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EXHIBIT 2.1
DISTRIBUTION AGREEMENT
BETWEEN
FORWARD AIR CORPORATION
F/K/A LANDAIR SERVICES, INC.
AND
LANDAIR CORPORATION
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TABLE OF CONTENTS
PAGE
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I. DEFINITIONS........................................................ 1
1.1 General..................................................... 1
II. THE DISTRIBUTION.................................................. 3
2.1 Cooperation Prior to the Distribution....................... 3
2.2 Conditions to Distribution.................................. 3
2.3 The Distribution............................................ 4
III. TRANSACTIONS RELATING TO THE DISTRIBUTION........................ 4
3.1 The Reorganization.......................................... 4
3.2 Company Charter and Bylaws.................................. 5
3.3 Other Agreements............................................ 5
3.4 Operation in the Ordinary Course of Business................ 5
3.5 Collections and Payments after the Distribution Date........ 5
IV. INDEMNIFICATION................................................... 5
4.1 Indemnification by FAF...................................... 5
4.2 Indemnification by the Company.............................. 5
4.3 Limitations on Indemnification Obligations.................. 5
4.4 Procedures for Indemnification.............................. 6
4.5 Releases.................................................... 7
4.6 Environmental Liabilities................................... 7
V. ACCESS TO INFORMATION; SERVICES.................................... 7
5.1 Access to Information....................................... 7
5.2 Production of Witnesses..................................... 8
5.3 Provision of Services....................................... 8
5.4 Reimbursement............................................... 8
5.5 Retention of Records........................................ 8
5.6 Confidentiality............................................. 8
5.7 Provision of Corporate Records.............................. 9
5.8 Privileged Matters.......................................... 9
VI. SHARED CLAIMS..................................................... 9
6.1 Acknowledgment.............................................. 9
6.2 Notification................................................ 9
6.3 Cooperation................................................. 9
6.4 Liability................................................... 9
VII. MISCELLANEOUS.................................................... 10
7.1 Complete Agreement; Construction............................ 10
7.2 Expenses.................................................... 10
7.3 Governing Law............................................... 10
7.4 Notices..................................................... 10
7.5 Amendments and Waivers...................................... 10
7.6 Counterparts................................................ 10
7.7 Successors and Assigns...................................... 10
7.8 Termination................................................. 10
7.9 No Third-Party Beneficiaries................................ 10
7.10 Titles and Headings......................................... 10
7.11 Legal Enforceability........................................ 10
7.12 Further Assurances.......................................... 11
7.13 No Solicitation of Employees................................ 11
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DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (this "Agreement") is made as of this
day of , 1998 by and between FORWARD AIR CORPORATION, a
Tennessee corporation f/k/a Landair Services, Inc. ("FAF"), and LANDAIR
CORPORATION, a Tennessee corporation (the "Company").
RECITALS
WHEREAS, FAF is the holder of all of the issued and outstanding shares of
$.01 par value per share common stock of the Company (the "Company Common
Stock");
WHEREAS, the Board of Directors of FAF (the "FAF Board") has determined
that it is advisable and in the best interests of FAF, its shareholders and the
Company to distribute (the "Distribution") all of the issued and outstanding
shares of Company Common Stock to the holders of the $.01 par value per share
common stock of FAF (the "FAF Common Stock"); and
WHEREAS, FAF 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 FAF and
the Company and their respective subsidiaries following the Distribution;
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth and other good and valuable consideration, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 General. As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
ACTION: any action, claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory
or administrative agency or commission or any arbitration tribunal.
AFFILIATE: as defined in Rule 12b-2 under the Exchange Act.
FAF GROUP: at any time following the Distribution, FAF and all
entities which are Affiliates of FAF at such time.
CODE: the Internal Revenue Code of 1986, as amended.
COMMISSION: the United States Securities and Exchange Commission.
COMPANY GROUP: at any time following the Distribution, the Company
and all entities which are Affiliates of the Company at such time.
DISTRIBUTION AGENT: SunTrust Bank, Atlanta.
DISTRIBUTION DATE: the date (as determined by the FAF Board or a
committee thereof) as of which the Distribution shall be effected.
DISTRIBUTION RATIO: the ratio of FAF Common Stock to Company Common
Stock to be distributed in the Distribution.
EMPLOYEE BENEFIT MATTERS AGREEMENT: the Employee Benefit Matters
Agreement to be entered into by FAF and the Company as of the Distribution
Date, the form of which is attached hereto as Annex A.
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ENVIRONMENTAL LIABILITIES: any Liabilities arising from, under or
relating to any environmental, 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 promulgated thereunder.
FORM 10: the Registration Statement on Form 10 filed by the Company
with the Commission to effect the registration of the Company Common Stock
under the Exchange Act.
FORWARD AIR: Forward Air, Inc., a Tennessee corporation.
FORWARD AIR BUSINESS: the business of providing the
less-than-truckload movement of deferred air freight as conducted by FAF
prior to the Distribution primarily through the FAF Group.
INFORMATION STATEMENT: the Information Statement on Form 14C filed by
the Company with the Commission and included in the Form 10 at the time of
its effectiveness.
INSURANCE PROCEEDS: those monies (i) received by an insured from an
insurance carrier on an insurance claim or (ii) paid by an insurance
carrier on behalf of an insured on an insurance claim, in either case net
of any applicable deductibles, retentions or costs paid by such insured,
but such term does not refer to proceeds received from an insurer on an
employee benefits group insurance policy.
IRS: the United States Internal Revenue Service.
INTERNATIONAL: Forward Air International Airlines, Inc., a Tennessee
corporation.
LIABILITIES: any and all debts, liabilities, obligations, absolute or
contingent, asserted or unasserted, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, direct or indirect,
whenever arising, including all costs and expenses relating thereto, and
including, without limitation, those debts, liabilities and obligations
arising under any law, rule, regulation, Action, threatened Action, order
or consent decree of any governmental entity or any award of any arbitrator
of any kind, and those arising under any contract, commitment or
undertaking including those arising under this Agreement.
LICENSING: Forward Air Licensing Company, a Delaware corporation.
LOSSES: any and all debts, losses, Liabilities, claims, damages,
obligations, payments or costs and expenses, absolute or contingent,
matured or unmatured, liquidated or unliquidated, accrued or unaccrued,
known or unknown, direct or indirect (including, without limitation, the
costs and expenses of any and all Actions, threatened Actions, demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or
threatened Actions).
OTHER AGREEMENTS: the Employee Benefit Matters Agreement, the
Services Agreement, the Tax Sharing Agreement and such other agreements and
understandings as are required to carry out the transactions authorized by
this Agreement.
RECORD DATE: the close of business on the date to be determined by
the FAF Board or a committee thereof as the record date for the
determination of shareholders of record of FAF entitled to receive the
Distribution.
REORGANIZATION: shall have the meaning set forth in SECTION 3.1
hereof.
ROYALTY: Forward Air Royalty Company, a Delaware corporation.
SECURITIES ACT: the Securities Act of 1933, as amended.
SERVICES AGREEMENT: the Transition Services Agreement to be entered
into by FAF and the Company as of the Distribution Date, the form of which
is attached hereto as Annex B.
SUBSIDIARIES: with respect to any entity, unless otherwise indicated,
shall be deemed to refer to both direct and indirect subsidiaries of such
entity.
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TAX SHARING AGREEMENT: the Tax Sharing Agreement to be entered into
by FAF and the Company as of the Distribution Date, the form of which is
attached hereto as Annex C.
TRANSPORT: Landair Transport, Inc., a Tennessee corporation.
TRANSPORTATION PROPERTIES: Transportation Properties, Inc., a
Tennessee corporation.
TRANSPORTATION PROPERTIES (TEXAS): Transportation Properties (Texas),
Inc., a Tennessee corporation.
TRUCKLOAD BUSINESS: the business of providing short- to medium-haul
delivery to the high-service segment of the general commodities truckload
market as conducted by FAF prior to the Distribution primarily through the
Company Group.
VOLUNTEER: Volunteer Adjustment, Inc., a Tennessee corporation.
ARTICLE II
THE DISTRIBUTION
2.1 Cooperation Prior to the Distribution. Prior to the Distribution:
(a) FAF and the Company shall prepare, and the Company shall file with
the Commission, the Form 10. FAF and the Company shall prepare, and FAF
shall mail, prior to the Distribution Date, to the holders of FAF Common
Stock, the Information Statement, which shall set forth appropriate
disclosure concerning the Company, the Distribution and other matters. The
Company shall use reasonable efforts to cause the Form 10 to become
effective under the Exchange Act.
(b) FAF and the Company shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereto that are appropriate to reflect the establishment of or
amendments to any employee benefit and other plans contemplated by the
Employee Benefit Matters Agreement.
(c) Prior to the Distribution, FAF will change the symbol under which
it is listed on The Nasdaq Stock Market to "FWRD" (or such other symbol as
FAF deems appropriate) and the Company shall prepare, file and pursue an
application to permit listing of the Company Common Stock on The Nasdaq
Stock Market (and/or such other exchange as the Company deems appropriate),
under the symbol "LAND" (or such other symbol as the Company deems
appropriate).
2.2 Conditions to Distribution. The FAF 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:
(a) the consummation of the Reorganization in accordance with SECTION 3.1 hereof
and certain internal corporate reorganizations; (b) the renegotiation of certain
FAF credit facilities and debt instruments, including the execution of certain
consents, waivers and amendments thereto by lenders, all on terms satisfactory
to the Board of Directors of FAF; (c) the establishment of separate credit
facilities for the Company and FAF on terms satisfactory to the Board of
Directors of the Company and FAF; (d) the receipt of certain third-party
consents relating to certain contracts, licenses and the Other Agreements; (e)
receipt by FAF of a private letter ruling from the IRS to the effect that, among
other things, the Distribution will qualify as a tax-free distribution for
Federal income tax purposes under Section 355 of the Code, or at the option of
the FAF Board, an opinion of special tax counsel to FAF, in form and substance
satisfactory to the FAF Board, to the effect that, among other things, the
Distribution will constitute such a tax-free distribution under Section 355 of
the Code; (f) the Form 10 having become effective and no stop order being in
effect; (g) 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; and (h) approval for listing of
the Company Common Stock on The Nasdaq Stock Market. The FAF Board reserves the
right in its discretion, other than with respect to those set forth in clauses
(a), (e), (f) and (g), to waive the satisfaction of any condition to the
Distribution;
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provided, however, that the FAF Board may abandon, defer or modify the
Distribution and the related transactions at any time prior to the Distribution
Date.
2.3 The Distribution. On the Distribution Date, subject to the conditions
set forth in this Agreement, FAF shall deliver to the Distribution Agent a
certificate or certificates representing the number of then outstanding shares
of Company Common Stock to be distributed in the Distribution, endorsed in
blank, and shall instruct the Distribution Agent to distribute to each holder of
record of FAF Common Stock on the Record Date a certificate or certificates
representing one share of Company Common Stock for one share of FAF 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.
ARTICLE III
TRANSACTIONS RELATING TO THE DISTRIBUTION
3.1 The Reorganization. Prior to the Distribution Date, FAF and the Company
shall cause, or have caused, the following transactions to occur (the
"Reorganization"):
(a) FAF shall take all steps necessary to cause Transport, its wholly
owned subsidiary, to incorporate FAF, Inc. ("FAF, Inc.") and Landair
Transportation Properties, Inc. ("LTP") as wholly owned Tennessee
corporations;
(b) FAF shall cause Transport to transfer such of its assets
associated with the Forward Air Business (including all goodwill and other
intangibles associated with such Forward Air Business) to FAF, Inc. in
exchange for all of the issued and outstanding stock of FAF, Inc. plus the
assumption by FAF, Inc. of liabilities associated with the transferred
assets.
(c) FAF shall cause Transport to distribute all of the issued and
outstanding stock of FAF, Inc. to its sole shareholder, FAF.
(d) FAF shall cause Transportation Properties to transfer the real
estate on which a ▇▇▇▇▇▇ County, Tennessee maintenance facility is being
constructed to LTP in exchange for cash and/or LTP's assumption of the debt
associated with such real estate.
(e) FAF shall borrow approximately $12.1 million from an unrelated
third party, and use the proceeds of any such borrowing to pay any
intercompany debt owed by Forward Air to Transport. In addition, FAF will
transfer to the Company in the form of a capital contribution $5 million.
(f) FAF shall incorporate, or have incorporated, the Company as a
wholly owned Tennessee corporation for the purpose of facilitating the
Distribution and the Reorganization.
(g) FAF shall transfer all of the issued and outstanding stock of each
of Transport and Volunteer and other assets directly held by FAF (including
trademarks, tradenames goodwill and any other intangibles associated with
the Truckload Business) that are associated with the Truckload Business to
the Company in exchange for all of the issued and outstanding stock of the
Company. Immediately thereafter, the Company will transfer to Transport all
of the assets that the Company received from FAF, except for all of the
issued and outstanding stock of Transport and Volunteer and the trademarks
and tradenames associated with the Truckload Business (including any
goodwill associated with such trademarks and tradenames).
(h) Immediately prior to the Distribution Date, FAF and the Company
shall take all steps necessary to increase the outstanding shares of
Company Common Stock so that, immediately prior to the Distribution, FAF
will hold a number of shares of Company Common Stock sufficient to enable
it to complete the Distribution based on the Distribution Ratio. FAF 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.
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3.2 Company Charter and Bylaws. On or prior to the Distribution Date, (a)
FAF shall approve and cause the Charter of the Company substantially in the form
of Annex D hereto to be filed with the Secretary of State of Tennessee and to be
in effect on the Distribution Date and (b) FAF shall adopt the Bylaws of the
Company substantially in the form of Annex E hereto to be in effect on the
Distribution Date.
3.3 Other Agreements. On or prior to the Distribution Date, FAF and the
Company shall enter into, and (if applicable) shall cause their respective
Subsidiaries to enter into, the Other Agreements and any other agreements
necessary or appropriate in connection with the transactions contemplated hereby
and thereby. In the event of a conflict between the terms of this Agreement and
the terms of any of the Other Agreements or any such other agreements, the terms
of this Agreement shall govern.
3.4 Operation in the Ordinary Course of Business. Prior to the
Distribution Date, the Company shall, and shall cause each of its Subsidiaries
to, conduct its business and operations in the ordinary course of business,
consistent with past practice, and shall, and shall cause each of its
Subsidiaries to, continue to provide services, pay accounts payable and
invoices, deposit and accept payments, and make capital expenditures in the
ordinary course of business, all consistent with past practice. The Company
shall not, and shall cause each of its Subsidiaries not to, undertake any
arrangement with the intent to delay receipt of any funds by the Company or its
Subsidiaries until on or after the Distribution Date or to accelerate any
payment to be made by the Company or its Subsidiaries prior to the Distribution
Date, except in each case in the ordinary course of business consistent with
past practice.
3.5 Collections and Payments after the Distribution Date. Except as may
be explicitly provided in this Agreement and the Other Agreements, any cash
receipts arising out of or relating to the assets, Liabilities or operations of
the Company or its past or present Subsidiaries received on or after the
Distribution Date shall be retained by the Company and such Subsidiaries, and
any Liabilities or obligations, arising out of, relating to or asserted on the
basis of the assets, Liabilities or operations of the Company or its past or
present Subsidiaries due and unpaid on and after the Distribution Date, or
incurred on and after the Distribution Date, shall be payable by the Company and
such Subsidiaries. The Company and FAF 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 FAF are
received by FAF, with such settlements to occur by wire transfer (a) daily, for
the three-month period beginning on the Distribution Date and (b) weekly,
thereafter.
ARTICLE IV
INDEMNIFICATION
4.1 Indemnification by FAF. Except as otherwise provided by any of the
Other Agreements or as contemplated by Section 4.5 or Article VI hereof,
effective as of the Distribution Date, FAF and each other member of the FAF
Group agree to indemnify, defend and hold harmless the Company, each other
member of the Company Group, and their present or former officers, directors,
shareholders, agents, employees, representatives, successors-in-interest,
parents, Affiliates, insurers, attorneys and assigns (the "Company Indemnitees")
from and against any and all Losses of the Company Indemnitees arising out of or
related in any manner to any item set forth on Schedule 4.1 hereto.
4.2 Indemnification by the Company. Except as otherwise provided by any
of the Other Agreements or as contemplated by Section 4.5 or Article VI hereof,
effective as of the Distribution Date, the Company and each other member of the
Company Group agree to indemnify, defend and hold harmless FAF, each other
member of the FAF Group, and their present or former officers, directors,
shareholders, agents, employees, representatives, successors-in-interest,
parents, Affiliates, insurers, attorneys and assigns (the "FAF Indemnitees")
from and against any and all Losses of the FAF Indemnitees arising out of or
related in any manner to any item set forth on Schedule 4.2 hereto.
4.3 Limitations on Indemnification Obligations. The amount that either
FAF 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
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any Insurance Proceeds 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 Insurance Proceeds
or other amounts in respect of such Loss, then such Indemnitee shall pay to such
Indemnifying Party a sum equal to the amount of such Insurance Proceeds or other
amounts actually received (up to but not in excess of the amount of any
indemnity payment made hereunder). No insurer or other third party shall: (a) be
relieved of the responsibility to pay any claims which it would otherwise be
obligated to pay in the absence of the foregoing indemnification provisions; (b)
solely by virtue of the indemnification provisions hereof have any subrogation
rights with respect to any claims which it would otherwise be obligated to pay;
or (c) be entitled to a benefit it would not be entitled to receive in the
absence of the foregoing indemnification provisions. Any Indemnifying Party
shall succeed to the rights of any Indemnitee with respect to any matter
contemplated by this SECTION 4.3.
4.4 Procedures for Indemnification. (a) If an Indemnitee shall receive
notice or otherwise learn of the assertion of any claim or commencement of any
proceeding (including any governmental investigation) by a person who is not a
party to this Agreement (or any Affiliate of either party) (a "Third-Party
Claim") with respect to which an Indemnifying Party may be obligated to provide
indemnification pursuant to this Agreement, such Indemnitee shall give such
Indemnifying Party written notice thereof promptly after becoming aware of such
Third-Party Claim setting forth the particulars as to such claim or proceeding
in reasonable detail; provided that the failure of any Indemnitee to give notice
as provided in this SECTION 4.4(A) shall not relieve the related Indemnifying
Party of its obligations under this ARTICLE IV, unless such Indemnifying Party
is actually prejudiced by such failure to give notice, and then only to the
extent of such actual prejudice.
(b) An Indemnifying Party may, to the extent it wishes within 30 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 Indemnifying Party to
an Indemnitee of its election to assume the defense of a Third-Party Claim, such
Indemnifying Party shall not be liable to such Indemnitee under this ARTICLE IV
for any legal or other expenses (except expenses approved in advance by the
Indemnifying Party) subsequently incurred by such Indemnitee in connection with
the defense thereof; provided that if the defendants in any such Third-Party
Claim include both the Indemnifying Party and one or more Indemnitees, and in
any Indemnitee's reasonable judgment a conflict of interest between one or more
of such Indemnitees and such Indemnifying Party exists in respect of such claim,
such Indemnitees shall have the right to employ separate counsel to represent
such Indemnitees. In that event, the reasonable fees and expenses of such
separate counsel (but not more than one separate counsel reasonably satisfactory
to the Indemnifying Party) shall be paid by such Indemnifying Party; provided
further if and to the extent that there is a conflict of defenses or positions
among the Indemnitees, the Indemnitees shall have the right to retain such
number of additional separate counsel, reasonably satisfactory to the
Indemnifying Party, as is reasonably necessary to avoid such conflicts, and the
Indemnifying Party shall be responsible for the reasonable fees and expenses of
such additional separate counsel; provided further that the Indemnitee may
participate in the settlement or defense of a Third-Party Claim through counsel
chosen by such Indemnitee if the fees and expenses of such counsel shall be
borne by such Indemnitee. If an Indemnifying Party elects not to assume
responsibility for defending a Third-Party Claim, such Indemnitee may defend or
seek to compromise or settle such Third-Party Claim, but shall not thereby waive
any right to indemnity therefor pursuant to this Agreement. Notwithstanding the
foregoing, the Indemnifying Party shall not be liable for any settlement of any
Third-Party Claim effected without its written consent. The Indemnifying Party
shall not, except with the consent of the Indemnitee, (i) enter into any such
settlement that does not include as an unconditional term thereof the giving by
the person or persons asserting such Third-Party Claim to all Indemnitees an
unconditional release from all Liability with respect to such Third-Party Claim,
or (ii) consent to entry of any judgment.
(c) 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
Indemnifying Party. Such Indemnifying Party shall have a
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period of 30 days after the receipt of such notice within which to respond
thereto. If such Indemnifying Party does not respond within such 30-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 30-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.
(d) In addition to any adjustments required pursuant to SECTION 4.3, if the
amount of any Loss shall, at any time subsequent to the payment required by this
Agreement, be reduced by recovery, settlement or otherwise, the amount of such
reduction that has been received by the Indemnitee, less any expenses properly
incurred in connection therewith, shall promptly be repaid by the Indemnitee to
the Indemnifying Party.
(e) In the event of payment by an Indemnifying Party to any Indemnitee in
connection with any Third-Party Claim, such Indemnifying Party shall have all
rights of subrogation and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right
or claim relating to such Third-Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense of such Indemnifying Party, in prosecuting any
subrogated right or claim.
(f) Notwithstanding anything to the contrary herein or in the Other
Agreements, the foregoing indemnification provisions and procedures shall apply
to any other indemnification agreements herein or in the Other Agreements.
4.5 Releases. (a) Subject to ARTICLE VI and effective on the Distribution
Date, the Company and each other member of the Company Group releases and
forever discharges FAF, each other member of the FAF Group, and their present or
former officers, directors, shareholders, agents, employees, representatives,
successors-in-interest, parents, Affiliates, insurers, attorneys and assigns of
and from any and all Liabilities (other than those for which indemnification is
available under this ARTICLE IV and any of the Other Agreements (subject to the
provisions of SECTION 4.3)).
(b) Subject to ARTICLE VI and effective on the Distribution Date, FAF and
each other member of the FAF Group releases and forever discharges the Company,
each other member of the Company Group and their present or former officers,
directors, shareholders, agents, employees, representatives, successors-in-
interest, parents, Affiliates, insurers, attorneys and assigns of and from any
and all Liabilities (other than those for which indemnification is available
under (i) this ARTICLE IV and (ii) any of the Other Agreements (subject to the
provisions of SECTION 4.3)).
4.6 Environmental Liabilities. Notwithstanding anything contained herein
or in any of the Other Agreements to the contrary, neither party shall have any
obligation to indemnify the other party with respect to any Environmental
Liabilities.
ARTICLE V
ACCESS TO INFORMATION; SERVICES
5.1 Access to Information. From and after the Distribution Date, FAF
shall, and shall cause its Subsidiaries to, afford to the Company and its
authorized accountants, counsel and other designated representatives
(collectively, "Representatives") reasonable access (including using reasonable
efforts to give access to the person or firms possessing information) and
duplicating rights during normal business hours to all administrative records,
books, contracts and instruments, and all Company-owned computer software and
computer data and other Company-owned data and information (collectively, but
excluding all software not owned by the Company, "Information") within FAF's or
any such Subsidiary's possession or control relating to the Company or any
Company Subsidiary and to any property owned by FAF that was leased or operated
by the Company or any Company Subsidiary, insofar as such access is reasonably
required by the Company or any Company Subsidiary. Similarly, the Company shall,
and shall cause its Subsidiaries to, afford to FAF and its Representatives
reasonable access (including using reasonable efforts to give access to persons
or firms possessing Information) and duplicating rights during normal business
hours to Information within the
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Company's or any such Subsidiary's possession or control relating to FAF or any
FAF 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 FAF or any FAF
Subsidiary (other than the Company and its Subsidiaries), insofar as such access
is reasonably required by FAF or any FAF Subsidiary. Information may be
requested under this ARTICLE V for, without limitation, audit, accounting,
claim, litigation and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations and for performing this Agreement and the
transactions contemplated hereby.
5.2 Production of Witnesses. After the Distribution Date, each of FAF 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.
5.3 Provision of Services. In addition to any services contemplated to be
provided following the Distribution Date by any of the Other Agreements, each
party, upon written request, shall make available to the other party, during
normal business hours and in a manner that will not interfere unreasonably with
such party's business, its financial, tax, accounting, legal, employee benefits
and similar staff services (collectively, "Services") whenever and to the extent
that they may be reasonably required in connection with the preparation of tax
returns, audits, claims, litigation or administration of employee benefit plans,
and otherwise to assist in effecting an orderly transition following the
Distribution.
5.4 Reimbursement. Except to the extent otherwise provided in any of the
Other Agreements, each party providing Information, witnesses or Services under
SECTION 5.1, 5.2 or 5.3 to the other party shall be entitled to receive from the
recipient, upon the presentation of invoices therefor, payment for all
out-of-pocket costs and expenses as may be reasonably incurred in providing such
Information, witnesses or Services. For purposes of this SECTION 5.4, salaries
and other compensation payable to employees of either party shall be deemed to
be an out-of-pocket cost or expense reimbursable hereunder.
5.5 Retention of Records. Except as otherwise required by law or agreed
to in writing, each of FAF 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 FAF 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 destroyed or disposed of, and (b) if
the recipient of such notice shall request in writing prior to the scheduled
date for such destruction or disposal that any of the Information proposed to be
destroyed or disposed of be delivered to such requesting party, the party
proposing the destruction or disposal shall promptly arrange for the delivery of
such of the Information as was requested at the expense of the requesting party.
5.6 Confidentiality. FAF and each other member of the FAF 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 Information concerning the
other in their possession or furnished by the other or the other's
Representatives pursuant to this Agreement or any of the Other Agreements
(except to the extent that such Information is (a) in the public domain through
no fault of such party or (b) later lawfully acquired by such party on a
non-confidential basis from other sources which are not subject to any
confidentiality litigation with the subject party or subsequently developed by
such party), and neither party shall release or disclose such Information to any
other person, except to its auditors, attorneys, financial advisors, bankers and
other consultants and advisors, and on terms and conditions substantially the
same as the terms and conditions on which such party releases
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its own Information, unless compelled to disclose by judicial or administrative
process or, as advised by its counsel, by other requirements of law.
5.7 Provision of Corporate Records. (a) Except as may otherwise be
provided in any of the Other Agreements, FAF shall arrange as soon as
practicable following the Distribution Date, to the extent not previously
delivered, for the delivery 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 FAF for review and duplication until FAF shall notify the
Company in writing that such records are no longer of use to FAF.
(b) Except as otherwise provided in any of the Other Agreements, the
Company shall arrange as soon as practicable following the Distribution Date, to
the extent not previously delivered, for the delivery to FAF of FAF's and its
Subsidiaries' books and records in its possession, except to the extent such
items are already in the possession of FAF or a Subsidiary of FAF. Such books
and records shall be the property of FAF, but shall be available to the Company
for review and duplication until the Company shall notify FAF in writing that
such records are no longer of use to the Company.
5.8 Privileged Matters. The Company and FAF 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 FAF and
the Company and that both FAF and the Company should be deemed to be the client
for the purposes of asserting all privileges related thereto. No party may waive
any privilege which could be asserted under any applicable law, and in
connection with which the other party has a material interest, without the
consent of the other party, except to the extent reasonably required in
connection with any litigation with third parties.
ARTICLE VI
SHARED CLAIMS
6.1 Acknowledgment. Each party acknowledges that, from and after the
Distribution Date, there may be claims and proceedings against such party and
its Subsidiaries that relate (in whole or in part) to activities alleged to have
transpired prior to the Distribution Date and with respect to which it would be
fair and appropriate to apportion Liability therefor between the parties
("Shared Claims").
6.2 Notification. If any party shall receive notice or otherwise learn of
the assertion of any claim or the commencement of any proceeding which such
party believes may constitute a Shared Claim (including, without limitation, any
such claim or proceeding that names or identifies the other party or any of its
Subsidiaries as a responsible party), such party shall (a) immediately assume
the defense thereof and shall in all respects respond thereto in a timely manner
and (b) promptly provide written notice thereof to the other party, setting
forth the particulars as to such claim or proceeding in reasonable detail;
provided that the failure of such party to give such notice shall not relieve
the other party of any obligation to accept Liability unless it is actually
prejudiced by such failure, and then only to the extent of such actual
prejudice.
6.3 Cooperation. The parties shall cooperate with each other in the
defense or settlement of Shared Claims to the effect that (a) subject to the
provisions of SECTION 6.2, the party bearing the greater Liability shall be
responsible for the control and administration of any Shared Claim and (b) the
other party shall cooperate with such party with respect to such control and
administration.
6.4 Liability. The parties shall seek to apportion Liability between them
with respect to any Shared Claim, and in so doing shall take cognizance of all
relevant factors, including but not limited to, the time and duration of any
alleged activity giving rise thereto, the benefit sought to be achieved by the
activity giving rise to the Shared Claim, and the employees involved in the
activity giving rise to the Shared Claim.
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ARTICLE VII
MISCELLANEOUS
7.1 Complete Agreement; Construction. This Agreement and the Other
Agreements, including any schedules and exhibits hereto or thereto, shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter.
7.2 Expenses. Except as otherwise set forth in this Agreement and the
Other Agreements, each party shall bear its own costs and expenses that are
necessary to effect the Distribution and that arise after the Distribution and
are related to the Distribution.
7.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee without regard to the
principles of conflicts of laws thereof.
7.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered by hand,
mailed by registered or certified mail (return receipt requested), or sent by
cable, telegram, telecopy (confirmed by regular, first-class mail), to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and shall be deemed given on the date on
which such notice is received:
if to FAF: if to the Company:
Forward Air Corporation Landair Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel Attn: General Counsel
7.5 Amendments and Waivers. This Agreement may not be altered or amended,
nor may rights hereunder be waived, except by an instrument in writing executed
by the party or parties to be charged with such amendment or waiver. No waiver
of any term, provision or condition of or failure to exercise or delay in
exercising any rights or remedies under this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, provision, condition, right or remedy or as a waiver of
any other term, provision or condition of this Agreement.
7.6 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.
7.7 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.
7.8 Termination. This Agreement may be terminated and the Distribution
abandoned at any time prior to the Distribution Date by and in the sole
discretion of the FAF Board without the approval of the Company or the
shareholders of FAF. 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 7.2.
7.9 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 FAF Group or the Company Group) any
remedy, claim, reimbursement, cause of action or other right other than those
existing without reference to this Agreement.
7.10 Titles and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
7.11 Legal Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability
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without invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Without prejudice to any
rights or remedies otherwise available to any party hereto, each party hereto
acknowledges that damages would be an inadequate remedy for any breach of the
provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
7.12 Further Assurances. In addition to the actions specifically provided
for elsewhere in this Agreement, each of the parties hereto will use its
reasonable efforts to (a) execute and deliver such further documents and take
such other actions as any other party may reasonably request in order to
effectuate the purposes of this Agreement and to carry out the terms hereof, and
(b) take, or cause to be taken, all actions, and to do, or cause to be done, all
things, reasonably necessary, proper or advisable under applicable laws,
regulations and agreements or otherwise to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using its reasonable efforts to obtain any consents and approvals and make any
filings and applications necessary or desirable in order to consummate the
transactions contemplated by this Agreement.
7.13 No Solicitation of Employees. For a period of three years after the
Distribution Date, neither FAF 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.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
FORWARD AIR CORPORATION
By:
--------------------------------------
Its:
--------------------------------------
LANDAIR CORPORATION
By:
--------------------------------------
Its:
--------------------------------------
Acknowledged and Agreed by the following entities with respect to the indicated
Sections of this Agreement:
Landair Transport, Inc.
(with respect to Sections 4.1, 4.5 and
5.6)
By:
--------------------------------------
Its:
--------------------------------------
Transportation Properties (Texas), Inc.
(with respect to Sections 4.1, 4.5 and
5.6)
By:
--------------------------------------
Its:
--------------------------------------
Volunteer Adjustment, Inc.
(with respect to Sections 4.1, 4.5 and
5.6)
By:
--------------------------------------
Its:
--------------------------------------
Landair Transportation Properties, Inc.
(with respect to Sections 4.1, 4.5 and
5.6)
By:
--------------------------------------
Its:
--------------------------------------
Forward Air, Inc.
(with respect to Sections 3.5, 4.2,
4.5 and 5.6)
By:
--------------------------------------
Its:
--------------------------------------
FAF, Inc.
(with respect to Sections 3.5, 4.2,
4.5 and 5.6)
By:
--------------------------------------
Its:
--------------------------------------
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SCHEDULE 4.1
Items with respect to which FAF shall indemnify the Company Indemnitees
pursuant to SECTION 4.1 in accordance with the provisions of ARTICLE IV of this
Agreement:
1. All Losses arising out of the business conducted or to be conducted
by FAF or any member of the FAF Group, whether such Losses relate to events
occurring, or whether such Losses are asserted, before or after the
Distribution Date, excluding the business conducted or to be conducted by
the Company (either directly or through a Subsidiary or Affiliate of the
Company) or the Subsidiaries and Affiliates of the Company;
2. All of FAF's and any member of the FAF Group's Losses arising out
of this Agreement or any of the Other Agreements, except as otherwise
provided in such Other Agreements;
3. All Losses arising out of or based upon any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, with respect to all information set
forth in the Information Statement or the Form 10 or any amendment thereto,
other than the information having been provided by the Company; and
4. All Losses arising out of Environmental Liabilities with respect to
the presence, use, storage, treatment, disposal (whether on-site or
off-site), escape, release or threatened release of any substance at, near
or from any property owned or leased by any Company Indemnitee to the
extent such presence, use, storage, treatment, disposal, escape, release or
threatened release is related to the operation of the businesses conducted
or to be conducted by FAF or any member of the FAF Group other than the
Company or its Subsidiaries. With respect to such substances, the Company's
right of indemnity hereunder shall be in addition to any rights of
indemnity owed to the Company by reason of the Real Property Leases, but
shall exclude any right of indemnity, right of contribution or other
recovery under any statutory law.
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SCHEDULE 4.2
Items with respect to which the Company will indemnify the FAF Indemnitees
in accordance with SECTION 4.2 of this Agreement:
1. All Losses arising out of the businesses conducted or to be
conducted by the Company or any member of the Company Group, whether such
Losses relate to events occurring, or whether such Losses are asserted,
before or after the Distribution Date, excluding the businesses conducted
or to be conducted by FAF (either directly or through a Subsidiary or
Affiliate of FAF) or the Subsidiaries of FAF;
2. All of the Company's and any member of the Company Group's
Liabilities arising out of this Agreement or any of the Other Agreements,
except as otherwise provided in such Other Agreements;
3. All Losses arising out of or based upon any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, with respect to the information set
forth in the Information Statement or the Form 10 or any amendment thereto,
other than the information having been provided by FAF; and
4. All Losses arising out of Environmental Liabilities with respect to
the presence, use, storage, treatment, disposal (whether on-site or
off-site), escape, release or threatened release of any substance at, near
or from any property owned or leased by any FAF Indemnitee to the extent
such threatened release is related to the operation of the businesses
conduced or to be conducted by the Company or any member of the Company
Group. With respect to such substances, FAF's rights of indemnity hereunder
shall be in addition to any rights of indemnity owed to the Company by
reason of the Real Estate Leases, but shall exclude any right of indemnity,
right of contribution or right of recovery under any statutory law.