INDEMNIFICATION
AGREEMENT
THIS
INDEMNIFICATION AGREEMENT
(the
“Agreement”)
is
made and entered into this 13th day of September, 2006, by and among JERRY
MOYES (“J. Moyes”),
VICKIE MOYES (together with J. Moyes, "Moyes") and THE JERRY AND VICKIE MOYES
FAMILY TRUST, DATED DECEMBER 11, 1987 (the "Family Trust") (Moyes and the
Family
Trust collectively hereinafter referred to as, the “Indemnifying
Party”),
on
the one hand, and GERALD F. EHRLICH, individually and in his capacity as
trustee
of The Moyes Children’s Trust (“Ehrlich”),
and
THE MOYES CHILDREN’S TRUST (the “Children’s
Trust”),
on
the other hand.
I RECITALS
1.1 Merger
Agreement.
Central Freight Lines, Inc., a Nevada Corporation ("Central"), North American
Truck Lines, LLC , a Nevada limited liability company (“NATL”),
and
Green Acquisition Company, a Nevada corporation (“GAC”),
are
parties to an Agreement and Plan of Merger, dated as of January 30, 2006,
as
amended by the First Amendment to Agreement and Plan of Merger, dated as
of
September 13, 2006 (collectively, the “Merger
Agreement”).
If
the Merger Agreement is approved by the stockholders of Central, GAC will
merge
with and into central, with Central continuing as the surviving corporation
(the
“Merger”).
1.2 Schedule
13E-3; Proxy Statement.
In connection with the Merger, Central, NATL, GAC, Moyes, Robert V. Fasso
and
the Family Trust have filed with the Securities and Exchange Commission (the
“SEC”)
a Rule
13e-3 Transaction Statement on Schedule 13E-3 (the “Schedule
13E-3”),
and
Amendment No. 1 to the Schedule 13E-3. Also in connection with the Merger,
Central has filed with the SEC a Preliminary Proxy Statement, as amended
(the
“Preliminary
Proxy Statement”),
pursuant to the definitive version of which (the “Definitive
Proxy Statement”)
Central’s board of directors will be soliciting proxies from stockholders of
Central in connection with the Merger. The Schedule 13E-3 and all amendments
thereto are collectively referred to as the “Schedule 13E-3” and the Preliminary
Proxy Statement, all amendments thereto and the Definitive Proxy Statement
are
collectively referred to as the “Proxy
Statement Filings.”
1.3 Inclusion
of Children’s Trust in SEC Filings.
Central and Moyes have advised the Children’s Trust that, under prior SEC
interpretations of Rule 13e-3 under the Securities Exchange Act of 1934,
the
Children’s Trust may be required to join in the Schedule 13E-3 Filings in
connection with the Merger, and to provide the statements in the Proxy Statement
Filings required under Item 1014 of Regulation M-A promulgated by the SEC
(the
“Item
1014 Statements”).
The
Children’s Trust disclaims any requirement to join in the Schedule 13E-3 Filings
or to make the Item 1014 Statements, on the basis that the Children’s Trust is
not engaged, directly or indirectly, in a Rule 13e-3 transaction, as that
term
is defined in Rule 13e-3. Central and Moyes have requested that the Children’s
Trust consent to its inclusion in the Schedule 13E-3 Filings and to the
attribution of the Item 1014 Statements to the Children’s Trust in the Proxy
Statement Filings.
1.4 Purpose
of Agreement.
By this Agreement, the parties desire to establish the terms and conditions
upon
which the Children’s Trust will consent to its inclusion in the Schedule 13E-3
Filings and to the attribution to the Children’s Trust of the Item 1014
Statements. In that regard, Central and Moyes have provided the Children’s Trust
with drafts of Amendment No. 2 to the Schedule 13E-3 and Amendment No. 2
to the
Preliminary Proxy Statement (the “Current
Draft Amendments”),
and
the Children’s Trust has provided comments and revisions to the Current Draft
Amendments for inclusion in Amendment No. 2 to the Schedule 13E-3 and Amendment
No. 2 to the Preliminary Proxy Statement when and as filed with the SEC (the
“Amended
Filings”).
Central and Moyes have also provided the Children’s Trust with a draft of a
Stockholders’ Agreement to be executed by the continuing equity holders of
Central as a condition to the completion of the Merger (the “Stockholders’
Agreement”).
II AGREEMENTS.
2.1 Consent
of Children’s Trust.
The Children’s Trust hereby consents to the inclusion of the Children’s Trust in
the Amended Filings, provided that the Amended Filings shall be substantially
in
the form of the Current Draft Amendments as modified to include the comments
and
revisions thereto provided by the Children’s Trust for inclusion in the Amended
Filings. Ehrlich, as trustee of the Children’s Trust, agrees to execute
Amendment No. 2 to the Schedule 13E-3 for filing with the SEC, provided that
such Amendment No. 2 is in the form required hereunder.
2.2 Additional
Amendments to Sec Filings.
The parties hereto acknowledge that additional amendments may be required
to the
Schedule 13E-3 Filings and the Proxy Statement Filings (the “Additional
Amendments”).
Central and Moyes agree that, if any changes made in an Additional Amendment
relate to the Children’s Trust, its role in the Merger, its inclusion in the
Schedule 13E-3 Filings or the Item 1014 Statements, such Additional Amendment
shall not be filed until the Children’s Trust has reviewed and approved such
changes, with such approval not to be unreasonably withheld or delayed. Ehrlich,
as trustee of the Children’s Trust, agrees to execute all Additional Amendments
for filing with the SEC that have been approved as required hereunder or
that do
not require approval of the Children’s Trust hereunder. The parties specifically
acknowledge that the Children’s Trust has not agreed to enter into the
Stockholders’ Agreement on the terms presently described in the Preliminary
Proxy Statement and the Children’s Trust has proposed certain modifications
thereto, and that the Preliminary Proxy Statement will be required to be
amended
to reflect the final, agreed terms of the Stockholders’ Agreement. The
Children’s Trust shall be entitled to review and approve any description of the
Stockholder’s Agreement included in any Additional Amendment before such
Additional Amendment is filed with the SEC, with such approval not to be
unreasonably withheld or delayed.
2.3 Indemnification
of Ehrlich and Children’s Trust.
In consideration of the agreements of Ehrlich and the Children’s Trust
hereunder, the Indemnifying Partieshereby agree, jointly and severally, to
indemnify, defend and hold harmless Ehrlich, in his individual capacity and
as
trustee of the Children’s Trust, the Children’s Trust, and their respective
representatives and agents (collectively, the “Indemnified
Parties”),
to
the fullest extent permitted by law, from and against any claims, liability,
loss, damage, cost, expense, fine or penalty, of whatsoever kind or nature,
including fees and expenses of legal counsel, asserted or assessed against,
or
incurred
by
an
Indemnified Party based upon, arising out of or related to the Merger Agreement,
the Merger and any related transaction, the Schedule 13E-3 Filings or the
Proxy
Statement Filings, as well as any other disclosure materials provided to
the
stockholders of Central with respect thereto (collectively, “Losses”),
except for Losses arising out of or related to (i) information provided by
Ehrlich or the Children's Trust for inclusion in the Schedule 13E-3 Filings
and
the Proxy Statement Filings and (ii) actions taken by Ehrlich or the Children's
Trust in violation of the United States securities laws. The Indemnifying
Partiesshall indemnify the Indemnified Parties as provided hereunder promptly
after receipt of written notice identifying the Losses for which indemnification
is sought, accompanied by reasonable documentation thereof.
2.4 Procedure
For Third Party Claims.
In the event that any Loss is asserted or assessed against, or incurred by,
any
Indemnified Party in connection with any litigation, arbitration or judicial
or
similar proceeding initiated or commenced by any third party, or in connection
with any administrative, civil or other proceeding initiated or commenced
by any
governmental authority (collectively, “Proceedings”),
the
Indemnified Party shall promptly notify the Indemnified Parties of the
commencement thereof; provided, however, that any failure or delay to provide
such notice shall not affect the obligations of the Indemnifying Parties
hereunder unless such failure or delay materially prejudices the ability
of the
Indemnifying Parties to defend such Proceeding. Upon receipt of such notice,
the
Indemnifying Parties shall assume the defense of such Proceeding, with counsel
reasonably satisfactory to the Indemnified Parties that are defendants in
or the
subjects of such Proceeding. The Indemnifying Parties shall not settle any
Proceeding without the consent of the Indemnified Parties that are defendants
in
or the subjects of such Proceeding, which consent shall not be unreasonably
withheld or delayed. If the defendants in or subjects of any Proceeding include
both an Indemnified Party and an Indemnifying Party, and if the Indemnifying
Parties have been advised by counsel that such counsel cannot represent both
the
Indemnifying Parties and the Indemnified Party due to legal ethics requirements,
then the Indemnified Parties that are defendants in or subjects of such
Proceeding shall have the right, at the expense of the Indemnifying Party,
to
select one counsel to participate in the defense of such Proceeding on behalf
of
such Indemnified Parties. Notwithstanding the foregoing, an Indemnified Party
shall not be prevented from retaining its own legal counsel, at such Indemnified
Party’s expense, in connection with any Proceeding.
2.5 Attorneys’
Fees.
In addition to and not in lieu of the obligations of the Indemnifying Parties
set forth in Sections 2.3 and 2.4, the Indemnifying Parties agree, on a joint
and several basis, to pay or reimburse the Children’s Trust and Ehrlich, upon
receipt of reasonable documentation, for all attorneys’ fees incurred by them in
connection with the review and revision of the Schedule13E-3 Filings and
the
Proxy Statement Filings, the analysis of issues related to the same affecting
the Children’s Trust and Ehrlich, and the review, preparation, negotiation and
execution of this Agreement, the Stockholders’ Agreement and any other documents
to be executed by either of them in connection with the Merger or the Merger
Agreement, as well as any other matters reasonably related to the foregoing.
2.6 Entire
Agreement; Amendments.
(a) This
Agreement contains the entire understanding of the parties with respect to
its
subject matter. There are no restrictions, agreements, promises, warranties,
covenants or undertakings with respect to such matters other than those
expressly set forth
herein.
This Agreement supersedes all prior agreements and understandings between
the
parties with respect to its subject matter. Any agreement on the part of
a party
hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
(b) Except
as
otherwise set forth herein, this Agreement may be amended only by a written
instrument executed by each party hereto.
2.7 Severability.
If any term, provision, covenants or restrictions of this Agreement is held
by a
court of competent jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants or restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such which may be hereafter declared invalid, voice
or
unenforceable.
2.8 Headings.
The section and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of
this Agreement.
2.9 Notices.
All notices, requests, claims, demands and other communications hereunder
shall
be in writing and shall be deemed to have been duly given on the date of
delivery, if personally delivered or if sent by facsimile, or if mailed
(registered or certified mail, postage prepaid, return receipt requested),
on
the third (3rd)
business day following mailing as follows:
If
to
Moyes or the Family Trust:
2710
E.
Old Tower Road
Phoenix,
Arizona 85034
Telephone: (602)
225-3712
Facsimile: (602)
275-6417
Attention: Jeff
A.
Shumway
With
a
copy to:
Skadden,
Arps, Slate, Meagher & Flom LLP
Four
Times Square
New
York,
New York 10036-6522
Facsimile: (212)
735-2000
Attention: Stephen
F. Arcano, Esq.
If
to
Ehrlich or the Children’s Trust:
Gerald
F.
Ehrlich
Lane
& Ehrlich, Ltd.
4001
N.
Third Street, Suite 400
Phoenix,
Arizona 85012
Telephone: (602)
264-4442
Facsimile: (602)
264-5006
With
a
copy to:
Squire,
Sanders & Dempsey L.L.P.
Two
Renaissance Square
Suite
2700
40
N.
Central Avenue
Phoenix,
Arizona 85004
Facsimile: (602)
253-8129
Attention: Christopher
D. Johnson, Esq.
Or
to
such other address as any party may have furnished to the others in writing
in
accordance herewith, except that notices of change of address shall only
be
effective upon receipt.
2.10 Successors
and Assigns.
All agreements herein contained shall apply to and bind, and inure to the
benefit of and be enforceable by, each of the parties hereto and each of
their
respective heirs, executors, administrators, successor and permitted assigns.
Other than as otherwise set forth in this Agreement, at no time shall any
party
be permitted to assign any of its rights or obligations hereunder to any
other
person or entity.
2.11 Governing
Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LOCAL LAW OF THE STATE OF ARIZONA WITHOUT GIVING EFFECT TO CHOICE
OF
LAW PRINCIPLES.
2.12 Consent
to Jurisdiction.
Each party hereto agrees that any proceeding arising out of or relating to
this
Agreement or the breach or threatened breach of this Agreement may be commenced
and prosecuted in the Superior Court of Arizona, in and for the County of
Maricopa (the “Court”).
Each
party hereto hereby irrevocably and unconditionally consents and submits
to the
non-exclusive personal jurisdiction of the Court in respect of any such
proceeding. Each party hereto consents to service of process upon him or
it with
respect to any such proceeding by registered mail, return receipt requested,
and
by any other means permitted by applicable laws and rules. Each party hereto
waives any objection that he or it may now or hereafter have to the laying
of
venue of any such proceeding in the Court and any claim that he or it may
now or
hereafter have that any such proceeding in the Court has been brought in
an
inconvenient forum.
2.13 Injunctive
Relief.
Each of the parties to this Agreement acknowledges and agrees that in the
event
of any breach of this Agreement, the non-breaching party or parties would
be
irreparably harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties will waive the defense in any action
for
injunctive relief, including specific performance, that a remedy at law would
be
adequate and that the parties, in addition to any other remedy to which they
may
be entitled to at law or in equity, shall be entitled to injunctive relief,
including specific performance, to enforce this Agreement in any action
instituted in any court of the United States or any state thereof having
subject
matter jurisdiction for such action.
2.14 Counterparts.
This Agreement may be executed simultaneously in one or more counterparts,
each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
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JERRY
MOYES
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/s/
Jerry Moyes |
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Jerry
Moyes
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VICKIE
MOYES
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/s/
Vickie Moyes |
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Vickie
Moyes
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THE
JERRY AND VICKIE MOYES FAMILY
TRUST, DATED
DECEMBER 11, 1987
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/s/
Jerry
Moyes |
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Jerry
Moyes, Trustee
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THE
MOYES CHILDREN’S TRUST, DATED
DECEMBER 14, 1992
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By:
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/s/
Gerald
F. Ehrlich |
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Name:
Gerald F. Ehrlich
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Title:
Trustee
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| Address: |
4001North
3rd Street #400,
Phoenix, AZ 85012 |
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/s/Gerald
F. Ehrlich |
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Gerald
F. Ehrlich, Trustee
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