AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 17, 1997
REGISTRATION NO. 333-33469
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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JEVIC TRANSPORTATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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New Jersey 4213 22-2373402
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
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P.O. Box 5157
Delanco, NJ 08075
(609) 461-7111
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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Mr. Harry J. Muhlschlegel
Chief Executive Officer
and Chairman of the Board
Jevic Transportation, Inc.
P.O. Box 5157
Delanco, NJ 08075
(609) 461-7111
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES TO:
Barry M. Abelson, Esquire Stephen A. Riddick, Esquire
Robert A. Friedel, Esquire Piper & Marbury L.L.P.
Pepper, Hamilton & Scheetz LLP 36 South Charles Street
3000 Two Logan Square Baltimore, MD 21201
Philadelphia, PA 19103 (410) 539-2530
(215) 981-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
/ / __________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
SEPTEMBER 17, 1997
3,800,000 SHARES
JEVIC
TRANSPORTATION INC.
COMMON STOCK
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All of the 3,800,000 shares of Common Stock offered hereby are being sold
by Jevic Transportation, Inc. ("Jevic" or the "Company"). Prior to this
offering, there has been no public market for the Common Stock. It is currently
estimated that the initial public offering price will be between $12 and $14 per
share. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. The Common Stock has been
approved for quotation on the Nasdaq National Market under the symbol "JEVC."
The Common Stock offered hereby is entitled to one vote per share, while the
Class A Common Stock is entitled to two votes per share and may be held only by
or for the benefit of its existing holders or their lineal descendants. The
rights of the holders of the Common Stock and the Class A Common Stock are
otherwise identical. See "Description of Capital Stock". Upon completion of this
offering, the existing holders of the Class A Common Stock will beneficially own
shares representing in the aggregate 77.6% of the voting power of the capital
stock of the Company and will be able to control the outcome of all matters
requiring a shareholder vote, including the election of directors.
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS COMPANY (1)
- ------------------------------------------------------------------------------------------------------------
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Per Share.......................................... $ $ $
- ------------------------------------------------------------------------------------------------------------
Total (2).......................................... $ $ $
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(1) Before deducting expenses payable by the Company estimated at $800,000.
(2) Certain of the Company's shareholders (the "Option Shareholders") have
granted the Underwriters a 30-day option to purchase up to 570,000
additional shares of Common Stock solely to cover over-allotments, if any.
To the extent that the option is exercised, the Underwriters will offer the
additional shares to the public at the Price to Public shown above. If the
option is exercised in full, the Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to Option Shareholders will be
$ , $ , $ and $ , respectively. See "Underwriting."
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The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares will be made at the offices of BT Alex.
Brown Incorporated, Baltimore, Maryland, on or about , 1997.
BT ALEX. BROWN
WILLIAM BLAIR & COMPANY
SCHRODER & CO. INC.
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and to make available quarterly reports
containing unaudited financial statements for the first three quarters of each
year.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THIS OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF COMMON STOCK IN THE OPEN MARKET TO COVER
SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
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Breakbulk-Free(Registered) is a trademark of the Company.
Freightliner(Registered) is a trademark of Freightliner Corp.,
Cummins(Registered) is a trademark of Cummins Engine Company, Inc.,
NCR(Registered) is a trademark of NCR Corporation, Novell(Registered) and
Novell/NT(Registered) are trademarks of Novell, Inc., Sequent(Registered) is a
trademark of Sequent Computer Systems, Inc., UNIX(Registered) is a trademark of
X/Open Co. and QUALCOMM(Registered) and OmniTRACS(Registered) are trademarks of
QUALCOMM, Inc.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Financial Statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, all information in
this Prospectus gives retroactive effect to (i) the reclassification of the
Company's capital stock into series designated "Common Stock" and "Class A
Common Stock" (collectively, the "Common Equity") and (ii) a 34,291-for-one
split of the shares of Common Stock and assumes no exercise of the Underwriters'
over-allotment option. References in this Prospectus to "Jevic" or the "Company"
refer to Jevic Transportation, Inc.
THE COMPANY
Jevic is a motor carrier that combines the high revenue yield
characteristics of a typical less-than-truckload ("LTL") carrier with the
operating flexibility and low fixed costs of a truckload carrier. Jevic utilizes
a simplified in-route delivery system in which over 70% of the Company's
shipments are delivered to their destinations directly from line-haul trailers,
eliminating the need for an expensive network of labor-intensive breakbulk
terminals, which most LTL carriers use to distribute shipments. Jevic's revenue
per terminal for 1996 was approximately $31.0 million, which the Company
believes is substantially higher than typical LTL carriers. The Company serves
shippers throughout the eastern half of the United States and in selected
markets in the remainder of the continental United States and Canada through its
origination facilities located in the metropolitan areas of Atlanta, Boston,
Charlotte, Chicago, Houston and Philadelphia. From 1992 to 1996, the Company's
operating revenues and operating income grew at compound annual rates of 26.6%
and 29.2%, respectively.
Jevic began operations as a motor carrier in 1983, soon after deregulation
of the trucking industry. Regulation had caused trucking industry participants
to develop as either truckload carriers or as terminal-based LTL carriers.
Following deregulation, most carriers continue to focus their operations and
price their services as either truckload carriers or LTL carriers. Traditional
truckload and LTL carriers can efficiently handle freight that is compatible
with their respective operating systems but typically do not have the
flexibility to accommodate a wide range of shipment size, length of haul and
delivery options. Jevic developed its Breakbulk-Free(Registered) operating
system to provide the capabilities of both truckload and LTL service without the
inherent infrastructure requirements and operational limitations of truckload
and LTL carriers.
Jevic's Breakbulk-Free system utilizes a simplified network of terminals,
which serve as regional origination points for initial consolidation of freight
on a trailer. The Company strategically combines smaller shipments (typically
handled by LTL carriers) with larger shipments (typically handled by truckload
carriers) in a sequence which permits direct unloading at each shipment's
destination, with no need to rehandle individual shipments at one or more
breakbulk terminals. Typical LTL carriers have to reload shipments into local
trucks for final delivery, whereas, in most cases, Jevic's operating system
avoids further rehandling at the destination facility. This generally results in
less damage to freight and faster transit times for less than full truckload
shipments. Jevic's flexible operating system minimizes rehandling of freight and
provides a broader range of service than other trucking companies.
MARKETING STRATEGY
Jevic targets prospective customers whose logistics needs are not being
met, develops solutions for those needs and offers a broad range of
transportation services.
o Offer Logistics-Based Solutions. The Company utilizes a consultative approach
to develop customized logistics-based solutions to meet its customers'
transportation and distribution needs. The Company's customer-focused approach
helps expand its customer base and forge long-term customer relationships.
o Offer a Broad Range of Differentiated Services. By creating a "one-stop-shop"
and offering a broad range of transportation services, the Company seeks to
become its customers' core carrier. Jevic offers its customers a wide range of
shipment size, length of haul and delivery options as well as heated service.
By increasing the number of shipments from existing customers, the Company
achieves operating efficiencies through higher pick-up and lane density,
improved terminal utilization and reduced administrative duplication.
o Focus on Customer Selectivity. The Company targets customers based on
disciplined sales criteria designed to identify shippers whose service
requirements drive the carrier selection process. This approach has generated
3
<PAGE>
significant incremental business in service-sensitive industries, such as the
chemical industry, which accounted for approximately 45% of the Company's
operating revenues from its top 200 customers in the first half of 1997.
o Solicit Optimal Mix of Shipment Sizes. Jevic selectively solicits business
from its customers in order to load trailers strategically by integrating
larger shipments with smaller shipments and thereby optimizes revenue yields
and asset utilization.
OPERATING STRATEGY
Jevic seeks to maximize its results of operations by providing flexible and
timely service.
o Utilize Breakbulk-Free System. Jevic sequences multiple deliveries from a
single trailer, eliminating the need for a network of breakbulk terminals and,
in most cases, destination terminals, at which typical LTL carriers unload and
reload shipments for final delivery. As a result, the Company reduces transit
times and freight damage while avoiding the infrastructure and labor costs
associated with a large breakbulk terminal network.
o Utilize Technology to Improve Productivity and Customer Service. The Company
utilizes technology to improve its customer service and to increase
productivity. The Company's tractors are equipped with state-of-the-art
QUALCOMM OmniTRACS satellite tracking units to provide real-time customer
information and increase fleet utilization. Jevic uses its EDI system to
improve customer communications and reduce administrative costs.
o Increase Utilization of Owner-Operator Drivers. Jevic has recently expanded
its driver force to include owner-operators in order to reduce capital
expenditure requirements, improve return on equity, reduce direct exposure to
fuel price fluctuations and provide access to an additional pool of drivers.
o Maintain a Positive Workforce Environment. Through stringent driver selection
criteria, a favorable wage and benefit structure and a positive working
environment, the Company minimizes driver turnover, maintains a high level of
employee satisfaction and motivates employees to provide high quality service.
The Company's annual driver turnover rate was 20.1% in 1996. None of Jevic's
employees, including drivers, is represented by a collective bargaining unit.
GROWTH STRATEGY
The Company seeks sustainable growth by increasing the amount of business
generated by existing customers, acquiring new customers within existing regions
and expanding into new regions.
In response to customer demand, Jevic initiates service to a new region by
introducing high-yield inbound LTL service to its existing customer base,
delivering in-route from line-haul trailers, consistent with the Company's
operating strategy. Until a sufficient volume of inbound business is generated,
the Company avoids the up-front capital costs of building or purchasing a new
facility by soliciting lower-yielding truckload shipments for the backhaul to
return the equipment to one of the Company's existing facilities. This results
in increased asset utilization and reduced empty miles. Once the Company opens a
new facility, it serves as a consolidation point for a wide range of higher
yielding shipments originating in the region, replacing the lower yielding
truckload shipments. The Company most recently employed these techniques in
opening its Houston facility in June 1997.
By providing a broad range of services, Jevic has the ability to build
volume rapidly in targeted geographic areas. The Company's growth plans include
constructing new, substantially larger facilities in metropolitan Boston and
Chicago, adding selected regional facilities in new regions and adding new
points served in route when supported by customer demand. Jevic also intends to
selectively pursue acquisitions of companies that are complementary with the
Company's operations.
The Company was incorporated in New Jersey in 1981. Jevic's headquarters
are located at 600 Creek Road, P.O. Box 5157, Delanco, New Jersey 08075, and its
telephone number is (609) 461-7111.
4
<PAGE>
THE OFFERING
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Common Stock offered by the Company..................... 3,800,000 shares
Common Equity to be outstanding after this offering:
Common Stock.......................................... 4,348,656 shares (1)
Class A Common Stock.................................. 6,309,544 shares
Total.............................................. 10,658,200 shares (1)
Use of proceeds......................................... To reduce indebtedness, purchase and expand regional
facilities and fund a distribution to certain current
shareholders and for the purchase of revenue equipment.
See "Use of Proceeds."
Proposed Nasdaq National Market symbol.................. JEVC
</TABLE>
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(1) Excludes approximately 1,285,820 shares of Common Stock issuable upon the
exercise of options which will be outstanding upon completion of this
offering and an aggregate of approximately 1,200,000 shares of Common Stock
reserved for issuance under the Company's employee benefit plans. See
"Management -Executive Incentive Plans" and Note 9 of "Notes to Financial
Statements."
5
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND CERTAIN OPERATING DATA)
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SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
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INCOME STATEMENT DATA:
Operating revenues.................... $ 60,296 $ 90,161 $ 119,299 $ 125,973 $ 154,799 $ 73,568 $ 90,417
Operating income...................... 3,370 4,024 11,737 6,050 9,390 2,166 6,109
Net income (1)........................ 2,104 2,833 10,412 4,239 6,195 748 4,355
Pro forma data (1):
Net income.......................... 3,849 481 2,647
Net income per share................ $ 0.49 $ 0.06 $ 0.34
Shares used in computing net income
per share......................... 7,843 7,843 7,843
Supplemental pro forma net income
per share (2)..................... $ 0.51 $ 0.08 $ 0.34
OPERATING DATA:
Total shipments (000s)................ 155 269 370 453 586 284 329
Total miles (000s).................... 38,842 57,924 65,855 65,599 75,795 36,288 42,873
Average operating revenue:
Per mile............................ $ 1.55 $ 1.56 $ 1.81 $ 1.92 $ 2.04 $ 2.03 $ 2.11
Per tractor per week................ $ 3,084 $ 3,085 $ 3,553 $ 3,539 $ 3,764 $ 3,705 $ 3,772
Number of tractors at end of period:
Company............................. 450 626 685 740 776 777 853
Owner-Operator...................... -- -- -- -- 63 15 105
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JUNE 30, 1997
----------------------------------------
PRO FORMA
AS ADJUSTED
ACTUAL PRO FORMA (3) (4)
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BALANCE SHEET DATA:
Working capital (deficit)................................................ $ (3,342) $ (13,728) $ 23,256
Property and equipment, net.............................................. 67,426 68,726 68,726
Total assets............................................................. 96,047 94,961 112,323
Long-term debt, less current maturities.................................. 36,910 36,910 28,752
Shareholders' equity..................................................... 27,228 8,528 53,670
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(1) For all periods presented, the Company was an S Corporation and,
accordingly, was not subject to corporate income taxes, except for certain
states during certain periods. Pro forma data assumes (a) the Company's
purchase of its Charlotte facility from certain of its current shareholders
(the "Charlotte Purchase") occurred on January 1, 1996 which would have
resulted in additional annual depreciation and interest expense of $70,000
and $190,000, respectively, and a reduction in annual rent expense of
$260,000 and (b) the Company had been subject to corporate income taxes for
all periods presented, based on the tax laws in effect during the periods.
Pro forma net income per share includes that number of shares that would be
required to be sold (at an assumed initial public offering price of $13 per
share, less underwriting discounts and commissions and estimated offering
expenses) to fund a distribution of $10.0 million (the "Distribution") to
shareholders as of August 11, 1997 immediately prior to the offering. See
"Prior S Corporation Status" and Note 2 of "Notes to Financial Statements."
(2) Supplemental pro forma net income per share is calculated by dividing pro
forma net income (adjusted for the pro forma reduction in interest expense
that specifically corresponds to the repaid indebtedness discussed in (a)
and (b) below) by the number of shares used in (1) above plus the estimated
number of shares that would be required to be sold (at an assumed initial
public offering price of $13 per share, less underwriting discounts and
commissions and estimated offering expenses) to (a) repay bank mortgage
indebtedness of $2.0 million in connection with the Charlotte Purchase and
(b) repay approximately $19.8 million of other indebtedness. See "Use of
Proceeds" and "Certain Transactions."
(3) Gives pro forma effect to (a) the Charlotte Purchase, which results in a
$1.3 million increase in property and equipment, a $2.0 million increase in
short-term indebtedness and a $700,000 deemed distribution to shareholders,
(b) bank borrowings of $6.0 million incurred to fund a portion of the
Distribution and the payment of the Distribution and (c) the termination of
the Company's S Corporation status resulting in a non-cash charge estimated
at $8.0 million in recognition of an increase in the Company's net deferred
tax liability, as if such termination had occurred on June 30, 1997.
(4) Adjusted to give effect to (a) the pro forma adjustments described in (3)
above, and (b) the sale by the Company of the 3,800,000 shares of Common
Stock offered hereby (at an assumed initial public offering price of $13 per
share) and the application of the estimated net proceeds therefrom as
described in "Use of Proceeds." See "Prior S Corporation Status" and
"Capitalization."
6
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RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Company's Common Stock.
Economic Factors. Fuel prices, insurance costs, liability claims, interest
rates, the availability of qualified drivers or owner-operators, fluctuations in
the resale value of revenue equipment and customers' business cycles and
shipping demands are economic factors over which the Company has little or no
control. Significant increases or rapid fluctuations in fuel prices, interest
rates or increases in insurance costs or liability claims, to the extent not
offset by increases in freight rates, would reduce the Company's profitability.
Difficulty in attracting or retaining qualified drivers or owner-operators or a
downturn in customers' business cycles or shipping demands also could have a
materially adverse effect on the profitability and growth of the Company.
Although owner-operators are responsible for purchasing their own equipment and
fuel and paying for other operating expenses, significant increases in these
expenses could cause them to seek higher compensation from the Company. If the
resale value of the Company's revenue equipment were to decline, the Company
could be forced to retain some of its equipment longer, with a resulting
increase in operating expenses for maintenance and repairs. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."
Geographic Concentration. A significant portion of the Company's business
is concentrated in the Northeast region. As a result, a general economic decline
in that geographic market could have a materially adverse effect on the growth
and profitability of the Company.
Dependence on Chemical Industry. Approximately 45% of the Company's
revenues from its top 200 customers in the first half of 1997 was generated from
customers in the chemical industry, and this level has remained relatively
consistent in recent years. An economic downturn in the chemical industry could
have a materially adverse effect on the Company's operating results. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."
Availability of Employee Drivers and Owner-Operators. The Company utilizes
the services of both employee drivers and owner-operators. Competition for
employee drivers and owner-operators is intense within the transportation
industry and, from time to time, there have been industry-wide shortages of
qualified employee drivers and owner-operators. There can be no assurance that
the Company will not be affected by a shortage of qualified employee drivers or
owner-operators in the future, which could result in temporary underutilization
of revenue equipment, difficulty in meeting shipper demands and increased
compensation levels. Prolonged difficulty in attracting or retaining qualified
employee drivers or owner-operators could have a materially adverse effect on
the Company's operations and limit its growth. The Company's annual driver
turnover rate was 20.1% in 1996. See "Business - Drivers" and " -
Owner-Operators."
Capital Requirements. The transportation industry is capital intensive.
Historically, the Company has depended on debt financing and operating and
capital leases to supplement its internally generated cash to maintain and
expand its fleet of revenue equipment. If the Company were unable in the future
to enter into acceptable lease or debt financing arrangements, sell additional
equity, generate sufficient cash flow from operations or borrow sufficient
funds, it would be forced to limit its growth and might be required to operate
its fleet for longer periods, which would likely adversely affect the Company's
operating results. See "Use of Proceeds" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources."
Competition. The trucking portion of the transportation industry is highly
competitive and fragmented. Jevic competes with regional, inter-regional and
national LTL and truckload carriers of varying sizes and, to a lesser extent,
with air freight carriers and railroads, a number of which have greater
financial resources, operate more revenue equipment and have larger freight
capacity than the Company. In certain regions, the Company also faces
competition from local carriers. The Company's strategy is to provide
high-quality service at competitive prices to meet the needs of customers whose
operations demand consistent, timely service.
The Company believes that there are substantial barriers to entry which
restrict the ability of competitors to adopt a Breakbulk-Free operating model.
Small LTL carriers typically lack the necessary critical mass, freight density
and capital, while large LTL carriers typically have work rules and labor
practices that lack the flexibility which a Breakbulk-Free system requires.
Truckload carriers lack a system to accommodate both multiple pick-ups and
multiple deliveries and would require a substantial capital investment to build
the necessary terminals. Additionally,
7
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the Breakbulk-Free operating model requires high quality drivers and
sophisticated operating systems and management, which the Company has developed
internally over an extended period of years. See "Business - Competition."
Acquisition of Revenue Equipment. The Company's strategy for continued
growth is dependent on the acquisition and deployment of additional revenue
equipment. Delays in the availability of equipment could occur due to work
stoppages at the equipment supplier, equipment and supply shortages or other
factors beyond the Company's control. Any delay or interruption in the
availability of equipment in the future could impede the Company's growth and
could have an adverse effect on the Company's operations and profitability. See
"Business - Revenue Equipment and Maintenance."
Voting Control of the Company; Anti-Takeover Provisions. The voting rights
of the Common Stock are limited by the Company's Restated Certificate of
Incorporation ("Restated Certificate"). On all matters with respect to which the
Company's shareholders have a right to vote, including the election of
directors, each share of Common Stock is entitled to one vote, while each share
of Class A Common Stock is entitled to two votes. The Common Stock and Class A
Common Stock vote together as a single class on virtually all matters. Shares of
Class A Common Stock can be converted into shares of Common Stock on a
share-for-share basis at the election of the holder and will be automatically
converted to shares of Common Stock upon certain events specified in the
Restated Certificate or upon transfer, except for certain transfers among Harry
J. Muhlschlegel, Karen B. Muhlschlegel, certain of their relatives, certain
trusts established for the benefit of, partnerships comprised solely of, or
corporations wholly owned by, the Muhlschlegels or such relatives, and
charitable organizations controlled by the Muhlschlegels or their family members
(collectively, the "Muhlschlegel Family"). See "Description of Capital Stock."
Upon completion of the offering, the Muhlschlegel Family will beneficially
own all of the outstanding shares of Class A Common Stock representing in the
aggregate 77.6% of the total voting power of both series of Common Equity (73.3%
if the Underwriters' over-allotment option is exercised in full). As long as the
Muhlschlegel Family controls a majority of the voting power of the Company, they
will be able, acting together, to elect the entire Board of Directors of the
Company (the "Board") and to amend the Restated Certificate and By-laws and,
subject to certain limitations, effect or preclude fundamental corporate
transactions involving the Company, including the acceptance or rejection of any
proposals relating to an acquisition of the Company or a going private
transaction. Although the Company has no present intention to issue additional
shares of Class A Common Stock, the Board will have the ability to issue such
shares of Class A Common Stock in the future, which would increase the voting
power of the Muhlschlegel Family. See "Principal Shareholders."
The Company's Restated Certificate authorizes the issuance of "blank check"
preferred stock with such designations, rights and preferences as may be
determined from time to time by the Board. Accordingly, the Board is empowered,
without shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could materially adversely
affect the voting power or other rights of the holders of the Common Stock
(including those of the purchasers in the offering). Holders of the Common Stock
will have no preemptive rights to subscribe for a pro rata portion of any
capital stock which may be issued by the Company. In the event of issuance, such
preferred stock could be utilized, under certain circumstances, as the method of
discouraging, delaying or preventing a change in control of the Company.
Although the Company has no present intention to issue any shares of preferred
stock, there can be no assurance that the Company will not do so in the future.
See "Description of Capital Stock."
Furthermore, the Company is subject to provisions of the New Jersey
Shareholders Protection Act and its Restated Certificate and By-laws contain
certain corporate governance provisions that may inhibit unsolicited changes in
control of the Company. First, the Restated Certificate provides for a
classified Board of Directors, with directors serving for three-year terms,
subject to removal only for cause and upon the vote of 80 percent of the voting
power of all outstanding capital stock of the Company entitled to vote (the
"Voting Power"). Second, the Restated Certificate and the By-laws do not
generally permit shareholders to call, or to require that the Board of Directors
call, a special meeting, and limit the business permitted to be conducted at any
such special meeting. In addition, the Restated Certificate does not permit
action to be taken by the shareholders of Jevic by written consent of less than
all shareholders. Third, the By-laws establish an advance notice procedure for
shareholders to nominate candidates for election as directors or to bring other
business before meetings of shareholders of Jevic. Only those shareholder
nominees who are nominated in accordance with this procedure will be eligible
for election as directors of Jevic, and
8
<PAGE>
only such shareholder proposals may be considered at a meeting of shareholders
as have been presented to Jevic in accordance with the procedure. Finally, the
Restated Certificate provides that the affirmative vote of at least 80 percent
of the Voting Power would be required to amend or repeal the foregoing
provisions of the Restated Certificate. In addition, the By-laws provide that
the amendment or repeal by shareholders of any By-laws made by the Board of
Directors of Jevic would require the affirmative vote of at least 80 percent of
the Voting Power. See "Description of Capital Stock - New Jersey Shareholders
Protection Act" and "- Certain Provisions of Restated Certificate of
Incorporation and By-laws." The existence of these provisions would be expected
to have an anti-takeover effect, including possibly discouraging takeover
attempts that might result in a premium over the market price for the Common
Stock.
Labor. None of the Company's employees are currently represented by a
collective bargaining unit, and management believes that relations with its
employees are good. However, there can be no assurance that the Company's
employees will not unionize in the future, which could increase the Company's
operating costs and force it to alter its operating methods, which in turn could
have a materially adverse effect on the Company's operating results. See
"Business - Drivers" and "- Employees."
Fuel. Fuel is one of the Company's largest operating expenses. Any
increase in fuel taxes or fuel prices or any change in federal or state
regulations which results in such an increase, to the extent not offset by
freight rate increases, or any interruption in the supply of fuel, could have a
materially adverse effect on the Company's operating results. The Company is a
party to agreements with two fuel suppliers to purchase approximately 40% of its
estimated fuel needs through March 1998 at fixed prices, which are consistent
with market prices on the date of this Prospectus. To the extent of the
Company's commitment to purchase fuel under these fixed-price contracts, the
Company will not benefit from a reduction in the price of fuel. See "Business -
Fuel Availability and Cost."
Seasonality. In the trucking industry, revenues generally follow a
seasonal pattern as customers reduce shipments during and after the winter
holiday season. In addition, highway transportation can be adversely affected
depending upon the severity of the weather in various sections of the country
during the winter months. The Company's operating expenses have historically
been higher in winter months, due primarily to decreased fuel efficiency and
increased maintenance costs for revenue equipment in colder weather.
Accordingly, the Company's results of operations may fluctuate to reflect such
seasonality. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Seasonality."
Claims Exposure and Insurance Costs. Trucking companies, including the
Company, face multiple claims for personal injury and property damage relating
to accidents, cargo damage, and workers' compensation. The Company currently
maintains liability insurance for bodily injury and property damage with a
deductible of $20,000 and workers' compensation insurance with a deductible, in
states in which a deductible is allowed, of $250,000. The Company also carries
cargo and physical damage insurance with a deductible of $5,000 per occurrence.
To the extent that the Company experiences a material increase in the frequency
or severity of accidents or workers' compensation claims, or unfavorable
developments on existing claims, the Company's operating results and financial
condition could be materially adversely affected. Significant increases in the
Company's claims and insurance cost, to the extent not offset by rate increases,
would reduce the Company's profitability. See "Business - Safety and Risk
Management."
Growth of Business. The Company has experienced significant and rapid
growth in revenues and profits in the last five years. There is no assurance
that the Company's business will continue to grow in a similar fashion in the
future or that the Company can effectively adapt its administrative and
operational systems and accounting and financial controls to manage future
growth effectively. Further, there can be no assurance that the Company's
operations will not be adversely affected by future changes in and expansion of
the Company's business or by changes in economic conditions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."
Regulation. Motor carriers are subject to regulation by various federal
and state agencies, including the United States Department of Transportation
("DOT"). These regulatory authorities exercise broad powers, generally governing
activities such as authorization to engage in motor carrier operations, rates
and charges, operations, safety, accounting systems, financial reporting and
certain mergers, consolidations and acquisitions. In the event the Company
should fail to comply with applicable regulations, the Company could be subject
to substantial fines or penalties and to civil or criminal liability. There is
no assurance that compliance with regulations promulgated from time to time by
the DOT or other regulatory bodies exercising jurisdiction over the Company will
not increase the
9
<PAGE>
Company's operating costs, which could adversely affect the Company's results of
operations. See "Business - Regulation."
Environmental Hazards. The Company's operations are subject to various
environmental laws and regulations dealing with the transportation, storage,
presence, use, disposal and handling of hazardous materials, discharge of
stormwater and underground fuel storage tanks. The Company's drivers are trained
in the handling and transportation of hazardous substances and are required to
have a hazardous materials endorsement on their drivers' licenses. If the
Company should be involved in a spill or other accident involving hazardous
substances, if any such substances were found on the Company's properties or if
the Company were found to be in violation of applicable laws and regulations,
the Company could be responsible for clean-up costs, property damage and fines
or other penalties, any one of which could have a materially adverse effect on
the Company. Approximately 45% of the Company's revenues from its top 200
customers in the first half of 1997 was generated from customers in the chemical
industry. See "Business - Regulation."
Dependence on Key Personnel. The success of the Company's business will
continue to be dependent upon the Company's Chief Executive Officer, Harry J.
Muhlschlegel, and its other senior executive officers. The loss of the services
of any of the Company's key personnel could materially adversely affect the
Company. The Company does not have employment contracts with, and does not
intend to maintain key man life insurance on, any of its executive officers. See
"Management."
No Prior Public Market for Common Stock; Determination of Offering
Price. Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market for the
Common Stock will develop after this offering or, if developed, that such market
will be sustained. The initial public offering price will be determined solely
through negotiation between the Company and the Representatives of the
Underwriters and may not be indicative of the market price for the Common Stock
after the offering. See "Underwriting" for a description of the factors to be
considered in determining the initial public offering price. From time to time,
the stock market experiences price and volume volatility, which may affect the
market price for the Common Stock for reasons unrelated to the Company's
performance.
Dilution. The current shareholders of the Company acquired their Common
Stock at a cost substantially below the public offering price of the Common
Stock offered hereby and, accordingly, purchasers of Common Stock in this
offering will experience immediate, substantial dilution of approximately $7.96
in net tangible book value per share. See "Dilution."
Dividend Policy; Distribution. Until immediately prior to the completion
of the offering, the Company will be treated as an S Corporation under the
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the Company
has made and, prior to that time, will make periodic distributions to its
shareholders in amounts sufficient to enable the shareholders to pay income
taxes on account of the Company's income. Following consummation of the
offering, the Company does not anticipate declaring any further cash dividends
for the foreseeable future. Immediately prior to the completion of this
offering, the Company will convert from S Corporation to C Corporation status.
In connection with this conversion, the Company will make distributions to its
current shareholders for their remaining federal and state income tax
liabilities arising from the Company's S Corporation income in 1997 through the
termination date. In addition, as a result of the payment of the Distribution,
the Company's retained earnings and stockholders' equity will be significantly
reduced. In addition, the Company will record a one-time, non-cash charge
against earnings in the third quarter of 1997, resulting from an increase in its
net deferred tax liability in connection with the Company's conversion from S
Corporation to C Corporation status. Had the Company recorded this additional
liability on June 30, 1997, the amount of this charge would have been
approximately $8.0 million. See "Prior S Corporation Status" and
"Capitalization."
Shares Eligible for Future Sale. Sales of a substantial number of shares
of the Common Stock or their availability for sale in the public market
following this offering may have an adverse effect on prevailing market prices
for the Common Stock. Upon completion of this offering, 4,348,656 shares of
Common Stock will be outstanding. All of these shares (plus up to 570,000
additional shares if the Underwriters' over-allotment option is exercised) will
be freely tradeable without restriction or further registration (except by
affiliates of the Company or persons voting as underwriters) under the
Securities Act of 1933, as amended (the "Securities Act"). None of the 548,656
outstanding shares of Common Stock or the 6,309,544 outstanding shares of Class
A Common Stock (collectively, the "Restricted Shares") may be sold until the
expiration of the lock-up periods described below and thereafter unless
10
<PAGE>
they are registered under the Securities Act or are sold pursuant to a exemption
for registration, such as the exemption provided by Rule 144 promulgated under
the Securities Act. In general, Rule 144 allows a person who has beneficially
owned Restricted Shares for at least one year, including persons who may be
deemed affiliates of the Company, to sell Restricted Shares commencing 90 days
after completion of this offering, subject to certain volume and manner of sale
restrictions.
Upon completion of this offering there will be approximately 1,285,820
shares of Common Stock issuable upon exercise of outstanding options under the
Company's employee benefit plans and an additional approximately 1,200,000
shares of Common Stock reserved for issuance under such plans. The Company
intends to file registration statements on Form S-8, within one year of the date
of this Prospectus, covering all such shares. The shares registered under such
registration statement will be freely transferable in the open market upon the
exercise of options or other stock-based awards, subject, in the case of
affiliates, to the Rule 144 volume limitations.
The Company, its executive directors and officers and current shareholders
have agreed that, for a period of 180 days after the date of this Prospectus,
they will not, without the prior written consent of BT Alex. Brown Incorporated,
sell or otherwise dispose of, or agree to sell or otherwise dispose of, any
shares of Common Stock or Class A Common Stock. See "Shares Eligible for Future
Sale."
Disclosure Regarding Forward-Looking Statements. This Prospectus contains
forward-looking statements relating to future events or the future financial
performance of the Company. Such statements may relate, but not be limited, to
projections of revenues, income or loss, capital expenditures, construction or
expansion of regional facilities, acquisitions, plans for growth and future
operations, financing needs or plans or intentions relating to acquisitions by
the Company, as well as assumptions relating to the foregoing. Forward-looking
statements are inherently subject to risks and uncertainties, some of which
cannot be predicted or quantified. Such risks include, but are not limited to,
the matters discussed in the foregoing paragraphs under "Risk Factors." Future
events and actual results could differ materially from those set forth in,
contemplated by or underlying the forward-looking statements.
11
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
3,800,000 shares offered hereby are estimated to be approximately $45.1 million,
assuming an initial public offering price of $13 per share, after deducting
underwriting discounts and commissions and estimated offering expenses.
The Company will use approximately $18.2 million of the net proceeds to
repay certain borrowings incurred to purchase revenue equipment. At June 30,
1997, these obligations had an aggregate principal balance of $19.8 million,
bore interest at a weighted average annual rate of 7.4% and provided for
maturity dates between October 1997 and May 2007. The Company plans to use
approximately $15.0 million of the net proceeds to purchase and expand regional
facilities. Of this amount, $2.0 million will be used to repay an existing
mortgage obligation in connection with the acquisition of the Company's
Charlotte facility from certain of its current shareholders. See "Certain
Transactions." The Company will use a portion of the net proceeds to repay
borrowings (estimated at $6.0 million) under the Company's line of credit
incurred to fund a portion of the Distribution. The line of credit expires on
June 28, 1998. At June 30, 1997, the interest rate on the line of credit was
7.0% per annum and no amounts were outstanding thereunder. See "Prior S
Corporation Status."
The balance of the net proceeds, or approximately $5.9 million, will be
used for the purchase of revenue equipment, including tractors and trailers.
Pending their use by the Company as described above, the Company intends to
invest the net proceeds of the offering in short-term, investment-grade
instruments.
12
<PAGE>
PRIOR S CORPORATION STATUS
Beginning in 1990 for Federal tax purposes, and subsequent to 1990 for
certain states, the Company elected to be treated under Subchapter S (an "S
Corporation") of the Internal Revenue Code of 1986. As a result, since such
elections were made, the Company's income has been taxed directly to the current
shareholders rather than to the Company. The Company has historically made
distributions to its current shareholders from its income, primarily to fund the
shareholders' income tax obligations on account of the Company's taxable income.
Aggregate net cash distributions made during the three years ended December 31,
1996 and during the six months ended June 30, 1997 were approximately $4.5
million and $1.2 million, respectively.
The Company's S Corporation status will terminate in connection with the
offering, after which the Company will be required to pay Federal and state
taxes on its taxable income. Subsequent to June 30, 1997, the Company will make
additional distributions to its current shareholders for their remaining federal
and state income tax liabilities arising from the Company's S Corporation income
in 1997 through the termination date (estimated at approximately $500,000). In
addition, immediately prior to the consummation of this offering, the Company
will effect the Distribution, the majority of which represents the sum of such
shareholders' stock basis and previously taxed, but undistributed income
(including such income arising during periods prior to the time the Company
became an S Corporation). A portion of the Distribution will be borrowed by the
Company under its line of credit (estimated at $6.0 million) and repaid from the
proceeds of this offering. The Board determined that the Distribution was
reasonable and appropriate in light of the shareholders' investment in and
ownership risks associated with the Company prior to the Distribution.
Purchasers of shares in this offering will not receive any portion of these
distributions.
Prior to completion of the offering, the Company will enter into a Tax
Indemnity Agreement with its current shareholders in order to provide that all
federal (and certain state) income taxes payable on account of the income of the
Company earned during the period that it was an S Corporation are borne by the
current shareholders and that all such taxes on account of the income of the
Company earned after such period are borne by the Company. The agreement
provides for payments to be made by the shareholders to the Company (up to the
amount of any tax refunds received) or by the Company to the shareholders as
necessary in order to take into account any future adjustments which may take
place in the Company's income taxes attributable to prior periods.
DIVIDEND POLICY
Except as described above under "Prior S Corporation Status," the Company
has not declared or paid any cash dividends or distributions on its capital
stock. The Company currently intends to retain any future earnings to fund
operations and the continued development of its business and, therefore, does
not anticipate paying any cash dividends on its Common Equity in the foreseeable
future. The payment of dividends is restricted by the Company's bank financing
agreements. Future cash dividends, if any, will be determined by the Board of
Directors, and will be based upon the Company's earnings, capital requirements,
financial condition and other factors deemed relevant by the Board of Directors.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
13
<PAGE>
CAPITALIZATION
The following table sets forth the short-term obligations and
capitalization of the Company (i) at June 30, 1997, (ii) on a pro forma basis as
of June 30, 1997 giving effect to (a) additional indebtedness incurred in
connection with the Charlotte Purchase, (b) bank borrowings (estimated at $6.0
million) under the Company's line of credit incurred to fund a portion of the
Distribution and the payment of such Distribution and (c) an estimated $8.0
million increase in the Company's net deferred tax liability resulting from the
termination of its S Corporation status, as if such termination had occurred on
June 30, 1997; and (iii) pro forma as adjusted at June 30, 1997 to reflect the
pro forma adjustments described in (ii) and the sale of 3,800,000 shares of
Common Stock offered hereby at an assumed initial public offering price of $13
per share and the application of the estimated net proceeds therefrom as
described in "Use of Proceeds." The information set forth below should be read
in conjunction with the Financial Statements and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------------------
PRO FORMA
AS
ACTUAL PRO FORMA(2) ADJUSTED(3)
--------- ------------ -------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Current portion of long-term debt and capital lease obligations........... $ 13,493 $ 21,493 $ 1,870
========= ========== =========
Long-term debt, less current maturities................................... $ 36,910 $ 36,910 $ 28,752
--------- ---------- ---------
Shareholders' equity:
Preferred Stock, no par value, 10,000,000 shares authorized; none issued
and outstanding...................................................... -- -- --
Common Stock, no par value, 40,000,000 shares authorized; no shares
issued and outstanding actual and pro forma; 3,800,000 shares issued
and outstanding pro forma as adjusted (1)............................ -- -- 45,142
Class A Common Stock, no par value, 10,000,000 shares authorized;
6,858,200 shares issued and outstanding actual and pro forma;
6,858,200 shares issued and outstanding pro forma as adjusted........ 1,128 8,528 8,528
Retained earnings....................................................... 26,100 -- --
--------- ---------- ---------
Total shareholders' equity.............................................. 27,228 8,528 53,670
--------- ---------- ---------
Total capitalization................................................. $ 64,138 $ 45,438 $ 82,422
========= ========== =========
</TABLE>
- ------------------
(1) Excludes approximately 1,285,820 shares of Common Stock reserved for
issuance upon the exercise of options which will be outstanding upon
completion of this offering, which will have a weighted average exercise
price of $10.59 per share, and an aggregate of approximately 1,200,000
shares of Common Stock reserved for issuance under the Company's employee
benefit plans. Also excludes 548,656 shares of Common Stock issued upon
conversion of Class A Common Stock after June 30, 1997. See "Management -
Executive Incentive Plans" and Note 9 of "Notes to Financial Statements."
(2) Gives pro forma effect to (a) the Charlotte Purchase which results in $2.0
million of additional short-term indebtedness and a $700,000 deemed
distribution to shareholders, (b) bank borrowings of $6.0 million incurred
to fund a portion of the Distribution, (c) the payment of the Distribution
and (d) the termination of the Company's S Corporation status resulting in a
non-cash charge estimated at $8.0 million in recognition of an increase in
the Company's net deferred tax liability, as if such termination had
occurred on June 30, 1997.
(3) Adjusted to give effect to (a) the pro forma adjustments described in (2)
above, and (b) the sale by the Company of the 3,800,000 shares of Common
Stock offered hereby (at an assumed initial public offering price of $13 per
share) and the application of the estimated net proceeds therefrom as
described in "Use of Proceeds." See "Prior S Corporation Status."
14
<PAGE>
DILUTION
As of June 30, 1997, the Company's net tangible book value was $27.2
million or $3.97 per share of Common Equity and its pro forma net tangible book
value was $8.5 million, or $1.24 per share of Common Equity. Pro forma net
tangible book value per share represents the amount of the Company's total
tangible assets minus its total liabilities after giving effect to (i) an
estimated $8.0 million non-cash charge relating to the termination of the
Company's S Corporation tax status, (ii) the Distribution and (iii) the
Charlotte Purchase, divided by the total number of shares of Common Equity
outstanding.
After giving effect to the sale by the Company of 3,800,000 shares of
Common Stock in this offering at an assumed initial public offering price of $13
per share (and after deduction of underwriting discounts and commissions and
estimated offering expenses), the pro forma net tangible book value as of June
30, 1997 would have been approximately $53.7 million or $5.04 per share of
Common Equity. This represents an immediate increase in pro forma net tangible
book value of $3.80 per share to current shareholders and an immediate dilution
in net tangible book value of $7.96 per share to purchasers of Common Stock in
this offering, as illustrated in the following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share...................................... $ 13.00
Net tangible book value per share at June 30, 1997................................. $3.97
Decrease attributable to the Distribution.......................................... (1.46)
Decrease attributable to the termination of S Corporation status and the Charlotte
Purchase........................................................................ (1.27)
Increase attributable to new investors............................................. 3.80
---------
Pro forma net tangible book value per share after this offering...................... 5.04
---------
Dilution per share to new investors.................................................. $ 7.96
=========
</TABLE>
The following table sets forth, as of June 30, 1997, the number of shares
of Common Equity purchased from the Company, the total consideration paid to the
Company and the average price per share paid by current shareholders and by the
purchasers of Common Stock in this offering (before deduction of underwriting
discounts and commissions and estimated offering expenses).
<TABLE>
<CAPTION>
SHARES PURCHASED
FROM THE COMPANY
(1) TOTAL CONSIDERATION WEIGHTED
------------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Current shareholders.......................... 6,858,200 64.3% $ 1,128,000(2) 2.2% $ 0.16
New investors................................. 3,800,000 35.7 49,400,000 97.8 $ 13.00
------------ --------- ------------- ---------
Total....................................... 10,658,200 100.0% $ 50,528,000 100.0%
============ ========= ============= =========
</TABLE>
- ------------------
(1) The current shareholders hold 6,309,544 shares of Class A Common Stock and
548,656 shares of Common Stock, and the new investors will hold Common
Stock.
(2) After giving effect to the Distribution, the consideration paid by current
shareholders for their Common Equity will have been repaid to them.
Upon completion of this offering, the Company will have outstanding stock
options to purchase approximately 1,285,820 shares of Common Stock at a weighted
average exercise price of $10.59 per share. If all options outstanding at June
30, 1997 were exercised, the net tangible book value per share after the
offering would be $5.24 per share and the dilution per share to new investors
would be $7.76 per share. The Company may also issue additional shares to effect
future potential business acquisitions or upon exercise of future stock option
grants or equity awards which could also result in additional dilution to then
existing shareholders. See "Management - Executive Compensation."
If the over-allotment option is exercised in full, sales by the Option
Shareholders in the offering will reduce the number of shares held by current
shareholders to 6,288,200 or 59.0% of the Common Equity outstanding after the
offering, and will increase the number of shares held by new investors to
4,370,000 or 41.0% of the Common Equity outstanding after the offering.
15
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
The selected income statement data for the years ended December 31, 1994,
1995 and 1996 and the selected balance sheet data as of December 31, 1995 and
1996 have been derived from the financial statements of the Company, audited by
Arthur Andersen LLP, independent public accountants, included elsewhere in this
Prospectus. The selected income statement data for the years ended December 31,
1992 and 1993 and the selected balance sheet data as of December 31, 1992, 1993
and 1994 have been derived from the Company's audited financial statements not
included herein. The selected financial data presented below as of June 30, 1996
and 1997 and for the six-month periods then ended have been derived from the
unaudited financial statements of the Company, which, in management's opinion,
include all adjustments necessary for a fair presentation of the information set
forth therein. The results of operations for the six months ended June 30, 1997
are not necessarily indicative of results to be expected for the entire year.
The information set forth below should be read in conjunction with the Company's
Financial Statements and notes thereto included elsewhere in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND CERTAIN OPERATING DATA)
INCOME STATEMENT DATA:
Operating revenues.................... $ 60,296 $ 90,161 $ 119,299 $ 125,973 $ 154,799 $ 73,568 $ 90,417
--------- --------- --------- --------- --------- --------- ---------
Operating expenses:
Salaries, wages and benefits........ 30,442 46,429 58,276 67,541 81,215 39,659 46,583
Supplies and other expenses......... 15,032 25,065 30,553 30,290 32,824 16,231 17,371
Purchased transportation............ 3,003 2,480 4,019 5,608 10,761 5,518 8,595
Depreciation and amortization....... 2,714 3,249 4,395 6,445 8,732 4,031 5,382
Operating taxes and licenses........ 4,075 6,286 7,369 7,767 8,722 4,318 4,302
Insurance and claims................ 1,720 2,792 3,141 2,612 3,325 1,772 1,975
(Gain) loss on sale of equipment.... (60) (164) (191) (340) (170) (127) 100
--------- --------- --------- --------- --------- --------- ---------
56,926 86,137 107,562 119,923 145,409 71,402 84,308
--------- --------- --------- --------- --------- --------- ---------
Operating income.................. 3,370 4,024 11,737 6,050 9,390 2,166 6,109
Interest expense, net............... 720 1,012 1,080 1,773 2,966 1,386 1,629
Other income, net................... (117) (144) (106) (153) (200) (48) (55)
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes and
cumulative effect adjustment...... 2,767 3,156 10,763 4,430 6,624 828 4,535
Income taxes (1).................... 250 323 351 191 429 80 180
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative effect
adjustment(1)..................... 2,517 2,833 10,412 4,239 6,195 748 4,355
Cumulative effect of a change in
accounting principle(1)........... (413) -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income(1)....................... $ 2,104 $ 2,833 $ 10,412 $ 4,239 $ 6,195 $ 748 $ 4,355
========= ========= ========= ========= ========= ========= =========
Pro forma data:
Net income (1).................... $ 3,849 $ 481 $ 2,647
========= ========= =========
Net income per share (1).......... $ 0.49 $ 0.06 $ 0.34
========= ========= =========
Shares used in computing net
income per share(1)............. 7,843 7,843 7,843
========= ========= =========
Supplemental pro forma net income
per share(2).................... $ 0.51 $ 0.08 $ 0.34
========= ========= =========
OPERATING DATA:
Total shipments (000s)................ 155 269 370 453 586 284 329
Total miles (000s).................... 38,842 57,924 65,855 65,599 75,795 36,288 42,873
Average operating revenue:
Per mile............................ $ 1.55 $ 1.56 $ 1.81 $ 1.92 $ 2.04 $ 2.03 $ 2.11
Per tractor per week................ $ 3,084 $ 3,085 $ 3,553 $ 3,539 $ 3,764 $ 3,705 $ 3,772
Number of tractors at end of period:
Company............................. 450 626 685 740 776 777 853
Owner-operator...................... -- -- -- -- 63 15 105
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
----------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PRO
1992 1993 1994 1995 1996 ACTUAL FORMA(3)
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
BALANCE SHEET DATA:
Working capital (deficit)............. $ 190 $ (188) $ 1,336 $ (2,727) $ (5,917) $ (3,342) $ (13,728)
Property and equipment, net........... 13,781 20,541 31,204 46,958 58,967 67,426 68,726
Total assets.......................... 22,426 32,943 49,037 66,427 82,355 96,047 94,961
Long-term debt, less current
maturities.......................... 7,267 11,965 14,554 25,734 28,855 36,910 36,910
Shareholders' equity.................. 6,436 8,246 17,702 18,236 24,071 27,228 8,528
</TABLE>
- ------------------
(1) For all periods presented, the Company was an S Corporation and,
accordingly, was not subject to corporate income taxes, except for certain
states during certain periods. Pro forma data assumes (a) the Charlotte
Purchase occurred on January 1, 1996, which would have resulted in
additional annual depreciation and interest expense of $70,000 and $190,000,
respectively, and a reduction in annual rent expense of $260,000 and (b) the
Company was subject to corporate income taxes for all periods presented,
based on the tax laws in effect during the periods. Pro forma net income per
share includes that number of shares that would be required to be sold (at
an assumed initial public offering price of $13 per share, less underwriting
discounts and commissions and estimated offering expenses) to fund the
Distribution. See "Prior S Corporation Status" and "Note 2 of Notes to
Financial Statements."
(2) Supplemental pro forma net income per share is calculated by dividing pro
forma net income (adjusted for the pro forma reduction in interest expense
that specifically corresponds to the repaid indebtedness discussed in (a)
and (b) below) by the number of shares used in (1) above plus the estimated
number of shares that would be required to be sold (at an assumed initial
public offering price of $13 per share, less underwriting discounts and
commissions and estimated offering expenses) to (a) repay bank mortgage
indebtedness of $2.0 million in connection with the Charlotte Purchase and
(b) repay approximately $19.8 million of other indebtedness. See "Use of
Proceeds," and "Certain Transactions."
(3) Gives pro forma effect to (a) the Charlotte Purchase, which results in a
$1.3 million increase in property and equipment, a $2.0 million increase in
short-term indebtedness and a $700,000 deemed distribution to shareholders,
(b) bank borrowings of $6.0 million incurred to fund a portion of the
Distribution and the payment of the Distribution and (c) the termination of
the Company's S Corporation status resulting in a non-cash charge estimated
at $8.0 million, in recognition of an increase in the Company's net deferred
tax liability, as if such termination had occurred on June 30, 1997.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Jevic was founded in 1981, after the deregulation of the trucking industry,
and has developed an operating system which combines the high revenue yield
characteristics of a typical LTL carrier with the operating flexibility and low
fixed costs of a truckload carrier. Most other motor carriers have continued to
specialize as either truckload, moving one shipment at a time, or as
less-than-truckload, moving multiple small shipments through networks of up to
500 terminals.
The Company's system uses a small number of regional facilities which serve
as origination points for consolidation of both small and large shipments. The
shipments are then loaded onto line-haul trailers in a sequence which permits
direct unloading at each shipment's destination, eliminating the need to
rehandle individual shipments at one or more breakbulk terminals. Management
focuses on adjusting freight mix to maximize asset utilization. The Company
maintains a high percentage of variable costs in order to minimize the impact of
short term swings in demand.
Because of the distinct nature of Jevic's operating system, the Company
believes that profitability measures and expense ratios traditionally used to
evaluate truckload or less-than-truckload carriers are not meaningful. Jevic's
results of operations for the last three years were impacted by several factors.
Jevic has been increasing the percentage of its shipments transported by
owner-operators, who supply their own tractor and bear all associated expenses
in return for a contracted rate. As a result, purchased transportation has
increased as a percentage of operating revenues, offset by a reduction, as a
percentage of operating revenues, of drivers' salaries, wages and benefits,
depreciation, fuel (and other supplies and operating expenses) and operating
taxes and licenses. A portion of the increase in owner-operator transportation
results from the Company replacing outside line-haul purchased transportation
with less costly owner-operators. Additionally, Jevic has shifted from a policy
of leasing tractors to purchasing them. As a result, depreciation and interest
expense has increased as a percentage of operating revenues while lease expense,
which is included in supplies and other expenses, has decreased. Finally,
results for 1994 were unusually impacted by the surge in freight that was
diverted to carriers, like Jevic, that did not have work forces represented by
the Teamsters during the trucking strike that took place in April and May.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
operating revenues represented by certain items in the Company's statements of
income:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
DESCRIPTION 1994 1995 1996 1996 1997
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Operating revenues..................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
--------- --------- --------- --------- ---------
Operating expenses:
Salaries, wages and benefits...................................... 48.8 53.6 52.5 53.9 51.5
Supplies and other expenses....................................... 25.6 24.0 21.2 22.1 19.2
Purchased transportation.......................................... 3.4 4.5 7.0 7.5 9.5
Depreciation and amortization..................................... 3.7 5.1 5.6 5.5 6.0
Operating taxes and licenses...................................... 6.2 6.2 5.6 5.9 4.8
Insurance and claims.............................................. 2.6 2.1 2.1 2.4 2.2
(Gain) loss on sale of equipment.................................. (0.2) (0.3) (0.1) (0.2) 0.1
--------- --------- --------- --------- ---------
90.1 95.2 93.9 97.1 93.3
--------- --------- --------- --------- ---------
Operating income....................................................... 9.9 4.8 6.1 2.9 6.7
Interest expense, net.................................................. 0.9 1.4 1.9 1.9 1.8
Other income, net...................................................... (0.1) (0.1) (0.1) (0.1) (0.1)
--------- --------- --------- --------- ---------
Income before income taxes............................................. 9.1% 3.5% 4.3% 1.1% 5.0%
========= ========= ========= ========= =========
</TABLE>
18
<PAGE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Operating Revenues
Operating revenues increased 22.8% for the six months ended June 30, 1997
to $90.4 million from $73.6 million for the comparable period of 1996. The
increase resulted primarily from a 15.8% increase in total shipments, due to
increased volume from existing customers and, to a lesser extent, the addition
of new customers. The Company's average tractor fleet grew 20.7% in the first
half of 1997 compared to the first half of 1996, and average revenues per
tractor per week increased slightly to $3,772 during the six months ended June
30, 1997 from $3,705 during the six months ended June 30, 1996.
Operating Expenses
Operating expenses increased 18.1% to $84.3 million for the six months
ended June 30, 1997 from $71.4 million for the comparable period of 1996. As a
percentage of operating revenues, operating expenses decreased to 93.3% for the
six months ended June 30, 1997 from 97.1% for the comparable period of 1996. The
increase in operating expenses is primarily due to increased revenues. The
percentage decrease was primarily due to a difficult freight market and adverse
weather conditions in early 1996, which caused lower tractor utilization during
the six months ended June 30, 1996. In addition, in 1997, driver wages,
equipment rent and outside line-haul and local transportation expense as a
percentage of operating revenues decreased due to the increased use of
owner-operators. Increased tractor utilization in 1997, due primarily to the
increased use of owner-operators, resulted in increased revenues per mile, and
led to overall operating efficiencies.
Salaries, wages and benefits increased 17.4% to $46.6 million for the six
months ended June 30, 1997 from $39.7 million for the comparable period of 1996.
As a percentage of operating revenues, salaries, wages and benefits decreased to
51.5% for the six months ended June 30, 1997 from 53.9% for the comparable
period of 1996. This percentage decrease was primarily due to the Company's
increased use of owner-operators in 1997.
Supplies and other expenses, which primarily consist of operating leases,
fuel, tolls, tires, parts and bad debt expense, increased 7.4% to $17.4 million
for the six months ended June 30, 1997 from $16.2 million for the comparable
period of 1996. As a percentage of operating revenues, supplies and other
expenses decreased to 19.2% for the six months ended June 30, 1997 from 22.1%
for the comparable period of 1996. This percentage decrease was primarily due to
the Company's continuing shift toward the purchase of revenue equipment financed
with debt rather than leasing such equipment under operating leases, and, to a
lesser extent, the Company's increased use of owner-operators in 1997.
Purchased transportation increased 56.4% to $8.6 million for the six months
ended June 30, 1997 from $5.5 million for the comparable period of 1996. As a
percentage of operating revenues, purchased transportation increased to 9.5% for
the six months ended June 30, 1997 from 7.5% for the comparable period of 1996.
The increase was primarily due to the increased use of owner-operators to
supplement the Company's fleet and to substitute for higher cost, outside
line-haul transportation. This increase was partially offset by a decrease in
the use of outside local cartage in the Midwest, as the Company increased its
local fleet in that region in 1997. As a percentage of total purchased
transportation expense, owner-operator expense increased to 59.0% for the six
months ended June 30, 1997 from 4.8% for the comparable period of 1996.
Depreciation and amortization expense increased 35.0% to $5.4 million for
the six months ended June 30, 1997 from $4.0 million for the comparable period
of 1996. As a percentage of operating revenues, depreciation and amortization
expense increased to 6.0% for the six months ended June 30, 1997, from 5.5% for
the comparable period of 1996. The increase was primarily attributable to the
Company's continuing shift toward the purchase of additional and replacement
revenue equipment financed with debt rather than leasing such equipment under
operating leases.
Operating taxes and licenses were flat at $4.3 million. As a percentage of
operating revenues, operating taxes and licenses decreased to 4.8% for the six
months ended June 30, 1997 from 5.9% for the comparable period of 1996. This
percentage decrease was primarily attributable to a decrease in fuel taxes due
to the Company's increased use of owner-operators, who pay for their own taxes
and licenses.
19
<PAGE>
Insurance and claims increased 11.1% to $2.0 million for the six months
ended June 30, 1997 from $1.8 million for the comparable period of 1996. As a
percentage of operating revenues, insurance and claims decreased to 2.2% for the
six months ended June 30, 1997 from 2.4% for the comparable period of 1996. This
percentage decrease was primarily due to auto liability insurance being based
upon miles rather than revenues and the Company experiencing efficiencies
through the increase in revenues per mile during the first six months of 1997.
Interest Expense
Interest expense increased 14.3% to $1.6 million for the six months ended
June 30, 1997 from $1.4 million for the comparable period of 1996. As a
percentage of operating revenues, interest expense was relatively flat between
periods at 1.8% for the six months ended June 30, 1997 and 1.9% for the
comparable period of 1996. Increased debt levels in 1997, resulting from the
increase in owned rather than leased equipment, were partially offset by lower
average interest rates.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Operating Revenues
Operating revenues increased 22.9% in 1996 to $154.8 million from $126.0
million in 1995. The increase resulted from a 29.5% growth in total shipments.
The Company's average tractor fleet grew 15.6% in 1996, and improved utilization
led to an increase in revenue per tractor per week of 6.4% in 1996 to $3,764
from $3,539 in 1995.
Operating Expenses
Operating expenses increased 21.3% to $145.4 million in 1996 from $119.9
million in 1995. Operating expenses as a percentage of operating revenues
decreased to 93.9% in 1996 from 95.2% in 1995. The increase in operating
expenses is primarily due to increased revenues. The percentage decrease was
primarily the result of decreased equipment rent in 1996, partially offset by
increased purchased transportation expense. Increased tractor utilization, which
resulted in increased revenues per mile, also contributed to the overall
decrease in operating ratio in 1996 compared to 1995.
Salaries, wages and benefits increased 20.3% to $81.2 million in 1996 from
$67.5 million in 1995. As a percentage of operating revenues, salaries, wages
and benefits decreased to 52.5% in 1996 from 53.6% in 1995. This percentage
decrease was primarily due to a decrease in medical insurance expense resulting
from decreased claims and increased employee co-pay percentages. As a percentage
of operating revenues, non-driver wages increased due to the addition of new
staff and management positions in 1996. This increase was offset by a decrease
in driver wages as a percentage of operating revenues, resulting from the use of
owner-operators, which commenced in 1996.
Supplies and other expenses increased 8.3% to $32.8 million in 1996 from
$30.3 million in 1995. As a percentage of operating revenues, supplies and other
expenses decreased to 21.2% in 1996 from 24.0% in 1995. This percentage decrease
was primarily due to the Company's shift toward the purchase of revenue
equipment financed with debt rather than leasing such equipment under operating
leases, and, to a lesser extent, the Company's use of owner-operators in 1996.
The decrease was partially offset by an increase in bad debt expense as a
percent of operating revenues from 0.1% in 1995 to 0.4% in 1996. The bad debt
expense recognized in 1995 was unusually low due to a higher rate of collection
of past due accounts than the Company historically experienced.
Purchased transportation increased 92.9% to $10.8 million in 1996 from $5.6
million in 1995. As a percentage of operating revenues, purchased transportation
increased to 7.0% in 1996 from 4.5% in 1995. The increase was due to using more
outside line-haul transportation and more local cartage transportation for fleet
support in the Midwest. In addition, inefficiencies resulting from a difficult
freight market and adverse weather conditions in early 1996 were only partially
offset by the Company's decision to use owner-operators that year. As a
percentage of total purchased transportation expense, owner-operator expense was
21.5% in 1996.
Depreciation and amortization expense increased 35.9% to $8.7 million in
1996 from $6.4 million in 1995. As a percentage of operating revenues,
depreciation and amortization expense increased to 5.6% in 1996 from 5.1% in
1995. The increase was primarily attributed to the Company's continuing shift
toward the purchase of additional and replacement revenue equipment with debt
financing rather than leasing such equipment under operating leases.
20
<PAGE>
Operating taxes and licenses increased 11.5% to $8.7 million in 1996 from
$7.8 million in 1995. As a percentage of operating revenues, operating taxes and
licenses decreased to 5.6% in 1996 from 6.2% in 1995. This percentage decrease
was primarily attributed to the use of owner-operators in 1996.
Insurance and claims increased 26.9% to $3.3 million in 1996 from $2.6
million in 1995. As a percentage of operating revenues, insurance and claims
remained flat at 2.1%. Higher cargo losses due to the adverse weather conditions
in early 1996 were partially offset by decreased insurance premiums later in
1996.
Interest Expense
Interest expense increased 66.7% to $3.0 million in 1996 from $1.8 million
in 1995. As a percentage of operating revenues, interest expense increased to
1.9% in 1996 from 1.4% in 1995. The increase was due to increased debt levels in
1996 resulting primarily from revenue equipment purchases being financed with
debt rather than operating leases, partially offset by slightly lower average
interest rates in 1996.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Operating Revenues
Operating revenues increased 5.6% in 1995 to $126.0 million from $119.3
million in 1994. The modest nature of the increase in 1995 operating revenues is
attributable to increased 1994 operating revenues resulting from a short term
surge in business during the 1994 Teamsters strike, coupled with a reduction in
the national economic growth rate during the second half of 1995. The Company's
average tractor fleet grew 6.0% in 1995, while revenue per tractor per week
remained relatively constant at $3,539 in 1995 and $3,553 in 1994.
Operating Expenses
Operating expenses increased 11.4% to $119.9 million in 1995 from $107.6
million in 1994. As a percentage of operating revenues, operating expenses
increased to 95.2% in 1995 from 90.1% in 1994. The increase represented the
return to a more normal expense ratio from the unusually high profit margins
experienced in 1994 as a result of the 1994 Teamsters strike.
Salaries, wages and benefits increased 15.8% to $67.5 million in 1995 from
$58.3 million in 1994. As a percentage of operating revenues, salaries, wages
and benefits increased to 53.6% in 1995 from 48.8% in 1994. The increase was
primarily due to the Company's decision to add personnel in sales, information
technology and administrative positions to support the Company's growth plans.
The increase was partially offset by a decrease in driver wages resulting from
the Company's increased use of purchased transportation in 1995.
Supplies and other expenses were relatively flat at $30.3 million in 1995
and $30.6 million in 1994. As a percentage of operating revenues, supplies and
other expenses decreased to 24.0% in 1995 from 25.6% in 1994. The decrease was
primarily due to the Company's shift in 1995 toward the purchase of revenue
equipment financed with debt rather than leasing such equipment under operating
leases and to a lesser extent a decrease in bad debt expense as a percentage of
operating revenues, to 0.1% in 1995 from 0.6% in 1994. The decrease in bad debt
expense was due to a higher rate of collection of past due accounts than the
Company historically experienced.
Purchased transportation increased 40.0% to $5.6 million in 1995 from $4.0
million in 1994. As a percentage of operating revenues, purchased transportation
increased to 4.5% in 1995 from 3.4% in 1994. The increase was due to the
Company's decision to use outside carriers in 1995 to supplement the Company's
existing fleet, rather than acquiring revenue equipment during a period when
slow economic growth was being widely forecast.
Depreciation and amortization expense increased 45.5% to $6.4 million in
1995 from $4.4 million in 1994. As a percentage of operating revenues,
depreciation and amortization increased to 5.1% in 1995 from 3.7% in 1994. The
increase was primarily attributable to the Company's purchases of new revenue
equipment to replace the aging portion of its fleet.
Operating taxes and licenses increased slightly to $7.8 million in 1995
from $7.4 million in 1994. As a percentage of operating revenues, operating
taxes and licenses remained flat at 6.2% as revenues per tractor per week was
consistent between years.
21
<PAGE>
Insurance and claims decreased 16.1% to $2.6 million in 1995 from $3.1
million in 1994. As a percentage of operating revenues, insurance and claims
decreased to 2.1% in 1995 from 2.6% in 1994. The decrease was due to reductions
in auto liability insurance premiums as a result of favorable loss experience.
Interest Expense
Interest expense increased 63.6% to $1.8 million in 1995 from $1.1 million
in 1994. As a percentage of operating revenues, interest expense increased to
1.4% in 1995 from 0.9% in 1994. The increase was primarily due to increased debt
levels in 1995 resulting from replacement revenue equipment purchases being
financed principally with debt, in addition to higher average interest rates in
1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity have been funds provided by
operations, capital and operating equipment leases and bank borrowings. Net cash
provided by operating activities was approximately $13.7 million, $11.8 million,
$15.5 million and $6.7 million in 1994, 1995 and 1996 and the six months ended
June 30, 1997, respectively. Net cash provided by operating activities is
primarily attributable to the Company's income before depreciation and
amortization expense. Operating cash flows during the six months ended June 30,
1996 and 1997 were lower than income before depreciation and amortization
expense for the periods due to the timing of certain payments, resulting in
increased prepaid expenses and decreased accounts payable.
Capital expenditures, net of trade-in allowances, totaled approximately
$14.6 million, $17.7 million, $20.7 million and $14.2 million during 1994, 1995
and 1996 and the six months ended June 30, 1997, respectively. The majority of
the Company's capital expenditures are financed with long-term debt or capital
leases. The 1994 capital expenditures of $14.6 million were comprised of $11.4
million of revenue equipment, $1.4 million of facilities and $1.8 million of
other equipment. In 1995, the $17.7 million of capital expenditures were
comprised of $7.2 million of revenue equipment, $7.4 million of facilities and
$3.1 million of other equipment. Of the $20.7 million of capital expenditures in
1996, $17.2 million represented revenue equipment, $1.5 million represented
facilities and $2.0 million represented other equipment. For the six months
ended June 30, 1997, the $14.2 million of capital expenditures were comprised of
$12.2 million of revenue equipment, $700,000 million of facilities and $1.3
million of other equipment.
The Company has budgeted for total capital expenditures of $13.0 million
for the second half of 1997 and $24.0 million in 1998. The Company's capital
budget includes $4.0 million to purchase new tractors and $5.0 million to
purchase new trailers in the second half of 1997 and $5.0 million to purchase
new tractors and $5.0 million to purchase new trailers in 1998. In addition, the
Company plans to spend approximately $4.0 million on real estate projects in the
second half of 1997 and an additional $11.0 million on such projects in 1998.
Projects planned for the second half of 1997 include the Charlotte Purchase, the
purchase of land on which to construct a new regional facility in metropolitan
Boston and expenditures for certain improvements to the Company's headquarters
building. Projects planned for 1998 include the construction of a Boston
facility and the purchase of land for and construction of a new regional
facility in metropolitan Chicago. The Company also plans to purchase $3.0
million of other equipment, primarily technology, during 1998. A portion of the
net proceeds of the offering, combined with cash flow from operations, will be
used to fund the Company's planned capital expenditures.
The Company generally purchases new line-haul tractors and replaces them
after three years. Regional and local tractors are generally replaced after five
years, depending on levels of use. The Company generated cash proceeds from
sales of used tractors of $750,000, $742,000, $108,000 and $241,000, in 1994,
1995 and 1996 and the six months ended June 30, 1997, respectively. Most of the
Company's tractors are covered by agreements under which the Company has the
right to resell the tractors to the vendor at a defined price. There is no
assurance that the Company will be able to generate consistent cash proceeds on
sales of used tractors or obtain favorable trade-in terms in the future.
Net cash provided by financing activities was approximately $2.3 million,
$3.7 million, $6.3 million and $9.7 million in 1994, 1995 and 1996 and the six
months ended June 30, 1997, respectively. At June 30, 1997, total borrowings
under long-term debt totaled $49.5 million, maturing through 2007, and
obligations relating to operating leases totaled $8.3 million through 2001, of
which $1.2 million related to facility leases with the current shareholders.
22
<PAGE>
Net distributions to current shareholders, primarily related to income
taxes on the Company's S Corporation income, were $956,000, $3.8 million and
$1.2 million in 1994 and 1995 and in the first six months of 1997, respectively.
In 1996, the shareholders made net contributions to the Company of $390,000,
primarily related to excess tax distributions made by the Company in 1995.
Subsequent to June 30, 1997, the Company will effect the Distribution and will
make a distribution to its current shareholders for their remaining 1997 Federal
and state S Corporation tax liabilities, estimated at $500,000 as of June 30,
1997. The Board determined that the Distribution was reasonable and appropriate
in light of the shareholders' investment in and ownership risks associated with
the Company prior to the Distribution. See "Use of Proceeds" and "Prior S
Corporation Status."
Jevic is a party to a $25 million credit facility with CoreStates Bank,
N.A. The credit facility includes a $7 million working capital revolving line of
credit, with borrowings limited to 80% of the Company's eligible accounts
receivable, and an $18 million term loan facility used to purchase or refinance
revenue equipment. At June 30, 1997, there was $13.4 million outstanding under
the credit facility, of which $200,000 represented outstanding standby letters
of credit and the remainder of which was outstanding under the term loan
facility. The term loans are secured by a first priority, perfected security
interest in the revenue equipment purchased or refinanced. The rate of interest
on both the term loans and the revolving credit loans is, at the Company's
election, either the Bank's prime rate, a rate based on the London Interbank
Offered Rate (LIBOR) or a fixed rate quoted by the Bank to Jevic on the date of
a borrowing. The revolving line of credit expires in June 1999. Term loans
outstanding under the facility vary as to their maturity (from five to eight
years from the date of each loan) depending on the type of revenue equipment
financed. The maturities of the Company's term loans range from July 2000 to
November 2004. The credit facility contains covenants made by the Company which
restrict its ability to make business acquisitions and pay dividends on its
capital stock, including the Common Stock, among other things. The Company
intends to borrow an amount under the revolving line of credit (estimated at
$6.0 million) prior to the offering to fund a portion of the Distribution, with
the balance of the Distribution to be paid from the Company's available cash.
See "Use of Proceeds" and "Prior S Corporation Status."
Jevic Transportation Services, Inc. ("JTS"), a freight brokerage company
owned by the Muhlschlegels, is expected to be merged into the Company after the
offering. JTS had gross revenues of approximately $1.0 million for 1996 and $1.2
million for the six months ended June 30, 1997. JTS had net income of
approximately $34,000 for 1996 and $57,000 for the six months ended June 30,
1997. The Muhlschlegels will receive $125,000 from the Company in exchange for
their JTS stock in the merger, which is equal to their capital investment in
JTS. The merger will be accounted for as a combination of companies under common
control.
The Company believes that the net proceeds from the offering, funds
generated from operations and available borrowings under its current or future
credit facilities will be sufficient to fund the Company's activities at least
through 1998. See "Use of Proceeds" and "Capitalization."
While the Company intends to selectively pursue acquisitions of companies
that are complementary with its operations, the Company currently does not have
any commitments or agreements for any business acquisition and is not in active
negotiations regarding any such acquisition.
INFLATION
The Company does not believe that inflation has had a material impact on
its results of operations for the past three years.
SEASONALITY
In the trucking industry, revenues generally follow a seasonal pattern as
customers reduce shipments during and after the winter holiday season. In
addition, highway transportation can be adversely affected depending upon the
severity of the weather in various sections of the country during the winter
months. The Company's operating expenses have historically been higher in winter
months, due primarily to decreased fuel efficiency and increased maintenance
costs for revenue equipment in colder weather. Accordingly, the Company's
results of operations may fluctuate to reflect such seasonality.
23
<PAGE>
INDUSTRY OVERVIEW
The trucking portion of the transportation industry is estimated at $350
billion, of which LTL and truckload carriers account for an estimated $80
billion. The trucking industry is highly fragmented and consists of over 360,000
carriers. Motor carriers historically have been classified as either truckload
or LTL based on the size of shipment and the manner in which they charge their
customers. Most carriers classified as truckload carriers specialize in handling
shipments weighing 20,000 lbs. or more and charge a flat rate per mile
regardless of how full the trailer is. Truckload carrier systems typically
utilize a driver and a trailer picking up a full load at the shipper's dock,
delivering the shipment to its destination and traveling to the next shipper to
pick up another load. Since truckload carriers are able to deliver freight from
point to point and do not operate with the hub and spoke systems used by typical
LTL carriers, they have lower fixed costs. The absence of a network of breakbulk
terminals, through which all freight is channeled, and destination terminals,
from which shipments are reloaded for final delivery to their destinations,
provides Jevic with greater operating flexibility than most LTL carriers.
Less-than-truckload carriers have traditionally handled large numbers of
small shipments, approximately 1,300 pounds on average, for multiple shippers
and multiple consignees on a scheduled basis through a series of hub and spoke
terminals. Although this method has historically been successful in keeping
trucks full, it has the drawback of requiring both multiple cargo rehandlings,
which are expensive, and a fixed network of pickup, breakbulk and destination
terminals, which is capital intensive, requires a large staff of freight
handlers and lacks operating flexibility. At each breakbulk terminal, freight is
unloaded and reloaded with other freight destined for locations in the same
general direction of another breakbulk terminal, where the truck is sent for
further unloading and loading, until the freight arrives at a destination
terminal located nearest the region of the consignee. At the destination
terminal, freight is then loaded onto a local truck for final delivery. In
addition to contributing to high fixed costs, the operation of a network of
breakbulk terminals increases transit times and the likelihood of cargo damage.
Although some LTL carriers have recently sought to reduce the number of their
breakbulk facilities, the Company believes that the use of the breakbulk system
will continue to be the standard operating method of most LTL carriers. LTL
carriers typically base their rates on the weight of the shipment and the
distance shipped. Because of the ability of LTL carriers to transport and charge
for multiple shipments in a single trailer, LTL carriers generally have a higher
revenue yield, measured in terms of revenue per ton, than truckload carriers.
In the early 1980s, federal regulations were eliminated or amended to
enable motor carriers to serve customers, transport shipments and set rate
structures without significant restriction. Since deregulation, carriers have
grappled with issues similar to those which other deregulated industries have
faced, including intense price competition, consolidation due to industry
over-capacity, lack of knowledge of costs, high fixed costs of inefficient
operations, and rigid work rules. Notwithstanding deregulation, most carriers
have continued to focus their business and price their services as either
truckload carriers or LTL carriers.
Traditional truckload and LTL carriers can efficiently handle freight that
is compatible with their respective operating systems but typically do not have
the flexibility to accommodate a wide range of shipment size, length of haul and
delivery options. As many businesses have focused on quality improvement,
reduced order cycle times, just-in-time inventory management, and regional
assembly and distribution methods, the need for high quality and flexible
service providers in the trucking portion of the transportation industry has
increased. Additionally, companies are streamlining administrative functions and
creating efficiencies by reducing the number of preferred motor carrier vendors
or "core carriers," which eliminates administrative duplication and helps create
strategic shipper advantages by working with a core carrier on solutions to
mutual problems. This trend toward the use of fewer carriers offers significant
growth opportunities for Jevic because of its ability to provide a full array of
services, its financial stability and its critical mass to support high
equipment utilization, commitment to quality service and technological
capabilities.
Jevic's Breakbulk-Free operating system combines the operating flexibility
of typical truckload carriers with the ability to service multiple smaller
shipments, previously the principal domain of the typical LTL carriers. The
benefits of avoiding breakbulks are a higher level of service to the shipper,
particularly improved speed of delivery and reduced cargo damage caused by
rehandling. Jevic's rates are based on a combination of the weight of the
shipment and the length of haul. The benefits to Jevic are the potential for
market share growth, the ability to generate a higher revenue yield as compared
to standard truckload carriers and reduced fixed costs as compared to standard
LTL carriers.
24
<PAGE>
BUSINESS
OVERVIEW
Jevic is a motor carrier that combines the high revenue yield
characteristics of a typical LTL carrier with the operating flexibility and low
fixed costs of a truckload carrier. Jevic utilizes a simplified in-route
delivery system in which over 70% of the Company's shipments are delivered to
their destinations directly from line-haul trailers, eliminating the need for an
expensive network of labor-intensive breakbulk terminals, which most LTL
carriers use to distribute shipments. Jevic's revenue per terminal for 1996 was
approximately $31.0 million, which the Company believes is substantially higher
than typical LTL carriers. The Company serves shippers throughout the eastern
half of the United States and in selected markets in the remainder of the
continental United States and Canada through its origination facilities located
in the metropolitan areas of Atlanta, Boston, Charlotte, Chicago, Houston and
Philadelphia. From 1992 to 1996, the Company's operating revenues and operating
income grew at compound annual rates of 26.6% and 29.2%, respectively.
Jevic began operations as a motor carrier in 1983, soon after deregulation
of the trucking industry. Regulation had caused trucking industry participants
to develop as either truckload carriers or as terminal-based LTL carriers.
Following deregulation, most carriers continue to focus their operations and
price their services as either truckload carriers or LTL carriers. Traditional
truckload and LTL carriers can efficiently handle freight that is compatible
with their respective operating systems but typically do not have the
flexibility to accomodate a wide range of shipment size, length of haul and
delivery options. Jevic developed its Breakbulk-Free operating system to provide
the capabilities of both truckload and LTL service without the inherent
infrastructure requirements and operational limitations of truckload and LTL
carriers.
Jevic's Breakbulk-Free system utilizes a simplified network of terminals,
which serve as regional origination points for initial consolidation of freight
on a trailer. The Company strategically combines smaller shipments (typically
handled by LTL carriers) with larger shipments (typically handled by truckload
carriers) in a sequence which permits direct unloading at each shipment's
destination, with no need to rehandle individual shipments at one or more
breakbulk terminals. Typical LTL carriers have to reload shipments into local
trucks for final delivery, whereas, in most cases, Jevic's operating system
avoids further rehandling at the destination facility. This generally results in
less damage to freight and faster transit times for less than full truckload
shipments. Jevic's flexible operating system minimizes rehandling of freight and
provides a broader range of service than other trucking companies.
MARKETING STRATEGY
Jevic targets prospective customers whose logistics needs are not being
met, develops solutions for those needs and offers a broad range of
transportation services.
o Offer Logistics-Based Solutions. The Company utilizes a consultative
approach to develop customized logistics-based solutions to meet its
customers' transportation and distribution needs. These solutions are
designed to reduce the customer's transportation costs, inventory
carrying costs, handling costs, loss and damage claims and information
processing costs. The Company's customer-focused approach, in which Jevic
provides information and problem-solving as well as transportation, helps
expand its customer base and forge long-term customer relationships.
o Offer a Broad Range of Differentiated Services. By creating a
"one-stop-shop" and offering a broad range of transportation services,
the Company seeks to become its customers' core carrier. Jevic offers its
customers a wide range of shipment size, length of haul and delivery
options as well as heated service. By increasing the number of shipments
from existing customers, the Company achieves operating efficiencies
through higher pick-up and lane density, improved terminal utilization
and reduced administrative duplication. As examples, (i) Jevic offers
regional service with delivery not just overnight, but before noon so
that the shipment can be used in the manufacturing process on the day it
is delivered, and (ii) uses insulated trailers with fully integrated
heaters to provide heated service for freight that can be damaged by cold
weather. The Company offers other specialized services such as partial
truckload service, next day service for shipments transported up to 500
miles and interregional service along key lanes.
o Focus on Customer Selectivity. The Company targets customers based on
disciplined sales criteria designed to identify shippers whose service
requirements drive the carrier selection process. This approach has
generated
25
<PAGE>
significant incremental business in service-sensitive industries, such as
the chemical industry, which accounted for approximately 45% of the
Company's operating revenues from its top 200 customers in the first half
of 1997.
o Solicit Optimal Mix of Shipment Sizes. Jevic selectively solicits
business from its customers in order to load trailers strategically by
integrating larger shipments with smaller shipments and thereby optimizes
revenue yields and asset utilization. The Company also integrates
regional and interregional shipments in a single trailer in order to
increase freight density, which improves asset utilization.
OPERATING STRATEGY
Jevic seeks to maximize its results of operations by providing flexible and
timely service.
o Utilize Breakbulk-Free System. Jevic sequences multiple deliveries from
a single trailer, eliminating the need for a network of breakbulk
terminals and, in most cases, destination terminals, at which typical LTL
carriers unload and reload shipments for final delivery. As a result, the
Company reduces transit times and freight damage, while avoiding the
infrastructure and labor costs associated with a large breakbulk terminal
network.
o Utilize Technology to Improve Productivity and Customer Service. The
Company utilizes technology to improve its customer service and to
increase productivity. The Company's tractors are equipped with state-of-
the-art QUALCOMM OmniTRACS satellite tracking units to provide real-time
customer information and increase fleet utilization. Jevic uses its EDI
system to improve customer communications and reduce administrative
costs. In 1998, the Company plans to implement a new bar coding system
which is designed to enhance the Company's freight tracking capability,
reduce cargo claims and improve operational efficiency.
o Increase Utilization of Owner-Operator Drivers. Jevic has recently
expanded its driver force through the addition of owner-operators, who
supply their own tractor and bear all associated expenses in return for a
contracted rate. The Company intends to increase its utilization of
owner-operator drivers in order to reduce capital expenditure
requirements, improve return on equity, reduce direct exposure to fuel
price fluctuations and provide access to an additional pool of drivers.
o Maintain a Positive Workforce Environment. Through stringent driver
selection criteria, a favorable wage and benefit structure and a positive
working environment, the Company minimizes driver turnover, maintains a
high level of employee satisfaction and motivates employees to provide
high quality service. The Company's annual driver turnover rate was 20.1%
in 1996. Among drivers who have worked for Jevic for more than one year,
the turnover rate through June 30, 1997 was 5.5%. None of Jevic's
employees, including drivers, is represented by a collective bargaining
unit.
GROWTH STRATEGY
The Company seeks sustainable growth by increasing the amount of business
generated by existing customers, acquiring new customers within existing regions
and expanding into new regions.
In response to customer demand, Jevic initiates service to a new region by
introducing high-yield inbound LTL service to its existing customer base,
delivering in-route from line-haul trailers, consistent with the Company's
operating strategy. Until a sufficient volume of inbound business is generated,
the Company avoids the up-front capital costs of building or purchasing a new
facility by soliciting lower-yielding truckload shipments for the backhaul to
return the equipment to one of the Company's existing facilities. This results
in increased asset utilization and reduced empty miles. Once the Company opens a
new facility, it serves as a consolidation point for a wide range of higher
yielding shipments originating in the region, replacing the lower yielding
truckload shipments. The Company most recently employed these techniques in
opening its Houston facility in June 1997.
By providing a broad range of services, Jevic has the ability to build
volume rapidly in targeted geographic areas. The Company's growth plans include
constructing new, substantially larger facilities in metropolitan Boston and
Chicago, adding selected regional facilities in new regions and adding new
points served in route when supported by customer demand. Jevic also intends to
selectively pursue acquisitions of companies that are complementary with the
Company's operations.
26
<PAGE>
SERVICE
Jevic seeks to customize its service offerings to meet its customers'
evolving requirements for greater speed and reliability. By regularly expanding
the services it provides, the Company increases the types of shipments it can
efficiently handle from existing customers and is able to attract and serve new
customers.
Faster Delivery Times. The Company provides next day and, in many cases,
next morning service along regional lanes of up to 500 miles. As an example,
while a typical regional LTL carrier may offer freight delivery from
metropolitan Philadelphia to metropolitan Boston by the end of the next business
day, Jevic offers delivery by noon on the next business day, at competitive
prices. Jevic believes that it generally provides transit times that are one to
two days faster along key interregional lanes than its principal national
competitors, primarily because of the Company's Breakbulk-Free strategy. For
example, whereas a typical interregional LTL carrier may offer freight delivery
from metropolitan Atlanta to New England in three days, Jevic offers delivery by
the morning of the second day after pickup, again at competitive prices. Other
interregional LTL carriers offer freight delivery from the Northeast to
metropolitan Chicago in three to four days, while Jevic offers delivery in two
days, also at competitive prices.
Wide Range of Shipment Sizes. Jevic provides its customers with the
flexibility to handle shipments of a range of sizes and weights not typically
provided by standard LTL or truckload carriers, which enhances the Company's
ability to become a core carrier to its customers. Many of the Company's
customers require transportation of multiple shipments ranging from as little as
50 pounds to over 40,000 pounds. While a standard truckload carrier would charge
a customer the full truckload rate for each shipment weighing over 10,000 pounds
even if it does not fill a trailer, the Company can efficiently handle the
customer's partial truckload shipments, charging the customer less than a full
truckload rate, and then integrating smaller shipments from the same customer or
other customers in the same region to fill the rest of the trailer. This allows
the customer to save money on the truckload portion of the shipment and the
Company to increase freight density and shipments per pickup, thereby minimizing
incremental costs and improving operating efficiencies.
Specialized Services.
Heated Service. The Company offers a heated service for customers whose
freight must be protected from freezing during the winter months, principally
customers in the chemical industry. Jevic's heated trailers allow the Company to
provide significant flexibility to customers, such as pickups and deliveries of
heated service shipments on any day of the week. The Company's heated service
enables the Company to attract business from new customers and then expand the
services it provides for those customers to encompass their regular shipments as
well as their heated service shipments. In addition, by providing this heated
service, Jevic is able to enhance revenues from mid-October to mid-April, a
period in which freight volumes are typically lower than at other times during
the year. Jevic believes that there is no significant competition for its heated
service in the LTL market and that it purchases more integrated diesel trailer
heaters than any LTL carrier.
Expedited Service. Jevic offers expedited delivery service on a regional
and inter-regional basis by integrating these premium rated deliveries with
standard service deliveries, thereby increasing revenue per mile. Through its
Breakbulk-Free strategy, Jevic can achieve benefits from the premium rates paid
for expedited service at rates which are typically equal to or lower than
competitors' expedited service rates.
BREAKBULK-FREE OPERATING MODEL
Jevic utilizes a simplified network of terminals, which serve as regional
origination points for initial consolidation of freight on a trailer. Shipments
of various sizes are typically picked up "same day" from customers and the
Company combines smaller shipments (typically handled by LTL carriers) with
larger shipments (typically handled by truckload carriers) onto a line-haul
trailer in a sequence which permits the direct unloading of each shipment at its
final destination. This simplifies the delivery process by reducing the number
of facilities needed to effect delivery. The Company's in-route delivery system
bypasses intermediate breakbulk terminals and, in most cases, destination
terminals.
LTL carriers typically rehandle freight at one or more breakbulk terminals
and reload the freight at a destination terminal into a local truck for delivery
to the final destination. Breakbulk-Free operations, in contrast, do not require
an extensive network of "hub and spoke" operating terminals. As a result, Jevic
avoids the fixed costs of operating and
27
<PAGE>
maintaining a large network of breakbulk terminals and a large staff of freight
handlers. Jevic's revenue per terminal for 1996 was $31.0 million, which the
Company believes is substantially higher than typical LTL carriers.
Jevic's Breakbulk-Free system accommodates a wider range of shipment sizes,
as determined by weight, than most LTL carriers, and can provide more rapid
transit times in many cases. By minimizing rehandling, Jevic's system reduces
damage to shipments and associated costs. The Breakbulk-Free system also
enhances the Company's asset utilization. To further increase asset utilization
and shorten transit times, Jevic has integrated the use of twin 28-foot
trailers, or pups, into its existing fleet of 48 foot and 53 foot trailers. The
pups are separated without rehandling of freight, and deliveries are made from
the two pups to different destinations at the same time. Deliveries via pup
trailers can effectively double the number of deliveries per day compared to a
single 48 or 53 foot trailer.
MARKETING AND CUSTOMERS
Jevic's sales force utilizes a consultative approach to develop customized
logistics-based solutions to meet its customers' total transportation and
distribution needs. These solutions are designed to reduce the customer's total
transportation costs, inventory carrying costs, handling costs, loss and damage
claims and information processing costs. The Company's customer-focused
approach, in which Jevic provides information and problem-solving as well as
transportation, helps expand the Company's customer base and forge long-term
relationships with customers.
The Company targets prospective customers whose logistics needs are not
being met and develops solutions for those needs. Once a customer begins to use
Jevic for certain of its shipping needs, the Company offers the customer
additional transportation services to develop the account while increasing its
pickup, lane and delivery density.
Jevic develops new geographic markets in existing or new lanes and regions
and monitors existing lanes for lane balance in both directions. The Company
addresses unbalanced lanes by creating new sales territories in the specific
areas that require additional freight as an origination point. Sales territories
are designed to minimize the distance between pickups and increase fleet
utilization, and seasoned sales personnel are recruited and hired for each
territory. Potential customers within the new territory are identified through
telephone interviews and a final list of top potential accounts are selected as
a starting point for the sales process.
At June 30, 1997, the Company had a direct sales staff of 72 employees. The
sales force is comprised of experienced motor carrier representatives who have
been recruited for territories geographically located to maximize both pickup
and lane density. The Company's sales personnel have knowledge of the local
market in which they operate and receive specialized training in order to learn
the Jevic system, including the disciplined sales criteria used in the customer
selection process. Many sales personnel work from their homes, which are
typically located in the region of an existing or planned Company facility. The
sales force is divided among three regions covering the Northeast,
South/Southeast and Midwest. The Company's National Accounts Department
coordinates the marketing efforts for customers with multiple shipping locations
across the country.
At June 30, 1997, the Company's customer base included over 8,000 active
accounts. The Company transports general commodities, including chemical
commodities used in manufacturing, petroleum, non-durable goods, paper products,
rubber and plastics.
In 1996, Jevic's largest 20, 10 and five customers accounted for
approximately 24.1%, 18.2% and 12.3% of the Company's operating revenues,
respectively. During the same year, the Company's largest customer accounted for
approximately 4.5% of operating revenues. Because approximately 45% of the
Company's revenues from its top 200 customers in the first half of 1997 had
standard industrial classification codes in the chemicals industry, the Company
believes that a significant amount of its business is generated from
transporting chemicals, including various materials which are subject to
environmental and safety regulations.
REGIONAL FACILITY OPERATIONS
Jevic currently operates through six regional facilities. The Company's
principal regional facility and headquarters are located in metropolitan
Philadelphia, and its other facilities are located in metropolitan Atlanta,
Boston, Charlotte, Chicago and Houston. Jevic's regional facilities are
strategically located to permit the Company to provide high quality service and
minimize freight rehandling to reduce costs. The Company uses its regional
facilities as origination points for initial consolidation of freight onto the
trailer for delivery in-route to the customer. Jevic does not use regional
facilities as breakbulk terminals. Over 70% of the Company's LTL tonnage is
routed directly
28
<PAGE>
from the originating terminal to the customer's destination. The remaining
freight is unloaded at a Company terminal for final local delivery to the
destination, typically in a situation where a specific piece of equipment, such
as a liftgate, is required in the unloading process but is not available on the
trailer or where the customer requires a specific delivery time.
Each regional facility is responsible for the pickup and delivery of
freight for its own service area. Primary responsibility for customer service
resides at the facility level. Facility employees trace freight movement between
facilities on the Company's automated tracing system and respond to customer
requests for delivery information. Jevic believes that its policy of maintaining
primary accountability to customers at the facility level fosters better
relationships, results in improved customer service and enhances its ability to
meet customers' needs.
Jevic's centralized Line-Haul Department is responsible for directing the
systemwide movement of revenue equipment from its origin to destination. The
Company continuously monitors the usage and location of its revenue equipment
and seeks to maximize utilization of all revenue equipment. Dispatchers are
responsible for tracking all drivers and revenue equipment until trailers are
emptied in order to assure timely delivery of shipments. Dispatchers then direct
the reloading of the trailers for deliveries either in the same region or to
another region serviced by the Company.
On a daily basis, the Company's senior executives and facility management
personnel review the prior day's freight shipment and activity reports to
monitor the Company's performance. The daily freight shipment report identifies
shippers, destinations, shipment size and shipment routing. The daily activity
report includes data such as regional bill counts, driver and tractor
availability, load counts, freight damage and loss and accidents. The Company
uses scheduled runs, and schedules additional runs as necessary, to meet its
delivery time schedules.
The Company's growth plans include construction of new, substantially
larger facilities in metropolitan Boston and Chicago and adding selected
regional facilities in new regions when supported by customer demand.
TECHNOLOGY
The Company believes that its use of proven technologies enhances the
Company's efficiency and provides competitive service advantages. Through this
technology, the Company provides better and more timely information to its
customers, improves its operating efficiency and controls and more effectively
leverages its resources.
Satellite Communications. In 1994, the Company installed the QUALCOMM
OmniTRACS satellite-based communications system ("OmniTRACS System") throughout
its fleet. Although more common to the truckload segment, satellite-based
communications systems are not used by most LTL carriers. Operating
continuously, the OmniTRACS System assists the Company's dispatchers in load
planning and enables them to monitor the movement of freight and simplifies the
location of equipment. The OmniTRACS System also permits timely and efficient
communication of critical operating data, such as shipment orders, loading
instructions, routing, safety, maintenance, billing, tracing and delivery
information. For example, dispatchers assign loads by entering the required
information into the system. Drivers then access the previously-planned pickup
from the system and acquire all the necessary customer, order and routing
information through their on-board OmniTRACS display unit, thus eliminating
waiting time and inefficient dependence on truckstop and roadside telephones.
Before installation of the OmniTRACS system, Jevic typically lost one hour or
more of productive time per driver per day while the driver stopped to wait for
and use a telephone.
Enterprise Wide Computing. The Company's NCR 3555 UNIX platform works in
conjunction with a Novell/NT network consisting of over a dozen file servers,
provides connectivity with all Company facilities and produces operational
reports for all end users at the Company's headquarters. In 1998, the Company
plans to add a Sequent NUMA-Q 2000 computer architecture in order to provide
increased enterprise computing and additional disaster recovery capabilities.
Relational database technology (RDBMS) is expected to be employed to provide
flexibility and consistency of data. The Company is developing enhancements to
its core transportation application with custom-designed software.
Document Imaging. The Company uses an optical imaging system to scan
documents such as bills of lading and delivery receipts onto compact disks.
Images are available across all networks to reduce clerical and management time
required to enter and retrieve information. This process enhances the
availability and increases the utilization of data, especially that which
pertains directly to customer service. The Company is currently adding
additional storage
29
<PAGE>
and system functionality which will increase image retention, eliminate many
manual duties and be expandable to meet future requirements.
Bar Coding. In 1998, the Company plans to install a comprehensive freight
locator and cross docking system. The bar coding system is designed to enhance
the Company's freight tracking capability and reduce cargo claims and also to
improve operational efficiency through the placement of a bar code on every
shipment which is readable by drivers and facility personnel using a hand-held
wireless scanner.
DRIVERS
A key element contributing to the Company's growth has been its driver
force. As a former driver, Harry Muhlschlegel, the Company's co-founder and
Chief Executive Officer, has continually emphasized the importance of a stable,
high quality driver force. The Company has implemented policies and programs to
maintain a high level of driver quality and job satisfaction. In 1996, the
average annual total wages paid to drivers who worked full time during the year
was over $56,000, not including health insurance and related benefits provided
by the Company. Jevic's line-haul drivers are typically able to return home once
a week and are provided with late model tractors with modern features to provide
driver comfort. See "- Revenue Equipment and Maintenance." Although the industry
experiences driver shortages from time to time, Jevic has been successful in
maintaining an adequate number of qualified drivers. The Company's annual driver
turnover rate was 20.1% in 1996. Among drivers who have worked for the Company
for more than one year, the turnover rate through June 30, 1997 was 5.5%. As of
June 30, 1997, 72% of the Company's drivers had worked for the Company for more
than one year, and 61% of them had worked for the Company for more than two
years.
At June 30, 1997, Jevic employed 916 Company drivers. In addition, 105
owner-operator drivers provided services to the Company. The Company believes
that its proven ability to recruit and retain dedicated, skilled drivers is a
key factor in the Company's continued growth and success. The Company's
recruiting and selection methods are designed to attract the best drivers, which
contributes to customer satisfaction and reduced claims and insurance expense as
a percentage or revenues. Using this process, the Company has been able to more
effectively recruit, hire and retain a reliable, stable driver workforce.
Jevic's policy is to recruit drivers who reside along the Company's primary
lanes of traffic, which enables drivers to return home more often and reduces
the number of off-route miles. The Company hires drivers based upon driving
records and experience, and requires all drivers to be no less than 25 years of
age with at least three years of experience. New hires are required to undergo a
two-week orientation program designed to introduce them to Jevic's operating
strategy. The Company meets with new drivers within the first 90 days of
employment and periodically thereafter to carefully evaluate performance, assist
with compatibility with Jevic's operating structure and discuss any current
concerns.
The Company believes that its stringent selection criteria for drivers, and
its initial and regular refresher training courses for drivers, have been an
important factor in improving the Company's safety record. Drivers are eligible
for bonuses ranging from $500 to $2,500 annually for safe and courteous driving,
depending on seniority within the Company.
OWNER-OPERATORS
In 1996, the Company initiated an owner-operator program. At June 30, 1997,
the Company had contracts with 105 owner-operators which require the contractor
to furnish a tractor and a driver exclusively to transport, load and unload
goods carried by the Company. Owner-operators are subject to the same
recruitment criteria as employee drivers and undergo the same orientation and
training programs. The owner-operators are compensated at a contracted rate per
mile and per pickup and delivery made in-route. The owner-operator program
provides the Company with an alternative method of obtaining additional revenue
equipment with no capital investment, improving return on equity. It also
provides access to an additional pool of drivers in response to the intense
industry competition for qualified drivers and, to a lesser degree, serves to
reduce the Company's direct exposure to fuel price fluctuations. The Company
intends to continue to increase its use of owner-operators.
30
<PAGE>
REVENUE EQUIPMENT AND MAINTENANCE
At June 30, 1997, the Company operated 853 tractors. The Company's policy
is to use new road tractors for up to 500,000 miles, after which they are
generally traded in or sold. Based on current tractor mileage levels, this
translates to approximately three years for tractors used in interregional
operations and approximately five years for tractors used in regional or local
operations. The major operating systems of the Company's tractors are covered by
manufacturers' warranties for between 250,000 to 750,000 miles. Most of the
Company's tractors are covered by agreements under which the Company has the
right to resell the tractors to the vendor at a defined price. All owner-
operators' tractors are required to pass DOT inspection before use in the
Company's fleet.
At June 30, 1997, the Company operated a fleet of 1,480 trailers. Trailers
are generally traded after 10 years. However, in furtherance of its program to
add heated services capability to its trailer fleet on an accelerated schedule,
the Company intends to trade in certain non-heated trailers which are less than
10 years old by the end of 1997. At June 30, 1997, 53.9% of the Company's
trailers were equipped with integrated heating capability. The Company plans to
spend $3.6 million and $5.3 million to purchase new tractors and $4.8 million
and $5.2 million to purchase new trailers during the second half of 1997 and
during 1998, respectively.
The Company has rigid specifications for all tractor and engine components
and has selected, among others, Freightliner tractors and Cummins engines as its
standard equipment. The Cummins electronic diesel engines control speed and
decrease fuel consumption. All tractors have modern features designed to enhance
performance and provide driver comfort.
In order to enhance its Breakbulk-Free operating model, in 1994 Jevic
introduced the use of twin 28-foot trailers, or "pups," into its fleet. The
Company derives several advantages through the selective use of pup trailers.
The use of twin pups permits more freight to be hauled with one tractor than
could be hauled if one larger trailer were used. The pups are separated without
rehandling of freight, and deliveries are made from the two pups to different
destinations at the same time, providing a significant improvement in delivery
times. Deliveries via pup trailers can effectively double the number of
deliveries per day compared to a single 48 foot or 53 foot trailer. Jevic also
uses pups to effect deliveries in regions where the delivery density is high
enough to require it, but where pickup density has not developed to the point of
opening a new regional facility to originate shipments out of the region.
The Company believes that its heated service is better than that offered by
other motor carriers in several respects. The Company's trailers have a
permanently installed heating system integrated in an insulated trailer body. In
addition, the Company's trailers are designed so that the air is heated and
circulated inside the trailer by passing over a heat exchanger, with no exposure
to any sparks or flame. This provides increased safety for both the driver and
the cargo. In contrast, other companies which offer protective service
alternatively may preheat the cargo and/or cover it with a blanket or place a
portable heater in the trailer, which heats the cargo unevenly and ineffectively
and does not provide the same safety features of the Company's heated trailers.
In addition, competing carriers generally provide much more restrictive
protective services, refusing to transport shipments requiring protection from
freezing in extremely cold weather or over a weekend.
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<PAGE>
The following table reflects the model years of the Company's tractors and
trailers as of June 30, 1997:
<TABLE>
<CAPTION>
TRACTORS
------------------------------------------
MODEL YEAR ROAD REGIONAL LOCAL TOTAL
---------- ---- -------- ----- -----
<S> <C> <C> <C> <C>
1998........................................................................ 40 -- 10 50
1997........................................................................ 108 24 60 192
1996........................................................................ 130 54 66 250
1995........................................................................ 208 2 -- 210
1994........................................................................ 4 27 -- 31
1993 and prior.............................................................. 0 31 89 120(1)
--- --- --- ---
Total..................................................................... 490 138 225 853
</TABLE>
<TABLE>
<CAPTION>
TRAILERS
----------------------------------------------
28-FOOT
MODEL YEAR "PUPS" 48-FOOT 53-FOOT TOTAL
---------- ------- ------- ------- -----
<S> <C> <C> <C> <C>
1997..................................................................... -- 160 110 270
1996..................................................................... 50 199 -- 249
1995..................................................................... 70 -- -- 70
1994..................................................................... -- 100 -- 100
1993 and prior........................................................... 32 703 56 791(2)
--- ----- --- -----
Total.................................................................. 152 1,162 166 1,480(3)
</TABLE>
- ------------------
(1) The average age of these tractors is 6.9 years.
(2) The average age of these trailers is 6.4 years.
(3) Includes 798 heated trailers.
The Company's primary maintenance facility is located near its New Jersey
headquarters and main regional facility. In addition, routine and preventative
maintenance checks and repairs on all revenue equipment are performed at all of
the Company's regional facilities. Through regular maintenance of its revenue
equipment, Jevic minimizes equipment downtime and enhances the equipment's
operating performance.
SAFETY AND RISK MANAGEMENT
The Company is committed to a high degree of safety in all of its
operations, and utilizes a self-directed, team approach to risk management,
building in loss control at the earliest stages. Employees are provided with the
equipment and training required to do their jobs safely and efficiently. Drivers
are retrained for risk management on a periodic basis and are provided with
cameras to film accident scenes as soon as an incident occurs.
In 1996, claims and insurance as a percentage of operating revenues were
2.1%, which the Company believes is low in comparison to the trucking industry
as a whole. This performance is the result of careful driver recruiting,
extensive driver training and the emphasis on a safety-conscious culture
throughout the Company.
The Company is self-insured for cargo claims up to $5,000 per occurrence.
The Company self-insures for bodily injury claims for up to $20,000 per
occurrence. Since 1993 the Company has self-insured for workers' compensation
claims of up to $250,000 per occurrence in order to capitalize on its favorable
claims history. During the past four years the Company received only nine claims
exceeding $50,000, of which only two exceeded $100,000. This led to an increase
in the Company's discount from standard insurance premium rates from 38% in 1992
to 81% in 1997.
EMPLOYEES
At June 30, 1997, the Company employed 1,754 persons in the following
categories:
CATEGORY NO. OF EMPLOYEES
-------- ----------------
Drivers.................................................. 916
Executive and Administrative............................. 503
Dockworkers.............................................. 162
Mechanics................................................ 101
Sales and Marketing...................................... 72
None of Jevic's employees is represented by a collective bargaining unit.
At June 30, 1997, the Company had 105 owner-operator drivers under contract in
addition to its employee drivers, and employed 69 part-time employees.
Management believes that relations with its employees and owner-operators are
good.
32
<PAGE>
PROPERTIES
The Company owns its headquarters and main regional facility located in
Delanco, New Jersey, near Philadelphia. The Company also owns its Houston
regional facility and leases regional facilities in Atlanta, Charlotte, Chicago
and New England.
Owned Facilities
<TABLE>
<CAPTION>
SQUARE FOOTAGE
----------------------
TERMINAL
AND
LOCATION ACRES # OF DOORS OFFICE MAINTENANCE
-------- ----- ---------- -------- -----------
<S> <C> <C> <C> <C>
600 Creek Road, Delanco, NJ (Phila. Metro)............. 36.0 108 155,900 17,400
700 Creek Road, Delanco, NJ (Phila. Metro)(1).......... 19.5 -- 24,000 --
Houston................................................ 6.5 44 15,870 3,920
</TABLE>
Leased Facilities
<TABLE>
<CAPTION>
SQUARE FOOTAGE
------------------------
TERMINAL LEASE
LOCATION ACRES # OF DOORS AND OFFICE MAINTENANCE EXPIRATION
-------- ----- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Atlanta............................................... 18.0 74 34,400 7,056 April 1999
Charlotte(2).......................................... 11.7 47 34,750 6,400 April 2000
Chicago............................................... 12.3 82 56,900 11,600 May 1999
New England-1......................................... 4.1 22 8,700 -- April 1998
New England-2......................................... -- 16 4,000 -- March 1998
Willingboro, NJ....................................... 5.5 -- -- 24,000 December 2013
</TABLE>
- ------------------
(1) This facility is an office only.
(2) The Company intends to purchase this facility after completion of the
offering. See "Use of Proceeds" and "Certain Transactions."
FUEL AVAILABILITY AND COST
The motor carrier transportation industry is dependent upon the
availability of diesel fuel. Increases in fuel prices or fuel taxes, shortages
of fuel or rationing of petroleum products could have a material, adverse effect
on the operations and profitability of the Company. As a result of its
relationships with major fuel suppliers, the Company has not experienced
difficulties in maintaining a consistent and ample supply of fuel, but fuel is
one of the Company's most substantial operating expenses. In order to reduce the
Company's vulnerability to rapid increases in the price of fuel, the Company
enters into purchase contracts with fuel suppliers from time to time for a
portion of its estimated fuel requirements at guaranteed prices. The Company is
a party to agreements with two fuel suppliers to purchase approximately 40% of
its estimated fuel needs through March 1998 at guaranteed prices, which are
consistent with market prices on the date of this Prospectus. Although this
arrangement helps reduce the Company's vulnerability to rapid increases in the
price of fuel, the Company will not benefit from a decrease in the price of fuel
to the extent of its commitment to purchase fuel under these contracts.
COMPETITION
The trucking portion of the transportation industry is highly competitive
and fragmented. Jevic competes with regional, inter-regional and national LTL
carriers of varying sizes and, to a lesser extent, with truckload carriers, air
freight carriers and railroads, a number of which have greater financial
resources, operate more revenue equipment and have larger freight capacity than
the Company. Also, in certain regions, the Company faces competition from local
carriers. The Company's principal competitors are Roadway Express, Inc., Yellow
Corp., Consolidated Freightways Corp., Con-Way Transportation Services and
Arkansas Best Corp. See "Risk Factors - Competition."
The Company believes that the principal competitive factors in its business
are service, pricing and the availability and configuration of equipment that
meets a variety of customers' needs. The Company also competes
33
<PAGE>
with other motor carriers for the services of drivers. The Company believes that
it is able to compete effectively in its markets by providing consistently high
quality and timely-service at competitive prices.
The Company believes that there are substantial barriers to entry which
restrict the ability of competitors to adopt a Breakbulk-Free operating model.
Small LTL carriers typically lack the necessary critical mass, freight density
and capital, while large LTL carriers typically have work rules and labor
practices that lack the flexibility which a Breakbulk-Free system requires.
Truckload carriers lack a system to accommodate both multiple pick-ups and
multiple deliveries and would require a substantial capital investment to build
the necessary terminals. Additionally, the Breakbulk-Free operating model
requires high quality drivers and sophisticated operating systems and
management, which the Company has developed internally over an extended period
of years.
REGULATION
Interstate and intrastate motor carriage has been substantially deregulated
as a result of the enactment of the Motor Carrier Act of 1980, the Trucking
Industry Regulatory Reform Act of 1994, the Federal Aviation Administration
Authorization Act of 1994 and the ICC Termination Act of 1995. Carriers can now
readily enter the trucking industry and rates and services are largely free of
regulatory controls. However, interstate motor carriers remain subject to
certain regulatory controls imposed by agencies within the DOT, such as the
Federal Highway Administration and the Surface Transportation Board.
Interstate motor carrier operations are subject to safety requirements
prescribed by the United States Department of Transportation ("DOT"). Such
matters as weight and dimension of equipment are also subject to federal and
state regulations. Since 1989, DOT regulations have imposed mandatory drug
testing of drivers, and more recent DOT regulations have imposed certain tests
for alcohol levels in drivers and other safety personnel. To date, the DOT's
national commercial driver's license and drug testing and alcohol testing
requirements have not adversely affected the availability to the Company of
qualified drivers.
The Federal Aviation Administration Authorization Act of 1994, which became
effective on January 1, 1995, essentially deregulated intrastate transportation
by motor carriers. This Act prohibits individual states from regulating entry,
pricing or service levels. However, the states retained the right to continue to
require certification of carriers, but this certification is based only upon two
primary fitness criteria: safety and insurance.
The Company's operations are subject to various environmental laws and
regulations dealing with, among other things, the transportation, storage,
presence, use, disposal and handling of hazardous materials, discharge of
stormwater and underground fuel storage tanks. All of the Company's drivers are
trained in the handling and transportation of hazardous substances and are
required to have a hazardous materials endorsement on their drivers license. The
Company believes it is in compliance with applicable environmental laws and
regulations.
The transportation industry is subject to regulatory and legislative
changes that can affect the economics of the industry by requiring changes in
operating practices or influencing the demand for and the costs of providing
services to shippers. From time to time, various legislative proposals are
introduced to increase federal, state, or local taxes, including taxes on motor
fuels. The Company cannot predict whether, or in what form, any increase in such
taxes applicable to the Company will be enacted.
LEGAL PROCEEDINGS
The Company is routinely a party to litigation incidental to its business,
primarily involving claims for workers' compensation or for personal injury and
property damage incurred in the transportation of freight. Management believes
that the outcome of such actions will not have a material adverse effect on the
Company's financial position or results of operations. The Company maintains
insurance which covers liability amounts in excess of retained liabilities from
personal injury and property damage claims.
34
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographies set forth information concerning the
individuals who serve or who will serve upon completion of the offering as
directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Harry J. Muhlschlegel........................ 50 Chairman of the Board and Chief Executive Officer
Karen B. Muhlschlegel........................ 50 Vice President, Secretary and Director
Paul J. Karvois.............................. 42 President, Chief Operating Officer and Director
Brian J. Fitzpatrick......................... 37 Senior Vice President - Finance and Chief Financial Officer
William F. English........................... 45 Senior Vice President - Operations
Joseph A. Librizzi........................... 48 Senior Vice President - Marketing and Sales
Gordon R. Bowker............................. 70 Director
Samuel H. Jones, Jr.......................... 64 Director
</TABLE>
Harry J. Muhlschlegel. Mr. Muhlschlegel has over 28 years of experience in
the trucking industry. He co-founded Jevic along with his wife, Karen
Muhlschlegel, in 1981 and has served as its Chairman of the Board and Chief
Executive Officer since its inception. Until March 1997, he also served as the
Company's President.
Karen B. Muhlschlegel. Ms. Muhlschlegel has over 28 years of experience in
the trucking industry. She co-founded Jevic along with her husband, Harry
Muhlschlegel, in 1981 and has served as a Vice President, Secretary and a
director of the Company since its inception.
Paul J. Karvois. Mr. Karvois became Jevic's President and Chief Operating
Officer in March 1997 and he was elected as a director in August 1997. He joined
the Company in January 1992 as Director of Insurance. Later in 1992, he created
the Company's risk management group and became Director of Risk Management. Mr.
Karvois was promoted to the position of Senior Vice President - Marketing and
Sales in December 1993. Prior to joining the Company, Mr. Karvois had 21 years
of marketing, sales and operations experience in the trucking industry, serving
in a variety of positions with truckload and LTL carriers.
Brian J. Fitzpatrick. Mr. Fitzpatrick joined Jevic in September 1993 as
Senior Vice President - Finance, and was elected to the office of Chief
Financial Officer in February 1995. Prior to joining the Company, Mr.
Fitzpatrick served for seven years with United Jersey Bank/South (now Summit
Bank), most recently as a Vice President, responsible for southern New Jersey
middle market development. Prior to joining the Company, Mr. Fitzpatrick had
twelve years of commercial banking experience.
William F. English. Mr. English joined Jevic in August 1988 as Senior Vice
President - Operations. Prior to joining the Company, Mr. English had 17 years
of operations, financial and marketing experience in the transportation
industry, including positions with national LTL and truckload carriers.
Joseph A. Librizzi. Mr. Librizzi joined Jevic in April 1997 as Senior Vice
President - Marketing and Sales. Prior to joining the Company, Mr. Librizzi had
more than 26 years of experience in the transportation industry. From 1996 until
he joined the Company, Mr. Librizzi served as a Vice President of G.O.D.
responsible for new market development. From 1992 until 1996, he served as an
officer of Carretta LTR, Inc., first as Vice President of LTL Sales and later as
the company's President.
Gordon R. Bowker. Mr. Bowker has agreed to serve as a director of Jevic
upon completion of the offering. Mr. Bowker served in various positions with
Ryder Truck Rentals from 1968 to 1973, most recently as Group Vice President, a
senior officer reporting directly to the President. Since 1973, Mr. Bowker has
been the owner and President of Bowker, Brown & Co., a management consulting
firm serving transportation related companies in the areas of truck renting and
leasing, business appraisal and sales and divestitures. Mr. Bowker has served on
the
35
<PAGE>
Arbitration Panel of the New York Stock Exchange since 1988, and has served on
the Arbitration Board of the National Asssociation of Securities Dealers since
1991.
Samuel H. Jones, Jr. Mr. Jones has agreed to serve as a director of Jevic
upon completion of the offering. Since 1971, Mr. Jones has been the owner and
President of S-J Transportation Co., a company specializing in the
transportation of industrial waste nationwide and in two Canadian provinces.
Since 1991, he has been the owner and President of S-J Venture Capital Company.
In addition, Mr. Jones currently serves as a director of MetaCreations, Inc. and
Fulton Financial Corporation, as well as a number of privately-held
organizations.
Mr. Bowker and Mr. Jones have agreed to serve on the Company's Board of
Directors upon completion of the offering, at which time the Board will be
divided into three classes serving for the terms noted below and thereafter for
staggered three-year terms. Mr. Muhlschlegel will be a Class I director with an
initial term expiring at the annual meeting of shareholders in 2000; Ms.
Muhlschlegel and Mr. Karvois will be Class II directors with an initial term
expiring at the annual meeting of shareholders in 1999; and Mr. Bowker and Mr.
Jones will be Class III directors with an initial term expiring at the annual
meeting of shareholders in 1998. The Restated Certificate does not provide for
cumulative voting in the election of directors. The Company's executive officers
are elected annually by the Board of Directors and serve at the discretion of
the Board.
Board Committees. Following completion of this offering, the Board of
Directors will have an Audit Committee, composed of Mr. Bowker and Mr. Jones and
a Compensation Committee, composed of Mr. Muhlschlegel, Mr. Bowker and Mr.
Jones. The principal functions of the Audit Committee will include making
recommendations to the Board regarding the selection of independent public
accountants to audit annually the books and records of the Company reviewing the
proposed scope of each audit and reviewing the recommendations of the
independent public accountants as a result of their audit of the Company. The
Audit Committee will also periodically review the activities of the Company's
accounting staff and the adequacy of the Company's internal controls. The
Compensation Committee will be responsible for establishing the salaries of the
executive officers of the Company, incentives and other forms of compensation
and benefit plans and administering the Company's employee benefit plans.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions. In 1996, decisions concerning compensation of executive officers
were made by the Company's Board of Directors, consisting, at that time, of
Harry and Karen Muhlschlegel. See "Certain Transactions."
Compensation of Directors. Prior to this offering, directors of the
Company were not compensated for their services as such. Following completion of
this offering, the Company will pay each director who is not an employee of
Jevic (an "outside director") $500 for each meeting of the Board of Directors
and Board Committee attended. The Company will also reimburse such directors for
their expenses incurred in connection with their activities as directors. The
Company also has an incentive plan which provides for the automatic grant of
stock options to outside directors. See "Executive Compensation - Executive
Incentive Plans - 1997 Incentive Plan."
36
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation. The following table sets forth, with respect to
services rendered during 1996, the total compensation paid to or for the account
of the Company's Chief Executive Officer and its three other executive officers
whose total annual salary and bonus exceeded $100,000 during 1996 (the "named
executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------
<S> <C> <C> <C> <C>
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS ($) COMPENSATION(1)
- --------------------------- ---- ------- --------- ---------------
Harry J. Muhlschlegel.............................................. 1996 $ 505,000 $ -- $31,824
Chief Executive Officer and Chairman of the Board (2)
Paul J. Karvois.................................................... 1996 $ 123,077 $25,000 $ 8,492
President and Chief Operating Officer (2)
Brian J. Fitzpatrick............................................... 1996 $ 158,703 $25,000 $ 8,901
Senior Vice President and Chief Financial Officer
William F. English................................................. 1996 $ 140,400 $25,000 $ 7,449
Senior Vice President - Operations
</TABLE>
- ------------------
(1) These amounts include matching contributions made by the Company under the
401(k) Plan on behalf of the executives in the following amounts: Mr.
Muhlschlegel - $950; Mr. Karvois - $1,218 and Mr. Fitzpatrick - $950. The
Company is a party to "split dollar" life insurance agreements with Messrs.
Muhlschlegel, Karvois, Fitzpatrick and English under which the Company
advances all or a portion of the premiums on permanent life insurance
policies insuring the lives of the executives and owned by the executives.
Upon termination of the executives' employment or the executives' death (or
upon the second to die of Mr. and Ms. Muhlschlegel in the case of Mr.
Muhlschlegel's agreement), all premiums previously advanced by the Company
under the policies are required to be repaid by the executive. The Company
retains an interest in the policies' cash values and excess death benefits
to secure the executives' repayment obligations. The amounts set forth in
the table include the following amounts representing the value of the
premium payments by the Company in 1996 projected on an actuarial basis
assuming that each executive retires at age 65 and the agreements are then
terminated: Mr. Muhlschlegel - $30,874, Mr. Karvois - $7,274, Mr.
Fitzpatrick - $7,951 and Mr. English - $7,448.
(2) In March 1997, Mr. Muhlschlegel resigned from the office of President,
retaining his position as Chief Executive Officer and Chairman of the Board.
At that time, Mr. Karvois was promoted from Senior Vice President -
Marketing and Sales to President and Chief Operating Officer, at an annual
salary of $250,000.
Option Holdings. The following table sets forth certain information
regarding the number and exercise price of options to purchase Common Stock held
by the named executive officers at December 31, 1996. No options were exercised
by or granted to the named executive officers in 1996.
37
<PAGE>
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END(#) AT YEAR-END($)(1)
---------------------- --------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
Harry J. Muhlschlegel.................................... -- --
Paul J. Karvois.......................................... 0/137,164 $0/$618,610
Brian J. Fitzpatrick..................................... 0/137,164 $0/$618,610
William F. English....................................... 0/137,164 $0/$618,610
</TABLE>
- ------------------
(1) Value equals an assumed per share initial public offering price of $13 per
share less the per share exercise price.
EXECUTIVE INCENTIVE PLANS
1997 Incentive Plan
The Company's 1997 Incentive Plan (the "Incentive Plan") authorizes the
issuance of up to 1,500,000 shares of its Common Stock to its employees,
directors, consultants and other individuals who perform services for the
Company pursuant to stock options and other performance-based awards granted
under the Incentive Plan.
The Compensation Committee of the Board of Directors administers the
Incentive Plan. Under the terms of the Incentive Plan, the Compensation
Committee is required to be composed of two or more directors. The Compensation
Committee has the authority to interpret the Incentive Plan and to determine and
designate the persons to whom options or awards shall be made and the terms,
conditions and restrictions applicable to each option or award (including, but
not limited to, the price, any restriction or limitation, any vesting schedule
or acceleration thereof, and any forfeiture restrictions).
Pursuant to the Incentive Plan, on the date of this Prospectus,
non-qualified options to purchase 12,500 shares of Common Stock will be granted
to each of Mr. Bowker and Mr. Jones, and options to purchase an aggregate of
approximately 575,000 shares will be granted to Jevic employees (including an
aggregate of 95,000 options to be granted to the named executive officers, other
than Mr. Muhlschlegel), in each case at an exercise price equal to the initial
public offering price set forth on the cover page of this Prospectus. Of these
options, 40% will vest on the second anniversary of the date of grant and 20%
will vest on each of the three succeeding anniversaries. Upon the initial
election of any outside director to the Board after the date of this Prospectus,
a non-qualified option to purchase 12,500 shares of Common Stock will be granted
to such outside director at an exercise price equal to the fair market price on
the date of grant. In addition, upon each election of any outside director to
the Board by the shareholders in or after the third year following such
director's preceding election to the Board, a non-qualified option to purchase
an additional 5,000 shares of Common Stock will be made to such outside director
at an exercise price equal to the fair market price on the date of grant, with
vesting provisions identical to those noted above.
The Incentive Plan contains provisions for granting various
performance-based awards, including incentive stock options as defined in
Section 422 of the Code, nonqualified stock options, restricted stock,
performance shares and performance units (as further described below). The term
of the Incentive Plan is ten years, subject to earlier termination or amendment.
Except with respect to stock option grants to outside directors, as
described above, the Compensation Committee has the power to select award
recipients and their allotments and to determine the price, terms and vesting
schedule for awards granted. While there are no predetermined performance
formulas or measures or other specific criteria used to determine recipients of
awards under the Incentive Plan, awards are based generally upon consideration
of the grantee's position and responsibilities, the nature of services provided
and accomplishments, the value of the services to the Company, the present and
potential contribution of the grantee to the success of the Company, the
anticipated number of years of service remaining and other factors the Board or
the Compensation Committee may deem relevant. Employees covered by a collective
bargaining agreement are not eligible to receive awards, exercise outstanding
awards, receive shares or cash pursuant to outstanding awards, or have
restrictions lapse with respect to outstanding restricted stock awards, unless
such collective bargaining agreement, by specific reference to the Incentive
Plan, expressly provides for participation in the Incentive Plan.
38
<PAGE>
Stock Options. The Incentive Plan provides for the grant of "incentive
stock options," as defined in Section 422 of the Code, to employees of the
Company. The Incentive Plan also provides for the grant of stock options that do
not qualify as incentive stock options under the Code ("nonqualified stock
options") to employees of the Company, directors of the Company, and consultants
and other individuals who perform services for the Company but are not employed
by the Company. The exercise price of any incentive stock option granted under
the Incentive Plan may not be less than 100% of the fair market value of the
Company's Common Stock on the date of grant. Options granted under the Incentive
Plan may be exercised for cash or in exchange for shares of Common Stock owned
by the option holder having a fair market value on the date of exercise equal to
the option exercise price. The aggregate fair market value, determined on the
date of grant, of the shares with respect to which incentive stock options are
exercisable for the first time by an employee during any calendar year may not
exceed $100,000.
Under the Incentive Plan, each option is exercisable for the full amount or
for any part thereof at such intervals or in such installments as the
Compensation Committee shall determine at the time it grants an option. However,
no award shall be exercisable with respect to any shares of Common Stock later
than ten years after the date of the grant of such options. Unless otherwise
specified by the Compensation Committee with respect to a particular option, all
options are non-transferable, except upon death, by the optionee. The shares
subject to expired options or terminated options which remain unexercised become
available for future grants.
If an optionee ceases to be employed by, or to render services to, the
Company for any reason other than death, disability or termination for cause,
unless otherwise specified by the Compensation Committee with respect to a
particular option, any option exercisable on the date of such termination
generally may be exercised for a period of 30 days from the date of such
termination or until the expiration of the stated term of the option, whichever
period is shorter. In the event of termination of employment or service by
reason of death, unless otherwise specified by the Compensation Committee with
respect to a particular option, any option exercisable at the date of such
termination generally may be exercised for a period of one year from the date of
termination or until the expiration of the stated term of the option, whichever
period is shorter. In the event of termination of employment or service by
reason of the participant's disability, unless otherwise specified by the
Compensation Committee with respect to a particular option, any option
exercisable at the date of such termination generally may be exercised for a
period of six months from the date of termination or until the expiration of the
stated term of the option, whichever is shorter. If a participant's employment
or service is terminated for cause, any option not exercised prior to the date
of such termination shall be forfeited. In the event of a change of control of
the Company, the Compensation Committee may cause all outstanding options to
become immediately fully exercisable.
Restricted Stock. "Restricted Stock" are shares of the Company's Common
Stock granted to an employee for no cash consideration, which, except in the
event of the participant's death or disability, will be forfeited to the Company
if the grantee ceases to be an employee of the Company during a restriction
period specified by the Compensation Committee at the time it grants the
Restricted Stock. In the event of death or disability, the restrictions will
lapse with respect to that percentage of Restricted Stock held by the grantee
that is equal to the percentage of the restriction period that had elapsed as of
the date of death or commencement of disability. In the event of a change of
control of the Company, the Compensation Committee may cause all restrictions on
shares of Restricted Stock to lapse. Shares of Restricted Stock that are
forfeited become available for future grants.
Performance Shares. A "Performance Share" is an award of the right to
receive stock at the end of a specified period upon the attainment of
performance goals specified by the Compensation Committee at the time of grant.
Performance Shares generally will be forfeited if the grantee ceases to be an
employee of the Company during the performance period for any reason other than
death or disability. In the event of death or disability, the participant or his
or her estate will be entitled to receive, at the expiration of the performance
period, a percentage of his or her Performance Shares equal to the percentage of
the performance period that had elapsed at the time of death or commencement of
disability, provided that the Compensation Committee determines that the
applicable performance goals have been met. In the event of a change of control
of the Company, the Compensation Committee may cause all conditions applicable
to the Performance Shares to terminate and issue the grantee a certificate or
certificates evidencing shares subject to the Performance Share award.
Performance Shares that are forfeited or not delivered to the grantee become
available for future grants.
Performance Units. A "Performance Unit" is an award of the right to
receive cash at the end of a specified period upon the attainment of performance
goals specified by the Compensation Committee at the time of the grant.
39
<PAGE>
The amount payable under a Performance Unit is equal to the increase in value of
a Unit from the date of award to the date of attainment of the performance
goals. Performance Units generally will be forfeited if the grantee ceases to be
an employee of the Company during the performance period for any reason other
than death or disability. In the event of death or disability, the grantee or
his or her estate will be entitled to receive, at the expiration of the
performance period, a percentage of his or her Performance Units equal to the
percentage of the performance period that elapsed at the time of death or
commencement of disability, provided that the Compensation Committee determines
that the applicable performance goals have been met. In the event of a change of
control of the Company, the Compensation Committee may cause all conditions
applicable to the Performance Units to terminate and a cash payment for the full
amount of the Performance Units to be made to the grantee.
1994 Stock Option Plan
The Company's 1994 Stock Option Plan (the "Option Plan") provides for the
grant of options to purchase up to 685,820 shares of the Common Stock of the
Company to employees, not including directors who are not also employees. The
options granted under the Option Plan are intended to constitute either
incentive stock options within the meaning of Section 422 of the Code, or
non-qualified stock options, as determined by the Board of Directors or
Compensation Committee, as the case may be, at the time of grant. On December
31, 1994, the Board of Directors granted non-qualified options to purchase all
685,820 shares of Common Stock available for issuance under the Option Plan to
executive officers and key employees of the Company at an exercise price of
$8.49 per share, which was determined by the Board to be the fair market value
of the shares on the date of grant. Of this amount, an option to purchase
137,164 shares was granted to each of Messrs. Karvois, Fitzpatrick and English.
No additional option grants will be made under the Option Plan.
The Option Plan has been administered by the Board of Directors of the
Company but, following the formation thereof, shall be administered by the
Compensation Committee of the Board of Directors. The Compensation Committee has
the authority to interpret the Option Plan and to determine and designate the
persons to whom options shall be granted and the terms, conditions and
restrictions applicable to each option (including, but not limited to, the
exercise price and the amendment of any option to, for example, accelerate the
exercise date or change the termination date of any option).
Stock options may be exercised within the earlier of 60 days after the
optionee's termination of employment, to the extent exercisable prior to such
termination (180 days after the optionee's death or Disability (as defined in
the Stock Option Plan)). Options granted under the Option Plan, to the extent
not earlier vested, will vest on the 10th anniversary of the date of grant and
must be exercised within 30 days after the vesting date. In the event the
Company completes a Public Offering (defined in the Option Plan), options
granted under the Option Plan vest ratably over a five-year period commencing on
the first anniversary of the offering. The offering of shares hereunder will
constitute a Public Offering pursuant to the terms of the Option Plan and will
initiate the vesting of the options granted thereunder. The Option Plan provides
for the automatic acceleration of the exercisability of all outstanding options
upon the occurrence of a Sale of the Company (as defined in the Option Plan);
provided that options accelerated in this manner must be exercised at or in
connection with such Sale of the Company. The Compensation Committee may
generally amend, alter or discontinue the Option Plan at any time, but no
amendment, alteration or discontinuation will be made which would impair the
rights of an optionee with respect to an outstanding stock option.
Employee Stock Purchase Plan
The Company has adopted an Employee Stock Purchase Plan (the "Purchase
Plan"), effective upon completion of this offering, which will allow all full
time employees of the Company, subject to certain limitations, to purchase
shares of the Company's Common Stock at a discount from the prevailing market
price at the time of purchase. Such shares may either be issued by the Company
from its authorized and unissued Common Stock or purchased by the Company on the
open market. Any employee owning five percent or more of the voting power or
value of the Company is not eligible to participate in the Purchase Plan. A
maximum of 300,000 shares of the Company's Common Stock will be available for
purchase under the Purchase Plan.
An eligible employee will be able to specify, before the commencement of
each semi-annual period, an amount to be withheld from his or her paycheck and
credited to an account established for him or her (the "Participation Account").
Amounts in the Participation Account will be applied to the purchase of shares
of the Company's Common Stock on the last day of each semi-annual period. The
price of such shares will be equal to 85% of the
40
<PAGE>
average of the high and low sales prices per share of the Company's Common Stock
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading or, if not listed or traded on any such exchange,
on the Nasdaq National Market. Only whole shares of Common Stock may be
purchased. Amounts withheld from an employee's paycheck and not applied to the
purchase of whole shares of Common Stock will, at the election of the employee,
either remain credited to the employee's Participation Account or be returned to
the employee.
Upon termination of an employee's employment for any reason other than
death or a leave of absence beyond 90 days, all amounts credited to such
employee's Participation Account shall be returned to him or her. Upon
termination of an employee's employment because of death, all amounts credited
to such employee's Participation Account shall be returned for his or her
successor-in-interest.
The Purchase Plan will be administered by the Compensation Committee of the
Board of Directors. The Board of Directors may amend or terminate the Purchase
Plan. The Purchase Plan is intended to comply with the requirements of Section
423 of the Code.
401(k) Plan
The Company maintains a 401(k) Profit-Sharing Plan ("401(k) Plan") for the
benefit of its eligible employees which consists of a 401(k) component and a
profit-sharing component. The 401(k) Plan, which is intended to be qualified
under the Code, is a cash or deferred profit-sharing plan covering all of the
employees of the Company who have completed at least six consecutive months of
service and have attained the age of 20 1/2.
Under the 401(k) component, participants may elect to defer between 1% and
15% of their compensation up to a maximum of $9,500 per year, as adjusted for
inflation and to deposit such amount in the 401(k) Plan Fund. The Company is
also currently matching 25% of all amounts contributed by a participant, up to a
deferral contribution of 6% of a participant's compensation. Under the
profit-sharing provisions of the 401(k) Plan, the Company may make contributions
in amounts to be determined by the Company in its sole discretion. Any such
Company profit-sharing contributions will be allocated among all eligible
employees, in proportion to that employee's compensation from the Company as
integrated with social security. The Company's matching contributions and
profit-sharing contributions allocated to each participant vest over seven
years, or earlier upon attainment of the appropriate retirement age, upon
retirement for disability, upon death and upon termination of the 401(k) Plan.
All contributions under the Plan are currently invested, subject to
participant-directed elections, in mutual funds managed by Fidelity Investments.
Following the offering, the Company intends to amend the Plan to adopt a Company
stock investment fund ("Stock Fund"). Plan participants will be entitled to
direct the investment of all or a portion of their account balances into the
Stock Fund. Shares of Common Stock of the Company will be purchased by the
trustee of the Plan either on the open market or from the Company's authorized
but unissued shares to provide the required shares to the Stock Fund. Upon a
distribution event, participants with account balances invested in the Stock
Fund will receive a cash distribution equal to the value of their investment in
the Stock Fund.
Payment of Plan benefits are generally made in a single lump sum.
Distribution of a participant's vested interest in his account generally occurs
on the earlier of his termination of employment for any reason (including
retirement, death or disability) or by the April 1 following the calendar year
the participant reaches age 70 1/2 if he is still employed.
Supplemental Executive Retirement Plan
Prior to the completion of the offering, the Company intends to adopt a
nonqualified deferred compensation plan known as a supplemental executive
retirement plan ("SERP"). Only those executives selected by the Board of
Directors will be entitled to participate in the SERP. Pursuant to the SERP,
participants will be entitled to elect, in advance, to reduce salary or bonus
income and have that reduction credited to an account under the SERP. To the
extent all or a portion of the participant's deferral relates to amounts that
could have been contributed to the 401(k) Plan, but for the application of
certain nondiscrimination guidelines, the Company will credit a matching
contribution amount equal to what would have been contributed to the 401(k)
Plan, in the absence of the guidelines.
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<PAGE>
CERTAIN TRANSACTIONS
The Company purchased its principal office and regional facility located in
Delanco, New Jersey from Harry and Karen Muhlschlegel in March 1995 for $5.5
million, which reflects an independent appraised value of $7.5 million less the
cost of improvements made to the site by the Company in the amount of $2.0
million. As required by generally accepted accounting principles, the Company
recorded the purchased facility at the Muhlschlegels' historical carrying value
as of the purchase date, with the excess consideration of $681,000 recorded as a
dividend. The purchase price was paid by the issuance of a promissory note to
the Muhlschlegels in the principal amount of $1.1 million due in March 2000,
bearing interest at 8%, and through the assumption of a mortgage loan of
approximately $4.4 million. The mortgage loan, which bore interest at 8% per
annum and was to mature in December 1998, was refinanced by the Company in
November 1995. The $1.1 million note payable to the Muhlschlegels was paid in
full in 1996. The Company paid the Muhlschlegels $45,743 in interest on this
note in 1995 and $93,761 in 1996. Prior to the purchase, the Company leased the
facility from the Muhlschlegels. The aggregate rent paid on the property by the
Company to the Muhlschlegels in 1994 and 1995 was $571,200.
The Company has leased its regional facility in metropolitan Charlotte,
North Carolina from Harry and Karen Muhlschlegel since 1995. Rent expense on the
property was $196,065 and $261,420 during 1995 and 1996, respectively, and was
$130,710 for the six months ended June 30, 1997. The Company plans to purchase
this facility from the Muhlschlegels after the offering, through the repayment
of an outstanding bank mortgage loan in the principal amount of $2.0 million. As
required by generally accepted accounting principles, the Company will record
the purchase at the Muhlschlegels' historical carrying value as of the purchase
date, with the excess consideration ($700,000 as of June 30, 1997) recorded as a
dividend. The mortgage loan matures in April 2000, bears interest of 9% per
annum and requires regular monthly installment payments of principal and
interest of $21,875. The mortgage loan will be repaid with a portion of the
proceeds of this offering. See "Use of Proceeds."
The Company currently leases its primary maintenance facility in
Willingboro, New Jersey from Harry and Karen Muhlschlegel. Rent expense on the
property was $114,240 for each of 1994, 1995 and 1996, respectively, and was
$57,120 for the six months ended June 30, 1997. The Company's lease expires in
2013 and requires aggregate rental payments of $114,240 in each of 1997 and
1998.
In April 1997, grantor annuity trusts for Harry and Karen Muhlschlegel
borrowed a total of $438,065 from the Company. The loans are collateralized by
the shares of Class A Common Stock held by the trusts, are due in October 1998
and bear interest at the short-term applicable federal rate of interest.
Interest owed through June 30, 1997 approximated $5,400.
Jevic Transportation Services, Inc. ("JTS"), a freight brokerage company
owned by the Muhlschlegels, is expected to be merged into the Company after the
offering. JTS had gross revenues of approximately $1.0 million for the fiscal
year ended December 31, 1996. The Muhlschlegels will receive $125,000 from the
Company in exchange for their JTS stock in the merger, which is equal to their
capital investment in JTS. In 1996 and the first six months of 1997, the Company
recorded sales of $105,000 and $111,000 to JTS and incurred purchased
transportation expenses to JTS of $46,000 and $346,000. The Company entered into
a one-year agreement with JTS in August 1997, under which the Company provides
certain administrative services to JTS in consideration of the reimbursement by
JTS of the Company's costs of providing such services.
Jevic is a party to two intermediary agreements with Bowker, Brown & Co.,
pursuant to which Bowker, Brown would receive a 7% commission from the Company
if the Company acquires either of two specified trucking companies. In addition,
the Company paid Bowker, Brown a total of $10,000 in 1994 and 1995 for a
business appraisal. Gordon R. Bowker, who will serve as a director of Jevic upon
completion of the offering, is the owner of Bowker, Brown & Co. The Company does
not have any commitments or agreements for any business acquisition and is not
in active negotiations regarding any such acquisition.
The Company considers the terms of its transactions with the Muhlschlegels
and Mr. Bowker to be at arms length, reasonably equivalent to terms it could
obtain through negotiations with an unaffiliated third party during similar
economic conditions.
In the future, the Company will not enter into any transactions with
officers, directors or other affiliates unless the terms are as favorable to the
Company as those generally available from unaffiliated third parties and the
transactions are approved by a majority of disinterested directors.
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PRINCIPAL SHAREHOLDERS
The table below sets forth as of September 15, 1997 certain information
regarding the beneficial ownership of the Company's Common Stock by each of the
Company's directors, each of the named executive officers, each person owning
beneficially more than 5% of the Common Stock or Class A Common Stock and all
directors and executive officers of the Company as a group both before and after
giving effect to this offering. Except as otherwise indicated, the persons named
in the table have sole voting and investment power with respect to all Common
Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
PERCENT OF BENEFICIAL
OWNERSHIP
---------------------
NAME AND ADDRESS NUMBER PRIOR TO AFTER
OF BENEFICIAL OWNER OF SHARES OFFERING OFFERING
------------------- --------- -------- --------
<S> <C> <C> <C>
Harry J. Muhlschlegel (1).............................................. 3,051,899(2) 44.5% 28.6%(3)
Karen B. Muhlschlegel (1).............................................. 3,051,899(4) 44.5% 28.6%(3)
Paul J. Karvois........................................................ -- -- --
Brian J. Fitzpatrick................................................... -- -- --
William F. English..................................................... -- -- --
Gordon R. Bowker....................................................... -- -- --
Samuel H. Jones, Jr.................................................... -- -- --
Bruce D. Burdick....................................................... 754,402(5) 11.0% 7.1%
George K. Reynolds..................................................... 548,656(5) 8.0% 5.1%
All directors and executive
officers as a group (8 persons)...................................... 6,103,798 89.0% 57.3%
</TABLE>
- ------------------
(1) Shares of Class A Common Stock are convertible into shares of Common Stock
on a 1-for-1 basis. The Class A Common Stock is entitled to two votes per
share, while the Common Stock is entitled to one vote per share. The shares
owned by Mr. and Ms. Muhlschlegel are shares of Class A Common Stock and are
reflected on an as-converted basis. The address of each of the Muhlschlegels
is P.O. Box 5157, Delanco, New Jersey 08075. See "Description of Capital
Stock."
(2) Of these shares, 514,365 are held by Harry J. Muhlschlegel as trustee of a
trust under which the Muhlschlegels' children are beneficiaries.
(3) If the Underwriters' over-allotment option is exercised in full, Mr. and Ms.
Muhlschlegel will each beneficially own 2,766,899 shares of Class A Common
Stock following the offering, constituting 26.9% of the Common Stock
outstanding after the offering, assuming conversion into Common Stock.
(4) Of these shares, 514,365 are held by Karen B. Muhlschlegel as trustee of a
trust under which the Muhlschlegels' children are beneficiaries.
(5) These shares are held pursuant to trusts for the benefit of members of the
Muhlschlegel Family, and include 548,656 shares of Common Stock which Mr.
Burdick and Mr. Reynolds hold as co-trustees. The amount set forth for Mr.
Burdick also includes 205,746 shares of Class A Common Stock, which is
reflected on an as-converted basis. The address of Mr. Burdick is 148
Catherine Lane, Grass Valley, California 95945 and the address of Mr.
Reynolds is Gordon, Feinblatt, Rothman, Hoffberger and Hollander, LLC, The
Garnet Building, 233 East Redwood Street, Baltimore, Maryland 21202-3332.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of the date of this Prospectus, the Company's authorized capital stock
consists of 50,000,000 shares of Common Equity, no par value and 10,000,000
shares of preferred stock, no par value. The Common Equity is divided into two
series, consisting of 40,000,000 shares of Common Stock, no par value and
10,000,000 shares of Class A Common Stock, no par value. As of September 15,
1997, 548,656 shares of Common Stock and 6,309,544 shares of Class A Common
Stock were issued and outstanding. No shares of preferred stock have ever been
issued. Upon completion of the offering, there will be 4,348,656 shares of
Common Stock outstanding and 2,485,820 shares of Common Stock will be reserved
for issuance under the Company's employee benefit plans, including 1,285,820
shares issuable upon exercise of options which will be outstanding upon the
completion of the offering.
COMMON EQUITY (COMMON STOCK AND CLASS A COMMON STOCK)
Voting. Holders of Common Stock are entitled to one vote per share.
Holders of Class A Common Stock are entitled to two votes per share. All actions
submitted to a vote of shareholders are voted on by holders of Common Stock and
Class A Common Stock voting together as a single class, except as otherwise
provided in the Restated Certificate or by law. No holder of Common Equity may
cumulate such holder's votes in voting for directors.
Limitations on Transfer of Class A Common Stock. No holder of Class A
Common Stock may transfer such holder's shares or any interest therein except to
certain "permitted transferees," including such holder's spouse, certain other
relatives of such holder, certain trusts established for the benefit of,
partnerships comprised solely of, or corporations wholly owned by, the holder or
such relatives, and charitable organizations controlled by the holder or such
holder's family members.
Conversion. The Common Stock has no conversion rights. Class A Common
Stock may be converted into Common Stock, in whole or in part, at any time and
from time to time on the basis of one share of Common Stock for each share of
Class A Common Stock. If at any time any shares of Class A Common Stock are
transferred or otherwise become beneficially owned by any person other than a
permitted transferee (as described above), or upon the occurrence of certain
events specified in the Restated Certificate, such shares shall automatically be
converted into an equal number of shares of Common Stock.
Dividends. Holders of Common Stock and Class A Common Stock are entitled
to receive dividends or distributions as may be declared by the Board of
Directors of the Company from funds legally available therefor. All such
dividends or distributions are to be paid or made in equal amounts, share for
share, to holders of Common Stock and Class A Common Stock as if a single class.
In the case of any dividend paid in stock, holders of Common Stock and Class A
Common Stock are entitled to receive such dividend at the same rate per share,
but the dividend payable on shares of Common Stock shall be payable in shares of
Common Stock, and the dividend payable on shares of Class A Common Stock shall
be payable in shares of Class A Common Stock.
Liquidation. Holders of Common Stock and Class A Common Stock share with
each other on a ratable basis as a single class in the net assets of the Company
available for distribution in respect of Common Stock and Class A Common Stock
in the event of liquidation.
Other Terms. Neither the Common Stock nor the Class A Common Stock may be
subdivided, consolidated, reclassified or otherwise changed unless
contemporaneously therewith the other class of shares is subdivided,
consolidated, reclassified or otherwise changed in the same proportion and in
the same manner. In any distribution of stock of any other corporation or any
merger, consolidation or business combination involving the Company, the
consideration to be received per share by holders of either Common Stock or
Class A Common Stock must be identical to that received by holders of the other
class of Common Equity. If the holders of Common Stock are granted options or
rights to subscribe for shares of Common Stock or any other security, the
holders of Class A Common Stock shall be granted the same options or rights on
an as-if-converted basis.
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<PAGE>
The rights, preferences and privileges of holders of both classes of Common
Equity are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of preferred stock which the Company may
designate and issue in the future.
The Company has no present plans to issue any additional shares of Class A
Common Stock.
PREFERRED STOCK
The Board of Directors of the Company is authorized, without further action
of the shareholders of the Company, to issue up to 10,000,000 shares of
preferred stock in classes or series and to fix the designations, powers,
preferences or other rights of the shares of each such class or series and the
qualifications, limitations and restrictions thereon. Such preferred stock may
rank prior to the Common Stock as to dividend rights, liquidation preferences or
both, may have full or limited voting rights, may be redeemable and may be
convertible into shares of either class of the Company's Common Equity.
The purpose of authorizing the Board of Directors to issue preferred stock
is, in part, to eliminate delays associated with a shareholder vote in specific
instances. The issuance of preferred stock, for example in connection with a
shareholder rights plan, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding existing stock of the Company.
The Company has no present plans to issue any shares of preferred stock.
LIMITATION OF DIRECTORS' LIABILITY
The Company's Restated Certificate provides that no director shall be
liable to the Company or its shareholders for damages for breach of any duty as
a director, except for liability based upon an act or omission (i) in breach of
the director's duty of loyalty to the Company or its shareholders, (ii) not in
good faith or involving a knowing violation of law or (iii) resulting in receipt
by the director of an improper personal benefit. The Company believes that this
provision will assist it in securing and maintaining the services of qualified
directors who are not employees of the Company.
CERTAIN PROVISIONS OF RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS
Other than those items previously discussed with respect to the relative
rights and preferences of the Common Stock and the Class A Common Stock, Jevic's
Restated Certificate of Incorporation (the "Restated Certificate") and By-laws
(the "By-laws") contain various other provisions intended to (i) promote
stability of Jevic's shareholder base and (ii) render more difficult certain
unsolicited or hostile attempts to take over Jevic which could disrupt Jevic,
divert the attention of Jevic's directors, officers and employees and adversely
affect the independence and integrity of Jevic's business. A summary of these
provisions of the Certificate and By-laws is set forth below.
Classified Board; Vacancies; Removal of Directors. Pursuant to the
Restated Certificate, the number of directors of Jevic will be fixed by the
Company's Board of Directors. The directors will be divided into three classes,
each class to consist as nearly as possible of one-third of the directors.
Directors elected by shareholders at an annual meeting of shareholders will be
elected by a plurality of all votes cast at such annual meeting. Initially, the
terms of office of the three classes of directors will expire, respectively, at
the annual meeting of shareholders in 1998, 1999 and 2000. The term of the
successors of each such class of directors expires three years from the year of
election. No decrease in the number of directors constituting the Board of
Directors of Jevic will shorten the term of any incumbent director.
The Restated Certificate provides that except as otherwise provided for or
fixed by or pursuant to an amendment to the Restated Certificate setting forth
the rights of the holders of any class or series of preferred stock, newly
created directorships resulting from any increase in the number of directors and
any vacancies on the Board of Directors of Jevic resulting from death,
resignation, disqualification, removal or other cause will be filled by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board, or by a sole remaining director, and not
by the shareholders unless there are no directors remaining on the Board. Any
director elected in accordance with the preceding sentence will be a director of
the same class in which the new directorship was created or in which the vacancy
occurred, and shall hold office until the next annual meeting of shareholders
and until such director's successor shall have been duly elected and qualified.
Subject to the rights of holders of any preferred stock, any director may be
removed from office only for cause by the affirmative vote of the holders of at
45
<PAGE>
least 80 percent of the voting power of all the outstanding capital stock of
Jevic entitled to vote generally in the election of directors (the "Voting
Power").
These provisions of the Restated Certificate would preclude a third party
from removing incumbent directors and simultaneously gaining control of the
Board of Directors of Jevic by filling the vacancies created by removal with its
own nominees. Under the classified board provisions described above, it would
take at least two elections of directors for any individual or group to gain
control of the Board of Directors of Jevic, unless a sufficient number of
vacancies in the Board arise prior to the first election of directors by reason
of death, resignation, disqualification, removal or other cause. Accordingly,
these provisions could discourage a third party from initiating a proxy contest,
making a tender offer or otherwise attempting to gain control of the Company.
Special Shareholders' Meetings and Right to Act by Written Consent. The
Restated Certificate and the By-laws provide that special meetings of the
shareholders may be called only by the Chairman of the Board or the President of
the Company or upon a resolution adopted by a majority of the entire Board of
Directors. Shareholders are not generally permitted to call, or to require that
the Board of Directors call, a special meeting of shareholders. Moreover, the
business permitted to be conducted at any special meeting of shareholders is
limited to the business brought before the meeting pursuant to the notice of the
meeting given by Jevic. In addition, the Restated Certificate provides that any
action taken by the shareholders of Jevic must be effected at an annual or
special meeting of shareholders or by unanimous written consent, and
specifically may not be effected by written consent of less than all
shareholders.
The provision of the Restated Certificate prohibiting shareholder action by
written consent of less than all shareholders may have the effect of delaying
consideration of a shareholder proposal until the next annual meeting. This
provision would also prevent the holders of a majority of the Voting Power from
unilaterally using the written consent procedure to take shareholder action.
Moreover, the provisions of the Restated Certificate and By-laws prevent a
shareholder from forcing shareholder consideration of a proposal over the
opposition of the Board of Directors of Jevic by calling a special meeting of
shareholders prior to the time the Board believes such consideration to be
appropriate.
Procedures for Shareholder Nominations and Proposals. The By-laws
establish an advance notice procedure for shareholders to nominate candidates
for election as directors or to bring other business before meetings of
shareholders of Jevic (the "Shareholder Notice Procedure"). Only those
shareholder nominees who are nominated in accordance with the Shareholder Notice
Procedure will be eligible for election as directors of Jevic. Under the
Shareholder Notice Procedure, notice of shareholder nominations to be made at an
annual meeting (or of any other business to be brought before such meeting) must
be received by Jevic not less than 60 days nor more than 90 days prior to the
first anniversary of the previous year's annual meeting. Moreover, the
Shareholder Notice Procedure provides that if the Board of Directors of Jevic
has determined that directors will be elected at a special meeting, a
shareholder must give written notice to the Secretary of Jevic of any
nominations to be brought before a special meeting, not earlier than the 90th
day prior to the special meeting and not later than the later of the 60th day
prior to the special meeting or the 10th day following the first public
announcement by Jevic of the date of the special meeting.
The By-laws provide that only such business may be conducted at a special
meeting as is specified in the notice of meeting. The Shareholder Notice
Procedure provides that at an annual meeting only such business may be conducted
as has been brought before the meeting (i) pursuant to the Company's notice of
meeting, (ii) by, or at the direction of, the Board of Directors or (iii) by a
shareholder who has given timely written notice (as set forth above) to the
Secretary of Jevic of such shareholder's intention to bring such business before
such meeting.
By requiring advance notice of nominations by shareholders, the Shareholder
Notice Procedure will afford the Board of Directors an opportunity to consider
the qualifications of the proposed nominees and, to the extent deemed necessary
or desirable by the Board of Directors, to inform shareholders about such
qualifications. By requiring advance notice of other proposed business, the
Shareholder Notice Procedure will provide a more orderly procedure for
conducting annual meetings of shareholders and, to the extent deemed necessary
or desirable by the Board of Directors, will provide the Board of Directors with
an opportunity to inform shareholders, prior to such meetings, of any business
proposed to be conducted at such meetings, together with the Board of Directors'
position regarding action to be taken with respect to such business, so that
shareholders can better decide whether to attend such a meeting or to grant a
proxy regarding the disposition of any such business.
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<PAGE>
Although the By-laws do not give the Board of Directors any power to
approve or disapprove shareholder nominations for the election of directors or
proposals for action, they may have the effect of precluding a contest for the
election of directors or the consideration of shareholder proposals if the
proper procedures are not followed, and of discouraging or deterring a third
party from conducting a solicitation of proxies to elect its own slate of
directors or to approve its own proposal, without regard to whether
consideration of such nominees or proposals might be harmful or beneficial to
Jevic and its shareholders.
Amendment of Jevic Certificate and By-laws. The Restated Certificate
provides that the affirmative vote of at least 80 percent of the Voting Power
would be required to (i) amend or repeal the provisions of the Restated
Certificate with respect to (A) the election of directors and (B) the right to
call a special shareholders' meeting and (C) the right to act by written
consent, (ii) adopt any provision inconsistent with such provisions and (iii)
amend or repeal the provisions of the Restated Certificate with respect to
amendments to the Restated Certificate or the By-laws. In addition, the By-laws
provide that the amendment or repeal by shareholders of any By-laws made by the
Board of Directors of Jevic would require the affirmative vote of at least 80
percent of the Voting Power.
NEW JERSEY SHAREHOLDERS PROTECTION ACT
The New Jersey Shareholders Protection Act, NJSA 14:10A-1 et seq. (the "New
Jersey Act"), prohibits certain New Jersey corporations, such as the Company
following this Offering, from entering into certain "business combinations" with
an "interested stockholder" (any person who is the beneficial owner of 10% or
more of such corporation's outstanding voting securities) for five years after
such person became an interested stockholder, unless the business combination or
the interested stockholder's acquisition of stock was approved by the
corporation's board of directors prior to such interested stockholder's stock
acquisition date. After the five-year waiting period has elapsed, a business
combination between such corporation and an interested stockholder will be
prohibited unless the business combination is approved by the holders of at
least two-thirds of the voting stock not beneficially owned by the interested
stockholder, or unless the business combination satisfies the New Jersey Act's
fair price provision intended to provide that all stockholders (other than the
interested stockholders) receive a fair price for their shares.
The New Jersey Act defines "business combination" to include, among other
things, (1) a merger or consolidation between certain corporations and an
interested stockholder or such interested stockholder's affiliates; (2) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition to or
with the interested stockholder, which has an aggregate market value equal to
10% or more of the aggregate market value of all of the assets, outstanding
stock or income of the corporation or its subsidiaries; (3) the issuance or
transfer to the interested stockholder of any stock of the corporation having an
aggregate market value equal to or greater than 5% of the corporation's
outstanding stock; (4) the adoption of a plan or proposal for the liquidation or
dissolution of the corporation proposed by the interested stockholder; (5) any
reclassification of securities proposed by the interested stockholder, that has
the effect, directly or indirectly, of increasing any class or series of stock
that is owned by the interested stockholder; and (6) the receipt by the
interested stockholder of any loans or other financial assistance from the
corporation.
The New Jersey Act does not apply to certain business combinations,
including those with persons who acquired 10% or more of the voting power of the
corporation prior to the time the corporation was required to file periodic
reports pursuant to the Securities Exchange Act of 1934 or prior to the time the
corporation's securities began to trade on a national securities exchange.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is First
Union National Bank, N.A., Charlotte, North Carolina.
47
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have outstanding
4,348,656 shares of Common Stock. All of these shares (plus up to 570,000
additional shares if the Underwriters exercise their over-allotment option) will
be freely tradeable without restriction or further registration (except by
affiliates of the Company or persons acting as underwriters) under the
Securities Act. None of the 548,656 shares of Common Stock or the 6,309,544
shares of Class A Common Stock (collectively, the "Restricted Shares") may be
sold until the expiration of the lock-up periods discussed below or thereafter
unless they are registered under the Securities Act or are sold pursuant to an
exemption from registration, such as the exemption provided by Rule 144
promulgated under the Securities Act. Market sales of a substantial number of
shares of Common Stock, or the availability of such shares for sale in the
public market, could adversely affect prevailing market prices of the Common
Stock.
In general, commencing 90 days after the completion of this offering, Rule
144 allows a person who has beneficially owned Restricted Shares for at least
one year, including persons who may be deemed affiliates of the Company, to
sell, within any three-month period, up to the number of Restricted Shares that
does not exceed the greater of (i) one percent of the then outstanding Common
Stock (or Common Equity in the case of a sale of Class A Common Stock), and (ii)
the average weekly trading volume during the four calendar weeks preceding the
date on which notice of the sale is filed with the Securities and Exchange
Commission. Shares of Class A Common Stock automatically convert into shares of
Common Stock on a share-for-share basis upon disposition to persons outside the
Muhlschlegel Family, and Rule 144 would apply to such sales as if they were
sales of Common Stock. A person who is not deemed to have been an affiliate of
the Company at any time during the 90 days preceding a sale and who has
beneficially owned his or her Restricted Shares for at least two years would be
entitled to sell such Restricted Shares under Rule 144(k) without regard to the
volume limitations described above and the other conditions of Rule 144.
Rule 144A under the Securities Act provides a nonexclusive safe harbor
exemption from the registration requirements of the Securities Act for specified
resales of restricted securities to certain institutional investors. In general,
Rule 144A allows unregistered resales of restricted securities to a "qualified
institutional buyer," which generally includes an entity, acting for its own
account or for the account of other qualified institutional buyers, that in the
aggregate owns or invests at least $100 million in securities of unaffiliated
issuers. Rule 144A does not extend an exemption to the offer or sale of
securities which, when issued, were of the same class as securities listed on a
national securities exchange or quoted on Nasdaq. The Common Stock and Class A
Common Stock outstanding as of the date of this Prospectus would be eligible for
resale under Rule 144A because such shares, when issued, were not of the same
class as any listed or quoted securities.
The Company, its directors and executive officers and current shareholders
have agreed not to directly or indirectly sell, grant any option for the sale of
or otherwise dispose of or agree to dispose of any Common Stock or Class A
Common Stock or any other securities or rights convertible into or exchangeable
or exercisable for Common Stock (except for the shares offered pursuant to this
offering or directly by the Company pursuant to any employee benefit plan or as
consideration for future acquisitions) without the prior written consent of BT
Alex. Brown Incorporated on behalf of the Underwriters for a period of 180 days
after the date of this Prospectus. Shares may be sold by such directors,
officers and shareholders after expiration of such period subject to the volume
limitations of Rule 144 noted above. The Company intends to file a registration
statement on Form S-8 to register 2,485,820 shares of Common Stock subject to
its stock-based employee benefit plans following the date of this Prospectus.
48
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives, BT
Alex. Brown Incorporated, William Blair & Company, L.L.C., and Schroder & Co.
Inc. (collectively, the "Representatives"), have severally agreed to purchase
from the Company the following respective number of shares of Common Stock at
the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus.
NUMBER OF
UNDERWRITER SHARES
----------- ---------
BT Alex. Brown Incorporated......................................
William Blair & Company, L.L.C...................................
Schroder & Co. Inc...............................................
----------
Total....................................................... 3,800,000
----------
----------
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the shares of Common Stock offered hereby, if
any of such shares are purchased.
The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the initial public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may re-allow, a concession not in
excess of $ per share to certain other dealers. After commencement of the
initial public offering, the offering price and other selling terms may be
changed by the Representatives.
Certain of the Company's existing shareholders (the "Option Shareholders")
have granted the Underwriters an option, exercisable not later than 30 days
after the date of this Prospectus, to purchase up to 570,000 additional shares
of Common Stock at the initial public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus. To the
extent that the Underwriters exercise such option, each of the Underwriters will
have a firm commitment to purchase approximately the same percentage thereof
that the number of shares of Common Stock to be purchased by it shown in the
above table bears to the total number of shares offered by the Company
hereunder, and the Option Shareholders will be obligated, pursuant to the
option, to sell such shares to the Underwriters. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the Common Stock offered hereby. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the 3,800,000 shares are
being offered.
To facilitate the offering of the Common Stock, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price of
the Common Stock. Specifically, the Underwriters may over-allot shares of the
Common Stock in connection with this Offering, thereby creating a short position
in the Underwriters' syndicate account. Additionally, to cover such over-
allotments or to stabilize the market price of the Common Stock, the
Underwriters may bid for, and purchase, shares of the Common Stock in the open
market. Any of these activities may maintain the market price of the Common
Stock at a level above that which might otherwise prevail in the open market.
The Underwriters are not required to engage in these activities, and, if
commenced, any such activities may be discontinued at any time. The
Representatives, on behalf of the syndicate of Underwriters, also may reclaim
selling concessions allowed to an Underwriter or dealer, if the syndicate
repurchases shares distributed by that Underwriter or dealer.
The Company and the Option Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
The Company, its directors and executive officers and current shareholders
have agreed not to sell, contract to sell or otherwise dispose of any shares of
Common Stock for a period of 180 days after the date of this Prospectus, except
upon the exercise of currently outstanding stock options, without the prior
written consent of BT Alex. Brown Incorporated. See "Shares Eligible for Future
Sale."
49
<PAGE>
The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.
Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock will be determined by negotiations between the Company and the
Representatives. Among the factors to be considered in such negotiations are
prevailing market conditions, the results of operations of the Company in recent
periods, the market capitalizations and stages of development of other companies
which the Company and the Representatives believe to be comparable to the
Company, estimates of the business potential of the Company, the present state
of the Company's development and other factors deemed relevant.
LEGAL OPINIONS
The validity of the issuance of the shares offered hereby will be passed
upon for the Company by Pepper, Hamilton & Scheetz LLP. Certain legal matters
will be passed upon for the Underwriters by Piper & Marbury L.L.P., Baltimore,
Maryland.
EXPERTS
The Financial Statements and Financial Statement Schedule of the Company as
of December 31, 1995 and 1996 and for each of the three years in the period
ended December 31, 1996 included in this Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form S-1 under the
Securities Act with the Securities and Exchange Commission (the "Commission") in
Washington D.C. with respect to the shares offered hereby. This Prospectus,
which is part of the Registration Statement, does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
shares offered hereby, reference is hereby made to the Registration Statement
and such exhibits and schedules which may be inspected without charge at the
public reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission at Seven World Trade Center, New York, New York 10048 and
Northwestern Atrium Center, 400 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials may be obtained at prescribed rates
from the Public Reference Section of the Commission, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. This information is also available from
the Commission's Internet web site at http://www.sec.gov. The Registration
Statement, including all exhibits thereto and amendments thereof, will be filed
with the Commission through EDGAR. Statements contained in this Prospectus as to
the contents of any contract or other document referred to herein are not
necessarily complete and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference.
50
<PAGE>
JEVIC TRANSPORTATION, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants..................... F-2
Balance Sheets............................................... F-3
Statements of Income......................................... F-4
Statements of Shareholders' Equity........................... F-5
Statements of Cash Flows..................................... F-6
Notes to Financial Statements................................ F-7
</TABLE>
F-1
<PAGE>
After the recapitalization and reclassification discussed in Note 12 to the
financial statements is effected, we will be in a position to render the
following report.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.
September 16, 1997
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Jevic Transportation, Inc.:
We have audited the accompanying balance sheets of Jevic Transportation, Inc. (a
New Jersey corporation) as of December 31, 1995 and 1996, and the related
statements of income, shareholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jevic Transportation, Inc. as
of December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Philadelphia, Pa.
February 19, 1997 (except with respect to
the matters discussed in Note 12, as to
which the date is_______________ 1997)
F-2
<PAGE>
JEVIC TRANSPORTATION, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
-------------------- ----------------------
ASSETS 1995 1996 ACTUAL PRO FORMA
--------- --------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.......................................... $ 1,146 $ 2,403 $ 4,842 $ 842
Accounts receivable, less allowance for doubtful accounts of $814,
$999 and $1,381................................................. 14,480 17,123 18,693 18,693
Prepaid expenses and other......................................... 3,330 2,335 3,421 3,421
Deferred income taxes.............................................. 94 174 209 1,823
--------- --------- --------- ---------
Total current assets............................................ 19,050 22,035 27,165 24,779
PROPERTY AND EQUIPMENT, net.......................................... 46,958 58,967 67,426 68,726
OTHER ASSETS......................................................... 419 1,353 1,456 1,456
--------- --------- --------- ---------
$ 66,427 $ 82,355 $ 96,047 $ 94,961
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt.................................. $ 6,893 $ 9,422 $ 12,613 $ 20,613
Current portion of capital lease obligations....................... 968 1,260 880 880
Accounts payable................................................... 6,644 7,365 4,015 4,015
Accrued salaries, wages and benefits............................... 1,465 2,226 4,167 4,167
Other accrued expenses............................................. 1,821 2,995 3,878 3,878
Claims and insurance reserves...................................... 2,766 3,385 3,431 3,431
State income taxes payable......................................... -- 54 114 114
Deferred freight revenues.......................................... 1,220 1,245 1,409 1,409
--------- --------- --------- ---------
Total current liabilities....................................... 21,777 27,952 30,507 38,507
--------- --------- --------- ---------
LONG-TERM DEBT....................................................... 24,484 28,855 36,910 36,910
--------- --------- --------- ---------
CAPITAL LEASE OBLIGATIONS............................................ 1,250 -- -- --
--------- --------- --------- ---------
DEFERRED INCOME TAXES................................................ 680 984 1,094 10,708
--------- --------- --------- ---------
OTHER LIABILITIES.................................................... -- 493 308 308
--------- --------- --------- ---------
COMMITMENTS AND CONTINGENCIES
(Notes 7 and 11)
SHAREHOLDERS' EQUITY:
Preferred stock, no par value, 10,000,000 shares authorized; none
issued and outstanding.......................................... -- -- -- --
Common stock, no par value, 40,000,000 shares authorized; none
issued and outstanding.......................................... -- -- -- --
Class A Common Stock, no par value, 10,000,000 shares authorized;
6,858,200 shares issued and outstanding......................... 1,014 1,128 1,128 8,528
Retained earnings.................................................. 17,222 22,943 26,100 --
--------- --------- --------- ---------
Total shareholders' equity...................................... 18,236 24,071 27,228 8,528
--------- --------- --------- ---------
$ 66,427 $ 82,355 $ 96,047 $ 94,961
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
JEVIC TRANSPORTATION, INC.
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------------- --------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES..................................... $ 119,299 $ 125,973 $ 154,799 $ 73,568 $ 90,417
---------- ---------- ---------- --------- ---------
OPERATING EXPENSES:
Salaries, wages and benefits......................... 58,276 67,541 81,215 39,659 46,583
Supplies and other expenses.......................... 30,553 30,290 32,824 16,231 17,371
Purchased transportation............................. 4,019 5,608 10,761 5,518 8,595
Depreciation and amortization........................ 4,395 6,445 8,732 4,031 5,382
Operating taxes and licenses......................... 7,369 7,767 8,722 4,318 4,302
Insurance and claims................................. 3,141 2,612 3,325 1,772 1,975
(Gain) loss on sales of equipment.................... (191) (340) (170) (127) 100
---------- ---------- ---------- --------- ---------
107,562 119,923 145,409 71,402 84,308
---------- ---------- ---------- --------- ---------
Operating income................................ 11,737 6,050 9,390 2,166 6,109
INTEREST EXPENSE, net.................................. 1,080 1,773 2,966 1,386 1,629
OTHER, net............................................. (106) (153) (200) (48) (55)
---------- ---------- ---------- --------- ---------
Income before state income taxes................ 10,763 4,430 6,624 828 4,535
STATE INCOME TAXES..................................... 351 191 429 80 180
---------- ---------- ---------- --------- ---------
NET INCOME............................................. $ 10,412 $ 4,239 $ 6,195 $ 748 $ 4,355
========== ========== ========== ========= =========
PRO FORMA DATA (UNAUDITED) (Note 2):
Income before income taxes........................... $ 6,624 $ 828 $ 4,535
Pro forma income taxes............................... 2,775 347 1,888
---------- --------- ---------
Pro forma net income................................. $ 3,849 $ 481 $ 2,647
========== ========= =========
Pro forma net income per share....................... $ 0.49 $ 0.06 $ 0.34
========== ========= =========
Shares used in computing pro forma net income per
share............................................. 7,843 7,843 7,843
========== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
JEVIC TRANSPORTATION, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK
--------------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance, December 31, 1993..................................... 6,858,200 $ 1,014 $ 7,232 $ 8,246
Net income................................................... -- -- 10,412 10,412
Net distributions to shareholders............................ -- -- (956) (956)
---------- --------- --------- ---------
Balance, December 31, 1994..................................... 6,858,200 1,014 16,688 17,702
Net income................................................... -- -- 4,239 4,239
Dividend to shareholders on purchase of facility............. -- -- (681) (681)
Net distributions to shareholders............................ -- -- (3,024) (3,024)
---------- --------- --------- ---------
Balance, December 31, 1995..................................... 6,858,200 1,014 17,222 18,236
Net income................................................... -- -- 6,195 6,195
Contribution of capital...................................... -- 114 -- 114
Net distributions to shareholders............................ -- -- (474) (474)
---------- --------- --------- ---------
Balance, December 31, 1996..................................... 6,858,200 1,128 22,943 24,071
Net income (unaudited)....................................... -- -- 4,355 4,355
Net distributions to shareholders (unaudited)................ -- -- (1,198) (1,198)
---------- --------- --------- ---------
Balance, June 30, 1997 (unaudited)............................. 6,858,200 $ 1,128 $ 26,100 $ 27,228
========== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
JEVIC TRANSPORTATION, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- --------------------
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................................... $ 10,412 $ 4,239 $ 6,195 $ 748 $ 4,355
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization....................... 4,395 6,445 8,732 4,031 5,382
(Gain) loss on sales of equipment................... (191) (340) (170) (127) 100
Provision for doubtful accounts..................... 758 84 629 184 483
Deferred state income taxes......................... (112) 185 224 -- 75
Changes in operating assets and liabilities --
Increase in accounts receivable.................. (4,310) (1,735) (3,272) (2,931) (2,053)
(Increase) decrease in prepaid expenses and
other.......................................... (23) (454) 245 (550) (1,086)
(Increase) decrease in other assets.............. 191 (221) (934) (80) (103)
Increase (decrease) in accounts payable.......... 1,399 1,749 721 (970) (3,350)
Increase in accrued salaries, wages and
benefits....................................... 25 349 761 1,200 1,941
Increase (decrease) in other accrued expenses.... (57) 594 1,667 1,674 698
Increase in claims and insurance reserves........ 888 878 619 479 46
Increase (decrease) in state income taxes
payable........................................ 138 (138) 54 (21) 60
Increase in deferred freight revenues............ 150 180 25 152 163
--------- --------- --------- --------- ---------
Net cash provided by operating activities...... 13,663 11,815 15,496 3,789 6,711
--------- --------- --------- --------- ---------
INVESTING ACTIVITIES:
Proceeds from sales of equipment......................... 750 742 108 19 241
Purchases of property and equipment...................... (14,583) (17,740) (20,679) (11,413) (14,180)
--------- --------- --------- --------- ---------
Net cash used in investing activities.......... (13,833) (16,998) (20,571) (11,394) (13,939)
--------- --------- --------- --------- ---------
FINANCING ACTIVITIES:
Net repayments on line of credit......................... (1,250) -- -- -- --
Payments of long-term debt............................... (4,771) (6,430) (9,210) (3,363) (4,294)
Proceeds from issuance of long-term debt................. 9,889 14,687 16,110 11,675 15,539
Payments of capital lease obligations.................... (617) (753) (958) (403) (380)
Net contributions from (distributions to) shareholders... (956) (3,774) 390 839 (1,198)
--------- --------- --------- --------- ---------
Net cash provided by financing activities...... 2,295 3,730 6,332 8,748 9,667
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....... 2,125 (1,453) 1,257 1,143 2,439
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............. 474 2,599 1,146 1,146 2,403
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD................... $ 2,599 $ 1,146 $ 2,403 $ 2,289 $ 4,842
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1997, AND FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1997, IS UNAUDITED)
1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BACKGROUND
Jevic Transportation, Inc. (the "Company") is a motor carrier engaged in
interregional and regional transportation of general commodity freight.
INTERIM FINANCIAL STATEMENTS
The financial statements as of and for the six months ended June 30, 1996
and 1997 are unaudited. In the opinion of management, this financial information
includes all adjustments, consisting of normal recurring adjustments, necessary
to fairly present the financial information set forth. The results of operations
for the six months ended June 30, 1997 are not necessarily indicative of the
results to be expected for the full year.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major additions and improvements
are capitalized, while maintenance and repairs that do not improve or extend the
life of assets are charged to expense as incurred. Gain or loss on retirement or
disposal of assets is included in income. For like-kind exchanges, any excess of
the trade-in allowance over the net book value of the traded asset is deferred
in the basis of the new asset.
Depreciation and amortization are provided using the straight-line method
over the following estimated useful lives:
<TABLE>
<CAPTION>
<S> <C>
Revenue equipment 3 to 10 years (10% to 20% salvage value)
Furniture and fixtures and other equipment 5 to 10 years
Building 35 years
Leasehold improvements lease term
</TABLE>
TIRES
The cost of original tires on revenue equipment is included in and
depreciated as part of the total revenue equipment cost. Replacement tires are
charged to expense when placed in service.
OTHER ASSETS
At December 31, 1995 and 1996 and June 30, 1997, other assets include
$350,000, $507,000 and $600,000, respectively, of cash surrender value related
primarily to a $3,000,000 life insurance policy on the Company's Chief Executive
Officer, net of loans of $121,000.
F-7
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997, AND FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1997, IS UNAUDITED)
1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
REVENUE RECOGNITION
The Company recognizes revenue in accordance with the Emerging Issues Task
Force of the Financial Accounting Standards Board Issue 91-9, "Revenue and
Expense Recognition in Freight Services in Process." Although the Company moves
freight under contractual arrangements with its shippers, revenue is recognized
on the delivery date rather than pick-up date. At December 31, 1995 and 1996 and
June 30, 1997, the Company had deferred freight revenues of $1,220,000,
$1,245,000 and $1,409,000, respectively.
CLAIMS AND INSURANCE RESERVES
Claims and insurance reserves reflect the estimated cost of claims for
cargo loss and damage, bodily injury and property damage, collision, workers'
compensation and group health that are less than the Company's insurance
deductibles (see Note 11). The related costs are charged to insurance and claims
expense except for workers' compensation and group health, which are charged to
salaries, wages and benefits.
INCOME TAXES
Effective January 1, 1990, the Company elected to be taxed pursuant to
Subchapter S of the Internal Revenue Code. Under those provisions, the income of
the Company is taxed at the shareholder level. The Company has also elected S
Corporation status in certain states. The Company does, however, record a
provision for state income taxes related to states that do not or only partially
recognize S corporations. The Company periodically makes distributions to its
shareholders to fund their personal tax liabilities resulting from the Company's
taxable income.
The Company accounts for certain income and expense items for financial
reporting purposes differently than for income tax purposes. The principal
differences relate to the use of accelerated tax depreciation for income tax
purposes and certain financial statement reserves that are not currently
deductible for income tax purposes. At June 30, 1997, net assets for financial
reporting purposes exceed those reflected for income tax purposes by
approximately $22,130,000.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those assets and
liabilities are expected to be recovered or settled.
Immediately preceding the Company's proposed initial public offering (see
Note 12), the Company will terminate its S Corporation status and will become
subject to federal and state income taxes. Upon terminating its S Corporation
status, the Company will record a tax provision for an increase in its net
deferred tax liability estimated at $8 million as of June 30, 1997 (see Note 2).
SUPPLEMENTAL CASH FLOW INFORMATION
For the years ended December 31, 1994, 1995 and 1996 and for the six months
ended June 30, 1996 and 1997, the Company paid interest of $1,183,000,
$1,886,000, $3,120,000, $1,363,000 and $1,722,000, respectively, and state
income taxes of $282,000, $425,000, $234,000, $168,000 and $140,000,
respectively.
The Company financed $1,034,000 of property and equipment purchases with
capital leases for the year ended December 31, 1994. In 1994, the Company
refinanced $563,000 of installment notes.
In March 1995, the Company purchased an operating facility from its
shareholders, and in December 1995, the Company recorded a receivable of
$750,000 from its shareholders related to income taxes, which was repaid in 1996
(see Note 10).
F-8
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997, AND FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1997, IS UNAUDITED)
1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
The Company accounts for equipment purchases that involve trade-ins as
like-kind exchanges. Accordingly, for the year ended December 31, 1996 and for
the six months ended June 30, 1997, purchases of property and equipment are
presented net of trade-in allowances of $7,188,000 and $3,638,000, respectively.
NEW ACCOUNTING PRONOUNCEMENTS
In 1996, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," and SFAS No. 123, "Accounting for
Stock-Based Compensation." SFAS No. 121 established accounting standards for the
impairment of long-lived assets, certain identifiable intangibles and goodwill.
The Company continually evaluates whether later events or circumstances have
occurred that would indicate that the remaining estimated useful life of a
long-lived asset may warrant revision or that the remaining balance may not be
recoverable. When factors indicate that assets should be evaluated for possible
impairment, the Company uses an estimate of the related undiscounted cash flows
over the remaining life of the asset to measure recoverability. SFAS No. 123
established financial accounting and reporting standards for stock-based
employee compensation plans. SFAS No. 123 also applies to transactions in which
an entity issues its equity instruments to acquire goods or services from
nonemployees. The adoptions did not have an effect on the Company's financial
condition or results of operations.
In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings Per Share." This statement is effective for fiscal years ending after
December 15, 1997, and, when adopted, will require restatement of prior years'
earnings per share. The adoption of SFAS No. 128 will not have a material effect
on the pro forma net income per share reported in the accompanying financial
statements.
2. PRO FORMA DATA (UNAUDITED)
PRO FORMA BALANCE SHEET DATA
The pro forma balance sheet of the Company as of June 30, 1997 reflects (i)
$6 million of borrowings on the Company's line of credit to fund a $10 million
distribution to the current shareholders of the Company (ii) the Company's
purchase of its Charlotte facility from certain of its current shareholders for
$2.0 million, resulting in a $700,000 deemed distribution and (iii) an increase
in the Company's net deferred tax liability (estimated at $8 million as of June
30, 1997) which will be recorded as a non-cash charge result of terminating its
S Corporation status shortly before the effective date of the Offering. The net
deferred income tax liability represents net tax assets and liabilities as of
the termination of the Company's S Corporation status, and will be recorded as
an income tax provision in the quarter in which the proposed initial public
offering is completed. The actual adjustment to the net deferred tax liability
will reflect the effect of the operations from July 1, 1997 through the
termination of the S Corporation status.
The significant items comprising the Company's pro forma net deferred tax
liability as of June 30, 1997, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred Tax Assets (Liabilities):
Allowance for doubtful accounts.......................... $ 552
Claims and insurance reserves............................ 1,442
Accrued expenses and other............................... 114
Property and equipment................................... (10,708)
Prepaid licenses and permits............................. (285)
---------
$ (8,885)
=========
</TABLE>
F-9
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997, AND FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1997, IS UNAUDITED)
2. PRO FORMA DATA (UNAUDITED) -- CONTINUED
PRO FORMA STATEMENT OF OPERATIONS DATA
Pro forma income before income taxes for the year ended December 31, 1996,
and the six months ended June 30, 1996 and 1997 reflects the Company's purchase
of its Charlotte facility from certain of its current shareholders, as if the
purchase occurred on January 1, 1996, resulting in increased annual depreciation
and interest expense of $70,000 and $190,000, respectively and decreased annual
rent expense of $260,000.
Immediately preceding the proposed initial public offering, the Company
will terminate its status as an S Corporation and will be subject to federal and
state income taxes. Accordingly, pro forma income taxes for the year ended
December 31, 1996 and the six months ended June 30, 1996 and 1997 reflect the
income taxes that would have been recorded had the Company been a C Corporation,
based on the tax laws in effect during the respective periods. The pro forma
provision for income taxes consists of the following:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
YEAR ENDED ------------------------
DECEMBER 31, 1996 1996 1997
----------------- ----------- -----------
<S> <C> <C> <C>
Current provision:
Federal.......................... $ 288 $ 282 $ 1,015
State............................ 40 65 149
Deferred provision................. 2,447 -- 724
--------- --------- ---------
$ 2,775 $ 347 $ 1,888
========= ========= =========
</TABLE>
Pro forma income taxes do not include a one-time, non-cash income tax
provision (estimated at $8 million as of June 30, 1997) related to the
recognition of an increase in the net deferred tax liability that will be
recorded by the Company upon terminating its S Corporation status.
The difference between the federal statutory income tax rate and the pro
forma effective income tax rate for the year ended December 31, 1996, is as
follows:
<TABLE>
<CAPTION>
<S> <C>
Federal statutory rate..................................... 34.0%
State income taxes, net of federal benefit................. 4.7
Non deductible expenses.................................... 3.2
---------
41.9%
=========
</TABLE>
PRO FORMA NET INCOME PER SHARE
Pro forma net income per share is computed by dividing pro forma net income
by the weighted average number of shares outstanding for the respective periods,
adjusted for the effect of dilutive common stock options, and after giving
effect to the estimated number of shares that would be required to be sold
(assuming an initial public offering price of $13.00 per share, less
underwriting discounts and commissions and estimated offering expenses) to fund
a $10 million distribution to the current shareholders.
3. RISKS AND UNCERTAINTIES
The Company's future results of operations involve a number of risks and
uncertainties. Factors that could affect the Company's future operating results
and cause actual results to vary materially from expectations include, but are
not limited to, general economic factors, availability of employee drivers and
owner-operators, capital requirements, competition, acquisition of revenue
equipment, unionization, fuel, seasonality, claims exposure and insurance costs,
difficulty in managing growth, regulation, environmental hazards and dependence
on key personnel.
F-10
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997, AND FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1997, IS UNAUDITED)
3. RISKS AND UNCERTAINTIES -- CONTINUED
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
The Company does not require collateral or other securities to support customer
receivables. A significant portion of the Company's operating revenues is
derived from sales to customers in the chemical industry, and the majority of
the Company's operating revenues are derived from sales to customers located in
the Northeast. However, no single customer accounts for more than 10% of the
Company's operating revenues.
4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenue equipment..................................................... $ 43,196 $ 60,214 $ 68,938
Furniture and fixtures and other equipment............................ 8,121 9,689 10,831
Land and building..................................................... 7,685 9,001 9,583
Leasehold improvements................................................ 2,434 2,531 2,555
Construction in progress.............................................. 67 104 155
--------- --------- ---------
61,503 81,539 92,062
Less - Accumulated depreciation and amortization...................... (14,545) (22,572) (24,636)
--------- --------- ---------
$ 46,958 $ 58,967 $ 67,426
========= ========= =========
</TABLE>
At December 31, 1995 and 1996 and June 30, 1997, total property and
equipment under capital leases was $4,122,000, with accumulated amortization of
$1,961,000, $2,639,000 and $3,242,000, respectively.
5. LINE OF CREDIT
The Company has a $7 million unsecured revolving line of credit with a
bank. Each draw on the line bears interest at a fixed rate, as defined, or at a
rate based on prime or LIBOR, as selected by the Company. Interest on the line
is payable monthly, and the line extends through June 1998. There were no
borrowings on the line during 1996. At June 30, 1997, $6.8 million was available
under the line as $200,000 in stand-by letters of credit were outstanding. In
addition, the Company has $575,000 of stand-by letters of credit outstanding
with another bank.
The line is cross-defaulted with certain long-term debt and the equipment
line (see Note 6). The corresponding loan agreement requires the Company to
maintain certain financial and nonfinancial covenants, as defined, the most
restrictive of which limits the payment of dividends to 50% of the Company's net
income, as defined.
F-11
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997, AND FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1997, IS UNAUDITED)
6. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Various installment notes, monthly principal payments plus interest at rates
ranging from 5.6% to 9.0%, collateralized by revenue and other equipment, due $ 21,667 $ 25,090 $ 30,863
through September 2003.........................................................
Term notes with bank, monthly principal payments plus interest at rates ranging
from 5.9% to 8.4%, collateralized by revenue equipment, due through December
2001........................................................................... 3,111 7,685 13,194
Mortgage note, monthly payments of principal and interest of $45,000, final
balloon payment of $4,628,000 due October 2005, interest at 8.4%,
collateralized by the Delanco facility......................................... 5,573 5,502 5,466
Term note with shareholders, repaid in 1996...................................... 1,026 -- --
--------- --------- ---------
31,377 38,277 49,523
Less - Current portion........................................................... (6,893) (9,422) (12,613)
--------- --------- ---------
$ 24,484 $ 28,855 $ 36,910
========= ========= =========
</TABLE>
Aggregate maturities of long-term debt at December 31, 1996, are as
follows:
<TABLE>
<CAPTION>
<S> <C>
1997.................................................... $ 9,422
1998.................................................... 7,316
1999.................................................... 5,818
2000.................................................... 4,276
2001.................................................... 3,740
Thereafter.............................................. 7,705
---------
$ 38,277
=========
</TABLE>
The Company has an $18 million equipment line with a bank for purchases of
revenue equipment. Upon the funding of the equipment purchases, the related
borrowings under the line are converted to a term note bearing interest at a
fixed rate, as defined, or at a rate based on prime or LIBOR, as selected by the
Company. At June 30, 1997, $4,806,000 was available under the equipment line.
The equipment line and certain term notes are cross-defaulted with the revolving
line of credit (see Note 5).
7. LEASE COMMITMENTS
The Company leases office space, maintenance facilities and certain revenue
equipment under capital and operating leases expiring on various dates through
2000. The Company leases two operating facilities from its shareholders (see
Note 10). The lease payments on these facilities are $9,520 per month through
December 1998, with three five-year renewal options, and $21,785 per month
through March 2000, with two five-year renewal options, respectively.
At June 30, 1997, the Company is liable under terms of noncancelable leases
for the following future minimum lease commitments:
F-12
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997, AND FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1997, IS UNAUDITED)
7. LEASE COMMITMENTS -- CONTINUED
<TABLE>
<CAPTION>
CAPITAL OPERATING RELATED-PARTY
LEASES LEASES LEASES
----------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
1997 $ 906 $ 1,936 $ 188
1998 -- 2,952 376
1999 -- 1,617 376
2000 -- 547 180
2001 -- -- 114
--------- --------- ---------
Total minimum lease payments.......................................... 906 $ 7,052 $ 1,234
========= =========
Less - Amount representing interest................................... (26)
---------
Present value of future capital lease payments........................ $ 880
=========
</TABLE>
Rent expense for all operating leases was $8,735,000, $6,873,000,
$5,234,000, $3,021,000 and $2,182,000 for the years ended December 31, 1994,
1995 and 1996 and the six months ended June 30, 1996 and 1997, respectively, of
which $569,000, $425,000, $376,000, $188,000 and $188,000, respectively, were on
related-party leases.
8. EMPLOYEE BENEFIT PLAN
The Company maintains a defined contribution 401(k) profit-sharing plan for
all eligible employees. Employer contributions to the plan are based on matching
employee contributions and an annual discretionary contribution determined by
the shareholders. The Company's total contributions for the years ended December
31, 1994, 1995 and 1996, and for the six months ended June 30, 1997, were
$343,000, $443,000, $551,000 and $306,000, respectively.
9. STOCK OPTION PLAN
In 1994, the Company adopted the 1994 Stock Option Plan (the "Option Plan")
that permits the grant of options to purchase shares of the Company's Common
Stock. The Option Plan allows the granting of incentive and nonqualified stock
options to employees, directors and consultants at exercise prices not less than
the fair market value of the Company's Common Stock on the date of grant. The
option grants and related vesting periods are determined by the Board of
Directors.
In December 1994, the Company granted options to purchase 685,820 shares of
Common Stock to key employees, under the Option Plan, at an exercise price of
$8.49 per share, representing fair market value on the grant date, as determined
by the Board of Directors. The options vest at the end of ten years or over a
five-year period if there is an initial public offering, as defined (see Note
12). In 1995, 1996 and for the six months ended June 30, 1997, no options were
granted, exercised or canceled. As of June 30, 1997, no options were exercisable
and no additional shares were available under the Option Plan.
In 1997, the Company adopted the 1997 Incentive Plan (the "Incentive Plan")
that permits the grant of options to purchase a total of 1,500,000 shares of the
Company's Common Stock. The Incentive Plan allows the granting of incentive and
nonqualified stock options to employees, directors and consultants at terms
determined by the Board of Directors. At June 30, 1997, no options were
outstanding under the Incentive Plan. However, in connection with its proposed
initial public offering (see Note 12), the Company plans to grant options to
purchase approximately 600,000 shares of Common Stock at $13 per share.
F-13
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997, AND FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1997, IS UNAUDITED)
10. RELATED-PARTY TRANSACTIONS
Through March 1995, the Company leased an operating facility from its
shareholders. The lease payment on this facility was $38,080 per month.
Effective March 31, 1995, the Company purchased this facility from its
shareholders for $5,542,000. The Company assumed the shareholders' mortgage debt
of $4,402,000 and issued a note to its shareholders for $1,140,000 in
consideration for the facility (see Note 6). As required by generally accepted
accounting principles, the Company recorded the purchased facility at the
shareholders' historical carrying value as of the purchase date, with the excess
consideration of $681,000 recorded as a dividend. The Company continues to lease
two facilities from its shareholders (see Note 7). Subsequent to June 30, 1997,
the Company intends to purchase one of these facilities from its shareholders in
consideration of assuming the related mortgage loan. The shareholders'
historical carrying value as of June 30, 1997 was $1,300,000, and the mortgage
loan was $1,999,000. The difference, as of the purchase date, will be recorded
as a dividend.
The Company periodically makes distributions to its shareholders to fund
their estimated personal tax liabilities. Due to overpayments in 1995, the
Company had a receivable from shareholders of $750,000 in prepaid expenses and
other at December 31, 1995. This amount was repaid by the shareholders in 1996.
In 1997, the Company loaned $438,000 to two trusts controlled by the Company's
shareholders in exchange for 5.83% notes due in October 1998. The notes are
collateralized by the Company common stock held by the trusts, and are included
in prepaid expenses and other in the accompanying balance sheet at June 30,
1997.
In February 1996, Jevic Transportation Services, Inc. ("JTS"), a freight
brokerage company owned by certain of the Company's shareholders, began
operations. During 1996 and for the six months ended June 30, 1997, the Company
recorded sales of $105,000 and $111,000, respectively, to JTS and incurred
purchased transportation expenses of $46,000 and $346,000, respectively, with
JTS. At December 31, 1996 and June 30, 1997, $43,000 and $71,000, respectively,
is included in accounts receivable and $19,000 and $32,000, respectively, is
included in accounts payable, related to transactions with JTS.
11. CONTINGENCIES
The Company's risk retention amounts per occurrence are as follows:
<TABLE>
<CAPTION>
<S> <C>
Workers' compensation............................................ $ 250,000
Liability - bodily injury and property damage.................... 20,000
Employee medical and hospitalization............................. 75,000
Cargo loss and damage............................................ 5,000
Collision........................................................ 25,000
</TABLE>
The Company has excess primary coverage on a per-claim and aggregate basis
beyond the deductible levels and also maintains umbrella policies to supplement
the primary liability coverage.
The liabilities for self-insured retention are included in claims and
insurance reserves based on claims incurred, with liabilities for unsettled
claims and claims incurred but not yet reported being estimated based on
management's evaluation of the nature and severity of individual claims and the
Company's past claims experience. Actual results may vary from management's
estimates.
The Company has outstanding letters of credit at June 30, 1997 totaled
$775,000 to cover workers' compensation insurance claims.
The Company is involved in certain legal actions arising in the ordinary
course of business. Management believes that the outcome of such actions will
not have a material adverse effect on the Company's financial position or
results of operations.
F-14
<PAGE>
JEVIC TRANSPORTATION, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1997, AND FOR THE SIX
MONTHS ENDED JUNE 30, 1996 AND 1997, IS UNAUDITED)
11. CONTINGENCIES -- CONTINUED
From time to time the Company enters into agreements with fuel suppliers to
purchase a portion of its estimated fuel requirements at fixed prices. The
Company is a party to agreements with two fuel suppliers to purchase
approximately 40% of its estimated fuel needs through March 1998 at fixed
prices.
12. RECAPITALIZATION AND RECLASSIFICATION
The Company is contemplating an initial public offering of 3,800,000 shares
of its Common Stock. In connection therewith, on August 12, 1997, the Company's
Certificate of Incorporation was amended to reclassify the Common Stock into two
series: Class A Common Stock, no par value, 300 shares authorized, and Common
Stock, no par value, 1,200 shares authorized. In addition, all outstanding
shares were reclassified as Class A Common Stock. Holders of the Class A Common
Stock are entitled to two votes per share and holders of Common Stock are
entitled to one vote per share.
On ________, 1997, the Company's Board of Directors and shareholders
approved an amendment to the Company's Certificate of Incorporation, authorizing
10,000,000 shares of no par value Preferred Stock, 10,000,000 shares of no par
value Class A Common Stock and 40,000,000 shares of no par value Common Stock.
In addition, the Company effected a 34,291-for-one split of its Common Stock.
The Common Stock reclassification, increases in authorized shares and stock
split have been retroactively reflected in the accompanying financial
statements.
F-15
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER TO SELL OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary.............................. 3
Risk Factors.................................... 7
Use of Proceeds................................. 12
Prior S Corporation Status...................... 13
Dividend Policy................................. 13
Capitalization.................................. 14
Dilution........................................ 15
Selected Financial and Operating Data........... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 18
Industry Overview............................... 24
Business........................................ 25
Management...................................... 35
Certain Transactions............................ 42
Principal Shareholders.......................... 43
Description of Capital Stock.................... 44
Shares Eligible for Future Sale................. 48
Underwriting.................................... 49
Legal Opinions.................................. 50
Experts......................................... 50
Additional Information.......................... 50
Index to Financial Statements................... F-1
</TABLE>
------------------
UNTIL , 1997 (25 DAYS FROM THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THE DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
================================================================================
3,800,000 SHARES
[JEVIC LOGO]
COMMON STOCK
------------------
PROSPECTUS
------------------
BT ALEX. BROWN
WILLIAM BLAIR & COMPANY
SCHRODER & CO. INC.
, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an itemized statement of all estimated
expenses, all of which will be paid by the Company, in connection with the
issuance and distribution of the securities being registered:
<TABLE>
<CAPTION>
NATURE OF EXPENSE AMOUNT
----------------- ------
<S> <C>
SEC Registration Fee...................................... $ 18,540
NASD Fee.................................................. 6,618
Nasdaq Listing and Entry Fee.............................. 44,146
Printing and engraving fees............................... 120,000
Registrant's counsel fees and expenses.................... 175,000
Accounting fees and expenses.............................. 150,000
Transfer agent and registrar fees......................... 5,000
Directors' and officers' liability insurance.............. 280,000
Miscellaneous............................................. 696
------------
TOTAL................................................... $ 800,000
============
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 14A:2-7(3) of the New Jersey Business Corporation Act (the "NJBCA")
permits New Jersey corporations to eliminate or limit the liability of directors
for breach of any duty owed to the Company or its shareholders, except for any
breach of duty based upon an act or omission (a) in breach of such director's
duty of loyalty to the corporation or its shareholders, (b) not in good faith or
involving a knowing violation of law or (c) resulting in receipt by the director
of an improper personal benefit. The last paragraph of Article FIFTH of the
Company's Restated Certificate of Incorporation and Section 14 of Article III of
the Company's By-laws eliminate liability of directors for breach of any duty to
the Company or its shareholders to the extent permitted by the NJBCA.
Section 14A:3-5 of the NJBCA permits each New Jersey business corporation
to indemnify a "corporate agent" against expenses and liability in connection
with any proceeding involving the corporate agent by reason of his being or
having been such a corporate agent, other than a proceeding by or in the right
of the corporation (unless the corporate agent shall have been adjudged not
liable to the corporation or shall have been adjudged liable, but in view of all
the circumstances in the case, the court in which such proceeding was brought
shall determine that such corporate agent is fairly and reasonably entitled to
indemnity), if such actions were taken in good faith and in a manner which he or
she reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal proceeding, if he or she had no
reasonable cause to believe his or her conduct was unlawful. Such
indemnification may only be made by the corporation as authorized in a specific
case upon a determination (by the board of directors of the corporation, a
committee thereof, independent legal counsel via a written opinion or by the
shareholders (if the board so directs)) that indemnification is proper because
the corporate agent has met the applicable standard of conduct. The NJBCA
defines a "corporate agent" as any person who is or was a director, officer,
employee or agent of the indemnifying corporation or of any constituent
corporation absorbed by the indemnifying corporation in a consolidation or
merger and any person who is or was a director, officer, trustee, employee or
agent of any other enterprise, serving as such at the request of the
indemnifying corporation, or of any such constituent corporation, or the legal
representative of any such director, officer, trustee, employee or agent.
Article X of the Company's By-laws provides that the Company shall indemnify any
director or officer of the Company and may indemnify any other corporate agent
to the full extent permitted by Section 14A:3-5 of the NJBCA. To the extent that
a corporate agent has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in NJBCA Section 14A:3-5(2) or (3),
or in defense of any claim, issue or matter therein, he or she shall be
indemnified by the Company against expenses in connection therewith. Such
expenses may be paid by the Company in advance of the final disposition of the
action, suit or proceeding as authorized by the Board of Directors upon receipt
of an undertaking to repay the advance if it is ultimately determined that such
person is not entitled to indemnification. The Appendix to Article X of the
Company's By-laws prescribes procedures for the submission and determination of
claims for indemnification, including procedures regarding the determination of
whether a corporate agent has met the applicable standard of conduct.
II-1
<PAGE>
Section 14A:3-5(9) of the NJBCA permits, and Article X of the Company's
By-laws provides, that any corporate agent may be insured by insurance purchased
and maintained by the Company against any expenses incurred in any proceeding
and any liabilities asserted against him or her in his or her capacity as a
corporate agent, whether or not the Company would have the power to indemnify
him or her against any such liability. In this regard, the Company maintains a
policy insuring it and its directors and officers against certain liabilities,
including liabilities under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has not sold any securities other
than the grant of options to purchase a total of 685,820 shares of Common Stock
as of December 31, 1994. The Company believes that such stock option grants were
exempt from registration under the Securities Act by virtue of the exemption
provided by Section 4(2) thereof for transactions not involving a public
offering, since such options were granted to a limited number of executive
officers of the Company who, in each case, had access to financial and other
relevant data concerning the Company, its financial condition, business and
assets. In addition, the Company believes that such stock option grants were
exempt from registration under the Securities Act by virtue of the exemption
provided by Rule 701 under said Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Form of Restated Certificate of Incorporation of the Company.
3.2 -- Form of By-laws of the Company, as amended.
4 -- Specimen Stock Certificate.
5 -- Opinion of Pepper, Hamilton & Scheetz LLP.*
10.1 -- 1997 Incentive Plan, as amended.
10.2 -- 1994 Stock Option Plan.**
10.3 -- Employee Stock Purchase Plan.**
10.4 -- 401(k) Profit Sharing Plan.**
10.5 -- Form of Supplemental Executive Retirement Plan.*
10.6 -- Contract for Sale of Real Estate, dated March 30, 1995, between Harry J. Muhlschlegel and Karen
Muhlschlegel and the Company.**
10.7 -- Promissory Note, dated March 31, 1995, made by the Company in favor of Harry J. Muhlschlegel and
Karen Muhlschlegel, in the principal amount of $1,140,459.27.**
10.8 -- Promissory Note, dated April 14, 1997, made by Karen B. Muhlschlegel, as Trustee of the Karen B.
Muhlschlegel 1996 Grantor Annuity Trust, in favor of the Company in the principal amount of $218,772,
as amended.
10.9 -- Promissory Note, dated April 14, 1997, made by Harry J. Muhlschlegel, as Trustee of the Harry J.
Muhlschlegel 1996 Grantor Annuity Trust, in favor of the Company in the principal amount of $219,293,
as amended.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
10.10 -- Lease Agreement made and entered into as of April 12, 1995 between Harry J. Muhlschlegel and Karen
Muhlschlegel and the Company as amended.
10.11 -- Form of Amended and Restated Lease Agreement by and between Harry Muhlschlegel and Karen Muhlschlegel
and the Company.
10.12 -- Lease Agreement between James F. Lomma, as Landlord, and the Company, as Tenant, dated June 1,
1995.**
10.13 -- Commercial Lease Agreement made and effective March 1, 1997 by and between 864 Realty Trust and the
Company.**
10.14 -- Lease Agreement made and entered into the 7th day of March, 1996 by and between Little Brownie
Properties Inc. and the Company.**
10.15 -- Agreement of Lease made and entered into between Dongary Investments, Ltd. and the Company dated
March 31, 1994.**
10.16 -- Credit Agreement, dated June 28, 1996, between the Company and CoreStates Bank, N.A.**
10.17 -- Security Agreement, dated as of June 28, 1996, by and between the Company and Corestates Bank, N.A.**
10.18 -- Promissory Note, dated October 31, 1995, made by the Company in favor of MetLife Capital Financial
Corporation.**
10.19 -- Mortgage Security Agreement, Assignment of Leases and Rents and Fixture Filing, made as of October
31, 1995, by the Company in favor of MetLife Capital Financial Corporation.**
10.20 -- Form of Tax Indemnity Agreement.
10.21 -- Administrative Services Agreement, dated August 12, 1997 between the Company and Jevic
Transportation, Services Inc.**
10.22 -- Intermediary Agreement between Bowker, Brown & Co. and the Company dated April 1997.
10.23 -- Intermediary Agreement between Bowker, Brown & Co. and the Company dated October 1996.
11.1 -- Statement re: Computation of Per Share Earnings.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Pepper, Hamilton & Scheetz.*
23.3 -- Consent of Gordon R. Bowker to be named as a director.
23.4 -- Consent of Samuel H. Jones, Jr. to be named as a director.
24.1 -- Power of Attorney (included on page II-5 of this Registration Statement).**
24.2 -- Certified Resolutions of the Board of Directors relating to Powers of Attorney for certain officers
of the Company.**
27.1 -- Financial Data Schedule.**
</TABLE>
- ------------------
* To be filed by amendment.
** Previously Filed.
II-3
<PAGE>
(B) FINANCIAL STATEMENT SCHEDULE:
Schedule No. Description
- ------------ -----------
II Valuation and Qualifying Accounts
All other schedules have been omitted because they are not applicable, not
required, or the required information is included in the Financial Statements or
the notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Delanco, New Jersey, on the 16th day
of September, 1997.
JEVIC TRANSPORTATION, INC.
By: /s/ Harry J. Muhlschlegel
---------------------------------
Harry J. Muhlschlegel, Chief Executive
Officer and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 1
to this Registration Statement has been signed by the following persons on
September 16, 1997 in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Harry J. Muhlschlegel Chief Executive Officer and Chairman of
- ------------------------------------- the Board (principal executive officer)
Harry J. Muhlschlegel
/s/ Karen B. Muhlschlegel Vice President, Secretary and Director
- -------------------------------------
Karen B. Muhlschlegel
/s/ Paul J. Karvois President, Director and Chief Operating Officer
- -------------------------------------
Paul J. Karvois
/s/ Brian Fitzpatrick Senior Vice President - Finance and Chief Financial
- ------------------------------------- Officer (principal financial officer and principal
Brian Fitzpatrick accounting officer)
</TABLE>
II-5
<PAGE>
After the recapitalization and reclassification discussed in Note 12 to the
Financial Statements is effected, we will be in a position to render the
following report.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.
September 16, 1997
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Jevic Transportation, Inc.:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Jevic Transportation, Inc. as of December 31, 1995
and 1996 and for each of the years in the three year period ended December 31,
1996 (except with respect to the matters discussed in Note 12 as to which the
date is ____________, 1997). Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The schedule of
valuation and qualifying accounts is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
Philadelphia, Pa.,
February 19, 1997 (except with respect to
the matters discussed in Note 12, as
to which the date is ____________, 1997)
S-1
<PAGE>
JEVIC TRANSPORTATION, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Allowance for Doubtful Accounts
CHARGES DEDUCTIONS
BEGINNING TO FROM ENDING
BALANCE EXPENSE RESERVE BALANCE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance, June 30, 1997 (unaudited) ........................ $999 $483 $(101) $1,381
Balance, December 31, 1996 ................................ 814 629 (444) 999
Balance, December 31, 1995 ................................ 1,153 84 (423) 814
Balance, December 31, 1994 ................................ 500 758 (105) 1,153
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Form of Restated Certificate of Incorporation of the Company.
3.2 -- Form of By-laws of the Company, as amended.
4 -- Specimen Stock Certificate.
10.1 -- 1997 Incentive Plan, as amended.
10.8 -- Promissory Note, dated April 14, 1997, made by Karen B. Muhlschlegel, as Trustee of the Karen B.
Muhlschlegel 1996 Grantor Annuity Trust, in favor of the Company in the principal amount of
$218,772, as amended.
10.9 -- Promissory Note, dated April 14, 1997, made by Harry J. Muhlschlegel, as Trustee of the Harry J.
Muhlschlegel 1996 Grantor Annuity Trust, in favor of the Company in the principal amount of
$219,293, as amended.
10.10 -- Lease Agreement made and entered into as of April 12, 1995 between Harry J. Muhlschlegel and Karen
Muhlschlegel and the Company, as amended.
10.11 -- Form of Amended and Restated Lease Agreement by and between Harry Muhlschlegel and Karen
Muhlschlegel and the Company.
10.20 -- Form of Tax Indemnity Agreement.
10.22 -- Intermediary Agreement between Bowker, Brown & Co. and the Company dated April 1997.
10.23 -- Intermediary Agreement between Bowker, Brown & Co. and the Company dated October 1996.
11.1 -- Statement re: Computation of Per Share Earnings.
23.1 -- Consent of Arthur Andersen LLP.
23.3 -- Consent of Gordon R. Bowker to be named as a director.
23.4 -- Consent of Samuel H. Jones, Jr. to be named as a director.
</TABLE>
3,800,000 Shares
JEVIC TRANSPORTATION, INC.
Common Stock
(without par value)
UNDERWRITING AGREEMENT
----------------------
_______________, 1997
Alex. Brown & Sons Incorporated
William Blair & Company, L.L.C.
Schroder & Co. Inc.
As Representatives of the
Several Underwriters
c/o Alex. Brown & Sons Incorporated
One South Street
Baltimore, Maryland 21202
Gentlemen:
Jevic Transportation, Inc., a New Jersey corporation (the "Company"),
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 3,800,000 shares of the Company's Common
Stock, without par value (the "Firm Shares"). The respective amounts of the Firm
Shares to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. Certain stockholders of the Company (the
"Option Shareholders") also propose to sell at the Underwriters' option an
aggregate of up to 570,000 additional shares of the Company's Common Stock (the
"Option Shares") as set forth below.
As the Representatives, you have advised the Company and the Option
Shareholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and the
Option Shares (to the extent the aforementioned option is exercised) are herein
collectively called the "Shares."
<PAGE>
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, PRINCIPAL SHAREHOLDERS AND
THE OPTION SHAREHOLDERS.
(a) The Company and each of the persons listed on Schedule II hereto
(collectively, the "Principal Shareholders") jointly and severally represents
and warrants to each of the Underwriters as follows:
(i) A registration statement on Form S-1 (File No. 333-33469) with
respect to the Shares has been carefully prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"), and
the Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462 (b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means (a) the form of prospectus first
filed with the Commission pursuant to Rule 424(b) or (b) the last preliminary
prospectus included in the Registration Statement filed prior to the time it
becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of the
Shares, together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus."
(ii) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of New Jersey, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. The Company is duly
qualified to transact business in all jurisdictions in which the conduct of its
business requires such qualification.
(iii) The outstanding shares of Common Stock of the Company,
including all shares to be sold by the Option Shareholders, have been duly
authorized and validly issued and are fully paid and non-assessable; the Shares
to be issued and sold by the Company have been duly authorized and when issued
and paid for as contemplated herein will be validly issued, fully
- 2 -
<PAGE>
paid and non-assessable; and no preemptive rights of stockholders exist with
respect to any of the Shares or the issue and sale thereof. Neither the filing
of the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any shares
of Common Stock or Class A Common Stock, without par value (the "Class A
Stock").
(iv) The information set forth under the caption "Capitalization"
in the Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the jurisdiction of
the Company's incorporation.
(v) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Prospectus and any amendments or supplements thereto will contain, all
statements which are required to be stated therein by, and will conform, to the
requirements of the Act and the Rules and Regulations. The Registration
Statement and any amendment thereto do not contain, and will not contain, any
untrue statement of a material fact and do not omit, and will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendments and
supplements thereto do not contain, and will not contain, any untrue statement
of material fact; and do not omit, and will not omit, to state any 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, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter through the Representatives, specifically for use in the
preparation thereof.
(vi) The financial statements of the Company, together with related
notes and schedules as set forth in the Registration Statement, present fairly
the financial position and the results of operations and cash flows of the
Company, at the indicated dates and for the indicated periods. Such financial
statements and related schedules have been prepared in accordance with generally
accepted principles of accounting, consistently applied throughout the periods
involved, except as disclosed herein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data included in the Registration Statement presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and the books and records of the
Company. The pro forma financial information included in the Registration
Statement and the Prospectus present fairly the information shown therein, have
been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial information, have been properly compiled on the
pro forma bases described therein, and, in the
- 3 -
<PAGE>
opinion of the Company, the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein.
(vii) Arthur Anderson & Co. L.L.P., who have certified certain of
the financial statements filed with the Commission as part of the Registration
Statement, are independent public accountants as required by the Act and the
Rules and Regulations.
(viii) There is no action, suit, claim or proceeding pending or, to
the knowledge of the Company, threatened against the Company before any court or
administrative agency or otherwise which if determined adversely to the Company
might result in any material adverse change in the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company or to prevent the consummation of the
transactions contemplated hereby, except as set forth in the Registration
Statement.
(ix) The Company has good and marketable title to all of the
properties and assets reflected in the financial statements (or as described in
the Registration Statement) hereinabove described, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in such
financial statements (or as described in the Registration Statement) or which
are not material in amount. The Company occupies its leased properties under
valid and binding leases conforming in all material respects to the description
thereof set forth in the Registration Statement.
(x) The Company has filed all Federal, State, local and foreign
income tax returns which have been required to be filed and have paid all taxes
indicated by said returns and all assessments received by them or any of them to
the extent that such taxes have become due. All tax liabilities have been
adequately provided for in the financial statements of the Company.
(xi) Since the respective dates as of which information is given in
the Registration Statement, as it may be amended or supplemented, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise), or
prospects of the Company, whether or not occurring in the ordinary course of
business, and there has not been any material transaction entered into or any
material transaction that is probable of being entered into by the Company,
other than transactions in the ordinary course of business and changes and
transactions described in the Registration Statement, as it may be amended or
supplemented. The Company has no material contingent obligations which are not
disclosed in the Company's financial statements which are included in the
Registration Statement.
- 4 -
<PAGE>
(xii) The Company is not or, with the giving of notice or lapse of
time or both, will be, in violation of or in default under its Charter or
By-Laws or under any agreement, lease, contract, indenture or other instrument
or obligation to which it is a party or by which it, or any of its properties,
is bound and which default is of material significance in respect of the
condition, financial or otherwise of the Company, or the business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated and the fulfillment of the
terms hereof will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a party, or of
the Charter or ByLaws of the Company or any order, rule or regulation applicable
to the Company of any court or of any regulatory body or administrative agency
or other governmental body having jurisdiction.
(xiii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws) has been obtained
or made and is in full force and effect.
(xiv) The Company holds all material licenses, certificates and
permits from governmental authorities which are necessary to the conduct of its
business; and the Company has not infringed any patents, patent rights, trade
names, trademarks or copyrights, which infringement is material to the business
of the Company. The Company knows of no material infringement by others of
patents, patent rights, trade names, trademarks or copyrights owned by or
licensed to the Company.
(xv) Neither the Company, nor to the Company's best knowledge, any
of its affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares. The Company acknowledges that the Underwriters may engage in passive
market making transactions in the Shares on The Nasdaq Stock Market in
accordance with Rule 10b-6A under the Exchange Act.
(xvi) The Company is not an "investment company" within the meaning
of such term under the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder.
- 5 -
<PAGE>
(xvii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xviii) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of its business
and the value of its properties and as is customary for companies engaged in
similar industries.
(xix) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(xx) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198,
An Act Relating to Disclosure of doing Business with Cuba, and the Company
further agrees that if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the Commission or
with the Florida Department of Banking and Finance (the "Department"), whichever
date is later, or if the information reported in the Prospectus, if any,
concerning the Company's business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Company will provide the
Department notice of such business or change, as appropriate, in a form
acceptable to the Department.
(b) Each of the Option Shareholders severally represents and warrants
as follows:
- 6 -
<PAGE>
(i) Such Option Shareholder now has and at the Option Closing Date
(as such date is hereinafter defined) will have good and marketable title to the
Option Shares to be sold by such Option Shareholder, free and clear of any
liens, encumbrances, equities and claims, and full right, power and authority to
effect the sale and delivery of such Option Shares; and upon the delivery of,
against payment for, such Option Shares pursuant to this Agreement, the
Underwriters will acquire good and marketable title thereto, free and clear of
any liens, encumbrances, equities and claims.
(ii) Such Option Shareholder has full right, power and authority to
execute and deliver this Agreement, the Power of Attorney, and the Custodian
Agreement referred to below and to perform its obligations under such
Agreements. The execution and delivery of this Agreement and the consummation by
such Option Shareholder of the transactions herein contemplated and the
fulfillment by such Option Shareholder of the terms hereof will not require any
consent, approval, authorization, or other order of any court, regulatory body,
administrative agency or other governmental body (except as may be required
under the Act, state securities laws or Blue Sky laws) and will not result in a
breach of any of the terms and provisions of, or constitute a default under,
organizational documents of such Option Shareholder, if not an individual, or
any indenture, mortgage, deed of trust or other agreement or instrument to which
such Option Shareholder is a party, or of any order, rule or regulation
applicable to such Option Shareholder of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction.
(iii) Such Option Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted, or
which might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Common Stock of the Company and, other than as
permitted by the Act, the Option Shareholder will not distribute any prospectus
or other offering material in connection with the offering of the Shares.
(iv) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties of the
Company contained herein or the information contained in the Registration
Statement, such Option Shareholder has no reason to believe that the
representations and warranties of the Company contained in this Section 1 are
not true and correct, is familiar with the Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in the
Registration Statement which has adversely affected or may adversely affect the
business of the Company or any of the Subsidiaries; and the sale of the Option
Shares by such Option Shareholder pursuant hereto is not prompted by any
information concerning the Company which is not set forth in the Registration
Statement. The information pertaining to such Option Shareholder under the
caption "Principal Shareholders" in the Prospectus is complete and accurate in
all material respects.
- 7 -
<PAGE>
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to the Underwriters and each Underwriter agrees, severally and
not jointly, to purchase, at a price of $_____ per share, the number of Firm
Shares set forth opposite the name of each Underwriter in Schedule I hereof,
subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made
in same day funds via wire transfer to the order of the Company against delivery
of certificates therefor to the Representatives for the several accounts of the
Underwriters. Such payment and delivery are to be made at the offices of Alex.
Brown & Sons Incorporated, One South Street, Baltimore, Maryland, at 10:00 a.m.,
Baltimore time, on the third business day after the date of this Agreement or at
such other time and date not later than five business days thereafter as you and
the Company shall agree upon, such time and date being herein referred to as the
"Closing Date." (As used herein, "business day" means a day on which the New
York Stock Exchange is open for trading and on which banks in New York are open
for business and are not permitted by law or executive order to be closed.) The
certificates for the Firm Shares will be delivered in such denominations and in
such registrations as the Representatives request in writing not later than the
second full business day prior to the Closing Date, and will be made available
for inspection by the Representatives at least one business day prior to the
Closing Date.
- 8 -
<PAGE>
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Option Shareholders listed on Schedule III hereto hereby grant an option to the
several Underwriters to purchase the Option Shares at the price per share as set
forth in the first paragraph of this Section 2. The maximum number of Option
Shares to be sold by each of the Option Shareholders is set forth opposite his
or her name on Schedule III hereto. The option granted hereby may be exercised
in whole or in part by giving written notice (i) at any time before the Closing
Date and (ii) only once thereafter within 30 days after the date of this
Agreement, by you, as Representatives of the several Underwriters, to the
Attorney-in-Fact, and the Custodian setting forth the number of Option Shares as
to which the several Underwriters are exercising the option, the names and
denominations in which the Option Shares are to be registered and the time and
date at which such certificates are to be delivered. If the option granted
hereby is exercised in part, the respective number of Option Shares to be sold
by each of the Option Shareholders listed in Schedule II hereto shall be
determined on a pro rata basis in accordance with the percentages set forth
opposite their names on Schedule III hereto, adjusted by you in such manner as
to avoid fractional shares. The time and date at which certificates for Option
Shares are to be delivered shall be determined by the Representatives but shall
not be earlier than three nor later than 10 full business days after the
exercise of such option, nor in any event prior to the Closing Date (such time
and date being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the notice
of exercise shall set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the number of
Firm Shares being purchased by such Underwriter bears to the total number of
Firm Shares, adjusted by you in such manner as to avoid fractional shares. The
option with respect to the Option Shares granted hereunder may be exercised only
to cover over-allotments in the sale of the Firm Shares by the Underwriters.
You, as Representatives of the several Underwriters, may cancel such option at
any time prior to its expiration by giving written notice of such cancellation
to the Attorney-in-Fact. To the extent, if any, that the option is exercised,
payment for the Option Shares shall be made on the Option Closing Date in same
day funds via wire transfer to the order of "____________________, as Custodian"
against delivery of certificates therefor at the offices of Alex. Brown & Sons
Incorporated, One South Street, Baltimore, Maryland.
(d) If, on Option Closing Date any Option Shareholder fails to sell
the Option Shares which such Option Shareholder has agreed to sell on such date
as set forth in Schedule II hereto, the Company agrees that it will sell or
arrange for the sale of that number of shares of Common Stock to the
Underwriters which represents the Option Shares which such Option Shareholder
has failed to so sell, as set forth in Schedule II hereto, or such lesser number
as may be requested by the Representatives.
- 9 -
<PAGE>
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other selling
terms. To the extent, if at all, that any Option Shares are purchased pursuant
to Section 2 hereof, the Underwriters will offer them to the public on the
foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY AND THE OPTION SHAREHOLDERS.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations.
(ii) The Company will advise the Representatives promptly (A) when
the Registration Statement or any post-effective amendment thereto shall have
become effective, (B) of receipt of any comments from the Commission, (C) of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, and (D) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to prevent
the issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
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(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), and of all amendments thereto, as the Representatives
may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934 (the "Exchange Act"), and
the rules and regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and the Prospectus. If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur as a
result of which, in the judgment of the Company or in the reasonable opinion of
the Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or, if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earning
statement (which need not be audited) in reasonable detail,
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covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earning statement shall
satisfy the requirements of Section 11(a) of the Act and Rule 158 of the Rules
and Regulations and will advise you in writing when such statement has been so
made available.
(vii) The Company will, for a period of five years from the Closing
Date, deliver to the Representatives copies of annual reports and copies of all
other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange pursuant to the requirements
of such exchange or with the Commission pursuant to the Act or the Securities
Exchange Act of 1934, as amended. The Company will deliver to the
Representatives similar reports with respect to significant subsidiaries, as
that term is defined in the Rules and Regulations, which are not consolidated in
the Company's financial statements.
(viii) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company, the Class A Stock of the Company or other
securities convertible into or exchangeable or exercisable for shares of Common
Stock or the Class A Stock of the Company or derivative of Common Stock or the
Class A Stock of the Company (or agreement for such) will be made for a period
of 180 days after the date of this Agreement, directly or indirectly, by the
Company otherwise than hereunder or with the prior written consent of Alex.
Brown & Sons Incorporated.
(ix) The Company will use its best efforts to list, subject to
notice of issuance, the Shares on the The Nasdaq Stock Market.
(x) The Company has caused each officer and director and specific
shareholders of the Company to furnish to you, on or prior to the date of this
agreement, a letter or letters, in form and substance satisfactory to the
Underwriters, pursuant to which each such person shall agree not to offer, sell,
sell short or otherwise dispose of any shares of Common Stock or Class A Stock
of the Company or other capital stock of the Company, or any other securities
convertible, exchangeable or exercisable for Common Stock, Class A Stock or
derivative of Common Stock owned by such person or request the registration for
the offer or sale of any of the foregoing (or as to which such person has the
right to direct the disposition of) for a period of 180 days after the date of
this Agreement, directly or indirectly, except with the prior written consent of
Alex. Brown & Sons Incorporated ("Lockup Agreements").
(xi) The Company shall apply the net proceeds of its sale of the
Shares as set forth in the Prospectus [and shall disclose appropriately in
Exchange Act reports filed with the Commission subsequent to the Closing Date
the application of the proceeds therefrom as may be required in accordance with
Rule 463 under the Act.
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<PAGE>
(xii) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company or any of the Subsidiaries to register as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
(xiii) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Stock.
(xiv) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.
(b) Each of the Option Shareholders covenants and agrees with the
several Underwriters that:
(i) No offering, sale, short sale or other disposition of any
shares of Common Stock or Class A Stock of the Company or other capital stock of
the Company or other securities convertible, exchangeable or exercisable for
Common Stock or Class A Stock or derivative of Common Stock or Class A Stock
owned by the Option Shareholder or request the registration for the offer or
sale of any of the foregoing (or as to which the Option Shareholder has the
right to direct the disposition of) will be made for a period of 180 days after
the date of this Agreement, directly or indirectly, by such Option Shareholder
otherwise than hereunder or with the prior written consent of Alex. Brown & Sons
Incorporated.
(ii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with
respect to the transactions herein contemplated, each of the Option Shareholders
agrees to deliver to you prior to or at the Option Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
(iii) Such Option Shareholder will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Company and the Option Shareholders under
this Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of counsel
for the Company and the Option Shareholders; the cost of
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printing and delivering to, or as requested by, the Underwriters copies of the
Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Underwriters' Selling Memorandum, the Underwriters' Invitation
Letter, the Listing Application, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission; the filing fee of the
NASD terms of the sale of the Shares; the Listing Fee of the Nasdaq Stock
Market. The Option Shareholders have agreed with the Company to reimburse the
Company for a portion of such expenses. To the extent, if at all, that any of
the Option Shareholders engage special legal counsel to represent them in
connection with this offering, the fees and expenses of such counsel shall be
borne by such Option Shareholder. Any transfer taxes imposed on the sale of the
Shares to the several Underwriters will be paid by the Company, on the one hand,
and the Option Shareholders, on the other hand, pro rata. The Company shall not,
however, be required to pay for any of the Underwriter's expenses (other than
those related to qualification under NASD regulation) except that, if this
Agreement shall not be consummated because the conditions in Section 6 hereof
are not satisfied, or because this Agreement is terminated by the
Representatives pursuant to Section 11 hereof, or by reason of any failure,
refusal or inability on the part of the Company or the Option Shareholders to
perform any undertaking or satisfy any condition of this Agreement or to comply
with any of the terms hereof on their part to be performed, unless such failure
to satisfy said condition or to comply with said terms be due to the default or
omission of any Underwriter, then the Company shall reimburse the several
Underwriters for reasonable out-of-pocket expenses, including fees and
disbursements of counsel, reasonably incurred in connection with investigating,
marketing and proposing to market the Shares or in contemplation of performing
their obligations hereunder; but the Company and the Option Shareholders shall
not in any event be liable to any of the several Underwriters for damages on
account of loss of anticipated profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm Shares
on the Closing Date and the Option Shares, if any, on the Option Closing Date
are subject to the accuracy, as of the Closing Date or the Option Closing Date,
as the case may be, of the representations and warranties of the Company, the
Principal Shareholders and the Option Shareholders contained herein, and to the
performance by the Company and the Option Shareholders of their covenants and
obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company
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<PAGE>
or the Option Shareholders, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a Federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Pepper, Hamilton &
Sheetz, counsel for the Company and the Option Shareholders, dated the Closing
Date or the Option Closing Date, as the case may be, addressed to the
Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
(i) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of New Jersey, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement; the Company is duly
qualified to transact business in all jurisdictions in which the conduct of its
business requires such qualification, or in which the failure to qualify would
have a materially adverse effect upon the business of the Company.
(ii) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus; the authorized
shares of the Company's Common Stock have been duly authorized; the outstanding
shares of the Company's Common Stock, including the Shares to be sold by the
Option Shareholders, have been duly authorized and validly issued and are fully
paid and non-assessable; all of the Shares conform to the description thereof
contained in the Prospectus; the certificates for the Shares, assuming they are
in the form filed with the Commission, are in due and proper form; the shares of
Common Stock, to be sold by the Company pursuant to this Agreement have been
duly authorized and will be validly issued, fully paid and non-assessable when
issued and paid for as contemplated by this Agreement; and no preemptive rights
of stockholders exist with respect to any of the Shares or the issue or sale
thereof.
(iii) Except as described in or contemplated by the Prospectus, to
the knowledge of such counsel, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any Common Stock, Class A Stock or other securities
of the Company included in the Registration Statement or the right, as a result
of the filing of the Registration Statement, to
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<PAGE>
require registration under the Act of any shares of Common Stock, Class A Stock
or other securities of the Company.
(iv) The Registration Statement has become effective under the Act
and, to the best of the knowledge of such counsel, no stop order proceedings
with respect thereto have been instituted or are pending or threatened under the
Act.
(v) The Registration Statement, the Prospectus and each amendment
or supplement thereto comply as to form in all material respects with the
requirements of the Act and the applicable rules and regulations thereunder
(except that such counsel need express no opinion as to the financial statements
and related schedules therein).
(vi) The statements under the captions "Management-Employee Benefit
Plans," "Business-Properties," "Business-Legal Proceedings," "Description of
Capital Stock"] and "Shares Eligible for Future Sale" in the Prospectus, insofar
as such statements constitute a summary of documents referred to therein or
matters of law, fairly summarize in all material respects the information called
for with respect to such documents and matters.
(vii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are no so filed or described
as required, and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized in all material
respects.
(viii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the Subsidiaries
except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the Charter or By-Laws of the Company, or any
agreement or instrument known to such counsel to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries may
be bound.
(x) This Agreement has been duly authorized, executed and delivered
by the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by
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<PAGE>
State securities and Blue Sky laws as to which such counsel need express no
opinion) except such as have been obtained or made, specifying the same.
(xii) The Company is not, and will not become, as a result of the
consummation of the transactions contemplated by this Agreement, and application
of the net proceeds therefrom as described in the Prospectus, required to
register as an investment company under the 1940 Act.
(xiii) This Agreement has been duly authorized, executed and
delivered on behalf of the Option Shareholders.
(xiv) Each Option Shareholder has full legal right, power and
authority, and any approval required by law (other than as required by State
securities and Blue Sky laws as to which such counsel need express no opinion),
to sell, assign, transfer and deliver the portion of the Option Shares to be
sold by such Option Shareholder.
(xv) The Custodian Agreement and the Power of Attorney executed and
delivered by each Option Shareholder is valid and binding.
(xvi) The Underwriters (assuming that they are bona fide purchasers
within the meaning of the Uniform Commercial Code) have acquired good and
marketable title to the Shares being sold by each Option Shareholder on the
Option Closing Date, free and clear of all liens, encumbrances, equities and
claims.
In rendering such opinion Pepper, Hamilton & Sheetz may rely as to
matters governed by the laws of states other than New Jersey and Pennsylvania or
Federal laws on local counsel in such jurisdictions, provided that in each case
Pepper, Hamilton & Sheetz shall state that they believe that they and the
Underwriters are justified in relying on such other counsel. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, at the time it became effective
under the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act) and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such
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statement, Pepper, Hamilton & Sheetz may state that their belief is based upon
the procedures set forth therein, but is without independent check and
verification.
(c) The Representatives shall have received from Piper & Marbury
L.L.P., counsel for the Underwriters, an opinion dated the Closing Date or the
Option Closing Date, as the case may be, substantially to the effect specified
in subparagraphs (ii), (iii), (iv), (x) and (xi) of Paragraph (b) of this
Section 6, and that the Company is a duly organized and validly existing
corporation under the laws of the State of New Jersey. In rendering such
opinion, Piper & Marbury L.L.P. may rely as to all matters governed other than
by the laws of the State of Maryland or Federal laws on the opinion of counsel
referred to in Paragraph (b) of this Section 6. In addition to the matters set
forth above, such opinion shall also include a statement to the effect that
nothing has come to the attention of such counsel which leads them to believe
that (i) the Registration Statement, or any amendment thereto, as of the time it
became effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) as of the Closing Date
or the Option Closing Date, as the case may be, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date or the Option Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact, necessary in order to make the statements, in the light
of the circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Piper &
Marbury L.L.P. may state that their belief is based upon the procedures set
forth therein, but is without independent check and verification.
(d) You shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, as the case may be, a letter dated the date
hereof, the Closing Date or the Option Closing Date, as the case may be, in form
and substance satisfactory to you, of Arthur Anderson & Co. LLP confirming that
they are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating that in their
opinion the financial statements and schedules examined by them and included in
the Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(e) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
Chief Executive Officer and the Chief Financial Officer of the Company to the
effect that, as of the Closing Date or the Option Closing Date, as the case may
be, each of them severally represents as follows:
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(i) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registration Statement has
been issued, and no proceedings for such purpose have been taken or are, to his
knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company contained in
Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules 424
or 430A under the Act have been made;
(iv) He has carefully examined the Registration Statement and the
Prospectus and, in his or her opinion, as of the effective date of the
Registration Statement, the statements contained in the Registration Statement
were true and correct, and such Registration Statement and Prospectus did not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, there has not been any material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole or the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and the Subsidiaries taken as a whole, whether or not
arising in the ordinary course of business.
(g) The Company and the Option Shareholders shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq Stock Market.
(i) The Lockup Agreements described in Section 4 (x) are in full force
and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Piper & Marbury
L.L.P., counsel for the Underwriters.
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If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company and the Option Shareholders of such
termination in writing or by telegram at or prior to the Closing Date or the
Option Closing Date, as the case may be.
In such event, the Option Shareholders, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AND THE OPTION SHAREHOLDERS.
The obligations of the Company and the Option Shareholders to sell and
deliver the portion of the Shares required to be delivered as and when specified
in this Agreement are subject to the conditions that at the Closing Date or the
Option Closing Date, as the case may be, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and in effect
or proceedings therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company, the Principal Shareholders and the Option
Shareholders, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities to which
such Underwriter or any such controlling person may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each Underwriter and
each such controlling person upon demand for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental inquiry
related to the offering of the Shares, whether or not such Underwriter or
controlling person is a party to any action or proceeding; provided, however,
that the Company and the Option Shareholders will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement, or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof. In no event,
however, shall the liability of any
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Option Shareholder for indemnification under this Section 8(a) exceed the
proceeds received by such Option Shareholder from the Underwriters in the
offering. This indemnity agreement will be in addition to any liability which
the Company or the Option Shareholders may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Principal Shareholders and the Option
Shareholders, and each person, if any, who controls the Company, The Principal
Shareholders or the Option Shareholders within the meaning of the Act, against
any losses, claims, damages or liabilities to which the Company or any such
director, officer, Principal Shareholder, Option Shareholder or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, Principal Shareholder, Option Shareholder or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided, however, that each
Underwriter will be liable in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the
- 21 -
<PAGE>
extent that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party and shall pay as incurred the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or
within 30 days of presentation) the fees and expenses of the counsel retained by
the indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel,
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them or (iii) the indemnifying party shall
have failed to assume the defense and employ counsel acceptable to the
indemnified party within a reasonable period of time after notice of
commencement of the action. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such indemnified parties. Such firm shall be designated in
writing by you in the case of parties indemnified pursuant to Section 8(a) and
by the Company, the Principal Shareholders and the Option Shareholders in the
case of parties indemnified pursuant to Section 8(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or
judgment. In addition, the indemnifying party will not, without the prior
written consent of the indemnified party, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
of which indemnification may be sought hereunder (whether or not any indemnified
party is an actual or potential party to such claim, action or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action
or proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company (and,
indirectly, the Principal Shareholders) and, if the Option Shares are purchased
hereunder, the Option Shareholders on the one hand and the Underwriters on the
other from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is
- 22 -
<PAGE>
appropriate to reflect not only such relative benefits but also the relative
fault of the Company, the Principal Shareholders and the Option Shareholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company (and,
indirectly, the Principal Shareholders) and, if the Option Shares are purchased
hereunder, the Option Shareholders on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and the
Option Shareholders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Principal Shareholders or
the Option Shareholders on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company, the Principal Shareholders, the Option Shareholders and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 8(d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this Section 8(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to above in this Section
8(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation, and (iii) no
Option Shareholder shall be required to contribute any amount in excess of the
proceeds received by such Option Shareholder from the Underwriters in the
offering. The Underwriters' obligations in this Section 8(d) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
- 23 -
<PAGE>
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company, the Principal Shareholders and
the Option Shareholders set forth in this Agreement shall remain operative and
in full force and effect, regardless of (i) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter, the
Company, its directors or officers or any persons controlling the Company, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter, or to the
Company, its directors or officers, or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
- 24 -
<PAGE>
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be,
any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or a Option
Shareholder), you, as Representatives of the Underwriters, shall use your
reasonable efforts to procure within 36 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company and the Option
Shareholders such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company or the
Option Shareholders, as the case may be, or you as the Representatives of the
Underwriters will have the right, by written notice given within the next
36-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the non-defaulting Underwriters or of the
Company or of the Option Shareholders, as the case may be except to the extent
provided in Section 8 hereof. In the event of a default by any Underwriter or
Underwriters, as set forth in this Section 9, the Closing Date or Option Closing
Date, as the case may be, may be postponed for such period, not exceeding seven
days, as you, as Representatives, may determine in order that the required
changes in the Registration Statement or in the Prospectus or in any other
documents or arrangements may be effected. The term "Underwriter" includes any
person substituted for a defaulting Underwriter. Any action taken under this
Section 9 shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to Alex. Brown & Sons
Incorporated, One South Street, Baltimore, Maryland 21202, Attention: Alexander
T. Daignault, Jr.; with a copy to Alex. Brown & Sons Incorporated, One South
Street, Baltimore, Maryland 21202. Attention: General Counsel; if to the Company
or
- 25 -
<PAGE>
the Option Shareholders, to Harry J. Muhlschlegel, Jevic Transportation, Inc.,
P.O. Box 5157, Delance, New Jersey 08075, with a copy to Barry M. Abelson,
Esquire, Pepper, Hamilton & Scheetz LLP, 3000 Two Logan Square, Philadelphia,
Pennsylvania 19103.
11. TERMINATION.
This Agreement may be terminated by you by notice to the Company and
the Option Shareholders as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m. on
the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company or the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company, whether or not arising in the ordinary
course of business; (ii) any outbreak or escalation of hostilities or
declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your reasonable
judgment, make it impracticable to market the Shares or to enforce contracts for
the sale of the Shares; (iii) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the NASD, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade; (iv)
the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects or may materially and adversely
affect the business or operations of the Company; (v) declaration of a banking
moratorium by United States or New York State authorities, (vi) any downgrading
in the rating of the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Exchange Act); (vii) the suspension of trading of the Company's Common Stock
on the Nasdaq Stock Market or (viii) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
- 26 -
<PAGE>
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Option Shareholders and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Principal Shareholders, the Option Shareholders and
the Underwriters acknowledge and agree that the only information furnished or to
be furnished by any Underwriter to the Company for inclusion in any Prospectus
or the Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers or the Principal Shareholders and (c) delivery of and
payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Option Shareholders, the
Company and the several Underwriters in accordance with its terms.
- 27 -
<PAGE>
Any person executing and delivering this Agreement as Attorney-in-Fact
for an Option Shareholder represents by so doing that he or she has been duly
appointed as Attorney-in-Fact by such Option Shareholder pursuant to a validly
existing and binding Power of Attorney which authorizes such Attorney-in-Fact to
take such action.
Very truly yours,
JEVIC TRANSPORTATION, INC.
By _____________________________________
Harry Muhlschlegel, Chairman and
Chief Executive Officer
PRINCIPAL SHAREHOLDERS
----------------------------------------
Harry J. Muhlschlegel
----------------------------------------
Karen B. Muhlschlegel
OPTION SHAREHOLDERS
By _____________________________________
Harry Muhlschlegel, Attorney-in-Fact
for Option Shareholders listed on Schedule III
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
ALEX. BROWN & SONS INCORPORATED
WILLIAM BLAIR & COMPANY, L.L.C.
SCHRODER & CO. INC.
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Brown & Sons Incorporated
By:_________________________
,Authorized Officer
- 28 -
<PAGE>
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
- ----------- ---------------------
Alex. Brown & Sons Incorporated
William Blair & Company, L.L.C.
Schroder & Co. Inc.
- ----------
Total
3,800,000
=========
- 1 -
<PAGE>
SCHEDULE II
SCHEDULE OF PRINCIPAL SHAREHOLDERS
Harry Muhlschlegel
KAREN MUHLSCHLEGEL
- 1 -
<PAGE>
SCHEDULE III
SCHEDULE OF OPTION SHAREHOLDERS
<TABLE>
<CAPTION>
NUMBER OF MAXIMUM PERCENT OF
Option Shareholder OPTION SHARES TO BE SOLD TOTAL OPTION SHARES
- ------------------ ------------------------ -------------------
<S> <C> <C>
HARRY MUHLSCHLEGEL 285,000 50.0%
KAREN MUHLSCHLEGEL 285,000 50.0%
TOTAL 570,000 100.0%
======= ======
</TABLE>
- 1 -
RESTATED
CERTIFICATE OF INCORPORATION
OF
JEVIC TRANSPORTATION, INC.
FIRST: The name of the Corporation is
JEVIC TRANSPORTATION, INC.
SECOND: The Corporation's registered office is located at 600 Creek Road,
Delanco, NJ 08075. The Corporation's registered agent at such address is Harry
J. Muhlschlegel.
THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on, are: to engage in any lawful act or activity
within the purposes for which corporations may be organized under the New Jersey
Business Corporation Act, N.J.S. ss.14A:1-1 et seq. (the "New Jersey Act").
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 60,000,000, of which 50,000,000
shares having no par value are to be of a class designated Common Equity,
consisting of 40,000,000 shares of a series designated Common Stock and
10,000,000 shares of a series designated Class A Common Stock, subject to the
provisions of paragraph 3.4 below, and 10,000,000 shares having no par value are
to be of a class designated Preferred Stock.
Immediately upon the acceptance for filing by the Secretary of State
of the State of New Jersey of this Restated Certificate of Incorporation,
without further action on the part of the Board of Directors or shareholders of
the Corporation, each issued and outstanding share of Class A Common Stock of
the Corporation shall be automatically reclassified as and converted into 34,291
shares of Class A Common Stock and each issued and outstanding share of Common
Stock of the Corporation shall automatically reclassified as and converted into
34,291 shares of Common Stock (the "Reclassification").
The following is a statement of the relative rights, preferences and
limitations of the shares of each class of stock of the Corporation. In this
Article Fourth, any reference to a section or paragraph, without further
attribution, within a provision relating to a particular class of stock is
intended to refer solely to the specified section or paragraph of the other
provisions relating to the same class of stock.
-1-
<PAGE>
COMMON EQUITY
1. Dividends.
1.1. After the payment or setting apart for payment of any
dividends or distributions to be made to holders of any outstanding Preferred
Stock, the holders of shares of the Common Stock and Class A Common Stock shall
be entitled to receive such dividends and distributions, payable in cash or
otherwise, as may be declared thereon by the Board of Directors from time to
time out of assets or funds of the Corporation legally available therefor,
provided that all such dividends or distributions shall be paid or made in equal
amounts, share for share, to the holders of the Common Stock and Class A Common
Stock as if a single class, except that (a) in the event that any dividend shall
be declared in shares of Common Stock or Class A Common Stock, such dividend
shall be declared at the same rate per share on Common Stock and Class A Common
Stock, but the dividend payable on shares of Common Stock shall be payable in
shares of Common Stock, and the dividend payable on shares of Class A Common
Stock shall be payable in shares of Class A Common Stock; and (b) any dividend
described in paragraph 1.2 below may be paid as therein described. If the
Corporation shall in any manner split, subdivide or combine the outstanding
shares of Common Stock or Class A Common Stock, the outstanding shares of the
other such class of stock shall be split, subdivided or combined in the same
manner proportionately and on the same basis per share.
1.2. In the event the Corporation shall distribute to the
holders of the shares of Common Stock and Class A Common Stock the common stock
or substantially equivalent equity securities of any subsidiary of the
Corporation, the Board of Directors shall have power, but shall not be
obligated, to capitalize or recapitalize such subsidiary with classes of common
equity having the powers, designations, preferences, and relative,
participating, optional, or other special rights and qualifications,
limitations, and restrictions thereof, corresponding, respectively, insofar as
practicable, to those of the Common Stock and the Class A Common Stock, and the
Board of Directors of the Corporation shall have the power, but shall not be
obligated, to distribute to the holders of shares of the Common Stock, the
shares of the subsidiary with rights corresponding to those of the Common Stock,
and to distribute to the holders of shares of the Class A Common Stock, the
shares of the subsidiary with rights corresponding to those of the Class A
Common Stock; provided, that holders of shares of Common Stock and holders of
shares of Class A Common Stock shall respectively receive the same number of
shares of such subsidiary per share of Common Stock and per share of Class A
Common Stock held.
2. Rights on Liquidation. In the event of any liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary, after the
payment or setting apart for payment to the holders of any outstanding Preferred
Stock of the full preferential amounts to which such holders are entitled, all
of the remaining assets of the Corporation shall belong to and be distributable
in equal amounts per share to the holders of the Common Stock and the holders of
Class A Common Stock, as if such classes constituted a single class. For
purposes of this paragraph 2, a consolidation or merger of the Corporation with
any other corporation, or the sale,
-2-
<PAGE>
transfer or lease of all or substantially all its assets shall not constitute or
be deemed a liquidation, dissolution or winding-up of the Corporation.
3. Conversion of Class A Common Stock.
3.1. The holders of Class A Common Stock shall have the right,
at their option, to convert any or all such shares into shares of Common Stock
of the Corporation on the following terms and conditions:
(i) Each share of Class A Common Stock shall be
convertible, at any time, at the office of any transfer agent for shares of
Common Stock of the Corporation, and at such other place or places, if any, as
the Board of Directors may determine, into one fully paid and nonassessable
share of Common Stock of the Corporation upon surrender at such office or other
place of the certificate or certificates representing the shares of Class A
Common Stock so to be converted. In no event, upon conversion of any shares of
Class A Common Stock into shares of Common Stock, shall any allowance or
adjustment be made in respect of dividends on the Class A Common Stock or the
Common Stock.
(ii) Shares of Class A Common Stock shall be deemed to
have been converted and the person converting the same shall become a holder of
shares of Common Stock for the purpose of receiving dividends and for all other
purposes whatsoever as of the date when the certificate or certificates for the
shares of Class A Common Stock to be converted are surrendered to the
Corporation as provided in paragraph 3.1(v).
(iii) A number of shares of Common Stock sufficient to
provide, upon the basis hereinbefore set forth, for the conversion of all shares
of the Class A Common Stock outstanding shall at all times be reserved by the
Corporation for the exercise of the conversion rights of the holders of shares
of the Class A Common Stock.
(iv) If the Corporation shall, at any time, be
consolidated or merged with, or shall sell its property as an entirety or
substantially as an entirety to, any other corporation or corporations, or in
the event of any recapitalization or reclassification of its shares after the
date hereof, proper provisions shall be made as a part of the terms of each such
consolidation, merger, sale, recapitalization or reclassification so that the
holder of any shares of the Class A Common Stock outstanding immediately prior
to such consolidation, merger, sale, recapitalization or reclassification shall
thereafter be entitled to and only entitled to conversion rights upon the terms
and with respect to such securities of the consolidated, merged or purchasing
corporation, or with respect to such securities issued upon such
recapitalization or reclassification, as such holder would have been entitled to
receive upon such consolidation, merger, sale, recapitalization or
reclassification if such holder had exercised the conversion privilege
immediately prior thereto. The provisions of this paragraph 3.1(iv) shall
similarly apply to successive consolidations, mergers, sales, recapitalizations
or reclassifications.
-3-
<PAGE>
(v) Before any holder of Class A Common Stock shall be
entitled to convert the same into Common Stock, such holder shall surrender its
certificate or certificates for such Class A Common Stock to the Corporation at
the office of a transfer agent for the Common Stock, or at such other place or
places, if any, as the Board of Directors may determine, duly endorsed or
accompanied if appropriate by duly executed instruments of transfer and shall
give written notice to the Corporation at said office or place that he elects so
to convert the shares of Class A Common Stock represented by the certificate or
certificates so surrendered. Unless the Common Stock is to be issued in the name
of the registered owner of the certificates surrendered, the holder shall state
in writing the name or names in which it wishes the certificate or certificates
for Common Stock to be issued, and shall furnish all requisite stock transfer
and stock issuance tax stamps, or funds therefor. The Corporation shall as soon
as practicable after such deposit of certificates for Class A Common Stock,
accompanied by the written notice above prescribed, issue and deliver, at the
office or place at which such certificates were deposited, to the person for
whose account Class A Common Stock was so surrendered, or to such person's
nominee or nominees, certificates for the number of full shares of Common Stock
to which he shall be entitled as aforesaid.
3.2. All outstanding shares of Class A Common Stock shall
automatically, without any act or deed on the part of the Corporation or any
other person, be converted into shares of Common Stock on a share-for-share
basis (i) at any time after the date hereof when the total number of shares of
Class A Common Stock outstanding and reserved for issuance upon exercise of
options, warrants or other securities convertible into or exchangeable for
shares of Class A Common Stock is less than 1,000,000; (ii) if at any time the
Board of Directors, in its sole discretion, determines that there has been a
material adverse change in the liquidity, marketability, or market value of the
outstanding Common Stock due to a delisting of the Common Stock from a national
securities exchange or a national over-the-counter listing or due to
requirements under applicable state securities laws in any such case
attributable to the existence of the Class A Common Stock; or (iii) if the Board
of Directors, in its sole discretion, elects to effect a conversion in
connection with its approval of any sale or lease of all or substantially all of
the Corporation's assets or any merger, consolidation, liquidation or
dissolution of the Corporation. In the event of any such automatic conversion,
each stock certificate theretofore representing Class A Common Stock will
thereafter represent the same number of shares of Common Stock.
3.3. The provisions of this paragraph 3 shall be in addition
to the provisions of paragraphs 5.1(i)(A)(3), 5.1(ii) and 5.1(iv), which require
automatic conversion of Class A Common Stock in the circumstances provided
therein.
3.4. Shares of the Class A Common Stock converted into Common
Stock as provided in paragraph 3.1 shall resume the status of authorized but
unissued shares of Class A Common Stock. Upon any automatic conversion of Class
A Common Stock into Common Stock pursuant to paragraph 3.2 or paragraph 5, the
Class A Common Stock shall no longer be authorized for issuance.
-4-
<PAGE>
4. Voting.
4.1. Except as otherwise provided by the laws of the State of
New Jersey or by this Article Fourth, each share of Common Stock shall entitle
the holder thereof to one vote.
4.2. Except as otherwise provided by the laws of the State of
New Jersey or by this Article Fourth, each share of Class A Common Stock shall
entitle the holder thereof to two votes. Except as otherwise provided herein or
required by law, holders of Common Stock and Class A Common Stock shall at all
times vote on all matters (including the election of directors) together as one
class and together with the holders of any other series or class of stock of the
Corporation accorded such class voting right.
4.3. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock and of Class A Common Stock, each voting
separately as a class, shall be required to:
(i) authorize additional shares of Class A Common Stock;
or
(ii) adopt any other amendment hereof that alters or
changes the designations or powers or the preferences, qualifications,
limitations, restrictions or the relative or special rights of either the Common
Stock or the Class A Common Stock so as to affect holders of shares of such
class adversely.
5. Limitations on Transfer and Issuance of Class A Common Stock.
5.1.
(i) No person holding any share of Class A Common Stock
may transfer, and the Corporation shall not register the transfer of such share
of Class A Common Stock or any interest therein, whether by sale, assignment,
gift, bequest, appointment or otherwise, except to a "Permitted Transferee" of
such person. The term "Permitted Transferee" shall mean only,
(A) In the case of a holder of Class A Common
Stock (a "Holder") who is a natural person and the holder of
record and beneficial owner of shares subject to a proposed
transfer, "Permitted Transferee" means: (1) the Holder, the
spouse of such Holder, any lineal descendant of a
grandparent of such Holder, or any spouse of such lineal
descendant (herein collectively referred to as "such
Holder's Family Members"); (2) the trustee of a trust solely
for the benefit of such Holder or such Holder's Family
Members, provided that such trust may also grant a general
or special power of appointment to one or more of such
Holder's Family Members and may permit trust assets to be
used to pay taxes,
-5-
<PAGE>
legacies and other obligations of the trust or of the
estates of one or more of such Holder's Family Members
payable by reason of the death of any of such Family
Members; (3) a corporation if all of the outstanding capital
stock of such corporation is beneficially owned by, or a
partnership if all of the partners are and all of the
partnership interests are beneficially owned by, the Holder
and his Permitted Transferees determined under this
paragraph 5.1(i)(A), provided that if by reason of any
change in the ownership of such stock or partners or
partnership interests, such corporation or partnership would
no longer qualify as a Permitted Transferee of such Holder
or his Permitted Transferees, all shares of Class A Common
Stock then held by such corporation or partnership shall
immediately and automatically, without further act or deed
on the part of the Corporation or any other person, be
converted into shares of Common Stock on a share-for-share
basis, and stock certificates formerly representing such
shares of Class A Common Stock shall thereupon and
thereafter be deemed to represent the like number of shares
of Common Stock; (4) an organization established by the
Holder or such Holder's Family Members, contributions to
which are deductible for federal income, estate or gift tax
purposes; or (5) the executor, administrator or personal
representative of the estate of such Holder or the guardian
or conservator of such Holder adjudged disabled by a court
of competent jurisdiction, acting in his capacity as such.
(B) In the case of a Holder holding the shares
subject to a proposed transfer as trustee pursuant to a
trust (other than a trust described in paragraph 5.1(i)(C)
below), "Permitted Transferee" means (1) the person who
established such trust and (2) any Permitted Transferee of
such person determined pursuant to paragraph 5.1(i)(A)
above.
(C) In the case of a Holder holding shares subject
to a proposed transfer as trustee pursuant to a trust which
was irrevocable on the date hereof, "Permitted Transferee"
means (1) any person to whom or for whose benefit principal
may be distributed either during or at the end of the term
of such trust whether by power of appointment or otherwise
(excluding beneficiaries of any employee benefit plan) and
(2) any Permitted Transferee of any such person determined
pursuant to paragraph 5.1(i)(A) above.
(D) In the case of a Holder which is a corporation
or partnership, "Permitted Transferee" means (1) any person
who transferred to such corporation or partnership the
shares that are the subject of the proposed transfer and (2)
any Permitted Transferee of any such person determined under
paragraph 5.1(i)(A) above.
(E) In the case of a Holder who is the executor,
administrator or personal representative of the estate of a
deceased Holder, guardian or conservator
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of the estate of a disabled Holder or who is a trustee of
the estate of a bankrupt or insolvent Holder, and provided
such deceased, disabled, bankrupt or insolvent Holder, as
the case may be, was the record and beneficial owner of the
shares subject to a proposed transfer, "Permitted
Transferee" means a Permitted Transferee of such deceased,
disabled, bankrupt or insolvent Holder as determined
pursuant to paragraph 5.1(i)(A) or (D) above, as the case
may be.
(ii) Notwithstanding anything to the contrary set forth
herein, any holder of Class A Common Stock may pledge his shares of Class A
Common Stock to a pledgee which is not a Permitted Transferee pursuant to a bona
fide pledge of such shares as collateral security for indebtedness due to the
pledgee, provided that such shares may not be transferred to or registered in
the name of the pledgee unless such pledgee is a Permitted Transferee. In the
event of foreclosure or other similar action by the pledgee, such pledged shares
of Class A Common Stock shall automatically, without any act or deed on the part
of the Corporation or any other person, be converted into shares of Common Stock
on a share-for-share basis, unless within five business days after such
foreclosure or similar event such pledged shares are returned to the pledgor or
transferred to a Permitted Transferee of the pledgor.
(iii) For purposes of this paragraph 5.1:
(A) The relationship of any person that is derived
by or through legal adoption shall be considered a natural
one.
(B) Each joint owner of shares of Class A Common
Stock shall be considered a Holder of such shares.
(C) A minor for whom shares of Class A Common
Stock are held pursuant to a Uniform Gifts to Minors Act or
similar law shall be considered a Holder of such shares.
(D) Unless otherwise specified, the term "person"
means both natural persons and legal entities.
(iv) Any purported transfer of Class A Common Stock other
than to a Permitted Transferee shall automatically, without any further act or
deed on the part of the Corporation or any other person, result in the
conversion of such shares into shares of Common Stock on a share-for-share
basis, effective on the date of such purported transfer. The Corporation may, as
a condition to transfer or registration of transfer of shares of Class A Common
Stock to a purported Permitted Transferee, require that the record holder
establish to the satisfaction of the Corporation, by filing with the transfer
agent an appropriate affidavit or certificate or such other proof as the
Corporation shall deem necessary, that such transferee is a Permitted
Transferee.
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5.2. Anything in this Article Fourth to the contrary
notwithstanding, no share of Class A Common Stock may be held of record but not
beneficially by a broker or dealer in securities, a bank or voting trustee or a
nominee of any such, or otherwise held of record but not beneficially by a
nominee of the beneficial owner of such share (any such form of holding being
referred to herein as holding in "street" or nominee name).
5.3. The Corporation shall note on the certificates
representing the shares of Class A Common Stock that there are restrictions on
transfer and registration of transfer imposed by paragraphs 5.1 and 5.2.
5.4. (i) For purposes of this paragraph 5, "beneficial
ownership" shall mean possession of the power to vote or to direct the vote and
to dispose of or to direct the disposition of the share of Class A Common Stock
in question, and a "beneficial owner" of a share of Class A Common Stock shall
be the person having beneficial ownership thereof.
(ii) The Board of Directors may, from time to time,
establish practices and procedures and promulgate rules and regulations, in
addition to those set forth in this Article Fourth, and amend or revoke any
such, regarding the evidence necessary to establish entitlement of any
transferee or purported transferee of Class A Common Stock to be registered as
such. Should the transferee or purported transferee of any share wish to contest
any decision of the Corporation on the question whether the transferee or
purported transferee has established entitlement to be registered as a
transferee of Class A Common Stock, then the Board of Directors shall in its
sole discretion make the final determination.
6. Other Matters.
6.1. In case the Corporation shall at any time issue to the
holders of its shares of Common Stock as such options or rights to subscribe for
shares of Common Stock (including shares held in the Corporation's treasury) or
any other security (whether of the Corporation or otherwise), the Corporation
shall issue such options or rights to the holders of the Class A Common Stock in
the respective amounts equal to the amounts that such holders would have been
entitled to receive had their respective shares of Class A Common Stock been
converted into Common Stock on the day prior to the date for the determination
of the holders of Common Stock entitled to receive such options or rights.
6.2. In any distribution of stock of any other corporation or
any merger, consolidation, reorganization or other business combination
involving the Company, the consideration to be received per share by holders of
either Common Stock or Class A Common Stock shall be identical to that received
by holders of the other class of Common Equity.
PREFERRED STOCK
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The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized to provide for the
issuance of shares of Preferred Stock in series and, by filing a certificate
pursuant to the applicable law of the State of New Jersey (hereinafter referred
to as a "Preferred Stock Designation"), to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations and restrictions thereof. The authority of the Board
of Directors with respect to each series shall include, but not be limited to,
determination of the following:
(i) the designation of the series, which may be by
distinguishing number, letter or title;
(ii) the number of shares of the series, which number the
Board of Directors may thereafter (except where otherwise provided in the
Preferred Stock Designation) increase or decrease (but not below the number of
shares thereof then outstanding);
(iii) whether dividends, if any, shall be cumulative or
noncumulative and the dividend rate of the series;
(iv) the dates at which dividends, if any, shall be
payable;
(v) the redemption rights and price or prices, if any,
for shares of the series;
(vi) the terms and amount of any sinking fund provided
for the purchase or redemption of shares of the series;
(vii) the amounts payable on shares of the series in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation;
(viii) whether the shares of the series shall be
convertible into shares of any other class or series, or any other security, of
the Corporation or any other corporation, and, if so, the specification of such
other class or series or such other security, the conversion price or prices or
rate or rates, any adjustments thereof, the date or dates as of which such
shares shall be convertible and all other terms and conditions upon which such
conversion may be made;
(ix) restrictions on the issuance of shares of the same
series or of any other class or series; and
(x) the voting rights, if any, of the holders of shares
of the series.
Except as may be provided in this Certificate of Incorporation or in
a Preferred Stock Designation, the Common Stock and the Class A Common Stock
shall have the exclusive
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right to vote for the election of directors and for all other purposes, and
holders of Preferred Stock shall not be entitled to receive notice of any
meeting of shareholders at which they are not entitled to vote. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the votes entitled to be cast by the holders of a majority of the outstanding
Common Stock and Class A Common Stock, voting as one class, without a vote of
the holders of the Preferred Stock, or of any series thereof, unless a vote of
any such holders is required pursuant to any Preferred Stock Designation.
The Corporation shall be entitled to treat the person in whose name
any share of its stock is registered as the owner thereof for all purposes and
shall not be bound to recognize any equitable or other claim to, or interest in,
such share on the part of any other person, whether or not the Corporation shall
have notice thereof, except as expressly provided by applicable law.
FIFTH: Subject to the rights of the holders of any series of Preferred
Stock to elect directors under specified circumstances, the number of directors
of the Corporation shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the whole Board, but
shall not be less than one or greater than nine. A director need not be a
shareholder.
The directors, other than those who may be elected by the holders of
any series of Preferred Stock or any other series or class of stock, as provided
herein or in any Preferred Stock Designation, shall be divided into three
classes, as nearly equal in number as possible. One class of directors shall be
initially elected for a term expiring at the annual meeting of shareholders to
be held in 1998, another class shall be initially elected for a term expiring at
the annual meeting of shareholders to be held in 1999, and another class shall
be initially elected for a term expiring at the annual meeting of shareholders
to be held in 2000. Members of each class shall hold office until their
successors are elected and shall have qualified. At each annual meeting of the
shareholders of the Corporation, commencing with the 1998 annual meeting, the
successors of the class of directors whose term expires at that meeting shall be
elected by a plurality vote of all votes cast at such meeting to hold office for
a term expiring at the annual meeting of shareholders held in the third year
following the year of their election. No decrease in the number of authorized
directors constituting the whole Board of Directors shall shorten the term of
any incumbent director.
Subject to the rights of the holders of any series of Preferred
Stock, and unless the Board of Directors otherwise determines, newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, though less than a
quorum, and shall not be filled by the shareholders unless there are no
directors remaining on the Board of Directors. Any director so chosen (a
"vacancy director") shall be a director of the same class as the director
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whose vacancy he or she fills. Such vacancy director shall hold office until the
next annual meeting of shareholders and until his or her successor shall have
been elected and qualified. The shareholders shall thereupon elect a director to
fill the vacancy having been temporarily filled by the vacancy director, which
individual may include the incumbent vacancy director. The director so elected
shall be a director of the same class as the vacancy director and shall serve
until the annual meeting of shareholders at which the term of office of such
class expires and until such director's successor shall have been duly elected
and qualified.
Subject to the rights of the holders of any series of Preferred
Stock or any other series or class of stock, as provided herein or in any
Preferred Stock Designation, to elect additional directors under specific
circumstances, any director may be removed from office at any time, but only for
cause and only by the affirmative vote of the holders of at least 80 percent
(80%) of the voting power of the then outstanding capital stock of the
Corporation entitled to vote generally in the election of directors (the "Voting
Stock"), voting together as a single class.
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for damages for breach of any duty owed to the
Corporation or its shareholders as a director, except for any breach of duty
based on an act or omission (i) in breach of the director's duty of loyalty to
the Corporation or its shareholders, (ii) not in good faith or involving a
knowing violation of law or (iii) resulting in receipt by such director of an
improper personal benefit. As used in this paragraph, an act or omission in
breach of a director's duty of loyalty means an act or omission which that
person know or believes to be contrary to the best interests of the Corporation
or its shareholders in connection with a matter in which he has a material
conflict of interest. This paragraph shall not eliminate or limit the liability
of a director for any act or omission occurring prior to the effective date of
its adoption. No repeal or modification of this paragraph, directly or by
adoption of an inconsistent provision of this Certificate of Incorporation, by
the shareholders of the Corporation shall be effective with respect to any cause
of action, suit, claim or other matter that, but for this paragraph, would
accrue or arise prior to such repeal or modification. If the New Jersey Act is
amended after the filing of the Restated Certificate of Incorporation of which
this Article is a part to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the New Jersey Act as so amended.
SIXTH: Election of directors need not be by written ballot unless a
shareholder demands election by ballot at the election and before voting begins.
SEVENTH: Any action required or permitted to be taken by the shareholders
shall be taken only at an annual or special meeting of such shareholders or by
unanimous written consent pursuant to ss.14A:5-6(1) of the New Jersey Act (or
any successor provision), and specifically
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shall not be taken upon the written consent of less than all shareholders
pursuant to ss.14A:5-6(2) of the New Jersey Act (or any successor provision).
Special meetings of the shareholders for any purpose or purposes shall be called
only by the Chairman of the Board or the President of the Corporation or upon a
resolution adopted by a majority of the entire Board of Directors of the
Corporation.
EIGHTH:
1. Amendment of Certificate of Incorporation. From time to time any of
the provisions of the Certificate of Incorporation may be amended, altered or
repealed, and other provisions authorized by the New Jersey Act may be added or
inserted, and all rights at any time conferred upon the shareholders of the
Corporation by its Certificate of Incorporation are granted subject to the
provisions of this Article Eighth. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80% of the voting power of the then outstanding Voting
Stock, voting together as a single class, shall be required to amend or repeal
Article Fifth, Article Seventh or this Article Eighth or adopt any provision
inconsistent with any of the foregoing articles.
2. By-laws. The Board of Directors is expressly authorized to make,
alter, amend and repeal the by-laws of the Corporation, in any manner not
inconsistent with the laws of the State of New Jersey or the Certificate of
Incorporation, subject to the power of the holders of the Capital Stock to alter
or repeal the by-laws made by the Board of Directors.
NINTH: The names and addresses of the directors constituting the current
Board of Directors of the Corporation are as follows:
Harry J. Muhlschlegel Karen B. Muhlschlegel Paul J. Karvois
4 Stags Leap Court 4 Stags Leap Court 12 Glenforest Drive
Tabernacle, NJ 08088 Tabernacle, NJ 08088 Voorhees, NJ 08043
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BY-LAWS
OF
JEVIC TRANSPORTATION, INC.
(AS AMENDED EFFECTIVE , 1997)
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE IN NEW JERSEY; RESIDENT AGENT. The
address of the Corporation's registered office in the State of New Jersey and
the name and address of its resident agent in charge thereof are as filed with
the Secretary of State of the State of New Jersey.
Section 2. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places either within or without the state of New
Jersey as the Board of Directors may from time to time determine or the business
of the Corporation requires.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. All meetings of the shareholders of
the Corporation shall be held at such place, within or without the State of New
Jersey, as may from time to time be designated by resolution passed by the Board
of Directors.
Section 2. ANNUAL MEETING. An annual meeting of the shareholders for
the election of directors and for the transaction of such other proper business,
notice of which was given in the notice of meeting, shall beheld on a date and
at a time as may from time to time be designated by resolution passed by the
Board of Directors.
Section 3. SPECIAL MEETINGS. A special meeting of the shareholders
for any purpose or purposes shall be called only by the Chairman of the Board or
the President of the Corporation or by the Board of Directors pursuant to a
resolution adopted by a majority of the whole Board.
Section 4. NOTICE OF MEETINGS. Except as otherwise provided by law,
written notice of each meeting of the shareholders, whether annual or special,
shall be mailed, postage prepaid, not less than ten nor more than sixty days
before the date of the meeting, to each shareholder entitled to vote at such
meeting, at the shareholder's address as it appears on the records of the
Corporation. Every such notice shall state the time, place, and purpose or
purposes of the meeting. Except when expressly required by law, notice of any
adjourned meeting of the shareholders shall not be required to be given if the
time and place to which the
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meeting is adjourned are announced at the meeting at which the adjournment is
taken and at the adjourned meeting only such business is transacted as might
have been transacted at the original meeting.
Section 5. LIST OF SHAREHOLDERS. The Secretary shall, from
information obtained from the transfer agent, prepare and make, at least ten
days before every meeting of shareholders, a complete list of the shareholders
entitled to vote at the meeting, arranged in alphabetical order within each
class, series or group or shareholders, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any shareholder who is
present. The list shall be prima facie evidence as to who are the shareholders
entitled to examine such list or to vote in person or by proxy at any meeting of
shareholders.
Section 6. QUORUM. At each meeting of the shareholders, the holders
of shares entitled to cast a majority of the votes at a meeting present either
in person or by proxy shall constitute a quorum for the transaction of business
except where otherwise provided by law or by the Certificate of Incorporation or
by these by-laws for a specified action. Except as otherwise provided by law, in
the absence of a quorum, a majority in interest of the shareholders of the
Corporation present in person or by proxy and entitled to vote shall have the
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until shareholders holding the requisite amount of
stock shall be present or represented. At any such adjourned meeting at which a
quorum may be present, any business may be transacted which might have been
transacted at a meeting as originally called, and only those shareholders
entitled to vote at the meeting as originally called shall be entitled to vote
at any adjournment or adjournments thereof. The absence from any meeting of the
number of shareholders required by law or by the certificate of Incorporation or
by these by-laws for action upon any given matter shall not prevent action at
such meeting upon any other matter or matters which may properly come before the
meeting, if the number of shareholders required in respect of such other matter
or matters shall be present. The shareholders present in person or by proxy at a
duly organized meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 7. ORGANIZATION. At every meeting of the shareholders the
Chairman of the Board, or, in his or her absence, the President, or in the
absence of the Chairman and the President, a director or an officer of the
Corporation designated by the Board shall act as Chairman. The Secretary, or, in
his or her absence, an Assistant secretary, shall act as Secretary at all
meetings of the shareholders. In the absence from any such meeting of the
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Secretary and the Assistant Secretaries, the Chairman may appoint any person to
act as Secretary of the meeting.
Section 8. NOTICE OF SHAREHOLDER BUSINESS AND NOMINATIONS.
(a) Annual Meetings of Shareholders.
(i) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be considered by
the shareholders may be made at an annual meeting of shareholders (a) pursuant
to the Corporation's notice of meeting, (b) by or at the direction of the Board
of Directors or (c) by any shareholder of the Corporation who was a shareholder
of record at the time of giving of notice provided for in this by-law, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this by-law.
(ii) For nominations or other business to be properly
brought before an annual meeting by a shareholder pursuant to clause (c) of
paragraph (a)(i) of this by-law, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such other business
must otherwise be a proper matter for shareholder action. To be timely, a
shareholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
60th day nor earlier than the close of business on the 90th day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by the
shareholder to be timely must be so delivered not earlier than the close of
business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a shareholder's notice as described above. Such shareholder's
notice shall set forth (a) as to each person whom the shareholder proposes to
nominate for election or reelection as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to any other business that the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the shareholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such shareholder, as they appear on the Corporation's books, and of
such beneficial owner and (ii) the
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class and number of shares of the Corporation which are owned beneficially and
of record by such shareholder and such beneficial owner.
(iii) Notwithstanding anything in the second sentence of
paragraph (a)(ii) of this by-law to the contrary, in the event that the number
of directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement by the Corporation naming all of
the nominees for director or specifying the size of the increased Board of
Directors at least 70 days prior to the first anniversary of the preceding
year's annual meeting, a shareholder's notice required by this by-law shall also
be considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
(b) Special Meetings of Shareholders. Only such business shall
be conducted at a special meeting of shareholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting. Nominations
of persons for election to the Board of Directors may be made at a special
meeting of shareholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any shareholder of the
Corporation who is a shareholder of record at the time of giving of notice
provided for in this by-law, who shall be entitled to vote at the meeting and
who complies with the notice procedures set forth in this by-law. In the event
the Corporation calls a special meeting of shareholders for the purpose of
electing one or more directors to the Board of Directors, any such shareholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
shareholder's notice required by paragraph (a)(ii) of this by-law shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the close of business on the 90th day prior to such special
meeting and not later than the close of business on the later of the 60th day
prior to such special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In no
event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a shareholder's notice as described
above.
(c) General.
(i) Only such persons who are nominated in accordance
with the procedures set forth in this by-law shall be eligible to serve as
directors and only such business shall be conducted at a meeting of shareholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this by-law. Except as otherwise provided by law, the Certificate
of Incorporation or these by-laws, the Chairman of the meeting shall have the
power and duty to determine whether a nomination or any business proposed to be
brought
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before the meeting was made or proposed, as the case may be, in accordance with
the procedures set forth in this by-law and, if any proposed nomination or
business is not in compliance with this by-law, to declare that such defective
proposal or nomination shall be disregarded.
(ii) For purposes of this by-law, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this
by-law, a shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this by-law.
Nothing in this by-law shall be deemed to affect any rights (i) of shareholders
to request inclusion of proposals in the Corporation's proxy statement pursuant
to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of
Preferred Stock to elect directors under specified circumstances.
Section 9. BUSINESS AND ORDER OF BUSINESS. At each meeting of the
shareholders such business may be transacted as may properly be brought before
such meeting, except as otherwise provided by law or in these by-laws. The order
of business at all meetings of the shareholders shall be as determined by the
Chairman, unless otherwise determined by a majority in interest of the
shareholders present in person or by proxy at such meeting and entitled to vote
thereat.
Section 10. VOTING. Except as otherwise provided by law, the
Certificate of Incorporation or these by-laws, each shareholder shall at every
meeting of the shareholders be entitled to one vote for each share of stock held
by such shareholder. Any vote on stock may be given by the shareholder entitled
thereto in person or by proxy appointed by an instrument in writing executed (or
transmitted by electronic means which results in a writing) by such shareholder
or by the shareholder's attorney thereunto authorized, and delivered to the
Secretary; provided, however, that no proxy shall be voted after 11 months from
its date unless the proxy provides for a longer period. Except as otherwise
provided by law, the Certificate of Incorporation or these by-laws, at all
meetings of the shareholders, all matters other than the election of directors
shall be decided by a majority of the votes cast at such meeting (which need not
be by ballot) by shareholders present in person or by proxy and entitled to vote
thereat, a quorum being present.
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ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed by or under the direction of its Board of
Directors.
Section 2. ELECTION OF DIRECTORS. At each meeting of the
shareholders for the election of directors, at which a quorum is present,
directors shall be elected by a plurality of votes cast in such election, which
need not be by written ballot unless a shareholder demands election by ballot at
the election and before voting begins. Voting shall otherwise be in accordance
with the provisions of Section 10 of Article II hereof.
Section 3. QUORUM AND MANNER OF ACTING. A majority of the members of
the Board of Directors shall constitute a quorum for the transaction of business
at any meeting, and the act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board of Directors
unless otherwise provided by law, the Certificate of Incorporation or these
by-laws. In the absence of a quorum, a majority of the directors present may
adjourn any meeting from time to time until a quorum shall be obtained. Notice
of any adjourned meeting need not be given if the time and place are fixed at
the meeting adjourning and if the period of adjournment does not exceed ten days
in any one adjournment. The directors shall act only as a board and the
individual directors shall have no power as such.
Section 4. PLACE OF MEETINGS. The Board of Directors may hold its
meetings at such place or places within or without the State of New Jersey as
the Board may from time to time determine or as shall be specified or fixed in
the respective notices or waivers of notice thereof.
Section 5. FIRST MEETING. Promptly after each annual election of
directors, the Board of Directors shall meet for the purpose of organization,
the election of officers and the transaction of other business, at the same
place as that at which the annual meeting of shareholders was held or as
otherwise determined by the Board. Notice of such meeting need not be given.
Such meeting may be held at any other time or place which shall be specified in
a notice given as hereinafter provided for special meetings of the Board of
Directors.
Section 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such places and at such times as the Board shall from
time to time determine. If any day fixed for a regular meeting shall be a legal
holiday at the place where the meeting is to be held, then the meeting which
would otherwise be held on that day shall be held at the same hour on the next
succeeding business day not a legal holiday. Notice of regular meetings need not
be given.
Section 7. SPECIAL MEETINGS; NOTICE. Special meetings of the Board
of Directors shall be held whenever called by the Chairman of the Board and
shall be called by the
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Chairman of the Board or the Secretary at the written request of three
directors. Notice of each such meeting stating the time and place of the meeting
shall be given to each director by mail, telephone, other electronic
transmission or personally. If by mail, such notice shall be given not less than
five days before the meeting; and if by telephone, other electronic transmission
or personally, not less than two days before the meeting. A notice mailed at
least two weeks before the meeting need not state the purpose thereof except as
otherwise provided in these by-laws. In all other cases the notice shall state
the principal purpose or purposes of the meeting. Notice of any meeting of the
Board need not be given to a director, however, if waived by the director in
writing before or after such meeting or if the director shall be present at the
meeting without protest prior to the conclusion thereof.
Section 8. ORGANIZATION. At each meeting of the Board of Directors,
the Chairman of the Board, or, in his absence, the President, or, in the absence
of the Chairman and the President, a director or an officer of the Corporation
designated by the Board shall act as Chairman. The Secretary, or, in the
Secretary's absence, any person appointed by the Chairman, shall act as
Secretary of the meeting.
Section 9. ORDER OF BUSINESS. At all meetings of the Board of
Directors, business shall be transacted in the order determined by the Board.
Section 10. RESIGNATIONS. Any director of the Corporation may resign
at any time by giving written notice to the Corporation. The resignation of any
director shall take effect at the time specified therein, and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 11. COMPENSATION. Each director shall be paid such
compensation, if any, as shall be fixed by the Board of Directors.
ARTICLE IV
COMMITTEES
Section 1. APPOINTMENT AND POWERS. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more directors of the
Corporation, which, to the extent provided in said resolution or in these
by-laws and not inconsistent with Section 14A:6-9 of the New Jersey Business
Corporation Act (the "New Jersey Act"), shall have and may exercise the powers
of the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
Board of Directors. The Board of Directors may, by resolution passed by a
majority of the whole Board, abolish any such committee.
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Section 2. TERM OF OFFICE AND VACANCIES. Each member of a
committee shall continue in office until a director to succeed him or her shall
have been elected and shall have qualified, or until he or she ceases to be a
director or until he or she shall have resigned or shall have been removed in
the manner hereinafter provided. Any vacancy in a committee shall be filled by
the vote of a majority of the whole Board of Directors at any regular or special
meeting thereof.
Section 3. ALTERNATES. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more directors as
alternate members of any committee, to act in the absence or disability of
members of any committee with all the powers of such absent or disabled members.
Section 4. ORGANIZATION. Unless otherwise provided by the Board of
Directors, each committee shall appoint a chairman. Each committee shall keep a
record of its acts and proceedings and report the same from time to time to the
Board of Directors.
Section 5. RESIGNATIONS. Any regular or alternate member of a
committee may resign at any time by giving written notice to the Chairman of the
Board, the President or the Secretary of the Corporation. Such resignation shall
take effect at the time of the receipt of such notice or at any later time
specified therein, and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 6. REMOVAL. Any regular or alternate member of a committee
may be removed with or without cause at any time by resolution passed by a
majority of the whole Board of Directors at any regular or special meeting.
Section 7. MEETINGS. Regular meetings of each committee, of which no
notice shall be necessary, shall be held on such days and at such places as the
chairman of the committee shall determine or as shall be fixed by a resolution
passed by a majority of all the members of such committee. Special meetings of
each committee will be called by the Secretary at the request of any two members
of such committee, or in such other manner as may be determined by the
committee. Notice of each special meeting of a committee shall be mailed to each
member thereof at least two days before the meeting or shall be given personally
or by telephone or other electronic transmission at least one day before the
meeting. Every such notice shall state the time and place, but need not state
the purposes of the meeting. No notice of any meeting of a committee shall be
required to be given to any alternate.
Section 8. QUORUM AND MANNER OF ACTING. Unless otherwise provided by
resolution of the Board of Directors, a majority of a committee (including
alternates when acting in lieu of regular members of such committee) shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of such
committee. The members of each committee shall act only as a committee and the
individual members shall have no power as such. Actions taken at a meeting
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of any committee shall be reported to the Board of Directors at its next meeting
following such committee meeting; provided that, when the meeting of the Board
is held within 2 days after the committee meeting, such report may be made to
the Board at its second meeting following such committee meeting.
Section 9. COMPENSATION. Each regular or alternate member of a
committee shall be paid such compensation, if any, as shall be fixed by the
Board of Directors.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the Corporation shall be a
Chairman of the Board of Directors and a President, each of whom shall chosen by
the Board of Directors from among its members, and one or more Vice Presidents
(one or more of whom may be Senior Vice Presidents or otherwise as may be
designated by the Board), a Secretary and a Treasurer, all of whom shall be
elected by the Board of Directors. Any two or more offices may be held by the
same person. The Board of Directors may also from time to time elect such other
officers as it deems necessary.
Section 2. TERM OF OFFICE. Each officer shall hold office until his
or her successor shall have been duly elected and qualified in his or her stead,
or until his or her death or until he or she shall have resigned or shall have
been removed in the manner hereinafter provided.
Section 3. ADDITIONAL OFFICERS; AGENTS. The Chairman of the Board
may from time to time appoint and remove such additional officers and agents as
may be deemed necessary. Such persons shall hold office for such period, have
such authority, and perform such duties as provided in these by-laws or as the
Chairman of the Board may from time to time prescribe. The Board of Directors or
the Chairman of the Board may from time to time authorize any officer to appoint
and remove agents and employees and to prescribe their powers and duties.
Section 4. SALARIES. Unless otherwise provided by resolution passed
by a majority of the whole Board, the salaries of all officers elected by the
Board of Directors shall be fixed by the Board of Directors.
Section 5. REMOVAL. Except where otherwise expressly provided in a
contract authorized by the Board of Directors, any officer may be removed,
either with or without cause, by the vote of a majority of the Board at any
regular or special meeting or, except in the case of an officer elected by the
Board, by any superior officer upon whom the power of removal may be conferred
by the Board or by these by-laws.
Section 6. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Corporation. Any such resignation shall take effect
at the date of receipt of
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such notice or at any later time specified therein, and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 7. VACANCIES. A vacancy in any office because of death,
resignation, removal, or otherwise, shall be filled for the unexpired portion of
the term in the manner provided in these by-laws for regular election or
appointment to such office.
Section 8. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors ("Chairman of the Board") shall be chief executive officer of
the Corporation and, subject to the control of the Board of Directors, shall
have general and overall charge of the business and affairs of the Corporation
and of its officers. He shall keep the Board of Directors appropriately informed
on the business and affairs of the Corporation. He shall preside at all meetings
of the shareholders and of the Board of Directors and shall enforce the
observance of the by-laws of the Corporation and the rules of order for the
meetings of the Board and the shareholders.
Section 9. PRESIDENT. The President shall be the chief operating
officer of the Corporation and, subject to the control of the Chairman of the
Board, shall direct and be responsible for the operation of the business and
affairs of the Corporation. The President shall keep the Chairman of the Board
and the Board of Directors appropriately informed on the business and affairs of
the Corporation. In the case of the absence or disability of the Chairman of the
Board, the President shall perform all the duties and functions and exercise all
the powers of, and be subject to all the restrictions upon, the Chairman of the
Board.
Section 10. SENIOR VICE PRESIDENTS. One or more Senior Vice
Presidents shall, subject to the control of the Chairman of the Board and the
President, have lead accountability for components or functions of the
Corporation as and to the extent designated by the Chairman of the Board and the
President. Each Senior Vice President shall keep the Chairman of the Board and
President appropriately informed on the business and affairs of the designated
components or functions of the Corporation.
Section 11. VICE PRESIDENTS. The Vice Presidents shall perform such
duties as may from time to time be assigned to them or any of them by the
Chairman of the Board or the President.
Section 12. SECRETARY. The Secretary shall keep or cause to be kept
in books provided for the purpose the minutes of the meetings of the
shareholders, of the Board of Directors and of any committee constituted
pursuant to Article IV of these by-laws. The Secretary shall be custodian of the
corporate seal and see that it is affixed to all documents as required and
attest the same. The Secretary shall perform all duties incident to the office
of Secretary and such other duties as from time to time may be assigned to him
or her.
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Section 13. ASSISTANT SECRETARIES. At the request of the Secretary,
or in his or her absence or disability, the Assistant Secretary designated by
him or her shall perform all the duties of the Secretary and, when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
Secretary. The Assistant Secretaries shall perform such other duties as from
time to time may be assigned to them.
Section 14. TREASURER. The Treasurer shall have charge of and be
responsible for the receipt, disbursement and safekeeping of all funds and
securities of the Corporation. The Treasurer shall deposit all such funds in the
name of the Corporation in such banks, trust companies or other depositories as
shall be selected in accordance with the provisions of these by-laws. From time
to time and whenever requested to do so, the Treasurer shall render statements
of the condition of the finances of the Corporation to the Board of Directors.
The Treasurer shall perform all the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him or her.
Section 15. ASSISTANT TREASURERS. At the request of the Treasurer,
or in his or her absence or disability, the Assistant Treasurer designated by
him or her shall perform all the duties of the Treasurer and, when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
Treasurer. The Assistant Treasurers shall perform such other duties as from time
to time may be assigned to them.
Section 16. CERTAIN AGREEMENTS. The Board of Directors shall have
power to authorize or direct the proper officers of the Corporation, on behalf
of the Corporation, to enter into valid and binding agreements in respect of
employment, incentive or deferred compensation, stock options, and similar or
related matters, notwithstanding the fact that a person with whom the
Corporation so contracts may be a member of its Board of Directors. Any such
agreement may validly and lawfully bind the Corporation for a term of more than
one year, in accordance with its terms, notwithstanding the fact that one of the
elements of any such agreement may involve the employment by the Corporation of
an officer, as such, for such term.
ARTICLE VI
AUTHORIZATIONS
Section 1. CONTRACTS. The Board of Directors, except as otherwise
provided in these by-laws, may authorize any officer, employee or agent of the
Corporation to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation, and such authority may be general
or confined to specific instances.
Section 2. LOANS. No loan shall be contracted on behalf of the
Corporation and no negotiable paper shall be issued in its name, unless
authorized by the Board of Directors.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the
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Corporation shall be signed by such officer or officers, employee or employees,
of the Corporation as shall from time to time be determined in accordance with
authorization of the Board of Directors.
Section 4. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may from time to time
designate, or as may be designated by any officer or officers of the Corporation
to whom such power may be delegated by the Board, and for the purpose of such
deposit the officers and employees who have been authorized to do so in
accordance with the determinations of the Board may endorse, assign and deliver
checks, drafts, and other orders for the payment of money which are payable to
the order of the Corporation.
Section 5. PROXIES. Except as otherwise provided in these by-laws or
in the Certificate of Incorporation, and unless otherwise provided by resolution
of the Board of Directors, the Chairman of the Board, the President or any other
officer may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation to cast
the votes which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation any of whose stock or other securities may be
held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporations, or to consent in writing to any action by
such other corporation, and may instruct the person or persons so appointed as
to the manner of casting such vote or giving such consent, and may execute or
cause to be executed in the name and on behalf of the Corporation and under its
corporate seal, or otherwise, all such written proxies or other instruments as
he may deem necessary or proper in the premises.
ARTICLE VII
SHARES AND THEIR TRANSFER
Section 1. CERTIFICATES OF STOCK. Certificates for shares of the
stock of the Corporation shall be in such form as shall be approved by the Board
of Directors. They shall be numbered in the order of their issue, by class and
series, and shall be signed by the Chairman of the Board, the President or a
Vice President, and may be countersigned by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation. Any or
all signatures upon a certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent, or registrar at the date of issue.
Section 2. RECORD OWNERSHIP. A record of the name and address of the
holder of each certificate, the number, class and series of shares represented
thereby and the date of issuance thereof shall be made on the Corporation's
books. The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof and accordingly
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shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have express
or other notice thereof, except as required by law.
Section 3. TRANSFER OF STOCK. Shares of stock shall be transferable
on the books of the Corporation by the person named in the certificate for such
stock in person or by such person's attorney or other duly constituted
representative upon surrender of such certificate with an assignment endorsed
thereon or attached thereto duly executed and with such guarantee of signature
as the Corporation may reasonably require.
Section 4. LOST, DESTROYED AND MUTILATED CERTIFICATES. The
Corporation may issue a new certificate of stock in the place of any certificate
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Corporation may require the owner of the lost, stolen or destroyed
certificate, or such person's legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
Section 5. TRANSFER AGENT AND REGISTRAR; REGULATIONS. The
Corporation shall, if and whenever the Board of Directors shall so determine,
maintain one or more transfer offices or agencies, each in charge of a transfer
agent designated by the Board of Directors, where the shares of the stock of the
Corporation shall be directly transferable, and also one or more registry
offices, each in charge of a registrar designated by the Board of Directors,
where such shares of stock shall be registered, and no certificate for shares of
the stock of the Corporation, in respect of which a registrar and transfer agent
shall have been designated, shall be valid unless countersigned by such transfer
agent and registered by such registrar. The Board of Directors may also make
such additional rules and regulations as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of stock of the
Corporation.
Section 6. FIXING RECORD DATE. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. If no record
date is fixed (1) the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if no
notice is given, at the close of business on the day next preceding the day on
which the meeting is held and (2) the record date for determining shareholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto. A determination of
shareholders of record entitled to notice of or to
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vote at a meeting of shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 7. EXAMINATION OF BOOKS BY SHAREHOLDERS. The Board of
Directors shall, subject to New Jersey Act and other applicable law, have power
to determine from time to time, whether and to what extent and under what
conditions and regulations the accounts and books of the Corporation, or any of
them, shall be open to the inspection of the shareholders; and no shareholder
shall have any right to inspect any book or document of the Corporation, except
as conferred the New Jersey Act, unless and until authorized so to do by
resolution of the Board of Directors or of the shareholders of the Corporation.
ARTICLE VIII
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal" and
"New Jersey".
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
January in each year.
ARTICLE X
INDEMNIFICATION
Section 1. DEFINITIONS. As used in this section,
(a) "corporate agent" means any person who is or was a
director, officer, employee or agent of the Corporation or of any constituent
corporation absorbed by the Corporation in a consolidation or merger and any
person who is or was a director, officer, trustee, employee or agent of any
other enterprise, serving as such at the request of the Corporation, or of any
such constituent corporation, or the legal representative of any such director,
officer, trustee, employee or agent;
(b) "other enterprise" means any domestic or foreign
corporation, other than the Corporation, and any partnership, joint venture,
sole proprietorship, trust or other enterprise, whether or not for profit,
served by a corporate agent;
(c) "expenses" means reasonable costs, disbursements and
counsel fees;
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(d) "independent legal counsel" means a law firm, or a member
of a law firm, that (i) is experienced in matters of corporation law; (ii)
neither presently is, nor in the past five years has been, retained to represent
the Corporation or the corporate agent claiming indemnification or any other
party to the action, suit, or proceeding giving rise to a claim for
indemnification, in any matter material to the Corporation, the claimant or any
such other party; and (iii) would not, under applicable standards of
professional conduct then prevailing, have a conflict of interest in
representing either the Corporation or such corporate agent in an action to
determine the Corporation's or such person's rights under this section;
(e) "liabilities" means amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties;
(f) "proceedings" means any pending, threatened or completed
civil, criminal, administrative or arbitrative action, suit or proceeding, and
any appeal therein and any inquiry or investigation which could lead to such
action, suit or proceeding; and
(g) references to "other enterprises" include employee benefit
plans; references to "fines" include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the Corporation" include any service as a corporate agent which imposes
duties on, or involves services by, the corporate agent with respect to an
employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner the person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this section.
Section 2. INDEMNIFICATION.
(a) The Corporation shall indemnify any director or officer
and may indemnify any other corporate agent against his or her expenses and
liabilities in connection with any proceeding involving the corporate agent by
reason of his being or having been such a corporate agent, other than a
proceeding by or in the right of the corporation if
(i) such corporate agent acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation; and
(ii) with respect to any criminal proceeding, such
corporate agent had no reasonable cause to believe his or her conduct was
unlawful.
The termination of any proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not of itself create a
presumption that such corporate agent did not meet the applicable standards of
conduct set forth in this section.
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(b) The Corporation shall indemnify any director or officer
and may indemnify any other corporate agent against his or her expenses in
connection with any proceeding by or in the right of the Corporation to procure
a judgment in its favor which involves the corporate agent by reason of his or
her being or having been such corporate agent, if he or she acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation. However, in such a proceeding no indemnification
shall be provided in respect of any claim, issue or matter as to which such
corporate agent shall have been adjudged to be liable to the corporation, unless
and only to the extent that the Superior Court or the court in which such
proceeding was brought shall determine upon application that despite the
adjudication of liability, but in view of all circumstances of the case, such
corporate agent is fairly and reasonably entitled to indemnity for such expenses
as the Superior Court or such other court shall deem proper.
(c) The Corporation shall indemnify any director or officer
and may indemnify any other corporate agent against expenses to the extent that
such corporate agent has been successful on the merits or otherwise in any
proceeding referred to in subsections (a) and (b) or in defense of any claim,
issue or matter therein.
(d) Any indemnification under subsection (a) and, unless
ordered by a court, under subsection (b) may be made by the corporation only as
authorized in a specific case upon a determination that indemnification is
proper in the circumstances because the corporate agent met the applicable
standard of conduct set forth in subsection (a) or subsection (b). Such
determination shall be made, in accordance with the procedures set forth in the
appendix to these by-laws,
(i) by the board of directors or a committee thereof,
acting by a majority vote of a quorum consisting of directors who were not
parties to or otherwise involved in the proceeding; or
(ii) if such a quorum is not obtainable, or, even if
obtainable and such quorum of the board of directors or committee by a majority
vote of the disinterested directors so directs, by independent legal counsel, in
a written opinion, such counsel to be designated by the board of directors; or
(iii) by the shareholders if the certificate of
incorporation or bylaws or a resolution of the board of directors or of the
shareholders so directs.
(e) Expenses incurred by a corporate agent in connection with
a proceeding may be paid by the corporation in advance of the final disposition
of the proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the corporate agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified as
provided in this section.
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(f) The indemnification and advancement of expenses provided
by or granted pursuant to the other subsections of this section shall not
exclude any other rights, including the right to be indemnified against
liabilities and expenses incurred in proceedings by or in the right of the
corporation, to which a corporate agent may be entitled under the Certificate of
Incorporation, any agreement, a vote of the shareholders, or otherwise; provided
that no indemnification shall be made to or on behalf of a corporate agent if a
judgment or other final adjudication adverse to the corporate agent establishes
that his acts or omissions (i) were in breach of his duty of loyalty to the
corporation or its shareholders, as defined in subsection (3) of Section 14A:2-7
of the New Jersey Act, (ii) were not in good faith or involved a knowing
violation of law or (c) resulted in receipt by the corporate agent of an
improper personal benefit.
(g) The Corporation may purchase and maintain insurance on
behalf of any corporate agent against any expenses incurred in any proceeding
and any liabilities asserted against him by reason of his being or having been a
corporate agent, whether or not the Corpora tion would have the obligation or
the authority to indemnify him or her against such expenses and liabilities
under the provisions of this section. The Corporation may purchase such
insurance from, or such insurance may be reinsured in whole or in part by, an
insurer owned by or otherwise affiliated with the Corporation, whether or not
such insurer does business with other insureds.
(h) The Corporation shall pay or reimburse expenses incurred
by any director or officer and may pay or reimburse expenses incurred by any
other corporate agent in connection with the corporate agent's appearance as a
witness in a proceeding at a time when the corporate agent has not been made a
party to the proceeding.
ARTICLE XI
AMENDMENT OF BY-LAWS
The Board of Directors is expressly authorized to make, alter, amend
and repeal the by-laws of the Corporation, in any manner not inconsistent with
the laws of the State of New Jersey or the Certificate of Incorporation, subject
to the power of the holders of the then outstanding capital stock of the
Corporation to alter or repeal the by-laws made by the Board of Directors;
provided, that any such amendment or repeal by shareholders shall require the
affirmative vote of the holders of at least 80 percent (80%) of the voting power
of such capital stock entitled to vote generally in the election of directors,
voting together as a single class.
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APPENDIX
PROCEDURES FOR SUBMISSION AND
DETERMINATION OF CLAIMS FOR INDEMNIFICATION
PURSUANT TO ARTICLE X OF THE BY-LAWS.
Section 1. PURPOSE. The Procedures for Submission and Determination
of Claims for Indemnification Pursuant to Article X of the by-laws (the
"Procedures") are to implement the provisions of Section 2 of Article X of the
by-laws of the Corporation (the "by-laws") in compliance with the requirement of
subsection (d) thereof.
Section 2. DEFINITIONS. For purposes of these Procedures:
(a) All terms that are defined in Section 1 of Article X of
the by-laws shall have the meanings ascribed to them therein when used in these
Procedures unless otherwise defined herein.
(b) "Change of Control" means:
(i) the acquisition in one or more transactions by any
"Person" (as the term person is used for purposes of Sections 13(d) or 14(d) of
the Exchange Act) of "Beneficial ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding voting securities (the
"Voting Securities"), provided that for purposes of this clause (i) Voting
Securities acquired directly from the Company by any Person shall be excluded
from the determination of such Person's Beneficial ownership of Voting
Securities (but such Voting Securities shall be included in the calculation of
the total number of Voting Securities then outstanding); or
(ii) approval by shareholders of the Company of:
(A) a merger, reorganization or consolidation
involving the Company if the shareholders of the Company immediately before such
merger, reorganization or consolidation do not or will not own directly or
indirectly immediately following such merger, reorganization or consolidation,
more than fifty percent (50%) of the combined voting power of the outstanding
voting securities of the company resulting from or surviving such merger,
reorganization or consolidation in substantially the same proportion as their
ownership of the Voting Securities outstanding immediately before such merger,
reorganization or consolidation; or
(B) a complete liquidation or dissolution of the
Company;
(C) an agreement for the sale or other disposition
of all or substantially all of the assets of the Company; or
(iii) acceptance by shareholders of the Company of
shares in a share exchange if the shareholders of the Company immediately before
such share exchange do not or will not own directly or indirectly immediately
following such share exchange more than fifty percent (50%) of the combined
voting power of the outstanding voting securities of the entity resulting from
or surviving such share exchange in substantially the same proportion as their
ownership of the Voting Securities outstanding immediately before such share
exchange.
Section 3. SUBMISSION AND DETERMINATION OF CLAIMS.
(a) To obtain indemnification or advancement of expenses under
Article X, Section 2 of the by-laws, a corporate agent shall submit to the
Secretary of the Corporation a written request therefor, including therein or
therewith such documentation and information as is reasonably available to the
corporate agent and is reasonably necessary to
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<PAGE>
permit a determination as to whether and what extent the Corporate agent is
entitled to indemnification or advancement of expenses, as the case may be. The
Secretary shall, promptly upon receipt of a request for indemnification, advise
the Board of Directors thereof in writing if a determination in accordance with
Article X, Section 2(d) of the by-laws is required.
(b) Upon written request by an corporate agent for
indemnification pursuant to Section 3(a) hereof, a determination with respect to
the corporate agent's entitlement thereto in the specific case, if required by
the by-laws, shall be made in accordance with Article X, Section 2(d) of the
by-laws, and, if it is so determined that the corporate agent is entitled to
indemnification, payment to the corporate agent shall be made within ten days
after such determination. The corporate agent shall cooperate with the person,
persons or entity making such determination, with respect to the corporate
agent's entitlement to indemnification, including providing to such person,
persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to the corporate agent and reasonably necessary to
such determination.
(c) If entitlement to indemnification is to be made by
independent legal counsel pursuant to Article X, Section 2(d)(ii) of the
by-laws, such counsel shall be selected as provided in this Section 3(c). If a
change of control shall not have occurred, the independent legal counsel shall
be selected by the Board of Directors, and the Corporation shall give written
notice to the corporate agent advising the corporate agent of the identity of
the independent legal counsel so selected. If a change of control shall have
occurred, the independent legal counsel shall be selected by the corporate agent
(unless the corporate agent shall request that such selection be made by the
Board of Directors, in which event the immediately preceding sentence shall
apply), and the corporate agent shall give written notice to the Corporation
advising it of the identity of the independent legal counsel so selected. In
either event, the corporate agent or the Corporation, as the case may be, may,
within seven days after such written notice of selection shall have been given,
deliver to the Corporation or to the corporate agent, as the case may be, a
written objection to such selection. Such objection may be asserted only on the
ground that the independent legal counsel so selected does not meet the
requirements of "independent legal counsel" as defined in Article X, Section 1
of the by-laws, and the objection shall set forth with particularity the factual
basis of such assertion. If such written objection is made, the independent
legal counsel so selected may not serve as independent legal counsel unless and
until a court has determined that such objection is without merit. If, within
twenty days after the next regularly scheduled Board of Directors meeting
following submission by the corporate agent of a written request for
indemnification pursuant to Section 3(a) hereof, no independent legal counsel
shall have been selected and not objected to, either the Corporation or the
corporate agent may petition the Superior Court of the State of New Jersey or
other court of competent jurisdiction for resolution of any objection which
shall have been made by the Corporation or the corporate agent to the other's
selection of independent legal counsel and/or for the appointment as independent
legal counsel of a person selected by the Court or by such other person as the
Court shall designate, and the person with respect to whom an objection is
favorably resolved or the person
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<PAGE>
so appointed shall act as independent legal counsel under Article X, Section
2(d)(ii) of the by-laws. The Corporation shall pay any and all reasonable fees
and expenses (including without limitation any advance retainers reasonably
required by counsel) of independent legal counsel incurred by such independent
legal counsel in connection with acting pursuant to Article X, Section 2(d)(ii)
of the by-laws, and the Corporation shall pay all reasonable fees and expenses
(including without limitation any advance retainers reasonably required by
counsel) incident to the procedures of Article X, Section 2(d)(ii) of the
by-laws and this Section 3(c), regardless of the manner in which independent
legal counsel was selected or appointed. Upon the delivery of its opinion
pursuant to Article X, Section 2(d)(ii) of the by-laws or, if earlier, the due
commencement of any judicial proceeding or arbitration pursuant to Section
4(a)(3) of these Procedures, independent legal counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
(d) If a change of control shall have occurred, in making a
determination with respect to entitlement to indemnification under the by-laws,
the person, persons or entity making such determination shall presume that an
corporate agent is entitled to indemnification under the by-laws if the
corporate agent has submitted a request for indemnification in accordance with
Section 3(a) hereof, and the Corporation shall have the burden of proof to
overcome that presumption in connection with the making by any person, persons
or entity of any determination contrary to that presumption.
Section 4. REVIEW AND ENFORCEMENT OF DETERMINATION.
(a) In the event that (1) advancement of expenses is not
timely made pursuant to Article X, Section 2(b) or (c) of the by-laws, (2)
payment of indemnification is not made pursuant to Article X, Section 2(a) or
(b) of the by-laws within ten days after receipt by the Corporation of written
request therefor, (3) a determination is made pursuant to Article X, Section
2(d) of the by-laws that a corporate agent is not entitled to indemnification
under the by-laws, (4) the determination of entitlement to indemnification is to
be made by independent legal counsel pursuant to Article X, Section 2(d)(ii) of
the by-laws and such determination shall not have been made and delivered in a
written opinion within ninety days after receipt by the Corporation of the
written request for indemnification, or (5) payment of indemnification is not
made within ten days after a determination has been made pursuant to Article X,
Section 2(d) of the by-laws that a corporate agent is entitled to
indemnification, the corporate agent shall be entitled to an adjudication in an
appropriate court of the State of New Jersey, or in any other court of competent
jurisdiction, of the corporate agent's entitlement to such indemnification or
advancement of Expenses. Alternatively, the corporate agent, at his or her
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. The corporate
agent shall commence such proceeding seeking an adjudication or an award in
arbitration within one year following the date on which the corporate agent
first has the right to commence such proceeding pursuant to this Section 4(a).
The
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<PAGE>
Corporation shall not oppose the corporate agent's right to seek any such
adjudication or award in arbitration.
(b) In the event that a determination shall have been made
pursuant to Article X, Section 2(d) of the by-laws that a corporate agent is not
entitled to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 4 shall be conducted in all respects as a de novo
trial, or arbitration, on the merits and the corporate agent shall not be
prejudiced by reason of that adverse determination. If a change of control shall
have occurred, the Corporation shall have the burden of proving in any judicial
proceeding or arbitration commenced pursuant to this Section 4 that the
corporate agent is not entitled to indemnification or advancement of expenses,
as the case may be.
(c) If a determination shall have been made or deemed to have
been made pursuant to Article X, Section 2(d) or of the by-laws that a corporate
agent is entitled to indemnification, the Corporation shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 4, absent (1) a misstatement or omission of a material fact in
connection with the corporate agent's request for indemnification, or (2) a
prohibition of such indemnification under applicable law.
(d) The Corporation shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 4 that the
procedures and presumptions of these Procedures are not valid, binding and
enforceable, and shall stipulate in any such judicial proceeding or arbitration
that the Corporation is bound by all the provisions of these Procedures.
(e) In the event that a corporate agent, pursuant to this
Section 4, seeks to enforce the corporate agent's rights under, or to recover
damages for breach of, Article X of the by-laws or these Procedures in a
judicial proceeding or arbitration, the Corporate agent shall be entitled to
recover from the Corporation, and shall be indemnified by the Corporation
against, any and all expenses (of the types described in the definition of
Expenses in Section 2 of these Procedures) actually and reasonably incurred in
such judicial proceeding or arbitration, but only if the corporate agent
prevails therein. If it shall be determined in such judicial proceeding or
arbitration that the corporate agent is entitled to receive part but not all of
the indemnification or advancement of expenses sought, the expenses incurred by
the corporate agent in connection with such judicial proceeding or arbitration
shall be appropriately prorated.
Section 5. AMENDMENTS. These Procedures may be amended at any time
and from time to time in the same manner as any by-law of the Corporation in
accordance with the Certificate of Incorporation and by-laws; provided, however,
that notwithstanding any amendment, alteration or repeal of these Procedures or
any provision hereof, any corporate agent shall be entitled to utilize these
Procedures with respect to any claim for indemnification arising out of any
action taken or omitted prior to such amendment, alteration or repeal except to
the extent otherwise required by law.
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JEVIC TRANSPORTATION, INC.
COMMON STOCK
This Corporation is authorized to issue 50,000,000 shares of Common Equity
without par value, of which 40,000,000 shares are of a series designated
Common Stock and 10,000,000 shares are of a series designated
Class A Common Stock.
THIS CERTIFIES THAT _____________________________ is the owner of _____________
__________________ fully paid and non-assessable Shares of the Common Stock
of the above named Corporation transferable only on the books of the
Corporation by the holder hereof in person or by duly authorized Attorney
upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate
to be signed by its duly authorized officers and its Corporate Seal to be
hereunto affixed this __________________ day of _________________ A.D. 19______.
_______________________________ [SEAL] _______________________________
Secretary/Treasurer Chairman of the Board
<PAGE>
The Corporation will furnish to any shareholder upon request and
without charge a full or summary statement of the designations, voting
rights, preferences, limitations and special rights of the shares of each
class and series authorized to be issued so far as they have been fixed and
determined, and the authority of the Board of Directors to fix and determine
the designations, voting rights, preferences, limitations and special rights
of each class and series of shares of the Corporation.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT --....... Custodian ......... under
TEN ENT -- as tenants by the entireties (Cust) ( Minor)
JT TEN -- as joint tenants with right of survivorship Uniform Gifts to Minors Act .......
and not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received, ______ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares represented by the within Certificate, and do hereby irrevocably
constitute and appoint __________________________________________, Attorney to
transfer the said Shares on the books of the within named Corporation with full
power of substitution in the premises.
Dated ____________ 19__
In presence of
______________________________________
_________________________________________
NOTICE. The signature of this assignment must correspond with the name as
written upon the face of the certificate in every particular without alteration
or enlargement, or any change whatever.
JEVIC TRANSPORTATION, INC.
1997 INCENTIVE PLAN
SECTION 1. Purpose; Definitions. The purpose of the Jevic Transportation,
Inc. 1997 Incentive Plan (the "Plan") is to offer to certain employees and
Directors of Jevic Transportation, Inc. (the "Company"), a New Jersey
corporation and its subsidiaries, equity interests in the Company, options to
acquire equity interests in the Company, and other performance-based incentive
awards, thereby attracting, retaining and motivating such persons, and
strengthening the mutuality of interests between such persons and the Company's
shareholders.
For purposes of the Plan, the following initially capitalized words and
phrases shall be defined as set forth below, unless the context clearly requires
a different meaning:
a. "Affiliate" means, with respect to a person or entity, a person that
directly or indirectly controls, or is controlled by, or is under common control
with such person or entity.
b. "Board" means the Board of Directors of the Company, as constituted from
time to time.
c. "Cause" occurs when the Participant, as determined by the Board:
(i) has engaged in any type of disloyalty to the Company, including
without limitation, fraud, embezzlement, theft, or dishonesty in the
course of his employment or engagement, or has otherwise breached
any fiduciary duty owed to the Company;
(ii) has been convicted of a felony;
(iii) has disclosed trade secrets or confidential information of the
Company; or
(iv) has breached any agreement with or duty to the Company in respect of
confidentiality, non-disclosure, non-competition or otherwise.
d. "Change of Control" means:
(i) the acquisition in one or more transactions by any "Person" (as the
term person is used for purposes of Sections 13(d) or 14(d) of the
Exchange Act) of "Beneficial ownership" (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of twenty-five percent
(25%) or more of the combined voting power of the Company's then
outstanding voting securities (the "Voting
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<PAGE>
Securities"), provided that for purposes of this clause (i) Voting
Securities acquired directly from the Company by any Person shall be
excluded from the determination of such Person's Beneficial
ownership of Voting Securities (but such Voting Securities shall be
included in the calculation of the total number of Voting Securities
then outstanding); or
(ii) approval by shareholders of the Company of:
(A) a merger, reorganization or consolidation involving the Company
if the shareholders of the Company immediately before such
merger, reorganization or consolidation do not or will not own
directly or indirectly immediately following such merger,
reorganization or consolidation, more than fifty percent (50%)
of the combined voting power of the outstanding voting
securities of the company resulting from or surviving such
merger, reorganization or consolidation in substantially the
same proportion as their ownership of the Voting Securities
outstanding immediately before such merger, reorganization or
consolidation; or
(B) a complete liquidation or dissolution of the Company;
(C) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company; or
(iii) acceptance by shareholders of the Company of shares in a share
exchange if the shareholders of the Company immediately before such
share exchange do not or will not own directly or indirectly
immediately following such share exchange more than fifty percent
(50%) of the combined voting power of the outstanding voting
securities of the entity resulting from or surviving such share
exchange in substantially the same proportion as their ownership of
the Voting Securities outstanding immediately before such share
exchange.
e. "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
f. "Committee" shall mean the Compensation Committee or such other
committee appointed by the Board in accordance with Section 2 of the Plan. The
Committee shall possess all of the power and authority of, and shall be
authorized to take any and all actions required to be taken hereunder by, and
make any and all determinations required to be taken hereunder by, the Board.
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<PAGE>
g. "Director" means a member of the Board.
h. "Disability" shall mean a disability of an employee or a Director which
renders such employee or Director unable to perform the full extent of his
duties and responsibilities by reason of his illness or incapacity which would
entitle that employee or Director to receive Social Security Disability Income
under the Social Security Act, as amended, and the regulations promulgated
thereunder. "Disabled" shall mean having a Disability. The determination of
whether a Participant is Disabled shall be made by the Board, whose
determination shall be conclusive; provided that,
(i) if a Participant is bound by the terms of an employment agreement
between the Participant and the Company, whether the Participant is
"Disabled" for purposes of the Plan shall be determined in
accordance with the procedures set forth in said employment
agreement, if such procedures are therein provided; and
(ii) a Participant bound by such an employment agreement shall not be
determined to be Disabled under the Plan any earlier than he would
be determined to be disabled under his employment agreement.
i. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
j. "Fair Market Value" means, as of any date: (i) the closing price of the
Shares as reported on the principal nationally recognized stock exchange on
which the Shares are traded on such date, or if no Share prices are reported on
such date, the closing price of the Shares on the next preceding date on which
there were reported Share prices; or (ii) if the Shares are not listed or
admitted to unlisted trading privileges on a nationally recognized stock
exchange, the closing price of the Shares as reported by The NASDAQ Stock Market
on such date, or if no Share prices are reported on such date, the closing price
of the Shares on the next preceding date on which there were reported Share
prices; or (3) if the Shares are not listed or admitted to unlisted trading
privileges on a nationally recognized stock exchange or traded on The NASDAQ
Stock Market, then the Fair Market Value shall be determined by the Board acting
in its discretion, which determination shall be conclusive.
k. "Incentive Stock Option" means any Option intended to be and designated
as an "Incentive Stock Option" within the meaning of Section 422 of the Code.
l. "Performance Award" or "Award" means an award made pursuant to Section
8 hereof that is payable in cash and/or Shares (including Restricted Shares,
Performance Shares and Performance Units) in accordance with the terms of the
grant, based on Company, business unit and/or individual performance, in each
case as determined by the Committee and as set forth in the grant letter.
m. "Non-Employee Director" shall have the meaning set forth in Rule 16b-
3(b)(3) promulgated by the Securities and Exchange Commission under the Exchange
Act, or any
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<PAGE>
successor definition adopted by the Securities and Exchange Commission;
provided, however, that the Board or the Committee may, in its sole discretion,
substitute the definition of "outside director" provided in the regulations
under Section 162(m) of the Code in place of the definition of Non-Employee
Director contained in the Exchange Act.
n. "Non-Qualified Stock Option" means any Option that is not an Incentive
Stock Option.
o. "Participant" means an employee or Director of the Company or a
Subsidiary to whom an award is granted pursuant to the Plan.
p. "Performance Share" means an award made pursuant to Section 9 hereof of
the right to receive Shares at the end of a specified performance period.
q. "Performance Unit" means an award made pursuant to Section 10 hereof of
the right to receive cash at the end of a specified performance period.
r. "Restricted Shares" means an award of Shares that is subject to
restrictions pursuant to Section 7 hereof.
s. "Retirement" means termination of the employment of a Participant with
the Company, an Affiliate (including parent) or a Subsidiary other than (i) a
termination effected at the direction of the Company or parent (whether or not
the Company effects such termination for Cause), (ii) termination on account of
Disability, or (iii) termination on account of death. With respect to a Director
who is not also an employee of the Company, Retirement shall occur at such time
as the individual ceases to be a Director.
t. "Rules" means Section 16 of the Exchange Act and the regulations
promulgated thereunder.
u. "SAR" means a share appreciation right granted under the Plan and
described in Section 6 hereof.
v. "Securities Broker" means a registered securities broker acceptable to
the Company who agrees to effect the cashless exercise of an Option pursuant to
Section 5(l) hereof.
w. "Share" means a common share of common stock, no par value, of the
Company, subject to substitution or adjustment as provided in Section 3(c)
hereof.
x. "Stock Option" or "Option" means any option to purchase Shares
(including Restricted Shares, if the Committee so determines) granted pursuant
to Section 5 hereof.
y. "Subsidiary" means, in respect of the Company or parent, a subsidiary
company, whether now or hereafter existing, as defined in Sections 424(f) and
(g) of the Code.
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<PAGE>
SECTION 2. Administration. The Plan shall be administered by the
Compensation Committee on behalf of the Board. The Board may at any time by a
unanimous vote, with each member voting, appoint a different Committee
consisting of not fewer than two Directors to administer the Plan on behalf of
the Board, subject to such terms and conditions as the Board may prescribe,
provided that each Committee member shall be a Non-Employee Director. Members of
the Committee shall serve for such period of time as the Board may determine.
Members of the Board or the Committee who are eligible for awards or have been
granted awards may vote on any matters affecting the administration of the Plan
or any awards pursuant to the Plan, except that no such member shall act upon an
award to himself or herself, but any such member may be counted in determining
the existence of a quorum at any meeting of the Board or Committee during which
action is taken with respect to an award to himself or herself.
All references to actions to be taken by the Board in the administration of
the Plan shall be construed as references to the Committee.
From time to time the Board may increase the size of the Committee and
appoint additional members thereto (provided such new members are Non-Employee
Directors), remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members of
the Committee and thereafter directly administer the Plan.
The Board shall have full authority to grant to eligible persons under
Section 4: (i) Options, (ii) SARs, (iii) Restricted Shares, (iv) Performance
Awards, (v) Performance Shares and/or (vi) Performance Units. In particular, the
Board shall have the authority:
a. to select the persons to whom Options, SARs, Restricted Shares,
Performance Awards, Performance Shares and Performance Units may from time to
time be granted hereunder;
b. to determine whether and to what extent Incentive Stock Options, Non-
Qualified Stock Options, SARs, Restricted Shares, Performance Awards,
Performance Shares and Performance Units, or any combination thereof, are to be
granted hereunder;
c. to determine the number of Shares, if any, to be covered by each such
award granted hereunder;
d. to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any award granted hereunder, including, but not limited to, the
Share price and any restriction or limitation, any vesting provisions, or any
vesting acceleration or forfeiture waiver regarding any Option or other award
and/or the Shares relating thereto, or the length of the period following
termination of employment of any Participant during which any Option or SAR may
be exercised (which, in the case of an Incentive Stock Option, shall be no
longer than one year in the
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<PAGE>
case of the termination of employment of a Participant by reason of death or
Disability, or three months in the case of the termination of employment of a
Participant for any reason other than death or Disability), based on such
factors as the Board shall determine, in its sole discretion;
e. to determine whether and under what circumstances an Option may be
exercised without a payment of cash under Section 5(l); and
f. to determine whether, to what extent and under what circumstances Shares
and other amounts payable with respect to an award under the Plan may be
deferred either automatically or at the election of the Participant.
Notwithstanding the Committee's discretion, upon the election of any new
Director other than an employee (a "non-employee Director") to the Board prior
to completion of an initial public offering of Shares (a "Public Offering"),
such non-employee Director shall be granted Non-Qualified Stock Options for
12,500 Shares at the initial public offering price upon completion of a Public
Offering, which will vest 40% on the second anniversary of grant and an
additional 20% on each of the three succeeding anniversaries. Upon the initial
election of any other new non-employee Director, or upon the appointment of any
new non-employee Director to fill an unexpired term, in either case after the
completion of a Public Offering, such new non-employee Director shall be granted
Non-Qualified Stock Options for 12,500 Shares, at Fair Market Value with the
same vesting provisions as noted above. Upon election of any non-employee
Director by the Company's shareholders after the third anniversary of such
Director's initial election to the Board, there shall be granted to such
Director Non-Qualified Stock Options for 5,000 Shares at Fair Market Value with
the same vesting provisions as noted above.
The Board shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
to amend the terms of any agreement relating to any award issued under the Plan,
provided that the Participant consents to such amendment; and to otherwise
supervise the administration of the Plan. The Board may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or in any award
granted in the manner and to the extent it shall deem necessary to carry out the
intent of the Plan.
All decisions made by the Board pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company and
Participants. No member of the Board shall be liable for any good faith
determination, act or failure to act in connection with the Plan or any award
made under the Plan.
SECTION 3. Shares Subject to the Plan.
a. Shares Subject to the Plan. The Shares to be subject or related to
awards under the Plan shall be authorized and unissued Shares of the Company,
whether or not previously issued and subsequently acquired by the Company. The
maximum number of Shares that may be the subject of awards under the Plan is
1,500,000 and the Company shall reserve for the purposes of the Plan, out of its
authorized and unissued Shares, such number of Shares. Notwithstanding the
foregoing, no individual shall receive, over the term of the Plan, awards for
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<PAGE>
more than an aggregate of 1,500,000 Shares, or SARs with respect to such Shares,
authorized for grant under the Plan.
b. Effect of the Expiration or Termination of Awards. If and to the extent
that an award made under the Plan expires, terminates or is canceled or
forfeited for any reason without having been exercised in full, the Shares
associated with the expired, terminated, canceled or forfeited portion of the
award shall again become available for award under the Plan.
c. Other Adjustment. In the event of any merger, reorganization,
consolidation, recapitalization, Share distribution or dividend, Share split or
combination, or other change in entity structure affecting the Shares, such
substitution or adjustment shall be made in the aggregate number, type and
issuer of the securities reserved for issuance under the Plan, in the number and
Option price of securities subject to outstanding Options granted under the Plan
and in the number and price of securities subject to other awards made under the
Plan, as may be determined to be appropriate by the Board in its sole
discretion, provided that the number of securities subject to any award shall
always be a whole number. The Board, in its sole discretion, shall make
appropriate equitable anti-dilution adjustments to the number of
then-outstanding SARs, and to the Fair Market Value upon which the value of such
SARs is based.
SECTION 4. Eligibility. Employees of the Company or its Subsidiaries,
directors, consultants, and other individuals who provide services are eligible
to be granted awards under the Plan; provided, however, that any employee who is
covered by a collective bargaining agreement shall not be eligible to be granted
awards, exercise outstanding awards, receive shares or cash pursuant to
outstanding awards, or have any restrictions lapse with respect to any
restricted stock awards, under the Plan unless such collective bargaining
agreement, by specific reference to the Plan, expressly provides for
participation in the Plan. Persons who are not employees of the Company or a
Subsidiary are eligible to be granted awards under the Plan, but are not
eligible to be granted Incentive Stock Options.
SECTION 5. Options. Options granted under the Plan may be of two types: (i)
Incentive Stock Options or (ii) Non-Qualified Stock Options. Options may be
granted alone, in addition to or in tandem with other awards granted under the
Plan. Any Option granted under the Plan shall be in such form as the Board may
from time to time approve.
The Board shall have the authority to grant any Participant eligible under
Section 4 Incentive Stock Options, Non-Qualified Stock Options, or both types of
Options (in each case with or without SARs). To the extent that any Option does
not qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Board shall deem appropriate;
provided, however, that the provisions of Option awards need to be the same with
respect to each Participant:
a. Option Price. The exercise price per Share purchasable under a Non-
Qualified Stock Option shall be determined by the Board. The exercise price per
Share purchasable under an Incentive Stock Option shall be 100% of the Fair
Market Value of the Share on the date of the grant. However, any Incentive Stock
Option granted to any Participant who, at the time the Option is granted, owns
more than 10% of the voting power of all classes of
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shares of the Company or of a Subsidiary shall have an exercise price per Share
of not less than 110% of Fair Market Value per Share on the date of the grant.
b. Option Term. The term of each Option shall be fixed by the Board, but
no Option shall be exercisable more than ten years after the date the Option is
granted. However, any Incentive Stock Option granted to any Participant who, at
the time such Option is granted, owns more than 10% of the voting power of all
classes of shares of the Company or of a Subsidiary may not have a term of more
than five years. No Option may be exercised by any person after expiration of
the term of the Option.
c. Exercisability. Options shall vest and be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Board at the time of grant. If the Board provides, in its discretion, that any
Option is exercisable only in installments, the Board may waive such installment
exercise provisions at any time at or after grant, in whole or in part, based on
such factors as the Board shall determine, in its sole discretion.
d. Method of Exercise. Subject to the exercise provisions under Section
5(c) and the termination provisions set forth in Sections 5(f) through (j),
Options may be exercised in whole or in part at any time and from time to time
during the term of the Option, by giving written notice of exercise to the
Company specifying the number of Shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, either by certified or
bank check, or such other instrument as the Board may accept. As determined by
the Board, in its sole discretion, at or after grant, payment in full or in part
of the exercise price of an Option may be made in the form of unrestricted
Shares based on the Fair Market Value of the Shares on the date the Option is
exercised; provided, however, that, in the case of an Incentive Stock Option,
the right to make a payment in the form of already owned Shares may be
authorized only at the time the Option is granted.
No Shares shall be issued upon exercise of an Option until full payment
therefor has been made. A Participant shall not have the right to distributions
or dividends or any other rights of a shareholder with respect to Shares subject
to the Option until the Participant has given written notice of exercise, has
paid in full for such Shares, and, if requested, has given the representation
described in Section 13(a) hereof.
e. Non-transferability of Options. No Option shall be transferable by the
Participant otherwise than by will or by the laws of descent and distribution,
and all Options shall be exercisable, during the Participant's lifetime, only by
the Participant or, in the event of his Disability, by his personal
representative.
f. Termination by Reason of Death. Subject to Section 5(j), if a
Participant's service with the Company or any Subsidiary terminates by reason of
death, any Option held by such Participant may thereafter be exercised, to the
extent then exercisable or on such accelerated basis as the Board may determine
at or after grant, by the legal representative of the estate or by the legatee
of the Participant under the will of the Participant, for a period expiring (i)
at such time as may be specified by the Board at or after the time of grant, or
(ii) if not specified by the
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Board, then one year from the date of death, or (iii) if sooner than the
applicable period specified under (i) or (ii) above, then upon the expiration of
the stated term of such Option.
g. Termination by Reason of Disability. Subject to Section 5(j), if an
Participant's service with the Company or any Subsidiary terminates by reason of
Disability, any Option held by such Participant may thereafter be exercised by
the Participant or his personal representative, to the extent it was exercisable
at the time of termination, or on such accelerated basis as the Board may
determine at or after grant, for a period expiring (i) at such time as may be
specified by the Board at or after the time of grant, or (ii) if not specified
by the Board, then six months from the date of termination of service, or (iii)
if sooner than the applicable period specified under (i) or (ii) above, then
upon the expiration of the stated term of such Option; provided, however, that
if the Participant dies within such period, any unexercised Option held by such
Participant shall, at the sole discretion of the Board, thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one (1) year from the date of such death (or such other period as may
be specified by the Board) or until the expiration of the stated term of such
Option, whichever period is shorter.
h. Cause. If a Participant's service is terminated for Cause, any Option
not already exercised shall be forfeited.
i. Other Termination. Subject to Section 5(j), if a Participant's service
with the Company or any Subsidiary terminates for any reason other than death,
Disability or Cause, any Option held by such Participant may thereafter be
exercised by the Participant, to the extent it was exercisable at the time of
such termination or on such accelerated basis as the Board may determine at or
after the time of grant, for a period expiring (i) at such time as may be
specified by the Board at or after the time of grant, or (ii) if not specified
by the Board, then thirty (30) days from the date of termination of service, or
(iii) if sooner than the applicable period specified under (i) or (ii) above,
then upon the expiration of the stated term of such Option.
j. Change of Control. In the event of a Change of Control, the Board may,
in its sole discretion, cause all outstanding Options to immediately become
fully exercisable.
k. Incentive Stock Option Limitations. To the extent required for
"incentive stock option" status under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by
the Participant during any calendar year under the Plan and/or any other plan of
the Company or any Subsidiary shall not exceed $100,000. For purposes of
applying the foregoing limitation, Incentive Stock Options shall be taken into
account in the order granted. Any Option not meeting such limitation shall be
treated for all purposes as a Non-Qualified Stock Option.
l. Cashless Exercise. The Company may, in the sole discretion of the Board,
cooperate in a "cashless exercise" of an Option. The cashless exercise shall be
effected by the Participant delivering to the Securities Broker instructions to
sell a sufficient number of Shares to cover the costs and expenses associated
therewith.
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SECTION 6. Share Appreciation Rights.
a. Grant. SARs may be granted alone ("Stand-Alone SARs") or in conjunction
with all or part of any Option granted under the Plan ("Tandem SARs"). In the
case of a Non-Qualified Stock Option, a Tandem SAR may be granted either at or
after the time of the grant of such Option. In the case of an Incentive Stock
Option, a Tandem SAR may be granted only at the time of the grant of such
Option.
b. Exercise.
(i) Tandem SARs. A Tandem SAR or applicable portion thereof shall
terminate and no longer be exercisable upon the termination or exercise of the
related Option or portion thereof, except that, unless otherwise determined by
the Board, in its sole discretion at the time of grant, a Tandem SAR granted
with respect to less than the full number of Shares covered by a related Option
shall be reduced only after such related Option is exercised or otherwise
terminated with respect to the number of Shares not covered by the Tandem SAR.
A Tandem SAR may be exercised by a Participant by surrendering the
applicable portion of the related Option, only at such time or times and to the
extent that the Option to which such Tandem SAR relates shall be exercisable in
accordance with the provisions of Section 5 and this Section 6. Options which
have been so surrendered, in whole or in part, shall no longer be exercisable to
the extent the related Tandem SARs have been exercised.
Upon the exercise of a Tandem SAR, a Participant shall be entitled to
receive, upon surrender to the Company of all (or a portion) of an Option in
exchange for cash and/or Shares, an amount equal to the excess of (A) the Fair
Market Value, as of the date such Option (or such portion thereof) is
surrendered, of the Shares covered by such Option (or such portion thereof) over
(B) the aggregate exercise price of such Option (or such portion thereof).
Upon the exercise of a Tandem SAR, the Option or part thereof to which such
Tandem SAR is related, shall be deemed to have been exercised for the purpose of
the limitation set forth in Section 3 of the Plan on the number of Shares to be
issued under the Plan, but only to the extent of the number of Shares issued
under the Tandem SAR at the time of exercise based on the value of the Tandem
SAR at such time.
A Tandem SAR may be exercised only if and when the Fair Market Value of the
Shares subject to the Option exceeds the exercise price of such Option.
(ii) Stand-Alone SARs. A Stand-Alone SAR may be exercised by a
Participant giving notice of intent to exercise to the Company, provided that
all or a portion of such Stand-Alone SAR shall have become vested and
exercisable as of the date of exercise.
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Upon the exercise of a Stand-Alone SAR, a Participant shall be entitled to
receive, in either cash and/or Shares, an amount equal to the excess, if any, of
(A) the Fair Market Value, as of the date such SAR (or portion of such SAR) is
exercised, of the Shares covered by such SAR (or portion of such SAR) over (B)
the Fair Market Value of the Shares covered by such SAR (or a portion of such
SAR) as of the date such SAR (or a portion of such SAR) was granted.
c. Terms and Conditions. SARs shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Board, in its sole discretion; provided,
however, that the provisions of SAR awards need not be the same with respect to
each Participant. Such terms and conditions include the following:
(i) Non-Transferability. No SAR shall be transferable by the Participant
otherwise than by will or by the laws of descent and distribution and all SARs
shall be exercisable, during the Participant's lifetime, only by the Participant
or, in the event of his Disability, by his personal representative.
(ii) Term of SAR. The term of each SAR shall be fixed by the Board,
provided that the term of a Tandem SAR shall be determined by the terms of the
applicable Option, and provided further that the term of a Stand-Alone SAR shall
be ten (10) years, unless another term is specified by the Board.
(iii) Exercisability. SARs shall vest and be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Board at the time of grant, provided that the term of a Tandem SAR shall be
determined by the terms of the applicable Option. A Participant shall not have
any rights as a shareholder with respect to any SAR.
(iv) Termination of Employment. Unless otherwise specified in the terms
of an award, SARs shall be subject to the terms of Sections 5(f)-(i) with
respect to exercise upon termination of employment.
(v) Change of Control. In the event of a Change of Control, the Board
may, in its sole discretion, cause all outstanding SARs to immediately become
fully exercisable.
SECTION 7. Restricted Shares.
a. Administration. Restricted Shares may be issued either alone or in
addition to other awards granted under the Plan. The Board shall determine the
persons to whom, and the time or times at which, grants of Restricted Shares
will be made, the number of Shares to be awarded, the price (if any) to be paid
by the recipient of Restricted Shares, the time or times within which such
awards may be subject to forfeiture, and all other conditions of the awards.
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<PAGE>
The Board may condition the vesting of Restricted Shares upon the
attainment of specified performance goals or such other factors as the Board may
determine, in its sole discretion, at the time of the award.
The provisions of Restricted Share awards need not be the same with respect
to each Participant.
b. Awards and Certificates. The prospective recipient of a Restricted Share
award shall not have any rights with respect to such award, unless and until
such recipient has executed an agreement evidencing the award and has delivered
a fully executed copy thereof to the Company, and has otherwise complied with
the applicable terms and conditions of such award. The purchase price for
Restricted Shares may be zero.
Each Participant receiving a Restricted Share award shall be issued a share
certificate in respect of such Restricted Shares. Such certificate shall be
registered in the name of such Participant, and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such award,
substantially in the following form:
"The transferability of this certificate and the shares represented hereby
are subject to the terms and conditions (including forfeiture) of the Jevic
Transportation, Inc. 1997 Incentive Plan and an Agreement entered into
between the registered owner and Jevic Transportation, Inc. Copies of such
Plan and Agreement are on file in the principal offices of Jevic
Transportation, Inc. and will be made available to any Shareholder without
charge upon request to the Secretary of the Company."
The Board shall require that the share certificates evidencing Restricted
Shares be held in custody by the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any Restricted Share award, the
Participant shall have delivered to the Company a share power, endorsed in
blank, relating to the Shares covered by such award.
c. Restrictions and Conditions. The Restricted Shares awarded pursuant to
this Section 7 shall be subject to the following restrictions and conditions:
(i) During a period set by the Board commencing with the date of such
award (the "Restriction Period"), the Participant shall not be permitted to
sell, transfer, pledge, assign or otherwise encumber Restricted Shares awarded
under the Plan. The Board, in its sole discretion, may provide for the lapse of
such restrictions in installments and may accelerate or waive such restrictions
in whole or in part, based on service, performance and/or such other factors or
criteria as the Board may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i), once
the Participant has been issued a certificate or certificates for Restricted
Shares, the Participant shall have, with respect to the Restricted Shares, all
of the rights of a shareholder of the Company, including the right to vote the
Shares, and the right to receive any cash distributions or
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<PAGE>
dividends. The Board, in its sole discretion, as determined at the time of
award, may permit or require the payment of cash distributions or dividends to
be deferred and, if the Board so determines, reinvested in additional Restricted
Shares to the extent Shares are available under Section 3 of the Plan.
(iii) Subject to the applicable provisions of the award agreement and
this Section 7, upon termination of a Participant's service with the Company for
reasons other than death or Disability during the Restriction Period, all
Restricted Shares still subject to restriction shall be forfeited by the
Participant. Subject to the provisions of the Plan, the Board, in its sole
discretion, may provide for the lapse of such restrictions in installments and
may waive such restrictions, in whole or in part, at any time, based on such
factors as the Board shall deem appropriate in its sole discretion. Upon the
death or Disability of a Participant during the Restriction Period, restrictions
will lapse with respect to a percentage of the Restricted Shares award granted
to the Participant that is equal to the percentage of the Restriction Period
that has elapsed as of the date of death or the date on which such Disability
commenced (as determined by the Board in its sole discretion), and a share
certificate or share certificates representing such Shares, without bearing the
restrictive legend described in Section 7(b), shall be delivered by the Company
to the Participant or the Participant's estate, as the case may be, in exchange
for the share certificate or share certificates that contain such restrictive
legend.
(iv) In the event of hardship or other special circumstances of a
Participant whose service with the Company is involuntarily terminated (other
than for Cause), the Board may, in its sole discretion, waive in whole or in
part any or all remaining restrictions with respect to such Participant's
Restricted Shares, based on such factors as the Board may deem appropriate.
(v) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Shares subject to such Restriction Period, the
certificates for such Shares, without bearing the restrictive legend described
in Section 7(b), shall be promptly delivered by the Company to the Participant,
in exchange for the share certificate or share certificates that contain such
restrictive legend.
(vi) In the event of a Change of Control, the Board, in its sole
discretion, may cause all Restricted Shares remaining subject to forfeiture to
immediately cease to be subject to forfeiture and a share certificate or shares
certificates representing such Shares, without bearing the restrictive legend
described in Section 7(b), shall be issued by the Company and delivered to the
Participant, in exchange for the share certificate or share certificates that
contain such restrictive legend.
SECTION 8. Performance Awards.
a. Awards and Administration. Performance Awards may be awarded either
alone or in addition to other awards granted under the Plan. Prior to award of a
Performance Award, the Board shall determine the nature, length and starting
date of the performance period (the "performance period") for each Performance
Award. Performance periods may overlap and
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Participants may participate simultaneously with respect to Performance Awards
that are subject to different performance periods and/or different performance
factors and criteria. Prior to award of a Performance Award, the Board shall
determine the performance objectives to be used in awarding Performance Awards
and determine the extent to which such Performance Awards have been earned.
Performance objectives may vary from Participant to Participant and between
groups of Participants and shall be based upon such Company, business unit
and/or individual performance factors and criteria as the Board may deem
appropriate, including, but not limited to, earnings per Share or return on
equity.
At the beginning of each performance period, the Board shall
determine for each Performance Award subject to such performance period the
range of dollar values or number of Shares to be awarded to the Participant at
the end of the performance period if and to the extent that the relevant
measure(s) of performance for such Performance Award is (are) met. Such dollar
values or number of Shares may be fixed or may vary in accordance with such
performance and/or other criteria as may be specified by the Board, in its sole
discretion.
b. Adjustment of Awards. In the event of special or unusual events or
circumstances affecting the application of one or more performance objectives to
a Performance Award, the Board may revise the performance objectives and/or
underlying factors and criteria applicable to the Performance Awards affected,
to the extent deemed appropriate by the Board, in its sole discretion, to avoid
unintended windfalls or hardship.
c. Termination of Service. Unless otherwise provided in the applicable
award agreements, if a Participant terminates service with the Company during a
performance period because of death, Disability or Retirement, such Participant
(or his estate) shall be entitled to a payment with respect to each outstanding
Performance Award at the end of the applicable performance period:
(i) based, to the extent relevant under the terms of the award, upon the
Participant's performance for the portion of such performance period ending on
the date of termination and the performance of the applicable business unit(s)
for the entire performance period, and
(ii) pro-rated, where deemed appropriate by the Board, for the portion
of the performance period during which the Participant was employed by or served
on the Board of the Company, all as determined by the Board, in its sole
discretion.
However, the Board may provide for an earlier payment in settlement of such
award in such amount and under such terms and conditions as the Board deems
appropriate, in its sole discretion.
Except as otherwise determined by the Board, if a Participant terminates
service with the Company during a performance period for any other reason, then
such Participant shall not be entitled to any payment with respect to the
Performance Awards subject to such performance period, unless the Board shall
otherwise determine, in its sole discretion.
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In the event of a Change of Control, the Board may, in its sole discretion,
cause all conditions applicable to a Performance Award to immediately terminate
and a share certificate or share certificates representing Shares subject to
such award, or cash, as the case may be, to be issued and/or delivered to the
Participant.
d. Form of Payment. The earned portion of a Performance Award may be paid
currently or on a deferred basis, together with such interest or earnings
equivalent as may be determined by the Board, in its sole discretion. Payment
shall be made in the form of cash or whole Shares, including Restricted Shares,
either in a lump sum payment or in annual installments commencing as soon as
practicable after the end of the relevant performance period, all as the Board
shall determine at or after grant. If and to the extent a Performance Award is
payable in Shares and the full amount of such value is not paid in Shares, then
the Shares representing the portion of the value of the Performance Award not
paid in Shares shall again become available for award under the Plan, subject to
Section 3(b). A Participant whose Performance Award is payable in Shares or
Restricted Shares shall not have any rights as a shareholder until such share
certificate or share certificates have been issued to such Participant, and, if
requested, the Participant has given the representation described in Section
13(a) hereof. Prior to any payment, the Board shall certify that all of the
performance goals or other material terms of the award have been met.
SECTION 9. Performance Shares.
a. Awards and Administration. The Board shall determine the persons to whom
and the time or times at which Performance Shares shall be awarded, the number
of Performance Shares to be awarded to any such person, the duration of the
period (the "performance period") during which, and the conditions under which,
receipt of the Shares will be deferred, and the other terms and conditions of
the award in addition to those set forth below.
The Board may condition the receipt of Shares pursuant to a Performance
Share award upon the attainment of specified performance goals or such other
factors or criteria as the Board shall determine, in its sole discretion.
The provisions of Performance Share awards need not be the same with
respect to each Participant, and such awards to individual Participants need not
be the same in subsequent years.
b. Terms and Conditions. Performance Shares awarded pursuant to this
Section 9 shall be subject to the following terms and conditions and such other
terms and conditions, not inconsistent with the terms of this Plan, as the Board
shall deem desirable:
(i) Conditions. The Board, in its sole discretion, shall specify the
performance period during which, and the conditions under which, the receipt of
Shares covered by the Performance Share award will be deferred.
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(ii) Share Certificate. At the expiration of the performance period, if
the Board, in its sole discretion, determines that the conditions specified in
the Performance Share agreement have been satisfied, a share certificate or
share certificates evidencing the number of Shares covered by the Performance
Share award shall be issued and delivered to the Participant. A Participant
shall not be deemed to be the holder of Shares, or to have the rights of a
holder of Shares, with respect to the Performance Shares unless and until a
share certificate or share certificates evidencing such Shares are issued to
such Participant.
(iii) Death, Disability or Retirement. Subject to the provisions of the
Plan, if a Participant terminates service with the Company during a performance
period because of death, Disability or Retirement, such Participant (or his
estate) shall be entitled to receive, at the expiration of the performance
period, a percentage of Performance Shares that is equal to the percentage of
the performance period that had elapsed as of the date of termination, provided
that the Board, in its sole discretion, determines that the conditions specified
in the Performance Share agreement have been satisfied. In such event, a share
certificate or share certificates evidencing such Shares shall be issued and
delivered to the Participant or the Participant's estate, as the case may be.
(iv) Termination of Service. Unless otherwise determined by the Board at
the time of grant, the Performance Shares will be forfeited upon a termination
of service during the performance period for any reason other than death,
Disability or Retirement.
(v) Change of Control. In the event of a Change of Control, the Board
may, in its sole discretion, cause all conditions applicable to the Performance
Shares to immediately terminate and a share certificate or share certificates
evidencing Shares subject to the Share award to be issued and delivered to the
Participant.
SECTION 10. Performance Units.
a. Awards and Administration. The Board shall determine the persons to whom
and the time or times at which Performance Units shall be awarded, the number of
Performance Units to be awarded to any such person, the duration of the period
(the "performance period") during which, and the conditions under which, a
Participant's right to Performance Units will be vested, the ability of
Participants to defer the receipt of payment of such Performance Units, and the
other terms and conditions of the award in addition to those set forth below.
A Performance Unit shall have a fixed dollar value.
The Board may condition the vesting of Performance Units upon the
attainment of specified performance goals or such other factors or criteria as
the Board shall determine, in its sole discretion.
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The provisions of Performance Unit awards need not be the same with respect
to each Participant, and such awards to individual Participants need not be the
same in subsequent years.
b. Terms and Conditions. Performance Units awarded pursuant to this Section
10 shall be subject to the following terms and conditions and such other terms
and conditions, not inconsistent with the terms of this Plan, as the Board shall
deem desirable:
(i) Conditions. The Board, in its sole discretion, shall specify the
performance period during which, and the conditions under which, the
Participant's right to Performance Units will be vested.
(ii) Vesting. At the expiration of the performance period, the Board, in
its sole discretion, shall determine the extent to which the performance goals
have been achieved, and the percentage of the Performance Units of each
Participant that have vested.
(iii) Death, Disability or Retirement. Subject to the provisions of this
Plan, if a Participant terminates service with the Company during a performance
period because of death, Disability or Retirement, such Participant (or the
Participant's estate) shall be entitled to receive, at the expiration of the
performance period, a percentage of Performance Units that is equal to the
percentage of the performance period that had elapsed as of the date of
termination, provided that the Board, in its sole discretion, determines that
the conditions specified in the Performance Unit agreement have been satisfied,
and payment thereof shall be made to the Participant or the Participant's
estate, as the case may be.
(iv) Termination of Service. Unless otherwise determined by the Board at
the time of grant, the Performance Units will be forfeited upon a termination of
service during the performance period for any reason other than death,
Disability or Retirement.
(v) Change of Control. In the event of a Change of Control, the Board
may, in its sole discretion, cause all conditions applicable to Performance
Units to immediately terminate and cash representing the full amount of such
award to be paid to the Participant.
SECTION 11. Amendments and Termination. The Board may amend, alter or
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would impair the rights of a Participant
with respect to an Option, SAR, Restricted Share, Performance Award, Performance
Share or Performance Unit which has been granted under the Plan, without the
Participant's consent, or which, without the approval of such amendment within
one year (365 days) of its adoption by the Board, by a majority of the votes
cast at a duly held shareholder meeting at which a quorum representing a
majority of the Company's outstanding voting shares is present (either in person
or by proxy), would:
a. except as expressly provided in the Plan, increase the total number of
Shares reserved for the purposes of the Plan;
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b. change the persons or class of persons eligible to participate in the
Plan; or
c. extend the maximum Option term under Section 5(b) of the Plan.
The Board may substitute new Options for previously granted Options,
including previously granted Options having higher exercise prices.
Subject to the above provisions, the Board shall have broad authority to
amend the Plan to take into account changes in applicable tax laws and
accounting rules, as well as other developments.
SECTION 12. Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the Board may authorize
the creation of trusts or other arrangements to meet the obligations created
under the Plan to deliver Shares or payments in lieu of Shares or with respect
to awards hereunder.
SECTION 13. General Provisions.
a. The Board may require each person acquiring Shares or a Share-based
award under the Plan to represent to and agree with the Company in writing that
the Participant is acquiring the Shares or Share-based award for investment
purposes and without a view to distribution thereof and as to such other matters
as the Board believes are appropriate to ensure compliance with applicable
Federal and state securities laws. The certificate evidencing such award and any
securities issued pursuant thereto may include any legend which the Board deems
appropriate to reflect any restrictions on transfer and compliance with
securities laws.
All certificates for Shares or other securities delivered under the Plan
shall be subject to such share-transfer orders and other restrictions as the
Board may deem advisable under the rules, regulations, and other requirements of
the Securities Act of 1933, as amended, the Exchange Act, any stock exchange
upon which the Shares are then listed, and any other applicable Federal or state
securities laws, and the Board may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
b. Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
c. The adoption of the Plan shall not confer upon any employee of the
Company or a Subsidiary any right to continued employment with the Company or
such Subsidiary, nor shall it interfere in any way with the right of the Company
or such Subsidiary to terminate the employment of any of its employees at any
time.
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d. No later than the date as of which an amount first becomes includable in
the gross income of the Participant for Federal income tax purposes with respect
to any award under the Plan, the Participant shall pay to the Company, or make
arrangements satisfactory to the Board regarding the payment, of any Federal,
state or local taxes of any kind required by law to be withheld with respect to
such amount. Unless otherwise determined by the Board, the minimum required
withholding obligations may be settled with Shares, including Shares that are
part of the award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Participant.
e. At the time of grant of an award under the Plan, the Board may provide
that the Shares received as a result of such grant shall be subject to a right
of first refusal, pursuant to which the Participant shall be required to offer
to the Company any Shares that the Participant wishes to sell, with the price
being the then Fair Market Value of the Shares, subject to such other terms and
conditions as the Board may specify at the time of grant.
f. The reinvestment of distributions or dividends in additional Restricted
Shares (or in other types of Plan awards) at the time of any distribution or
dividend payment shall only be permissible if sufficient Shares are available
under Section 3 of the Plan for such reinvestment (taking into account then
outstanding Options and other Plan awards).
g. The Board shall establish such procedures as it deems appropriate for a
Participant to designate a beneficiary to whom any amounts payable in the event
of the Participant's death are to be paid.
h. The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of New
Jersey.
SECTION 14. Effective Date of Plan. This Plan shall become effective on the
date that it is adopted by the Board; provided, however, that it shall not be an
Incentive Stock Option Plan if it is not approved, within one year (365 days) of
its adoption by the Board, by a majority of the votes cast at a duly held
shareholder meeting at which a quorum representing a majority of Company's
outstanding voting shares is present, either in person or by proxy. The Board
may make awards hereunder prior to approval of the Plan; provided, however, that
any and all Incentive Stock Options so awarded automatically shall be converted
into Non-Qualified Stock Options if the Plan is not approved by shareholders
within 365 days of its adoption.
SECTION 15. Term of Plan. No Option, SAR, Restricted Share, Performance
Award, Performance Share or Performance Unit shall be granted pursuant to the
Plan on or after the tenth (10th) anniversary of the date of shareholder
approval of the Plan, but awards granted prior to such tenth (10th) anniversary
may extend beyond that date.
- 19 -
EXHIBIT 10.8
PROMISSORY NOTE
$218,772 Delanco, New Jersey
April 14, 1997
FOR VALUE RECEIVED, Karen B. Muhlschlegel, as Trustee of the Karen B.
Muhlschlegel 1996 Grantor Annuity Trust (the "Maker"), hereby promises to pay to
the order of Jevic Transportation, Inc., a New Jersey corporation, on October
31, 1998 (the "Due Date"), the principal sum of Two Hundred Eighteen Thousand
Seven Hundred Seventy Two Dollars ($218,772) (the "Principal Sum"), together
with interest on the unpaid balance of the Principal Sum at the applicable
Federal rate of interest for short-term loans under Sections 7872(f) and 1274(d)
of the Internal Revenue Code of 1986, as amended, which rate is 5.83% per annum
as of the date of this Note.
Prior to payment in full of the principal hereunder, interest on the
unpaid balance of the Principal Sum shall be due and payable on June 30 and
December 31 of each year. On the Due Date, the entire unpaid balance of the
Principal Sum, plus all accrued and unpaid interest thereon, shall be due and
payable.
All payments shall be made in lawful money of the United States of
America in immediately available funds at P.O. Box 5157, Delanco, New Jersey
08075, or at such other place as may be designated by the holder hereof.
The Maker hereby waives presentment, protest and demand, notice of
demand, notice of non-payment and notice of dishonor.
The Maker shall have the right to prepay the whole or any part of the
unpaid balance of the Principal Sum at any time and from time to time without
penalty or premium.
All payments made under this Note shall be applied first to accrued and
unpaid interest and the remainder, if any, to the outstanding balance of the
Principal Sum.
No failure or delay by the holder hereof to insist upon the strict
performance of any provision of this Note or to exercise any right, power or
remedy consequent upon a default hereunder, shall constitute a waiver of any
such provision or of any such default, or preclude the holder hereof from
exercising any such right, power or remedy at any later time or times. By
accepting payment after the due date of any amount payable under this Note, the
holder hereof shall not be deemed to have waived the right either to require
prompt payment when due of all other amounts due under this Note or to exercise
any other available right, power or remedy.
The Maker promises to pay to the holder hereof, upon demand, all costs
and expenses of collection of this Note, including, but not limited to,
attorneys' fees and
<PAGE>
expenses, plus interest on all such costs and expenses from the Due Date at the
rate in effect from time to time under this Note.
The obligations of the Maker under this Note are irrevocable, absolute
and unconditional, and are not subject to any claim or right of setoff. The
Maker hereby waives all rights to assert any setoff or counterclaim in any
proceeding brought to enforce this Note. THE MAKER HEREBY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY ACTION OR OTHER PROCEEDING BROUGHT TO ENFORCE OR OTHERWISE
RELATING TO THIS NOTE.
No modification, change, waiver or amendment of this Note shall be
effective unless in writing and signed by the holder hereof.
This Note is executed in the State of New Jersey, and shall be governed
by, construed and enforced in accordance with the laws of the State of New
Jersey.
This Note shall be binding upon the Maker and the Maker's heirs,
guardians, personal representatives, successors and assigns.
IN WITNESS WHEREOF, this Note has been executed, under seal, with the
intention of making this a sealed instrument, on the day and year first above
written.
/s/ Karen B. Muhlschlegel (SEAL)
------------------------------------
Karen B. Muhlschlegel, as Trustee
of the Karen B. Muhlschlegel 1996
Grantor Annuity Trust
-2-
EXHIBIT 10.9
PROMISSORY NOTE
$219,293 Delanco, New Jersey
April 14, 1997
FOR VALUE RECEIVED, Harry J. Muhlschlegel, as Trustee of the Harry J.
Muhlschlegel 1996 Grantor Annuity Trust (the "Maker"), hereby promises to pay to
the order of Jevic Transportation, Inc., a New Jersey corporation, on October
31, 1998 (the "Due Date"), the principal sum of Two Hundred Nineteen Thousand
Two Hundred Ninety Three Dollars ($219,293) (the "Principal Sum"), together with
interest on the unpaid balance of the Principal Sum at the applicable Federal
rate of interest for short-term loans under Sections 7872(f) and 1274(d) of the
Internal Revenue Code of 1986, as amended, which rate is 5.83% per annum as of
the date of this Note.
Prior to payment in full of the principal hereunder, interest on the
unpaid balance of the Principal Sum shall be due and payable on June 30 and
December 31 of each year. On the Due Date, the entire unpaid balance of the
Principal Sum, plus all accrued and unpaid interest thereon, shall be due and
payable.
All payments shall be made in lawful money of the United States of
America in immediately available funds at P.O. Box 5157, Delanco, New Jersey
08075, or at such other place as may be designated by the holder hereof.
The Maker hereby waives presentment, protest and demand, notice of
demand, notice of non-payment and notice of dishonor.
The Maker shall have the right to prepay the whole or any part of the
unpaid balance of the Principal Sum at any time and from time to time without
penalty or premium.
All payments made under this Note shall be applied first to accrued and
unpaid interest and the remainder, if any, to the outstanding balance of the
Principal Sum.
No failure or delay by the holder hereof to insist upon the strict
performance of any provision of this Note or to exercise any right, power or
remedy consequent upon a default hereunder, shall constitute a waiver of any
such provision or of any such default, or preclude the holder hereof from
exercising any such right, power or remedy at any later time or times. By
accepting payment after the due date of any amount payable under this Note, the
holder hereof shall not be deemed to have waived the right either to require
prompt payment when due of all other amounts due under this Note or to exercise
any other available right, power or remedy.
The Maker promises to pay to the holder hereof, upon demand, all costs
and expenses of collection of this Note, including, but not limited to,
attorneys' fees and
<PAGE>
expenses, plus interest on all such costs and expenses from the Due Date at the
rate in effect from time to time under this Note.
The obligations of the Maker under this Note are irrevocable, absolute
and unconditional, and are not subject to any claim or right of setoff. The
Maker hereby waives all rights to assert any setoff or counterclaim in any
proceeding brought to enforce this Note. THE MAKER HEREBY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY ACTION OR OTHER PROCEEDING BROUGHT TO ENFORCE OR OTHERWISE
RELATING TO THIS NOTE.
No modification, change, waiver or amendment of this Note shall be
effective unless in writing and signed by the holder hereof.
This Note is executed in the State of New Jersey, and shall be governed
by, construed and enforced in accordance with the laws of the State of New
Jersey.
This Note shall be binding upon the Maker and the Maker's heirs,
guardians, personal representatives, successors and assigns.
IN WITNESS WHEREOF, this Note has been executed, under seal, with the
intention of making this a sealed instrument, on the day and year first above
written.
/s/ Harry J. Muhlschlegel (SEAL)
-------------------------------------
Harry J. Muhlschlegel, as Trustee
of the HARRY J. Muhlschlegel
1996 Grantor Annuity Trust
-2-
LEASE AGREEMENT
---------------
This Lease Agreement ("Lease") is made and entered into as of April 12,
1995, between HARRY MUHLSCHLEGEL and KAREN MUHLSCHLEGEL ("Landlord"), and JEVIC
TRANSPORTATION, INC., a New Jersey corporation ("Tenant").
STATEMENT OF PURPOSE
--------------------
Landlord is the owner of certain real property located in Cabarrus County,
North Carolina, more particularly described on attached Exhibit A ("Premises").
Tenant wishes to lease the Premises from Landlord for use as trucking terminal
upon the terms and conditions set out in the following Agreement.
AGREEMENT
---------
1. RENT
----
1.1 Tenant covenants and agrees to pay annually, in equal monthly
installments as the basic rent the sum of $261,420.00 payable in monthly
installments of $21,785.00 in advance on the first day of each and every
calendar month in lawful money of the United States of America at the offices of
the Landlord or as directed by Landlord. If the commencement date is a date
other than the first day of a calendar month, there shall be due and payable on
or before such date as basic rent for the remainder of such calendar month a sum
equal to that portion of the basic rent specified for the first full calendar
month, which the number of days from the commencement date to the end of the
calendar month during which the commencement date falls bears to the total
number of days in such month.
1.2 In addition to the basic rent provided for in 1.1, the Tenant
convenants and agrees to pay "additional rent" beginning on the first day of the
first renewal term and continuing thereafter for the remaining term of the Lease
including each subsequent renewal term, which "additional rent" shall be
ascertained and computed for such periods of time and in the manner defined in
paragraph 1.3 of this Agreement.
1.3 Landlord has obtained from Southern National Bank of North Carolina
("Lender") a first lien upon the premises as security for a loan in the original
principal amount of $2,147,500.00 ("Loan"). In the event that Landlord and
Lender shall agree to increase the interest rate on the loan from Lender, which
will result in an increase in the monthly payments under the Loan, the annual
rent and the monthly installment provided in paragraph 1.1 of this Agreement
shall increase to an amount equal to the total annual payments due under the
Loan and the monthly installment due under the Loan. Landlord hereby directs and
Tenant agrees to make all rent payments due under this Agreement directly to
Lender by delivering such payments on or before the due date to Lender at 200
South College Street, Charlotte, North Carolina, 28202, Attn: Senior Loan
Officer.
<PAGE>
2. TERM. The term of this Lease shall be for a period of five (5) years
beginning April 12, 1995, and ending April 12, 2000.
3. NON-ASSIGNMENT OF LEASE
3.1 Without the previous written consent of Landlord, neither Tenant, nor
Tenant's legal representatives or successors in interest by operation of law or
otherwise, shall assign, mortgage or grant any security interest or lien upon
this Lease, or sublet the whole or any part of the Premises or permit the
Premises or any part of the Premises to be used or occupied by others. Any
consent by Landlord to any act of assignment or subletting shall be held to
apply only to the specific transaction thereby authorized. Such consent shall
not be construed as a waiver of the duty of Tenant, or the legal representatives
or assigns of Tenant, to obtain from Landlord consent to any other or subsequent
assignment or subletting, or as modifying or limiting the rights of Landlord
under the foregoing covenant by Tenant not to assign or sublet without such
consent. Any violation of any provision of this Lease, whether by act or
omission, by any assignee, subtenant or under-tenant or occupant, shall be
deemed a violation of such provision by Tenant, it being the intention and
meaning of the parties hereto that Tenant shall assume and be liable to Landlord
for any and all acts and omissions of any and all assignees, subtenants,
under-tenants and occupants. If this Lease be assigned, Landlord may and is
hereby empowered to collect rent from the assignee; if the Premises or any part
of the Premises be underlet or occupied by any person other than Tenant,
Landlord, in the event of Tenant's default, may, and is hereby empowered to,
collect rent from the under-tenant or occupant; in either of such events,
Landlord may apply the net amount received by it to the rent reserved in this
Agreement, and no such collection shall be deemed a waiver of the covenant in
this Agreement against assignment and underletting, or the acceptance of the
assignee, under-tenant or occupant as tenant, or a release of Tenant from the
further performance of the covanants contained in this Agreement on the part of
Tenant.
The foregoing provisions shall include the assignment of this Lease, in
whole or in part, to any corporation into or with which Tenant may be merged or
consolidated or to any corporation which shall be an affiliate, subsidiary,
parent or successor of Tenant, or of a corporation into or with which Tenant may
be merged or consolidated, or to a partnership, the majority interest in which
shall be owned by stockholders of Tenant or of any such corporation.
For the purpose of this Article, a "subsidiary" or "affiliate" or a
"successor" of Tenant shall mean the following:
(a) An "affiliate" shall mean any corporation which, directly or
indirectly, controls or is controlled by or is under common control with Tenant.
For this purpose, "control" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such corporation, whether through the ownership of voting securities or by
contract or otherwise.
2
<PAGE>
(b) A "subsidiary" shall mean any corporation not less than 50% of whose
outstanding stock shall, at the time, be owned directly or indirectly by Tenant.
(c) A "successor" of Tenant shall mean:
(i) A corporation in which or with which Tenant, its corporate
successors or assigns, is merged or consolidated, in accordance with
applicable statutory provisions for merger or consolidation of
corporations, provided that by operation of law or by effective provisions
contained in the instruments of merger or consolidation, the liabilities of
the corporations participating in such merger or consolidation are assumed
by the corporation surviving such merger or created by such consolidation,
or
(ii) A corporation acquiring this lease and the term hereby demised
and a substantial portion of the property and assets of Tenant, its
corporate successors or assigns, or
(iii) Any corporate successor or a successor corporation becoming such
by either of the methods described in (i) or (ii).
3.2 An assignment, within the meaning of this Article, shall be deemed to
include one or more sales or transfers, by operation of law or otherwise, or
creation of new stock, by which an aggregate of more than 50% of Tenant's stock
shall by vested in a party or parties who are nonstockholders as of the date
hereof.
4. QUIET - ENJOYMENT
Landlord covenants that Tenant in performing its obligations under this
Agreement shall peacefully and quietly hold and enjoy the Premises throughout
the term of this Lease and any extensions of this Lease.
5. USE
5.1 Lawful Use. The Premises shall be used and occupied for any lawful
purpose.
5.2 Compliance with Law. Tenant shall, at Tenant's expense, promptly comply
with all applicable statutes, ordinances, rules, regulations, orders and
requirements in effect during the term or any part of the term hereof,
regulating the use by Tenant of the Premises. Tenant shall not use or permit the
use of the Premises in any manner that will tend to create waste or a nuisance.
5.3 Condition of Premises. Tenant shall accept the Premises in their
condition existing as of the date of delivery of possession subject to all
matters unrecorded as well as of
3
<PAGE>
record and to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises, and
accepts this Lease subject thereto and to all matters disclosed thereby and by
any exhibits attached hereto.
6. MAINTENANCE REPAIRS AND ALTERATIONS
6.1 Tenant's Obligations. Tenant shall during the term of this Lease keep
in good order, condition and repair, the Premises and every part to the
Premises, including, without limiting the generality of the foregoing, the
foundations under the Premises, exterior and interior walls and roof of the
Premises, and all plumbing, heating, air conditioning, ventilating, electrical
and lighting facilities and equipment within the Premises, and all fixtures,
ceilings, windows, doors, plate glass, showcases, skylights, entrances and
vestibules located with the Premises, and all adjacent sidewalks, landscaping,
driveways, parking lots, fences and signs located in the areas which are
included in the Premises. Landlord shall incur no expense nor have any
obligations of any kind whatsoever in connection with maintenance of the
Premises, and Tenant expressly waives the benefits of any statute now or
hereafter in effect which would otherwise afford Tenant the right to make
repairs at Landlord's expense or to terminate this Lease because of Landlord's
failure to keep the Premises in good order, condition and repair.
6.2 Surrender. On the last day of the term hereof, or on any sooner
termination, Tenant shall surrender the Premises to Landlord in the same
condition as when such improvements to the Premises were completed, broom clean,
ordinary wear and tear excepted. All alterations, improvements, repairs and
replacements made by Tenant during the term of this Lease shall be removed by
Tenant upon termination of this lease or at Landlord's option, shall remain with
the premises when surrendered by Tenant and be deemed a part of Landlord's
property, at no cost to Landlord. Where removal of any such item is required,
Tenant, at Tenant's expense, shall cause same to be removed and the premises
restored to a condition that is reasonably satisfactory to Landlord. Removal and
restoration shall be completed prior to the termination of this lease. In
default thereof, Landlord may effect said removal and repairs at Tenant's
expense or treat Tenant as a holdover Tenant until such removal and restoration
is completed to Landlord's reasonable satisfaction.
In addition to the foregoing, any personal property of Tenant remaining at
the premises upon termination of this lease (including without limitation
Tenant's trade fixtures) shall be deemed abandoned by Tenant, and Landlord, at
its option, may accept same as part of Landlord's property or cause the removal
of same at Tenant's expense without being liable to Tenant for conversion or any
claim for damages therefor.
6.3 Alterations and Additions. Tenant shall be responsible for all
construction costs incurred with regard to leasehold improvements to the
property, including, but not limited to, bulk excavation, storm drainage, stone
sub-base, paving, parking lines, fencing, landscaping, curbs, steps, and pads to
total $654,687.00. Tenant shall also be responsible for improvements regarding
the warehouse for building equipment, mechanicals, in-plant office, electrical
and all net change orders totaling $930,852.00. Tenant shall also be responsible
for prorata soft costs totaling $120,075.00. The total cost of all leasehold
improvements will be $1,705,614.00 as shown on attached Exhibit B.
Tenant shall also be responsible for any further improvements to the
property required for Tenant's use of the property during any term of the Lease,
except as expressly provided in this Agreement, Tenant shall not, without
Landlord's prior written consent, apply for or obtain any variance of the
present zoning of the Premises or make any alternations, improvements,
additions, utility installations in or about the Premises, except for
non-structural alterations not exceeding $5,000.00 in cost.
4
<PAGE>
7. INSURANCE: INDEMNITY
7.1 Liability Insurance. Tenant, at its sole expense, shall obtain and keep
in force during the term of this Lease a policy of comprehensive public
liability insurance insuring Landlord and Tenant against any liability arising
out of the ownership, use, occupancy or maintenance of the Premises. Such
insurance shall be in an amount of not less than $1,000,000.00 for injury to or
death of one person in any one accident or occurrence and in an amount of not
less than $1,000,000.00 for injury to or death of more than one person in any
one accident or occurrence. Such insurance shall further insure Landlord and
Tenant against liability for property damage of at least $1,000,000.00. If
Tenant shall fail to procure and maintain said insurance, Landlord may, but
shall not be required to, procure and maintain the same, but at the expense of
Tenant.
7.2 Casualty Insurance. Tenant, at its sole expense, shall obtain and keep
in force during the term of this Lease a policy or policies of insurance
covering loss or damage to the Premises in the amount of the full replacement
cost value of the Premises but not for any amount less than $1,400,000.00
against all perils included within the classification of fire, extended
coverage, vandalism and malicious mischief. The insurance policies provided for
in this section shall include an inflation guard endorsement and provide for
payment of loss under such policies to Landlord as additional insured and to
Landlord's permanent lender or lenders under a standard mortgage clause. If
Tenant shall fail to procure and maintain said insurance, Landlord may, but
shall not be required to, procure and maintain the same, but at the expense of
Tenant.
7.3 Insurance Policies. Insurance required under this Agreement shall be in
companies acceptable to Landlord, rated AAA or better in "Best's Insurance
Guide." Tenant shall deliver to Landlord policies of such insurance evidencing
the existence and amount of such insurance with loss payable clauses
satisfactory to Landlord. Any renewal policies shall be delivered to Landlord at
least fifteen (15) days prior to expiration of any other policy covering the
same insured risk. No such policy shall be cancellable or subject to reduction
of coverage or other modification except after thirty (30) days' prior written
notice to Landlord. Tenant shall, within fifteen (15) days prior to the
expiration of such policies, furnish Landlord with renewals of such policies, or
Landlord may order such insurance and charge the cost of such insurance to
Tenant, which amount shall be payable by Tenant upon demand. Tenant shall not do
or permit to be done anything which shall invalidate the insurance policies
referred to in this Agreement.
7.4 Property of Landlord. Except as otherwise provided for in this
Agreement, all insurance proceeds in the hands of Landlord or its permanent
lender or lenders at the time of termination of this Lease, and all insurance
proceeds thereafter received by Landlord or its permanent lender or lenders
under any policy of insurance required to be maintained under the
5
<PAGE>
terms of this Lease, shall be the sole and exclusive property of Landlord,
subject to the rights of the Landlord's permanent lender or lenders.
7.5 Indemnity. Tenant shall indemnify and hold harmless Landlord from and
against any and all claims arising from Tenant's use, possession, maintenance or
improvement of the Premises, or from the conduct of Tenant's business or from
any activity, work or things done, permitted or suffered by Tenant in or about
the Premises and shall further indemnify and hold harmless Landlord from and
against any and all claims arising from any breach or default in the performance
of any obligation on Tenant's part to be performed under the terms of this
Lease, or arising from any negligence of the Tenant, or any of Tenant's agents,
customers, contractors, employees, invitees, or any person in or about the
Premises, and from and against all costs, attorneys' fees, expenses and
liabilities insured in the defense of any such claim or any action or proceeding
brought thereon; and in case any action or proceeding be brought against
Landlord by reason of any such claim, Tenant, upon notice from Landlord shall
defend the same at Tenant's expense. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to person in, upon or about the Premises arising from any cause and
Tenant hereby waives all claims in respect of any such damage or injury against
Landlord except for any claims arising from Landlord's negligence or willful
act.
7.6 Exemption of Landlord from Liability. Tenant hereby agrees that except
for any matter arising out of Landlord's negligence or willful act, Landlord
shall not be liable for injury to Tenant's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Tenant or any subtenant, or any subtenant's employees, contractors, invitees,
customers, or any other person in or about the Premises, nor shall Landlord be
liable for injury to the person of Tenant, Tenant's or any subtenant's
employees, customers, agents, contractors, invitees or any other person in or
about the Premises, whether such damage or injury is caused by or results from
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, sprinkler, wires, appliances, plumbing,
air conditioning or lighting fixtures, or from any other cause, whether the said
damage or injury results from conditions arising upon the Premises, and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant.
8. DAMAGE OR DESTRUCTION.
8.1 Damage - Insured. After any loss insured against pursuant to 6,
Landlord shall, as soon as Landlord has collected the amount of insurance
proceeds, commence repairing or rebuilding the damaged building and improvements
upon the Premises, unless the Landlord terminates this Lease as provided in
paragraph 7.3(a).
8.2 Damage - Uninsured. If at any time during the term hereof the Premises
are damaged and such damage was caused by a casualty not covered under an
insurance policy required to be maintained pursuant to paragraph 6, Landlord
shall, at Landlord's option, either
6
<PAGE>
(a) repair such damage as soon as reasonably possible at Landlord's expense,
except if such damage was caused by a negligent or willful act of Tenant, in
which event it shall be at Tenant's expense; this Lease shall continue in full
force and effect, or (b) give written notice to Tenant within thirty (30) days
after the date of the occurrence of such damage of Landlord's intention to
cancel and terminate this Lease as of the date of the occurrence of such damage.
In the event Landlord elects to give such notice of Landlord's intention to
cancel and terminate this Lease, Tenant shall have the right within fifteen (15)
days after the receipt of such notice to give written notice to Landlord of
Tenant's intention to repair such damage at Tenant's expense, without
reimbursement from Landlord, in which event this Lease shall continue in full
force and effect and Tenant shall proceed to make such repairs as soon as
reasonably possible. If Tenant does not give such notice within such 15-day
period, this Lease may, at Landlord's option, be cancelled and terminated as of
the date of the occurrence of such damage.
8.3 Termination; Abatement.
(a) Destruction. In the event the Premises are totally destroyed or the
Premises cannot be repaired as required in this Agreement under applicable laws
and regulations, notwithstanding the availability of insurance proceeds or
contributions from Tenant, this Lease may, at Landlord's option, be terminated
effective the date of the damage.
(b) Non-abatement of Rent. In the event of any destruction which is
repaired by Landlord, during the period between the date of damage and
completion of repairs,the rent payable by Tenant shall not be reduced.
9. RIGHT OF TENANT TO CANCEL
Notwithstanding anything anything in this Lease contained to the contrary,
in the event that (a) the entire Premises of more than twenty-five percent (25%)
of the building shall be taken by condemnation, or (b) the improvements on the
Premises are required to be removed or reconstructed by any governmental
authority, or (c) the use of the Premises is prohibited by law or ordinance or
other governmental authority, then the Tenant, if not then in default under this
Agreement, may at its option notify Landlord within thirty (30) days after
notice of such condemnation, taking, requirement or prohibition, that it elects
to cancel and terminate this Lease and all of its rights and obligations under
this Agreement,including all obligations, if any, arising from the event which
is the basis for such option to cancel. The effective date of cancellation shall
be the later of the date Tenant ceases to occupy the Premises or, as to (a), the
date the condemning authority takes possession of the premises; or as to (b),
the date in the order or decision by the governmental authority when the
premises must be removed or reconstructed; or as to (c), the effective date of
the law or ordinances. Upon such cancellation, Landlord shall be entitled to
receive the award damages (as provided in paragraph 13), any other remuneration,
and all the proceeds of insurance which have accrued or which may accrue from
such taking, requirement, prohibition or other casualty.
7
<PAGE>
10. REAL PROPERTY TAXES
10.1 Payment of Taxes. Landlord shall pay all real property taxes assessed
against the Premises. Real property taxes are defined in 9.2. All such payments
shall be made at least ten (10) days prior to the delinquency date of such
payment. If any such taxes payable by Tenant shall cover any period of time
prior to or after the expiration of the term hereof, Tenant's share of such
taxes shall be equitably prorated to cover only the period of time within the
tax fiscal year during which this Lease shall be in effect. Any taxes required
to be paid by Tenant under the terms of this Lease but which become payable to
the taxing authority after the expiration or earlier termination hereof shall be
paid to Landlord by Tenant at the expiration or earlier termination hereof.
Tenant's pro rata share will be based on the number of months during the
applicable tax period that the Lease was in effect. If Tenant shall fail to pay
Landlord within five (5) days of demand, such amount shall commence to bear
interest at the Penalty Rate.
10.2 Definition of "Real Property Tax". As used in this Agreement the term
"real property tax" shall include any form of tax assessment, license fee, levy,
penalty or tax (other than income, inheritance, or estate taxes) imposed by any
authority having the direct or indirect power to tax real property, including
any city, county, state or federal government, or any school, agricultural,
lighting, drainage or other improvement districts of any city, county, state or
federal government, as against any legal or equitable interest of Landlord in
the Premises or in the real property of which the Premises are a part. Provided,
however, if any such tax or aassessment may be paid in installments over more
than one (1) year, Tenant may pay each such installment at least thirty (30)
days prior to the last day such installment may be paid prior to delinquency.
10.3 Right to Protest. So long as Tenant shall in good faith deem any such
tax covered by this paragraph to be excessive or illegal, Tenant shall have the
privilege, in the name of Landlord (at Tenant's cost and expense) with respect
to taxes covered by this paragraph of protesting, contesting, objecting to or
opposing the legality of validity of any such taxes to be paid by Tenant under
this paragraph, provided that notice of such protest, contest, objection or
position shall be given to Landlord by Tenant at least thirty (30) days before
any delinquency, and provided further that such protest, contest, objection or
opposition shall not be carried on or maintained after the delinquency date by
Tenant unless Tenant shall have paid the amount under protest or shall procure
and maintain a stay of all proceedings to enforce any collection of any such
amount under protest in such manner as may be required or permitted by law to
accomplish such stay. Landlord shall, without cost to it, cooperate with Tenant
in connection with any such proceedings. In the event of any such protest,
contest, objection or opposition, Tenant shall, within fifteen (15) days after
the final determination of any such protest, contest, objection or opposition
adversely to it, fully pay, satisfy, and discharge the amounts involved in or
affected by such protest, contest, objection or opposition, together with any
penalties, fines, interest, cost or expenses which may have accrued on any such
amounts. Landlord shall execute any and all documents needed, necessary or
convenient when required by Tenant in connection
8
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with any such protest, contest, objection or opposition or action based
thereon; provided, however, that any costs or expenses involved any such
protest, contest, objection or opposition or action based thereon shall be paid
by Tenant. Any rebates or refunds obtained by Tenant shall belong to and be the
property of Tenant.
10.4 Personal Property Taxes. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon trade fixtures, furnishings, equipment
and other personal property of Tenant contained in the Premises or elsewhere.
When possible, Tenant shall cause said trade fixtures, furnishings, equipment
and all other personal property to be assessed and billed separately from the
real property of Landlord.
11. UTILITIES
Tenant shall pay for all water, sewer, gas, heat, light, power, telephone
and other utilities and services supplied to the Premises, together with any
taxes thereon.
12. LANDLORD'S ACCESS
Landlord and Landlord's agents shall have the right to enter the Premises
at reasonable times for the purpose of inspecting the same or showing the same
to prospective purchasers or lenders. Landlord may enter the Premises to make
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part; however, such work shall not unreasonably
interfere with Tenant's use of the Premises during its normal working hours.
13. DEFAULTS; REMEDIES
13.1 Defaults. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Tenant:
(a) The failure by Tenant to make any payment of rent or any other payment
required to be made by Tenant under this Agreement, as and when due, where such
failure shall continue for a period of fifteen (15) days.
(b) The failure by Tenant to observe or perform any covenants, conditions
or provisions of this Lease to be observed or performed by Tenant, other than
described in (a) above, where such failure shall continue for a period of thirty
(30) days after it becomes known to Tenant by written notice of such failure
from Landlord to Tenant, provided, however, that if the nature of Tenant's
default is such that more than thirty (30) days are reasonably required for its
cure, then Tenant shall not be deemed to be in default if Tenant commenced such
cure within said thirty-day period and thereafter diligently prosecutes such
cure to completion.
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(c)(1)The making by Tenant of any general assignment or general arrangement
for the benefit of creditors; (ii) the filing by or against Tenant of a petition
to have Tenant adjudged a bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed within ninety (90) days);
(iii) the appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within ninety
(90) days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within ninety (90)
days.
13.2 Remedies. Landlord shall have, in addition to any other rights or
remedies, the right either to terminate this Lease or to continue this Lease in
full force and effect.
(a) This Lease shall not terminate unless Landlord notifies Tenant in
writing that this Lease and Tenant's right of possession under this Agreement
are terminated, or, unless Landlord institutes a judicial proceeding for the
primary purpose of terminating and which in fact results in a termination of
Tenant's right to possession of the Premises. In no event shall the following
actions by Landlord or its agents, either before or after any abandonment of the
Premises by Tenant constitute a termination of this Lease: (i) maintenance or
preservation of the Premises; (ii) efforts to relet the Premises; (iii)
appointment of a receiver in order to protect Landlord's interests under this
Agreement. If Landlord elects to terminate this Lease, Landlord thereupon shall,
without liability to Tenant, have the immediate right to re-enter the Premises,
remove all persons and property therefrom, and store any property so removed in
a public warehouse or elsewhere, at the cost of and for the account of Tenant.
Any reletting of the Premises by Landlord may be for such term (including a term
extending beyond the term of this Lease) at such rental or rentals and
containing such other provisions as Landlord, in its sole discretion, shall
determine.
(b) If Landlord terminates this Lease by reason of Tenant's breach, Tenant
shall pay to Landlord and be liable for:
(1) all rents and other charges due and unpaid at the time of
termination, together with interest thereon accrued from the date
each such sum became due at the Penalty Rate; and
(2) all rents and other charges which become due between the
time of termination and the time of award, less any rent other charges
that: (i) Landlord has actually received from reletting the Premises,
or (ii) Landlord could have obtained in reletting the Premises by
action reasonable in the circumstances then prevailing, together with
interest thereon accrued from the date each such sum became due at
the Penalty Rate; and
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(3) the difference, if any, between (a) all rents and other
charges for the balance of the term of this Lease, less (b) any rents
and other charges that Tenant proves: (i) Landlord will receive by
reason of the reletting of the Premises, or (ii) Landlord could
obtain in reletting the Premises by acting reasonable in the
circumstances then prevailing, which difference shall be discounted
to present value at the time of award at the discount rate of nine
percent (9%) in effect at the time of award plus one percent (1%);
and
(4) all costs, expenses and losses Landlord incurs by reason of
Tenant's breach of this Lease, including without limitation, the
following: (i) all expenses for repairing or restoring the Premises,
(ii) all brokers' fees, advertising costs and other expenses of
reletting the Premises, (iii) all expenses in retaking possession of
the Premises, and (iv) reasonable attorneys' fees and court costs.
(5) As used in subparagraph (b) hereof, the term "time of award"
shall mean the time of entry of a judgment of award against Tenant in
an action or proceeding arising out of Tenant's breach of this Lease.
(c) If, upon breach of this Lease by Tenant, Landlord elects to continue
this Lease in full force and effect, Landlord, in addition to exercising any
other rights or remedies, may enforce all of its rights and remedies under this
Agreement and Tenant shall remain obligated to perform all of Tenant's
obligations under this Agreement to be performed by Tenant, including without
limitation, timely payment of all rents and other charges. In addition, Tenant
shall be liable for reasonable attorneys' fees incurred by Landlord by reason of
Tenant's breach under this Agreement. Notwithstanding that Landlord elects,
after a breach of this Lease by Tenant, to continue this Lease in full force and
effect, Landlord may at any time thereafter elect to terminate this Lease for
such breach or any other breach. If Landlord so terminates, in addition to any
other rights or remedies of Landlord, Landlord shall have the rights and
remedies provided for in subparagraphs (a) and (b) above.
(d) The rights, privileges, elections and remedies of Landlord in this
Section 12 are cumulative and not alternative.
13.3 Default by Landlord. Landlord shall not be in default unless Landlord
fails to perform obligations required of Landlord within thirty (30) days after
written notice by Tenant to Landlord; provided, however, that if the nature of
Landlord's obligation is such that more than thirty (30) days are required for
performance, then Landlord shall not be in default if Landlord commences
performances within such 30-day period and thereafter diligently prosecutes the
same to completion.
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14. CONDEMNATION
14.1 Right to Terminate. If the Premises or so much of the Premises that
the portion remaining is not suitable for the conduct of Tenant's business shall
be taken by condemnation, Tenant may cancel this Lease as provided in 8.
14.2 Rent Reduction. If Tenant does not terminate or if Tenant does not
have a right to terminate this Lease in accordance with the foregoing, this
Lease shall remain in full force and effect as to the portion of the Premises
remaining, except that the rent shall be reduced in the proportion that the
floor area taken bears to the total floor area of the building included in the
Premises. Land areas taken shall not cause a reduction in rent.
If this Lease is not so terminated, the condemnation proceeds shall be
applied (a) first in satisfaction and discharge of all assessments, if any, for
both principal and interest levied on the Premises or any part of the Premises
for benefits resulting from the improvements for which or in conjunction with
which the condemnation was effected; and (b) so much of the balance as is
necessary to pay the cost of restoration of injury to, or damage to, the
buildings or improvements located on the Premises resulting from the
condemnation.
14.3 Property of Landlord. Except as expressly provided in this Agreement
and after all of Tenant's obligations under this Agreement are terminated, any
award for the taking of all or any part of the Premises under the power of
eminent domain or any payment made under threat of the exercise of such power
shall be the property of Landlord, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages.
15. GENERAL PROVISIONS
15.1 Estoppel Certificate. Tenant or Landlord shall at any time upon not
less than thirty (30) days prior written notice from the other party execute,
acknowledge and deliver to the requesting party a statement in writing (a)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect) and the date to which the
rent and other charges are paid in advance, if any; (b) acknowledging that there
are not, to the knowledge of the party making such statement, any uncured
defaults on the part of the requesting party under this Agreement, or specifying
such defaults if any are claimed; and (c) setting forth such other information
as may reasonably be desired by the requesting party. Any such statment may be
conclusively relied upon by any prospective subtenant of the Premises.
15.2 Landlord's Liability. The term "Landlord" as used in this Agreement
shall mean only the owner or owners at the time in question of the fee title or
a tenant's interest in a ground lease of the Premises, and providing Landlord is
not at that time in default of any of
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<PAGE>
Landlord's obligations under this Agreement, in the event of any
transfer of such title or interest, Landlord named in this Agreement
(and in case of any subsequent transfers, the then grantor) shall be
relieved from and after the date of such transfer of all liability as
respects Landlord's obligations thereafter to be performed, provided
that any funds in the hands of Landlord or the then grantor at the time
of such transfer, in which Tenant has an interest, shall be delivered to
the grantee. The obligations contained in this Lease to be performed by
Landlord shall, subject as aforesaid, be binding on Landlord's
successors and assigns only during their respective periods of ownership.
15.3 Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
15.4 Interest on Past-due Obligations. Except as expressly provided in this
Agreement, any amount due to Landlord not paid when due shall bear interest at
the Penalty Rate from the date due. Payment of such interest shall not excuse or
cure any default by Tenant under the Lease.
15.5 Time of Essence. Time is of the essence.
15.6 Captions. Article and paragraph's captions are not a part hereof.
15.7 Incorporation of Prior Agreements; Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned in this
Agreement. No prior agreement or understanding pertaining to any such matter
shall be effective. This Lease may be modified in writing only, signed by the
parties in interest at the time of the modification.
15.8 Notice. Any notice required or permitted to be given under this
Agreement shall be in writing and may be served by certified mail, postage
prepaid, return receipt requested, addressed to Landlord and Tenant respectively
at the addresses set forth above.
15.9 Waivers. No waiver by Landlord of any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent breach by Tenant of
the same or any other provision. Landlord's consent to or approval of any act
shall not be deemed to render unneccesary the obtaining of Landlord's consent to
or approval of any subsequent act by Tenant. The acceptance of rent under this
Agreement by Landlord shall not be a waiver of any preceding breach by Tenant of
any provision hereof, other than the failure of Tenant to pay the particular
rent so accepted, regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such rent.
15.10 Recording. Tenant shall not record this Lease without Landlord's
prior written consent. Either party shall, upon request of the other, execute,
acknowledge and deliver to the other a "short form" memorandum of this Lease for
recording.
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<PAGE>
15.11 Holding Over. If Tenant remains in possession of the Premises or any
part of the Premises after the expiration of the term hereof without the express
written consent of Landlord, such occupancy shall be a tenancy from
month-to-month at a rental in the amount of the last monthly rental plus all
other charges payable under this Agreement, and upon all the terms hereof
applicable to a month-to-month tenancy.
15.12 Cumulative Remedies. No remedy or election under this Agreement shall
be deemed exclusively but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
15.13 Covenants and Conditions. Each provision of this Lease performable by
Tenant shall be deemed both a convenant and a condition.
15.14 Binding Effect; Choice of Law. This Lease shall bind the parties,
their successors and assigns. This Lease shall be governed by the laws of the
State of North Carolina.
15.15 Attorneys' Fees. If either party brings an action to enforce the
terms hereof or declare rights under this Agreement, the prevailing party in any
such action, trial or appeal, shall be entitled to these reasonable attorneys'
fees to be paid by the losing party as fixed by the court.
15.16 Merger. The voluntary or other surrender of this Lease by Tenant, or
a mutual cancellation of this Lease, shall not work a merger, and shall, at the
option of Landlord, except as expressly provided in this Agreement to the
contrary, terminate all or any existing subtenancies or may, at the option of
Landlord, operate as an assignment to Landlord of any or all of such
subtenancies.
15.17 Option to Renew. Provided that Tenant is not in default of any term,
covenant or condition of this Lease, Tenant shall have the right and option to
renew this Lease by written notice delivered to Landlord not less than ninety
(90) days prior to the expiration of the previous term, for two (2) additional
terms defined as follows: (a) an initial renewal term of five (5) years, and (b)
one additional renewal term of five (5) years on the same terms and conditions
contained in this Agreement except as to rental and except Tenant shall have no
further renewal options.
15.18 Penalty Rate. The parties hereto do hereby agree that "Penalty Rate"
as used in this Lease is defined as two percent (2%) above the rate of interest
under the Loan in effect from time to time. For the purpose of computing the
"Penalty Rate" in this Agreement, changes in the prime rate shall be effective
on the date of each change.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the day
and year first above written.
LANDLORD:
/s/ Harry Muhlschlegel
-----------------------
HARRY MUHLSCHLEGEL
/s/ Karen Muhlschlegel
-----------------------
KAREN MUHLSCHLEGEL
TENANT: JEVIC TRANSPORTATION, INC.
By: /s/ Brian J. Fitzpatrick
------------------------
S.V. President & CFO
ATTEST:
Karen Muhlschlegel
- ---------------------------
________ Secretary
[Corporate Seal]
15
<PAGE>
NEW JERSEY
Burlington COUNTY
I, Joanne Murnane, a Notary Public of Burlington County certify that HARRY
MUHLSCHLEGEL personally came before me this day and acknowledged the due
execution of the foregoing instrument.
WITNESS my hand and notarial seal or stamp, the 12 day of April, 1995.
Joanne Murnane
---------------
Notary Public
My Commission Expires:
- ------------------------
JOANNE MURNANE
NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES MAY 16, 1999
NEW JERSEY
Burlington COUNTY
I, Joanne Murnane, a Notary Public of Burlington County, certify that
KAREN MUHLSCHLEGEL personally came before me this day and acknowledged the due
execution of the foregoing instrument.
WITNESS my hand and notarial seal or stamp, this 12 day of April, 1995.
Joanne Murnane
------------------
Notary Public
My Commission Expires:
- ------------------------
JOANNE MURNANE
NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES MAY 16, 1999
NEW JERSEY
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<PAGE>
NEW JERSEY
Burlington COUNTY
I, Joanne Murnane, a Notary Public of Burlington County, certify that KAREN
MUHLSCHLEGEL personally came before me this day and acknowledged that (s)he is
_________ Secretary of JEVIC TRANSPORTATION, INC., a New Jersey corporation, and
that by authority duly given and as the act of the corporation, the foregoing
instrument was signed in its name by its Sr. Vice President, sealed with its
corporate seal and attested by him/her as its ________________Secretary.
WITNESS my hand and notarial seal or stamp, this 12 day of April, 1995.
Joanne Murnane
---------------
Notary Public
My Commission Expires:
- ------------------------
JOANNE MURNANE
NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES MAY 16, 1999
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<PAGE>
EXHIBIT A
Description of Premises.
LOT #1, GOODMAN ROAD INDUSTRIAL PARK
Lying and being in Cabarrus County, North Carolina, No. 2 Township and
BEGINNING at a point marked by a #5 Iron Rebar, which point is N. 13-33-04
E. 715.68 feet from NCGS Monument "Tent" (N=605,467.07), E=1,493,754.63, NAD
27), and running thence N. 44-10-13 W. 507.64 feet to an existing iron; thence
N.24-52-34 E. 266.05 feet to a found Monument; thence N. 69-04-11 W. 50.00 feet
to a PK Nail set in the center of Goodman Road (SR #1441); thence with the
center line of said Goodman Road N. 25-14-24 E. 463.20 feet to an existing iron;
thence S. 40-57-30 E. 263.87 feet to an Ash Cluster; thence S. 74-12-58 E.
596.27 feet to an existing iron; thence S. 29-11-51 W.19.94 feet to a Monument;
thence N. 55-32-17 W. 4.64 feet to a Monument; thence S. 42-52-42 W. 611.58 feet
to a Monument; and thence S. 46-03-07 W. 314 feet to the point or place of
beginning, and consisting of 11.668 acres, more or less, as shown on Boundary
Survey of Lot #1, Goodman Road Industrial Park prepared for Harry J. and Karen
B. Muhlschlegel dated February 24, 1993, by Power Engineering Co., Inc., Kenneth
M. Green, RLS.
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EXHIBIT B
Cost of Leasehold Improvements
Item Dollar Amount
---- -------------
Site:
-----
Bulk Excavation $220,775.00
Storm Drainage $ 55,194.00
Stone Sub-Base $ 5,674.00
Paving $275,970.00
Parking Lines $ 1,021.00
Fencing $ 10,556.00
Landscaping $ 40,853.00
Curbs, Steps, Pads $ 44,644.00
===========
Sub-Total $654,687.00
Warehouse:
----------
Equipment $229,777.00
Mechanicals $172,155.00
In-Plant Office $192,840.00
Electrical $126,835.00
Changes Orders, Net $209,245.00
-----------
Sub-Total $930,852.00
Total Jevic Costs $1,585,539.00
Total Jevic Costs: $1,585,539.00
Total Project Costs less General Costs $2,349,936.50
Jevic Percent of Total 67.47%
Total General Conditions $ 177,964.00
Prorats General Conditions $ 120,075.10
-------------
Total Jevic Costs $1,705,614.10
-19-
AMENDED AND RESTATED LEASE AGREEMENT
This Amended and Restated Lease Agreement ("Lease") is made and executed
this __ day of September, 1997, by and between HARRY MUHLSCHLEGEL and KAREN
MUHLSCHLEGEL (together, "Landlord") and JEVIC TRANSPORTATION, INC. ("Tenant").
Background
Landlord and Tenant are parties to a certain Business Lease dated
December 23, 1993 ("Original Lease"), pursuant to which Landlord leased to
Tenant and Tenant leased from Landlord the premises herein described. Landlord
and Tenant are entering into this Lease to clarify and restated their respective
obligations as Landlord and Tenant and intend for this Lease to replace the
Original Lease in its entirety.
NOW, THEREFORE, in consideration of the mutual undertaking set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, Landlord and Tenant agree as follows:
1. LEASE OF PREMISES. Landlord hereby leases to Tenant, and Tenant accepts
from Landlord, under the terms and conditions set forth in this Lease, the real
property located at Ironside Court in Willingboro, New Jersey which is
designated on the current Willingboro tax map as Lots 8-12, 8-15, 8-16 and 8-17
in Block 13, together with all improvements thereon and all of Landlord's rights
thereto ("Premises").
2. CONDITION OF PREMISES. The Premises have been delivered by Landlord
to Tenant, and accepted by Tenant, in an "AS-IS" "WHERE IS" condition. Tenant
acknowledges that Landlord has no unperformed obligation to alter, improve,
decorate or otherwise prepare the Premises for Tenant's occupancy or which
remain unsatisfied under the Original Lease. Tenant further acknowledges that
neither Landlord nor any agents of Landlord have made any representations,
warranties or covenants, either express or implied, with respect to the Premises
or the condition thereof.
3. TERM. Tenant shall have and hold the Premises for the term ("Term")
hereafter provided. Landlord and Tenant acknowledge that the Term commenced on
January 1, 1994 ("Commencement Date") and shall end at 11:59 p.m. on December
31, 2013 ("Expiration Date").
4. RENT.
4.1 Base Rent. The annual base rent ("Base Rent") for the Premises shall
be $114,240. Tenant shall pay Base Rent in monthly installments of $9,520, in
advance, on the first day of each calendar month during the Term.
4.2 Additional Rent. In addition to Base Rent, Tenant shall pay all sums
of money or other charges required to be paid by Tenant under this Lease as
additional rent ("Additional Rent"), whether or not same are expressly
designated in this Lease as Additional
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<PAGE>
Rent. All Additional Rent shall be due and payable with each monthly
installment of Base Rent unless otherwise provided herein.
4.3 Manner of Payment. Base Rent and Additional Rent (together, "Rent")
payable under this Lease shall be paid in lawful money of the United States of
America without prior notice or demand therefor, and without deduction, defense,
counterclaim, setoff or abatement whatsoever. Rent shall be paid to Landlord at
the address designated by Landlord for notice or such other address as Landlord
may notify Tenant in accordance with the procedure for notice set forth in this
Lease.
4.4 Interest on Delinquent Payments. If any payment of Base Rent is not
paid in full within ten (10) business days after its due date or any payment of
Additional Rent is not paid in full when due , Tenant shall pay interest on such
delinquent payment, from the original due date of such delinquent payment until
paid in full, at an interest rate ("Interest Rate") equal to the lesser of (a)
one and one-half percent (1.5%) per month, or (b) the maximum rate permitted by
applicable law. This Section shall not relieve Tenant from its obligation to pay
Rent at the times and in the manners herein specified. Acceptance by Landlord of
interest shall not constitute a waiver of Tenant's default with respect to said
delinquent payment, nor prevent Landlord from exercising any other rights or
remedies available to Landlord. Interest at the Interest Rate also shall accrue
on any judgment obtained in connection with enforcement of this Lease.
5. NET LEASE - TAXES AND UTILITY CHARGES.
5.1 Net Lease. This Lease is a triple net lease between Landlord and
Tenant, and it is the intent of the parties that all costs of owning and
operating the Premises during the Term hereof shall be paid by Tenant as
Additional Rent hereunder, including without limitation the costs and expenses
expressly set forth in this Lease but excluding any payments now or hereafter
due on account of any indebtedness of Landlord secured by a mortgage on the
Premises.
5.2 Real Estate Taxes and Utilities Charges.
(a) Obligation. Without limiting the foregoing, the parties agree
that Tenant shall pay as Additional Rent all "Real Estate Taxes" and "Utility
Charges" defined as follows:
(1) For purposes herein, "Real Estate Taxes" shall consist of (A)
all real estate taxes relating to the Premises; (B) all charges which
may be levied in lieu of real estate taxes; (C) all assessments for municipal
improvements and other governmental charges of any kind and nature for public
improvements, services, benefits, or any other purpose; and (D) all assessments
against the Premises pursuant to any covenants, restrictions or easement
agreements affecting the Premises which become payable during the Term (or which
become payable after the expiration or earlier termination hereof and are
attributable in whole or in part to any period during the Term hereof), together
with all costs and expenses incurred by Landlord in good faith in contesting,
resisting, or appealing any such taxes or assessments, including,
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<PAGE>
without limitation, legal fees. Real Estate Taxes shall not include any interest
or penalties arising as a result of Landlord's late payment thereof.
(2) "Utility Charges" shall mean all electricity, water, sewer,
cable, telephone or other similar utility charges, and all excises,
taxes and fees with respect thereto, including without limitation license,
permit, inspection, authorization and similar fees of utility providers for
utility services rendered or furnished to the Premises during the Lease Term.
Utility Charges shall not include any interest or penalties arising as a result
of Landlord's late payment thereof.
(b) Payment. Tenant shall pay all Real Estate Taxes and Utility
Charges for the Premises within twenty (20) business days after Tenant's
receipt of Landlord's invoice therefor. Landlord's invoice shall be accompanied
by reasonable evidence documenting and supporting the amount of Real Estate
Taxes or Utility Charges for which such assessment of Additional Rent is being
made. Landlord agrees to make payment of Real Estate Taxes and Utility Charges
in a timely manner. Tenant's obligation hereunder for amounts falling due during
the Term of this Lease shall survive termination of this Lease.
(c) Direct Billing to Tenant. At Landlord's option, Landlord may
cause Real Estate Taxes and Utilities Charges, or portions thereof, to
be billed directly to Tenant. In such case, Tenant agrees to pay all of such
amounts promptly when due and shall be responsible for any interest or penalty
as a result of the delinquent payment thereof as well as any loss suffered by
Landlord as a result of such delinquency. Within ten (10) business days after
Landlord's request made from time to time at Landlord's discretion, Tenant shall
provide evidence reasonably satisfactory to Landlord (such as in the form of
receipts marked as paid) that all of such Real Estate Taxes and Utility Charges
separately billed to Tenant are current without delinquency.
5.3 Availability of Utilities and Services. Tenant acknowledges that
Landlord is not responsible to Tenant for any disruption or inadequacy of
utilities services during the Term except to the extent caused solely by the
gross negligence or wilful misconduct of Landlord, its employees or agents. In
this regard, Landlord does not warrant that any services supplied to the
Premises will not be interrupted. Services may be interrupted because of
accidents, repairs, alterations, improvements, or any reason beyond the
reasonable control of Landlord. Any such interruption shall not make Landlord
liable to Tenant for damages, nor constitute a constructive eviction or entitle
Tenant to a rent abatement unless same shall have been caused solely by the
gross negligence or wilful misconduct of Landlord, its employees or agents.
6. REPAIRS AND MAINTENANCE OF THE PREMISES.
6.1 Structural and System Repairs and Replacements. Tenant, at Tenant's
expense, shall perform all replacements and repairs necessary to maintain the
roof, load bearing walls and foundations of any building located on the Premises
during the Term of this Lease in good repair and proper working order
("Structural Work"). Unless an emergency exists in Tenant's reasonable
commercial judgment (in which case Tenant, without Landlord's prior consent, is
authorized to undertake such "temporary" corrective action as is necessary to
abate the
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emergency until Landlord's consent to the "permanent" corrective action can be
obtained), Tenant will obtain Landlord's prior approval to the scope and
necessity of any Structural Work, the estimated cost thereof, and the contractor
to perform such Structural Work. Landlord's approval to the foregoing shall not
be unreasonably withheld, but Landlord may impose such conditions as part of its
consent as Landlord deems appropriate taking into consideration the nature of
the proposed Structural Work, including, without limitation, requiring Tenant to
furnish Landlord with security for the payment of all costs to be incurred in
connection with such work, insurance, and copies of the plans, specification,
permits and approval necessary therefor.
6.2 Tenant's General Obligations. In addition to Tenant's obligations
under subsections (a) above, Tenant, at Tenant's expense, shall perform all
repairs, maintenance and replacements necessary to maintain the Premises and
every part thereof in good repair and proper working condition. Without limiting
the foregoing, Tenant's obligations hereunder shall include repairs, maintenance
and replacements of windows, doors, overhead doors, floors, private roadways and
parking areas, electric and HVAC equipment and systems, waste disposal and
plumbing systems, and all other structural and mechanical elements and systems
serving the Premises. Tenant also shall perform responsible leaf, snow and ice
clearing and removal.
6.3 Clean Condition. Tenant, at Tenant's expense, shall keep the
Premises in a clean, sanitary, orderly and safe condition to the reasonable
satisfaction of Landlord and in accordance with any rules and regulations from
time to time in effect during the Term of this Lease. Tenant shall provide such
reasonable pest extermination measures as is necessary to maintain the Premises
free from insects, vermin and any other pests.
7. ALTERATIONS.
7.1 Consent Required. Except as hereafter provided or as required
pursuant to Section 6 above, Tenant shall make no alterations, additions or
improvements ("Tenant Alterations" or "Tenant Alteration") to the Premises
without the consent of Landlord, which consent shall not be unreasonably
withheld. At the time of Landlord's consent, Landlord shall designate whether
Tenant shall be required to remove the proposed Tenant Alteration upon
termination of this Lease, and if Landlord's written consent fails to state that
such Tenant Alteration is required to be removed, Landlord shall be deemed to
have agreed that Tenant shall not be obligated to remove such Tenant Alteration
upon the termination of this Lease. Landlord may impose such conditions as part
of its consent as Landlord deems appropriate taking into consideration the
nature of the proposed Tenant Alteration, including, without limitation,
requiring Tenant to furnish Landlord with security for the payment of all costs
to be incurred in connection with such work, insurance, and copies of the plans,
specifications, permits and approvals necessary therefor.
7.2 Permitted Tenant Alterations. Landlord's consent shall not be
required for Tenant Alterations ("Permitted Tenant Alterations") which: (i) do
not adversely impact the structural integrity of the Premises or the systems
serving the Premises or their operation, (ii) are not visible from the exterior
of the Premises and (iii) cost $5,000 or less in the aggregate to complete.
Unless, however, Landlord's prior written consent was obtained to a Permitted
Tenant Alteration, Landlord may require the removal of any Permitted Tenant
Alteration upon the
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termination of this Lease. Notwithstanding the foregoing, with respect to
Permitted Tenant Alterations for which a building permit is required, no work
shall be performed until Tenant provides notice to Landlord that Tenant will be
undertaking such Permitted Tenant Alteration, which notice describes in
reasonable detail the scope of the Permitted Tenant Alteration. Tenant's
delivery to Landlord of a copy of Tenant's application for a building permit
shall be deemed to satisfy the foregoing description of the scope of the
Permitted Tenant Alteration.
7.3 Removal at Lease Termination. If removal of a Tenant Alteration
(including Permitted Tenant Alterations) is required at termination of this
Lease, Tenant shall promptly remove such Tenant Alterations and repair any
damage occasioned by such removal to Landlord's reasonable satisfaction. In
default thereof, Landlord may effect said removal and repairs at Tenant's
expense and treat Tenant as a holdover tenant until such removal and restoration
is completed. With respect to any Tenant Alterations which Tenant is not
obligated to remove hereunder, such Tenant Alterations, if not removed by Tenant
upon the termination of this Lease, shall be deemed abandoned by Tenant and
deemed a part of Landlord's property.
8. GENERAL CONSTRUCTION/MAINTENANCE PROCEDURES.
8.1 Quality of Performance. All undertakings under Sections 6, 7 and 10
hereof which are furnished by or upon the direction of Tenant ("Tenant's Work")
shall be performed in a good and workmanlike manner, using only materials of at
least the same quality and integrity as that being repaired, replaced or
altered, and performed and furnished in compliance with all applicable laws,
regulations, ordinances and requirements of all duly constituted authorities or
governmental bodies having jurisdiction over the Premises and of the
requirements of any board of underwriters having jurisdiction thereof.
8.2 Prior Plan Approval. With respect to Structural Work and Tenant
Alterations other than the Permitted Tenant Alterations, no work shall be
performed until the plans and specifications therefor have been approved by
Landlord, which approval shall not be unreasonably withheld. Where applicable
given the nature of the Tenant's Work, Tenant shall provide copies of as-built
plans and specifications for all Tenant's Work to Landlord within a reasonable
time of completion of the Tenant's Work.
8.3 Contractors. Any contractors employed by Tenant to construct or
perform Tenant's Work shall be approved by Landlord in writing, which approval
shall not be unreasonably withheld. Each contractor shall carry contractor's
liability insurance which covers Landlord as additional insured, covering bodily
injury in such amounts as may be customary and appropriate for the Tenant's Work
undertaken, as reasonably determined by Landlord. Tenant shall provide proof of
such insurance acceptable to Landlord prior to commencement of any Tenant's Work
on the Premises.
8.4 Mechanic's Liens. Prior to commencement of any Tenant's Work, Tenant
shall procure waivers of mechanics liens from all contractors and copies of said
waivers shall be delivered to Landlord prior to construction commencement.
Tenant shall promptly pay and discharge all claims for labor done or supplies
furnished.
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8.5 Landlord's Approval and Review Reimbursement. By approving any
request for Tenant's Work (or any plans therefor), Landlord does not expressly
or implicitly covenant or warrant that the Tenant's Work or the plans and
specifications therefor are accurate, safe or sufficient, or that the same
comply with any applicable laws, ordinances, building codes, zoning requirements
and like regulations, nor shall Landlord's approval of any contractor be deemed
any endorsement of the qualifications of such contractor. Tenant shall be solely
responsible for determining the adequacy and sufficiency of the foregoing and
for obtaining all necessary permits and governmental approvals, including a
Certificate of Occupancy upon completion of the Tenant's Work, if and when
required by the municipality in which the Premises are located. Tenant shall
reimburse Landlord for Landlord's expenses incurred (including any engineering,
architectural or legal fees) in connection with reviewing any request for
consent to Tenant's Work.
9. SIGNS AND APPEARANCE OF PREMISES.
9.1 Signs. Subject to applicable zoning requirements, Tenant, at its
expense, may install and maintain one outside identification sign, which shall
be of an appearance and at a location that is mutually acceptable to Landlord
and Tenant. Tenant shall obtain at its expense all necessary permits or
governmental approvals for such sign.
9.2 Exterior. Tenant shall not place or cause to be placed on the
exterior of the Premises or upon the roof, or otherwise visible from the
exterior of the Premises, any sign, awning, canopy, marquee, advertising matter,
decoration, lettering, antennae, satellite dish or any other thing of any kind
without the prior written consent of Landlord.
10. USE AND COMPLIANCE WITH LAWS.
10.1 Permitted Use. Tenant shall use the Premises only as a truck
terminal and office space incidental thereto ("Permitted Use"). Tenant shall not
permit the Premises to be vacant nor shall Tenant permit the Premises to be used
for any illegal purpose or in any manner which would tend to damage any portion
thereof.
10.2 Insurance Risks. Tenant shall not conduct any activity or permit
any activity to be conducted or place any equipment in or about the Premises
which would in any way increase the rate of fire insurance or other insurance on
the Premises.
10.3 Compliance with Applicable Laws. Tenant shall comply with all
applicable laws, regulations, ordinances, and directives of the Federal
Government, state and municipality in which the Premises are located as well as
all judicial orders and the requirements of any Board of Fire Underwriters (or
any other body exercising similar functions) as are in effect during the Term of
this Lease, including without limitation, those relating to Hazardous Materials
(hereafter defined), those otherwise relating to occupational safety and health,
and the Americans With Disabilities Act of 1990, as amended from time to time,
and all regulations or judicial interpretations of the requirements thereof.
Tenant, at Tenant's sole expense, shall perform any act or obligation arising
from or as is necessary to achieve such compliance. At all times during this
Lease, Tenant shall maintain and comply with all permits, licenses or other
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authorizations required by any governmental authority or agency for
Tenant's occupancy or operations at the Premises.
10.4 Notice of Violations. Tenant shall promptly notify Landlord of
violation of any applicable law which is alleged to have been committed at the
Premises and shall forward to Landlord copies of any written communications,
complaints, citations or other notices relating to the condition of the Premises
or compliance with applicable laws ("Action Notice"). Tenant promptly shall
respond to any Action Notice, cure any violation of applicable laws and have
dismissed any legal action commenced against Tenant or the Premises to the
satisfaction of Landlord. Prior to undertaking same, however, Tenant shall
propose to Landlord its intended course of action and proceed only with
Landlord's approval of same, which shall not be deemed to be Landlord's
guarantee that such action is appropriate nor impose any liability for same on
Landlord.
10.5 Landlord's Inquiries and Inspection. Tenant shall promptly and
accurately respond in writing to all inquiries made by Landlord (including
without limitation requests for documents) pertaining to Tenant's obligations
under this Lease or use of the Premises. Landlord and any authorized agent or
contractor hired by Landlord may enter the Premises at any time and from time to
time for purposes of inspecting same and conducting tests and sampling thereupon
as Landlord deems reasonably necessary to determine that Tenant is in compliance
with this Lease, but Landlord shall not be obligated to do so. Unless an
emergency exists, as determined by Landlord in its sole discretion, Landlord
shall notify Tenant at least one (1) day in advance of any such inspection or
testing and, to the extent practicable, shall conduct any such inspection or
testing in such manner so as to minimize unreasonable interference with Tenant's
operations. The costs of such investigation and inspection shall be paid by
Landlord unless it is determined that Tenant is in noncompliance with this
Lease, in which case such costs shall be paid solely by Tenant as Additional
Rent within ten (10) business days after Landlord's demand therefor.
10.6 Environmental Laws and Hazardous Materials. In amplification of
Tenant's obligations under Section 10.3 above and not in limitation thereof, the
following shall apply:
(a) Environmental Laws. Tenant shall comply with all applicable
environmental laws, orders, regulations, ordinances and directives now existing
or hereafter enacted, and all judicial interpretations thereof (collectively,
"Environmental Laws"), including without limitation the Industrial Site Recovery
Act, N.J.S.A. 13: IK-6 et seq. ("ISRA"). Tenant, at Tenant's expense, shall
perform any act or obligation arising from or as is necessary to achieve
compliance with the Environmental Laws, including, without limitation,
investigation of alleged or actual violations, performance of necessary testing
and sampling, provision of financial assurances or remediation funding sources,
and compliance with all directives of the governmental authority or agency
("Authority") have jurisdiction thereof. Tenant further agrees to cooperate with
Landlord as is necessary for Landlord to satisfy lenders or investors that the
Premises are in compliance with Environmental Laws, including without limitation
by providing ISRA Clearance (defined below).
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(b) Hazardous Materials. Tenant shall not cause or permit any portion
of the Premises to be used for the production, storage, deposit or
disposal of Hazardous Materials, nor shall Tenant permit Hazardous Materials
ever to be placed or located upon the Premises except in such de minimis
quantities of the types commonly used in office and cleaning supplies, provided
that same are at all times used, kept and stored in full compliance with the
Environmental Laws. As used herein, "Hazardous Materials" means all substances
or pollutants which are declared to be or regulated as hazardous, toxic,
dangerous or polluting substances under the Environmental Laws at any time
during the Term of this Lease and shall include, without limitation, asbestos,
polychlorinated biphenyles (PCBs), urea formaldehyde, foam insulation, and
petroleum products and by-products.
(c) Liens. Tenant shall promptly notify Landlord of any actual or
threatened lien against the Premises of which Tenant becomes aware pursuant to
any of the Environmental Laws. Tenant, at Tenant's sole cost and expense, shall
promptly discharge and remove any lien arising from Tenant's violation of any of
the Environmental Laws, such action to be completed within thirty (30) days
after Tenant first receives notice of such lien or violation or such shorter
period of time if required (1) by the governmental agency enforcing the
correction of such violation, or (2) to prevent the holder of any such lien from
forcing the sale of the Premises.
(d) Tanks. Tenant shall not bury nor place any underground or above-
ground storage tanks at the Premises or the land on which same is located.
(e) Industrial Establishment. Tenant shall not permit all or any
portion of the Premises to be occupied or used by an "Industrial
Establishment" as defined under ISRA (defined below); provided, however, that if
the definition of "Industrial Establishment" is amended or reinterpreted after
the commencement of a permitted occupation or use in such a way that such
occupation or use falls within the new definition of "Industrial Establishment,"
Tenant shall be permitted to continue the occupation or use and shall not for
that reason be in breach of this Lease.
(f) ISRA at Lease Termination. In addition to Tenant's general
obligation to comply with ISRA, and irrespective of whether ISRA is applicable
to Tenant's use of the Premises, Tenant, at Tenant's expense, shall obtain in
connection with any termination of this Lease either: (A) a nonapplicability
letter; (B) a de minimis quantity exemption; (C) an unconditional approval of
Tenant's negative declaration; or (D) a no further action letter with respect to
Tenant's remediation work plan (collectively "ISRA Clearance") from the
Authority having jurisdiction over ISRA compliance. If Tenant fails to deliver
ISRA Clearance which is satisfactory to Landlord upon the termination of this
Lease, Landlord shall have the right, in addition to Landlord's remedies for
breach of this Section, to treat Tenant as a holdover tenant in possession of
the Premises in accordance with the terms of this Lease. If, however, Tenant has
timely and in good faith attempted to discharge its ISRA obligations prior to
the termination of this Lease and Tenant demonstrates to Landlord's reasonable
satisfaction that Tenant's failure to obtain an ISRA Clearance is due solely to
the failure of the Authority to respond to Tenant's submissions and/or the
failure of Landlord to make any submissions or provide any cooperation that is
necessary for Tenant to have obtained the ISRA Clearance, such failure shall not
constitute a breach of this Lease nor entitle Landlord to treat Tenant as a
holdover Tenant.
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(g) Remedial Action. Should an Authority determine that remediation
be undertaken at the Premises because Hazardous Materials have been
Released (hereafter defined) in, on, under or about the Premises during the
Term, Tenant, at Tenant's expense, shall promptly prepare and submit a remedial
action work plan and establish a remediation funding source which are
satisfactory to the applicable Authority and diligently complete its obligations
thereunder. "Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration into
the indoor or outdoor environment, including the movement of any Hazardous
Materials through or in the air, soil, surface water, groundwater, at, on, in
under or from the Premises; the term "Released" shall have a corresponding
meaning. Landlord agrees to cooperate with Tenant as is necessary for Tenant to
obtain approval of such remedial action workplan, but Landlord shall not be
obligated to, and nothing in this Lease shall be construed to require Landlord
to, cooperate with or consent to: (1) any remediation or cleanup which does not
strictly comply with the applicable Authority's most stringent relevant criteria
for protection of human health, the environment or groundwater quality; (2) any
Declaration of Environmental Restrictions or any similar recorded notice or
institutional control, or any Classification Exception Area (as such terms are
defined in ISRA); or (3) any remediation or clean-up which involves the use of
engineering controls that allow contamination to remain at the Premises at
levels in excess of the applicable Authority's most stringent relevant criteria
for protection of human health, the environment or groundwater quality;
provided, however, that Tenant will not be obligated to remediate or clean-up
the Premises or its environs beyond the condition of the Premises or its
environs as they existed as of the commencement of this Lease.
(h) Sharing of Environmental Documents. Each party shall notify the
other in advance of all meetings scheduled with any Authority concerning
compliance of the Premises with ISRA and all other Environmental Laws, and the
other party, either directly or through representatives, shall have the right,
without the obligation, to attend and participate in all such meetings. The
parties shall make reasonable efforts to share Environmental Documents
(hereafter defined) to insure that any party trying to comply with ISRA and the
other Environmental Laws has all Environmental Documents reasonably available to
the other party. "Environmental Documents" means all environmental documentation
concerning the Premises or its environs, in the possession or under the control
of a party, including without limitation all preliminary assessment reports,
site investigation reports, remedial action plans or reports or the equivalent,
sampling results reports, data, diagrams, charts, maps, analyses, conclusions,
correspondence to or from the Authority, submissions to the Authority and
directives, orders, approvals and disapprovals issued by the Authority. Each
party shall deliver to the other party all Environmental Documents concerning
the Premises; provided, however, that nothing herein shall require the
disclosure of privileged information.
10.7 Indemnification. In amplification of Tenant's obligations under
Section 14 and not in limitation thereof, Tenant shall indemnify, defend (with
legal counsel selected by Landlord) and hold harmless Landlord from and against
any and all claims, legal or equitable, damages for personal injury (including
death) or harm to property (real or personal), liabilities, penalties, fines and
costs (including without limitation, investigation and remediation costs, sums
paid in private rights of action or in settlement of claims, legal fees,
consultant fees and expert fees) and damages in the nature of loss of use of the
Premises, or loss of a sale of the Premises,
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arising out of or in any way connected to any condition caused or created by
Tenant's failure to comply with its obligations under this Section 10.
10.8 Survival. The provisions of this Section 10 shall survive the
scheduled expiration or earlier termination of this Lease, and, in addition to
performance of the obligations hereby required, Tenant shall continue to pay
rent, even though this Lease may have been terminated, until Tenant has
completed the performance of all of its obligations hereunder.
11. INSURANCE.
11.1 Tenant's Required Coverage.
(a) Type of Insurance. Tenant, at Tenant's sole cost and expense,
shall carry and maintain during the Term of this Lease the following
types of insurance, in the amounts and form hereinafter provided:
(1) All Risk Insurance. Loss or damage to the Premises by fire,
vandalism and malicious mischief, extended coverage perils commonly known as
"All Risk" and all physical loss perils, including but not limited to sprinkler
leakage, in an amount not less than one hundred percent (100%) of the then full
replacement cost thereof as reasonably determined by Landlord from time to time;
(2) Boiler Insurance. Loss or damage by explosion of steam
boilers, pressure vessels or similar apparatus, now or hereafter
installed in the Premises, in such limits with respect to any one accident as
reasonably determined by Landlord from time to time; and
(3) Public Liability and Premises Damage. Comprehensive
public liability insurance with a combined single limit of not less than one
million dollars ($1,000,000) (with inflation endorsement) per occurrence or such
larger amount as reasonably determined by Landlord from time to time, insuring
against any and all liability with respect to the Premises or arising out of
Tenant's maintenance, use or occupancy thereof.
(b) Tenant's Property and Improvements. Tenant acknowledges that
Landlord shall have no liability or responsibility whatsoever with respect to
any loss or damage however caused (including without limitation by fire or other
casualty, sprinkler leakage, theft or vandalism), to Tenant's personal property
located at the Premises and all personal property of others in Tenant's
possession. Tenant agrees to carry such casualty insurance with respect thereto
as is customarily carried by tenants of similar properties.
11.2 Policy Form. All policies of insurance required to be carried by
Tenant hereunder shall be issued by insurance companies with general
policyholders' rating of not less than A and a financial rating of AAA or better
as rated in the most current available "Best's Insurance Guide" and qualified to
do business in the state in which the Premises is located. All policies shall be
in form and content acceptable to Landlord and shall name Landlord and such
other persons or entities as Landlord specifies from time to time as additional
insureds. Each
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policy shall provide (a) that Landlord, although named as additional
insured, shall nevertheless be entitled to recovery under said policy for any
loss occasioned by reason of the acts or negligence of Tenant or Tenant's
officers, employees or agents, and (b) the company writing said policy shall
give to Landlord written notice not less than thirty (30) days in advance of any
modification, cancellation or nonrenewal of such insurance coverage. All
policies shall be written as primary policies, not contributing with, and not in
excess of coverage which Landlord may carry.
11.3 No Separate Insurance. Tenant shall not, on Tenant's own initiative
or pursuant to the request or requirement of any third party, take out separate
insurance concurrent in form or contributing in the event of loss with the
insurance required in this Section 11 to be furnished by Tenant if the effect of
such insurance would invalidate or reduce the primary coverage which Tenant is
required by this Lease to maintain.
11.4 Failure to Maintain Insurance. Tenant shall pay all of the premiums
for insurance required hereunder. Certified copies of such insurance policies or
certificates thereof shall be delivered to Landlord prior to Tenant's possession
of the Premises, and thereafter no later than thirty (30) days prior to the
expiration of the term of such policy. As often as any such policy shall expire
or terminate, renewal or replacement policies shall be procured and maintained
by Tenant which satisfy the requirements of this Lease. Tenant shall permit
Landlord at all reasonable times to inspect the policies of insurance required
to be maintained by Tenant hereunder. If Tenant shall fail to deliver evidence
to Landlord that Tenant has in force the insurance required hereunder to be
maintained by Tenant within the time period provided herein and does not
thereafter deliver evidence of same to Landlord within twenty-four (24) hours of
Landlord's demand (verbal or written) therefor, Landlord may treat such failure
as an Event of Default and, in addition thereto, Landlord may obtain the
required insurance on Tenant's behalf (but shall not be obligated to do so). If
Landlord obtains the required coverage on behalf of Tenant, Tenant shall
reimburse the actual premium amounts paid by Landlord within ten (10) business
days after Landlord's written demand therefor.
11.5 Waiver of Subrogation.
(a) Tenant, for itself and any party claiming through or under
Tenant by way of subrogation or otherwise, hereby waives any claims
against Landlord, and Landlord's employees and agents, for loss or damage to
Premises covered by insurance maintained by Tenant or any party making its claim
through or under Tenant, even if such loss or damage shall have been caused by
the fault or negligence of Landlord or anyone for whom they may be responsible.
(b) Landlord, for itself and any party claiming through or under
Landlord by way of subrogation or otherwise, hereby waives any claim against
Tenant, and Tenant's employees and agents, for loss or damage to Premises
covered by insurance maintained by Landlord or any party making its claim
through or under Landlord, even if such loss or damage shall have been caused by
the fault or negligence of Tenant or anyone for whom Tenant may be responsible.
Such waiver shall not, however, be deemed to prevent Landlord from
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declaring Tenant in default of this Lease if the action or omission giving rise
to the loss or damage also shall constitute a default under this Lease.
(c) The waivers made pursuant to this Section shall be effective,
however, only of and with respect to any loss or damage occurring during such
time as the insured party's policy or policies of insurance covering said loss
or damage shall contain a waiver of the insurer's right of subrogation and a
provision to the effect that such waiver shall not adversely affect or impair
said insurance or prejudice the right of the insured to recover thereunder
("Validation Provision"). Landlord and Tenant shall cause their respective
insurers to include in their respective policies a Validation Provision which
has the same effect as the foregoing. If the waivers created by this Section
shall be determined to contravene any law with respect to exculpatory agreements
and are thereby rendered unenforceable, the liability of the party in question
shall be deemed not released but shall be secondary to the other's insurer.
12. FIRE OR CASUALTY.
12.1 Insured Casualty.
(a) In case of damage to the Premises by a risk insured against
pursuant to Section 11 hereof, Landlord, unless it shall otherwise elect
as hereinafter provided, shall repair the Premises to substantially the
condition which existed prior to such damage, with reasonable dispatch after
receiving from Tenant written notice that damage has occurred, but without
obligation to do so until Landlord has received confirmation from the insurance
carrier and all mortgagees holding mortgages on the Premises that adequate
insurance proceeds will be available for repair or reconstruction. Landlord's
restoration, however, shall be of only those portions of the Premises which were
provided at Landlord's expense, and restoration of items within the Premises
which were not provided at Landlord's expense shall be Tenant's obligation.
(b) If damage to the Premises exceeds fifty percent (50%) of its fair
market value prior to such damage, as determined by a reputable fire adjuster or
contractor selected by Landlord or the obligated insurer ("Damage Estimate"),
then either party may terminate this Lease in the manner herein provided, in
which event all Rent shall abate and this Lease terminate as of the date said
damage occurred. Tenant shall notify Landlord in writing of its decision to
terminate this Lease within thirty (30) days after delivery of the Damage
Estimate to Tenant ("Tenant's Notice Period"). Tenant's failure to terminate
this Lease by written notice of termination delivered to Landlord within
Tenant's Notice Period shall be conclusively construed as Tenant's agreement for
this Lease to continue; subject, however, to Landlord's right to terminate this
Lease by written notice delivered to Tenant within thirty (30) days after the
expiration of Tenant's Notice Period. If neither party terminates this Lease,
then Landlord shall commence restoration, and Rent shall abate to the extent
described in Subsection (c) below.
(c) If the damages are such as to render the Premises or a portion
thereof uninhabitable, as reasonably determined by Landlord, Rent shall abate in
proportion to the portion of the Premises affected by such damage or of which
Tenant has been deprived use as a result of such damage or reconstruction, as
reasonably determined by Landlord. Such abatement shall commence as of the date
of such damage and end when restoration of the
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Premises is substantially completed or Tenant's operations are totally or
partially resumed, whichever is earlier.
12.2 Uninsured Casualty. If damage or destruction of all or any portion
of the Premises is not fully covered by insurance proceeds received by Landlord,
Landlord shall have the right to terminate this Lease by written notice of
termination delivered to Tenant within thirty (30) days after Landlord has been
notified in writing that said damage or destruction is not covered by insurance.
In such case, this Lease shall terminate as of the date specified in Landlord's
notice to Tenant.
12.3 Mortgagee's Right. If the holder of any indebtedness secured by a
mortgage covering the Premises requires that the insurance proceeds be applied
to such indebtedness, then Landlord shall have the right to terminate this Lease
by written notice of termination delivered to Tenant within thirty (30) days
after such requirement has been made in writing upon Landlord. In such case,
this Lease shall terminate as of the date specified in Landlord's notice to
Tenant.
12.4 Damage Near End of Term. Notwithstanding any provision of this
Lease to the contrary, Landlord shall not have any obligation whatsoever to
repair, reconstruct or restore the Premises when the damage or destruction
occurs during the last year of the Term of this Lease. In such event, Landlord
shall have the option to terminate this Lease in which case Rent shall abate as
of the date said damage occurred.
12.5 Tenant's Compensation/Liability. In no case shall Tenant be
compensated by Landlord for damages or loss in the use of the Premises or for
any inconvenience occasioned by such damage or restoration or for any theft,
vandalism, or malicious mischief suffered in or at the Premises. Notwithstanding
Section 11.5, if any damage is caused by the negligence or improper conduct of
Tenant or any of Tenant's employees, agents, contractors, licensees or invitees,
Tenant shall be responsible for all damages not covered by insurance, including
without limitation, any deductible paid by Landlord and Rent through the Term
hereof, even if this Lease shall have been terminated.
13. EMINENT DOMAIN.
13.1 Termination Rights. If through the exercise of the power of eminent
domain, all or such portion of the Premises is taken as, in the reasonable
determination of Landlord, substantially impairs Tenant's use of the Premises
("Substantial Taking"), then either party shall have the right to terminate this
Lease effective as of the date that possession is required to be surrendered to
said authority. Such termination right shall be exercised by written notice
delivered to the other party within thirty (30) days after delivery of
Landlord's notice to Tenant of a Substantial Taking. The failure of Tenant or
Landlord to deliver termination notice within the time limit set forth above
shall be conclusively construed as such party's agreement for this Lease to
continue.
13.2 Repair and Rent Adjustment. If a Substantial Taking is not deemed
to have occurred or if neither party terminates this Lease under subsection 13.1
above, Landlord
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shall promptly restore the Premises to substantially the same condition prior to
such condemnation (less the portion thereof lost in such condemnation), but
without obligation to do so until Landlord receives the compensation awarded to
Landlord on account of such taking and confirmation from all holders of
mortgages on the Premises that the award shall be made available to Landlord for
restoration. If the compensation awarded to Landlord is inadequate to fully
cover the cost of necessary repairs or restorations, Landlord may terminate this
Lease. If this Lease is not terminated by Landlord, then Base Rent shall be
proportionately reduced by the portion of the Premises taken by the exercise of
eminent domain, as reasonably determined by Landlord. Such adjustment shall be
effective as of the date possession is required to be surrendered to the eminent
domain authority.
13.3 Condemnation Awards. Tenant shall not be entitled to receive any
part of any award or awards that may be made to or received by Landlord relating
to loss of the Premises or any part thereof, and Tenant hereby assigns to
Landlord any share of such award as may be granted to Tenant. Notwithstanding
the foregoing, Tenant, at its sole cost and expense, may pursue independent
proceedings against the authority exercising the power of eminent domain to
prove and establish any damage Tenant may have sustained relating to Tenant's
business and relocation expenses, provided any such compensation does not
diminish Landlord's award.
13.4 Mortgagee's Rights. If the holder of any indebtedness secured by a
mortgage covering the Premises requires that the condemnation award be applied
to such indebtedness, then Landlord shall have the right to terminate this Lease
by written notice of termination delivered to Tenant within thirty (30) days
after such requirement has been made in writing upon Landlord. In such case,
this Lease shall terminate as of the date specified in Landlord's notice to
Tenant.
14. NONLIABILITY AND INDEMNIFICATION OF LANDLORD.
14.1 Release. Tenant hereby agrees that Landlord shall not be liable to
Tenant and hereby releases Landlord for all liability to Tenant for injury to
any person (including bodily damage or death) or damage to any property
(including real or personal property), happening in any manner in, on or about
the Premises from any cause whatsoever, unless caused solely by the gross
negligence or willful misconduct of Landlord, but Landlord shall not be liable
to Tenant for any such damage or loss to the extent that Tenant is compensated
therefor by Tenant's insurance or would have been compensated therefor under
policies which Tenant is required to carry under this Lease. In no event,
however, shall Landlord be liable for consequential damages. Tenant agrees to
the foregoing and makes the foregoing release on behalf of Tenant and any party
claiming a right or interest through Tenant, including without limitation
Tenant's agents, contractors, subcontractors, employees, licensees, or invitees
(collectively, "Tenant's Agents").
14.2 Indemnification. Tenant shall indemnify, defend (with legal counsel
selected by Landlord), and hold harmless Landlord, and Landlord's employees and
agents, from and against liability whatsoever which may be imposed upon,
incurred by, or asserted against Landlord, or Landlord's employees or agents, by
reason of any of the following which shall occur during the Term of this Lease:
(a) use of the Premises by Tenant or Tenant's Agents; (b) any Tenant's Work done
in, on or about the Premises (including without limitation as a result of
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defect in design, material or workmanship) made by, or at the direction of
Tenant or Tenant's Agents; (c) any accident, injury or damage to persons
(including bodily injury and death) or property (real or personal) occurring in,
or about the Premises, but not if caused solely by the gross negligence or
willful misconduct of Landlord, or Landlord's employees or agents; and (d) any
failure on the part of Tenant to perform or comply with any provision of this
Lease. Without limiting the generality of the foregoing, Tenant's obligations
hereunder shall include all damages, obligations, penalties, fines, liens,
claims, reasonable fees for legal counsel selected by Landlord, investigation
costs, remediation costs and all other reasonable costs and expenses incurred by
Landlord, or Landlord's employees or agents. Tenant shall not settle or
compromise any such liability for which indemnification is sought hereunder
without first obtaining Landlord's prior written consent, which Landlord may
withhold in its sole discretion.
14.3 Limitation on Landlord's Liability. The liability of Landlord to
Tenant or anyone claiming by or through Tenant shall be limited to Landlord's
interest in the Premises. The foregoing shall be absolute and without exception
whatsoever.
14.4 Survival. This Section 14 shall survive the termination of this
Lease with respect to any damage, injury, death or claim occurring before such
termination, irrespective of when such claim is presented.
15. ASSIGNMENT AND SUBLEASING.
15.1 General Provisions.
(a) Tenant shall not sell, assign, mortgage, pledge or otherwise
transfer this Lease or Tenant's interest in the Premises (or any part thereof)
nor shall Tenant sublease or permit occupancy of the Premises (or any part
thereof) by any party other than Tenant, without Landlord's prior written
consent which Landlord may withhold in its sole discretion. For purposes of this
Lease, any merger, consolidation, or sale or transfer of a controlling interest
in Tenant (being 51% or more, whether accomplished in a single transaction or in
a series of transactions) or a sale of substantially all of the assets of Tenant
shall be deemed an assignment of this Lease. All of the foregoing events
described in this Section shall be deemed to be a "Transfer," and any purported
Transfer undertaken without Landlord's consent shall be void at Landlord's
option and constitute an Event of Default hereunder.
(b) Each request for Landlord's consent shall be in writing and shall
identify in reasonable detail (1) the identity, business and financial condition
of the proposed subtenant or assignee, (2) the terms and conditions of the
proposed Transfer, and (3) the nature of the use of the Premises proposed by
such assignee or subtenant. Tenant shall deliver such further information as
Landlord may request to make its decision.
(c) If Landlord consents to any Transfer, Landlord shall be provided
with a written agreement which is acceptable in form and content to Landlord and
by which the transferee assumes all obligations of Tenant hereunder. No Transfer
shall relieve Tenant of any obligation under this Lease unless otherwise agreed
in writing signed by Landlord, and any purported Transfer undertaken without
Landlord's consent shall be void at Landlord's option and
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constitute an Event of Default hereunder. Landlord's consent to any Transfer
shall not constitute a waiver of the necessity of such consent to any subsequent
Transfer.
(d) The prohibitions in this Lease against Transfers shall be
construed to include assignments by operation of law or by voluntary
assignment or for the benefit of creditors or which might otherwise be affected
or accomplished by bankruptcy, receivership, attachment, execution or other
judicial process or proceeding. If any such assignment shall be made or deemed
made by Tenant, then Landlord shall have the option to immediately terminate
this Lease by written notice to Tenant.
(e) Tenant shall pay all of Landlord's expenses (including reasonable
fees for legal counsel) incurred in connection with any request for Landlord's
consent to a Transfer.
16. DEFAULT OF TENANT.
16.1 Events of Default. In addition to Events of Default specified in
other sections of this Lease, the occurrence of any of the following shall be a
default by Tenant, and each shall constitute an "Event of Default" hereunder
without notice from Landlord unless expressly required herein:
(a) Tenant shall fail to pay Rent on its due date or shall fail to
make any other payment when required pursuant to this Lease (regardless
of whether or not any legal or formal demand has been made therefor);
(b) Tenant shall violate or fail to perform any of the terms,
conditions, covenants or agreements herein made by Tenant (other than those set
forth in subsections 16.l(a) and (c)-(g) inclusive or where expressly declared
to be an immediate default in other sections of this Lease) within thirty (30)
days after written notice thereof from Landlord;
(c) Tenant shall abandon or vacate any substantial portion of the
Premises, whether or not Tenant is in default of the payments of Rent hereunder,
and such abandonment or vacation shall continue for a period of five (5)
business days after written notice thereof to Tenant by Landlord, which may be
accomplished by sending notice to last known address of Tenant and posting
notice on the door of the Premises:
(d) Tenant shall be adjudicated a bankrupt or file a voluntary
petition in any bankruptcy or insolvency proceeding, or if any
involuntary petition in any bankruptcy or insolvency proceeding shall be filed
against Tenant and not discharged by Tenant within sixty (60) days from the date
of filing;
(e) Tenant shall make or consent to an assignment for the benefit of
creditors or a common law composition of creditors, without the prior written
consent of Landlord;
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(f) A receiver or trustee shall be appointed for all or substantially
all of Tenant's assets; and/or
(g) Tenant shall make a transfer in fraud of creditors.
16.2 Remedies. Upon the occurrence of any Event of Default, Landlord
shall have the option to pursue any and all rights and remedies available herein
or at law or in equity, without any notice or demand whatsoever, including
without limitation: Upon the occurrence of any Event of Default, Landlord shall
have the following rights and remedies which shall be cumulative and are in
addition to any other remedies available by law or equity:
(a) Lease Termination. Landlord shall have the right to immediately
terminate this Lease and all rights of Tenant hereunder, in which event Tenant
shall immediately surrender the Premises to Landlord. If Tenant fails to do so,
Landlord may, without notice and without prejudice to any other remedy Landlord
may have, enter upon and take possession of the Premises and expel or remove
Tenant and its effects without being liable to prosecution or any claim for
damages therefor and Tenant shall indemnify Landlord for all loss and damages
which Landlord may suffer by reason of such termination, whether through
inability to relet the Premises or otherwise, including loss of Rent for the
remainder of the Term and any exercised renewals.
(b) Rent Acceleration. Landlord shall have the right to declare Rent
for the unexpired portion of the Term (without regard to any early
termination of the Term by virtue of an Event of Default) immediately due and
payable. Rent so accelerated shall include Landlord's good faith estimate of all
amounts due as Additional Rent for the unexpired Term of this Lease which
Landlord may base on the highest monthly rate or amount in effect during the
twelve (12) months immediately preceding the Event of Default. Accelerated Rent
shall accrue interest at the Interest Rate from the date of Landlord's
acceleration until paid in full.
(c) Option to Rent. Landlord, with or without terminating this Lease,
shall have the right (but not the obligation) to relet the Premises or any part
thereof for such Rent and upon such terms as Landlord deems appropriate. Tenant
shall remain liable for any deficiency between the Rent collected by Landlord on
account of such reletting and the Rent due hereunder, along with all expenses
incurred by Landlord in connection with such reletting, including without
limitation, costs of cleaning, painting, repairing or refitting the Premises,
advertising, broker fees, municipal fees, and legal fees for preparation and
negotiation of the replacement lease. Landlord shall have the right to bring
suit for collection of such deficiency on a monthly basis or delay such
collection action until the expiration of the Term of this Lease, in which event
Tenant hereby agrees that the cause of action shall not be deemed to have
accrued until the date originally scheduled for expiration of the Term of this
Lease. In no event, however, shall Tenant be entitled to any rent received by
Landlord in excess of amounts due hereunder.
(d) Dispossession. The provisions of this Section 16 shall
automatically operate as a notice to quit (any notice to quit, or of Landlord's
intention to re-enter,
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being hereby expressly waived), and Landlord may proceed to recover possession
under and by virtue of the laws of the jurisdiction where the Premises are
located.
(e) Waiver of Redemption Rights. Tenant hereby expressly waives any
and all rights of redemption granted by or under any present or future
law in the event this Lease is terminated or Tenant is evicted or dispossessed
following an Event of Default.
(f) Removal of Contents by Landlord. Landlord shall have the right,
with or without terminating this Lease, to re-enter the Premises and
remove all persons and property from the Premises. All property removed by
Landlord may be stored in a public warehouse or elsewhere at the cost of and for
the account of Tenant, without service of notice or resort to legal process (all
of which Tenant expressly waives), and Landlord shall have no liability
whatsoever to Tenant therefor, including without limitation liability for
trespass or conversion.
16.3 No Waiver or Adverse Interpretation of Actions. No waiver by
Landlord of any breach of any covenant, condition or agreement herein contained
shall operate as a waiver of such covenant, condition, or agreement, or of any
subsequent breach thereof. No payment by Tenant or receipt by Landlord of a
lesser amount than the Rent herein stipulated shall be deemed to be other than
on account of Rent, nor shall any endorsement or statement on any check or
letter accompanying a check for payment of Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or to pursue any other
remedy provided in this Lease. Payment received by Landlord when Tenant is in
arrears shall be applied as Landlord determines. No re-entry, re- letting or
taking of possession of the Premises by Landlord, and no acceptance by Landlord
of keys from Tenant shall be considered Landlord's acceptance of a surrender of
this Lease nor Landlord's election to terminate this Lease unless written notice
signed by Landlord which expressly states such intention is given to Tenant or
unless the termination thereof is decreed by a court of competent jurisdiction,
and Tenant's liability under this Lease shall continue until the Term would have
expired had such termination not occurred. No action shall be construed to
impose upon Landlord a duty to mitigate damages, and Landlord and Tenant agree
that Landlord has no duty to mitigate damages following Tenant's default.
16.4 Right of Landlord to Cure Tenant's Default. Whenever Tenant
defaults in the making of any payment required hereunder or in the doing of any
act herein required to be made or done by Tenant, then Landlord, without prior
notice to Tenant, may make such payment or do such act on Tenant's behalf but
shall not be required to do so. All costs incurred by Landlord to satisfy
Tenant's obligations, including without limitation payment of any penalty or
fine which may be imposed as a result of Tenant's failure or violation, shall be
paid by Tenant as Additional Rent within ten (10) business days after Landlord's
demand therefor. The making of such payment or the taking of such action by
Landlord shall not operate to cure or waive such default by Tenant nor prevent
Landlord from exercising any other remedy available to Landlord.
16.5 Collection Expenses. If Landlord consults an attorney or collection
agency for the collection of any sums due from Tenant or otherwise to enforce
Tenant's performance hereunder, Tenant, whether or not proceedings are
instituted, shall reimburse Landlord for the
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reasonable fees for legal counsel, collection fees and court costs, if any,
incurred by Landlord within ten (10) business days after Landlord's demand
therefor.
17. SURRENDER AT LEASE TERMINATION. Upon the scheduled expiration or
earlier termination of this Lease, Tenant shall promptly surrender to Landlord
the Premises, together with all building apparatus, machinery, replacements to
mechanical and other systems serving the Premises, Tenant's Work performed
during the Term and any fixtures installed by Tenant other than Tenant's trade
fixtures, except for items which Landlord, in writing, may have permitted or
required Tenant to remove at the termination of this Lease. Tenant shall return
the Premises in substantially the same condition as the Premises were delivered
to Tenant at the commencement of this Lease, reasonable wear and tear accepted.
18. HOLDING OVER. If Tenant shall not immediately surrender the Premises
on the scheduled expiration or earlier termination of this Lease, then, in
addition to all remedies available to Landlord for Tenant's default, Tenant, as
a result of such holding over, shall become a tenant at will, at twice (2x) the
monthly installment of Base Rent due for the last month of the Term of this
Lease together with all Additional Rent due hereunder, and otherwise upon the
terms, conditions, covenants and agreements of this Lease. Tenant also shall be
liable to Landlord for all damages which Landlord suffers because of any holding
over by Tenant, and Tenant shall indemnify Landlord against all claims made by
any other tenant or prospective tenant against Landlord resulting from delay in
delivering or inability to deliver possession of the Premises to such other
tenant or prospective tenant.
19. SUBORDINATION, NONDISTURBANCE AND ATTORNMENT.
19.1 Estoppel Certificate. Within ten (10) business days after
Landlord's request, Tenant shall provide an estoppel certificate in recordable
form certifying (if such be the case) that this Lease is in full force and
effect and that there are no defenses or offsets thereto, or stating those
claimed by Tenant, along with such other information as Landlord reasonably may
request. Tenant's failure to deliver such statement within the time required
shall be conclusive evidence of Tenant's certification that this Lease is in
full force and effect, that there are no defenses or offsets thereto, and of
such other information as Landlord has reasonably requested.
19.2 Attornment. Tenant shall attorn to any mortgagee or purchaser of
the Premises.
19.3 Subordination. Tenant's rights hereunder are subordinate to the
lien of any mortgage or mortgages, or to the lien resulting from any other
method of financing or refinancing, or to any ground lease, now or hereafter in
force against the land of which the Premises are a part, to all advances made
upon the security thereof, and to all renewals, extensions or modifications
thereof. Regardless of the self-operating provision of this Section, if a
prospective mortgagee or ground lessee requests Tenant to sign a subordination
agreement, Tenant shall do so promptly.
19.4 Rights of Mortgagee. If any act or omission of Landlord hereunder
which would give Tenant the right to cancel or terminate this Lease, or to claim
a total or partial
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eviction, Tenant shall not exercise such right (a) until it has given written
notice of such act or omission to the holder if each mortgage and ground lessee
whose name and address shall have been furnished previously to Tenant in
writing, and (b) until a reasonable period for remedying such default shall have
elapsed following the giving of such notice.
20. SUBDIVISION, EASEMENTS AND LICENSES. Tenant's use of the Premises
shall be subject to all covenants, conditions, easements and restrictions now or
hereafter affecting or encumbering the land on which same are located. Landlord
reserves the right to (a) subdivide the land on which the Premises are located,
(b) alter the boundaries of the land on which the Premises are located, (c)
grant easements on the land on which the Premises are located and dedicate for
public use portions thereof and (d) grant licenses creating rights to use the
rooftop of the Premises and utility lines serving the Premises; provided,
however, that no such action shall materially interfere with Tenant's Permitted
use of the Premises. Tenant hereby consents, and subordinates this Lease, to
such subdivision, boundary revision, and/or grant or dedication of easements and
agrees from time to time, at Landlord's request, to execute, acknowledge and
deliver to Landlord, in accordance with Landlord's instructions, all documents
or instruments necessary to effectuate Tenant's consent thereto.
21. LIMITED ATTORNEY-IN-FACT. If Tenant shall fail to execute any such
instruments or certificates to carry out the intent of Sections 19 or 20 within
ten (10) business days after Landlord's written request for Tenant to execute
such instruments or certificates, then Tenant hereby irrevocably appoints
Landlord as attorney-in-fact for Tenant with full power and authority to execute
and deliver in the name of Tenant any such instruments or certificates.
22. LANDLORD'S COVENANT OF QUIET ENJOYMENT. Landlord covenants that
Tenant, and all those claiming through Tenant and permitted hereunder, shall
have quiet and peaceable enjoyment of the Premises by and through Landlord
provided Tenant, and all those claiming through Tenant and permitted hereunder,
are not in default of this Lease.
23. LANDLORD RIGHT OF ENTRY. Landlord shall have the right to place on
any portion of the Premises signs or billboards indicating that the Premises are
"For Sale" or "For Rent," but such signs shall be of such size and so placed as
not to materially interfere with Tenant's Permitted Use of the Premises. At all
times during this Lease, Landlord, and Landlord's agents, upon reasonable notice
to Tenant, shall be admitted to the Premises at reasonable hours of the day to
view the Premises, including without limitation, the right to show the Premises
to prospective purchasers, mortgagees, tenants or contractors.
24. RULES AND REGULATIONS. At all times during the Term, Tenant shall
comply with, and cause Tenant's Agents to comply with, all rules and regulations
set forth in Exhibit A attached hereto and made a part hereof, together with
such amendments and supplements thereto as Landlord may from time to time
reasonably adopt.
25. FINANCIAL STATEMENTS. Tenants shall, at the request of the Landlord,
furnish its current financial statements certified by Tenant's chief financial
officer and, if applicable, such annual or quarterly reports as Tenant may file
with the Securities and Exchange
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Commission or any other government agency. Such financial statements shall be
prepared in accordance with generally accepted accounting principles.
26. CORPORATE AUTHORITY. Tenant represents that the person who executed
this Lease on Tenant's behalf has been duly authorized to enter into this Lease
and that the execution and consummation of this Lease by Tenant does not and
shall not violate any provision of any by-laws, certificate of incorporation, or
other agreement, order, judgment, governmental regulation or any other
obligations to which Tenant is a party or is subject.
27. CHANGE IN OWNERSHIP. If the Premises are sold, or in the event of
any change of legal title or equitable ownership thereof, all obligations and
rights of Landlord hereunder shall be transferred to such purchaser or
transferee, and Landlord's obligations shall terminate and Landlord shall be
released and relieved from all liability and responsibility to Tenant. Tenant
shall look solely to such purchaser or transferee for the performance of said
obligations or for the enforcement thereof. Each purchaser of assignee shall in
turn have like privileges of sale, assignment and release.
28. SUCCESSORS AND ASSIGNS. This Lease shall inure to the benefit of and
shall bind the parties hereto and their respective heirs, successors and
permitted assigns to the extent that such rights hereunder may succeed and be
assigned according to the terms hereof.
29. NOTICE. All notices, demands and communications required or permitted
by this Lease shall be effective only if in writing (unless otherwise provided
herein) and shall be sent by United States certified mail, return receipt
requested or overnight mail deposited with a nationally recognized carrier with
a receipt therefor, postage prepaid in each case and using the address for such
recipient designated below or such other address as either party may have
furnished to the other in accordance with this Section. Any notice so provided
shall be deemed to have been delivered upon the earlier of (a) actual receipt,
or (b) two (2) business days after mailing by certified mail, return receipt
requested, or (c) one (1) business day after depositing with a nationally
recognized carrier. Initial notice addresses for Landlord and Tenant are as
follows:
If to Landlord: Harry and Karen Muhlschlegel
4 Stag Leap Court
Tabernacle, NJ 08088
If to Tenant: Jevic Transportation, Inc.
___ Ironside Court
Willingboro, NJ 08080
30. SEVERABILITY. If any term, covenant, condition of provision of this
Lease, or the application thereof to any person or circumstance, shall to any
extent be held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, covenants, conditions or provisions
of this Lease, or the application thereof to any person or circumstance, shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
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31. ENTIRE AGREEMENT AND GOVERNING LAW. This Lease is the entire agreement
of Landlord and Tenant and shall be governed and construed in accordance with
the laws of the state in which the Premises are located. This Lease shall not be
amended or supplemented unless by written agreement signed by Landlord and
Tenant.
32. WAIVER OF TRIAL BY JURY. LANDLORD AND TENANT EACH WAIVE TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES
AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE
AND OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.
IN WITNESS WHEREOF, and intending to be legally bound, Landlord and Tenant
have caused this Lease to be duly executed under seal, as of the day and year
first above written.
LANDLORD
- ---------------------- ---------------------------------
Date Harry Muhlschlegel
- ---------------------- ---------------------------------
Date Karen Muhlschlegel
TENANT
Jevic Transportation, Inc.
By:
- --------------------- -----------------------------
Date Print Name:
Title:
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EXHIBIT A
RULES AND REGULATIONS
---------------------
Unless otherwise provided herein, capitalized terms shall have the definition
provided in the Lease.
1. The water, bathroom, and other plumbing fixtures shall not be used for any
purposes other than those for which they were constructed, and no
sweepings, rubbish, rags, or other substances shall be thrown therein.
2. No animals of any kind (other than guide dogs for the visually impaired)
shall be brought into or kept about the Premises.
3. Tenant shall immediately notify Landlord of any serious breakage, fire or
disorder which comes to its attention in the Premises.
4. Tenant shall not re-key the Premises or add additional locks or security to
the Premises without the prior written consent of Landlord and provision to
Landlord of the new keys and security codes.
TAX INDEMNITY AGREEMENT
THIS TAX INDEMNITY AGREEMENT is made this ___ day of September, 1997,
by and among JEVIC TRANSPORTATION, INC., a New Jersey corporation (the
"Company") , and each of the Company's shareholders (collectively, the
"Shareholders" and each individually a "Shareholder").
W I T N E S S E T H:
WHEREAS, the Company filed an election prior to March 15, 1990, with
the Internal Revenue Service to be taxed as an "S" corporation under Subchapter
S of the Internal Revenue Code of 1986, as amended (the "Code") and under
similar provisions of state and local tax laws;
WHEREAS, for the period (the "S Corporation Period") commencing on
January 1, 1990 until the close of business on the Termination Date (as
hereinafter defined), the Company will have been taxed as an "S" corporation
under Subchapter S of the Code and under similar provisions of applicable state
and local tax laws;
WHEREAS, for Federal and certain state and local income tax purposes,
the Company's items of income, loss and deductions were passed through to and
reported on the individual tax returns of the Shareholders;
WHEREAS, as a result of the initial public offering ("Public Offering")
of the Company's common stock, no par value per share ("Common Stock"), the
Company will no longer be eligible to be taxed as an S corporation for Federal
and certain state and local income tax purposes; and
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WHEREAS, the parties to this Agreement recognize that the election of
the Company to be taxed under Subchapter S of the Code will terminate
automatically at the close of business on the day (the "Termination Date")
immediately preceding the closing ("Closing") of the Public Offering; and
WHEREAS, the parties to this Agreement desire to set forth their
agreement with respect to certain taxes (and related liabilities) which may be
imposed upon the Shareholders or the Company as a result of the invalidity or
termination of the Company's S corporation election or the conduct of the
Company's business during the S Corporation Period;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Prior to consummation of the Public Offering, the Company will
distribute to the Shareholders the sum of $10,000,000 to shareholders of record
as of August 11, 1997. In addition, the Company will make additional
distributions to the Shareholders for the purpose of providing the Shareholders
with sufficient funds to pay their estimated income tax liabilities attributable
to the Company's taxable income earned in 1997 prior to the Closing. Such
distributions (collectively, the "Distributions") were made on a pro rata basis
in accordance with the number of shares of Common Stock owned by each
Shareholder on the respective record date or date of distribution, as the case
may be.
2. a. The Company agrees to indemnify, defend and hold harmless each
Shareholder, from and against any and all losses, liabilities, obligations,
damages, impositions, assessments, fines, deficiencies, costs and expenses,
including without limitation, attorneys' and
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<PAGE>
accountants' fees and expenses (collectively, a "Loss") with respect to all
Federal, state, city, or municipal taxes of any kind whatsoever including
interest, penalties, and additions to taxes (collectively, "Taxes") imposed upon
a Shareholder as a result of an adjustment or change, including any increase in
items of income or gain or any decrease in items of loss, deduction, or credit
reported to such Shareholder by the Company with respect to the Company's S
Corporation Period, but only to the extent that such adjustment or change
consists of: (i) an increase in an item of the Company's income or gain with
respect to one or more of the taxable years of the Company (including short
taxable years) falling within the Company's S Corporation Period ("S Years") and
a corresponding decrease in an item of income or gain with respect to one or
more of the taxable years of the Company (including short taxable years) falling
outside of the Company's S Corporation Period ("C Years"); or (ii) a decrease in
an item of loss, deduction, or credit reported to a Shareholder by the company
with respect to one or more of the Company's S Years and a corresponding
increase in an item of loss, deduction, or credit with respect to one or more of
the Company's C Years. Any payment with respect to a Loss for Taxes shall be
paid in cash by the Company no later than ten days prior to the due date of any
payment required to be made by the Shareholder with respect to such Taxes.
b. In the event any Taxes as to which an amount shall have been
paid to a Shareholder by the Company pursuant to Section 2(a) are subsequently
refunded or repaid to such Shareholder, such Shareholder agrees to repay to the
Company such refund or repayment, less any net tax cost incurred by the
Shareholder with respect to such amounts.
c. Each Shareholder agrees to prepare his income tax returns with
respect to the calendar year in which the Termination Date occurs consistent
with the manner in
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<PAGE>
which each item of income, loss, deduction and credit of the Company is reported
by the Company to each such Shareholder.
3. a. The Shareholders, individually on a pro rata basis in accordance
with the number of shares of Common Stock owned by each Shareholder on the
Termination Date, agree to indemnify, defend and hold harmless the Company, from
and against any and all Losses with respect to Taxes imposed upon the Company as
a result of an adjustment or change, including any increase in items of income
or gain or any decrease in items of loss, deduction or credit of the Company,
whether before, during or after the Company's S Corporation Period, but only to
the extent that such adjustment or change (i) results from the invalidity or
termination of the Company's S corporation election for any reason other than
the Public Offering, or (ii) consists of: (A) an increase in an item of the
Company's income or gain in any C Year and a corresponding decrease in an item
of income or gain reported to the Shareholders by the Company with respect to an
S Year; or (B) a decrease in an item of loss, deduction, or credit reported by
the Company in any C Year and a corresponding increase in an item of loss,
deduction, or credit with respect to an S Year. Any payment with respect to a
Loss for Taxes shall be paid in cash by the Shareholders no later than ten days
prior to the due date of any payment required to be made by the Company with
respect to such Taxes.
b. The obligation of the Shareholders to indemnify the Company under
Section 3(a)(i) shall be limited in amount to the refund of Taxes received (or
increases in net operating losses incurred) by such Shareholder as a result of
the termination or invalidity of the S corporation election. Each Shareholder
agrees that if the Company does or is to realize a Loss with respect to Taxes
because of the termination or invalidity of the S corporation election,
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<PAGE>
such Shareholder will use his or her best efforts to file all necessary amended
tax returns to claim all available refunds (or to achieve an increase in net
operating loss carry forward).
c. In the event any Taxes as to which an amount shall have been
paid to the Company by the Shareholders pursuant to Section 3(a) are
subsequently refunded or repaid to the Company, the Company agrees to repay to
the Shareholders such refund or repayment, less any net tax cost incurred by the
Company with respect to such amounts.
d. In the event that the S corporation election of the Company is
terminated during the S Corporation Period for any reason other than the Public
offering, each of the Shareholders and the Company agrees to take such steps as
are reasonably necessary to obtain relief from the effects of such termination
pursuant to Section 1362(f) of the Code and the regulations thereunder.
4. a. Any Shareholder receiving notice of an intention by a taxing
authority to audit any return of the Shareholder or the Company which includes
any item of income, gain, deduction, loss, or credit reported by the Company
with respect to any S Year shall inform the Company, in writing, of the intended
audit within 15 days after receipt of such notice. Should the Company receive
notice of an intention by a taxing authority to audit any return of the Company
which includes any item of income, gain, deduction, loss, or credit reported by
the Company with respect to any S Year shall inform the Shareholders, in
writing, of the intended audit within 15 days after receipt of such notice.
b. On behalf of all Shareholders, the Shareholder with the largest
percentage interest in the outstanding stock of the Company on the Termination
Date shall be responsible for management and supervision of such audit of the
Company (the "Managing
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<PAGE>
Shareholder"). The Company shall cooperate with such audit by, without
limitation, organizing and making available all books and records of the Company
and participating, on a reasonable basis, in meetings and correspondence with
the taxing authority. The cost of professional assistance, including independent
accountants and attorneys hired by any or all of the Shareholders in the course
of the audit shall be borne by such Shareholder or Shareholders. The Company
shall have the right to participate in the audit, directly or through its
representatives, at its expense, and the Managing Shareholder shall keep the
Company informed of all meetings, correspondence and other procedural aspects of
the audit.
c. Any Shareholder (a "Notified Shareholder") receiving notice from
a taxing authority of any proposed adjustment for which the Company may be
required to indemnify the Notified Shareholder for any Loss for Taxes under
Section 2(a) (a "Proposed Adjustment") must give notice to the Company of the
Proposed Adjustment within 15 days after receipt of such notice from a taxing
authority. A failure on the part of a Notified Shareholder to provide such
notice to the Company on a timely basis shall not relieve the Company of its
obligation of indemnification under Section 2(a) unless such failure materially
prejudices the ability of the Company to cause the Proposed Adjustment to be
contested. The Company may, based on the procedural rules then in effect either
contest such Proposed Adjustment or upon giving written notice to the Notified
Shareholder, request that the Notified Shareholder contest such Proposed
Adjustment. If the Company shall contest such Proposed Adjustment itself, the
Company shall bear all associated costs. If the Company shall request that any
Proposed Adjustment be contested by the Notified Shareholder, then the Notified
Shareholder shall, at the Company's expense, contest (or engage representatives
to contest) the Proposed Adjustment or
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<PAGE>
permit the Company and, its representatives, at the Company's request, to
contest the Proposed Adjustment (including pursuing all administrative and
judicial appeals and processes). The Company shall pay to the Shareholders on
demand all costs and expenses (including attorneys' and accountants' fees) that
the Shareholders may incur in contesting such Proposed Adjustments.
d. Without regard to any other provisions of this Agreement, the
Shareholders shall not make, accept or enter into a settlement or other
compromise with respect to any Taxes of the Company, which could be the subject
of indemnification (whether by the Shareholders or the Company), or forego or
terminate any proceeding relating to a proposed adjustment without the consent
of the Company, which shall not be unreasonably withheld or delayed.
e. Procedures similar to those set forth in Section 4(c) shall apply
to any Proposed Adjustment with respect to which the Shareholders may be
obligated to indemnify the Company with respect to any Loss for Taxes under
Section 3; provided, however, that the Company shall have the right to require
the Shareholders, at the Shareholders' expense, to contest any proposed
adjustment that results from an assertion that there was a termination of the S
corporation election or that it was invalid during any time in the S Corporation
Period until a final judicial determination is reached as to the status of the S
corporation election for the relevant time period. The Company shall not
exercise such right if, in the judgment of the Company, there is no reasonable
basis for contesting the assertion that the S election terminated or was
invalid. Should the validity or termination of the S corporation election be
raised in any audit with respect to Taxes, each Shareholder shall take all
necessary steps to extend the time
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<PAGE>
period for which such Shareholder could file an amended tax return relating to
the period for which the S corporation election is in question.
f. Nothing in this Section 4 shall limit the Company's or the
Shareholders' obligation to indemnify the other party pursuant to Sections 2 or
3 hereof if the indemnifying party decides not to contest, or abandons its prior
decision to contest, a Proposed Adjustment.
5. The Company shall elect and the Shareholders shall consent, pursuant
to Section 1362(e)(3) of the Code, to allocate tax items to its short taxable
year ending on the Termination Date and its short taxable year beginning after
the Termination Date pursuant to as if the tax year had ended on the Termination
Date (the "closing of the books method").
6. The covenants and agreements of the parties set forth in this
Agreement shall survive indefinitely.
7. All notices, requests, demands and other communications which are
required or which may be given under this Agreement shall be in writing.
8. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof.
9. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
10. No provision of this Agreement may be amended, waived or otherwise
modified without the prior written consent of each of the parties hereto.
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11. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same
instrument. This Agreement shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.
12. This Agreement shall be effective upon the Termination Date.
13. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New Jersey, without reference to the
principles of conflicts of law.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
JEVIC TRANSPORTATION, INC.
By: ___________________________
-------------------------------
Harry J. Muhlschlegel
-------------------------------
Karen B. Muhlschlegel
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BOWKER, BROWN & CO.
- --------------------------------------------------------------------------------
INTERMEDIARY AGREEMENT
This agreement confirms the understanding between Bowker, Brown &
Co., (Consultant) and JEVIC Transportation, Inc. (Buyer) in regard to the
possible acquisition of stock or assets of M.M.S. Trucking, Inc. Sprinfield,
OH brought forward by Bowker, Brown & Co. It is understood that Consultant
will act only on behalf of Buyer as Buyer's agent and only in the interest
of Buyer, until such time as Buyer withdraws from active consideration of the
acquisition.
In the event an acquisition or merger is consummated by the Buyer, or a
business the Buyer controls, the Buyer agrees to pay a fulfillment fee to the
Consultant, as a Buyer disbursement at closing, in the amount of 7% of the
purchase price.
The full amount of the fee will apply whether the purchase is for all
assets or stock or less than the total, and regardless of the method of payment;
whether it be stock, cash, notes or other debt instruments, covenants not to
compete or deferred compensation to the owner.
Accepted: JEVIC Transportation, Inc.
By: /s/ Title: /s/
----------------------------- ---------------------------
Date: April 1997 SIGNATURES ON FILE
3926 South Nine Drive
Valrico, FL 33594
Phone 813 654 8400
Fax 813 654 8994
BOWKER, BROWN & CO.
- --------------------------------------------------------------------------------
INTERMEDIARY AGREEMENT
This agreement confirms the understanding between Bowker, Brown &
Co., (Consultant) and JEVIC Transportation, Inc. (Buyer) in regard to the
possible acquisition of stock or assets of BOSTON BUFFALO EXPRESS, INC.
brought forward by Bowker, Brown & Co. It is understood that Consultant
will act only on behalf of Buyer as Buyer's agent and only in the interest
of Buyer, until such time as Buyer withdraws from active consideration of the
acquisition.
In the event an acquisition or merger is consummated by the Buyer, or a
business the Buyer controls, the Buyer agrees to pay a fulfillment fee to the
Consultant, as a Buyer disbursement at closing, in the amount of 7% of the
purchase price.
The full amount of the fee will apply whether the purchase is for all
assets or stock or less than the total, and regardless of the method of payment;
whether it be stock, cash, notes or other debt instruments, covenants not to
compete or deferred compensation to the owner.
Accepted: JEVIC Transportation, Inc.
By: /s/ Title: /s/
----------------------------- ---------------------------
Date: October 1996 SIGNATURES ON FILE
3926 South Nine Drive
Valrico, FL 33594
JEVIC TRANSPORTATION, INC.
NET INCOME PER SHARE COMPUTATIONS
(in thousands, except per share amounts)
Six Months
Year Ended Ended June 30,
December 31, --------------
1996 1996 1997
---- ---- ----
PRO FORMA NET INCOME PER SHARE(1):
Pro forma net income $3,849 $ 481 $2,647
------ ------ ------
Shares used in computation -
Weighted average shares outstanding 6,858 6,858 6,858
Dilutive effect of stock options 143 143 143
Shares required to fund $10 million
distribution 842 842 842
------ ------ ------
7,843 7,843 7,843
------ ------ ------
Pro forma net income per share $ 0.49 $ 0.06 $ 0.34
====== ====== ======
SUPPLEMENTAL PRO FORMA NET INCOME PER SHARE(2):
Pro forma net income $3,849 $ 481 $2,647
Interest expense reduction -
Charlotte purchase 190 95 95
Other indebtedness 653 260 598
Tax effect of interest reduction (313) (142) (259)
------ ------ ------
Supplemental pro forma net income $4,379 $ 694 $3,081
------ ------ ------
Shares used in computation -
Pro forma shares 7,843 7,843 7,843
Shares required for debt repayment(3) 684 909 1,278
------ ------ ------
8,527 8,752 9,121
------ ------ ------
Supplemental pro forma net income
per share $ 0.51 $ 0.08 $ 0.34
====== ====== ======
(1) Pro forma net income per share is computed by dividing pro forma net
income by the weighted average number of shares outstanding for the
respective periods, adjusted for the effect of dilutive common stock
options, and after giving effect to the estimated number of shares that
would be required to be sold (at an assumed initial public offering price
of $13 per share, less underwriting discounts and commissions and estimated
offering expenses) to fund a distribution of $10 million to shareholders
immediately prior to the offering.
(2) Supplemental pro forma net income per share is computed by dividing pro
forma net income (adjusted for the pro forma reduction in interest expense
that specifically corresponds to the repaid the indebtedness discussed
below) by the number of shares used in (1) above plus the estimated number
of shares that would be required to be sold (at an assumed initial public
offering price of $13 per share, less underwriting discounts and
commissions and estimated offering expenses) to (a) repay bank mortgage
indebtedness of $2.0 million assumed in connection with purchase of the
Charlotte facility and (b) repay other indebtedness totaling approximately
$19.8 million at June 30, 1997,
(3) Based on average debt balances.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Jevic Transportation, Inc.
As independent public accountants, we hereby consent to the use of our
report and to all references to our firm included in or made a part of this
registration statement.
Arthur Andersen LLP
Philadelphia, Pa.
September 16, 1997
CONSENT TO SERVE AS A DIRECTOR
I, Gordon R. Bowker, hereby consent to be named as a director in Jevic
Transportation, Inc.'s Registration Statement on Form S-1, including any
amendments or supplements thereto, and I hereby agree to serve as a member of
Jevic Transportation, Inc.'s Board of Directors upon completion of the
offering.
/s/ Gordon R. Bowker
-----------------------------
Name: Gordon R. Bowker
Date: September 16, 1997
CONSENT TO SERVE AS A DIRECTOR
I, Samuel H. Jones, Jr., hereby consent to be named as a director in Jevic
Transportation, Inc.'s Registration Statement on Form S-1, including any
amendments or supplements thereto, and I hereby agree to serve as a member of
Jevic Transportation, Inc.'s Board of Directors upon completion of the
offering.
/s/ Samuel H. Jones, Jr.
-----------------------------
Name: Samuel H. Jones, Jr.
Date: September 16, 1997
