
By:/s/ X. X. Xxxxxxx
Its: President and Chief
Executive Officer
CONSOLIDATED FREIGHTWAYS CORPORATION
By:/s/ S. D. Xxxxxxxx
Its: Senior Vice President and
General Counsel
Acknowledged and Agreed by
the following entities with
respect to the indicated
Sections of this Agreement:
XXXXX AIR FREIGHT CORPORATION
(with respect to Sections 4.1, 4.5 and 5.6)
By: /s/ X.X. XxXxxxxx
Its: Vice President
CON-WAY TRANSPORTATION SERVICES, INC.
(with respect to Sections 4.1, 4.5 and 5.6)
By: /s/ X. X. Xxxxxx
Its: Vice President
Page 33
MENLO LOGISTICS, INC.
(with respect to Sections 4.1, 4.5 and 5.6)
By: /s/ Xxxx Xxxxxxxxx
Its: President
CONSOLIDATED FREIGHTWAYS CORPORATION
OF DELAWARE
(with respect to Sections 3.6, 4.2, 4.5,
5.6, 6.1, 6.2 and 6.3)
By: /s/ S. D. Xxxxxxxx
Its: Vice President and General
Counsel
CANADIAN FREIGHTWAYS LIMITED
(with respect to Sections 3.6, 4.2, 4.5,
5.6, 6.1, 6.2 and 6.3)
By: /s/ X.X. Xxxxxxx
Its: Secretary and Treasurer
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