AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
JEVIC TRANSPORTATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
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.)
</TABLE>
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)
------------------
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)
------------------
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, please 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
<S> <C> <C>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE (1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
Common Stock, no par value........................................ $61,180,000 $18,540
==================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o). Includes amount to be sold pursuant to an over-allotment
option to be granted to the Underwriters.
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.
================================================================================
<PAGE>
SUBJECT TO COMPLETION
AUGUST 13, 1997
3,800,000 SHARES
[LOGO]
JEVIC TRANSPORTATION, INC.
COMMON STOCK
------------------
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 Company has made application
for the Common Stock to be quoted 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".
------------------
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.
<TABLE>
<CAPTION>
===========================================================================================================
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS COMPANY (1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.......................................... $ $ $
- ------------------------------------------------------------------------------------------------------------
Total (2).......................................... $ $ $
===========================================================================================================
</TABLE>
(1) Before deducting expenses payable by the Company estimated at $600,000.
(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."
------------------
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 Alex. Brown
& Sons Incorporated, Baltimore, Maryland, on or about , 1997.
ALEX. BROWN & SONS
INCORPORATED
WILLIAM BLAIR & COMPANY
SCHRODER & CO. INC.
THE DATE OF THIS PROSPECTUS IS , 1997
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 BY 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.
<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.
------------------
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."
------------------
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. In addition, all information concerning ownership of the
Common Equity and voting power reflects ownership of the Company's capital stock
as of August 1, 1997. 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 $25.8 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.
3
<PAGE>
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
significant incremental business in service-sensitive industries, such as the
chemical industry, which accounted for approximately 34% of the Company's
operating revenues 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
<TABLE>
<S> <C>
Common Stock offered by the Company..................... 3,800,000 shares
Common Equity to be outstanding after this offering:
Common Stock.......................................... 3,800,000 shares (1)
Class A Common Stock.................................. 6,858,200 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 working capital and general
corporate purposes, including the purchase of revenue
equipment and possible future acquisitions. See "Use of
Proceeds."
Proposed Nasdaq National Market symbol.................. JEVC
</TABLE>
- ------------------
(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)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
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......................... 7,839 7,839 7,839
Supplemental pro forma net income
per share (2)..................... $ 0.51 $ 0.08 $ 0.34
OPERATING DATA:
Total shipments (000s)................ 155 269 370 463 586 284 329
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............................. 376 626 685 740 776 777 857
Owner-Operator...................... -- -- -- -- 63 15 105
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA (3) AS ADJUSTED (4)
--------- ------------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)................................................ $ (3,342) $ (13,727) $ 23,457
Property and equipment, net.............................................. 67,426 68,726 68,726
Total assets............................................................. 96,047 94,961 112,523
Long-term debt, less current maturities.................................. 36,910 36,910 28,752
Shareholders' equity..................................................... 27,228 8,529 53,871
</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 Company's
purchase of its Charlotte facility from certain of its current shareholders
(the "Charlotte Purchase") occurred on January 1, 1996 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 (the "Record Date") 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)
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 to be assumed in connection with the Charlotte Purchase and (b)
repay approximately $19.8 million of other indebtedness. See "Use of
Proceeds" and "Certain Transactions."
(3) Adjusted to give pro forma effect to (a) the Charlotte Purchase, (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
<PAGE>
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. As a significant
portion of the Company's business is concentrated in the Northeast region, a
general economic decline in that geographic market could have a materially
adverse effect on the growth and profitability of the Company. Approximately 34%
of the Company's revenues 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. 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 to meet the needs of customers whose operations demand
consistent, timely service. This strategy may place the Company at a competitive
disadvantage with respect to shippers who consider price the principal factor in
hiring carriers. 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 Amended and 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
7
<PAGE>
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. 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
transfer, except certain transfers among Harry J. Muhlschlegel, Karen
Muhlschlegel, their lineal descendents, or trusts for, custodial accounts for,
or entities owned by any of the foregoing (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 78.3% of the total voting power of both series of Common Equity (74.2%
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 certain corporate
governance provisions that may inhibit changes in control of the Company. 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. See "Description of Capital Stock"
and "New Jersey Shareholders Protection Act." Any of the above could deter or
delay unsolicited changes in control of the Company. See "Description of Capital
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. In addition, to
the extent of the Company's commitment to purchase fuel under contracts at
guaranteed prices, 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. 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
8
<PAGE>
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 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 34% of the Company's revenues 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 $7.95
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
9
<PAGE>
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, 3,800,000 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 6,858,200
outstanding shares of Class A Common Stock (the "Restricted Shares") may be sold
until the expiration of the lock-up periods described below and thereafter
unless 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 Alex. Brown & Sons
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 forward-looking statements are within the
meaning of that term in Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934. 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.
10
<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 $45.3 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 7.42% 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. 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 will be used for working capital and
general corporate purposes, including the purchase of revenue equipment and
possible future business acquisitions. The Company currently does not have any
commitments or agreements for any business acquisition and is not in active
negotiations regarding any such acquisitions.
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.
11
<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 this
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. Purchasers of shares in this offering will not
receive any portion of these distributions.
The Company has entered into a Tax Indemnity Agreement with its current
shareholders in order to ensure 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 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."
12
<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
ACTUAL PRO FORMA AS ADJUSTED
--------- ----------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Current portion of long-term debt and capital lease obligations............... $ 13,493 $ 21,492 $ 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).................................... -- -- 45,342
Class A Common Stock, no par value, 10,000,000 shares authorized; 6,858,200
shares issued and outstanding............................................ 1,128 -- --
Retained earnings........................................................... 26,100 8,529 8,529
--------- --------- ---------
Total shareholders' equity.................................................. 27,228 8,529 53,871
--------- --------- ---------
Total capitalization..................................................... $ 64,138 $ 45,439 $ 82,623
========= ========= =========
</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. See "Management - Executive Incentive Plans" and Note 9 of
"Notes to Financial Statements."
13
<PAGE>
DILUTION
As of June 30, 1997, the Company's 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 $53.9 million or $5.05 per share of
Common Equity. This represents an immediate increase in pro forma net tangible
book value of $3.81 per share to current shareholders and an immediate dilution
in net tangible book value of $7.95 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
Pro forma net tangible book value per share at June 30, 1997................ $1.24
Increase attributable to new investors...................................... 3.81
-----
Pro forma net tangible book value per share after this offering............... 5.05
------
Dilution per share to new investors........................................... $ 7.95
======
</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 Class A 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 these options are exercised,
further dilution to new investors will occur. 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.
14
<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,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND CERTAIN OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
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)............. 7,839 7,839 7,839
========= ========= =========
Supplemental pro forma net income
per share(2).................... $ 0.51 $ 0.08 $ 0.34
========= ========= =========
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Total shipments (000s)................ 155 269 370 463 586 284 329
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............................. 376 626 685 740 776 777 853
Owner-operator...................... -- -- -- -- 63 15 105
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, 1997
----------------------------------------------------- --------------------
PRO
1992 1993 1994 1995 1996 ACTUAL FORMA(3)
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............. $ 190 $ (188) $ 1,336 $ (2,727) $ (5,917) $ (3,342) $ (13,727)
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 8,529
</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 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)
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 to be assumed in connection with the Charlotte Purchase and (b)
repay approximately $19.8 million of other indebtedness. See "Use of
Proceeds," and "Certain Transactions."
(3) Adjusted to give pro forma effect to (a) the Charlotte Purchase, (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.
16
<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..................................... 5.5 6.0 3.7 5.1 5.6
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>
17
<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 20.1% 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 as a percentage of operating revenues decreased to 93.3%
for the six months ended June 30, 1997 from 97.1% for the comparable period of
1996. This 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.
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 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 and parts, decreased as a percentage of operating revenues to
19.2% for the six months ended June 30, 1997 from 22.1% for the comparable
period of 1996. This 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.
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. This 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 4.7% 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. This 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.
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 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.
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
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 offset by lower average
interest rates.
18
<PAGE>
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 15.2% in 1996, and improved utilization
led to an increase in revenue per tractor per week of 6.7% in 1996 to $3,764
from $3,539 in 1995.
Operating Expenses
Operating expenses as a percentage of operating revenues decreased to 93.9%
in 1996 from 95.2% in 1995. This 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.
As a percentage of operating revenues, salaries, wages and benefits
decreased to 52.5% in 1996 from 53.6% in 1995. The 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.
As a percentage of operating revenues, supplies and other expenses
decreased to 21.2% in 1996 from 24.0% in 1995. This 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.
As a percentage of operating revenues, purchased transportation increased
to 7.0% in 1996 from 4.5% in 1995. This 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.
As a percentage of operating revenues, depreciation and amortization
expense increased to 5.6% in 1996 from 5.1% in 1995. This 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.
As a percentage of operating revenues, operating taxes and licenses
decreased to 5.6% in 1996 from 6.2% in 1995. This decrease was primarily
attributed to the use of owner-operators in 1996.
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 offset by decreased insurance premiums later in 1996 and the overall
efficiencies gained by the increase in revenues per mile.
Interest Expense
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 operating revenues in 1995
was largely the result of an unusual revenue increase in early 1994, resulting
from a Teamsters strike that adversely impacted the Company's unionized
competitors. 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.
19
<PAGE>
Operating Expenses
Operating expenses as a percentage of operating revenues increased to 95.2%
in 1995 from 90.1% in 1994. This represented the return to a more normal expense
ratio from the unusually high profit margins experienced as a result of the 1994
Teamsters strike.
As a percentage of operating revenues, salaries, wages and benefits
increased to 53.6% in 1995 from 48.8% in 1994. This 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.
As a percentage of operating revenues, supplies and other expenses
decreased to 24.0% in 1995 from 25.6% in 1994. This 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.
As a percentage of operating revenues, purchased transportation increased
to 4.5% in 1995 from 3.4% in 1994. This 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.
As a percentage of operating revenues, depreciation and amortization
increased to 5.1% in 1995 from 3.7% in 1994. This increase was primarily
attributable to the Company's purchases of new revenue equipment to replace the
aging portion of its fleet.
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.
As a percentage of operating revenues, insurance and claims decreased to
2.1% in 1995 from 2.6% in 1994. This decrease was due to reductions in auto
liability insurance premiums as a result of favorable loss experience.
Interest Expense
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 Company has budgeted for total capital expenditures of $13.8 million
for the second half of 1997 and $26.2 million in 1998, which includes $3.6
million and $4.8 million to purchase new trailers in the second half of 1997 and
$5.3 million to purchase new tractors and $5.2 million to purchase new trailers
in 1998, with remaining funds expected to be used primarily for real estate
projects and technology equipment purchases.
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
20
<PAGE>
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.
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. 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 1998. 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. See
"Use of Proceeds" and "Prior S Corporation Status."
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."
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.
21
<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.
22
<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 $25.8 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
23
<PAGE>
significant incremental business in service-sensitive industries, such as
the chemical industry, which accounted for approximately 34% of the
Company's operating revenues 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 annual turnover rate is 8%. 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.
24
<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 or four 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 LTL carrier would not handle
the customer's shipments weighing over 10,000 pounds and a standard truckload
carrier would charge the 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 integrate 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 the same rapid delivery times
required for expedited deliveries and benefits from the premium rates for
expedited service without the inefficiencies and high operating costs of
competing carriers, and 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.
25
<PAGE>
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 maintaining a large network of breakbulk
terminals and a large staff of freight handlers. Jevic's revenue per terminal
for 1996 was $25.8 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 24.0%, 18.1% and 12.3% of the Company's gross freight revenue,
respectively. During the same year, the Company's largest customer accounted for
approximately 4.5% of gross freight revenue. Because approximately 34% of the
Company's revenue 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
26
<PAGE>
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 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.
27
<PAGE>
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 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 annual turnover rate is 8.0%. 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 920 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
28
<PAGE>
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.
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.
29
<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........................................................................ 132 -- 60 192
1996........................................................................ 150 34 66 250
1995........................................................................ 210 -- -- 210
1994........................................................................ 4 23 -- 27
1993 and prior.............................................................. 31 4 89 124
---- ---- ---- ----
Total..................................................................... 567 61 225 853
</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 66 249
1995..................................................................... 70 -- -- 70
1994..................................................................... -- 100 -- 100
1993 and prior........................................................... 32 703 56 791
----- ----- ---- -----
Total.................................................................. 152 1,162 166 1,480(1)
</TABLE>
- ------------------
(1) 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 1996.
EMPLOYEES
At June 30, 1997, the Company employed 1,758 persons in the following
categories:
CATEGORY NO. OF EMPLOYEES
-------- ----------------
Drivers.................................................. 920
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. Management believes that relations with its
employees and owner-operators are good.
30
<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 -- May 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) Prior to completion of this offering, the Company intends to purchase this
facility. 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 an agreement with a fuel supplier to purchase approximately 40% of
its estimated fuel needs through March 1998 at a guaranteed price, which is
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. In certain regions, the Company faces competition from local
carriers. 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 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.
31
<PAGE>
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.
32
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographies set forth information concerning the
individuals who serve 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
</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 and Secretary of the
Company since its inception.
Paul J. Karvois. Mr. Karvois became Jevic's President and Chief Operating
Officer in March 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 1992 until
he joined the Company, he served as President of Carretta LTR, an affiliate of
Carretta Trucking, where he served as Vice President of LTL Sales from 1990 to
1992.
In September 1997, the Company intends to add two non-employee directors
("outside directors") to its Board of Directors, at which time the Board of
Directors 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 the two
outside directors will be Class III directors with an initial term expiring at
the annual meeting of shareholders in 1998. The Amended 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 the two outside directors,
and a Compensation Committee, composed of Mr. Muhlschlegel, and the two outside
directors. The principal functions of the Audit Committee will include
33
<PAGE>
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 non-employee 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."
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 $100,000 during 1996 (the "named
executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
SALARY ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) COMPENSATION(1)
- --------------------------- ---- ------ --------- ---------------
<S> <C> <C> <C> <C>
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 also 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 $250,000.
Option Holdings. The following table sets forth certain information
regarding the number and exercise price of options to purchase Common Stock held
by the named executive officers at December 31, 1996. No options were exercised
by or granted to the named executive officers in 1996.
34
<PAGE>
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END(#) AT YEAR-END($)(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 stock-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 at the initial
public offering price set forth on the cover page of this Prospectus will be
granted to each of the outside directors 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 the named executive officers, other than Mr.
Muhlschlegel). 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 after the third anniversary of
such director's initial 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 same vesting provisions as noted above.
The Incentive Plan contains provisions for granting various stock-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.
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
35
<PAGE>
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 one month 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 or 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 one year
from the date of termination or until the expiration of the stated term of the
option, whichever period is shorter. If a participant's employment or service is
terminated for cause, unless otherwise specified by the Compensation Committee
with respect to a particular option, 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 exercisable and may provide for the cancellation of options
and a cash payment to the holders of such canceled options.
Restricted Stock. "Restricted Stock" are shares of the Company's Common
Stock granted to an employee for no cash consideration, which 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 or cash, at the election of the recipient, 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 cash in the amount of the fair market value of the full number of
shares of Common Stock subject to the Performance Share award to be issued to
the grantee. 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. 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,
36
<PAGE>
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 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 will vest on the 10th
anniversary of the date of grant. 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 90% of the 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
37
<PAGE>
termination of an employee's employment because of death, his or her
successor-in-interest shall have the right to elect before the earlier of the
end of that calendar quarter or the 60th day following the employee's date of
death either to withdraw the amount credited to his or her Participation Account
or to apply such amounts to the purchase of Common Stock.
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 4% of a participant's compensation. Moreover, each
participant may make a voluntary after-tax contribution to the Plan. These
contributions are not matched by the Company and the amount could be limited
under certain nondiscrimination guidelines. 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 participants of the
401(k) Plan who are employed on the last day of the plan year and who completed
more than 500 hours of service during the plan year, in proportion to each
participant'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.
38
<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. 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 prior to completion of the offering, for a
purchase price equal to the independent appraised value of the property less the
amount of leasehold improvements paid for by the Company. The purchase price
will be paid by the assumption of an outstanding bank mortgage loan in the
principal amount of $2.0 million. 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.
The Company considers the terms of its transactions with the Muhlschlegels
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.
39
<PAGE>
PRINCIPAL SHAREHOLDERS
The table below sets forth as of August 1, 1997 certain information
regarding the beneficial ownership of the Company's Common Equity by each of the
Company's directors, each of the named executive officers, each person owning
beneficially more than 5% of the Common Equity 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).............................................. 3,326,227(2) 48.5% 31.2%(3)
Karen B. Muhlschlegel (1).............................................. 3,326,227(4) 48.5% 31.2%(3)
Paul J. Karvois........................................................ -- -- --
Brian J. Fitzpatrick................................................... -- -- --
William F. English..................................................... -- -- --
All directors and executive
officers as a group (6 persons)...................................... 6,652,454 97.0% 62.4%
</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 above
table reflects the ownership of Class A Common Stock by Mr. and Ms.
Muhlschlegel 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 3,041,227 shares following the
offering, constituting 28.5% of the Common Stock outstanding after the
offering, assuming conversion of their Class A 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.
40
<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 August 1, 1997,
6,858,200 shares of Class A Common Stock were issued and outstanding and no
shares of Common Stock were outstanding. No shares of preferred stock have ever
been issued. Upon completion of the offering, there will be 3,800,000 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 set
forth below or provided by law.
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
beneficially owned by any person other than the Muhlschlegel Family (or any
trust or custodial account for the benefit of any of them or any entity
wholly-owned by any of them), such shares shall automatically be converted into
an equal number of shares of Common Stock.
Dividends. Holders of Common Stock are entitled to receive cash dividends
on the same basis as Class A Common Stock if and when such dividends are
declared by the Board of Directors of the Company from funds legally available
therefor. In the case of any dividend paid in stock, holders of Common Stock are
entitled to receive the same percentage dividend (payable in shares of Common
Stock) as the holders of Class A Common Stock receive (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; provided that if, after such business combination, the
Muhlschlegel Family (or any trust or custodial account for the benefit of any of
them or any entity wholly-owned by any of them) jointly owns more than one-third
(1/3) of the surviving entity, any securities received by them may differ as to
voting rights only to the extent that voting rights now differ between Common
Stock and Class A Common Stock.
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 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 voting powers, designations,
preferences or other rights of the shares of each such class or series and the
qualifications, limitations and
41
<PAGE>
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 of Incorporation provides that no
director shall be liable to the Company or its shareholders for monetary damages
for breach of fiduciary duty as a director, except for liability for breach of
the director's duty of loyalty to the Company or its shareholders, for acts or
omissions not in good faith or which involve a knowing violation of law, or for
any act or omission which results 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.
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.
42
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have outstanding
3,800,000 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 6,858,200 shares of Class A Common Stock (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
Alex. Brown & Sons 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 2,458,820 shares of Common Stock
subject to its stock-based employee benefit plans following the date of this
Prospectus.
43
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons 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
----------- ---------
Alex. Brown & Sons 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 Alex. Brown & Sons Incorporated. See "Shares Eligible for
Future Sale."
The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.
44
<PAGE>
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, Philadelphia,
Pennsylvania. 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 Schedules 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.
45
<PAGE>
JEVIC TRANSPORTATION, INC
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Report of Independent Public Accountants............................ F-2
Balance Sheets...................................................... F-3
Statements of Operations............................................ F-4
Statements of Shareholders' Equity.................................. F-5
Statements of Cash Flows............................................ F-6
Notes to Financial Statements....................................... F-7
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.
August 12, 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 $ 20,612
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 38,506
--------- --------- --------- ---------
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 --
Retained earnings.................................................. 17,222 22,943 26,100 8,529
--------- --------- --------- ---------
Total shareholders' equity...................................... 18,236 24,071 27,228 8,529
--------- --------- --------- ---------
$ 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............................................. 7,839 7,839 7,839
========== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
JEVIC TRANSPORTATION, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
<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 (549) (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 3,790 6,711
--------- --------- --------- --------- ---------
INVESTING ACTIVITIES:
Proceeds from sales of revenue 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, the excess of
the trade-in allowance over the net book value of the traded asset is reflected
in the basis of the new asset.
Depreciation and amortization are provided using the straight-line method
over the following estimated useful lives:
<TABLE>
<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.
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)
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 its current shareholders and (iii) an
increase in the Company's net deferred tax liability which will be recorded by
the Company as a result of terminating its S Corporation status shortly before
the effective date of the Offering (estimated at $8 million as of June 30,
1997). 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:
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)
=========
PRO FORMA STATEMENT OF OPERATIONS DATA
Pro forma income before income taxes reflects the Company's purchase of its
Charlotte facility from its current shareholders, as if the purchase occurred on
January 1, 1996, resulting in increased depreciation and interest expense and
decreased rent expense for the year ended December 31, 1996, and the six months
ended June 30, 1996 and 1997.
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
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
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.
Pro forma income taxes do not include a one-time income tax provision
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
(estimated at $8 million as of June 30, 1997).
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:
Federal statutory rate................................................. 34.0%
State income taxes, net of federal benefit............................. 4.7
Non deductible expenses................................................ 3.2
----
41.9%
====
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) 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.
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.
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)
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.
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
through September 2003......................................................... $21,667 $25,090 $ 30,863
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>
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 -- CONTINUED
Aggregate maturities of long-term debt at December 31, 1996, are as
follows:
1997..................................................... $ 9,422
1998..................................................... 7,316
1999..................................................... 5,818
2000..................................................... 4,276
2001..................................................... 3,740
Thereafter............................................... 7,705
-------
$38,277
=======
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.
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:
<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.
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)
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.
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.
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)
11. CONTINGENCIES
The Company's risk retention amounts per occurrence are as follows:
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
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.
From time to time the Company enters into agreements with fuel suppliers to
purchase a portion of its fuel needs for up to 18 months, at guaranteed 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-14
<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
PAGE
----
Prospectus Summary.................................................. 3
The Company......................................................... 3
Risk Factors........................................................ 7
Use of Proceeds..................................................... 11
Prior S Corporation Status.......................................... 12
Dividend Policy..................................................... 12
Capitalization...................................................... 13
Dilution............................................................ 14
Selected Financial Data............................................. 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................................................ 17
Industry Overview................................................... 22
Business............................................................ 23
Management.......................................................... 33
Certain Transactions................................................ 39
Principal Shareholders.............................................. 40
Description of Capital Stock........................................ 41
Shares Eligible for Future Sale..................................... 43
Underwriting........................................................ 44
Legal Opinions...................................................... 45
Experts............................................................. 45
Additional Information.............................................. 45
Index to Financial Statements....................................... F-1
------------------
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 ALLOTMENTS OR SUBSCRIPTIONS.
3,800,000 SHARES
JEVIC TRANSPORTATION, INC.
COMMON STOCK
----------
PROSPECTUS
----------
ALEX. BROWN & SONS
INCORPORATED
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:
NATURE OF EXPENSE AMOUNT
----------------- ------
SEC Registration Fee............................................... $ 18,540
NASD Fee........................................................... 6,618
Nasdaq Listing and Entry Fee....................................... 44,146
Printing and engraving fees........................................ 100,000
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....................... 100,000
Miscellaneous...................................................... 696
---------
TOTAL............................................................ $ 600,000
=========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 14A:3-5 of the Corporation Law of the State of New Jersey ("NJCL")
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 NJCL 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 VII of the Company's By-laws provides that the Company shall
indemnify any corporate agent to the full extent permitted by Section 14A:3-5 of
the NJCL. To the extent that a director, officer, employee or agent of the
Company has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in NJCL 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.
Section 14A:3-5(9) permits, and Article VII 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.
II-1
<PAGE>
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 -- Certificate of Incorporation of the Company, as amended through August 13, 1997.
3.2 -- By-laws of the Company.
4 -- Specimen Stock Certificate.*
5 -- Opinion of Pepper, Hamilton & Scheetz LLP.*
10.1 -- 1997 Incentive Plan.
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 S. Muhlschlegel, as Trustee of the Karen B.
Muhlschlegel 1996 Grantor Annuity Trust, in favor of the Company in the principal amount of $218,772.
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.
10.10 -- Lease Agreement made and entered into as of April 12, 1995 between Harry J. Muhlschlegel and Karen
Muhlschlegel and the Company.
10.11 -- Business Lease, dated December 22, 1993, between Harry 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.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
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
Systems, Inc.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Pepper, Hamilton & Scheetz.*
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.
(B) COMBINED FINANCIAL STATEMENT SCHEDULES:
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 Combined 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
II-3
<PAGE>
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 to provide to the Underwriters, at the
closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
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 12th day
of August, 1997.
JEVIC TRANSPORTATION, INC.
By: /s/ Harry J. Muhlschlegel
--------------------------------------
Harry J. Muhlschlegel, Chief Executive
Officer and Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Harry J. Muhlschlegel and Karen B.
Muhlschlegel, and each or either of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their, his or her substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on August 12,
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
Brian Fitzpatrick principal 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.
August 12, 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
CERTIFICATION OF INCORPORATION
OF
JEVIC TRANSPORTATION, INC.
THIS IS TO CERTIFY THAT, there is hereby organized a corporation under and
by virtue of N.J.S. 14A:l-1 et seq., the "New Jersey Business Corporation Act."
1. The name of the corporation is JEVIC TRANSPORTATION, INC.
2. The address of this corporation's initial registered office is 25
Bretton Way, Mount Laurel, New Jersey 08054 and the name of the corporation's
initial registered agent at such address is Harry Muhlschlegel.
3. The purposes for which this corporation is organized are:
To engage in any activity within the purposes for which corporations may be
organized under the "New Jersey Business Corporation Act." N.J.S. 14A:l-1 et
seq.
4. The aggregate number of shares which the corporation shall have
authority to issue is 1500 shares - no par value.
5. The first Board of Directors of this corporation shall consist of one
(1) Director and the name and address of the person who is to serve as such
Director is:
Name Address Zip Code
Harry Muhlschlegel 25 Bretton Way
Mount Laurel, New Jersey 08054
6. The name and address of each incorporator is:
Name Address Zip Code
Harry Muhlschlegel 25 Bretton Way
Mount Laurel, New Jersey 08054
IN WITNESS WHEREOF, the individual incorporator, being over the age of
eighteen years, has signed this Certificate this 8th day of May, 1981.
/s/ HARRY MUHLSCHLEGEL
-----------------------
HARRY MUHLSCHLEGEL
<PAGE>
I, The Secretary of State of the State of New Jersey, DO HEREBY CERTIFY
that the foregoing is a true copy of CERTIFICATE OF INCORPORATION and the
endorsements thereon, as the same is taken from and compared with the original
filed in my office on the 27th day of May, A.D. 1981 and now remaining on file
and of record therein.
[SEAL] IN TESTIMONY WHEREOF, I have hereunto set my hand and
affixed my Offical Seal at Trenton, this 27th day of
May 1981, A.D.
SECRETARY OF STATE
DONALD LAN
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
JEVIC TRANSPORTATION, INC.
Jevic Transportation, Inc., a corporation organized and existing under and
by virtue of the laws of the State of New Jersey (hereinafter referred to as the
"Corporation"),
DOES HEREBY CERTIFY to the Secretary of State of the State of New Jersey
that:
FIRST: That the name of the Corporation is Jevic Transportation, Inc.
SECOND: That on July 30, 1997, the Board of Directors (the "Board"), by
unanimous written consent of its members, filed with the minutes of the Board,
pursuant to Section 14A:6-7.1(5) and the By-laws of the Corporation, adopted
resolutions to amend the Corporation's Certificate of Incorporation (the
"Amendment") to (i) authorize two classes of common capital stock of the
Corporation: "Common Stock" and "Class A Common Stock" and (ii) reclassify each
of the Corporation's outstanding shares of stock as shares of Class A Common
Stock, which resolutions (the "Resolutions") are as follows:
RESOLVED, that the first paragraph of Article 4 of the Certificate of
Incorporation of Jevic Transportation, Inc. shall be amended to read as
follows:
"4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 1,500 shares of a single
class designated Common Equity, divided into two series consisting of
1,200 shares of Common Stock, no par value (the "Common Stock") and 300
shares of Class A Common Stock, no par value (the "Class A Common
Stock"). The voting powers, designations, preferences, limitations,
restrictions, and special or relative rights with respect to each class
of stock are or shall be fixed as follows.
Except as otherwise stated herein, the holders of Common Stock and
Class A Common Stock shall have all of the rights afforded holders of
common stock under the New Jersey Business Corporation Act, N.J.S.
14A:l-1 et seq., including the right to vote on all matters submitted to
a vote of the common shareholders and the right to receive the net assets
of the corporation upon dissolution. The Common Stock and Class A Common
Stock shall vote together as a single class and shall receive any
dividends and distributions payable to holders of the Corporation's
common capital stock on a pro rata basis; provided, that: (i) holders of
Common Stock shall be entitled to one (1) vote per share on all
<PAGE>
matters submitted to a vote of the common shareholders; (ii) holders of
Class A Common Stock shall be entitled to two (2) votes per share on
all matters submitted to a vote of the common shareholders and (iii) in
the case of any dividend payable in the Corporation's common capital
stock, holders of Common Stock shall be entitled to receive the same
dividend (on a per outstanding share basis), payable in shares of Common
Stock, as the holders of shares of Class A Common Stock shall be entitled
to receive (on a per outstanding share basis), payable in shares of Class
A Common Stock. Holders of Class A Common Stock may convert such shares
into Common Stock, 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 any
Class A Common Stock shall cease to be owned by Harry J. Muhlschlegel,
Karen B. Muhlschlegel or any of their lineal descendants (the
"Muhlschlegel Family"), any trust or custodial account for the benefit of
one or more members of the Muhlschegel Family or any other entity which
is 100% beneficially owned, directly or indirectly, by one or more
members of the Muhlschlegel Family or by any such trust (each of the
foregoing being referred to as a "Permitted Holder"), such shares that
are no longer so owned shall be converted automatically into Common
Stock. In any distribution of stock of any other corporation to the
shareholders of the Corporation or any merger, consolidation or business
combination involving the Corporation, the consideration to be received
per share by holders of the Common Stock and Class A Common Stock shall
be identical; provided that if, after such distribution, merger,
consolidation or business combination, more than one-third (1/3) of the
surviving entity is owned by Permitted Holders, any securities to be
received may differ to the extent that the voting rights differ between
Common Stock and Class A Common Stock.";
RESOLVED, that, without any other action on the part of the
Corporation or any other person, on the date (the "Filing Date") on which
this Certificate of Amendment to the Corporation's Certificate of
Incorporation is filed with the Secretary of State of the State of New
Jersey, each share of the Corporation then outstanding shall be
automatically reclassified as one share of Class A Common Stock; and
RESOLVED, that, promptly following the Filing Date, new stock
certificates representing shares of Class A Common Stock shall be issued by
the Corporation in exchange for the surrender of all stock certificates
representing outstanding shares, and all stock certificates representing
such outstanding shares shall be deemed canceled and shall not be
recognized as outstanding on the books of the Corporation for any purpose.
THIRD: The Amendment so adopted by the Board was adopted by the
shareholders of the Corporation, by written consent filed with the minutes of
the shareholders, on July 30, 1997.
<PAGE>
FOURTH: The Corporation currently has 200 shares of stock issued and
outstanding and entitled to vote on the Amendment. The Corporation's shares
constitute a single class.
FIFTH: All 200 outstanding shares cast votes in favor of the Amendment via
written consent. No shares cast votes against the amendment. There being only a
single class of the Corporation's shares, no class vote was required. Pursuant
to N.J.S. Section 14A:5-6 and the By-laws of the Corporation, the Amendment has
been approved by the shareholders of the Corporation.
SIXTH: The reclassification of issued shares provided in the Amendment
shall be effected as specified in the foregoing Resolutions of the Board.
SEVENTH: This Certificate of Amendment of the Certificate of Incorporation
of the Corporation shall be effective upon filing with the Secretary of State of
the State of New Jersey.
IN WITNESS WHEREOF, said JEVIC TRANSPORTATION, INC. has caused this
instrument to be signed by its Chief Executive Officer and attested to by its
Secretary, this 30th day of July, 1997.
JEVIC TRANSPORTATION, INC.
By: /s/ Harry J. Muhlschlegel
-----------------------------------
Harry J. Muhlschlegel
Chief Executive Officer
ATTEST:
By: /s/ Karen Muhlschlegel
--------------------------------
Karen Muhlschlegel
Secretary
EXHIBIT 3.2
BY-LAWS
OF
JEVIC TRANSPORTATION, INC.
-------------------------------------------------------------------
Adopted July 27, l981
ARTICLE I
OFFICES
1. Registered Office and Agent.--The registered office of the
Corporation in the State of New Jersey is at
14A:4-1 25 Bretton Way, Mount Laurel, New Jersey 08054
The registered agent of the Corporation at such office is
Harry Muhlschlegel
2. Principal Place of Business.--The principal place of
business of the Corporation is
Rt. 130 and Hartford Road, Delran, New Jersey
3. Other Places of Business.--Branch or subordinate places of
business or offices may be established at any time by the Board at
any place or places where the Corporation is qualified to do
business.
Page B -9
<PAGE>
ARTICLE II
SHAREHOLDERS
14A:5-2 1. Annual Meeting.--The annual meeting of shareholders shall
be held upon not less than ten nor more than
14A:5-4(1) sixty days written notice of the time, place, and purposes of the
meeting at ten o'clock a.m. on the first Tuesday of the month of
_______ July _________ of each year at
principal place of business
14A:5-1 or at such other time and place as shall be specified in the notice
of meeting, in order to elect directors and transact such other
business as shall come before the meeting. If that date is a legal
holiday, the meeting shall be held at the same hour on the next
succeeding business day.
14A:5-3 2. Special Meetings.--A special meeting of shareholders may
be called for any purpose by the president or the Board. A special
meeting shall be held upon not less than ten nor more than sixty
days written notice of the time, place, and purposes of the meeting.
14A:5-6(1) 3. Action Without Meeting.--The shareholders may act without a
meeting if, prior or subsequent to such action, each shareholder who
would have been entitled to vote upon such action shall consent in
writing to such action. Such
Page B -10
<PAGE>
written consent or consents shall be filed in the minute book.
14A:5-9(1) 4. Quorum.--The presence at a meeting in person or
by proxy of the holders of shares entitled to cast(9) a majority of
the votes shall constitute a quorum.
Page B -11
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
14A:6-2 1. Number and Term of Office.--The Board shall
14A:6-3 consist of(10) two members. Each director shall be elected by the
shareholders at each annual meeting and shall hold office until the
next annual meeting of shareholders and until that director's
successor shall have been elected and qualified.
14A:6-10(2) 2. Regular Meetings.--A regular meeting of the Board shall be
held without notice immediately following and at the same place as
the annual shareholders' meeting for the purposes of electing
officers and conducting such other business as may come before the
meeting. The Board, by resolution, may provide for additional
regular meetings which may be held without notice, except to members
not present at the time of the adoption of the resolution.
14A:6-10(2) 3. Special Meetings.--A special meeting of the Board may be
called at any time by the president or by two directors for any
purpose. Such meeting shall be held upon three days notice if given
orally, (either by telephone or in person,) or by telegraph, or by
five days notice if given by depositing the notice in the United
States mails, postage prepaid. Such notice shall specify the time
and place of the meeting.
Page B -12
<PAGE>
14A:6-7(2) 4. Action Without Meeting.--The Board may act without a meeting
if, prior or subsequent to such action, each member of the Board
shall consent in writing to such action. Such written consent or
consents shall be filed in the minute book.
14A:6-7(1) (11)5. Quorum.-- A majority of the entire Board shall
constitute a quorum for the transaction of business.
14A:6-5 6. Vacancies in Board of Directors.--Any vacancy in the
Board, (12) including a vacancy caused by an increase in the number
of directors, may be filled by the affirmative vote of a majority of
the remaining directors, even though less than a quorum of the
Board, or by a sole remaining director.
Page B -13
<PAGE>
ARTICLE IV
WAIVERS OF NOTICE
14A:5-5(1) Any notice required by these by-laws, by the certificate
14A:6-10(2) of incorporation, or by the New Jersey Business Corporation Act
may be waived in writing by any person entitled to notice. The
waiver or waivers may be executed either before or after the event
with respect to which notice is waived. Each director or shareholder
attending a meeting without protesting, prior to its conclusion, the
lack of proper notice shall be deemed conclusively to have waived
notice of the meeting.
Page B -14
<PAGE>
ARTICLE V
OFFICERS
14A:6-15(1) 1. Election.--At its regular meeting following the annual
meeting of shareholders, the Board shall elect a president, a
treasurer, a secretary, and it may elect such other officers,
including one or more vice presidents, as it shall
14A:6-15(2) deem necessary. One person may hold two or more offices.
14A:6-15(4) 2. Duties and Authority of President.--The president
shall be chief executive officer of the Corporation. Subject only to
the authority of the Board, he shall have general charge and
supervision over, and responsibility for, the business and affairs
of the Corporation. Unless otherwise directed by the Board, all
other officers shall be subject to the authority and supervision of
the president. The president may enter into and execute in the name
of the Corporation contracts or other instruments in the regular
course of business or contracts or other instruments not in the
regular course of business which are authorized, either generally or
specifically, by the Board. He shall have the general powers and
duties of management usually vested in the office of president of a
corporation.
14A:6-15(4) 3. Duties and Authority of Vice President.--The vice
president shall perform such duties and have such authority as from
time to time may be delegated to him by the president
Page B -15
<PAGE>
or by the Board. In the absence of the president or in the event of
his death, inability, or refusal to act, the vice president shall
perform the duties and be vested with the authority of the
president.
14A:6-15(4) 4. Duties and Authority of Treasurer.--The treasurer
shall have the custody of the funds and securities of the
Corporation and shall keep or cause to be kept regular books of
account for the Corporation. The treasurer shall perform such other
duties and possess such other powers as are incident to that office
or as shall be assigned by the president or the Board.
14A:6-15(4) 5. Duties and Authority of Secretary.--The secretary
shall cause notices of all meetings to be served as prescribed in
these by-laws and shall keep or cause to be kept the minutes of all
meetings of the shareholders and the Board. The secretary shall have
charge of the seal of the Corporation. The secretary shall perform
such other duties and possess such other powers as are incident to
that office or as are assigned by the president or the Board.
Page B -16
<PAGE>
ARTICLE VI
AMENDMENTS TO AND EFFECT OF BY-LAWS;
FISCAL YEAR
1. Force and Effect of By-laws.--These by-laws are subject to
the provisions of the New Jersey Business Corporation Act and the
Corporation's certificate of incorporation, as it may be amended
from time to time. If any provision in these by-laws is inconsistent
with a provision in that Act or the certificate of incorporation,
the provision of that Act or the certificate of incorporation shall
govern.
2. Wherever in these by-laws references are made to more than
one incorporator, director or shareholder, they shall, if this is a
sole incorporator, director, shareholder corporation, be construed
to mean the solitary person; and all provisions dealing with the
quantum of majorities or quorums shall be deemed to mean the action
by the one person constituting the corporation.
14A:2-9(1) 3. Amendments to By-laws.--These by-laws may be altered,
amended or repealed by the shareholders or the Board. Any by-law
adopted, amended or repealed by the shareholders may be amended or
repealed by the Board, unless the resolution of the shareholders
adopting such by-law expressly reserves to the shareholders the
right to amend or repeal it.
4. Fiscal Year.--The fiscal year of the Corporation shall begin
on the first day of __________ of each year.
Page B -17
<PAGE>
ARTICLE VII - INDEMNIFICATION
Section 1. Definitions.
For purposes of this Article VII the following definitions, as
well as all other definitions set forth in N.J.S.A. 14A:3-5 shall
apply:
a. "Corporate Agent" shall mean any person who is or was a
director, officer, employee or agent of the indemnifying corporation
in 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. Furthermore, any
Corporate Agent also serving as a "fiduciary" of an employee benefit
plan governed by the Act of Congress entitled "Employee Retirement
Income Security Act of 1974" (ERISA) as amended from time to time,
shall serve in such capacity as a Corporate Agent, if the
corporation shall have requested any such person to serve.
Additionally, the corporation shall be deemed to have requested such
person to serve as a fiduciary of an employee benefit plan, only
where the performance by such person of his duties to the
corporation also imposes duties on, or otherwise involves services
by, such person to the plan or participants or beneficiaries of the
plan.
b. "Other Enterprise" shall mean any domestic or foreign
corporation other than the indemnifying corporation, and any
partnership, joint venture, sole proprietorship, trust or other
enterprise, (including employee benefit plans governed by ERISA)
Page B -18
<PAGE>
whether or not for profit served by a Corporate Agent.
Section 2. Indemnification.
a. Any Corporate Agent shall be indemnified by the corporation
to the full extent permitted by N.J.S.A. 14A:3-5 in connection with
any proceeding involving the Corporate Agent by reason of his being
or having been such a Corporate Agent.
b. Any Corporate Agent may be insured by insurance purchased
and maintained by the corporation against any expenses incurred in
any proceeding and any liabilities asserted against him in his
capacity as Corporate Agent, whether or not the corporation would
have the power to indemnify him against such liability.
ARTICLE VIII -- LOANS TO AND GUARANTEES
OF OBLIGATIONS OF OFFICERS, DIRECTORS AND EMPLOYEES
This corporation may lend money to, or guarantee any obligation
of, or otherwise assist, any officer or other employee of this
corporation or of any subsidiary, even if said officer or other
employee is also a Director of this corporation or of any
subsidiary, whenever, in the judgment of the directors, such loan,
guarantee or assistance may reasonably be expected to benefit the
corporation. Such loan, guarantee or assistance, if made to an
officer or employee who is also a Director, must be authorized by a
majority of the entire Board of Directors of this corporation. Any
such loan, guarantee or other assistance may be made with or without
interest, and may be unsecured, or secured in such manner as the
board of directors shall approve, including, without limitation, a
pledge of shares of this corporation, and may be made upon such
other terms and conditions as the board may determine. The proceeds
of any such loan may be applied to the purchase of
Page B -19
<PAGE>
shares of the corporation and any shares so purchased shall be
deemed to be fully paid and non-assessable.
Page B -20
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
- 1 -
<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.
- 2 -
<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
- 3 -
<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.
- 4 -
<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
- 5 -
<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 Fair Market Value 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. 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.
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
- 6 -
<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. 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
- 7 -
<PAGE>
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
- 8 -
<PAGE>
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.
- 9 -
<PAGE>
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.
- 10 -
<PAGE>
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.
- 11 -
<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
- 12 -
<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
- 13 -
<PAGE>
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.
- 14 -
<PAGE>
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.
- 15 -
<PAGE>
(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.
- 16 -
<PAGE>
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;
- 17 -
<PAGE>
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.
- 18 -
<PAGE>
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 10.2
JEVIC TRANSPORTATION, INC.
1994 STOCK OPTION PLAN
Section 1. Purposes.
The purposes of the Plan are (a) to recognize and compensate
selected employees of the Company and its Subsidiaries who contribute to the
development and success of the Company and its Subsidiaries; (b) to maintain the
competitive position of the Company and its Subsidiaries by attracting and
retaining employees; and (c) to provide incentive compensation to such employees
based upon the Company's performance as measured by the appreciation in Common
Stock. The Options granted pursuant to the 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 or the Committee at the
time of grant. The type of Options granted will be specified in the Option
Agreement between the Company and the recipient of the Options. The terms of
this Plan shall be incorporated in the Option Agreement to be executed by the
Optionee.
Section 2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company,
as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean the Committee appointed by the
Board in accordance with Section 4(a) of the Plan.
(d) "Company" shall mean Jevic Transportation, Inc., a New
Jersey corporation.
(e) "Common Stock" shall mean common stock of the Company,
$.01 par value per share.
(f) "Disability" or "Disabled" shall mean the inability of a
Participant or Optionee, as the case may be, to perform his or her normal
employment duties for the Company resulting from a mental or physical illness,
impairment or any other similar occurrence which can be expected to result in
death or which has lasted or can be expected to last for a period of twelve (12)
consecutive months, as determined by the Board of Directors.
(g) "Employee" shall mean any person (including officers)
employed by the Company or any Subsidiary. A director of the Company or any
Subsidiary shall not be considered to be employed by the Company or any
Subsidiary for purposes of this Plan solely by reason of
<PAGE>
serving as such director or receiving compensation from the Company or any
Subsidiary for serving as such director.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as in effect from time to time.
(i) "Fair Market Value" shall mean the fair market value of a
share of Common Stock, as determined pursuant to Section 7 hereof.
(j) "Option" shall mean an incentive stock option or
non-qualified stock option to purchase Common Stock that is granted pursuant to
the Plan.
(k) "Option Agreement" shall mean a written agreement in such
form or forms as the Board (subject to the terms and conditions of this Plan)
may from time to time approve evidencing and reflecting the terms of an Option.
(l) "Optionee" shall mean a Participant to whom an Option is
granted.
(m) "Participant" shall mean each Employee.
(n) "Plan" shall mean this 1994 Stock Option Plan, as amended
from time to time.
(o) "Proprietary Information" shall mean any and all
confidential, proprietary, business and technical information or trade secrets
of the Company or of any Subsidiary or affiliate of the Company revealed,
obtained or developed in the course of Optionee's employment with the Company or
in the course of Optionee's performance of services for the Company in any other
capacity. Such Proprietary Information shall include but shall not be limited
to, methods of production and manufacture, research, marketing and development
plans and efforts, cost information, pricing information, marketing methods and
plans, identities of customers and suppliers, the Company's relationship with
actual or potential customers and the needs and requirements of any such actual
or potential customers, and any other confidential information relating to the
business of the Company. Proprietary Information shall not include (i) such
information as may be necessary or appropriate for an Optionee to disclose in
the course of his employment for the effective and efficient discharge of his
duties as an employee of the Company or as may be required by law to be
disclosed; and (ii) such information as is readily available to the general
public so long as such information did not become available to the general
public as a direct or indirect result of Optionee's breach of his obligation to
maintain confidentiality.
(p) "Public Offering" shall mean the consummation of an
underwritten public offering of the equity of the Company pursuant to the
Securities Act of 1933, as amended, which results in aggregate gross cash
proceeds to the Company (prior to the deduction of underwriters' commissions and
expenses, if any) of not less than Thirty Million Dollars ($30,000,000), and the
Company's outstanding equity had an aggregate market valuation of at least One
Hundred Million Dollars ($100,000,000).
-2-
<PAGE>
(q) "Sale of the Company" shall mean (i) a sale, transfer,
assignment of other disposition (including by merger or consolidation but
excluding a Public Offering), in one transaction or a series of related
transactions, of all of the outstanding Shares of the Company by the holders
thereof or of all or substantially all of the assets of the Company, (ii) a
liquidation of the Company, or (iii) dissolution of the Company.
(r) "Securities Act" shall mean the Securities Act of 1933, as
in effect from time to time.
(s) "Shares" shall mean shares of Common Stock.
(t) "Stock Purchase Agreement" shall mean an agreement in such
form as the Board may from time to time approve, which an Optionee may be
required to execute as a condition of purchasing Shares upon exercise of an
Option.
(u) "Subsidiary" shall mean a subsidiary corporation of the
Company, whether now or hereafter existing, as defined in Sections 424(f) and
(g) of the Code.
Section 3. Participation.
The Board may grant Options at any time and from time to time
to Participants who shall be selected by the Board. Options may be granted only
to Participants. Any grant of Options may include or exclude any Participant, as
the Board shall determine in its sole discretion. A Participant who has been
granted an Option, if he or she is otherwise eligible, may be granted additional
Options.
Section 4. Administration.
(a) Procedure. The Plan shall be administered by the Board or
a Committee consisting of not less than two persons appointed by the Board.
Members of the Board or the Committee who are eligible for Options or have been
granted Options may vote on any matters affecting the administration of the Plan
or the grant of any Options pursuant to the Plan, except that no such member
shall act upon the granting of an Option 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 the granting
of Options to himself or herself.
If a Committee is appointed by the Board, the Committee shall
have the power to administer the Plan on behalf of the Board, and 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 made hereunder by, the Board, subject to such
terms and conditions as the Board may prescribe. Members of the Committee shall
serve for such period of time as the Board may determine. From time to time the
Board may increase
-3-
<PAGE>
the size of the Committee and appoint additional members thereto, 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. If no Committee is appointed, any and all actions
required to be taken hereunder by, and any and all determinations required to be
made hereunder by, the Committee shall instead be taken or made by the Board.
(b) Powers of the Board and the Committee. Subject to the
provisions of the Plan, the Board or its Committee shall have the authority, in
its discretion: (i) to grant Options; (ii) to determine the Fair Market Value
per Share in accordance with Section 7 of the Plan; (iii) to determine the
exercise price of the Options to be granted in accordance with Sections 6 and 7
of the Plan; (iv) to determine the Participants to whom, and the time or times
at which, Options shall be granted, and the number of Shares to be subject to
each Option; (v) to prescribe, amend and rescind rules and regulations relating
to the Plan; (vi) to determine the terms and provisions of each Option granted
under the Plan, each Option Agreement and each Stock Purchase Agreement (which
need not be identical with the terms of other Options, Option Agreements and
Stock Purchase Agreements), (vii) to modify or amend any Option, Option
Agreement or Stock Purchase Agreement, including, without limitation, to
accelerate the exercise date of any Option or to change the termination date of
any Option, (viii) to determine whether any Participant will be required to
execute a Stock Purchase Agreement or other agreement as a condition to the
exercise of an Option, and to determine the terms and provisions of any such
agreement (which need not be identical with the terms of any other such
agreement) and, with the consent of the Optionee, to amend any such agreement;
(ix) to interpret the Plan or any agreement entered into with respect to the
grant or exercise of Options; (x) to authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an Option
previously granted by the Board or to take such other actions as may be
necessary or appropriate with respect to the Company's rights pursuant to
Options or agreements relating to the grant or exercise thereof; and (xii) to
make such other determinations and establish such other procedures as it deems
necessary or advisable for the administration of the Plan.
(c) Effect of the Board's or Committee's Decision. All
decisions, determinations and interpretations of the Board or the Committee
shall be final and binding on all Optionees and any other holders of any Options
granted under the Plan.
(d) Limitation of Liability. Notwithstanding anything herein
to the contrary, no member of the Board or of the Committee shall be liable for
any good faith determination, act or failure to act in connection with the Plan
or any Option granted hereunder.
Section 5. Stock Subject to the Plan.
Subject to this Section 5 and to the provisions of Section 8
of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is Twenty (20). Options may be either incentive stock
options or non-qualified stock options, as determined by the Board.
-4-
<PAGE>
If an Option expires or becomes unexercisable for any reason without having been
exercised in full, the Shares subject to such Option shall, unless the Plan
shall have been terminated, return to the Plan and become available for future
grant under the Plan.
Section 6. Terms and Conditions of Options.
Each Option granted pursuant to the Plan shall be authorized
by the Board and shall be evidenced by an Option Agreement. Each Option
Agreement shall incorporate by reference all other terms and conditions of the
Plan, and shall contain the following terms and conditions:
(a) Number of Shares. The number of shares subject to the
Option.
(b) Option Price. The price per share payable on the exercise
of any Option shall be stated in the Option Agreement and shall be determined by
the Committee. Notwithstanding the foregoing, if an Option which is an incentive
stock Option shall be granted under this Plan, the price payable upon exercise
shall be no less than 100 percent (100%) of the Fair Market Value per share of
the Common Stock on the date such Option is granted, and if it is granted to any
person who, at the time of the grant of such Option, owns capital stock
possessing more than 10% of the total combined voting power of all classes of
the Company's capital stock, the price per share payable upon exercise of such
incentive stock Option shall be no less than 110 percent (110%) of the Fair
Market Value per share of the Common Stock on the date such Option is granted.
(c) Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
be determined by the Board and may consist entirely of cash, check, promissory
notes or Shares having a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised, or any combination of such methods of payment, or such other
consideration and method of payment permitted under any laws to which the
Company is subject which is approved by the Board. In making its determination
as to the type of consideration to accept, the Board shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.
(i) If the consideration for the exercise of an Option is
a promissory note, it may, in the discretion of the Board, be either full
recourse or nonrecourse and shall bear interest at a per annum rate which is not
less than the applicable federal rate determined in accordance with Section
1274(d) of the Code as of the date of exercise. In such an instance, the Company
may, in its sole discretion, retain the Shares purchased upon exercise of the
Option in escrow as security for payment of the promissory note.
(d) Form of Option. The Option Agreement will state whether
the Option granted is an incentive stock option or a non-qualified stock option,
and will constitute a binding determination as to the form of Option granted.
-5-
<PAGE>
(e) Exercise of Options. Any Option granted hereunder shall be
exercisable at such times and under such conditions as shall be set forth in the
Option Agreement (as may be determined by the Board and as shall be permissible
under the terms of the Plan), which may include performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan.
An Option may be exercised in accordance with the
provisions of this Plan as to all or any portion of the Shares then exercisable
under an Option from time to time during the term of the Option. At any time
that the number of shares of Common Stock outstanding exceeds 5,000,000, an
Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company at its principal executive
office in accordance with the terms of the Option Agreement by the person
entitled to exercise the Option and full payment for the Shares with respect to
which the Option is exercised has been received by the Company, accompanied by
any agreements required by the terms of the Plan and/or Option Agreement,
including an executed Stock Purchase Agreement. Full payment may consist of such
consideration and method of payment allowable under Section 6 of the Plan. No
adjustment shall be made for a dividend or other right for which the record date
is prior to the date the Option is exercised, except as provided in Section 8 of
the Plan.
As soon as practicable after any proper exercise of an
Option in accordance with the provisions of the Plan, the Company shall, without
transfer or issue tax to the Optionee, deliver to the Optionee at the principal
executive office of the Company or such other place as shall be mutually agreed
upon between the Company and the Optionee, a certificate or certificates
representing the Shares for which the Option shall have been exercised. The time
of issuance and delivery of the certificate(s) representing the Shares for which
the Option shall have been exercised may be postponed by the Company for such
period as may be required by the Company, with reasonable diligence, to comply
with any applicable listing requirements of any national or regional securities
exchange or any law or regulation applicable to the issuance or delivery of such
Shares.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(f) Vesting of Options.
Options shall vest as follows, provided that no Option
shall vest at the times set forth below if the Optionee is not then an employee
of the Company:
(i) An Option shall become 100% vested, to the extent not
sooner vested, on the date which is ten (10) years after the date of grant.
-6-
<PAGE>
(ii) Commencing on the first anniversary of the completion
by the Company of a Public Offering, and on each of the next four anniversaries
of such completion, each Option granted prior to the Public Offering will vest
in cumulative annual installments of twenty percent (20%) of the Shares subject
to purchase under such Option.
(iii) An Option shall become 100% vested 24 hours prior to
the closing of a Sale of the Company.
(g) Term and Exercise of Options.
(i) Options vested in accordance with Section 6(f)(i)
above must be exercised within thirty (30) days after the vesting date. Shares
purchased upon exercise of Options vested pursuant to Section 6(f)(i) shall be
subject to repurchase by the Company at their then-current Fair Market Value as
provided in the Option Agreement.
(ii) Options vested in accordance with Section 6(f)(ii)
may be exercised at any time during the period ending on the earlier of (i) the
expiration of the term of the Option as set forth in the Option Agreement, or
(ii) sixty (60) days after the termination of such Optionee's employment with
the Company; provided that if Optionee's termination of employment occurred by
reason of the Optionee's death or Disability, such Option may be exercised at
any time within one hundred eighty (180) days after the date of such Optionee's
death or Disability by the Optionee's personal representative or by the legatee
of the Optionee under the will of the Optionee.
(iii) Options vested in accordance with Section 6(f)(iii)
above must be exercised at or in connection with the closing of the Sale of the
Company.
(iv) Vested Options which are not exercised within the
applicable period of exercisability shall terminate.
(h) Termination of Options.
(i) Unless sooner terminated as provided in this Plan,
each Option shall be exercisable for the period of time as shall be determined
by the Board and set forth in the Option Agreement, and shall be void and
unexercisable thereafter.
(ii) Unvested Options will terminate if the employment of
the Optionee terminates for any reason (including by reason of death, Disability
or retirement). Vested or unvested Options may be terminated at any time by
agreement between the Company and the Optionee.
-7-
<PAGE>
(i) Forfeiture. Notwithstanding any other provision of this
Plan, if the Optionee's employment is terminated by the Company and the Board
makes a determination that the Optionee (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 (ii) has been convicted
of a felony or (iii) has disclosed any Proprietary Information without the
consent of the Company or (iv) has breached the terms of any written
confidentiality agreement or any non-competition agreement with the Company in
any material respect, all unexercised Options held by such Optionee shall
terminate on the date of such a finding.
Section 7. Determination of Fair Market Value of Common Stock.
(a) Except to the extent otherwise provided in this Section 7,
the Fair Market Value of a share of Common Stock shall be determined by the
Board in its sole discretion.
(b) In the event that Shares are traded in the
over-the-counter market, the Fair Market Value of a share of Common Stock shall
be the mean of the bid and asked prices for a share of Common Stock on the
relevant valuation date as reported in The Wall Street Journal, or, if there is
no trading on such date, on the next preceding trading date. In the event Shares
are listed on a national or regional securities exchange or traded in the Nasdaq
National Market, the Fair Market Value of a share of Common Stock shall be the
closing price of a share of Common Stock on the exchange or on Nasdaq National
Market, as reported in The Wall Street Journal on the relevant valuation date,
or if there is no trading on that date, on the next preceding trading date.
Section 8. Adjustments.
(a) Subject to required action by the shareholders, if
any, the number of shares of Common Stock as to which Options may be granted
under this Plan and the number of shares subject to outstanding Options and the
option prices thereof shall be adjusted proportionately for any increase or
decrease in the number of outstanding shares of Common Stock of the Company
resulting from stock splits, reverse stock splits, stock dividends,
reclassifications and recapitalizations.
(b) At any time that the number of shares of Common Stock
outstanding exceeds 5,000,000, (i) no Option shall vest in respect of a
fractional share of Common Stock, (ii) no fractional shares of Common Stock
shall be issuable upon the exercise of any Option on account of any action
mentioned in paragraph 8(a) above, and (iii) the aggregate number of shares into
which Shares then covered by under the Option, when changed as the result of
such action, shall be reduced to the number of whole shares resulting from such
action, unless the Board, in its sole discretion, shall determine to issue scrip
certificates with respect to any fractional shares, which scrip certificates, in
such event, shall be in a form and have such terms and conditions as the Board
in its discretion shall prescribe. The 5,000,000 number referred to in the
preceding sentence is not subject
-8-
<PAGE>
to adjustment in the case of stock splits, reverse stock splits, stock
dividends, reclassifications or recapitalizations pursuant to paragraph 8(a)
above.
Section 9. Rights as a Shareholder.
The Optionee shall have no rights as a shareholder of the
Company and shall have neither the right to vote nor receive dividends with
respect to any Shares subject to an Option until such Option has been exercised.
Section 10. Time of Granting Options.
The date of grant of an Option shall, for all purposes, be the
date on which the Board authorizes the granting of such Option. Notice of the
grant shall be given to each Participant to whom an Option is so granted within
a reasonable time after the date of such grant.
Section 11. Modification, Extension and Renewal of Option.
Subject to the terms and conditions of the Plan, the Board may
modify, extend or renew an Option, or accept the surrender of an Option (to the
extent not theretofore exercised). Notwithstanding the foregoing, (a) no
modification of an Option which adversely affects an Optionee shall be made
without the consent of such Optionee, and (b) no incentive stock Option may be
modified, extended or renewed if such action would cause it to cease to be an
"incentive stock option" under the Code, unless the Optionee specifically
acknowledges and consents to the tax consequences of such action.
Section 12. Conditions to Issuance of Shares Upon Exercise.
(a) The obligation of the Company to issue and sell Shares to
an Optionee upon the exercise of an Option granted under the Plan is conditioned
upon (i) the Company obtaining any required permit or order from appropriate
governmental agencies, authorizing the Company to issue and sell such Shares,
and (ii) such issuance and sale complying with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed.
(b) At the option of the Board, the obligation of the Company
to issue and sell Shares to an Optionee upon the exercise of an Option granted
under the Plan may be conditioned upon obtaining appropriate representations,
warranties and agreements of the Optionee set forth in the Stock Purchase
Agreement. Among other representations, warranties, restrictions and agreements,
the Optionee may be required to represent and agree that the purchase of Shares
of Common Stock under the Option Agreement shall be for investment, and not with
a view to the public resale or distribution thereof, unless the Shares subject
to the Option are registered under the
-9-
<PAGE>
Securities Act and the issuance and sale of the Shares complies with all
other laws, rules and regulations applicable thereto. Unless the issuance of
such Shares is registered under the Securities Act, the Optionee shall
acknowledge that the Shares purchased on exercise of the Option are not
registered under the Securities Act and may not be sold or otherwise transferred
unless such Shares have been registered under the Securities Act in connection
with the sale or other transfer, or counsel satisfactory to the Company has
issued an opinion satisfactory to the Company that the sale or other transfer is
exempt from registration under the Securities Act, and unless said sale or other
transfer is in compliance with any other applicable laws, rules and regulations
including all applicable federal and state securities laws, rules and
regulations. Unless the Shares subject to an Option are registered under the
Securities Act, the certificates representing all Shares issued upon exercise of
such Option shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR ANY
APPLICABLE STATE SECURITIES LAWS. THESE
SHARES HAVE NOT BEEN ACQUIRED WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED OR
DISPOSED OF, BY GIFT OR OTHERWISE, OR IN ANY
WAY ENCUMBERED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY APPLICABLE STATE SECURITIES LAWS, OR A
SATISFACTORY OPINION OF COUNSEL SATISFACTORY
TO JEVIC TRANSPORTATION, INC. THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS.
Section 13. Transferability.
No Option shall be assignable or transferable otherwise than
by will or by the laws of descent and distribution. During the lifetime of the
Optionee, the Optionee's Options shall be exercisable only by such Optionee, or
in the event of his or her legal incapacity, then by the Optionee's legal
representative.
Section 14. Other Provisions.
The Option Agreement and Stock Purchase Agreement may contain
such other provisions as the Board of Directors in its discretion deems
advisable and which are not inconsistent with the provisions of this Plan.
-10-
<PAGE>
Section 15. Amendment of the Plan.
Insofar as permitted by law and the Plan, the Board may from
time to time suspend, terminate or discontinue the Plan or revise or amend it in
any respect whatsoever with respect to any Shares at the time not subject to an
Option; provided, however, that without approval of the shareholders, no such
revision or amendment may change the aggregate number of Shares for which
Options may be granted hereunder, change the designation of the class of persons
eligible to receive Options or decrease the price at which Options may be
granted.
Any other provision of this Section 15 notwithstanding, the
Board specifically is authorized to adopt any amendment to this Plan deemed by
the Board to be necessary or advisable to assure that the incentive stock
Options or the non-qualified stock Options available under the Plan continue to
be treated as such, respectively, under the law.
Section 16. Application of Funds.
The proceeds received by the Company from the sale of shares
pursuant to the exercise of Options shall be used for general corporate purposes
or such other purpose as may be determined by the Company.
Section 17. No Obligation to Exercise Option.
The granting of an Option shall impose no obligation upon the
Optionee to exercise such Option.
Section 18. Reservation of Shares.
The Company, during the term of this Plan, shall at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
The Company, during the term of this Plan, shall use its best
efforts to seek to obtain from appropriate regulatory agencies any requisite
authorization in order to issue and sell such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain from any such regulatory agency having jurisdiction the requisite
authorization(s) deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any Shares hereunder, or the inability of the Company to
confirm to its satisfaction that any issuance and sale of any Shares hereunder
will meet applicable legal requirements, shall relieve the Company of any
liability in respect to the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
Section 19. Taxes, Fees, Expenses and Withholding of Taxes.
-11-
<PAGE>
(a) The Company shall pay all original issue and transfer
taxes (but not income taxes, if any) with respect to the grant of Options and/or
the issue and transfer of Shares pursuant to the exercise thereof, and all other
fees and expenses necessarily incurred by the Company in connection therewith,
and will from time to time use its best efforts to comply with all laws and
regulations which, in the opinion of counsel for the Company, shall be
applicable thereto.
(b) The grant of Options hereunder and the issuance of Shares
pursuant to the exercise thereof is conditioned upon the Company's reservation
of the right to withhold in accordance with any applicable law, from any
compensation or other amounts payable to the Optionee, any taxes required to be
withheld under federal, state or local law as a result of the grant or exercise
of such Option or the sale of the Shares issued upon exercise thereof. To the
extent that compensation or other amounts, if any, payable to the Optionee is
insufficient to pay any taxes required to be so withheld, the Company may, in
its sole discretion, require the Optionee, as a condition of the exercise of an
Option, to pay in cash to the Company an amount sufficient to cover such tax
liability or otherwise to make adequate provision for the Company's satisfaction
of its withholding obligations under federal, state and local law.
Section 20. Notices.
Any notice to be given to the Company pursuant to the
provisions of this Plan shall be addressed to the Company in care of its
Secretary (or such other person as the Company may designate from time to time)
at its principal executive office, and any notice to be given to an Optionee
shall be delivered personally or addressed to him or her at the address given
beneath his or her signature on his or her Option Agreement, or at such other
address as such Participant or his or her transferee (upon the transfer of the
Shares purchased upon exercise) may hereafter designate in writing to the
Company. Any such notice shall be deemed duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, registered or certified, and
deposited, postage and registry or certification fee prepaid, in a post office
or branch post office regularly maintained by the United States Postal Service.
It shall be the obligation of each Optionee and each transferee holding Shares
purchased upon exercise of an Option to provide the Secretary of the Company, by
letter mailed as provided herein, with written notice of his or her direct
mailing address.
Section 21. No Enlargement of Optionee Rights.
This Plan is purely voluntary on the part of the Company, and
the continuance of the Plan shall not be deemed to constitute a contract between
the Company and any Optionee, or to be consideration for or a condition of the
employment or service of any Optionee. Nothing contained in this Plan shall be
deemed to give any Optionee the right to be retained in the employ or service of
the Company or any Subsidiary, or to interfere with the right of the Company or
any such corporation to discharge or retire any Optionee thereof at any time,
subject to applicable law. No Optionee shall have any right to or interest in
Options authorized hereunder prior to the grant thereof to such Optionee, and
upon such grant he shall have only such rights and interests as are expressly
-12-
<PAGE>
provided herein, subject, however, to all applicable provisions of the Company's
Certificate of Incorporation, as the same may be amended from time to time.
Section 22. Invalid Provisions.
In the event that any provision of this Plan is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
Section 23. Applicable Law.
This Plan shall be governed by and construed in accordance
with the laws of the State of New Jersey.
-13-
JEVIC TRANSPORTATION, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.
The Jevic Transportation, Inc. Employee Stock Purchase Plan (the
"Plan") is intended to encourage and facilitate the purchase of Shares of the
Common Stock of Jevic Transportation, Inc. (the "Company"), by employees of the
Company and any Participating Companies, thereby providing employees with a
personal stake in the Company and a long range inducement to remain in the
employ of the Company and Participating Companies. It is the intention of the
Company that the Plan qualify as an "employee stock purchase plan" within the
meaning of Section 423 of the Code.
2. Definitions.
(a) "Account" means a bookkeeping account established by the Committee
on behalf of a Participant to hold Payroll Deductions.
(b) "Approved Leave of Absence" means a leave of absence that has been
approved by the applicable Participating Company in such a manner as the Board
may determine from time to time.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Committee appointed pursuant to section 14 of
the Plan.
(f) "Company" means Jevic Transportation, Inc.
(g) "Compensation" means an Employee's cash compensation payable for
services to a Participating Company during a calendar month.
(h) "Election Form" means the form acceptable to the Committee which an
Employee shall use to make an election to purchase Shares through Payroll
Deductions pursuant to the Plan.
(i) "Eligible Employee" means an Employee who meets the requirements
for eligibility under section 3 of the Plan.
(j) "Employee" means a person who is an employee of a Participating
Company.
(k) "Five Percent Owner" means an Employee who, with respect to a
Participating Company, is described in section 423(b) of the Code.
<PAGE>
(l) "Offering" means an offering of Shares to Eligible Employees
pursuant to the Plan.
(m) "Offering Commencement Date" means the first day of each January
and July, beginning on or after adoption of the Plan by the Board, until the
Plan Termination Date, provided that the first Offering Commencement Date may be
delayed until the first day of the second month after adoption of the Plan, if
necessary to permit Participants to make elections in accordance with section
3(e) of the Plan.
(n) "Offering Period" means the period extending from an Offering
Commencement Date through the following Offering Termination Date.
(o) "Offering Termination Date" means the last day of each six-month
period following an Offering Commencement Date. If the initial Offering
Commencement Date is not a January 1 or July 1, the initial Offering Termination
Date shall be the earlier of the June 30 or December 31 next following the
initial Offering Commencement Date.
(p) "Option Price" means 85 percent of the average of the high and low
sales prices per Share on the principal exchange on which the Shares are listed
or, if not so listed, on the Nasdaq National Market, on the Offering Termination
Date, or if such date is not a trading day, then on the next trading day
thereafter.
(q) "Participant" means an Employee who meets the requirements for
eligibility under section 3 of the Plan and who has timely delivered an Election
Form to the Committee.
(r) "Participating Company" means, as provided in Schedule A, the
Company and subsidiaries of the Company, within the meaning of section 424(f) of
the Code, if any, that are approved by the Board from time to time and whose
employees are designated as Employees by the Board.
(s) "Payroll Deductions" means amounts withheld from a Participant's
Compensation pursuant to the Plan, as described in section 5 of the Plan.
(t) "Plan" means Jevic Transportation, Inc. Employee Stock Purchase
Plan, as set forth in this document, and as may be amended from time to time.
(u) "Plan Termination Date" means the earlier of:
(1) The Offering Termination Date for the Offering in which the
maximum number of Shares specified in section 5 of the Plan have been
issued pursuant to the Plan; or
(2) The date as of which the Board chooses to terminate the Plan as
provided in section 15 of the Plan.
- 2 -
<PAGE>
(v) "Shares" means shares of Common Stock of the Company, no par value.
(w) "Successor-in-Interest" means the Participant's executor or
administrator, or such other person or entity to whom the Participant's rights
under the Plan shall have passed by will or the laws of descent and
distribution.
(x) "Termination Form" means the form acceptable to the Committee which
an Employee shall use to withdraw from an Offering pursuant to section 8 of the
Plan.
3. Eligibility and Participation.
(a) Initial Eligibility. Except as provided in section 3(b) of the
Plan, each Employee shall be eligible to participate in the Plan.
(b) Ineligibility. An Employee shall not be eligible to participate in
the Plan if such Employee:
(1) Is a Five Percent Owner;
(2) Is a temporary Employee;
(3) Has been employed by a Participating Company on a full-time basis
for less than a 6-consecutive-month period ending on the last day of the
month immediately preceding the effective date of an election to purchase
Shares pursuant to the Plan;
(4) Has not customarily worked more than 20 hours per week during a
24-consecutive-month period ending on the last day of the month
immediately preceding the effective date of an election to purchase Shares
pursuant to the Plan; or
(5) Is restricted from participating under section 3(d) of the Plan.
(c) Leave of Absence. For purposes of participation in the Plan, an
Employee on an Approved Leave of Absence shall be deemed to be an Employee for
the first 90 days of such Approved Leave of Absence and such Employee's
employment shall be deemed to have terminated for purposes of participation
under the Plan at the close of business on the 90th day of such Approved Leave
of Absence unless such Employee shall have returned to regular non-temporary
employment before the close of business on such 90th day. Termination by the
Participating Company of an Employee's Approved Leave of Absence, other than
termination or return to non-temporary employment, shall terminate an Employee's
employment for all purposes of the Plan and shall terminate such Employee's
participation in the Plan and the right to exercise any option. An Approved
Leave of Absence shall be considered active employment for purposes of sections
3(b)(3) and 3(b)(4) of the Plan.
- 3 -
<PAGE>
(d) Restrictions on Participation. Notwithstanding any provisions of
the Plan to the contrary, no Employee shall be granted an option to participate
in the Plan if:
(1) Immediately after the grant, such Employee would be a Five Percent
Owner; or
(2) Such option would permit such Employee's rights to purchase stock
under all employee stock purchase plans of the Participating Companies
which meet the requirements of section 423(b) of the Code to accrue at a
rate which exceeds $25,000 in fair market value (as determined pursuant to
section 423(b)(8) of the Code) for each calendar year in which such option
is outstanding.
(e) Commencement of Participation. An Employee who meets the
eligibility requirements of sections 3(a) and 3(b) of the Plan and whose
participation is not restricted under section 3(d) of the Plan shall become a
Participant by completing an Election Form and filing it with the Committee on
or before the 15th day of the month immediately preceding the Offering
Commencement Date for the first Offering to which such Election Form applies.
Payroll Deductions for a Participant shall commence on the applicable Offering
Commencement Date when his or her authorization for Payroll Deductions becomes
effective, and shall end on the Plan Termination Date, unless sooner terminated
by the Participant pursuant to section 8 of the Plan.
4. Shares Per Offering.
The Plan shall be implemented by a series of Offerings that shall
terminate on the Plan Termination Date. Offerings shall be made with respect to
Compensation payable for each calendar month of the Company's fiscal year for
the period commencing with the first day of the month first occurring on or
after adoption of the Plan by the Board and ending with the Plan Termination
Date. Shares available for any Offering shall be the difference between the
maximum number of Shares that may be issued under the Plan, as determined
pursuant to section 10(a) of the Plan, for all of the Offerings, less the actual
number of Shares purchased by Participants pursuant to prior Offerings. If the
total number of Shares for which options are exercised on any Offering
Termination Date exceeds the maximum number of Shares available, the Committee
shall make a pro rata allocation of Shares available for delivery and
distribution in as nearly a uniform manner as practicable, and as it shall
determine to be fair and equitable, and the unapplied Account balances shall be
returned to Participants as soon as practicable following the Offering
Termination Date.
- 4 -
<PAGE>
5. Payroll Deductions.
(a) Amount of Payroll Deductions. An Eligible Employee who wishes to
participate in the Plan shall file an Election Form with the Committee at least
15 days before the Offering Commencement Date for the first Offering for which
such Election Form is effective on which he or she may elect to have Payroll
Deductions of such amounts designated by the Committee on the Election Form from
time to time made from his or her Compensation on each regular payday during the
time he or she is a Participant in the Plan, provided that the rules established
by the Committee shall be consistent with section 423(b)(5) of the Code.
(b) Participants' Accounts. All Payroll Deductions with respect to a
Participant pursuant to section 5(a) of the Plan shall be credited to the
Participant's Account under the Plan.
(c) Changes in Payroll Deductions. A Participant may discontinue his
participation in the Plan as provided in section 8(a) of the Plan, but no other
change can be made during an Offering, including, but not limited to, changes in
the amount of Payroll Deductions for such Offering. A Participant may change the
amount of Payroll Deductions for subsequent Offerings by giving written notice
of such change to the Committee on or before the 15th day of the month
immediately preceding the Offering Commencement Date for the Offering for which
such change is effective.
(d) Leave of Absence. A Participant who goes on an Approved Leave of
Absence before the Offering Termination Date after having filed an Election Form
with respect to such Offering may:
(1) Withdraw the balance credited to his or her Account pursuant to
section 8(b) of the Plan;
(2) Discontinue contributions to the Plan but remain a Participant in
the Plan through the Offering Termination Date;
(3) Remain a Participant in the Plan during such Approved Leave of
Absence through the Offering Termination Date and continue the
authorization for the Participating Company to make Payroll Deductions for
each payroll period out of continuing payments to such Participant, if any.
6. Granting of Options.
On each Offering Termination Date, each Participant shall be deemed to
have been granted an option to purchase a minimum of one (1) Share and a maximum
number of Shares that shall be a number of whole Shares equal to the quotient
obtained by dividing the balance credited to the Participant's Account as of the
Offering Termination Date, by the Option Price.
- 5 -
<PAGE>
7. Exercise of Options.
(a) Automatic Exercise. With respect to each Offering, a Participant's
option for the purchase of Shares granted pursuant to section 6 of the Plan
shall be deemed to have been exercised automatically on the Offering Termination
Date applicable to such Offering.
(b) Fractional Shares and Minimum Number of Shares. Fractional Shares
shall not be issued under the Plan. Amounts credited to an Account remaining
after the application of such Account to the exercise of options for a minimum
of one (1) full Share shall be credited to the Participant's Account for the
next succeeding Offering, or, at the Participant's election, returned to the
Participant as soon as practicable following the Offering Termination Date,
without interest.
(c) Transferability of Option. No option granted to a Participant
pursuant to the Plan shall be transferable other than by will or by the laws of
descent and distribution, and no such option shall be exercisable during the
Participant's lifetime other than by the Participant.
(d) Delivery of Certificates for Shares. The Company shall deliver
certificates for Shares acquired on the exercise of options during an Offering
Period as soon as practicable following the Offering Termination Date.
8. Withdrawals.
(a) Withdrawal of Account. A Participant may elect to withdraw the
balance credited to the Participant's Account by providing a Termination Form to
the Committee at any time before the Offering Termination Date applicable to any
Offering.
(b) Amount of Withdrawal. A Participant may withdraw all, but not less
than all, of the amounts credited to the Participant's Account by giving a
Termination Form to the Committee. All amounts credited to such Participant's
Account shall be paid as soon as practicable following the Committee's receipt
of the Participant's Termination Form, and no further Payroll Deductions will be
made with respect to the Participant.
(c) Effect of Withdrawal on Subsequent Participation. A Participant who
elects to withdraw from an Offering pursuant to section 8(a) of the Plan shall
be deemed to have elected not to participate in each of the four succeeding
Offerings following the date on which the Participant gives a Termination Form
to the Committee.
(d) Termination of Employment. Upon termination of a Participant's
employment for any reason other than death, including termination due to
disability or continuation of a leave of absence beyond 90 days, all amounts
credited to such Participant's Account shall be returned to the Participant. In
the event of a Participant's (1) termination of employment due to death or (2)
death after termination of employment but before the Participant's Account has
been returned, all
- 6 -
<PAGE>
amounts credited to such Participant's Account shall be returned to the
Participant's Successor-in-Interest.
(e) Leave of Absence. A Participant who is on an Approved Leave of
Absence shall, subject to the Participant's election pursuant to section 5(d) of
the Plan, continue to be a Participant in the Plan until the end of the first
Offering ending after commencement of such Approved Leave of Absence. A
Participant who has been on an Approved Leave of Absence for more than 90 days
shall not be eligible to participate in any Offering that begins on or after the
commencement of such Approved Leave of Absence so long as such leave of absence
continues.
9. Interest.
No interest shall be paid or allowed with respect to amounts paid into
the Plan or credited to any Participant's Account.
10. Shares.
(a) Maximum Number of Shares. No more than 300,000 Shares may be issued
under the Plan. Such Shares may be unissued shares or treasury shares of the
Company. The number of Shares available for any Offering and all Offerings shall
be adjusted if the number of outstanding Shares of the Company is increased or
reduced by split-up, reclassification, stock dividend or the like. All Shares
issued pursuant to the Plan shall be validly issued, fully paid and
nonassessable.
(b) Participant's Interest in Shares. A Participant shall have no
interest in Shares subject to an option until such option has been exercised.
(c) Registration of Shares. Shares to be delivered to a Participant
under the Plan shall be registered in the name of the Participant.
(d) Restrictions on Exercise. The Board may, in its discretion, require
as conditions to the exercise of any option such conditions as it may deem
necessary to assure that the exercise of options is in compliance with
applicable securities laws.
11. Expenses.
The Participating Companies shall pay all fees and expenses incurred
(excluding individual Federal, state, local or other taxes) in connection with
the Plan. No charge or deduction for any such expenses will be made to a
Participant upon the termination of his or her participation under the Plan or
upon the distribution of certificates representing Shares purchased with his or
her contributions.
- 7 -
<PAGE>
12. Taxes.
The Participating Companies shall have the right to withhold from each
Participant's Compensation an amount equal to all Federal, state, city or other
taxes as the Participating Companies shall determine are required to be withheld
by them. In connection with such withholding, the Participating Companies may
make any such arrangements as are consistent with the Plan as it may deem
appropriate, including the right to withhold from Compensation paid to a
Participant other than in connection with the Plan.
13. Plan and Contributions Not to Affect Employment.
The Plan shall not confer upon any Eligible Employee any right to
continue in the employ of the Participating Companies.
14. Administration.
The Plan shall be administered by the Board, which may delegate
responsibility for such administration to a committee of the Board (the
"Committee"). If the Board fails to appoint the Committee, any references in the
Plan to the Committee shall be treated as references to the Board. The Board, or
the Committee, shall have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, and to make all other
determinations deemed necessary or advisable in administering the Plan, with or
without the advice of counsel. The determinations of the Board or the Committee
on the matters referred to in this paragraph shall be conclusive and binding
upon all persons in interest.
15. Amendment and Termination.
The Board may terminate the Plan at any time and may amend the Plan
from time to time in any respect; provided, however, that upon any termination
of the Plan, all Shares or Payroll Deductions (to the extent not yet applied to
the purchase of Shares) under the Plan shall be distributed to the Participants,
provided further, that no amendment to the Plan shall affect the right of a
Participant to receive his or her proportionate interest in the Shares or his or
her Payroll Deductions (to the extent not yet applied to the purchase of Shares)
under the Plan, and provided further that the Company may seek shareholder
approval of an amendment to the Plan if such approval is determined to be
required by or advisable under the regulations of the Securities or Exchange
Commission or the Internal Revenue Service, the rules of any stock exchange or
system on which the Shares are listed or other applicable law or regulation.
16. Effective Date.
The Plan shall be effective on July 1, 1997, subject to approval by the
Company's shareholders within one year of the adoption of the Plan by the Board.
Any option granted before the approval of the Plan by the Company's shareholders
shall be expressly conditioned upon such
- 8 -
<PAGE>
approval, and no Share certificates shall be issued until such approval. If
shareholder approval is not received within 12 months before or after the date
of the initial adoption of the Plan by the Board, no Share certificates shall be
issued with respect to any automatic exercises which may have occurred pursuant
to section 7 of the Plan, and all amounts credited to Participants' Accounts
with respect to such Shares shall be returned to Participants as soon as
administratively practicable.
17. Government and Other Regulations.
(a) In General. The purchase of Shares under the Plan shall be subject
to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies as may be required.
(b) Securities Law. The Committee shall have the power to make each
grant under the Plan subject to such conditions as it deems necessary or
appropriate to comply with the then-existing requirements of the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended,
including Rule 16b-3 (or any similar rule) of the Securities and Exchange
Commission.
18. Non-Alienation.
No Participant shall be permitted to assign, alienate, sell, transfer,
pledge or otherwise encumber his interest under the Plan prior to the
distribution to him of Share certificates. Any attempt at assignment,
alienation, sale, transfer, pledge or other encumbrance shall be void and of no
effect.
19. Notices.
Any notice required or permitted hereunder shall be sufficiently given
only if delivered personally, telecopied, or sent by first class mail, postage
prepaid, and addressed:
If to the Company:
Jevic Transportation, Inc.
P.O. Box 5157
Delanco, NJ 08075
Attention: Employee Stock Purchase Plan Committee
Or any other address provided pursuant to written notice.
- 9 -
<PAGE>
If to the Participant:
At the address on file with the Company from time to time, or to such
other address as either party may hereafter designate in writing by
notice similarly given by one party to the other.
20. Successors.
The Plan shall be binding upon and inure to the benefit of any
successor, successors or assigns of the Company.
21. Severability.
If any part of this Plan shall be determined to be invalid or void in
any respect, such determination shall not affect, impair, invalidate or nullify
the remaining provisions of this Plan which shall continue in full force and
effect.
22. Acceptance.
The election by any Eligible Employee to participate in this Plan
constitutes his or her acceptance of the terms of the Plan and his or her
agreement to be bound hereby.
23. Applicable Law.
This Plan shall be construed in accordance with the laws of the State
of New Jersey, to the extent not preempted by applicable Federal law.
- 10 -
EXHIBIT 10.4
THE CORPORATE PLAN FOR RETIREMENT (SERVICE MARK)
(PROFIT SHARING/401(K) PLAN)
A FIDELITY PROTOTYPE PLAN
Non-Standardized Adoption Agreement 002
Basic Plan No. 07
<PAGE>
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Non-standardized Profit Sharing Plan with COOA
FFN: 5031874AH07-002 Case: 9306266 EIN: 04-2033129
BPC: 07 Plan: 002 Letter Serial No: D358678b
Washington, DC 20224
Person to Contact: Mr. Dua
FIDELITY MANAGEMENT & RESEARCH CO
Telephone Number: (202) 622-8380
82 DEVONSHIRE STREET C7A
Refer Reply to: E:EP:Q:3
BOSTON, MA 02109
Date: 08/24/93
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely affect the plan's acceptability under section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/ Illegible
Chief Employee Plans Qualifications Branch
<PAGE>
INSTRUCTIONS - NON-STANDARDIZED PROFIT SHARING/401(K) PLAN
ADOPTION AGREEMENT
All sections of this Adoption Agreement must be completed, except where stated
as optional. An Employer may only select the options listed. Due to Internal
Revenue Service regulations an Employer may not make any changes to the printed
language in this Adoption Agreement, no matter how slight. An Employer should
consult with its attorney and/or accountant for assistance in completing this
Agreement.
1.01. PLAN INFORMATION:
(a) Enter the legal name of the Plan.
(b) Type of Plan (Select one option):
(b)(1) A 401(k) and profit sharing plan includes Employee Deferral
Contributions, Employer Matching Contributions (optional), Employer
Fixed or Discretionary Contributions and Qualified Discretionary
Contributions (optional).
(b)(2) A profit sharing plan includes only Employer fixed or Discretionary
Contributions.
(b)(3) A 401(k) plan includes Employee Deferral Contributions, Employer
Matching Contributions (optional) and Qualified Discretionary
Contributions (optional). Check this option if the Plan has 401(k) plan
features and there is a frozen profit sharing plan source for
Participant Accounts.
(c) Complete only if the Plan Administrator is not the Employer. (Fidelity
is not the Plan Administrator). A Committee may be designated to act on
behalf of the Plan Administrator. However, in such case, the Employer
or other Plan Administrator would still be named in this section.
(d) "Limitation Year" refers to the twelve-month period used to determine if
the Internal Revenue Code Section 415 annual addition limitation has
been exceeded for a Participant. If an Employer is a member of a
controlled group of businesses (as defined by the Internal Revenue Code)
and adopts this Plan, then the Limitation Year for all Employer plans,
(regardless of whether the other Related Employers adopt this Plan) must
be the same. (Check one only).
(e) This is the three digit number assigned to the plan as required by the
Internal Revenue Service. For a new plan, if the Employer does not
currently or has never maintained another qualified retirement then this
Plan Number will be "001". If the Employer currently maintains or has
ever maintained another qualified retirement plan then this Plan will be
"002". If the Employer currently maintains or has ever maintained two
other qualified retirement plans then this Plan will be "003", etc. An
existing Employer plan that is a conversion from another plan document
must use the same three digit plan number currently in effect.
(f) Enter the month and day of the Plan Year end (i.e., December 31). The
Plan Year must be the last day of a month.
(g)(1) (Select (1) or (2).) If this is a new plan then enter the Effective
Date. Generally, the Effective Date for a new plan may be any date
during the initial year the Plan is established. This date will
determine the appropriate Entry Date(s) for eligible Employees under
Section 1.03(b), the measurement period to determine eligible
Compensation for new Participants under Section 1.04(b), and the maximum
Participant annual addition limitation for the initial Plan Year. An
Employer may have an Effective Date that is different from the Fidelity
Implementation Date (This is the date an Employer's Plan is implemented
with Fidelity as identified in the Fidelity Service Agreement.) For
example, an Employer's Plan may have a January 1, 1994, Effective Date
but a June 1, 1994, Implementation Date.
If this Plan is a "spin-off" from a prior plan, then the Employer must
check option (g)(1). A "spin-off" is when an existing qualified
retirement plan is separated into one or more plans. The separation may
be the result of a business entity selling a division or portion of its
assets to the Employer, or when the Employer wants to separate one plan
into two or more plans.
<PAGE>
ADOPTION AGREEMENT
ARTICLE 1
NON-STANDARDIZED PROFIT SHARING PLAN
1.01 PLAN INFORMATION
(a) Name of Plan:
This is the Jevic Transpsortation, Inc.
-------------------------------------
401K Savings Plan Plan (the "Plan").
----------------------------
(b) Type of Plan:
(1) /x/ 401(k) and Profit Sharing
(2) / / Profit Sharing Only
(3) / / 401(k) Only
(c) Name of Plan Administrator, if not the Employer:
__________________________________________________
Address: _______________________________________
Phone Number: ___________________________________
The Plan Administrator is the agent for service of legal process
for the Plan.
(d) Limitation Year (check one):
(1) /xx/ Calendar Year
(2) / / Plan Year
(3) / / Other: _____________
(e) Three Digit Plan Number: 001
-------------
(f) Plan Year End (month/day): December 31
-----------------
(g) Plan Status (check one):
(1) / / Effective Date of new Plan:
----------------
<PAGE>
(2) /x/ Amendment Effective Date: July 1, 1994. This is (check
one):
(A) / / an amendment of The CORPORATEplan for Retirement Adoption
Agreement previously executed by the Employer; or
(B) /x/ a conversion from another plan document into The
CORPORATEplan for Retirement.
The original effective date of the Plan: January 1, 1986
------------------
The substantive provisions of the Plan shall apply prior to the
Effective Date to the extent required by the Tax Reform Act of
1986 or other applicable laws.
1.02 EMPLOYER
(a) The Employer is: Jevic Transportation, Inc.
--------------------------------------------
Address: PO Box 5157 600 Creek Road
--------------------------------------------
Delanco, New Jersey 08075
--------------------------------------------
Contact's Name: Mr. Ray Conlin - Director of Risk Management
------------------------------------------------
Telephone Number: (609) 461-7111
--------------------------------------------
(1) Employer's Tax Identification Number: 22-237-3402
-------------------
(2) Business form of Employer (check one):
(A) / / Corporation
(B) / / Sole proprietor or partnership
(C) /x/ Subchapter S Corporation
(D) / / Governmental
(E) / / Tax-exempt organization
(F) / / Rural Electric Cooperative
(3) Employer's fiscal year end: December 31
---------------
(4) Date business commenced: May 1981
---------------
2
<PAGE>
Instructions - Page 2
(g)(2) Enter the Effective Date of Amendment to the CORPORATEplan for
Retirement(service mark). This is the date that all Plan assets will
be wired to Fidelity and when the provisions in this Adoption
Agreement will become effective. This date MUST be the first day of a
month. The Effective Date for an Employer checking option (A) below
must be the same date as the Implementation Date. The Implementation
Date is also identified in the Fidelity Service Agreement.
(A) If an Employer previously adopted the CORPORATEplan for
Retirement(service mark) and is amending or restating it then check this
option. Also enter the plan's original Effective Date on the line
below (B). (This is the date the Plan was originally established by
the Employer.)
(B) If this is an amendment or conversion of the Employer's Plan from
another plan document then check this option. Also enter the Plan's
original Effective Date on the line below (B). (This is the date the
Plan was originally established by the Employer.)
1.02. EMPLOYER:
(a) Enter the Employer's legal name, principal address, contact name and
phone number. If one or more Related Employers are adopting this Plan
then the Employer identified in this section should be the Employer
sponsoring the plan. A union may not be listed as an Employer, but an
Employer may establish a Plan for its employees covered by a collective
bargaining agreement with a union. An association may establish a Plan
only for its own Employees. The association may not establish a Plan for
its members.
(a)(1) Enter the Employer's Federal tax identification number. This is not the
Federal tax identification number of the Plan.
(a)(2) Select the business form(s) of the Employer. Related Employers under
1.02.(b) adopting the CORPORATEplan for Retirement(service mark) that
have multiple business forms may select more than one business form, if
applicable.
NOTE: Tax-exempt employers and plans of government employers are not
allowed to establish 401(k) plans. However, plans of tax-exempt
employers adopted before July 2, 1986, and plans of state and
local governments adopted before May 6, 1986, are not subject to
this restriction.
(a)(3) Enter the month and day of the Employer's, not the Plan's, fiscal tax
year end.
(a)(4) Enter the date the Employer's business commenced.
<PAGE>
(b) The term "Employer" includes the following Related Employer(s)
(as defined in Section 2.01(a)(26)):
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
1.03 COVERAGE
(a) All Employees who meet the conditions specified below will be
eligible to participate in the Plan:
(1) Service requirement (check one):
(A) / / no service requirement.
(B) / / three consecutive months of service (no minimum
number Hours of Service can be required).
(C) /x/ six consecutive months of service (no minimum
number Hours of Service can be required).
(D) / / one Year of Service (1,000 Hours of Service is
required during the Eligibility Computation
Period.)
(2) Age requirement (check one):
(A) / / no age requirement.
(B) /x/ must have attained age 20-1/2 (not to exceed 21).
3
<PAGE>
Instructions - Page 3
(b) (Optional) If an Employer is part of an affiliated service group or
controlled group of employers (collectively defined as "Related
Employers") then it may include one or more Related Employers, in the
definition of "Employer" under this Plan. (Unrelated Employers CANNOT be
included as part of the Employer's Plan. Please consult your attorney
and/or accountant for assistance on the definition of legally Related
Employers.) Each Related Employer must take the appropriate legal
action (i.e., Board of Directors' Resolution for a corporation) to
be included as part of the Employer's Plan. If any Related Employer(s)
is/are excluded from this Plan then the Employer is still responsible
for insuring that this Plan complies with the minimum coverage
requirements of Internal Revenue Code Section 410(b), the
nondiscrimination requirements of Internal Revenue Code Section
401(a)(4) the minimum participation requirements of Internal Revenue
Code Section 401(a)(26) and any other Internal Revenue Code
requirements. Employees of Related Employers, even if those Employees do
not participate in this Plan, will be considered in applying the minimum
coverage and participation tests. Furthermore, all eligible
Participants, regardless of whether employed by the Employer or a
Related Employer must receive a uniform allocation percentage of
compensation (i.e., 5% of eligible Compensation) under Section 1.05(a),
if any, and/or the same uniform matching percentage (i.e., 50% match
for each $1.00 of Deferral Contributions) under Section 1.05(c).
1.03. COVERAGE
(a) An Employer may require Employees to complete a specified minimum period
of employment and/or attain a minimum age to be eligible to participate
in the Plan. An Employer's Plan that is a 401(k) and a Profit Sharing
Plan must select the same service requirement for the 401(k) and profit
sharing portion of the plan.
(a)(1) (Select one option.) The maximum Employee eligibility service
requirement allowed by the Internal Revenue Service for an Employer's
401(k) plan is one year of service. An Employer may elect no service
requirement (Option A), a three consecutive months requirement (Option
B), or a six consecutive months requirement (Option C). However, if
Option B or C is elected, the Employer cannot require an Employee to
work a specified number of hours. For this purpose, "consecutive" means
uninterrupted period of employment with the Employer or Related
Employer. If the one year service requirement is selected (Option D)
then the Employee must complete 1,000 Hours of Service with the Employer
during the twelve month period beginning on his/her date-of-hire and
ending on his/her employment anniversary date.
(a)(2) (Select one option.) An Employer may elect not to have an age
requirement (Option A) or an Employer may specify an age requirement
as long as it is not greater than 21 (Option B).
<PAGE>
(3) The class of Employees eligible to participate in the Plan
(check one):
(A) /x/ includes all Employees of the Employer.
(B) / / includes all Employees of the Employer except for (check
the appropriate box(es)):
(i) / / Employees covered by a collective bargaining
agreement.
(ii) / / Highly Compensated Employees as defined in
Code Section 414(q).
(iii) / / Leased Employees as defined in Section
2.01(a)(18).
(iv) / / Nonresident aliens who do not receive any
earned income from the Employer which
constitutes United States source income.
(v) / / Other
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Note: No exclusion in this section may create a discriminatory
class of employees. An Employer's plan must still pass the
Internal Revenue Code coverage and participation
requirements if one or more of the above groups of
Employees have been excluded from the Plan.
(b) The Entry Date(s) shall be (check one):
(1) / / the first day of each Plan Year (not if Section 1.03
(a)(1)(D) is elected).
(2) / / the first day of each Plan Year and the date six months
later.
(3) /x/ the first day of each Plan Year and the first day of the
fourth, seventh, and tenth months.
(4) / / the first day of each month.
4
<PAGE>
Instructions - Page 4
(a)(3)(A) If all Employees of the Employer and Related Employers, if applicable,
are eligible to participate in the Plan after meeting the service and
age requirement(s), if any, then select this option.
(a)(3)(B) An Employer may exclude certain non-discriminatory groups of Employees
from participating in the Plan. An Employer may exclude Employees by
checking the appropriate option(s) in (B):
(i) Collective bargaining employees as defined in Section
2.01(a)(10) of the Basic Plan Document,
(ii) Highly Compensated Employees as defined in Internal
Revenue Code Section 414(q),
(iii) Leased Employees as defined in Section 2.01(a)(18) of the
Basic Plan Document,
(iv) Nonresident aliens who do not receive any earned income
from the Employer which constitutes United States source
income.
(v) Any other non-discriminatory group of Employees in
accordance with the Internal Revenue Code, Internal
Revenue Service regulations and other governmental
regulations.
The Employer will be responsible for compliance with the appropriate
annual required Internal Revenue Code tests if any group(s) of Employees
is/are excluded from the Plan. The term "Employer" includes the Employer
and any Related Employer(s).
(b) (Select one option.) The Entry Date is the date an eligible Employee may
actually begin participating in the Plan. Participation may
occur only on or after the date an Employee satisfies the
service and/or age requirement(s). Option (1) provides for an
annual Entry Date. Option (1) may not be selected if an
Employer elected a one-year service requirement in Section
1.03(a)(1)(D) or an age requirement greater than 20-1/2 in
Section 1.03(a)(2)(B). Option (2) provides for semi-annual Entry
Dates, Option (3) provides for quarterly entry dates and Option
(4) provides for monthly Entry Dates. An Employee may become
eligible to participate in the plan on the Effective Date if
Section 1.03(c)(2) or (3) is selected. (Select one option)
<PAGE>
(c) Date of Initial Participation - An Employee will become a Participant
unless excluded by Section 1.03(a)(3) above on the Entry Date
immediately following the date the Employee completes the service and
age requirement(s) in Section 1.03(a), if any except (check one):
(1) / / No exceptions.
(2) / / Employees employed on the Effective Date in Section 1.01(g)
will become Participants on that date.
(3) /x/ Employees who meet the age and service requirement(s) of
Section 1.03(a) on the Effective Date in Section 1.01(g)
will become Participants on that date.
1.04 COMPENSATION
(a) For purposes of determining Contributions under the Plan, Compensation
shall be as defined in Section 2.01(a)(7), but excluding (check the
appropriate box(es)):
(1) / / Overtime Pay.
(2) / / Bonuses.
(3) / / Commissions.
(4) / / The value of a qualified or a non-qualified stock option granted
to an Employee by the Employer to the extent such value is
includable in the Employee's taxable income.
Note: These exclusions shall not apply for purposes of the "Top
Heavy" requirements in Section 9.03, or allocating
Discretionary Employer Contributions if an Integrated Formula
is elected in Section 1.05(a)(2)(B).
(5) /x/ No exclusions.
5
<PAGE>
Instructions - Page 5
(c) (Select one option.) Upon adoption of the CORPORATEplan for
Retirement(Service Mark), an Employer may determine when an Employee
who is not yet otherwise eligible may become a Participant in the Plan.
The Employer has three different options.
(c)(1) If this option is selected then an Employee must satisfy the service
and age requirement(s) in Section 1.03(a)(1) and (2) before being
eligible to participate in the Plan on the Entry Date(s) elected in
Section 1.03(b).
(c)(2) If this option is checked then an Employee who is employed by the
Employer on the Effective Date in Section 1.01(g) is eligible to
participate in the Plan on the Effective Date regardless of whether
or not he/she has satisfied the service and age requirement(s) in
Section 1.03(a)(1). This is a special one-time election for the
Employer due to the adoption of the Fidelity CORPORATEplan for
Retirement(Service Mark). An eligible Employee is considered a
Participant and will be included in the appropriate annual Internal
Revenue Code tests (i.e. minimum coverage, minimum participation,
annual addition, actual deferral percentage and actual contribution
percentage tests, etc.). Therefore, an eligible Participant who elects
not to make any Employee Deferral Contributions under Section
1.05(b)(1) as of the Effective Date in Section 1.01(g) may make them
on the next available date under Section 1.05(b)(1)(A).
(c)(3) If this option is checked then an Employee must satisfy the service
and age requirement(s) in Section 1.03(a)(1) before being eligible
to participate in the Plan on the earlier of the Effective Date in
Section 1.01(g) or the next Entry Date. Checking this option creates
a special one-time Entry Date based upon the Effective Date.
1.04 COMPENSATION (Select one option):
(a) Compensation is defined under the Plan as total Compensation paid which
is reportable as earnings in the wages, tips and other Compensation
box on the annual IRS tax Form W-2 ("W-2 Compensation"), subject to
any elections in Section 1.04(a)(1) through (4). For purposes of
determining Employee and Employer Contributions under Section 1.05,
W-2 Compensation is modified as follows:
to include:
o Internal Revenue Code Section 401(k) salary deferrals (known as
Deferral Contributions under this Plan);
o Internal Revenue Code Section 125 salary deferrals (Employee pre-tax
contributions to a "cafeteria plan");
o Elective contributions under Internal Revenue Code Sections 402(h)
(Simplified Employee Pension), 403(b) (Tax Sheltered Annuities),
other deferred compensation described in Section 457(b) (Plan of
State and Local Governments and Tax-Exempt Organizations), or
414(h)(2) (Plan of a State or Political Subdivision of the
Government), and
to exclude:
o Deferred compensation;
o Fringe benefits (cash and non-cash);
o Moving expenses;
o Reimbursements or other expense allowances;
o Welfare benefits.
This modified W-2 Compensation definition meets the "safe harbor"
requirements of the regulations under Internal Revenue Code Section
414(s). However, Compensation for purposes of the Internal Revenue
Code actual deferral percentage test and the actual contribution
percentage test will be based upon the aforementioned definition of
Compensation regardless of any items excluded from the definition of
Compensation in Section 1.04(a)(1) through (4).
An Employer may exclude overtime pay, bonuses, commissions, and/or
the value of a qualified or non-qualified stock option granted from
an Employee's Compensation by checking the appropriate option(s) in
(a)(1) through (4). However, an Employer may not exclude bonuses from
the definition of Compensation in Section 1.04(a)(2) if it elects to
allow a Participant to make Bonus Deferral Contributions in Section
1.05(b)(3). The Employer must demonstrate that these Compensation
exclusions are non-discriminatory when the Plan is submitted to the
<PAGE>
(b) Compensation for the First Year of Participation
Contributions for the Plan Year in which an Employee first becomes a
Participant shall be determined based on the Employee's Compensation
(check one):
(1) / / For the entire Plan Year.
(2) /x/ For the portion of the Plan Year in which the Employee is
eligible to participate in the Plan.
1.05 CONTRIBUTIONS
(a) /x/ Employer Contributions:
(1) / / Fixed Formula-Nonintegrated Formula (check (A) or (B)):
(A) / / Fixed Percentage Employer Contribution:
For each Plan Year, the Employer will contribute for each
eligible Participant an amount equal to _____% (not to
exceed 15%) of such Participant's Compensation.
(B) / / Fixed Flat Dollar Employer Contribution:
For each Plan Year, the Employer will contribute for each
eligible Participant an amount equal to $______.
(2) /x/ Discretionary Formula
The Employer may decide each Plan Year whether to make a
Discretionary Employer Contribution on behalf of eligible
Participants in accordance with Section 4.06. Such contributions
may only be funded by the Employer after the Plan Year ends and
shall be allocated to eligible Participants based upon the following
(check (A) or (B)):
(A) / / Nonintegrated Allocation Formula:
In the ratio that each eligible Participant's Compensation
bears to the total Compensation paid to all eligible
Participants for the Plan Year.
(B) /x/ Integrated Allocation Formula:
In accordance with Section 4.06.
Note: An Employer who maintains any other plan that provides for
Social Security Integration (permitted disparity) may not
elect (2)(B).
6
<PAGE>
Instructions - Page 6
Internal Revenue Service for an individual determination letter. If
the Plan's Compensation will be defined as W-2 Compensation without
any of the exclusions in (a)(1) through (4) then select option (a)(5).
(b)(1) Employer Contributions may be allocated to a first year eligible
Participant on the basis of his/her Compensation for the entire Plan
Year.
(b)(2) Employer Contributions may be allocated to a first year eligible
Participant only for the portion of the Plan Year that he/she
is eligible to participate in the Plan. Compensation paid prior to
a Participant's date of participation will be not be considered
in allocating Employer Contributions in Section 1.05(a). Deferral
Contributions in Section 1.05(b)(2) and (3). Matching Contributions
in Section 1.05(c) and Employee After-Tax Contributions in Section
1.05(d). For example, assume a Participant satisfied the service and
age requirements in Section 1.03(a)(1) & (a)(2) and is eligible to
participant in a calendar Plan Year on July 1. Compensation for
purposes of allocating all of the aforementioned contributions
for the initial Plan Year will be based upon the Participant's
Compensation from July 1, through December 31. Thereafter, the
Participant's Compensation will be based upon the entire Plan Year
unless he/she terminates employment before the end of a Plan Year.
Regardless of which option in Section 1.04(b) is selected,
Compensation for the initial Plan Year for a new Plan should be based
upon eligible Participant Compensation, subject to Section 1.04(b),
from the Effective Date in Section 1.01(g)(1) through the end of the
first Plan Year. If the Effective Date in Section 1.01(g)(1) for a
new Plan is less than twelve months then the Plan has a short Plan
Year for the initial year. The Internal Revenue Code Section 415
annual addition limitation for each Participant in the initial Plan
Year must be adjusted accordingly.
1.05. EMPLOYER CONTRIBUTIONS:
To establish a 401(k) and profit sharing plan, complete (a) and (b).
Options (c) and (d) are optional.
To establish only a profit sharing plan, complete (a) only.
To establish only a 401(k) plan, complete (b). Options (c) and (d)
are optional.
(a) (Optional). The contributions in Section 1.05(a) are Employer profit
sharing contributions. An Employer with a 401(k) and Profit Sharing
or a Profit Sharing only Plan must select an option in Section
1.05(a)(1) and/or Section 1.05(a)(2). All Employer Contributions
(Fixed, Discretionary, Matching, and Qualified Discretionary) and
Employee Deferral Contributions, are subject to the Internal Revenue
Code Section 404(a) annual tax deductible limit. A profit sharing
and/or 401(k) plan deduction is limited annually to 15% of total
Compensation for all eligible Participants.
(a)(1) (Optional). An Employer may annually elect to contribute a profit
sharing contribution to each eligible Participant based upon the
same fixed percentage of Participant Compensation (Option (A)) or
based upon the same fixed flat dollar amount for each eligible
Participant (Option (B)). Employer Contributions under either of
these two options are made according to a pre-determined Participant
allocation formula and are considered profit sharing contributions.
The Employer will be legally obligated to make the required
contributions within the prescribed time limit each year regardless
of profits.
(a)(2) (Optional). An Employer may elect to contribute a discretionary
profit sharing contribution, if any, each year by adoption of a
corporate Board of Directors Resolution. A Sole Proprietor or a
Partnership must write a Letter of Intent declaring the Employer
Contribution for a particular Plan Year.
(A) If the non-integrated profit sharing contribution formula is elected,
contributions are allocated for the particular Plan Year to each
eligible Participant in the ratio that each eligible Participant's
Compensation bears to the total Compensation of all eligible
Participants for that Plan Year.
(B) If the integrated profit sharing contribution formula is elected,
contributions are allocated for the particular Plan Year to each
eligible Participant using a formula that is integrated with Social
Security. (The Employer may not exclude any items from Compensation
in Section 1.04(a)(1) through (4) for purposes of allocating Employer
Contributions if the Plan assets Option B.) Employer Contributions
are allocated in two steps.
Section 1.05(a)(2)(B) is continued on the next page.
<PAGE>
(3) Eligiblity Requirement(s)
A Participant shall be entitled to Employer Contributions for a
Plan Year under this Subsection (a) if the Participant satisfies
the following requirement(s) (Check the appropriate box(es)- Options
(B) and (C) may not be elected together):
(A) /x/ is employed by the Employer on the last day of the
Plan Year.
(B) /x/ earns at least 500 Hours of Service during the Plan Year.
(C) / / earns at least 1,000 Hours of Service during the Plan Year.
(D) / / no requirements.
Note: If option (A), (B) or (C) above is selected then Employer
Contributions can only be funded by the Employer after
Plan Year end.
(b) /x/ Deferred Contributions
(1) Regular Contributions
The Employer shall make a Deferral Contribution in accordance
with Section 4.01 on behalf of each Participant who has an executed
salary reduction agreement in effect with the Employer for the
payroll period in question, not to exceed 15% (no more than 15%)
of Compensation for that period.
(A) A Participant may increase or decrease, on a prospective basis,
his salary reduction agreement percentage (check one):
(i) / / As of the beginning of each payroll period.
(ii) / / As of the first day of each month.
(iii) /x/ As of the next Entry Date.
(iv) / / (Specify, but must be at least one per Plan Year)
------------------------------------------------
------------------------------------------------
(B) A Participant may revoke, on a prospective basis, a salary
reduction agreement at any time upon proper notice to the
Administrator but in such case may not file a new salary
reduction agreement until (check one):
(i) / / The first day of the next Plan Year.
(ii) /x/ Any subsequent Plan Entry Date.
(iii) / / (Specify, but must be at least once per Plan Year)
------------------------------------------------
------------------------------------------------
7
<PAGE>
Instructions - Page 7
First - Contributions are allocated to each eligible Participant in
the ratio that each eligible Participant's total
Compensation, plus Compensation in excess of the Social
Security Taxable Wage Base (known as "Excess Compensation")
bears to the total eligible Compensation of all eligible
Participants, plus the Compensation of all eligible
Participants in excess of the Social Security Taxable Wage
Base. The Social Security Taxable Wage Base is the annual
FICA limit determined by the Social Security Administration.
The allocation to each participant in the first step may
not exceed 5.7% of each Participant's total Compensation
plus Excess Compensation.
Second - Remaining contributions are allocated in the ratio that each
eligible Participant's Compensation bears to the total
Compensation of all eligible Participants.
Note: If the Plan is top-heavy in accordance with Internal
Revenue Code Section 416 then the Employer must contribute
the required minimum top-heavy contribution specified in
Section 1.12(c). The top-heavy minimum contribution is
allocated prior to the aforementioned two steps.
(a)(3) (Select one option.) The Eligibility Requirement(s) in Section
1.05(a)(3) apply to all Fixed and/or Discretionary Employer
Contributions. The allocation of Employer Fixed or Discretionary
Contributions to each Participant may be conditioned on the
Participant completing certain requirement(s). The Employer may
require the Participant to be employed by the Employer on the last
day of the Plan Year (Option (A)) and/or either earn at least 500
hours of service during the Plan Year (Option (B)) or earn at least
1,000 hours of service during the Plan Year (Option (C)). The
Employer Contribution can only be funded after Plan Year end if
Option(s) (A), and/or (B) or (C) is elected. Employer Contributions
funded during the applicable Plan Year will become unconditional
Contributions. Participants who die, become disabled or retire during
the Plan Year must meet the requirement(s) elected in Option (A),
and/or (B), or (C), if any, to receive a Fixed or Discretionary
Employer Contribution. The Employer should elect Option (D) if
Participants are not required to meet any of the aformentioned
conditions to receive Employer Fixed or Discretionary Contributions.
Note: Conditional Employer Contributions elected in Option (A),
(B), or (C) that are funded during the Plan Year will be
treated as unconditional Employer Contributions.
(b)(1) (Optional.) An Employer with a 401(k) and Profit Sharing or a 401(k)
Plan only must complete Section 1.05(b)(1). An Employer may allow a
Participant to elect to contribute Regular Deferral Contributions in
a whole percentage, from 1% to 15%, of Compensation into the Plan.
Deferral Contributions may only be withheld from a Participant's
Compensation on a prospective basis after he/she has properly
completed and executed a written salary deferral election. An
Employer cannot require a minimum Deferral Contribution of more than
one percent of his/her Compensation. The Internal Revenue Code's
annual calendar year limit for a Participant's Deferral Contributions
is $8,994 for 1993 (adjusted annually by the Secretary of the
Treasury). The specified percentage cannot be exceeded for any
particular payroll, unless the Participant elects a Catch-Up Deferral
Contribution in Section (b)(2) or a Bonus Deferral Contribution in
Section (b)(3). In either of these two circumstances an electing
Participant must properly complete and execute the appropriate salary
deferral election form. All Participant Deferral Contributions must
be withheld by the Employer through payroll deduction.
(b)(1)(A) (Select one option.) Select the frequency of deferral percentage
changes (must be at least once per Plan Year) that a Participant
may make in a Plan Year. A Participant may increase, decrease or
suspend his/her Regular Deferral Contributions based upon this
frequency.
(B) (Select one option.) Select the date(s) on which a Participant who
completely suspends his/her Regular Deferral Contributions may resume
such contributions (must be at least once per Plan Year) on the
elected date.
<PAGE>
(2) / / Catch-Up Contributions
The Employer may allow Participants upon proper notice and approval
to enter into a special salary reduction agreement to make additional
Deferral Contributions in an amount up to 100% of their Compensation
for the payroll period(s) in the final month of the Plan Year.
(3) / / Bonus Contributions
The Employer may allow Participants upon proper notice and approval
to enter into a special salary reduction agreement to make Deferral
Contributions in an amount up to 100% of any Employer paid cash
bonuses made for such Participants during the Plan Year. The
Compensation definition elected by the Employer in Section 1.04(a)
must include bonuses if bonus contributions are permitted.
Note: A Participant's Contributions under (2) and/or (3) may not
cause the Participant to exceed the percentage limit
specified by the Employer in (1) after the Plan Year. The
Employer has the right to restrict a Participant's right to
make Deferral Contributions if they will adversely effect
the Plan's ability to pass the Actual Deferral Percentage
and/or the Actual Contribution Percentage test.
(4) / / Qualified Discretionary Contributions
The Employer may contribute an amount which it designates as a
Qualified Discretionary Contribution to be included in the Actual
Deferral Percentage of Actual Contribution Percentage test. Qualified
Discretionary Contributions shall be allocated to Non-highly
Compensated Employees (check one):
(A) / / in the ration which each such Participant's Compensation
for the Plan Year bears to the total of all such
Participants' Compensation for the Plan Year.
(B) / / as a flat dollar amount for each such Participant for the
Plan Year.
8
<PAGE>
Instructions - Page 8
(b)(2) (Optional.) If Regular Employee Deferral Contributions are elected
under (b)(1) then an Employer may also allow a Participant to make
Catch-Up Deferral Contributions under certain conditions. If Catch-Up
Deferral Contributions are elected, a Participant may defer up to
100% of his/her Compensation for one or more payroll periods in the
final month of the Plan Year. However, Catch-Up Deferral
Contributions for a Participant may not exceed any of the following
limits: the Deferral Contribution percentage specified in (b)(1),
the Internal Revenue Code's annual calendar year Deferral Contribution
limit ($8,994 for 1993) and other appropriate Internal Revenue Code
limits.
A Participant must complete a special election form to make a
Catch-Up Deferral Contribution. If Section 1.04(b)(2) is selected,
then eligible Compensation for a first year eligible Participant for
purposes of Catch-Up Deferral Contributions will be limited.
Compensation will be measured from the Participant's Entry Date or the
Effective Date, as appropriate, through the end of his/her initial
Plan Year.
(b)(3) (Optional.) In addition or as an alternative to Regular Deferral
Contributions or Catch-Up Deferral Contributions, an Employer may
permit a Participant to make a special bonus deferral election.
However, an Employer may not exclude bonuses from the definition
of Compensation in Section 1.04(a) if it wants to allow a Participant
to make Bonus Deferral Contributions. If elected, a Participant may
defer up to 100% of his/her bonus but it may not exceed any of the
following limits: the Deferral Contribution percentage specified in
(b)(1), the Internal Revenue Code's annual calendar year Deferral
Contribution limit ($8,994 for 1993) and other appropriate Internal
Revenue Code limits. A Participant must complete a special election
form to make a Bonus Deferral Contribution. If Section 1.04(b)(2) is
selected, then Compensation for a first year eligible Participant
for purposes of Bonus Deferral Contributions will be limited.
Compensation will be measured from the Participant's Entry Date or
the Effective Date, as appropriate, through the end of his/her
initial Plan Year.
Note: An Employer electing Catch-Up and/or Bonus Deferral
Contributions has the right to refuse to accept these
Contributions if they will adversely affect the Plan's
actual deferral percentage or actual contribution percentage
test(s).
(b)(4) (Optional). Check this option if you would like Qualified
Discretionary Contributions (QDC's) to be treated as additional
Deferral Contributions for all Non-highly Compensated Employees to
the extent necessary to satisfy the requirements of the actual
deferral percentage and actual contribution percentage tests. QDC's
are treated as Employer profit sharing contributions except they are
always 100% vested and may not be withdrawn as a hardship by a
Participant. (A separate source will be set up in the Employer's
Plan to properly account for any QDC's.) QDC's may also be used to
satisfy any required Internal Revenue top-heavy minimum Employer
Contributions for Non-key Employees under Section 1.12(c). If an
Employer wants to make a QDC then it must be made for each Non-highly
Compensated Employee who was eligible to participate in the Plan
during the Plan Year. An Employer cannot require a Participant to
work a certain number of hours during the Plan Year and/or be
employed up to the last day of the Plan Year and/or be employed as of
the last day of the Plan Year to be eligible to receive a QDC. An
Employer must contribute QDC's to the Plan within the prescribed
legal time limit.
(A) An Employer may allocate QDC's to Non-highly Compensated Employees
for a Plan Year on a percentage of Compensation basis.
(B) An Employee may allocate QDC's to Non-highly Compensated Employees for
a Plan Year on a flat dollar basis.
<PAGE>
(c) / / Matching Contributions (only if Section 1.05(b) is checked)
(1) The Employer shall make a Matching Contribution on behalf of each
Participant in an amount equal to the following percentage of a
Participant's Deferral Contributions during the Plan Year (Check One):
(A) / / 50%
(B) / / 100%
(C) /X/ 25%
(D) / / (Tiered Match) ____% of the first ____% of the
Participant's Compensation contributed to the Plan,
____% of the next ____% of the Participant's Compensation
contributed to the Plan,
____% of the next ____% of the Participant's Compensation
contributed to the Plan.
Note: The percentages specified above for Matching Contributions
may not increase as the percentage of Compensation
contributed increases.
(E) / / The percentage declared for the year, if any, by a Board of
Directors' resolution.
(2) / / The Employer may at Plan Year end make an additional Matching
Contribution equal to a percentage declared by the Employer,
through a Board of Directors' resolution, of the Deferral
Contributions made by each Participant during the Plan Year
(only if an option is checked under Section 1.05(c)(1)).
(3) / / Matching Contribution Limits (check the appropriate box(es)):
(A) /X/ Deferral Contribution is in excess of 4% of the
Participant's Compensation for the period in question shall
not be considered for Matching Contributions.
Note: If the Employer elects a percentage limit in (A) above and
requests the Trustee to account separately for matched and
unmatched Deferral Contributions, the Matching Contributions
allocated to each Participant must be computed, and the
percentage limit applied, based upon each payroll period.
(B) / / Matching Contributions for each Participant for each Plan
Year shall be limited to $____.
9
<PAGE>
Instructions - Page 9
(c)(1) (Optional). Employer Matching Contributions can only be selected if
Employee Deferral Contributions are selected in Section 1.05(b). An
Employer may elect to match all Employee Deferral Contributions,
subject to any percentage of Compensation and/or dollar limit(s) under
Section 1.05(c)(3), based upon 50% (Option (A)), 100% (Option (B)),
a specified percentage (Option (C)), or a tiered match (Option (D)).
If Option (D) is selected, the matching contribution percentage may
not increase as the percentage of compensation contributed to the
plan increases. For example:
Percent of Eligible Employer
Participant Compensation Matching
Tier Contributed to the Plan Contributions
---- ------------------------ -------------
First First 2% 100%
Second Next 2% 75%
Third Next 2% 50%
In the above example an Employer may not have a first tier match of
50%, a second tier match of 75% and a third tier match of 100%.
An Employer may make Discretionary Matching Contributions, if any,
each Plan Year based upon a percentage of Participant Employee
Deferral Contributions (Option (E)). This option enables the
Employer to vary the Matching Contribution annually without having to
amend the CORPORATEplan for Retirement(service mark) Adoption
Agreement. The amount of Matching Contributions, if any, will be
determined annually by the Employer and then communicated to the
Participants. The Employer may declare the Matching Contributions at
any time during the Plan Year. A corporate Employer must pass a Board
of Directors Resolution declaring the Matching Contribution for a
particular Plan Year. A Sole Proprietor or a Partnership must write
a Letter of Intent declaring the Matching Contribution for a
particular Plan Year.
Employer Matching Contributions must be computed based upon the amount
of a Participant's Deferral Contributions, subject to any percentage
of Compensation and/or dollar limit(s) under Section 1.05(c)(3). An
Employer may not:
o compute Matching Contributions on Employee Deferral
Contributions using a formula based upon a Participant's Years of
Service with the Employer,
o make any Matching Contributions on Employee After-Tax
Contributions,
o make any Qualified Matching Contributions (QMAC's).
(c)(2) (Optional). If Matching Contributions are selected in (c)(1) then an
Employer may elect to make additional Matching Contributions at the
end of the Plan Year through a Board of Directors Resolution for a
Corporation or a Letter of Intent for a Sole Proprietor or a
Partnership.
(c)(3)(A) (Optional). An Employer may select to limit the percentage of a
Participant's Deferral Contributions that are eligible for the
Matching Contributions specified in (c)(1) to a certain percentage of
his/her eligible Compensation.
Example: An Employer wants to match 50% of each dollar contributed to
the Plan as Deferral Contributions but only on the first
six percent of a Participant's eligible Compensation. A
Participant's eligible Compensation for one payroll is
$1,000 and he contributes 10% of it into the Plan as
Deferral Contributions. The Matching Contribution will be
limited to $30 [($1,000 of Compensation) x (6% limit) =
$60, $60 x 50% = $30].
If an Employer directs Fidelity to establish a Basic Employee Deferral
Contribution and a Supplemental Employee Deferral Contribution source
for contributions made pursuant to Section 1.05(b) on the Fidelity
Participant Recordkeeping System and the Employer elects a percentage
limit on Matching Contributions then the match must be computed based
upon each payroll period. A Basic Deferral Contribution represents the
portion of a Participant's Deferral Contributions that will not be
matched by the Employer. A Supplemental Deferral Contribution
represents the portion of a Participant's Deferral Contributions that
will not be matched by the Employer. Please refer to the CPR
Compliance Section of the CORPORATEplan for Retirement (service mark)
for further details.
Section 1.05(c)(3) is continued on the next page.
<PAGE>
(4) Eligibility Requirement(s)
A Participant who makes Deferral Contributions during the Plan Year
under Section 1.05(b) shall be entitled to Matching Contributions
for that Plan Year if the Participant satisfies the following
requirement(s) (Check the appropriate box(es). Options (B) and (C)
may not be elected together):
(A) / / Is employed by the Employer on the last day of the Plan
Year.
(B) / / Earns at least 500 Hours of Service during the Plan Year.
(C) / / Earns at least 1,000 Hours of Service during the Plan Year.
(D) / / Is not a Highly Compensated Employee for the Plan Year.
(E) / / Is not a Partner of the Employer, if the Employer is a
partnership.
(F) /X/ No requirements.
Note: If option (A), (B) or (C) above is selected then Matching
Contributions can only be funded by the Employer after the
Plan Year ends. Any Matching Contribution funded before Plan
Year end shall not be subject to the eligibility requirements
of this Section 1.05(c)(4)). If option (A), (B), or (C) is
adopted during a Plan Year, such option shall not become
effective until the first day of the next Plan Year.
(d) / / Employee After-Tax Contributions (check one):
(1) / / Future Contributions
Participants may make voluntary non-deductible Employee Contributions
pursuant to Section 4.09 of the Plan. This option may only be elected
if the Employer has elected to permit Deferral Contributions under
Section 1.05(b). Matching Contributions by the Employer are not
allowed on any voluntary non-deductible Employee Contributions.
Withdrawals are limited to one per year unless Employee Contributions
were allowed under a previous plan document which authorized more
frequent withdrawals.
(2) / / Frozen Contributions
Participants may not make voluntary non-deductible Employee
Contributions but the Employer does maintain frozen Participant
voluntary non-deductible Employee Contribution accounts.
10
<PAGE>
Instructions - Page 10
(c)(3)(B) (Optional). An Employer may select to limit the total Matching
Contributions to a fixed dollar amount.
Note: An Employer may select (3)(A), (3)(B) or both (3)(A) and
(3)(B). If the latter is selected then the Matching
Contributions will be limited to whichever limit occurs first,
either the percentage of Compensation in (A) or the fixed
dollar amount in (B).
(c)(4) (Select one or more options.) If a Matching Contribution is selected
in Section 1.05(c)(1) then the Employer must select one of the Options
(A through F) listed in this section. An Employer may specify that a
Participant must satisfy certain conditions during a Plan Year to be
eligible to receive Matching Contributions. The Employer may require a
Participant to be employed on the last day of the Plan Year (Option
(A)) and/or either earn at least 500 hours of service during the Plan
Year (Option B)) or earn at least 1,000 hours of service during the
Plan Year (Option C)). Matching Contributions made pursuant to (A),
(B), or (C) are referred to as conditional contributions and must be
funded after Plan Year end. Participants who die, become disabled or
retire during the Plan Year must meet the requirement(s) selected, if
any, to receive Matching Contributions on their Deferral
Contributions. If Option (A), (B), or (C) is adopted during a Plan
Year then it will not become effective until the first day of the next
Plan Year. An Employer may also exclude a Highly Compensated Employee
(Option (D)) and/or a Partner in a partnership (Option E)), from
eligibility for Matching Contributions. If the Employer wants to make
Mandatory or unconditional Matching Contributions to Participants
making Employee Deferral Contributions then select Option (F).
Matching Contributions are subject to the Internal Revenue Code's
annual actual contribution percentage and annual addition limitation
tests.
Note: Conditional Matching Contributions elected in Option (A), (B),
or (C) that are funded during the Plan Year will be treated as
unconditional Matching Contributions. Additionally, if an
Employer has been making unconditional Matching Contributions
and elects Option (A), (B), or (C) during a Plan Year then such
option will not become effective until the first day of the next
Plan Year.
(d)(1) (Optional). An Employer that elects Employee Deferral Contributions in
Section 1.05(b), may also elect to allow Employee After-Tax
Contributions to be made by a Participant by selecting Option (1).
Employee After-Tax Contributions may be limited due to the actual
contribution percentage test and/or the annual addition limitation.
Employee After-Tax Contributions are not eligible for Matching
Contributions and may be withdrawn only once per year unless Employee
After-Tax Contributions under the Employer's prior plan document
allowed more frequent withdrawals.
(d)(2) (Optional.) An Employer that previously allowed Participant Employee
After-Tax Contributions or accepted transfers of such contributions
from another qualified retirement plan may elect not to allow such
contributions in the future under Option (2).
<PAGE>
1.06 RETIREMENT AGE(S)
(a) The Normal Retirement Age under the Plan is (check one):
(1) /X/ age 65.
(2) / / age __ (specify between 55 and 64).
(3) / / later of the age __ (can not exceed 65) or the fifth
anniversary of the Participant's Commencement Date.
(b) / / The Early Retirement Age is the first day of the month after
the Participant attains age __ (specify 55 or greater) and
completes ___ years of Service for Vesting.
(c) /x/ A Participant is eligible for Disability Retirement if
he/she (check the appropriate box(es)):
(1) /x/ satisfies the requirements for benefits under the
Employer's Long-Term Disability Plan.
(2) / / satisfies the requirements for Social Security
disability benefits.
(3) / / is determined to be disabled bya physician approved by
the Employer.
11
<PAGE>
Instructions - Page 11
1.06. RETIREMENT AGE(S):
Retirement Age in a qualified retirement plan is a "protected
benefit" under the Internal Revenue Code. An Employer coverting to
the CORPORATEplan for Retirement(Service Mark) from another plan
document may not eliminate any protected benefits for Participants
attaining the Retirement Age(s) that were specified in the prior
document.
(a) This is the age at which a Participant becomes 100% vested in his/her
Employer and Matching Contribution Account, regardless of his/her
length of service with the Employer or a Related Employer. An
Employer may select age 65 (Option (1)), any other age between 55 and
64 (Option (2)), or the later of a specified age between 55 and 65
and the fifth anniversary of the date the Participant commenced
employment (Option (3)). A Participant is not required to retire once
he/she attains normal retirement age. (Select one option).
(b) (Optional). A Participant become 100% vested in his/her Employer and
Matching Contribution accounts upon satisfying the early retirement
requirement(s). If an Employer converted to the CORPORATEplan for
Retirement(Service Mark) and had an Early Retirement Age in its prior
plan document then this Plan must offer the same or a more favorable
Early Retirement Age. Specify the early age (must be at least 55) and
required years of service, if applicable.
(c) (Optional). A Participant becomes 100% vested in his/her Employer and
Matching Contribution Account upon Disability Retirement. If an
Employer converted to the CORPORATEplan for Retirement(Service Mark)
and previously had a Disability Retirement in its prior plan document
then it must select one or more of the options in this section.
Option (1) requires a Participant to satisfy the Employer's normal
requirements for benefits under its Long Term Disability Plan. Option
(2) requires a Participant to be eligible for Social Security
disability benefits. Option (3) requires a Participant to be
determined disabled by a physician that is approved by the Employer.
An Employer may select more than one option in this Section.
<PAGE>
1.07 VESTING SCHEDULE
(a) The Participant's vested percentage in Employer Contributions
(Fixed or Discretionary) elected in Section 1.05(a) and/or
Matching Contributions elected in Section 1.05(c) shall be based
upon the schedule(s) selected below, except with respect to any
Plan Year during which the Plan is Top-Heavy. The schedule
elected in Section 1.12(d) shall automatically apply for a
Top-Heavy Plan Year and all Plan Years thereafter unless the
Employer has already elected a more favorable vesting schedule
below.
<TABLE>
<CAPTION>
(1) Employer Contributions (2) Matching Contributions
(check one) (check one)
<S> <C>
(A) / / N/A - No Employer Contributions (A) / / N/A - No Matching Contributions
(B) / / 100% Vesting immediately (B) / / 100% Vesting immediately
(C) / / 3 year cliff (see C below) (C) / / 3 year cliff (see C below)
(D) / / 5 year cliff (see D below) (D) / / 5 year cliff (see D below)
(E) / / 6 year graduated (see E below) (E) / / 6 year graduated (see E below)
(F) /x/ 7 year graduated (see F below) (F) /x/ 7 year graduated (see F below)
(G) / / Other vesting (complete G1 below) (G) / / Other vesting (complete G2 below)
</TABLE>
Years of
Sevice for
Vesting C D E F G1 G2
---------- - - - - -- --
0 0% 0% 0% 0% ___ ___
1 0% 0% 0% 0% ___ ___
2 0% 0% 20% 0% ___ ___
3 100% 0% 40% 20% ___ ___
4 100% 0% 60% 40% ___ ___
5 100% 100% 80% 60% ___ ___
6 100% 100% 100% 80% ___ ___
7 100% 100% 100% 100% 100% 100%
Note: A schedule elected under G1 or G2 must be at least as
favorble as one of the schedules in C, D, E or F above.
(b) / / Years of Service for Vesting shall exclude (check one):
(1) / / for new plans, service prior to the Effective Date
as define in Section 1.01(g)(1).
(2) / / for existing plans converting from another plan
document, service prior to the original Effective Date as
defined in Section 1.01(g)(2).
12
<PAGE>
Instructions - Page 12
1.07. VESTING SCHEDULE:
(a) Vesting refers to the nonforfeitable interest of a Participant in
Employer and/or Matching Contributions and the earnings thereon. A
Participant is always 100% vested in Employee Deferral
Contributions and Qualified Discretionary Contributions and the
earnings thereon. Vesting under the CORPORATEplan for
Retirement(Service Mark) is based upon the elapsed-time method
that is defined under "Years of Service for Vesting" in Section
2.01(a)(33) of the Basic Plan Document. Participant Years of
Service for vesting Employer and/or Matching Contributions includes
all years of service subject to any such exclusion in Section
1.07(b). Amounts which are not fully vested when a Participant
terminates employment will be used in the current Plan Year to
reduce future Employer and/or Matching Contributions and/or to pay
Plan expenses. An Employer's Plan that is converted from another
plan document that previously allowed vesting under another method
will be subject to the transitional rules in accordance with
governmental regulations to convert it to the elapsed-time method.
(a)(1) (Select one option.) An Employer must elect Option (A) if there are
no Employer Contributions. An Employer electing Employer
Contributions in Section 1.05(a) (Fixed or Discretionary) must
select one of the Vesting Schedules listed in Options (B) through
(G1). An Employer may create its own Vesting Schedule by inserting
the elected vesting percentage in the blanks in (G1). However, the
percentages elected in (G1) must be at least as favorable as the
ones listed in (D) or (F) (i.e., The vesting percentage for a
Participant with three Years of Service must be at least 20%, four
Years of Service must be at least 40%, etc.).
If an Employer previously adopted the CORPORATEplan for
Retirement(Service Mark) Adoption Agreement and elected a top-heavy
schedule then it may not elect a non top-heavy schedule in Option
(D), (F) or (G1) if it is not as favorable as Option (E). If a Plan
becomes top-heavy then the top-heavy Vesting Schedule elected in
Section 1.12(d) will automatically be used for each Plan Year
thereafter unless the schedule elected here is the same or more
favorable in all cases.
(a)(2) (Select one.) An Employer must select Option (A) if there are no
Employer Contributions. An Employer electing Matching Contributions
in Section 1.05(c) must select only one of the Vesting Schedules
listed in Options (B) through (G2). An Employer may create its own
vesting schedule by inserting the elected vesting percentage in the
blanks in (G2). However, the percentages must be at least as
favorable as the ones listed above in (D) or (F) (i.e., The vesting
percentage for a Participant with three Years of Service must be at
least 20%, four Years of Service must be at least 40%, etc.). An
Employer electing Option (B), which provides that Matching
Contributions are 100%, may not include these Contributions in the
actual deferral percentage or actual contribution percentage test
as Qualified Matching Contributions.
If an Employer previously adopted the CORPORATEplan for
Retirement(Service Mark) Adoption Agreement and elected a top-heavy
schedule then it may not elect a non top-heavy schedule in Option
(D), (F) or (G1) (if it is not as favorable as Option (E)). If a
Plan becomes top-heavy then the top-heavy Vesting Schedule elected
in Section 1.12(d) will automatically be used for each Plan Year
thereafter unless the schedule elected here is the same or more
favorable in all cases.
An Employer that elected two different Vesting Schedules, one in
Option (1) for Employer Contributions and another in Option (2) for
Matching Contributions has dual vesting. For example, Employer
Fixed or Discretionary Contributions may be subject to a six year
graded Vesting Schedule as elected in Option (E) and Matching
Contributions may be immediately 100% vested immediately as elected
in Option (B).
(b) (Optional). Years of Service for Participant vesting includes all
Years of Service for an Employee except an Employer may elect to
exclude service prior to the Effective Date of a new plan (Option
(1)) or prior to the original Effective Date of a pre-existing plan
(Option (2)).
<PAGE>
1.08 PREDECESSOR EMPLOYER SERVICE
/x/ Service for purposes of eligibility in Section 1.03(a)(1) and
vesting in Section 1.07(a) of this Plan shall include service
with the following employer(s):
(a) Harren Equipment
-------------------------------------------------------------
(b) ____________________________________________________________
(c) ____________________________________________________________
(d) ____________________________________________________________
1.09 PARTICIPANT LOANS
Participant loans (check (a) or (b)):
(a) /x/ will be allowed in accordance with Section 7.09, subject
to a $1,000 minimum amount and will be granted (check (1)
or (2)):
(1) /x/ for any purpose.
(2) / / for hardship withdrawal (as defined in Section 7.10)
purposes only.
(b) / / will not be allowed.
1.10 HARDSHIP WITHDRAWALS
Participant withdrawals for hardship prior to termination of employment
(check one):
(a) /x/ will be allowed in accordance with Section 7.10, subject to a
$1,000 minimum amount.
(b) / / will not be allowed.
13
<PAGE>
Instructions - Page 13
1.08. PREDECESSOR EMPLOYER SERVICE:
(Optional). An Employer may elect to include an Employee's Years of
Service with any predecessor employer(s) listed in (a) through (d)
for both eligibility and vesting purposes. (If this Plan is a
continuation of a plan of a predecessor employer, Years of Service
with Predecessor Employer(s) are automatically included for
eligibility and vesting purposes).
1.09. PARTICIPANT LOANS (Select one option):
(a) (Optional) An Employer may elect to allow Participant loans (Option
(a)). If selected, then the Employer may allow Participant loans
for any purpose (Option (1)) or only hardship withdrawal reasons
(Option (2)) as defined in Section 7.10 of the CORPORATEplan for
Retirement(Service Mark) Basic Plan Document. All loans are subject
to a $1,000 minimum. An outstanding Participant loan becomes due
and payable in full as of the date a Participant dies, becomes
disabled (as defined in Section 1.06(c), retires (as defined in
Section 1.06(a) or (b)) or terminates employment with the Employer
or a Related Employer.
The loan feature provides for a Participant loan with a five-year
maximum term, except a ten-year term is permitted for a loan used
for the purchase of the Participant's primary residence. Funds for
a loan may be withdrawn from Deferral Contributions, Matching
Contributions, Qualified Discretionary Contributions, Discretionary
Contributions and Employee After-Tax Contributions for a loan
unless the Employer restricts the contribution sources in a
separate written administrative procedure delivered to Fidelity. A
Participant may have only one loan outstanding at any one time and
may request only one loan per plan year. A Participant may not
refinance, renegotiate or extend the maturity date of an existing
loan. Also, a Participant may not obtain a second loan for the
purpose of paying off the first loan. All loans are governed in
accordance with the loan procedures disclosed in Section 7.09 of
the CORPORATEplan for Retirement(Service Mark) Basic Plan
Document. Loan set up and annual maintenance fees will be charged
to the affected Participant's Account, unless it is paid by the
Employer. Loan fees are disclosed in the CORPORATEplan for
Retirement(Service Mark) Service Agreement.
In accordance with governmental regulations, a Plan may not permit
Participant loans to Owner-Employees (sole proprietor or a partner
owning a 10% or more interest in a partnership) of non-corporate
entities or to Shareholder-Employees of Subchapter S corporations
(i.e., an employee or officer who owns more than 5% of the
outstanding stock of the Subchapter S corporation).
(b) An Employer may elect not to offer Participant loans by selecting
this option.
1.10. HARDSHIP WITHDRAWALS (Select one option):
(a) (Optional) An Employer may elect to make hardship withdrawals
available with a $1,000 minimum.
A Participant may request a hardship withdrawal from his/her
Deferral and Rollover Contributions. However, amounts may be
available for withdrawal from Employer and/or Matching Contribution
Account(s) if allowed under the Employer's prior plan document.
Hardship withdrawals will be made in accordance with the Internal
Revenue Code safe harbor provisions: for the purchase of a
Participant's primary residence, to prevent evicition or
foreclosure from the Participant's primary residence, for
post-secondary educational expenses for the next twelve months for
the Participant or his/her dependents, or for unreimbursed medical
expenses of the Participant and his/her dependents.
If the Participant receives the hardship withdrawal he/she must
suspend all Employee Deferral Constributions for a twelve month
period from this Plan and any other Employer qualified and
non-qualified Plan. The Participant must also exhaust all other
resources, including obtaining a loan if this feature is offered
under Section 1.09 of this Plan or other plans maintained by the
Employer, and by withdrawing all Employee After-Tax Contributions
in his/her account before obtaining a hardship withdrawal. The
amount of the withdrawal may not exceed the amount of the hardship.
A Participant may increase the amount of his/her hardship
withdrawal, only to the extent his/her account balance is
available, to cover Federal, state, and local income taxes along
with any penalties.
(b) An Employer may elect not to make hardship withdrawals available by
selecting this option.
<PAGE>
1.11 DISTRIBUTIONS
(a) Subject to Articles 7 and 8 and (b) below, distributions under the
Plan will be paid--(check the appropriate box(es)):
(1) /x/ as a lump sum.
(2) / / under a systematic withdrawal plan (installments).
(b) /x/ Check if a Participant will be entitled to receive a distribution
of all or any portion of the following Accounts without
terminating employment upon attainment of age 59 1/2 (check one):
(1) /x/ Deferral Contribution Account
(2) / / All Accounts
(c) / / Check if the Plan was converted (by plan amendment) from another
defined contribution plan, and the benefits were payable as (check
the appropriate box(es)):
(1) / / a form of single or joint and survivor life annuity.
(2) / / an in-service withdrawal of vested Employer Contributions
maintained in a Participant's Account (check (A) and/or (B)):
(A) / / for at least _____ (24 or more) months.
(B) / / after the Participant has at least 60 months
of participation.
(3) /x/ another distribution option that is a "protected benefit"
under Section 411(d)(6) of the Internal Revenue Code. Please
attach a separate page identifying the distribution option(s).
These additional forms of benefit may be provided for such plans under
Articles 7 or 8.
Note: Under Federal Law, distributions to Participants must generally
begin no later than April 1 following the year in which the
Participant attains age 70 1/2.
<PAGE>
Instructions - Page 14
1.11 DISTRIBUTIONS:
(a) Generally, distributions from the Plan may be paid to a Participant
only as a lump sum (Option (1)) or as systematic installment
withdrawals (Option (2)). A Participant's right to receive a
distribution from an Employer's Plan is a legally protected right. If
the Employer converted from another plan document that allowed a
Participant the right to receive his/her distribution from the Plan in
a lump sum and/or installment option(s) must select the same option in
this section. (Select one or both options)
(b) (Optional.) Check this option to allow a Participant who has not yet
terminated employment with the Employer to receive a distribution of
part or all of his/her Employee Deferral Contributions Account or
his/her entire Account, on or after attainment of age 59 1/2. If an
Employer converted from another plan document must select (1) or (2).
Option (1) allows a Participant to withdraw part or all of his/her
Employee Deferral Contribution Accounts only while Option (2) allows a
Participant to withdraw part or all of his/her entire Account.
(c) An Employer may be required under Internal Revenue Service regulations
to continue to provide for such method(s) of Participant distribution
in addition to a lump sum and/or installments. If an Employer's Plan
is an amendment or conversion from another plan document which
previously provided for annuity payments (Option (1)), in-service
withdrawals of Employer Contributions (Option (2)), or any other
distribution option that is a "protected benefit" under Internal
Revenue Code Section 411(d)(6) (Option (3)), then the Employer must
elect the appropriate option(s). (Check as many as apply, or leave
blank, if none apply).
The Plan Administrator is responsible for identifying any Participant
older than age 70 1/2. These Participants must receive the minimum
required distribution in accordance with the Internal Revenue Code.
The Plan Administrator is responsible for computing the amount of the
minimum contribution and providing Fidelity with the appropriate
written direction.
<PAGE>
1.12 TOP HEAVY STATUS
(a) The Plan shall be subject to the Top-Heavy Plan requirements of Article
9 (check one):
(1) / / for each Plan Year.
(2) /x/ for each Plan Year, if any, for which the Plan is Top-Heavy as
defined in Section 9.02.
(3) / / Not applicable. (This option is available for plans covering
only employees subject to a collective bargaining agreement
and there are no Employer or Matching Contributions
elected in Section 1.05.)
(b) In determining Top-Heavy status, if necessary, for an employer with at
least one defined benefit plan, the following assumptions shall apply:
(1) Interest:____% per annum
(2) Mortality table:_________
(3) /x/ Not applicable.
(c) In the event that the Plan is treated as Top-Heavy for a Plan Year,
each non-key Employee shall receive an Employer Contribution of at
least 3 (3, 4, 5, or 7 1/2)% of Compensation for the Plan Year in
accordance with Section 9.03 (check one):
(1) / / under this Plan in any event.
(2) /x/ under this Plan only if the Participant is not entitled to such
contribution under another qualified plan of the Employer.
(3) / / Not applicable. (This option is available for plans covering
only employees subject to a collective bargaining
agreement and there are no Employer or Matching
Contributions elected in Section 1.05.)
Note: Such minimum Employer contribution may be less than the
percentage indicated in (c) above to the extent provided in
Section 9.03(a).
15
<PAGE>
Instructions - Page 15
1.12 TOP-HEAVY STATUS
Generally, a defined contribution plan is considered top-heavy
if more than 60% of the account balances are for the benefit
of key employees. A key employee is defined under Internal
Revenue Code Section 416.
(a) Option (1) allows an Employer to assume its Plan is always top-heavy
and automatically comply with the top-heavy plan requirements each Plan
Year. Thus, each Plan Year the Employer will make the required
top-heavy minimum contribution listed in Section 1.12(c) and be subject
to the top-heavy Vesting Schedule in Section 1.12(d). Option (2)
requires an Employer to perform the top-heavy test each Plan Year. If
the Plan is determined to be top-heavy then it will be subject to the
top-heavy requirements under Section 1.12(c) and 1.12(d). (Select one
option).
(b) If an Employer's Plan is top-heavy and the Employer currently maintains
a defined benefit plan then an actuary should assist in the completion
of the information in Option (1) and (2). If an Employer does not
currently maintain a defined benefit plan then check Option (3).
(c) Generally, every non-key employee who is a participant in a top-heavy
plan at the end of the Plan Year msut receive minimum Employer
Contributions under such plan, if any key employee as defined by the
Internal Revenue Code is receiving a contribution for that Plan Year. A
Participant who is a non-key employee must receive the minimum
top-heavy Employer Contribution regardless of any Hours of Service
eligibility requirement elected under Section 1.05(a)(3)(A) or (B)
(Employer Contributions), or Section 1.05(c)(4)(B) or (C) (Matching
Contributions). Only Employer and Qualified Discretionary contributions
are counted as top-heavy minimum contributions. Employee Deferral,
Employee After-Tax, and Employer Matching Contributions are not counted
as top-heavy minimum contributions for non-key employees.
Use the table below to determine the minimum top-heavy contribution to
be inserted in this Section 1.12(c) and the appropriate selection from
options (c)(1) through (c)(3).
Minimum Select
Situation Contribution Option
--------- ------------ ------
o Employer maintains this Plan only. 3% (c)(1)
o Employer maintains a defined benefit plan 3% (c)(2)
or another defined contribution plan which
provides the top-heavy minimum benefit or
contribution for employees who participate
in both plans.
o Employer maintains another defined contri- 3% (c)(1)
bution plan and the top-heavy minimum
contribution for employees who participate
in both plans is made to this Plan.
o Employer also maintains a defined benefit 5% (c)(1)
plan which does not provide the minimum
benefit to employees who participate in
both plans.
o The Employer also maintains a defined 7 1/2% (c)(1)
benefit plan which does not provide the
minimum benefit to employees who parti-
cipate in both plans, the top-heavy
ratio does not exceed 90% and the plan
provides an extra minimum contribution
in order to use the 125% limitation under
Internal Revenue Code Section 415(e).
o The Employer also maintains a defined 4% (c)(1)
benefit plan, the top-heavy ratio does
not exceed 60% and both plans provide
minimum benefits or contributions and
provide extra minimums in order to use
the 125% limitation under Internal Revenue
Code Section 415(e).
o The Plan covers only employees subject to N/A (c)(3)
a collective bargaining agreement and
there are no Employer or Matching Con-
tributions.
<PAGE>
(d) In the event that the Plan is treated as Top-Heavy for a Plan Year, the
following vesting schedule shall apply instead of the schedule(s)
elected in Section 1.07(a) for such Plan Year and each Plan Year
thereafter (check one):
(1) / / 100% vested after_________(not in excess of 3) Years of Service
for Vesting.
<TABLE>
<CAPTION>
(2) /x/ Years of Service for Vesting Vesting Percentage Must be at Least
---------------------------- ------------------ ----------------
<S> <C> <C> <C>
0 0 0%
1 0 0%
2 20 20%
3 40 40%
4 60 60%
5 80 80%
6 100 100%
</TABLE>
Note: If one or both schedules elected in Section 1.07(a) is(are)
more favorable in all cases than the schedules elected in (d)
above then such schedule(s) will continue to apply even in
Plan Years in which the Plan is Top-Heavy.
1.13 TWO OR MORE PLANS - Code Section 415 limitation on annual additions
If the Employer maintains or ever maintained another qualified plan
in which any Participant in this Plan is (or was) a participant or
could become a participant, the Employer must complete this
section. The Employer must also complete this section if it
maintains a welfare benefit fund, as defined in Section 419(e) of
the Code, or an individual medical account, as defined in Section
415(1)(2) of the Code, under which amounts are treated as annual
additions with respect to any Participant in this Plan.
(a) If the Employer maintains, or had maintained, any other
defined contribution plan or plans which are not Master or
Prototype Plans, Annual Additions for any Limitation Year to
this Plan will be limited (check one):
(1) /xx/ in accordance with Section 5.03 of this Plan.
(2) / / in accordance with another method set forth on an
attached separate sheet.
(3) / / Not Applicable.
16
<PAGE>
Instructions - Page 16
Note: Compensation for top-heavy purposes is defined as total
annual Compensation for a Participant less any Employee
Deferral Contributions.
(d) An Employer MUST elect a top-heavy Vesting Schedule for its
Plan unless the Plan is covering only Employees subject to
a collective bargaining agreement and there are no Employer
or Matching Contributions. Even an Employer that allows
only Employee Deferral Contributions MUST elect a top-heavy
Vesting Schedule since the Plan could become top-heavy
under certain circumstances.
The Vesting Schedule(s) elected in Section 1.07(a) will
apply unless the Plan is top-heavy. Once an Employer's Plan
is top-heavy and subject to the Vesting Schedule elected in
this Section then it will continue to apply even in
subsequent Plan Years when the Plan is not top-heavy. An
Employer must elect a top-heavy Vesting Schedule under
either Option (1) or (2) unless one or both of the Vesting
Schedules in Section 1.07(a) is/are more favorable to the
Participants.
1.13. TWO OR MORE PLANS:
(a) (Select one option.) Annual Participant Contributions
(Employee Deferral and After-Tax) and all Employer
Contributions and benefits under all Employer and Related
Employer qualified retirement plans are subject to one
overall annual addition limit. Section 1.13 is designed to
determine how the Employer's Plan will comply with these
limitations under all Employer plans. The maximum
permissible annual addition limit for a limitation year for
a Participant in one or more defined contribution plans is
the lesser of $30,000 (as indexed) or 25% of a
Participant's compensation. For purposes of the latter
limit, a Participant's Compensation must be reduced by any
elective contributions under Internal Revenue Code Sections
402(h) (Simplified Employee Pension), 403(b) (Tax Sheltered
Annuities), other deferred compensation described in 457(b)
(Plan of State and Local Governments and Tax-Exempt
Organizations) or 414(h)(2) (Plan of a State or Political
Subdivision of the Government). Option (a) is required by
the Internal Revenue Service, unless (1) this is the only
Plan even maintained by the Employer, or (2) the Employer
maintains other defined contribution plans, but they are
master or prototype plans. An Employer Cafeteria or
Internal Revnue Code Section 125 plan is not considered a
plan for purposes of Section 1.13.
(a)(1) Excess annual additions for an affected Participant will
be refunded from both the Employer's other defined
contribution plan and this Plan on a prorata basis.
(a)(2) If the Employer does not want excess annual additions for
an affected Participant to be refunded in accordance with
(a)(1) then the Employer should select this option. The
Employer may designate how excess annual additions will be
refunded from the Employer's other defined contribution
plan and this Plan by attaching a separate schedule.
(a)(3) Check this option if this is the only Plan the Employer
maintains. Excess annual additions for a Participant will
be refunded from this Plan.
<PAGE>
(b) If the Employer maintains, or had maintained, a defined benefit
plan or plans, the sum of the Defined Contribution Fraction and
Defined Benefit Fraction for a Limitation Year may not exceed
the limitation specified in Code Section 415(e), modified by
section 416(h)(1) of the Code. This combined plan limit will be
met as follows (check one):
(1) / / Annual Additions to this Plan are limited so that the
sum of the Defined Contribution Fraction and the
Defined Benefit Fraction does not exceed 1.0.
(2) / / another method of limiting Annual Additions or reducing
projected annual benefits is set forth on an attached
schedule.
(3) /x/ Not Applicable.
1.14 ESTABLISHMENT OF TRUST AND INVESTMENT DECISIONS
(a) Investment Directions
Participant Accounts will be invested (check one):
(1) / / in accordance with investment directions provided to
the Trustee by the Employer for allocating all
Participant Accounts among the options listed in (b)
below.
(2) /x/ in accordance with investment directions provided to
the Trustee by each Participant for allocating his
entire Account among the options listed in (b) below.
(3) / / in accordance with investment directions provided to
the Trustee by each Participant for all contribution
sources in a Participant's Account except the following
sources shall be invested as directed by the Employer
(check (A) and/or (B)):
(A) / / Fixed or Discretionary Employer Contributions
(B) / / Employer Matching Contributions
The Employer must direct the applicable sources among
the same investment options made available for
Participant directed sources listed in (b) below.
17
<PAGE>
Instructions - Page 17
(b) (Select one option.) Completion of Option (b) is required by the
Internal Revenue Service unless this is the only plan ever maintained
by the Employer or the Employer never had or maintained a defined
benefit plan.
(b)(1) If an Employer maintains or has ever maintained a defined benefit plan
in addition to this defined contribution plan then there are certain
Internal Revenue Code fractions that must be computed annually. An
Employer must compute each Participant's defined benefit fraction under
the defined benefit plan and defined contribution fraction under the
defined contribution plan. The sum of these two fractions for each
Participant may not exceed 1.0.
(b)(2) An Employer not electing (b)(1) may reduce excess annual additions for
an affected Participant participating at one time or another in both a
defined benefit plan and a defined contribution plan maintained by the
Employer by attaching a separate schedule.
(b)(3) Check this option if the Employer does not currently or has never
maintained a defined benefit plan.
1.14. ESTABLISHMENT OF TRUST AND INVESTMENT DECISIONS:
This section establishes the Trust under the Plan and permits the
Employer to designate who directs the investments (Employer,
Participants or both) and the Fidelity Mutual Funds available for
investment under the Plan. (Select one option from (a) and complete
Option (b).)
(a)(1) An Employer may direct all Participant account balances between/among
the available Fidelity Funds offered under the Plan by electing Option
(1). The Employer is responsible for sending Fidelity written direction
for any exchanges between/among available Funds based upon procedures
established by Fidelity.
(a)(2) An Employer may allow each Participant to direct his/her entire account
balance between/among the available Fidelity Funds offered under the
Plan by selecting Option (2). (A Participant's spouse or a third party
may not direct Participant account balances.) Each Participant should
receive a prospectus in accordance with Securities and Exchange
Commission requirements before investing money in any Fidelity Mutual
Fund. Participant exchanges will be based upon instructions given by
Participants to Fidelity Telephone Representatives during predetermined
business hours.
An Employer electing this Option may also elect to comply with Section
404(c) of the Employee Retirement Income Security Act of 1974 (ERISA).
If the requirements of ERISA 404(c) are satisfied by the Plan then each
Participant is responsible for any investment gains/losses in his/her
Accounts. However, election of ERISA 404(c) by an Employer does not
fully relieve it of all fiduciary liability. The Employer is still
responsible for the selection and monitoring of Plan investment
options.
(a)(3) An Employer may direct certain sources of Participant account balances
and allow a Participant to direct his/her remaining account balances
between/among the available Fidelity Funds by selecting Option (3). The
Employer may direct Participant Fixed and/or Discretionary Employer
Contributions by selecting Option (A) or only direct Employer Matching
Contributions by selecting Option (B). All remaining sources will be
directed by each Participant. An Employer may not elect ERISA 404(c)
protection for the portion of Participant's Account it directs. The
Employer and Participant must select from the available Funds listed in
Option (b). The Employer must provide Fidelity with written
instructions for the investment of Participant accounts that it will
direct between/among Fidelity Funds.
<PAGE>
(b) Plan Investment Options
The Employer hereby establishes a Trust under the plan in accordance
with the provisions of Article 14, and the Trustee signifies acceptance
of its duties under Article 14 by its signature below. Participant
Accounts under the Trust will be invested among the Fidelity Funds
listed below pursuant to Participant and/or Employer directions.
Fund Name Fund Number
_________ ___________
(1) Managed Income Portfolio
___________________________________ ___________
(2) Investment Grade Bond Fund
___________________________________ ___________
(3) Magellan Fund
___________________________________ ___________
(4) Puritan Fund
___________________________________ ___________
(5) Blue Chip Growth
___________________________________ ___________
(6) Fidelity Asset Manager (Portfolio)
___________________________________ ___________
(7) ___________________________________ ___________
(8) ___________________________________ ___________
(9) ___________________________________ ___________
(10)___________________________________ ___________
Note: An additional annual recordkeeping fee will be charged for each
fund in excess of five funds.
To the extent that the Employer selects as an investment option
the Managed Income Portfolio of the Fidelity Group Trust for
Employee Benefit Plans (the "Group Trust"), the Employer hereby
(A) agrees to the terms of the Group Trust and adopts said terms
as a part of this Agreement and (B) acknowledges that it has
received from the Trustee a copy of the Group Trust, the
Declaration of Separate Fund for the Managed Income Portfolio of
the Group Trust, and the Circular for the Managed Income
Portfolio.
Note: The method and frequency for change of investments will be
determined under the rules applicable to the selected funds or,
if applicable, the rules of the Employer adopted in accordance
with Section 6.03. Information will be provided regarding
expenses, if any, for changes in investment options.
18
<PAGE>
Instructions - Page 18
(b) The Employer may only select Fidelity Funds offered under the
CORPORATEplan for Retirement(Service Mark). An additional
recordkeeping fee will be charged for each Fidelity Fund selected
in excess of five (5).
An Employer that selects the Fidelity Managed Income Portfolio
(formerly known as the GIC Open-End Portfolio), MUST receive the Group
Trust, the Declaration of Separate Fund and the Circular for the
Managed Income Portfolio from the Fidelity Account Executive prior to
the execution of this Adoption Agreement. The Employer by executing the
Adoption Agreement agrees to all of the requirements in the
aforementioned documention. Certain restrictions apply on investment
exchanges from the Managed Income Portfolio into a "competing" Fund.
Please refer to the aforementioned documentation for further
information.
<PAGE>
1.15 RELIANCE ON OPINION LETTER
An adopting Employer may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this
Plan is qualified under Section 401 of the Code. If the Employer wishes
to obtain reliance that his or her plan(s) are qualified, application
for a determination letter should be made to the appropriate Key
District Director of the Internal Revenue Service. Failure to properly
fill out the Adoption Agreement may result in disqualification of the
Plan.
This Adoption Agreement may be used only in conjunction with Fidelity
Prototype Plan Basic Plan Document No. 07. The Prototype Sponsor shall
inform the adopting Employer of any amendments made to the Plan or of
the discontinuance or abandonment of the prototype plan document.
1.16 PROTOTYPE INFORMATION:
_____________________
Name of Prototype Sponsor: Fidelity Management & Research Co.
Address of Prototype Sponsor: 82 Devonshire Street
Boston, MA 02109
Questions regarding this prototype document may be directed to the
following telephone number:
1-(800) 343-9184.
19
<PAGE>
Instructions - Page 19
1.15 RELIANCE ON OPINION LETTER:
Because this is a non-standardized prototype plan an adopting Employer
may not rely on the opinion letter issued by the National Office of the
IRS that its plan satisfies the qualification requirements of Internal
Revenue Code Section 401(a). Fidelity originally received an Internal
Revenue Service "Opinion Letter" dated June 12, 1991 (Letter Serial No.
D358678a) for the CORPORATEplan for Retirement(Service Mark) Basic Plan
Document No. 7 and the Non-Standardized Adoption Agreement. On August
24, 1993, Fidelity received an IRS "Opinion Letter" on the Plan as
amended and restated (Letter Serial No. D358678b). The Plan
Administrator is responsible for applying for an individual
determination letter for the Plan from the appropriate Key District
Director of the Internal Revenue Service. The Plan Administrator should
consult with their attorney and/or accountant for further information.
Failure by the Employer to properly complete and execute the Adoption
Agreement may result in disqualification of the Plan.
<PAGE>
EXECUTION PAGE
(Fidelity's Copy)
IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be
executed this 18th day of March, 1994.
---- --------------
Employer Jevic Transportation, Inc.
-----------------------------------
/s/ Brian J. Fitzpatrick
By -----------------------------------
Brian J. Fitzpatrick
Senior Vice President/Finance
Title ----------------------------------
Employer -----------------------------------
By ____________________________________
Title ____________________________________
Accepted by
Fidelity Management Trust Company, as Trustee
By ________________________________________ Date ______________________
Title _____________________________________
20
CONTRACT FOR SALE OF REAL ESTATE
THIS CONTRACT FOR SALE is made on March 30, 1995, between HARRY J.
MUHLSCHLEGEL AND KAREN MUHLSCHLEGEL, his wife whose address is 4 Stags Leap
Court, Tabernacle, New Jersey, hereinafter referred to as Seller, and JEVIC
TRANSPORTATION, INC., of 600 Creek Road, Delanco, New Jersey, hereinafter
referred to as Buyer.
1. PURCHASE AGREEMENT
The Seller agrees to sell and the Buyer agrees to buy all that land,
buildings, structures and fixtures on land in the municipality of Delanco,
County of Burlington and, State of New Jersey, being commonly known as 600 Creek
Road, Delanco, New Jersey. It appears on the Municipal Tax Map as Block 2000,
Lot Nos. 13.02 and llB. A description of the boundaries of the land is attached
as Schedule "A". Seller shall also convey all of the Seller's rights relating to
the land.
2. PERSONAL PROPERTY AND FIXTURES
The property being transferred includes all fixtures permanently attached
to the building.
3. PURCHASE PRICE
The purchase price is $5,542,062.00. (The purchase price was determined by
using an appraisal of $7,500,000.00 and subtracting the sum of $1,957,938.00 in
leasehold improvements made by the Buyer.)
4. PAYMENT OF PURCHASE PRICE
The Buyer will pay the purchase price as follows:
A. Assumption of Mortgage held by United Jersey Bank in
1
<PAGE>
the sum of $4,401,602.73.
B. The sum of $1,140,459.27 to be paid to Seller as follows: The Buyer
shall execute a promissory note in favor of seller in the sum of $1,140,459.27
which shall bear interest at the rate of eight per cent (8%) per annum and shall
be payable in five (5) years. There shall be semi-annual payments of principal
each in the sum of $114,045.93 plus accrued interest commencing September 30,
1995 and on March 31 and September 30 of each succeeding year until paid in
full. The note shall further provide that in the event there is a public
offering of the Buyer's corporate stock the principal balance due and any
accrued interest shall become immediately due and payable.
5. DEPOSIT MONIES
There will be no deposit monies.
6. MORTGAGE CONTINGENCY
This agreement is not subject to any mortgage contingency. The parties
acknowledge that United Jersey Bank has consented to the assumption.
7. TIME AND PLACE OF SETTLEMENT
At settlement, the Seller shall transfer ownership of the property by deed
to the Buyer and the Buyer shall pay the Seller the purchase price. Settlement
shall take place at the office of the Buyer at 600 Creek Road, Delanco, New
Jersey, or other agreeable location on or before March 31, 1995 at 3:30 o'clock
P.M.
2
<PAGE>
8. TYPE OF DEED
The Seller shall provide to Buyer and Buyer agrees to accept a deed known
as a Bargain and Sale Deed with Covenants as to Grantor's Acts. The deed shall
be in the proper statutory form for recording in the appropriate Clerk's office
or Register of Deeds.
9. QUALITY AND INSURABILITY OF TITLE
The title to be transferred shall be marketable title of record and
insurable at regular rates by a reputable title insurance company authorized to
do business in the State of New Jersey. The title shall be free and clear of all
encumbrances, including municipal liens and assessments and liabilities for
future assessments for improvements now being constructed.
The title shall be subject to all existing utility easements and
restrictions of record, if any. (An easement is a right of a person other than
the owner of the property to use a portion of the property for a special
purpose.)
A violation of any restriction shall not be reason for Buyer refusing to
complete settlement as long as the title insurance company insures the Buyer
against actual loss at regular rates, and the violation does not restrict the
ordinary use of the property. The Seller, however, guarantees that there are no
restrictions in any conveyance or plans of record which would prohibit or
interfere with the use and/or occupancy of the property as a warehouse.
The Seller states that all buildings and other improvements on the property
are within its boundary lines and that no improvements on adjoining properties
extend across the boundary lines of this
3
<PAGE>
property. This provision shall not apply to any driveways or fences which may
not coincide with title lines.
If the Seller is unable to transfer the quality of title as stated herein
and the Buyer is unwilling to accept the Seller's title without a reduction of
purchase price, then this contract shall be null and void.
The title shall be conveyed subject to all liens and exceptions as appear
on the current policy of title insurance as issued by First American Title
Insurance Company through their agent Settler's Title Agency.
10. POSSESSION
Possession and occupancy has already been given to buyer. There will be no
adjustment of any rent at time of closing.
11. SELLER'S WARRANTIES
There are no warranties. The property is being conveyed AS-IS.
12. RISK OF LOSS
The risk of loss or damage to the property by fire or otherwise, excepting
ordinary wear and tear, is the liability of the Buyer until settlement.
13. RELIANCE
This contract is entered into by the Seller and Buyer based upon their
independent knowledge of the value of the property and their full understanding
of the meaning of all of the provisions of this contract and not upon any
representations made by either of them to the other.
4
<PAGE>
14. SETTLEMENT COSTS AND ADJUSTMENTS
The Buyer shall be responsible for all closing costs.
15. COMPLETE AGREEMENT
This contract is deemed to be the entire and only agreement between the
Buyer and Seller. This contract replaces and cancels any previous agreement
between the parties. This contract can only be changed by an agreement in
writing signed by both the Buyer and Seller. The Seller states that the Seller
has not made any other contract to sell the property to anyone else. Any
representations not contained in this contract are of no effect.
16. PARTIES LIABLE
This contract is binding on all parties who sign it and all who succeed to
their rights and responsibilities.
17. NOTICES
All notices under this contract must be in writing. The notices must be
delivered personally or mailed by certified mail, return receipt requested, to
the other party at the address written in this contract or to that party's
attorney.
18. ASSIGNMENT
This contract shall not be assigned.
/s/ HARRY J. MUHLSCHLEGEL
---------------------------
HARRY J. MUHLSCHLEGEL, Seller
/s/ KAREN MUHLSCHLEGEL
---------------------------
KAREN MUHLSCHLEGEL, Seller
JEVIC TRANSPORTATION, INC.
/s/ HARRY J. MUHLSCHLEGEL
----------------------------
by HARRY J MUHLSCHLEGEL, President
5
PROMISSORY NOTE
STATE OF NEW JERSEY )
) SS.:
COUNTY OF CAMDEN )
March 31, 1995
$1,140,459.27
FOR VALUE RECEIVED, JEVIC TRANSPORTATION, INC., a New Jersey corporation,
having an address at 600 Creek Road, Delanco, New Jersey 08075 ("Maker"), hereby
covenants and premises to pay to HARRY J. MUHLSCHLEGEL and KAREN MUHLSCHLEGEL,
each having an address at 4 Stags Leap Court, Tabernacle, New Jersey
(collectively hereinafter referred to as "Payee"), or order, at Payee's address
first above written or at such other address as Payee may designate in writing,
One Million One Hundred Forty Thousand Four Hundred Fifty Nine and 27/l00ths
Dollars ($1,140,459.27), lawful money of the United States of America, together
with interest thereon computed from the date hereof at the rate of eight percent
per annum. There shall be ten (10) equal payments of principal in the sum of
$114,045.93 plus accrued interest, commencing September 30, 1995 and on March 31
and September 30 of each year thereafter until paid in full.
Maker covenants and agrees with Payee as follows:
1. Maker will pay the indebtedness evidenced by this Note as provided
herein.
2. In the event any payment due hereunder shall not be paid on the date
when due, such payment shall bear interest at the lesser of eight per cent (8%)
or the highest lawful rate permitted under applicable law, from the date when
such payment was due until paid. In addition, Maker shall pay a late payment
premium of five percent of any principal or interest payment made more than ten
(10) days after the due date thereof, which premium shall be paid with such late
payment.
3. Maker shall have the right to prepay the indebtedness evidenced by this
Note, in whole or in part, without penalty, upon ten days prior written notice
to Payee.
4. Maker hereby waives presentment for payment, demand, protest, and notice
of dishonor.
<PAGE>
5. Any notice or demand required or permitted to be made or given hereunder
shall be deemed sufficiently made and given if given by the mailing of such
notice or demand by certified or registered mail, return receipt requested,
addressed, if to Maker, at Maker's address first above written, or if to Payee,
at Payee's address first above written. Either party may change its address by
like notice to the other party.
6. This Note may not be changed or terminated orally, but only by an
agreement in writing signed by the party against whom enforcement of any change,
modification, termination, waiver, or discharge is sought. This Note shall be
construed and enforced in accordance with the laws of New Jersey.
7. In the event there is a public offering of Maker's corporate stock then
the principal balance and any accrued interest shall become immediately due and
payable on the date of the public offering.
IN WITNESS WHEREOF, Maker has executed this Note on the date first above
written.
JEVIC TRANSPORTATION INC.
ATTEST: By Harry Muhlschlegel
--------------------------
President
By Karen M. Muhlschlegel
----------------------------
Secretary
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. Upon demand being made hereunder, 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. Upon demand being made hereunder, 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. Tenant shall repair any damage to the Premises
occasioned by the removal of Tenant's trade fixtures, furnishings and equipment,
which repair shall include the patching and filling of holes and repair of
structural damage.
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
<PAGE>
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.
9
<PAGE>
(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
-10-
<PAGE>
(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.
-11-
<PAGE>
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
-12-
<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.
-13-
<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.
-14-
<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.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
-16-
<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
-17-
<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.
-18-
<PAGE>
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-
EXHIBIT 10.11
Consult your lawyer before signing this lease--it has important legal
consequences.
BUSINESS LEASE
The Landlord and the Tenant agree to lease the Rental Space for the Term
and at the Rent stated, as follows:
(The words Landlord and Tenant include all landlords and all tenants under this
Lease.)
Landlord Harry and Karen Muhlschlegel Tenant JEVIC TRANSPORTATION, INC.
____________________________ ______________________________
Print or type Print or type
4 Stags Leap Court
______________________________________ ______________________________
Address Residence address
Tabernacle, NJ 08088
______________________________________ ______________________________
Zip
Rental Space Ironside Court, Willingboro, NJ 08046 (Lots 8-12, 8-15, 8-16 & 17
in Blk 13 on Willingboro Tax Map)
_______________________________________________________________________________
_______________________________________________________________________________
in the Building at_____________________________________________________________
Address
Date of Lease December 22 1993 Rent for the year is $114,240.00
Term 20 years The Rent is payable in advance on the
Beginning January 1 1994 first day of each month, as follows:
Ending December 31 2013 $9,520.00 per month
Security $ N/A
Broker. The Landlord and the Tenant
recognize__________________________
N/A
as the Broker who brought about this
Lease. The __________________________
shall pay the Broker's commission.
Liability Insurance. Minimum amounts for
each person injured $1,000,000, for any
one accident
$1,000,000, for property damage
$1,000,000
Municipal Real Estate Taxes $__________
Base Year 19__ Percent of Increase ___%
Use of Rental Space For Truck Terminal
Additional agreements The Tenant shall be responsible for all repairs and taxes
on the property.
Table of Contents
1. Possession and Use 16. No Alterations
2. Delay in Giving of Possession 17. Signs
3. No Assignment or Subletting 18. Access to Rental Space
4. Rent and Additional Rent 19. Fire and Other Casualty
5. Security 20. Eminent Domain
6. Liability Insurance 21. Subordination to Mortgage
7. Unavailability of Fire Insurance, 22. Tenant's Certificate
Rate Increases 23. Violation, Eviction, Re-entry
8. Water Damage and Damages
9. Liability of Landlord and Tenant 24. Notices
10. Real Estate Taxes 25. No Waiver
11. Acceptance of Rental Space 26. Survival
12. Quiet Enjoyment 27. End of Term
13. Utilities and Services 28. Binding
14. Tenant's Repairs, Maintenance, 29. Full Agreement
and Compliance
15. Landlord's Repairs and Maintenance
<PAGE>
1. Possession and Use
The Landlord shall give possession of the Rental Space to the Tenant for
the Term. The Tenant shall take possession of and use the Rental Space for the
purpose stated above. The Tenant may not use the Rental Space for any other
purpose without the written consent of the Landlord.
The Tenant shall not allow the Rental Space to be used for any unlawful
or hazardous purpose. The Tenant is satisfied that the Rental Space is zoned
for the Use stated. The Tenant shall obtain any necessary certificate of
occupancy or other certificate permitting the Tenant to use the Rental Space for
that Use.
The Tenant shall not use the Rental Space in any manner that results in
(1) an increase in the rate of fire or liability insurance or (2) cancellation
of any fire or liability insurance policy on the Rental Space. The Tenant shall
comply with all requirements of the insurance companies insuring the Rental
Space. The Tenant shall not abandon the Rental Space during the Term of this
Lease or permit it to become vacant for extended periods.
2. Delay in Giving of Possession
This paragraph applies if (a) the Landlord cannot give possession of the
Rental Space to the Tenant on the beginning date and (b) the reason for the
delay is not the Landlord's fault. The Landlord shall not be held liable for
the delay. The Landlord shall then have 30 days in which to give possession.
If possession is given within that time, the Tenant shall accept possession and
pay the Rent from that date. The ending date of the Term shall not change. If
possession is not given within that time this Lease may be cancelled by either
party on notice to the other.
3. No Assignment or Subletting
The Tenant may not do any of the following without the Landlord's
written consent: (a) assign this Lease (if the Tenant is a corporation, the sale
of a majority of its shares shall be treated as an assignment), (b) sublet all
or any part of the Rental Space or (c) permit any other person or business to
use the Rental Space.
4. Rent and Additional Rent
Tenant shall pay the Rent to the Landlord at the Landlord's address.
If the Tenant fails to comply with any agreement in this Lease, the
Landlord may do so on behalf of the Tenant. The Landlord may charge the cost to
comply, including reasonable attorney's fees, to the Tenant as "additional
rent". The additional rent shall be due and payable as Rent with the next
monthly Rent payment. Non-payment of additional rent shall give the Landlord
the same rights against the Tenant as if the Tenant failed to pay the Rent.
5. Security
The Tenant has given to the Landlord the Security stated above. The
Security shall be held by the Landlord during the Term of this Lease. The
Landlord may deduct from the Security any expenses incurred in connection with
the Tenant's violation of any agreement in this Lease. For example, if the
Tenant does not leave the Rental Space in good condition at the end of the Term,
the Security may be used to put it in good condition. If the amount of damage
exceeds the Security, the Tenant shall pay the additional amount to the Landlord
on demand.
If the Landlord uses the Security or any part of it during the Term, the
Tenant shall on demand pay the Landlord for the amount used. The amount of the
Security is to remain constant throughout the Term. The Security is not to be
used by the Tenant for the payment of Rent. The Landlord shall repay to the
Tenant any balance remaining within a reasonable time after the end of the Term.
The Tenant shall not be entitled to interest on the Security.
If the Landlord's interest in the Rental Space is transferred, the
Landlord shall turn over the Security to the new Landlord. The Landlord shall
notify the Tenant of the name and address of the new Landlord. Notification must
be given within 5 days after the transfer, by registered or certified mail. The
Landlord shall then no longer be responsible to the Tenant for the repayment of
the Security. The new Landlord shall be responsible to the Tenant for the return
of the Security in accordance with the terms of this Lease.
6. Liability Insurance
The Tenant shall obtain, pay for, and keep in effect for the benefit of
the Landlord and the Tenant public liability insurance on the Rental Space. The
insurance company and the broker must be acceptable to the Landlord. This
coverage must be in at least the minimum amounts stated above.
All policies shall state that the insurance company cannot cancel or
refuse to renew without at lease 10 days written notice to the Landlord.
The Tenant shall deliver the original policy to the Landlord with proof
of payment of the first year's premiums. This shall be done not less than 15
days before the Beginning of the Term. The Tenant shall deliver a renewal policy
to the Landlord with proof of payment not less than 15 days before the
expiration date of each policy.
7. Unavailability of Fire Insurance, Rate Increases
If due to the Tenant's use of the Rental Space the Landlord cannot
obtain and maintain fire insurance on the Building in an amount and form
reasonably acceptable to the Landlord, the Landlord may cancel this Lease on 30
days notice to the Tenant. If due to the Tenant's use of the Rental Space the
fire insurance rate is increased, the Tenant shall pay the increase in the
premium to the Landlord on demand.
8. Water Damage
The Landlord shall not be liable for any damage or injury to any persons
or property caused by the leak or flow of water from or into any part of the
Building.
9. Liability of Landlord and Tenant
The Landlord shall not be liable for injury or damage to any person or
property unless it is due to the Landlord's act or neglect. The Tenant is liable
for any loss, injury or damage to any person or property caused by the act or
neglect of the Tenant or the Tenant's employees. The Tenant shall defend the
Landlord from and reimburse the Landlord for all liability and costs resulting
from any injury or damage due to the act or neglect of the Tenant or the
Tenant's employees.
10. Real Estate Taxes
The Landlord shall pay the yearly Municipal Real Estate Taxes on the
Building in the amount stated above. This is the tax assessed for the Base Year
stated above. The Tenant shall pay the Percent of Increase stated above of each
yearly increase in the Municipal Real Estate Taxes over the tax for the Base
Year. The Tenant shall pay this amount yearly in one sum within 30 days of the
Landlord's written request accompanied by a copy of the current year's tax bill.
The Tenant's liability for this payment shall be pro-rated for any part of the
year the Tenant does not occupy the Rental Space under this Lease.
11. Acceptance of Rental Space
The Tenant has inspected the Rental Space and agrees that the Rental
Space is in satisfactory condition. The Tenant accepts the Rental Space "as is".
12. Quiet Enjoyment
The Landlord has the right to enter into this Lease. If the Tenant
complies with this Lease, the Landlord must provide the Tenant with undisturbed
possession of the Rental Space.
13. Utilities and Services
The Tenant shall arrange and pay for all utilities and services required
for the Rental Space, including the following:
(a) Heat
(b) Hot and cold water
(c) Electric
(d) Gas
The Landlord is not liable for any inconvenience or harm caused by any
stoppage or reduction of utilities and services beyond the control of the
Landlord. This does not excuse the Tenant from paying Rent.
<PAGE>
14. Tenant's Repairs, Maintenance, and Compliance
The Tenant shall:
(a) Promptly comply with all laws, orders, rules and requirements of
governmental authorities, insurance carriers, board of fire underwriters, or
similar groups.
(b) Maintain the Rental Space and all equipment and fixtures in it in
good repair and appearance.
(c) Make all necessary repairs to the Rental Space and all equipment and
fixtures in it, except structural repairs.
(d) Maintain the Rental Space in a neat, clean, safe, and sanitary
condition, free of all garbage.
(e) Keep the walks, driveway, parking area, yard, entrances, hallways,
and stairs clean and free from trash, debris, snow and ice.
(f) Use all electric, plumbing and other facilities in the Rental Space
safely.
(g) Use no more electricity than the wiring or feeders to the Rental
Space can safely carry.
(h) Promptly replace all broken glass in the Rental Space.
(i) Do nothing to destroy, deface, damage, or remove any part of the
Rental Space.
(j) Keep nothing in the Rental Space which is inflammable, dangerous or
explosive or which might increase the danger of fire or other casualty.
(k) Promptly notify the Landlord when there are conditions which need
repair.
(l) Do nothing to destroy the peace and quiet of the Landlord, other
tenants, or persons in the neighborhood.
(m) Avoid littering in the building or on its grounds.
The Tenant shall pay any expenses involved in complying with the above.
16. No Alterations
The Tenant may not make any changes or additions to the Rental Space
without the Landlord's written consent. Any changes or additions made without
the Landlord's written consent shall be removed by the Tenant on demand.
All changes or additions made with the Landlord's written consent shall
become the property of the Landlord when completed and paid for by the Tenant.
They shall remain as part of the Rental Space at the end of the Term. The
Landlord may demand that the Tenant remove any changes or additions at the end
of the Term. The Tenant shall promptly pay for all costs of any permitted
changes or additions. The Tenant shall not allow any mechanic's lien or other
claim to be filed against the Building. If any lien or claim is filed against
the Building, the Tenant shall have it promptly removed.
17. Signs
The Tenant shall obtain the Landlord's written consent before placing
any sign on or about the Rental Space. Signs must conform with all applicable
municipal ordinances and regulations.
18. Access to Rental Space
The Landlord shall have access to the Rental Space on reasonable notice
to the Tenant to (a) inspect the Rental Space (b) make necessary repairs,
alterations, or improvements, (c) supply services, and (d) show it to
prospective buyers, mortgage lenders, contractors or insurers.
The Landlord may show the Rental Space to rental applicants at
reasonable hours on notice to the Tenant within 6 months before the end of the
Term.
The Landlord may enter the Rental Space at any time without notice to
the Tenant in case of emergency.
19. Fire and Other Casualty
The Tenant shall notify the Landlord at once of any fire or other
casualty in the Rental Space. The Tenant is not required to pay Rent when the
Rental Space is unusable. If the Tenant uses part of the Rental Space, the
Tenant must pay Rent pro-rata for the usable part.
If the Rental Space is partially damaged by fire or other casualty, the
Landlord shall repair it as soon as possible. This includes the damage to the
Rental Space and fixtures installed by the Landlord. The Landlord need not
repair or replace anything installed by the Tenant.
Either party may cancel this Lease if the Rental Space is so damaged by
fire or other casualty that it cannot be repaired within 90 days. If the parties
cannot agree, the opinion of a contractor chosen by the Landlord and the Tenant
will be binding on both parties.
This Lease shall end if the Rental Space is totally destroyed. The
Tenant shall pay Rent to the date of destruction.
If the fire or other casualty is caused by the act or neglect of the
Tenant or the Tenant's employees, the Tenant shall pay for all repairs and all
other damage.
20. Eminent Domain
Eminent domain is the right of a government to lawfully condemn and take
private property for public use. Fair value must be paid for the property. The
taking occurs either by court order or by deed to the condemning party. If any
part of the Rental Space is taken by eminent domain, either party may cancel
this lease on 30 days notice to the other. The entire payment for the taking
shall belong to the Landlord. The Tenant shall make no claim for the value of
this Lease for the remaining part of the Term.
21. Subordination to Mortgage
In a foreclosure sale all mortgages which now or in the future affect
the Building have priority over this Lease. This means that the holder of a
mortgage may end this Lease on a foreclosure sale. The Tenant shall sign all
papers needed to give any mortgage priority over this Lease. If the Tenant
refuses, the Landlord may sign the papers on behalf of the Tenant.
22. Tenant's Certificate
At the request of the Landlord, the Tenant shall sign a certificate
stating that (a) this Lease has not been amended and is in effect, (b) the
Landlord has fully performed all of the Landlord's agreements in this Lease, (c)
the Tenant has no rights to the Rental Space except as stated in this Lease, (d)
the Tenant has paid all Rent to date, and (e) the Tenant has not paid Rent for
more than one month in advance. The Certificate shall also list all the property
attached to the Rental Space owned by the Tenant.
23. Violation, Eviction, Re-entry and Damages
The Landlord reserves a right of re-entry which allows the Landlord to
end this Lease and re-enter the Rental Space if the Tenant violates any
agreement in this Lease. This is done by eviction. Eviction is a court procedure
to remove a tenant. Eviction is started by the filing of a complaint in court
and the service of a summons on a tenant to appear in court. The Landlord may
also evict the Tenant for any one of the other grounds of good cause provided by
law. After a court order of eviction and compliance with the warrant of removal,
the Landlord may re-enter and take back possession of the Rental Space. If the
cause for eviction is non-payment of Rent, notice does not have to be given to
the Tenant before the Landlord
<PAGE>
files a complaint. If there is any other cause to evict, the Landlord must give
to the Tenant the notice required by law before the Landlord files a complaint
for eviction.
The Tenant is liable for all damages caused by the Tenant's violation of
any agreement in this Lease. This includes reasonable attorney's fees and costs.
After eviction the Tenant shall pay the Rent for the Term or until the
Landlord re-rents the Rental Space, if sooner. If the Landlord re-rents the
Rental Space for less than the Tenant's Rent, the Tenant shall pay the
difference until the end of the Term. The Tenant shall not be entitled to any
excess resulting from the re-renting. The Tenant shall also pay (a) all
reasonable expenses incurred by the Landlord in preparing the Rental Space for
re-renting and (b) commissions paid to a broker for finding a new tenant.
24. Notices
All notices given under this Lease must be in writing. Each party must
accept and claim the notices given by the other. Unless otherwise provided by
law, they may be given by (a) personal delivery, or (b) certified mail, return
receipt requested. Notices shall be addressed to the Landlord at the address
written at the beginning of this Lease and to the Tenant at the Rental Space.
25. No Waiver
The Landlord's failure to enforce any agreement in this Lease shall not
prevent the Landlord from enforcing the agreement for any violations occurring
at a later time.
26. Survival
If any agreement in this Lease is contrary to law, the rest of the Lease
shall remain in effect.
27. End of Term
At the end of the Term the Tenant shall (a) leave the Rental Space
clean, (b) remove all of the Tenant's property, (c) remove all signs and restore
that portion of the Rental Space on which they were placed, (d) repair all
damage caused by moving, and (e) return the Rental Space to the Landlord in the
same condition as it was at the beginning of the Term except for normal wear and
tear.
If the Tenant leaves any property in the Rental Space, the Landlord may
(a) dispose of it and charge the Tenant for the cost of disposal, or (b) keep it
as abandoned property.
28. Binding
This Lease binds the Landlord and the Tenant and all parties who
lawfully succeed to their rights or take their places.
29. Full Agreement
The parties have read this Lease. It contains their full agreement. It
may not be changed except in writing signed by the Landlord and the Tenant.
30. Harren Equipment, Inc. agrees to be bound hereby with the terms herein to
the extent of their keeping their equipment in the leased premises. The
Landlord, however, shall look solely to Jevic Transportation, Inc. for Lease
payment.
31. Tenant shall be responsible for any further improvements for the property
during the term of this lease.
Signatures The Landlord and the Tenant agree to the terms of this Lease
by signing below. If a party is a corporation, this Lease is
signed by its proper corporate officers and its corporate seal
is affixed.
/s/ Harry Muhlschlegel
Witnessed or attested by: ------------------------------- SEAL
HARRY MUHLSCHLEGEL Landlord
/s/ /s/ Karen Muhlschlegel
- -------------------------- ------------------------------- SEAL
As to Landlord KAREN MUHLSCHLEGEL Landlord
HARREN EQUIPMENT, INC.
------------------------------- SEAL
JEVIC TRANSPORTATION, INC. Tenant
BY: /s/ Harry Muhlschlegel BY: /s/ Harry Muhlschlegel
- --------------------------- ------------------------------- SEAL
As to Tenant Tenant
EXHIBIT 10.12
LEASE AGREEMENT
This Agreement, between James F. Lomma, individually, as Landlord and
Jevic Transportation, Inc., as Tenant witnesseth: That the said Landlord has let
unto the said Tenant and the said Tenant has hired from the said Landlord, the
premises commonly known as 476 Hartford Turnpike, Shrewsbury, Mass. 01545, as
further described on Schedule A hereto (referred to herein variously as the
"premises", "demised premises", "leased property", "property", "leased area",
"Premises"), for the term of two (2) years to commence from June 1, 1995, and to
end on May 31 , 1997, to be used and occupied for motor freight terminal
purposes, upon the conditions and covenants following:
1st: That the Tenant shall pay the annual rent of $96,000.00 net of real estate
taxes, insurance and maintenance. Said rent to be paid in equal monthly payments
in advance on the first day of each and every month during the term aforesaid,
as follows: $8,000.00 per month payable on the 1st day of each calendar month.
The Tenant shall have the option to renew for one additional one year period at
an annual rental rate of $108,000 net of real estate taxes, insurance and
maintenance, paid in equal monthly installments of $9,000 in advance on 1st day
of each and every month. The option is exercisable only upon six months prior
notice of intent from Tenant to Landlord.
2nd: That the Tenant shall take good care of the premises and, except as
otherwise provided herein, shall at the Tenant's own cost and expense make all
repairs to the demised premises unless damage is caused by Landlord or its
agents, and in connection therewith, Tenant shall contract with a qualified
company for the routine maintenance of the HVAC system for the Premises. Tenant
shall keep its leased area in a clean and orderly fashion. There will be no
outside storage of pallets; tires, used or new; rims; tubes; 55 gallon drums,
empty or full of any material whatsoever. There will be no outside servicing of
tractors. The changing of motor oil outside is specifically prohibited. The
storage of private cars that are not plated, inspected and in running condition
shall not be allowed on the property. Notwithstanding any other provisions of
this Lease to the contrary, Tenant's obligations with respect to repair and
maintenance shall be limited to routine repairs and maintenance (except to the
extent of damage caused by Tenant, its agents or invitees); to the extent the
roof, structural elements and systems of the Premises (including, without
limitation, HVAC, plumbing and electric) require replacement (and ordinary
repair would not be deemed commercially prudent), such replacement shall be
undertaken by Landlord at Landlord's sole cost and expense including any such
replacement required under the provisions of The Americans With Disabilities
Act, 42 U.S.C. 12101, et seq., and the regulations promulgated thereunder
(collectively, the "ADA Act").
<PAGE>
At all times during the course of this Lease, the office area will be
cleaned on a weekly basis, a dumpster shall be provided for the leased property
for the removal of garbage and if Tenant services its tractors in the building
located on the Premises (which such building and the dock areas constituting a
portion of the Premises at times hereinafter referred to as the "Building"), the
used motor oil shall be disposed of once a week by a properly licensed vendor
who shall manifest the disposal of said oil. If Tenant allows dumping of motor
oil on the ground Landlord, at his option, shall have the right to terminate
this Lease. The yard area inside the fence line, as well as outside the fence
line is to be kept broom clean at all times free of litter, garbage, pallets,
junk, etc. If this is not done, Landlord may order said cleaning of said yard
inside and out and bill Tenant who, at the end or other expiration of the term,
shall deliver up the demised premises in good order or condition, damages by the
elements and reasonable wear and tear excepted
3rd: That the Tenant shall promptly execute and comply with all statutes,
ordinances, rules, orders, regulations and requirements of the Federal, State
and City Government and of any and all their Departments and Bureaus, applicable
to said premises, for the correction, prevention, and abatement of nuisances,
violations or other grievances, in, upon or connected with said premises during
said term, provided the premises is not in violation of such statutes,
ordinances, rules, orders, regulations and requirements as of the date hereof
and such compliance is necessary as a result of Tenant's use of the Premises as
a motor freight terminal; and shall also promptly comply with and execute all
rules, orders, and regulations of the Board of Fire Underwriters, or any other
similar body, for the prevention of fires relating to Tenant's use of the
Premises, at the Tenant's own cost and expense. Tenant shall further comply with
any Federal, State or local rainwater run-off regulations at its cost and
expense, provided the Premises is currently in compliance with such run-off
regulations. In no event shall the Tenant have any obligation to make any
improvements to the Premises required under the provisions of the ADA Act.
4th: That in case the Tenant shall fail or neglect to comply with the aforesaid
statutes, ordinances, rules, orders, regulations and requirements or any of them
for which Tenant is responsible, or in case the Tenant shall fail or neglect to
make any necessary repairs for which Tenant is responsible, then the Landlord or
the Landlord's Agents may enter said premises and make said repairs and comply
with any and all of the said statutes, ordinances, rules, orders, regulations or
requirements, at the cost and expense of the Tenant and in case of the Tenant's
failure to pay therefor, the said cost and expense shall be added to the next
month's rent and be due and payable as such, or the Landlord may deduct the same
from the balance of any sum remaining in the Landlord's hands. This provision is
in addition to the right of
2
<PAGE>
the Landlord to terminate this Lease by reason of any default on the part of the
Tenant.
5th: That Landlord hereby indemnifies and holds Tenant harmless from any and all
liability or obligation relating to any actual or alleged, known or unknown,
release, spill, leak, disposal, pumping, pouring, emitting, emptying, injection,
leaching, dumping, escape, discharge or other presence of Hazardous Substances
(hereinafter defined), and any contamination arising therefrom on, in or under,
or originating from, the Premises which occurred or occurs on or before the
commencement date of the term of the Lease, and/or is continuing as of such
date (collectively, "Discharge and/or Contamination"), including without
limitation any such Discharge and/or Contamination (i) arising from any Tank
(hereinafter defined) or (ii) referred to, or otherwise described, directly or
indirectly, in a certain Report prepared by Ensol, Inc. and entitled the
"Enviro-Screen Report" dated July 15, 1993 (the "Report").
For purposes of this Agreement, the term "Hazardous Substances" shall
mean hazardous substances or hazardous wastes as defined in the United States
Comprehensive Environmental Response Compensation Liability Act, as amended, any
hazardous materials defined under the United States Hazardous Materials
Transportation Act, any hazardous wastes as defined under the United States
Resource Conservation and Recovery Act, any toxic as defined in the United
States Toxic Substances and Control Act, and as the term hazardous substances,
hazardous wastes, hazardous materials, toxic substances, pollutants or
contaminants are defined under corresponding State or local laws, ordinances,
regulations and including without limitation, petroleum products and radioactive
materials.
6th: That Landlord hereby represents and warrants to the Lessee that: To
Landlord's Knowledge
(1) There are no underground storage tanks heretofore or currently
located at or on the Premises other than those described in the Report (the
"Tanks").
(2) The Tanks comply with all applicable Federal, State and local
statutes, ordinances, regulations, orders and requirements regulating
underground storage tanks (and any Hazardous Substances contained therein);
(3) The Tanks are not subject to any Federal, State or local
governmental investigation.
7th: That the Landlord hereby acknowledges and agrees that the Tanks shall not
be considered part of the Premises and the Lessee shall have no duty, directly
or indirectly, with respect to such Tanks, other than the Tenant's Tank
(hereafter defined),
3
<PAGE>
including without liability any duty to maintain, repair, replace or upgrade
such Tanks; Landlord shall be solely responsible for compliance with all
applicable Federal, State and local statutes, ordinances, regulations, orders
and requirements regulating the Tanks (and any Hazardous Substances contained
therein) other than the Tenant's Tank and shall indemnify and hold Tenant
harmless from any and all liability or obligations arising from Landlord's
failure to do so. Landlord further acknowledges that the above ground diesel
fuel tank currently located on the Premises (the "Tenant's Tank") is being
purchased by the Tenant from the former tenant at the Premises and Landlord does
not now have, nor shall have, any right, title or interest in the Tenant's Tank.
The Tenant hereby acknowledges and confirms that upon its purchase of the
Tenant's tank, the Tenant shall be responsible for future compliance with all
applicable federal, state and local statutes, ordinances and regulations, orders
and requirements regulating the Tenant's Tank and any hazardous substance placed
in the Tenant's Tank by Tenant following its purchase by Tenant, and Tenant
shall indemnify and hold Landlord harmless from any and all liability or
obligation arising from Tenant's failure to do so.
8th: That Landlord warrants and confirms that the applicable zoning and
municipal codes allow the Tenant to use the Premises for motor freight terminal
purposes. In the event Tenant is unable to use the Premises at any time during
the term for such use, the Tenant may terminate this Lease. Landlord further
represents and warrants that the Landlord has obtained all governmental
approvals (including without limitation a Certificate of Occupancy, if
necessary) necessary to permit the Tenant to use the Premises for the specified
purpose.
9th: That the Tenant shall not assign this Agreement, or underlet or underlease
the premises or any part thereof without Landlord's consent, or occupy, or
permit or suffer the same to be occupied for any business or purpose deemed
disreputable or extra-hazardous on account of fire, under penalty of damages and
forfeiture.
l0th: That no alterations, additions or improvements shall be made in or to the
premises without the consent of the Landlord in writing, under penalty of
damages and forfeiture, which consents shall not be either unreasonably withheld
or delayed and all additions and improvements to the premises made by the Tenant
shall belong to the Landlord, other than movable furniture, trade fixtures and
those items described on Schedule B hereto which shall remain the property of
Tenant.
llth: That in the event the improvements (including the Building) upon the
premises or any part thereof shall, during the term of this Lease or any renewal
hereof, be destroyed or damaged by fire, explosion, the elements, other casualty
or environmental
4
<PAGE>
contamination for which Landlord is responsible, the Tenant shall give immediate
notice thereof to the Landlord, who shall thereupon cause the damage to be
repaired within 180 days unless the lease is terminated as hereinafter provided.
If the leased premises or any part thereof shall have been rendered untenantable
from the time of the damage until the completion of said repair and restoration,
an equitable reduction in the rental during such period of repair and
restoration shall be made until said leased premises are so repaired and again
ready for occupancy. However, in the event the improvements on the premises are
hereby damaged to the extent of more than fifty (50%) of the replacement cost
thereof, or the damage affects the dock area, either party may elect to
terminate the lease within thirty (30) days of the date of such damage by giving
written notice thereof by registered or certified mail to the other party and
thereupon this Lease shall immediately terminate and the Tenant shall have no
further obligation hereunder other than to pay the rental accrued to the date of
such damage.
12th: That Tenant agrees that Landlord and Landlord's Agents, and other
representatives, shall have the right to enter into and upon said premises, or
any part thereof, at all reasonable hours for the purpose of examining the same
or making such repairs or alterations therein as may be necessary for the safety
and preservation thereof.
13th: That the Tenant also agrees to permit the Landlord or Landlord's Agents to
show the premises to persons wishing to rent or purchase the same.
14th: That if the said premises, or any part thereof, shall become vacant during
the said term, or should the Tenant be evicted by summary proceedings or
otherwise, the Landlord or Landlord's representatives my re-enter the same,
either by force or otherwise, without being liable to prosecution therefor; and
re-let the said premises as the Agent of the said Tenant and receive the rent
thereof; applying the same, first to the payment of such reasonable expenses as
the Landlord may be put to in re-entering and then to the payment of the rent
due by these presents; the balance (if any) to be paid over to the Tenant who
shall remain liable for any deficiency.
15th: It is expressly agreed and understood by and between the parties to this
Agreement, that the Landlord shall not be liable for any damage or injury to
person or property caused by or resulting from steam, electricity, gas water,
rain, ice or snow, or any leak or flow from or into any part of the Building, or
from any damage or injury resulting or arising from any other cause or happening
whatsoever, unless caused by Landlord or Landlord's Agents.
5
<PAGE>
16th: That if a material default be made in any of the covenants of Tenant
herein contained, then it shall be lawful (following the running of any
applicable grace period or giving of notice, as applicable), for the said
Landlord to re-enter the said premises, and the same to have again, re-possess
and enjoy.
17th: The Tenant has this day deposited with the Landlord the sum of $8,000 as
security for the full and faithful performance by the Tenant of all of the terms
and conditions upon the Tenant's part to be performed, which said sum shall be
returned to the Tenant after the time fixed as the expiration of the term
herein, provided that Tenant has fully and faithfully carried out all of the
terms, covenants and conditions on the Tenant's part to be performed. In the
event of a bona fide sale, subject to this Lease, the Landlord shall have the
right to transfer the security to the vendee for the benefit of the Tenant and
the Landlord shall be considered released by the Tenant from all liability for
the return of such security so long as the Tenant is notified of such transfer;
and the Tenant agrees to look to the new landlord solely for the return of the
said security, and it is agreed that this shall apply to every such transfer or
assignment made of the security to a new landlord.
18th: That the security deposited under this Lease shall not be mortgaged,
assigned or encumbered by the Tenant without the written consent of the
Landlord.
19th: It is expressly understood and agreed that if for any reason it shall be
impossible to obtain fire insurance on the buildings and improvements on the
demised premises in an amount, and in the form, and in fire insurance companies
acceptable to the Landlord in the exercise of its reasonable business judgment,
the Landlord may, if the Landlord so elects, at any time thereafter terminate
this Lease and the term thereof, on giving to the Tenant thirty days' notice in
writing of Landlord's intention so to do and thirty days following the giving of
such notice, this Lease and the term thereof shall terminate and come to an end.
20th: That the Tenant will not nor will the Tenant permit undertenants or other
persons to do anything in said premises (other than permitted use) or bring
anything into said premises, or permit anything to be brought into said premises
or to be kept therein, which will in any way increase the rate of fire insurance
on said demised premises, nor use the demised premises or any part thereof, nor
suffer or permit their use for any business or purpose which would cause an
increase in the rate of fire insurance on said building, and the Tenant agrees
to pay on demand any such increase.
21st: If after default in payment of rent or violation of any other provision of
this Lease, or upon the expiration of this
6
<PAGE>
Lease, the Tenant moves out or is dispossessed and fails to remove any trade
fixtures or other property prior to such said default, removal, expiration of
lease, or vacates the demised premises prior to the issuance of the final order
or execution of the warrant, then and in that event, the said movable furniture,
fixtures and property shall be deemed abandoned by the said Tenant and shall
become the property of the Landlord.
22nd: The failure of the Landlord to insist upon strict performance of any of
the covenants or conditions of this Lease or to exercise any option herein
conferred in any one or more instances, shall not be construed as a waiver or
relinquishment for the future of any such covenants, conditions or options, but
the same shall be and remain in full force and effect.
23rd: In the event that the relation of the Landlord and Tenant may cease or
terminate by reason of the re-entry of the Landlord under the terms and
covenants contained in this Lease or by the ejectment of the Tenant by summary
proceedings or otherwise, or after the abandonment of the premises by the
Tenant, it is hereby agreed that the Tenant shall remain liable and shall pay in
monthly payments the rent which accrues subsequent to the re-entry by the
Landlord, and the Tenant expressly agrees to pay as damages for the breach of
the covenants herein contained, the difference between the rent reserved and the
rent collected and received, if any, by the Landlord, during the remainder of
the unexpired term, such difference or deficiency between the rent herein
reserved and the rent collected, if any, shall become due and payable in monthly
payments during the remainder of the unexpired term, as the amounts of such
difference or deficiency shall from time to time be ascertained.
24th: In the event the premises or any portion thereof (the unavailability of
which would materially interfere with Tenant's ability to operate) are taken
under the power of eminent domain or the threat of the exercise thereof for any
public or quasi-public use, then the Tenant may terminate and cancel this Lease
by giving Landlord notice in writing by registered or certified mail, and
thereupon both parties shall be relieved of any further obligation under this
Lease, excepting that Tenant shall fulfill all the obligations of it hereunder
to be performed to the date of such termination: In the even this Lease is not
terminated and cancelled after a condemnation of a portion of the Leased
premises, the rent shall be reduced by a reasonable sum directly proportioned to
the total rent in such ratio as the value of the part of the leased premises
condemned plus the damage to the residue shall bear to the value of the entire
premises.
25th: This Lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in nowise be affected, impaired or excused because Landlord is
unable to
7
<PAGE>
supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repairs, additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment or fixtures. If Landlord is prevented or delayed from so doing by
reason of governmental preemption in connection with a National Emergency
declared by the President of the United States or in connection with any rule,
order or regulation of any department or subdivision thereof of any governmental
agency or by reason of the conditions of supply and demand which have been or
are affected by war or other emergency.
26th: Landlord shall not be liable for failure to give possession of the
premises upon commencement date by reason of the fact that premises are not
ready for occupancy, or due to a prior tenant wrongfully holding over or any
other person wrongfully in possession or for any other persons in such event the
rent shall not commence until possession is given or is available, but the term
herein shall not be extended.
27th: Tenant shall pay all amounts when due to third parties retained by Tenant
to perform work on or at the demised premises. If a mechanic's lien claim is
filed against the demised premises for labor or material alleged to have been
furnished at the demised premises to or for the Tenant, or to or for someone
claiming under the Tenant, Tenant shall be obligated to obtain the removal or
discharge of such lien claim and shall pay any judgments against the demised
premises arising out of such lien claim.
28th: Tenant will not intentionally allow any portion of said demised premises
to be used for any illegal activities, and upon notification thereof from
Landlord, Tenant shall take reasonable steps to make such activities terminated.
29th: If, during the term of the Lease, (a) Tenant shall make an assignment for
the benefit of creditors, or (b) a voluntary petition be filed by Tenant under
any law having for its purpose the adjudication of Tenant a bankrupt, or for the
extension of time of payment, composition, adjustment, modification, settlement
or satisfaction of the liabilities of Tenant or for the reorganization or
liquidation of Tenant, or (c) a receiver be appointed for the property of Tenant
by reason of the insolvency or alleged insolvency of Tenant, or (d) any
department of the state or federal government or any officer thereof or duly
authorized trustee or receiver shall take possession of the business or property
of Tenant by reason of the insolvency or alleged insolvency of Tenant, or (e) an
involuntary petition be filed against Tenant under any law having for its
purpose the adjudication of Tenant a bankrupt, or for the liquidation of Tenant;
and except with respect to items (a) and (b), if Tenant shall not within sixty
(60) days thereafter, remove or cure any
8
<PAGE>
of the foregoing or undertake action to correct same, then Landlord may give
Tenant notice of a default under this Lease and if, within thirty (30) days
after such notice, Tenant shall still have not removed or cured any of the
foregoing, then the occurrence of any such event shall be deemed a breach of
this Lease and this Lease shall, ipso facto, upon the happening of any of said
events and at the election of Landlord, be terminated and the same shall expire
as if the day of the happening of such event were the date herein specifically
fixed for the expiration of the term, and Tenant (or such receiver or trustee as
the case may be) will then quit and surrender the Premises to Landlord, but
Tenant shall remain liable. Landlord reserves the right to file a claim against
any assignee, receiver or trustee of or for the premises for damages and for
loss of rent, for the full term of the lease or otherwise, which Landlord may
suffer as a result of the foregoing.
If, during the term of this Lease, Tenant shall default in performance
of any of the covenants of this Lease (other than the covenants for the payment
of rent) Landlord may give to Tenant written notice of any default or of the
happening of any contingency in this article referred to, and if at the
expiration of thirty (30) days after receipt of such notice (or such longer
period as is reasonably necessary to cure such default or contingency provided
Tenant diligently pursues such cure) the default or the contingency upon which
said notice was based shall continue to exist, Landlord, at its option, may
terminate this Lease, and upon such termination Tenant will quit and surrender
the premises to Landlord.
3Oth: Tenant agrees to pay, or cause to be paid immediately when due, all
charges for electricity, gas, fuel, heat, water, power, sewer service, sprinkler
stand-by fees, trash collection service, telephone or other communication
service and all other utilities used, rendered to, or supplied upon and in
connection with Tenant's use of the premises, throughout the term of this Lease,
or ordered or used by Tenant prior to or subsequent thereto, and to indemnify
Landlord and save it harmless against any liability therefor or damages on such
account. Landlord shall not in any event be liable to Tenant or responsible to
Tenant for any stoppage or interruption in any utility service furnished to the
premises or for the failure to obtain or inability to obtain any energy source
or fuel of any type or nature whatsoever, except as may result from Landlord's
willful acts or negligence. Tenant shall be responsible for all snow removal and
subject to the provisions of Paragraph 2nd above, the routine maintenance of all
parking areas and fences on the premises. Tenant shall contract for all the
above utilities and services in his own name.
31st: Landlord reserves the right from time to time and at any time or times in
the future to obtain a loan or loans secured by a mortgage, deed of trust, and
security agreement upon the
9
<PAGE>
Premises, or any part thereof. In the event that Landlord desires to obtain such
loan, Tenant agrees that promptly upon the request of Landlord: (a) it will
execute and deliver to Landlord, for delivery to the mortgagee, an agreement in
recordable form and otherwise in form and substance reasonably satisfactory to
said mortgagee, whereby Tenant agrees to subordinate the lien of this Lease to
the lien of said mortgage and security agreement, and Tenant agrees to attorn to
the mortgagee or any purchaser at foreclosure or judicial sale, provided that as
part of such agreement, said mortgagee covenants that so long as Tenant shall
not be in default under this Lease, Tenant will not be disturbed in the
enjoyment and use of the Premises under the terms of this Lease during the
primary and option terms hereof, and (b) Landlord and Tenant each agree to
execute and deliver to the other party, an estoppel certificate setting forth
the space leased to Tenant, the term of the Lease, the fixed rent payable under
the Lease, any credits, set offs or claims which either party is entitled to
claim against the fixed rent, any concessions obtained from Landlord or
obligations owed by Landlord to Tenant, and stating whether the Lease has been
modified or amended and whether or not said Lease is then in good standing and
effect (and if so modified or amended or not in good standing and effect,
setting forth the particulars thereof). Upon request by Tenant, Landlord agrees
to execute a Landlord's lien waiver with respect to any personal property which
Tenant may be placing within the Premises and with respect to which Tenant is
obtaining financing.
32nd: In the event that any installment of rent, additional rent, impositions or
the like shall be delinquent and overdue for a period in excess of fifteen days,
a "late charge" of 18% for each one dollar so delinquent and overdue may be
charged to Tenant by Landlord for the purpose of defraying Landlord's expenses
incident to handling such delinquent payment. This charge shall be in addition
to, and not in lieu of, any other remedy which Landlord may have whether any
such remedy shall be authorized herein, by law or by equity.
Such "late charges", if not previously paid, shall, at the option of
Landlord be added to and become a part of the succeeding monthly installment of
Rent to be made under the Lease.
33rd: Tenant agrees to permit Landlord and the authorized representatives of
Landlord, upon two days' advance notice, to enter the Premises during usual
business hours of Tenant for the purposes of inspecting the Premises and if
Landlord so elects, but without any obligation to do so, for the purpose of
making any necessary repairs to the Premises and performing any work therein
that may be necessary to comply with any laws, ordinances, rules, regulations or
requirements of any public authority or of the Board of Fire Underwriters or any
similar
10
<PAGE>
body, which Landlord may deem necessary to prevent waste or deterioration in
connection with the Premises or for the purpose of performing any work required
to be performed in connection with any other contiguous property owned by
Landlord or any of Landlord's affiliated companies or entities. Nothing herein
shall imply any duty upon the part of Landlord to do any work which, under any
provision of this Lease, Tenant may be required to perform, and the performance
thereof by Landlord shall not constitute a waiver by Landlord of Tenant's
default in failing to perform the same. Landlord may, during the progress of any
work on the Premises, keep and store upon the Premises all necessary materials,
tools and equipment provided that it does not interfere with Tenant's use of the
Premises.
Landlord is hereby given the right at any time during usual business
hours and upon two days' prior notice to Tenant to enter the Premises and to
exhibit the same for the purposes of sale or mortgage. During the final six
months of the term Landlord shall be entitled to display on the Premises in such
manner as not unreasonably to interfere with Tenant's business the usual "For
Sale" or "To Let" signs, and Tenant agrees that such signs may remain unmolested
upon the Premises.
34th: This Lease is made upon the express condition that Tenant agrees to keep,
save and hold Landlord free and harmless from and indemnify it against all
liability, penalties, losses, damages, costs, expenses, causes of action, claims
and/or judgments arising by reason of any injury occurring on the Premises to
any person or persons including, without limitation, Landlord, its servants,
agents and employees, and any damage occurring on the Premises to any property
of any kind whatsoever, and to whomsoever belonging including, without
limitation, damage to property of Landlord, its servants, agents and employees,
and other parties, which such injury to persons or damage to property results
from the acts or omissions of Tenant. Tenant hereby covenants and agrees to
indemnify, protect and save Landlord harmless from all liability, judgments,
claims, losses, costs and obligations on account of or arising out of any such
injuries and damage however occurring, except as may result from Landlord's
willful acts or negligence or its breach of the terms of this Lease.
Tenant, as a material part of the consideration to be rendered to
Landlord, hereby waives all claims against Landlord for damages to goods,
equipment, improvements, wares and merchandise which occurs on the Premises and
for injuries to Tenant, its servants, agents, employees or third persons
occurring on the Premises from any cause arising at any time, except as may
result from Landlord's willful acts or negligence or its breach of the terms of
this Lease.
11
<PAGE>
Notwithstanding any other provision of this Lease, Tenant shall have no
obligation to indemnify or to hold harmless Landlord except in relation to the
acts or omissions of Tenant and its agents, representatives, employees and
independent contractors.
35th: Tenant shall, as additional rent together with all other sums agreed to be
paid by it under this Lease, pay unto Landlord, payment per year, the cost of
Landlord's fire and extended casualty insurance on only the structures on the
demised premises. The cost of the insurance at the present time is $1,124 per
year. Tenant shall be responsible for and obtain its own insurance for its
personal property. This payment for insurance shall be due and payable with the
regular monthly rental installments. Landlord agrees to maintain throughout the
term of this Lease (and any extensions) fire and extended casualty insurance on
a replacement cost basis on the structures on the premises including without
limitation the Building. Landlord shall deliver to Tenant prior to the
commencement of the term evidence of such insurance and shall provide to Tenant
copies of paid receipts of all premiums within 10 days of the due date for such
premiums.
Tenant agrees to maintain public liability insurance in a reputable
insurance company at its own expense. The liability under such insurance to be
not less than One Million Dollars ($1,000,000.00) for any one person injured, or
One Million Dollars ($1,000,000.00) for any one accident, or One Million Dollars
($1,000,000.00) for property damages. Said policy shall name Landlord as an
additional insured and protect Landlord and Tenant as their interests may
appear. Tenant shall provide Lessor with a Certificate of Insurance that
provides the aforesaid coverage, with a provision for thirty (30) days Notice of
Cancellation.
36th: As additional rent, Tenant shall pay all real estate taxes imposed on the
subject property when due. Attached to and made part of this Lease is the
1994/95 real estate tax bill.
Tenant shall pay to Landlord "Tenant's Pro-Rata Share" (hereinafter
defined), of any assessment imposed by a governmental authority affecting the
Premises during the term of this Lease. For purposes of this paragraph, the term
"Tenant's Pro-Rata Share" shall mean a fraction, the numerator of which is the
number of full calendar months remaining in the term of this Lease (and
excluding the option year if not exercised) and the denominator of which is the
number of months of useful life of the improvement for which such assessment was
imposed as determined by the applicable Internal Revenue Service Useful Life
tables. Tenant shall pay to Landlord Tenant's Pro-Rata Share of such assessments
in equal monthly payments commencing on the first date that any Payment for such
assessment is due to be paid
12
<PAGE>
to the applicable governmental authority and continuing until Lessee's Pro-Rata
Share for such improvements have been paid in full.
37th: Prior to the commencement of the term of this Lease, Landlord and Tenant
shall inspect the premises. Any repairs by Lessor shall be only those things
reasonable and necessary for Lessee's enjoyment and use of the premises, as is
but repaired, and shall not include any alterations or customizing of the
premises for Lessee's special requirements, but shall include those items on
Schedule B hereto.
Landlord agrees to make an inspection to document the condition of the premises.
This inspection will document the condition upon which the Tenant accepts the
premises and will return the premises at the expiration of the lease, subject to
damages by the elements and ordinary wear and tear.
38th: And the said Landlord doth covenant that the said Tenant on paying the
said yearly rent, and performing the covenants aforesaid, shall and may
peacefully and quietly have, hold and enjoy the said demised Premises for the
term aforesaid; provided, however, that this covenant shall be conditioned upon
the retention of title to the Premises by the Landlord, but shall be binding
upon Landlord's successor in title.
And it is further understood and agreed, that the covenants and agreements
herein contained are binding on the parties hereto and upon their respective
successors, heirs, executors, administrators and assigns.
It is further expressly agreed that the words used in the singular shall include
words in the plural where the text of this instrument so requires.
Witness: LANDLORD:
/s/ FRANK KEARNEY /s/
- ------------------------------ ------------------------------
4200 OWNER IN FEE
- ------------------------------ ------------------------------
Landlord SIC Number Landlord Title
Witness: TENANT:
JEVIC TRANSPORTATION, INC.
/s/ KAREN MUHLSCHLEGEL /s/ BRIAN J.FITZPATRICK
- ------------------------------ ------------------------------
SVP & CFO
- ------------------------------ ------------------------------
Tenant SIC Number Tenant Title
13
<PAGE>
ACKNOWLEDGEMENT
STATE OF NEW JERSEY :
: ss.
COUNTY OF BURLINGTON :
On this 31st day of May 31, 1995, before me the subscriber, a Notary Public
or Attorney at Law of the State of NJ, personally appeared BRIAN J. FITZPATRICK,
who I am satisfied is the SVP & CFO of JEVIC TRANSPORTATION, the corporation
named in and subscribing to the foregoing instrument, and he/she, being by me
duly sworn, acknowledged, deposed, said that such instrument was made by such
corporation and sealed with its corporate seal, and that he/she signed, sealed
and delivered the same as such officer of that corporation, as its voluntary act
and deed by virtue of authority from or by its Board of Directors, for the uses
and purposes therein expressed.
/s/ JOANNE MURNANE
-------------------------------------
Print Name: JOANNE MURNANE
-------------------------
Title: INSURANCE CLAIMS ANALYST
------------------------------
Commission Expires: May 16, 1999
------------------
STATE OF NEW JERSEY :
: ss.
COUNTY OF BURLINGTON :
On this _________ day of _____________, 19 __, before me the
subscriber, a Notary Public or Attorney at Law of the State of ____________,
personally appeared, who I am satisfied is the individual named in and
subscribing to the foregoing instrument, and he/she, being by me duly sworn,
acknowledged, deposed and said that he/she signed, sealed and delivered the same
as his/her voluntary act and deed, for the uses and purposes therein expressed.
-------------------------------------
Print Name:
-------------------------
Title:
------------------------------
Commission Expires:
------------------
14
<PAGE>
SCHEDULE A
LEGAL DESCRIPTION
<PAGE>
SCHEDULE B
ITEMS OWNED BY TENANT
1. 10,000 gallon above ground fuel oil tank purchased by Tenant from the prior
tenant, TNT Red Star.
2. All movable furniture on or about the Premises.
3. All computer equipment (including software) on or about the Premises.
4. All telephone systems on or about the Premises.
5. All trade fixtures on or about the Premises.
IMPROVEMENTS TO BE MADE BY LANDLORD
COMMERCIAL LEASE AGREEMENT
This Commercial Lease Agreement ("Lease") is made and effective 3/11/97, by and
between 864 Realty Trust ("Landlord") and Jevic Transportation, Inc. ("Tenant").
Landlord is the owner of land and improvements commonly known and numbered as
864 Hartford Turnpike, Shrewsbury, Ma. 01545 and legally described as follows
(the "Building"): Motor Freight Terminal
Landlord makes available for lease a portion of the Building designated as 864
Hartford Turnpike, Building Center, loading dock doors 1 through 16 in the
Northernmost section of the building. (the "Leased Premises").
Landlord desires to lease the Leased Premises to Tenant, and Tenant desires to
lease the Leased Premises from Landlord for the term, at the rental and upon the
covenants, conditions and provisions herein set forth. Landlord represents that
the intended use by the Tenant as a trucking terminal/warehouse, is acceptable
under all applicable zoning and use laws governing the leased property.
THEREFORE, in consideration of the mutual promises herein, contained and other
good and valuable consideration, it is agreed:
1. Term.
A. Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby
leases the same from Landlord, for an "Initial Term" of one (1) year beginning
04/01/97 and ending 03/31/98.
B. Tenant may renew the Lease for one extended term of 1 year. Tenant shall
exercise such renewal option, if at all, by giving written notice to Landlord
not less than ninety (90) days prior to the expiration of the Initial Term. The
renewal term shall be at the rental set forth below and otherwise upon the same
covenants, conditions and provisions as provided in this Lease. If Tenant fails
to renew the lease for an extended term, Tenant may remain on a "Tenant at will"
basis, renewable monthly. After the initial term, Tenant may terminate its month
by month Lease, by giving not less than sixty (60) days prior written notice.
After the initial term, Landlord may terminate its month by month Lease, by
giving not less than ninety (90) days prior written notice.
2. Rental.
A. Tenant shall pay to Landlord during the Initial Term rental of forty eight
thousand dollars ($48,000.00) per year, payable in installments of four thousand
dollars ($4,000.00) per month. Each installment payment shall be due in advance
on the first day of each calendar month during the lease term to Landlord at 864
Hartford Turnpike, Shrewsbury, Ma. 01545 or at such other place designated by
written notice from Landlord or Tenant. The rental payment amount for any
partial calendar months included in the lease term shall be prorated on a daily
basis. Tenant shall also pay to Landlord a "Security Deposit" equal to last
month's rent, in the amount of four thousand dollars ($4,000.00.)
-1-
<PAGE>
B. The rental for any renewal lease term, if created as permitted under this
Lease, shall be forty eight thousand dollars ($48,O00.00) per year payable in
installments of four thousand dollars ($4,000.00) per month.
3. Use
Motor Freight Handling. Notwithstanding the forgoing, Tenant shall not use the
Leased Premises for the purposes of storing, manufacturing or selling any
explosives, flammables or other inherently dangerous substance, chemical, thing
or device other than freight commodities which it transports in the normal
course of business.
4. Sublease and Assignment.
Tenant shall have the right without Landlord's consent, to assign this Lease to
a corporation with which Tenant may merge or consolidate, to any subsidiary of
Tenant, to any corporation under common control with Tenant, or to a purchaser
of substantially all of Tenant's assets. Except as set forth above, Tenant shall
not sublease all or any part of the Leased Premises, or assign this Lease in
whole or in part without Landlord's consent, such consent not to be unreasonably
withheld or delayed.
5. Repairs.
During the Lease term, Tenant shall make, at Tenant's expense, all necessary
repairs to the Leased Premises. Repairs shall include such items as routine
repairs of floors, walls, ceilings, and other parts of the Leased Premises
damaged or worn through normal occupancy, except for major mechanical systems or
the roof, subject to the obligations of the parties otherwise set forth in this
Lease.
6. Alterations and Improvements.
Tenant, at Tenant's expense, shall have the right following Landlord's consent
to remodel, redecorate, and make additions, improvements and replacements of and
to all or any part of the Leased Premises from time to time as Tenant may deem
desirable, provided the same are made in a workmanlike manner and utilizing good
quality materials. Tenant shall have the right to place and install personal
property, trade fixtures, equipment and other temporary installations in and
upon the Leased Premises, and fasten the same to the premises. All personal
property, equipment, machinery, trade fixtures and temporary installations,
whether acquired by Tenant at the commencement of the Lease term or placed or
installed on the Leased Premises by Tenant thereafter, shall remain Tenant's
property free and clear of any claim by Landlord. Tenant shall have the right to
remove the same at any time during the term of this Lease provided that all
damage to the Leased Premises caused by such removal shall be repaired by Tenant
at Tenant's expense.
Landlord shall construct a security fence to restrict access to leased property
to Tenant only. Landlord shall regrade and repave driveway to Tenant
specifications, Specifically, 47" height of loading docks from ground level.
Landlord shall deliver to Tenant, leased property with all overhead doors in
proper working order and all dock levelers securely anchored and fully
operational in accordance with Tenant's specifications prior to 4/11/97.
-2-
<PAGE>
7. Property Taxes.
Landlord shall pay, prior to delinquency, all general real estate taxes and
installments of special assessments coming due during the Lease term on the
Leased Premises, and all personal property taxes with respect to Landlord's
personal property, if any, on the Leased Premises. Tenant shall be responsible
for paying all personal property taxes with respect to Tenant's personal
property at the Leased Premises.
8. Insurance.
A. If the Leased Premises or any other party of the Building is damaged by fire
or other casualty resulting from any act or negligence of Tenant or any of
Tenant's agents, employees or invitees, rent shall not be diminished or abated
while such damages are under repair, and Tenant shall be responsible for the
costs of repair not covered by insurance.
B. Landlord shall maintain fire and extended coverage insurance on the Building
and the Leased Premises in such amounts as Landlord shall deem appropriate.
Tenant shall be responsible, at its expense, for fire and extended coverage
insurance on all of its personal property, including removable trade fixtures,
located in the Leased Premises.
C. Tenant and Landlord shall, each at its own expense, maintain a policy or
policies of comprehensive general liability insurance with respect to the
respective activities of each in the Building with the premiums thereon fully
paid on or before due date, issued by and binding upon some insurance company
approved by Landlord, such insurance to afford minimum protection of not less
than $1,000,000 combined single limit coverage of bodily injury, property damage
or combination thereof. Landlord shall be listed as an additional insured on
Tenant's policy or policies of comprehensive general liability insurance, and
Tenant shall provide Landlord with current Certificates of Insurance evidencing
Tenant's compliance with this Paragraph. Tenant shall obtain the agreement of
Tenant's insurers to notify Landlord that a policy is due to expire at least
(10) days prior to such expiration. Landlord shall not be required to maintain
insurance against thefts within the Leased Premises or the Building.
9. Utilities.
Tenant shall pay all charges for electricity, telephone and other services and
utilities used by Tenant on the Leased Premises during the term of this Lease
unless otherwise expressly agreed in writing by Landlord. In the event that any
utility or service provided to the Leased Premises is not separately metered,
Landlord shall pay the amount due and separately invoice Tenant for Tenant's pro
rata share of the charges but not to exceed one hundred fifty (150) dollars per
month. Tenant shall pay such amounts within fifteen (15) days of invoice. Tenant
acknowledges that the Leased Premises are designed to provide standard office
use electrical facilities and standard office lighting. Tenant shall not use any
equipment or devices that utilizes excessive electrical energy or which may, in
Landlord's reasonable opinion, overload the
-3-
<PAGE>
wiring or interfere with electrical services to other tenants.
10. Signs.
Following Landlord's consent, Tenant shall have the right to place on the Leased
Premises, at locations selected by Tenant, any signs which are permitted by
applicable zoning ordinances and private restrictions. Landlord may refuse
consent to any proposed signage that is in Landlord's opinion too large,
deceptive, unattractive or otherwise inconsistent with or inappropriate to the
Leased Premises or use of any other tenant. Landlord shall assist and cooperate
with Tenant in obtaining any necessary permission from governmental authorities
or adjoining owners and occupants for Tenant to place or construct the foregoing
signs. Tenant shall repair all damage to the Leased Premises resulting from the
removal of signs installed by Tenant.
11. Entry.
Landlord shall have the right to enter upon the Leased Premises at reasonable
hours to inspect the same, provided Landlord shall not thereby unreasonably
interfere with Tenant's business on the Leased Premises.
12. Parking.
During the term of this Lease, Tenant shall have the non-exclusive use in common
with Landlord, other tenants of the Building, their guests and invitees, of the
non-reserved common automobile parking areas, driveways, and footways, subject
to rules and regulations for the use thereof as prescribed from time to time by
Landlord. Landlord reserves the right to designate parking areas within the
Building or in reasonable proximity thereto, for Tenant and Tenant's agents and
employees. Tenant shall provide Landlord with a list of all license numbers for
the cars owned by Tenant, its agents and employees. Separated structured
parking, if any, located about the Building is reserved for tenants of the
Building who rent such parking spaces. Tenant hereby leases from Landlord four
(4) spaces in such structural parking area, such spaces to be on a first
come-first served basis. In consideration of the leasing to Tenant of such
spaces, Tenant shall pay a monthly rental of $-0- per space throughout the term
of the Lease. Such rental shall be due and payable each month without demand at
the time herein set for the payment of other monthly rentals, in addition to
such other rentals. Tenant will have the right to park trailers, other than the
16 trailers against the doors in an open area which is presently gravel covered.
Number of trailers/spaces to be 5 to 10 units in addition to doors.
13. Building Rules.
Tenant will comply with the reasonable rules of the Building adopted and altered
by Landlord from time to time and will cause all of its agents, employees,
invitees and visitors to do so; all changes to such rules will be sent by
Landlord to Tenant in writing.
-4-
<PAGE>
14. Damage and Destruction.
Subject to Section 8A. above, if the Leased Premises or any part thereof or any
appurtenance thereto is so damaged by fire, casualty or structural defects that
the same cannot be used for Tenant's purposes, then Tenant shall have the right
within thirty (30) days following damage to elect by notice to Landlord to
terminate this Lease as of the date of such damage. In the event of minor damage
to any part of the Leased Premises, and if such damage does not render the
Leased Premises unusable for Tenant's purposes, Landlord shall promptly repair
such damage at the cost of the Landlord. In making the repairs called for in
this paragraph, Landlord shall not be liable for any delays resulting from
strikes, governmental restrictions, inability to obtain necessary materials or
labor or other matters which are beyond the reasonable control of Landlord.
Tenant shall be relieved from paying rent and other charges during any portion
of the Lease term that the Leased Premises are inoperable or unfit for
occupancy, or use, in whole or in part, for Tenant's purposes. Rentals and other
charges paid in advance for any such periods shall be credited on the next
ensuing payments, if any, but if no further payments are to be made, any such
advance payments shall be refunded to Tenant. The provisions of this paragraph
extend not only to the matters aforesaid, but also to any occurrence which is
beyond Tenant's reasonable control and which renders the Leased Premises, or any
appurtenance thereto, inoperable or unfit for occupancy or use, in whole or in
part, for Tenant's purposes.
15. Default.
If default shall at any time be made by Tenant in the payment of rent when due
to Landlord as herein provided, and if said default shall continue for fifteen
(15) days after written notice thereof shall have been given to Tenant by
Landlord, or if default shall be made in any of the other covenants or
conditions to be kept, observed and performed by Tenant, and such default shall
continue for thirty (30) days after notice thereof in writing to Tenant by
Landlord without correction thereof then having been commenced and thereafter
diligently prosecuted, Landlord may declare the term of this Lease ended and
terminated by giving Tenant written notice of such intention, and if possession
of the Leased Premises is not surrendered, Landlord may reenter said premises.
Landlord shall have, in addition to the remedy above provided, any other right
or remedy available to Landlord on account of any Tenant default, either in law
or equity. Landlord shall use reasonable efforts to mitigate its damages.
16. Quiet Possession.
Landlord covenants and warrants that upon performance by Tenant of its
obligations hereunder, Landlord will keep and maintain Tenant in exclusive,
quiet, peaceable and undisturbed and uninterrupted possession of the Leased
Premises during the term of this Lease.
17. Condemnation.
If any legally, constituted authority condemns the Building or such part thereof
which shall make the Leased Premises unsuitable for leasing, this Lease shall
cease when the public authority takes possession, and Landlord and Tenant shall
account for rental as of that date.
-5-
<PAGE>
Such termination shall be without prejudice to the rights of either party to
recover compensation from the condemning authority for any loss or damage caused
by the condemnation. Neither party shall have any rights in or to any award made
to the other by the condemning authority.
18. Subordination.
Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust
or other lien presently existing or hereafter arising upon the Leased Premises,
or upon the Building and to any renewals, refinancing and extensions thereof,
but Tenant agrees that any such mortgagee shall have the right at any time to
subordinate such mortgage, deed of trust or other lien to this Lease on such
terms and subject to such conditions as such mortgagee may deem appropriate in
its discretion. Landlord is hereby irrevocably vested with full power and
authority to subordinate this Lease to any mortgage, deed of trust or other lien
now existing or hereafter placed upon the Leased Premises of the Building, and
Tenant agrees upon demand to execute such further instruments subordinating this
Lease or attorning to the holder of any such liens as Landlord may request. In
the event that Tenant should fail to execute any instrument of subordination
herein required to be executed by Tenant promptly as requested, Tenant hereby
irrevocably constitutes Landlord as its attorney-in-fact to execute such
instrument in Tenant's name, place and stead, it being agreed that such power is
one coupled with an interest. Tenant agrees that it will from time to time upon
request by Landlord execute and deliver to such persons as Landlord shall
request a statement in recordable form certifying that this Lease is unmodified
and in full force and effect (or if there have been modifications, that the same
is in full force and effect as so modified), stating the dates to which rent and
other charges payable under this Lease have been paid, stating that Landlord is
not in default hereunder (or if Tenant alleges a default stating the nature of
such alleged default) and further stating such other matters as Landlord shall
reasonably require. Notwithstanding the above, the Signatory has the authority
to enter into this lease agreement between Landlord and Tenant.
19. Security Deposit.
The Security Deposit shall be held by Landlord without liability for interest
and as security for the performance by Tenant of Tenant's covenants and
obligations under this Lease, it being expressly understood that the Security
Deposit shall not be considered an advance payment of rental or a measure of
Landlord's damages in case of default by Tenant. Unless otherwise provided by
mandatory non-waivable law or regulation, Landlord may commingle the Security
Deposit with Landlord's other funds. Landlord may, from time to time, without
prejudice to any other remedy, use the Security Deposit to the extent necessary
to make good any arrearages of rent or to satisfy any other covenant or
obligation of Tenant hereunder. Following any such application of the Security
Deposit, Tenant shall pay to Landlord on demand the amount so applied in order
to restore the Security Deposit to its original amount. If Tenant is not in
default at the termination of this Lease, the balance of the Security Deposit
remaining after any such application shall be returned by Landlord to Tenant. If
Landlord transfers its interest in the Premises during the term of this Lease,
Landlord may assign the Security Deposit to the transferee and thereafter shall
have no further liability for the return of such Security Deposit.
-6-
<PAGE>
20. Notice.
Any notice required or permitted under this Lease shall be deemed sufficiently
given or served if sent by United States certified mail, return receipt
requested, addressed as follows:
If to Landlord to:
Roger C. Perlstein, Trustee
864 Realty Trust
864 Hartford Turnpike
Shrewsbury, Ma. 01545
Phone (508)845-9007 Fax (508)845-1698
If to Tenant to:
Brian Fitzpatrick, C.F.O.
Jeff McCormick, V.P.
Jevic Transportation, Inc.
600 Creek Road.
Delanco, N.J. 08075
Phone (800) 64-JEVIC Fax (609)764-7237
Landlord and Tenant shall each have the right from time to time to change the
place notice is to be given under this paragraph by written notice thereof to
the other party.
21. Brokers.
Tenant represents that Tenant was not shown the Premises by any real estate
broker or agent and that Tenant has not otherwise engaged in, any activity which
could form the basis for a claim for real estate commission, brokerage fee,
finder's fee or other similar charge, in connection with this Lease
22. Waiver.
No waiver of any default of Landlord or Tenant hereunder shall be implied from
any omission to take any action on account of such default if such default
persists or is repeated, and no express waiver shall affect any default other
than the default specified in the express waiver and that only for the time and
to the extent therein stated. One or more waivers by Landlord or Tenant shall
not be construed as a waiver of a subsequent breach of the same covenant, term
or condition.
23. Memorandum of Lease.
-7-
<PAGE>
The parties hereto contemplate that this Lease should not and shall not be filed
for record, but in lieu thereof, at the request of either party, Landlord and
Tenant shall execute a Memorandum of Lease to be recorded for the purpose of
giving record notice of the appropriate provisions of this Lease.
24. Headings.
Thee headings used in this Lease are for convenience of the parties only and
shall not be considered in interpreting the meaning of any provision of this
Lease.
25. Successors.
The provisions of this Lease shall extend to and be binding upon Landlord and
Tenant and their respective legal representatives, successors and assigns.
26. Consent.
Landlord shall not unreasonably withhold or delay its consent with respect to
any matter for which Landlord's consent is required or desirable under this
Lease.
27. Performance.
If there is a default with respect to any of Landlord's covenants, warranties or
representations under this Lease, and if the default continues more than fifteen
(15) days after notice in writing from Tenant to Landlord specifying the
default, Tenant may, at its option and without affecting any other remedy
hereunder, cure such default and deduct the cost thereof from the next accruing
installment or installments of rent payable hereunder until Tenant shall have
been fully reimbursed for such expenditures, together with interest thereon at a
rate equal to the lessor of twelve percent (12%) per annum or the then highest
lawful rate. If this Lease terminates prior to Tenant's receiving full
reimbursement, Landlord shall pay the unreimbursed balance plus accrued interest
to Tenant on demand.
28. Compliance with Law.
Tenant shall comply with all laws, orders, ordinances and other public
requirements now or hereafter pertaining to Tenant's use of the Leased Premises.
Landlord shall comply with all laws, orders, ordinances and other public
requirements now or hereafter affecting the Leased Premises.
-8-
<PAGE>
29. Final Agreement.
This Agreement terminates and supersedes all prior understandings or agreements
on the subject matter hereof. This Agreement may be modified only by a further
writing that is duly executed by both parties.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year
first above written.
864 Realty Trust
Roger C. Perlstein, Trustee
/s/ Roger C. Perlstein, Trustee
- ----------------------------------
date 3/6/97
---------------
Jevic Transportation, Inc.
Brian Fitzpatrick, C.F.O.
/s/ Brian Fitzpatrick
- ----------------------------------
date 3/4/97
----------------
-9-
EXHIBIT 10.14
LEASE AGREEMENT
This lease, made and entered into this 7th day of March, 1996 by and between
LITTLE BROWNIE PROPERTIES INC., hereinafter called "LESSOR", and JEVIC
TRANSPORTATION INC., hereinafter called "LESSEE".
1 Premises: LESSOR hereby leases to LESSEE, and LESSEE leases from
LESSOR, for the term, and upon the terms and conditions hereinafter set forth,
that certain property described in Exhibit "A" attached hereto, and by reference
made a part hereof.
2. Purpose: The premises are to be used and occupied by LESSEE solely
as TRUCK TERMINAL & FUELING and for no other purposes or uses. LESSEE further
shall not use or permit the premises, or any part thereof, to be used for any
other purpose. LESSEE shall comply with all codes, rules, regulations, and laws
or any other requirements pertaining to the operation of its business and the
use and occupancy of the premises. This includes, without limitation, the
obtaining of any and all permits, licenses, insurance policies, or any other
requirements in the operation of LESSEE's business or use of the leased
premises. LESSEE agrees that LESSEE will not use or permit the premises to be
used for any unlawful purpose. LESSOR warrants and represents that the premises
and proposed purpose is legal under all codes, regulations and laws.
3. Term: The term of this Lease shall be THREE (3) year(s), commencing
MAY 1, 1996 and ending APRIL 30, 1999.
4. Rent: LESSEE shall pay to LESSOR total rent for the premises
described in Exhibit "A" the sum of FOUR-HUNDRED, THIRTY-SEVEN THOUSAND,
TWO-HUNDRED, AND TWENTY DOLLARS. ($437,220) Dollars, payable in equal monthly
installments of TWELVE-THOUSAND, ONE-HUNDRED, FORTY-FIVE DOLLARS ($12,145)
dollars, due and payable in advance, without notice or demand, on the first day
of each calendar month during the term hereof. LESSEE shall have 2 successive
one year options to rent at $15,960 per month, with a deposit of $15,960
required at that time. The LESSEE shall also have an option to buy the property
at 3934 THURMOND RD. for $1,600,000 anytime during the three year lease term.
LESSEE has the right to a memorandum of lease with the appropriate public
records regarding the sold option above.
5. Taxes: LESSEE agrees to pay any and all taxes levied upon personal
property, including trade fixtures and inventory, not owned by LESSOR, and kept
on the leased premises.
6. DELETED PARAGRAPH.
7. DELETED PARAGRAPH.
-1-
<PAGE>
8. Summary of Charges:
Monthly Charges
---------------
Rent $12,145.
Sales Tax N/A
Gas ________________
Water ________________
Electricity ________________ TO BE INVOICED DIRECTLY
Sewer/Wastewater ________________ BY UTILITY COMPANIES.
Utilities ________________
Other ________________
Total $12,145
Miscellaneous Charges
---------------------
Rent Deposit ________________ NOT ON INITIAL THREE
Security Deposit ________________ YEAR LEASE. TO APPLY
Total 0 ON TWO, ONE YEAR
OPTIONS EQUAL
TO $15,960 AS
THE DEPOSIT.
9. Place of Payments: All payments to be made to LESSOR are to be made
at the office of Little Brownie Properties, Inc., P.O. Box 1226 Apopha, Florida
32703, or as designated in writing by LESSOR at such other place or to such
other person as indicated by LESSOR.
10. Pledger: REPLACE WITH ADDENDUM A.
11. Right of Entry: LESSOR, or any of his agents, shall have the right
to enter the premises during all reasonable hours, with reasonable prior written
notice to examine the same, to make such repairs, additions or alterations as
may be deemed necessary for the safety, comfort, or preservation thereof, or of
the building, or to exhibit the premises, and to put or keep upon the doors or
windows thereof a notice "FOR RENT" at any time within thirty (30) days before
the expiration of this lease. The right of entry shall likewise exist for the
purpose of removing placards, signs, fixtures, alterations, or additions, which
do not conform to this agreement, or to the rules and regulations of the
building.
12. Maintenance and Repairs: LESSEE hereby accepts the premises in the
condition it is in at the beginning of this lease. LESSEE agrees to maintain the
premises in the same condition, order and repair as it is at the commencement of
this Lease, accepting only reasonable wear and tear arising from the use thereof
under this Agreement, and to make good to LESSOR immediately upon demand, any
damage to the premises caused by any negligence by LESSEE, or its invitees,
agents, or of any person or persons in the employ or under the control of
LESSEE. LESSEE shall maintain the
-2-
<PAGE>
exterior of the leased premises, including without limitation, the roof and
exterior walls, windows and doors, in a good, clean and substantial condition,
order and repair. LESSEE also shall maintian the interior of the leased
premises, including without limitation, interior ceilings, walls and floors,
fixtures, pipes, plumbing, doors, heat and air conditioning units, electrical
system, sprinkler system, electrical and distribution panel, also the outside
loading docks in a good, clean and substantial condition, order and repair.
LESSEE shall make all structural and other repairs and replacements necessitated
by any peril covered by a standard Fire and Extended Coverage Insurance policy,
whether or not caused by LESSEE'S negligence. "Structural", as used herein
includes without limitation, the framework, walls, roof and floor of all
structures on the premises. "Repairs", as used herein, includes without
limitation, plumbing, electrical, painting and other interior maintenance. In
the event if there is any structural damage or repairs needed, not caused by the
negligence of the LESSEE, it shall be the LESSORS responsibility.
13. Alterations: LESSEE shall not make any alteration, additions or
improvements involving structural changes or any other alterations, additions or
improvements such as to the exterior of the building on the premises, the
interior, floors, walls and any other portion of the premises, without securing
LESSOR'S prior written consent, except to the mutually agreed upon pre-rental
improvements described on ADDENDUM "B". Any alterations, additions, or
improvements of a permanent nature shall become a part of the leased property
and the property of LESSOR, and shall be surrendered with the premises at the
termination of this Lease. LESSEE agrees to pay for all such improvements,
additions or alterations contracted for by it. In no event shall LESSEE cause or
allow any lien to be recorded on LESSOR'S property, and LESSEE expressly agrees
to indemnify and hold harmless LESSOR from any cost, or expense, including legal
fees and court costs, that may arise as a result of any such lien. LESSEE
reserves the right to construct commercial signage in accordance with prevailing
local zoning codes.
14. DELETED PARAGRAPH
15. Assignment: LESSEE may not assign this Lease or any part thereof or
Sublease the leased premises or any part thereof, except to any related LESSEE
companies without LESSOR'S prior written consent of which LESSOR's consent will
not be unreasonably withheld. In the event of any assignment or Sublease, LESSEE
shall, nevertheless, remain fully responsible to LESSOR for all obligations
under the Lease Agreement.
16. Personal Property: All personal property placed or moved in the
premises above described shall be at the risk of LESSEE or owner thereof, LESSOR
shall not be liable for loss or damage to, or theft of, the contents placed in
or upn the leased premises from any cause whatsoever, and LESSOR shall not be
liable for any damage to said personal property, or to LESSEE, arising from the
bursting or leaking of water pipes,
-3-
<PAGE>
or from any act or negligence of any co-tenant or occupants of the building or
of any related person whomsoever. LESSOR does not carry any insurance to cover
any loss or damage to the contents of the leased premises or on any property of
LESSEE and strongly recommends that LESSEE obtain such insurance to protect
LESSEE'S property from all perils. LESSEE agrees to obtain such insurance to
cover any loss or damage from any cause whatsoever as desired at LESSEE'S own
expense.
17. Damage and Restoration: In the event the premises shall be destroyed
or so damaged or injured by fire or other casualty during the term of this
Lease, or any extension thereof, whereby same shall be rendered untenantable,
and said destruction, damage or injury not be caused by any negligence of LESSEE
or its invitees, agents, or employees or other persons under LESSEE'S control,
then LESSOR shall have the right to render said premises tenantable by repairs
within ninety (90) days therefrom; during said ninety-day period, LESSEE's rent
shall abate and not be payable. If the premises are not rendered tenantable
within said time, it shall be optional with either party hereto to cancel this
Lease, by giving written notice to the other party, and in the event of such
cancellation, the rent shall be paid only to the date of such fire or casualty.
18. Other Damage: LESSOR shall not be liable for any damage caused by
or growing out of fire, rain, wind, leaks, seepage, freezing or any other causes
whatsoever, and LESSEE agrees to indemnify and hold LESSOR harmless from the
payment for any such damage incurred by the LESSEE. LESSOR shall not be liable
to LESSEE, its invitees, family, employees, agents or servants, or any other
person, for any personal injury or damage to personal property caused by any
negligence by LESSEE or its agents or employees, and LESSEE agrees to indemnify
and hold LESSOR harmless herefrom. LESSEE further agrees to indemnify and hold
LESSOR harmless from any and all claims for damages and costs arising from the
negligent use of the leased premises or negligent activity, work or things,
done, permitted or suffered in or about the premises by LESSEE, its invitees,
family, employees, agents or servants, or employees of LESSOR if acting at
request of LESSEE.
19. Services: It is further understood and agreed between the parties
hereto that any charges against LESSEE by LESSOR for services or for work done
on the premises by order of LESSEE or otherwise accruing under this Agreement
shall be considered as rent due and shall be included in any lien for rent due
and unpaid.
20. Claims and Insurance: LESSEE shall be liable for any and all claims
for damages or injury to persons or property arising directly or indirectly from
any negligence of LESSEE, its agents, employees or invitees, from the failure of
LESSEE to comply with the terms of this Lease or any renewal or extension
thereof, and shall carry commercial general liability insurance coverage and
indemnify and hold LESSOR harmless therefrom. LESSEE agrees at LESSEE'S expense
to maintain in force continuously throughout the term of this Lease, and any
extension thereof, commercial general liability
-4-
<PAGE>
insurance coverage covering the premises and LESSEE'S operations and activities
thereon, with a general aggregate limit of $1,000,000 and $500,000 for each
occurrence, and shall furnish LESSOR a certificate by the insurer that such
insurance is in force. LESSEE further covenants and agrees at all times during
the term hereof to obtain and maintain and keep in force workmen's compensation
insurance on all its employees and to deliver to LESSOR a certificate of said
insurance and renewals thereof from time to time during the term of this Lease.
LESSEE further covenants and agrees that the commercial general liability
insurance required to be carried hereunder shall be placed with an independent
insurance company. The parties further agree that LESSOR (and the owner of the
leased premises, if different from LESSOR) and LESSEE shall be named as
additional insured as their respective interest may appear in connection with
any policies issued hereunder, and LESSEE shall deliver to LESSOR certificates
of said insurance and of renewals thereof from time to time during the term of
this Lease. LESSEE further agrees to give LESSOR written notice within thirty
(30) days of any change of cancellation of any of the aforesaid insurance. All
insurance aforesaid shall be placed in full force and effect prior to any entry
onto the premises by LESSEE to commence improvements or otherwise.
21. Compliance with Laws: LESSEE shall promptly comply with all
applicable laws, statutes, ordinances, rules, orders, regulations, and
requirements Federal, State, County, Municipal or other lawful authority
pertaining to the use and occupancy of the premises, and the operation of
LESSEE'S business therein and thereon. LESSOR warrants and represents that the
premises and proposed purpose is legal under all codes, regulations and laws.
22. Eminent Domain: If all of the premises are taken under the power of
eminent domain or conveyed under threat of condemnation proceedings, or if only
a part of the premises is taken and the remainder is determined by LESSEE to be
inadequate or unsatisfactory for LESSEE'S purposes as described in this Lease,
which determination shall not be arbitrarily or capriciously made, then in
either event, this Lease shall terminate effective as of the date LESSEE is
required to give up the right to occupy or use any part of the premises. In the
event LESSEE shall so determine that the remainder of the premises is inadequate
or unsatisfactory for its purposes, and LESSOR feels that such determination is
arbitrary or capricious, then upon ten (10) days written notice by LESSOR to
LESSEE, this matter shall be submitted to arbitration as hereinafter provided
for reduction of rental, in such event LESSEE'S obligation to pay rental shall
abate during the period of such arbitration. The termination of this Lease as
above provided shall not operate to deprive LESSEE of the right to make claim
against the condemning authority for any damage suffered by LESSEE, but LESSEE
shall have no right to make any claim against LESSOR because of such
condemnation or termination. If this Lease is not terminated as provided,
LESSOR and LESSEE shall agree upon an equitable reduction of the rental. If the
parties fail to agree upon such reduction, LESSOR and LESSEE shall choose three
arbitrators. The decision of any two of the arbitrators as to the rental
reduction, if any, shall be binding on LESSEE and LESSOR, and any expense of the
-5-
<PAGE>
arbitration shall be divided equally between LESSEE and LESSOR. The rental
amount agreed to or decided by arbitration shall be paid by LESSEE for any
period of abatement and thereafter pursuant to the terms of this Lease. PLUS
ADDENDUM 'C'.
23. Attorneys' Fees and Court Costs: If suit is brought to enforce any
covenant of this Lease, or for the breach of any covenant or condition herein
contained, the parties hereto agree that the losing party shall pay to the
prevailing party a reasonable attorneys' fee and all court costs.
24. Default and Late Charge: Time is of the essence in the performance of
this Agreement and in the payment of each and every installment of rent, and
other charges covenanted herein to be paid. In the event LESSEE abandons, or
vacates the premises, or fails to pay when due any installment of rent, or other
charges, or in the event LESSEE shall fail to perform any of the other
covenants, terms or conditions of this Lease to be performed by LESSEE'S, and
upon the LESSEE'S failure to cure said default within fifteen (15) days after
written notice from LESSOR, which specifies the particular default complained
of, LESSOR may, but shall have no obligation to LESSEE so to do:
(a) pay any such charges, effect such insurance or make such repairs
and the amounts so paid or expended therefore shall thereupon become
immediately due and payable from LESSEE to LESSOR as rent; or
(b) seek payment of the unpaid rent or payment of other charges due
under this Lease as the same become due; or
(c) terminate this Lease whereupon it shall be lawful for LESSOR to
reenter, repossess or enjoy the premises of LESSOR'S former estate and
interest therein, including such pertinent property created or added to
such premises, or sublet the premises to third parties and apply the rent
in partial or complete satisfaction to the obligation of LESSEE, without
causing a termination of this Lease.
(d) in the event of a default in any payment hereuner, to accelerate
and declare the entire balance owing under the Lease Agreement to be
immediately due and owing.
These rights and remedies are not to the exclusion of any other legal or
equitable rights and remedies available to LESSOR against LESSEE. LESSOR shall
be entitled to receive as late charge for any monthly payment more than ten (15)
days late hereunder, five (5%) percent of said monthly payment amount. Failure
to pay any such late charge shall constitute a default under this Lease
Agreement. No waiver of any breach of any covenant, term or condition herein
shall be construed to be a waiver of any succeeding or any future breach of the
same, or any other covenant, term or condition of this Lease.
25. Bankruptcy: If LESSEE shall become insolvent, make an assignment for
the benefit of creditors, or if bankruptcy proceedings shall be begun by or
against LESSEE,
- 6 -
<PAGE>
before the end of the said term, LESSOR is hereby irrevocably authorized at its
option, to cancel this lease, as for a default. LESSOR may elect to accept the
rent from such receiver, trustee, or other judicial officer during the term of
their occupancy in their fiduciary capacity without affecting LESSOR'S rights as
contained in this Agreement, but no receiver, trustee or other judicial officer
shall ever have any right, title or interest in or to the above described
property by virtue of this Agreement.
26. Quiet Enjoyment: LESSEE, upon paying the rent and other charges and
performing the covenants and agreements of this Lease, shall quietly have, hold
and enjoy the premises, and all rights granted LESSEE in this Lease during the
terms hereof and any extensions thereto, if any. PLUS ADDENDUM "D".
27. Indemnity and Hold Harmless: LESSEE agrees to indemnify and hold
harmless LESSOR from any and all loss, injury, damage, expense (including, but
not limited to, attorneys' fees), demands, claims, actions or causes of actions
arising directly or indirectly from any negligence of LESSEE or its agents, or
employees, or invitees, or from the failure of LESSEE to comply with the terms
of this Lease or any renewal or extension thereof. Also LESSOR holds LESSEE
harmless if any of the above stated actions are not the result of LESSEE'S
negligence.
28. Surrender: At the termination of this Lease, LESSEE shall surrender
possession of the leased premises to LESSOR.
29. Notices: Any notices required or permitted hereunder shall be in
writing and delivered either in person to the other party, the other's
authorized agent, or by United States Mail, postage prepaid, or by United States
Certified Mail, Return Receipt Requested, Postage fully prepaid, to the
addresses set forth below, or at such other address as designated by either
party in writing or through facsimile machine under dually authorized
signatures.
LESSOR: LITTLE BROWNIE PROPERTIES, INC. 1350 SHEELER RD APOPKA, FL 32703
FAX # 407/886/2382
LESSEE JEVIC TRANSPORTATION INC. ATT: BRIAN J. FITZPATRICK C.F.O. 600 CREEK
RD DELANCO N.J. 08075 FAX # 609/764/7237
30. Successors and Assigns: The terms, conditions and covenants of this
Lease shall be binding upon, and shall inure to the benefit of each of the
parties hereto, their heirs, personal representatives, successors and assigns,
and shall run with the land.
31. Amendments: No waivers, alterations or modifications of this Lease or
any agreement in connection therewith, shall be valid unless in writing duly
executed by both LESSOR and LESSEE.
- 7 -
<PAGE>
32. Merger: This Lease and the Addedum A, B, C and D constitutes the sole
and only Agreement of the parties hereto and supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the demised premises, and contains all the covenants, agreements and other
obligations between the parties with respect to said premises.
33. Severability Clause: If any part of this Agreement including Addendum
A, B, C and D is declared invalid, such decision shall not affect the validity
of any remaining portion, which remaining portion shall remain in force and
effect as if this Agreement had been executed with the invalid portion thereof
eliminated. It is hereby declared the intention of the parties that they would
have executed the remaining portion of this Agreement without including any such
part, parts, or portions which may, for any reason, be hereafter declared
invalid.
THIS LEASE AGREEMENT MAY BE EXECUTED IN TWO OR MORE COUNTERPARTS, EACH OF
WHICH SHALL BE DEEMED AN ORIGINAL BUT ALL OF WHICH SHALL CONSTITUTE ONE AND THE
SAME INSTRUMENTS.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
this day and year first above written.
Signed, sealed and delivered in our presence:
/s/ /s/
________________________________ _____________________________________
CORPORATE SECRETARY LESSOR LITTLE BROWNIE PROPERTIES INC.
/s/
_____________________________________
SIGNERS NAME
/s/ Karen Muhlschlegel /s/ Brian J. Fitzpatrick
________________________________ _____________________________________
CORPORATE SECRETARY LESSEE JEVIC TRANSPORTATION INC
Brian Fitzpatrick
_____________________________________
SIGNERS NAME
<PAGE>
ADDENDUM "A"
LANDLORDS LIEN WAIVER
LESSOR further agrees to execute any landlords lien waiver with respect to
any personal property which TENANT may place within the premises which is
required of LESSEE by any financing institution or insurance company providing
financing to LESSEE.
<PAGE>
ADDENDUM "B"
The following construction projects will be handled and prepaid by JEVIC
TRANSPORTATION INC. Once the below improvements have been authorized and
contracted for, the LESSEE will have the right to enter the premises at
3934 THURMOND RD on May 1, 1996.
o All building exteriors to be painted
o Paving repairs sufficient to render the yard useable
o Chain link fence to be added and or repaired such that property will
be secured.
o Dock levelers to be repaired or replaced so that all are functional
(Initial estimate is 45 requiring replacement)
o Roof repair or recoating
The estimated cost for the above projects will not exceed $110,000 which
will be credited against the monthly rental payments in thirty-six 36
equal amounts of $3055. Based rent of $15,200 less $3055 = Net rent of
$12,145, as reflected on page one of this lease.
JEVIC shall have the right to commence projects upon execution
of this lease.
Notice of commencement will be filed with Clayton County.
All work will be authorized in advance and mutually approved by Little
Brownie Properties Inc. and lessee.
Work done on the interior office will be done at the Lessee's sole
discretion and expense.
<PAGE>
ADDENDUM C
ENVIRONMENTAL RERPESENTATIONS, WARRANTIES AND
INDEMNIFICATION:
A. Lessor hereby indemnifies and holds Lessee harmless from any
and all inability or obligation relating to any actual or alleged, known
or unknown, release, spill, leak, disposal, pumping, pouring, emitting,
emptying, injection, leaching, dumping, escape, discharge or other
presence of Hazardous Substances (hereinafter defined), and any
contamination arising therefrom on, in or under, or originating from,
the premises which occurred or ???? on or before the commencement date
of the term of this Lease, and/or is continuing as of such date
(collectively, "Discharge and/or Contamination"), including without
limitation any such Discharge and/or Contamination arising from any task
currently or heretofore located at, on, under or within the premises (the
"Tanks").
For purposes of this Agreement, the term "Hazardous Substances"
shall mean hazardous substances or hazardous wastes as defined in the
United States Comprehensive Environmental Response Compensation
Liability Act, as amended, any hazardous materials defined under the
United States Hazardous Materials Transportation Act, any hazardous
wastes as defined under the United States Resource Conversation and
Recovery Act, any toxic substance as defined in the United States Toxic
Substances and Control Act, and as the term hazardous substances,
hazardous wastes, hazardous materials, toxic substances, pollutants or
contaminants are defined under corresponding State or local laws,
ordinances and regulations and including without limitation, petroleum
products and radioactive materials.
B. Lessor hereby represents and warrants to the Lessee that:
(1) The Tanks have been and are in compliance with all
applicable Federal, State and local statutes, ordinances, regulations,
orders and requirements regulating storage tanks (and any Hazardous
Substances contained therein) and are not subject to any Federal, State
or local governmental investigation.
C. Lessor hereby acknowledges and agrees that the Tanks shall
not be considered part of the premises and the Lessee shall have no duty
directly or indirectly, with respect to such Tanks (including without
limitation any duty to maintain, repair, replace or upgrade such
Tanks); Lessor shall be solely responsible for compliance with all
applicable Federal, State and local statutes, ordinances, regulations,
orders and requirements regulating the Tanks (and any Hazardous
Substances contained therein) and shall indemnify and hold Lessee
harmless from any and all liability or obligation arising from Lessor's
failure to do so.
<PAGE>
ADDENDUM D
NON-DISTURBANCE PROVISION
In the event there is a mortgage encumbering the premises now or
at any time in the future, Lessor shall deliver to Lessee (within ten
days of the execution of this Lease Agreement in the event there is
currently a mortgage on the premises or within ten days after the
placement of any new mortgage on the premises) a nondisturbance
agreement in form reasonably satisfactory to Lessee providing that in
the event any such mortgagee forecloses or exercises any other rights to
possession or control of the premises pursuant to said mortgage,
Lessee's rights under this Lease Agreement shall not be disturbed or
interrupted so long as Lessee is not in default under this Lease
(subject to applicable notice and cure periods). Such obligation shall be
binding upon any successor or assignee of any such mortgagee.
<PAGE>
EXHIBIT "A"
[The Exhibit is a plot plan of the site where the leased premises are located.]
LEASE OF REAL PROPERTY
THIS AGREEMENT OF LEASE of real property is made and entered into by and
between DONGARY INVESTMENTS. LTD., a Colorado corporation, hereinafter referred
to as "LESSOR," and JEVIC TRANSPORTATION. INC., hereinafter referred to as
"LESSEE."
<TABLE>
<CAPTION>
LESSOR LESSEE
<S> <C>
Name: DONGARY INVESTMENTS, LTD. Name: JEVIC TRANSPORTATION, INC.
Street: 3980 QUEBEC STREET Ste 214 Street:
Mailing Address: PO Box 7240 Mailing Address: PO Box 5157
City, State, Zip: Denver CO 80207 City, State, Zip: Delanco NJ 08075
Telephone: 303-320-3960 Telephone: (800) 257-0427, (609) 764-7247
Federal ID#: 84-0478211 Attn: Brian J. Fitzpatrick
</TABLE>
DATE OF LEASE TERM OF LEASE MONTHLY BASE RENT
- ------------- ------------- -----------------
Beginning Ending
--------- ------
March 31, 1994 June 1, 1994 May 31, 1999 $19,000.00
I. LOCATION OF PREMISES:
4200 WEST 35TH PLACE, CHICAGO IL 60632
Consisting of eighty two (82) doors of a truck terminal dock, offices, shop and
parking, all located on approximately 12.279 acres as more particularly
described in Exhibit "A" attached hereto and made a part hereof.
II. TERM:
TO HAVE AND TO HOLD the premises, together with all improvements, rights,
easements, privileges and appurtenances thereon or appertaining or held and
enjoyed, unto Lessee upon the covenants and agreements herein set forth, the
term of this Lease shall be FIVE (5) YEARS, commencing the 1ST DAY OF JUNE, 1994
and terminating the 31st DAY OF MAY, 1999 with two options to renew for ONE (1)
year each (the initial term and any renewal terms exercised are herein referred
to as the "term") at a rental rate of NINETEEN THOUSAND ($19,000.00) plus one
half of the percentage increase in the city of Chicago CPI (Consumer Price
Index), annual average, all items, for the period June 1, 1994 through May 31,
1999 for the first option and for the period June 1, 1994 through May 31, 2000
for the second option, but not less than NINETEEN THOUSAND ($19,000.00) monthly
base rent. Said options exercisable only upon six (6) months prior written
notice of intent from Lessee to Lessor.
<PAGE>
III. PURCHASE OPTION:
A. Lessor hereby grants Lessee an option to acquire the premises during the
FIVE (5) YEAR original term of this lease. The purchase option expires at the
end of the five year term thus there is no purchase option during any option
year of the Term. The option price shall be ONE MILLION NINE HUNDRED THOUSAND
DOLLARS ($1,900,000.00) during the first year of the lease and TWO MILLION
DOLLARS ($2,000,000.00) during the next four years of the term. Any and all
major improvements paid for by Lessor will be added to the above prices on a
prorated basis, based on their remaining useful life.
B. Lessor further agrees to execute and deliver a memorandum of Lease for
recording by Lessee in the appropriate recording office, evidencing the purchase
option provided for under this Lease.
C. In the event Lessee exercises such purchase option, Lessor shall convey
to Lessee in fee simple title to the Premises, free and clear of all liens,
encumbrances, judgments and rights or claims of record. In connection with such
purchase option, Lessor (seller) shall pay the county and state transfer taxes
plus the recording fees and Lessee (purchaser) shall pay the city transfer
taxes. Such purchase will be pursuant to an Agreement of Sale to be executed by
Lessor as Seller and Lessee as Purchaser using a standard commercial agreement
of sale typically used in the conveyance of commercial property in Chicago,
Illinois.
IV. BASE RENT:
The base rental payable during the FIVE YEAR TERM shall be ONE MILLION ONE
HUNDRED FORTY THOUSAND AND NO/100 DOLLARS ($1,140,000.00). Said base rental
shall be payable by Lessee to Lessor in SIXTY (60) installments as follows:
A. Contemporaneous with the execution of the Lease, Lessee shall pay
Lessor the first installment of NINETEEN THOUSAND DOLLARS ($19,000.00) and
a security deposit of TWENTY THOUSAND DOLLARS ($20,000.00) for a total of
THIRTY NINE THOUSAND DOLLARS ($39,000.00). The prepaid installment for the
security deposit will not accrue interest to Lessee. Any income which may
be earned by Lessor from these funds will be considered additional rental
income by Lessor. The security deposit will be refunded at the termination,
plus any extensions, of this Lease providing Lessee is not in default and
after an inspection of the premises by Lessor and any repairs are made
which are Lessee's responsibility. If the Lessor's interest in the leased
premises is transferred, the Lessor shall turn over the security deposit to
the new Lessor.
B. Beginning on the FIRST DAY OF JULY, 1994, and on the same day of
the succeeding FIFTY EIGHT (58) MONTHS, Lessee shall pay Lessor NINETEEN
THOUSAND AND NO/100 DOLLARS ($19,000.00) through MAY 31, 1999.
C. Unless otherwise specified in writing by Lessor, all rental
payments shall be made payable to DONGARY INVESTMENTS, LTD., at the address
stated above.
2
<PAGE>
D. All installments of rent due under the provisions of this Lease
which are unpaid within fifteen days of the date the same are due shall
bear interest at eighteen percent (18%) per annum from and after the due
date thereof and until paid; if not paid on or before the end of said
fifteen day period. All sums of money which the Lessor shall be required to
pay or shall advance or expend by reason of the default of the Lessee under
the provisions of this Lease shall bear interest at eighteen percent (18%)
per annum from and after the date of the payment thereof and until the
Lessor shall be reimbursed therefor. The interest due as provided under
this Section shall constitute additional rent under this Lease.
E. The entire amount of rent reserved and agreed to be paid under this
Lease and each and every installment thereof, the amount of all taxes,
assessments, insurance premiums and other charges to be paid by the Lessee
as herein provided, if paid by Lessor, and all costs, reasonable attorneys'
fees and expenses which may be incurred by Lessor in enforcing the
provisions of this Lease or on account of any delinquency of Lessee in
carrying out any of the provisions of this Lease, shall be the
responsibility of the Lessee.
V. USE OF DEMISED PREMISES:
Lessor warrants that the applicable zoning and municipal codes allow the
Lessee to use the premises for motor freight terminal purposes. In the event
Lessee is unable to use the leased premises during the term of this lease for
motor freight terminal purposes, the Lessee may terminate this lease.
Lessee shall be responsible for and comply with all the applicable zoning,
use and building laws, ordinances, and governmental regulations in force from
time to time, during the term of this Lease, provided, however, that in the
event any such zoning, use or building laws, ordinances or governmental
regulations require any modifications to the Premises, Lessee shall pay
"Lessee's Pro-Rata Share" (hereinafter defined) of any major improvements
imposed by a governmental authority affecting the Premises during the Term. For
purposes of this paragraph, the term "Lessee's Pro-Rata Share" shall mean a
fraction, the numerator of which is the number of full calendar months remaining
in the Term when such major improvements are completed (and excluding any option
years not exercised, but including option years when exercised) and the
denominator of which is the number of months of useful life of such major
improvement as determined by the applicable Internal Revenue Service Useful Life
tables. The rules and regulations of the Board of Fire Underwriters for the area
in which the premises are located shall be complied with in dealing with all
volatile, explosive or especially inflammable fluids, vapors, gases, or
materials on the premises.
Lessee warrants that it will not conduct any hazardous waste storage or
hazardous waste disposal operations (including but not limited to hazardous
waste transportation operations or special waste transportation operations) on
the premises; except as is necessary in the ordinary course of its business and
then in complete compliance with applicable law. Nor will it store any hazardous
waste in the trailers, tractors, yard, shop or terminal areas (in drums or other
containers) at the premises, except as is necessary in the ordinary course of
its business and then
3
<PAGE>
in complete compliance with applicable law, nor will Lessee have hazardous waste
generators at this site, except as is necessary in the ordinary course of its
business and then in complete compliance with applicable law, nor will Lessee
permit the use or storage upon the premises of hazardous waste in any form by
others who Lessee may bring on to the leased premises or conduct business with.
VI. ENVIRONMENTAL REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION:
A. The Lessor hereby indemnifies and holds Lessee harmless from any and all
liability or obligation relating to any actual known or unknown, release, spill,
leak, disposal, or discharge of Hazardous Substances (hereinafter defined), and
any contamination arising therefrom on, in or under, or originating from, the
Premises which occurred or occurs on or before the commencement date of the
Term, and/or is continuing as of such date (collectively, "Discharge and/or
Contamination"), including without limitation any such Discharge and/or
Contamination (i) arising from any Tank (hereinafter defined) or (ii) referred
to, or otherwise described, in a certain "Report of Underground Storage Tank
Removals and Closure Assessments, 4200/4300 West 35th Street, Chicago, Illinois
dated April 15, 1992 prepared by Environmental Science & Engineering, Inc., a
certain letter from M&M Contractors, Inc. dated November 16, 1992, a certain
letter from R.W. Collins, Co., dated November 14, 1988 or a certain letter
(including sampling results) from Gulf Coast Laboratories, Inc., dated October
12, 1988 (collectively, the "Existing Reports"), or a report to be issued by
Dames & Moore of its audit of the Premises pursuant to a proposal dated March
30, 1994 (the "Current Report").
For purposes of this Agreement, the term "Hazardous Substances" shall mean
hazardous substances or hazardous wastes as defined in the United States
Comprehensive Environmental Response Compensation Liability Act, as amended, any
hazardous materials defined under the United States Hazardous Materials
Transportation Act, any hazardous wastes as defined under the United States
Resource Conservation and Recovery Act, any toxic as defined in the United
States Toxic Substances and Control Act, and as the term hazardous substances,
hazardous wastes, hazardous materials, toxic substances, pollutants or
contaminants are defined under corresponding State or local laws, ordinances,
regulations and including without limitation, petroleum products and radioactive
materials.
B. Lessor hereby represents and warrants to the Lessee that:
1) To the best of Lessor's knowledge there are no underground storage
tanks currently located at or on the Premises and other than those
described in the Existing Reports or the Current Report (the "Prior Tanks")
there have been no prior underground storage tanks located at or on the
Premises.
C. The Lessor hereby acknowledges and agrees that the Prior Tanks and any
other underground storage tanks hereinafter discovered at or on the Premises
(collectively with the Prior Tanks, the "Tanks"), other than those underground
storage tanks brought at or on the premises by Lessee, shall not be considered
part of the Premises and the Lessee shall have no duty, directly or indirectly,
with respect to such Tanks (including without liability any duty to maintain,
repair, replace or upgrade such Tanks); Lessor shall be solely responsible for
compliance with all applicable Federal, State and local statutes, ordinances,
regulations, orders and requirements regulating the Tanks (and any Hazardous
Substances contained therein) and shall indemnify and hold Lessee harmless from
any and all liability or obligation arising from Lessor's failure to do so.
D. The Lessor hereby acknowledges and agrees that any asbestos containing
materials ("ACM") located on or about the Premises shall be the sole
responsibility of Lessor unless, as a result of the Lessee's negligence, such
ACM is caused to become friable, in which event Lessee shall be responsible for
remediating such ACM in compliance with applicable law. Lessor and Lessee shall
each indemnify and hold the other harmless from any and all liability or
obligation arising from the other party's failure to comply with its obligations
under this Paragraph.
4
<PAGE>
VII. IMPROVEMENTS - LESSOR - LESSEE:
Prior to the commencement of Lessee's term, Lessor and Lessee shall inspect
the premises. Any repairs by Lessor shall be only those things reasonable and
necessary for Lessee's enjoyment and use of the premises, as is but repaired,
and shall not include any alterations or customizing of the premises for
Lessee's special requirements, but shall include the items not specifically
identified as Lessee's responsibility listed on Exhibit "B" attached hereto.
Lessor agrees to make an inspection to document the condition of the
facility. This inspection will document the condition upon which the Lessee
accepts the premises and will return the premises at the expiration of the
lease.
At the expiration of the Lease Agreement, or prior termination, the Lessee
shall surrender the leased property to the Lessor in at least as good a
condition as when received. Lessee shall be liable to Lessor for any damage to
the leased property resulting from the negligent or willful acts or omissions of
Lessee, its agents or employees.
VII. REAL ESTATE TAXES:
A. Lessee shall, in addition to all other sums agreed to be paid by it
under this Lease, pay unto Lessor, monthly, the real estate taxes of the total
property. The amount of the real estate taxes at the present time is NINE
THOUSAND, THREE HUNDRED, NINETY SEVEN AND 68/100 DOLLARS ($9,397.68) monthly
beginning June 1, 1994. Annually, when the real estate tax bills are received,
any overage will be refunded to Lessee or any shortage will be billed to Lessee
and must be paid to Lessor no later than the next regular monthly rental
installment. Lessor will provide Lessee with a copy of all real estate tax bills
and annual valuation notices and proof of payment when received, any and all
changes incurred in reducing the tax valuation and thus the tax expense shall be
paid by Lessee upon billing by Lessor.
B. Lessee shall pay to Lessor "Lessee's Pro-Rata Share" (hereinafter
defined) of any assessment imposed by a governmental authority affecting the
Premises during the Term. For purposes of this paragraph, the term "Lessee's
Pro-Rata Share" shall mean a fraction, the numerator of which is the number of
full calendar months remaining in the Term (and excluding any option years not
exercised, but including option years when exercised) and the denominator of
which is the number of months of useful life of the improvement for which such
assessment was imposed as determined by the applicable Internal Revenue Service
Useful Life tables. Lessee shall pay to Lessor Lessee's Pro-Rata Share of such
assessments in equal monthly payments commencing on the completion of the
project or the first date that any payment for such assessment is due to be paid
to the applicable governmental authority, whichever occurs first, and continuing
until Lessee's pro-rata share for such improvements have been paid in full.
5
<PAGE>
IX. INSURANCE:
A. Lessee shall, as additional rent together with all other sums
agreed to be paid by it under this Lease, pay unto Lessor, monthly, the
cost of Lessor's fire and extended casualty insurance on only the
structures on the demised premises. The cost of the insurance at the
present time is ONE HUNDRED FIFTEEN AND 75/100 DOLLARS ($115.75) per month.
Lessee shall be responsible for and obtain their own insurance for their
personal property. This payment for insurance shall be due and payable with
the regular monthly rental installments. Lessor agrees to maintain
throughout the term, fire and extended casualty insurance on a replacement
cost basis on the structures on the premises. Lessor will provide Lessee
with evidence of such insurance and a copy of the premium billing.
B. Lessee agrees to maintain public liability insurance in a reputable
insurance company at its own expense. The liability under such insurance to
be not less than Five Million Dollars ($5,000,000.00) for any one person
injured, or Five Million Dollars ($5,000,000.00) for any one accident, or
Five Million Dollars ($5,000,000.00) for property damages. Said policy
shall name Lessor as an additional insured and protect Lessor and Lessee as
their interests may appear. Lessee shall provide Lessor with a Certificate
of Insurance that provides the aforesaid coverage, with a provision for
thirty (30) days Notice of Cancellation.
X. UTILITIES:
Lessee shall, in addition to all other sums agreed to be paid by it under
this Lease, pay all utilities on the premises each month. Said utilities shall
include but not be limited to, service usage charges for heat, light, water and
sewage, trash hauling and cleaning service. Lessee shall transfer all utilities
into their name prior to occupancy.
XI. PERSONAL PROPERTY TAXES:
It is understood and agreed that Lessee shall be liable for all taxes
levied against personal property and fixtures owned by Lessee or placed by
Lessee in, on or about the demised premises, and if any such taxes on such
personal property or fixtures are levied against Lessor's property, Lessor shall
have the right to pay the same in the event Lessee does not make such payment or
provide an adequate reserve for such payment.
XII. ALTERATIONS:
Lessee shall not make, nor suffer to be made, any alterations of said
premises or any part thereof, without the written consent of Lessor first had
and obtained which consent will not be unreasonably withheld. Any additions to,
or alterations of, the said premises, except movable furniture, trade fixtures
and items #10 & 11 on Exhibit "B" hereto, shall become at once a part of the
realty and belong to Lessor. Any and all alterations, changes and improvements
which Lessee may make with Lessor's consent shall be made by Lessee at its own
cost and expense, and Lessee shall not permit any liens for labor and/or
materials to attach to or be filed against the property of Lessor. Lessee hereby
agrees to indemnify and protect Lessor against, and hold it free and
6
<PAGE>
harmless from, all such liens and claim of liens. Lessor hereby approves the
alterations to the premises as described on Exhibit "B" hereto.
XIII. REPAIRS AND REPLACEMENT:
Lessee shall, at its own expense, keep the entire premises, including but
not limited to doors, paving, fences, fixtures and equipment, repaired and in
good tenantable condition, order and repair at all times. Any and all asphalt
paving damage caused by lessee, holes or wear due to Lessee's use, etc. shall be
Lessee's responsibility. Lessor shall at its own expense keep the roof and main
structure in good tenantable condition, order and repair. Lessee shall, at its
own expense and without injury to the roof, remove all snow and ice from the
same when necessary, and will remove the snow and ice from all sidewalks and
walkways.
Due to the responsibility of Lessee to keep the facilities and the
improvements in good condition and repair at all times at its expense, Lessee
agrees that they shall maintain the following good housekeeping rules during the
term of this lease:
A. It is the responsibility of Lessee to continue the heating and
ventilating equipment service contract with Air Comfort Corporation, 2550
Braga Dr., Broadview, IL. 60153-3987, Phone (708) 345-1900 during the term
of this lease. All units shall be covered by the service contract.
B. All plumbing and plumbing fixtures shall be kept in good, clean
operating condition and checked at least once each two years by a licensed
plumbing contractor All expenses for such inspection and repairs shall be
paid by Lessee.
C. Lessee will maintain the interior offices in a clean and sanitary
condition at all times.
D. All electric outlets and fixtures shall be kept in good working
condition by Lessee and any inspection and/or repairs are to be paid for by
Lessee.
E. In the event any of the above conditions are not complied with by
Lessee, or Lessee is not diligently proceeding to comply, Lessor shall
notify Lessee by registered mail fifteen (15) days prior to his intent to
perform the necessary services or repairs and Lessee agrees that he will
pay the total cost plus fifteen percent overhead for same within thirty
days after submission of invoices.
In addition, any and all damages caused by Lessee, its employees, or
agents, shall be immediately repaired by Lessee at Lessee's sole expense.
Lessor shall notify Lessee by registered mail fifteen (15) days prior to
his intent to perform the necessary repairs and if Lessor has the damages
repaired, it shall be billed to Lessee, plus fifteen percent overhead, and
shall be due and payable within thirty (30) days of billing.
F. Failure to list specifically any item shall not relieve Lessee of
its duty to maintain the entire facility unless specifically listed as
Lessor's responsibility.
G. Lessee shall provide Lessor with copies of any and all inspections.
H. In the event Lessor fails to fulfill its obligations under this
Lease, following fifteen days prior written notice to Lessor by registered
mail, during which period Lessor has failed to cure such deficiency (or
such longer period as may be reasonably necessary for Lessor to cure such
deficiency, provided Lessor is diligently proceeding to cure such
7
<PAGE>
deficiency) Lessee may cure such deficiency on the part, and for the
account, of Lessor and it shall be billed to Lessor, plus fifteen percent
overhead, and it shall be due and payable within thirty (30) days of
billing.
XIV. RIGHT OF INSPECTION AND ENTRY:
Lessor shall have the right, through its agents, at all reasonable times
during the continuance hereof, to enter upon said premises to see that proper
care is taken thereof, or to show the same to any intending Lessee.
XV. ASSIGNMENT OF LEASE:
Lessee agrees not to assign this Lease nor any rights hereunder, nor let,
nor sublet the demised premises nor any part thereof, without first obtaining
the written consent of Lessor, which shall not be unreasonably withheld.
XVI. ABANDONMENT OF PREMISES:
If Lessee shall abandon or vacate the Premises, or if Lessee's right to
occupy the Premises be terminated by Lessor by reason of Lessee's breach of any
of the covenants herein, the same may be re-let by Lessor (and Lessor shall
undertake reasonable efforts to do so) for such rent and upon such terms as
Lessor may deem fit; and if a sufficient sum shall not thus be realized monthly,
after paying the expenses of such re-letting and collecting to satisfy the rent
hereby reserved, Lessee agrees to satisfy and pay all deficiencies monthly
during the remaining period of this Lease.
XVII. SURRENDER BY LESSEE:
Lessee will, at the termination of this Lease by lapse of time or
otherwise, yield up immediate possession to Lessor, and failing so to do, will
pay as liquidated damages, for the whole time such possession is withheld, the
sum of ONE THOUSAND AND NO/100 DOLLARS ($1,000.00) per day; but the provisions
of this clause shall not be held as a waiver by Lessor of any right of re-entry
as herein set forth; nor shall the receipt of said rent or any part thereof, or
any other act in apparent affirmance of tenancy, operate as a waiver of the
right to forfeit this Lease and the term hereby granted for the period still
unexpired, for a breach of any of the covenants herein.
XVIII. REMOVAL OF FURNITURE:
Lessee shall have the right to remove from the premises all movable
furniture, trade fixtures and items #10 & 11 on Exhibit "B" hereto, belonging to
it, and the same shall be removed by Lessee at the expiration or termination of
this Lease, or any renewal term hereof, provided that
8
<PAGE>
the same may be removed without damage to the building or property, and if
damage is caused by such removal, Lessee agrees to repair such damage at its own
cost forthwith.
XIX. BANKRUPTCY OR INSOLVENCY OF LESSEE:
If Lessee be adjudged bankrupt or insolvent, this Lease shall thereupon
immediately terminate, and the same shall not be assignable by any process of
law nor be treated as an asset of Lessee or assignees of said Lessee by virtue
of any proceeding in bankruptcy or insolvency; and, in case of any such
adjudication, or if Lessee shall become bankrupt or insolvent, or make an
assignment of all its property for the benefit of its creditors, said Lessor
may, in any such case, at its option, terminate this Lease and re-enter upon
said premises and thereupon all rights of Lessee hereunder shall cease and
terminate.
XX. REMEDIES OF LESSOR:
A. If default be made in the payment of the above rent, taxes, and
insurance or any part thereof, or in any of the covenants herein contained
to be kept by the Lessee, fifteen days after notice in writing to Lessee,
unless Lessee is diligently proceeding to cure such default, Lessor may at
any time thereafter at his election declare said term ended and reenter the
Premises or any part thereof, with or (to the extent permitted by law)
without notice or process of law, and remove Lessee or any persons
occupying the same, without prejudice to any remedies which might otherwise
be used for arrears of rent, taxes and insurance. Upon request by Lessee,
Lessor agrees to execute a Lessor's lien waiver with respect to any
financed personal property which Lessee may place within the premises upon
proof of financing thereon.
B. Lessee's covenant to pay rent, taxes and insurance is and shall be
independent of each and every other covenant of this Lease. Lessee agrees
that any claim by Lessee against Lessor shall not be deducted from rent,
taxes and insurance nor set off against any claim for rent, taxes and
insurance in any action.
C. The rights and remedies of Lessor under this Lease are cumulative.
The exercise or use of any one or more thereof shall not bar Lessor from
exercise or use of any other right or remedy provided herein or otherwise
provided by law, nor shall exercise nor use of any right or remedy by
Lessor waive any other right or remedy.
XXI. PLURALS AND SUCCESSORS:
The words "Lessor" and "Lessee" wherever herein occurring and used shall be
construed to mean "Lessors" and "Lessees" in case more than one person
constitutes either party to this Lease; and all the covenants and agreements
contained shall be binding upon, and inure to, their respective successors,
heirs, executors, administrators and assigns and may be exercised by his or
their attorney or agent.
XXII. SEVERABILITY:
Wherever possible, each provision of this Lease shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Lease shall be prohibited
9
<PAGE>
by or invalid under applicable law such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Lease.
XXIII. INDEMNITY OF LESSOR, LESSEE:
A. Against Violation of Laws and Ordinances:
Lessee covenants and agrees that it will protect and save and keep the
Lessor forever harmless and indemnified against and from any penalty,
damage or charges claimed or imposed for any violation of any laws or
ordinances, occasioned by the negligence of Lessee or those holding
under Lessee or by the occupancy and business of Lessee, or any
misrepresentation or breach of covenant, warranty or agreement made by
Lessee under this Lease.
B. Against Accidents and Occurrences:
Lessee covenants and agrees that it will protect and save and keep the
Lessor forever harmless and indemnified against and from any and all
loss, cost, damage or expense arising out of or from any accident or
incident due to the negligence of the Lessee, its servants or agents
on or about the premises, causing injury to any person or damage to
any property whomsoever or whatsoever.
C. Against Claims and Liens of Third Parties:
Lessee further covenants and agrees that it will forever defend and
indemnify Lessor and hold Lessor harmless from any and all liens,
claims, suits, judgments, loss, costs, damage or expense made by or
for any contractor, employee of a contractor or any other person
whatsoever arising out of or in any way connected with any contract
with Lessee, its agents or employees, in connection with any work
performed, material furnished, construction, installation or
alterations made or being made or performed in or about the premises
which are contracted for by the Lessee. Lessee's obligations set forth
in this Section shall not apply to work performed, material furnished,
construction, installation, alterations or repairs required of Lessor
by this Lease.
D. Against Violation of Laws and Ordinances:
Lessor covenants and agrees that it will protect and save and keep the
Lessee forever harmless and indemnified against and from any penalty,
damage or charges claimed or imposed for any violation of any laws or
ordinances, occasioned by the negligence of Lessor or those holding
under Lessor, or any misrepresentation or breach of covenant, warranty
or agreement made by Lessor under this Lease.
E. Against Accidents and Occurrences:
Lessor covenants and agrees that it will protect and save and keep the
Lessee forever harmless and indemnified against and from any and all
loss, cost, damage or expense arising out of or from any accident or
incident due to the negligence of the Lessor, its servants or agents
on or about the premises, causing injury to any person or damage to
any property whomsoever or whatsoever.
F. Against Claims and Liens of Third Parties:
Lessor further covenants and agrees that it will forever defend and
indemnify Lessee and hold Lessee harmless from any and all liens,
claims, suits, judgments, loss, costs, damage or expense made by or
for any contractor, employee of a contractor or any other person
whatsoever arising out of or in any way connected with any contract
with Lessor, its agents or employees, in connection with any work
performed, material furnished, construction, installation or
alterations made or being made or performed in or about the premises
which are contracted for by the Lessor. Lessor's obligations set forth
in this Section shall not apply to work performed, material furnished,
construction, installation, alterations or repairs required of Lessee
by this Lease.
10
<PAGE>
XXIV. ASSOCIATION MEMBERSHIP:
It is understood and agreed that the various owners and the Lessees within
the development, known as Highway Freight Center, will all be members of an
association. This association will have the responsibility of maintaining the
roadways and utilities and to further provide additional services desired by the
Lessees and owners, such as security, for their mutual benefit. All costs
incurred by this association shall be paid by each member on a basis
proportionate to the square footage of the land area owned or leased to the
total area within the development. Lessee shall be responsible for all costs
associated with this membership.
XXV. MORTGAGES OR TRUST DEEDS:
This lease shall be subject and subordinate to any bonafide mortgages or
trust deeds that may hereafter be placed upon said leased premises and to any
and all advances to be made thereunder, and to the interest thereon, and all
renewals, replacements and extensions thereof provided that a subordination,
recognition, and non-disturbance agreement in recordable form and in form
reasonably acceptable to Lessee is executed, acknowledged and delivered by such
mortgagee/trustee. If, at the date of the execution of this Lease, there is any
such mortgage or deed of trust against any portion of the Premises, Lessor shall
deliver to Lessee simultaneously herewith such a subordination, recognition and
non-disturbance agreement. It is further provided that Lessee shall execute and
deliver whatever instruments may be required for such purposes, and in the event
Lessee fails so to do within ten (10) days after demand by Lessor in writing,
Lessee does hereby make, constitute and irrevocably appoint Lessor as its
attorney in fact and in its name, place and stead so to do.
XXVI. FINANCIAL:
Lessee agrees to provide Lessor with current financial statements prior to
the execution of this Lease. Lessee further agrees to furnish to Lessor, and
Lessor agrees to furnish to Lessee, financial statements annually at each
anniversary date during the term of this Lease and any extensions thereto.
Lessor and Lessee agree to keep each others financial statements (and the
information contained therein) confidential and not to disclose or otherwise
disseminate each others financial statements (and the information contained
therein) to any other party.
XXVII. DAMAGE OR DESTRUCTION:
In the event the improvements upon the leased premises or any part thereof
shall, during the term of this Lease or any renewal hereof, be destroyed or
damaged by fire, explosion, the elements, other casualty or environmental
contamination for which Lessor is responsible, the
11
<PAGE>
Lessee shall give immediate notice thereof to the Lessor, who shall
thereupon cause the damage to be repaired within 180 days unless the lease is
terminated as hereinafter provided. If the leased premises or any part thereof
shall have been rendered untenantable from the time of the damage until the
completion of said repair and restoration, an equitable reduction in the rental
during such period of repair and restoration shall be made until said leased
premises are so repaired and again ready for occupancy. However, in the event
the improvements on the leased premises are thereby damaged to the extent of
more than fifty percent (50%) of the replacement cost thereof, or the damage
affects the dock area, either party may elect to terminate the lease within
thirty (30) days of the date of such damage by giving written notice thereof by
registered or certified mail to the other party and thereupon this lease shall
immediately terminate and the Lessee shall have no further obligation hereunder
other than to pay the rental accrued to the date of such damage.
XXVIII. EMINENT DOMAIN:
In the event the leased premises or any portion thereof (the unavailability
of which would materially interfere with Lessee's ability to operate) are taken
under the power of eminent domain or the threat of the exercise thereof for any
public or quasi-public use, then the Lessee may terminate and cancel this lease
by giving Lessor notice in writing by registered or certified mail, and
thereupon both parties shall be relieved of any further obligation under this
lease, excepting that Lessee shall fulfill all the obligations of it hereunder
to be performed to the date of such termination. In the event this lease is not
terminated and cancelled after a condemnation of a portion of the leased
premises, the rent shall be reduced by a reasonable sum directly proportioned to
the total rent in such ratio as the value of the part of the leased premises
condemned plus the damage to the residue shall bear to the value of the entire
premises.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by
affixing their names by their duly authorized officers on the date appearing
below their respective names.
LESSOR LESSEE
DONGARY INVESTMENTS, LTD. JEVIC TRANSPORTATION, INC.
Federal ID#: 84-0478211
BY: /s/ Eldon C. Yeutter BY: /s/ Brian J. Fitzpatrick
----------------------- -------------------------
Title: Executive Vice President Title: SVP/Finance and Treasurer
Date: May 3, 1994 Date: May 7, 1994
12
<PAGE>
EXHIBIT "A"
DATE OF LEASE: MARCH 31, 1994
LESSOR: DONGARY INVESTMENTS, LTD.
LESSEE: JEVIC TRANSPORTATION INC.
TERM OF LEASE: JUNE 1, 1994 THRU MAY 31, 1999
LOCATION OF PROPERTY: 4200 WEST 35TH PLACE, CHICAGO, IL
[GRAPHIC OMITTED]
The graphic shows a floor plan of the premises of the Trucking Terminal referred
to in the preceding exhibit.
13
<PAGE>
EXHIBIT "B"
REPAIRS AND IMPROVEMENTS
1. All downspouts inside and outside both buildings should be clear and running
to preclude ice and snow buildup.
2. All skylights should be weathertight.
3. All dock shock absorbers should be in place and afford proper protection.
4. The awning overhead doors and structure on the east end must be repaired and
operable.
5. The raised areas of the aprons should be saw cut and repaired to form a
smooth transition to the center slab in the terminal.
6. All dock levelers must be in proper operating condition.
7. All overhead and dock lights must be operable.
8. All areas are to be broom clean and free of debris.
9. All appropriate utilities must be in functional condition.
10. Should Lessee so decide, the spaces between the dock levelers, the apron,
and the outside walls may be protected by removable structures to allow safe
forklift and pedestrian traffic. Such structures will be obtained and
installed by Lessee and at the termination of this lease be either removed
by Lessee or sold to the Lessor at Lessor's discretion.
11. Should Lessee so decide, a "warm room" or area may be constructed (of
removable materials) in some portion of the dock area to provide for the
protected storage of freight. Such area would utilize existing heating units
and would be removed by Lessee and returned to an agreed upon condition at
the termination of this Lease.
14
[LOGO]
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
$25,000,000
between
JEVIC TRANSPORTATION, INC.
and
CORESTATES BANK, N.A.
as of
June 28, 1996
- -------------------------------------------------------------------------------
<PAGE>
Table of Contents
1. Certain Definitions .................................................... 1
1.1 Definitions ........................................................ 1
1.2 Accounting Terms ................................................... 10
2. The Credit ............................................................. 10
2.1 The Loans .......................................................... 10
(a) Revolving Credit Loans ......................................... 10
(b) Term Loans ..................................................... 10
(c) Standby Letters of Credit....................................... 11
2.2 The Notes .......................................................... 12
(a) Revolving Credit Note .......................................... 12
(b) Term Notes ..................................................... 12
2.3 Funding Procedures ................................................. 12
(a) Request for Advance ............................................ 12
(b) Irrevocability ................................................. 13
(c) Availability of Funds .......................................... 13
(d) Funding of Net Amount .......................................... 13
2.4 Interest ........................................................... 13
(a) Base Rate ...................................................... 13
(b) LIBO Rate ...................................................... 13
(c) "As Offered" Fixed Rate ........................................ 13
(d) Renewals and Conversions of Loans .............................. 13
(e) Automatic Reinstatement ........................................ 14
2.5 Fees ............................................................... 14
(a) Revolving Loan Commitment Fee .................................. 14
(b) Term Credit Commitment Fee ..................................... 14
(c) Payment of Commitment Fees ..................................... 14
2.6 Reduction or Termination of Commitments ............................ 14
(a) Voluntary ...................................................... 14
(b) Revolving Loan Commitment Termination .......................... 15
2.7 Voluntary Prepayments .............................................. 15
(a) Base Rate Loans ................................................ 15
(b) LIBO Rate Loans ................................................ 15
(c) "As Offered" Fixed Rate Loans .................................. 15
2.8 Payments ........................................................... 15
(a) Base Rate Loans ................................................ 15
(b) LIBO Rate Loans ................................................ 15
(c) "As Offered" Fixed Rate Loans .................................. 15
(d) Form of Payments, Application of Payments, Payment
Administration, Etc. ........................................... 15
(e) Net Payments ................................................... 16
(f) Prepayment of LIBO Rate Loans .................................. 16
2.9 Changes in Circumstances; Yield Protection ......................... 17
- i -
<PAGE>
2.10 Illegality ........................................................ 18
2.11 Indemnity Against Funding Losses or Expenses ...................... 18
3. Representations and Warranties ......................................... 19
3.1 Organization, Standing ............................................ 19
3.2 Corporate Authority, Validity, Etc. ............................... 19
3.3 Litigation ........................................................ 19
3.4 ERISA ............................................................. 19
3.5 Financial Statements .............................................. 20
3.6 Not in Default, Judgments, Etc. ................................... 20
3.7 Taxes ............................................................. 20
3.8 Permits, Licenses, Etc. ........................................... 20
3.9 Compliance with Laws, Etc. ........................................ 20
3.10 Solvency .......................................................... 21
3.11 Subsidiaries, Etc. ................................................ 21
3.12 Title to Properties, Leases ....................................... 21
3.13 Public Utility Holding Company; Investment Company ................ 21
3.14 Margin Stock....................................................... 21
4. Conditions Precedent.................................................... 22
4.1 All Loans ......................................................... 22
(a) Documents ..................................................... 22
(b) Covenants; Representations .................................... 22
(c) Defaults ...................................................... 22
(d) Material Adverse Change ....................................... 22
4.2 Conditions to First Loan ......................................... 22
(a) Articles, Bylaws .............................................. 22
(b) Evidence of Authorization ..................................... 22
(c) Legal Opinions ................................................ 22
(d) Incumbency .................................................... 22
(e) Notes ......................................................... 23
(f) Documents ..................................................... 23
(g) Consents ...................................................... 23
(h) Change ........................................................ 23
(i) Other Agreements .............................................. 23
(j) Loan Request................................................... 23
(k) Fees .......................................................... 23
(1) Borrowing Base Certificate .................................... 23
5. Affirmative Covenants .................................................. 23
5.1 Financial Statements and Reports .................................. 23
(a) Annual Statements.............................................. 23
(b) Quarterly Statements .......................................... 24
(c) No Default .................................................... 24
(d) ERISA ......................................................... 25
(e) Material Changes .............................................. 25
(f) Other Information ............................................. 25
- ii -
<PAGE>
(g) Borrowing Base Certificates ................................... 25
(h) Monthly Receivables Report .................................... 25
5.2 Corporate Existence ............................................... 25
5.3 ERISA ............................................................. 25
5.4 Compliance with Regulations ....................................... 25
5.5 Conduct of Business; Permits and Approvals, Compliance with Laws .. 25
5.6 Maintenance of Insurance .......................................... 26
5.7 Payment of Debt; Payment of Taxes, Etc. ........................... 26
5.8 Notice of Events .................................................. 26
5.9 Inspection Rights ................................................. 27
5.10 Generally Accepted Accounting Principles .......................... 27
5.11 Use of Proceeds ................................................... 27
5.12 Further Assurances ................................................ 27
5.13 Compliance with Material Contracts ................................ 27
5.14 Restrictive Covenants in Other Agreements ......................... 27
5.15 Personal Guarantees ............................................... 27
6. Negative Covenants ..................................................... 28
6.1 Consolidation and Merger .......................................... 28
6.2 Liens ............................................................. 28
6.3 Guarantees ........................................................ 28
6.4 Margin Stock ...................................................... 28
6.5 Acquisitions and Investments ...................................... 28
6.6 Transfer of Assets; Nature of Business ............................ 29
6.7 Restricted Payments ............................................... 29
6.8 Accounting Change ................................................. 29
6.9 Transactions with Affiliates ...................................... 29
6.10 Negative, Negative Pledge Agreements .............................. 29
6.11 Restriction on Amendment of This Agreement ........................ 29
7. Financial Covenants .................................................... 29
7.1 Borrowing Base .................................................... 29
7.2 Minimum Tangible Net Worth ........................................ 30
7.3 Debt to Tangible Net Worth ........................................ 30
7.4 Debt Service Coverage ............................................. 30
8. Default ................................................................ 30
8.1 Events of Default ................................................. 30
(a) Payments ...................................................... 30
(b) Covenants ..................................................... 30
(c) Representations, Warranties ................................... 30
(d) Bankruptcy .................................................... 31
(e) Certain Other Defaults ........................................ 31
(f) Judgments ..................................................... 31
(g) Attachments ................................................... 31
(h) Change in Control ............................................. 31
- iii -
<PAGE>
(i) Security Interests ............................................ 31
(j) Material Adverse Change ....................................... 31
9. Collateral.............................................................. 32
9.1 Collateral........................................................ 32
9.2 Security Agreement................................................ 32
10. Miscellaneous .......................................................... 32
10.1 Waiver ........................................................... 32
10.2 Amendments ....................................................... 32
10.3 Governing Law .................................................... 32
10.4 Participations and Assignments ................................... 33
10.5 Captions ......................................................... 33
10.6 Notices .......................................................... 33
10.7 Expenses; Indemnification ........................................ 33
10.8 Survival of Warranties and Certain Agreements .................... 34
10.9 Severability ..................................................... 34
10.10 No Fiduciary Relationship ........................................ 34
10.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS ................... 34
10.12 WAIVER OF JURY TRIAL ............................................. 35
1O.13 Counterparts; Effectiveness ...................................... 35
10.14 Use of Defined Terms ............................................. 35
10.15 Offsets .......................................................... 35
10.16 Entire Agreement ................................................. 35
10.17 Jevic Transportation Services, Inc. .............................. 35
10.18 Inconsistency with Existing CoreStates Loans ..................... 36
- ------------------------------------------------------
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF TERM NOTE
EXHIBIT C FORM OF BORROWING BASE CERTIFICATE
EXHIBIT D FORM OF SECURITY AGREEMENT
EXHIBIT E FORM OF LETTER OF CREDIT APPLICATION
SCHEDULE 1 MISCELLANEOUS INFORMATION
- iv -
<PAGE>
Credit Agreement
This Credit Agreement, dated as of June 28, 1996 (this "Agreement"), is
entered into by and between JEVIC TRANSPORTATION, INC., a New Jersey corporation
("Jevic") and CORESTATES BANK' N.A., a national banking association
("CoreStates", "CoreStates Bank" or the "Bank").
Preliminary Statement
WHEREAS, Jevic desires to have available to it a credit facility the
proceeds of which may be used for the purchase or refinancing of over the road
chassis and trailers, Qualcomm satellites, trailer Dollys, trailer heaters, fork
trucks, automobiles and miscellaneous equipment used in connection with its
business and for working capital purposes.
WHEREAS, Jevic has requested that CoreStates Bank establish such credit
facility and make loans to Jevic under the terms and conditions hereinafter set
forth.
WHEREAS, the Bank is willing to establish such credit facility and make
loans to Jevic under the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and promises hereinafter
set forth and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Certain Definitions
1.1 Definitions.
"Accounts Receivable Aging Report" shall mean a report in summary form of
the status of accounts receivable in form and substance reasonably
satisfactory to the Bank.
"Additional Amount" shall have the meaning set forth in (section) 2.8(f).
"Adjusted EBITDA" shall mean EBITDA plus all Operating Lease expenses
during the period plus all interest expenses incurred during the period.
"Affiliate" shall mean any Person: (1) which directly or indirectly
controls, or is controlled by, or is under common control with Jevic; (2)
which directly or indirectly beneficially owns or holds ten percent (10%)
or more of any class of voting stock of Jevic; or (3) ten percent (10%) or
more of whose voting stock of which is directly or indirectly beneficially
owned or held by Jevic. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract, or otherwise.
"Agreement" shall mean this Credit Agreement, as amended, supplemented,
modified, replaced, substituted for or restated from time to time and all
exhibits and schedules attached hereto.
- 1 -
<PAGE>
"As Offered Fixed Rate" shall mean the fixed rate which the Bank may quote
to Jevic on any day that it may request such a rate for the purpose of
fixing the rate of all or a portion of the unpaid principal amount of any
Loan for a period which shall not extend beyond the Revolver Termination
Date in the case of a Revolving Credit Loan or the final maturity date set
forth in the Term Notes in the case of the Term Loans. If the Bank shall
elect not to make available a quote for an "As Offered" Fixed Rate Loan on
the day of the request, the request may be resubmitted on such later date
as the Bank shall elect to make available such a quote. Interest on Loans,
or portions thereof, at an "As Offered" Fixed Rate shall be computed on the
basis of a year of 360 days (composed of twelve 30 day months) and on the
date the Loan matures (whether by acceleration of the maturity as provided
in (section) 8.1 or otherwise).
"As Offered Fixed Rate Loans" shall mean Revolving Credit Loans and Term
Loans accruing interest based on an As Offered Fixed Rate.
"Base Rate" shall mean, for any day, the higher of the Federal Funds Rate
plus 1/2 of 1% or the prime commercial lending rate of CoreStates Bank,
N.A., as announced from time to time at its head office, calculated on the
basis of the actual number of days elapsed in a year of 360 days.
"Base Rate Loans" shall mean Revolving Credit Loans and Term Loans accruing
interest based on the Base Rate.
"Borrowing Base" shall mean that amount which is equal to 80% of the
Eligible Receivables.
"Borrowing Base Certificate" shall mean a certificate in substantially the
form attached hereto as Exhibit D hereto which shall be signed by the chief
financial officer, treasurer or controller of Jevic.
"Business Day" shall mean any day other than a Saturday, Sunday, or other
day on which commercial banks in Philadelphia are authorized or required to
close under the laws of the Commonwealth of Pennsylvania and, if the
applicable day relates to a LIBO Rate Loan, or notice with respect to a
LIBO Rate Loan, a day on which dealings in Dollar deposits are also carried
on in the London interbank market and banks are open for business in London
("London Business Day").
"Capitalized Lease" shall mean all lease obligations of any Person for any
property (whether real, personal or mixed) which have been or should be
capitalized on the books of the lessee in accordance with General Accepted
Accounting Principles.
"Capitalized Lease Obligations" with respect to any Person, shall mean the
aggregate amount which, in accordance with GAAP, is required to be reported
as a liability on the balance sheet of such Person at such time in respect
of such Person's interest as lessee under a Capital Lease.
"Closing Date" shall mean the date closing shall occur.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time. and all rules and regulations with respect thereto in effect from
time to time.
- 2 -
<PAGE>
"Commitment Fee" shall have the meaning set forth in (section) 2.5(a).
"Debt" shall mean, as of any date of determination with respect to Jevic,
without duplication, (i) all items which in accordance with Generally
Accepted Accounting Principles would be included in determining total
liabilities as shown on the liability side of a balance sheet of Jevic as
of the date on which Debt is to be determined, (ii) all indebtedness of
others with respect to which Jevic has become liable by way of a guarantee
or endorsement (other than for collection or deposit in the ordinary course
of business), (iii) all contingent liabilities of Jevic, and (iv) lease
obligations that, in conformity with GAAP, have been capitalized on Jevic's
balance sheet.
"Debt Service" shall mean actual payments of principal on Debt and
Capitalized Lease Obligations (including any Debt or Capital Lease
Obligations paid from the sale of equipment during the period), plus
Operating Lease expenses during the period, plus interest expense incurred
during the period.
"Default Rate" on any Loan shall mean 2% per annum above the Base Rate.
"Dollars" shall mean the lawful currency of the United States of America.
"EBITDA" shall mean the sum of (i) operating income, plus (ii) depreciation
and amortization, plus (iii) the net proceeds from the sale or other
disposal of Revenue Equipment as stated in the notes to the financial
statements, but not including any gain of such sale(s) included in net
income before income taxes.
"Eligible Receivables" shall mean accounts receivable by Jevic which (1)
arose in the ordinary course of business of Jevic, (2) have been fully
earned by completed performance on the part of Jevic, (3) are not subject
to any prior assignment, claim, lien, security interest or other limitation
on the absolute title of Jevic thereto, (4) with respect a specific
invoice, has not been paid in whole or in part, (5) are not more than 90
days from the invoice date, (6) are not more than 90 days past due, (7) are
freely assignable, (8) are not questionable as to collectibility, and (9)
the account debtor is not located outside of the United States of America
or Canada.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
"ERISA Affiliate" shall mean any corporation which is a member of the same
controlled group of corporations as Jevic within the meaning of (section)
414(b) of the Code, or any trade or business which is under common control
with Jevic within the meaning of (section) 414(c) of the Code.
"Event of Default" shall have the meaning set forth in (section) 8.1.
"Environmental Control Statutes" shall mean each and every applicable
federal, state, county or municipal environmental statute, ordinance, rule,
regulation, order, directive or requirement, together with all successor
statutes, ordinances, rules, regulations, orders, directives or
requirements, of any Governmental Authority, including without limitation
laws in any way related to Hazardous Substances.
- 3 -
<PAGE>
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that if the day for which such rate
is to be determined is not a Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day.
"Fiscal Quarter" shall mean a fiscal quarter of Jevic, which shall be any
quarterly period ending on March 31, June 30, September 30 or December 31
of any year.
"Fiscal Year" shall mean a fiscal year of Jevic, which shall end on
December 31.
"Generally Accepted Accounting Principles" or "GAAP" shall mean generally
accepted accounting principles as in effect from time to time in the United
States, consistently applied.
"Governmental Authority" shall mean the federal, state, county or municipal
government, or any department, agency, bureau or other similar type body
obtaining authority therefrom or created pursuant to any laws, including
without limitation Environmental Control Statutes.
"Hazardous Substances" shall mean without limitation, any regulated
substance, toxic substance, hazardous substance, hazardous waste,
pollution, pollutant or contaminant, as defined or referred to in the New
Jersey Environmental Rights Act, N.J.S.A. 2A:35A-1 et seg.; the New Jersey
Spill Compensation and Control Act, N.J.S.A.26:2C-1 et seg.; the Resource
Conservation and Recovery Act, as amended, 15 U.S.C., (section) 2601 et
seg.; the Comprehensive Environmental Response, Compensation and Liability
Act, 33 U.S.C. (section) 1251 et seg.; the Hazardous Substances Discharge:
Reports and Notices Act, N.J.S.A. 13:IK-15 et seg.; the Industrial Site
Recovery Act, N.J.S.A. 13:1K-6 et seg.; the New Jersey Underground storage
of Hazardous Substances Act, N.J.S.A. 58:L10A-21 et seg.; (P.L. 1986 Ch.
102), and the federal underground storage tank law, Subtitle I of the
Resource Conservation and Recovery Act, as amended, P.L. 98-616, 42 U.S.C.
(section) 6901 et seg.; together with any amendments thereto, regulations
promulgated thereunder and all substitutions thereof, as well as words of
similar purport or meaning referred to in any other federal, state, county
or municipal environmental statute, ordinance, rule or regulation.
"Indebtedness for Borrowed Money" shall mean (i) all indebtedness,
liabilities, and obligations, now existing or hereafter arising, for money
borrowed by Jevic, whether or not evidenced by any note, indenture, or
agreement (including, without limitation, the Notes and any indebtedness
for money borrowed from an Affiliate) and (ii) all indebtedness of others
for money borrowed (including indebtedness of an Affiliate) with respect to
which Jevic has become liable by way of a guarantee or indemnity.
"Intangible Assets" shall mean all assets which would be classed as
intangible assets under GAAP consistently applied, including, without
limitation, goodwill (whether representing the excess of cost over book
value of assets acquired or otherwise), patents, trademarks, trade names,
copyrights, franchises, and deferred charges (including, without
limitation. unamortized debt
- 4 -
<PAGE>
discount and expense, organization costs, and research and development
costs). For purposes of this definition, prepayments of taxes, license fees
and other expenses shall not be deemed Intangible Assets.
"Interest Period" shall mean with respect to any LIBO Rate Loan, each
period commencing on the date any such Loan is made, or, with respect to a
Loan being renewed, the last day of the next preceding Interest Period with
respect to a Loan, and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day of the calendar
month) in the first, second or third calendar month thereafter as selected
under the procedures specified in (section) 2.3, if the Bank is then
offering LIBO Rate Loans for such period; provided that each LIBO Rate Loan
Interest Period which would otherwise end on a day which is not a Business
Day (or, for purposes of Loans to be repaid on a London Business Day, such
day is not a London Business Day) shall end on the next succeeding Business
Day (or London Business Day, as appropriate) unless such next succeeding
Business Day (or London Business Day, as appropriate) falls in the next
succeeding calendar month, in which case the Interest Period shall end on
the next preceding Business Day (or London Business Day, as appropriate)
"Investment" in any Person shall mean (a) the acquisition (whether for
cash, property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of such Person; (b) any deposit with, or advance, loan or other
extension of credit to, such Person (other than any such deposit, advance,
loan or extension of credit having a term not exceeding 90 days in the case
of unaffiliated Persons and 120 days in the case of Affiliates representing
the purchase price of inventory or supplies purchased in the ordinary
course of business) or guarantee or assumption of, or other contingent
obligation with respect to, Indebtedness for Borrowed Money or other
liability of such Person; and (c) (without duplication of the amounts
included in (a) and (b)) any amount that may, pursuant to the terms of such
investment, be required to be paid, deposited, advanced, lent or extended
to or guaranteed or assumed on behalf of such Person.
"LIBO Rate" shall mean, for the applicable Interest Period, (i) the rate,
rounded upwards to the next one-sixteenth of one percent, determined by the
Bank two London Business Days prior to the date of the corresponding LIBO
Rate Loan, at which the Bank is offered deposits in dollars at
approximately 11:00 A.M., London time by leading banks in the interbank
eurodollar or eurocurrency market for delivery on the date of such Loan in
an amount and for a period comparable to the amount and Interest Period of
such Loan and in like funds, divided by (ii) a number equal to one (1.0)
minus the LIBO Rate Reserve Percentage. The LIBO Rate shall be adjusted
automatically with respect to any LIBO Rate Loan outstanding on the
effective date of any change in the LIBO Rate Reserve Percentage, as of
such effective date. LIBO Rate shall be calculated on the basis of the
number of days elapsed in a year of 360 days.
"LIBO Rate Reserve Percentage" shall mean, for any LIBO Rate Loan for any
Interest Period therefor, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained during
such Interest Period under Regulation D by the Bank against "Eurocurrency
liabilities" (as such terms is used in Regulation D) but without benefit of
credit proration, exemptions, or offsets that might otherwise be available
to the Bank from time to time under Regulation D. Without limiting the
effect of the foregoing, the LIBO Rate Reserve Percentage shall reflect any
-5-
<PAGE>
other reserves required to be maintained by the Bank against (l) any
category of liabilities which includes deposits by reference to which the
rate for LIBO Rate Loans is to be determined; or (2) any category of
extension of credit or other assets which include LIBO Rate Loans.
"LIBO Rate Loans" shall mean Revolving Credit Loans and Term Loans accruing
interest based on the LIBO Rate.
"Lien" shall mean any lien, mortgage, security interest, chattel mortgage'
pledge or other encumbrance (statutory or otherwise) of any kind securing
satisfaction of an Obligation, including any agreement to give any of the
foregoing, any conditional sales or other title retention agreement, any
lease in the nature thereof, and the filing of or the agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction
or similar evidence of any encumbrance, whether within or outside the
United States.
"Loan" or "Loans" shall mean a Revolving Credit Loan or a Term Loan and
Revolving Credit Loans and Term Loans.
"Loan Documents" shall mean this Agreement, the Revolving Credit Note, the
Term Notes, the Security Agreement, and all other documents directly
related or incidental to said documents, the Loans or the Collateral.
"Material Adverse Change" shall mean any event or condition which, in the
reasonable determination of the Bank, could result in a material adverse
change in the financial condition, business, properties, profits or
prospects of Jevic or which gives reasonable grounds to conclude that Jevic
may not or will not be able to perform or observe (in the normal course)
its obligations under the Loan Documents to which it is a party, including
but not limited to the Notes.
"Material Adverse Effect" shall mean a material adverse effect (i) on the
financial condition, business, properties, or profits of Jevic, (ii) the
ability of Jevic to perform its obligations under this Agreement, the
Revolving Credit Note, the Term Notes and the other Loan Documents, or
(iii) the legality, validity or enforceability of this Agreement, the
Revolving Credit Note, the Term Notes or the rights and remedies of the
holders of the Loans.
"Multiemployer Plan" shall mean a multiemployer plan as defined in ERISA
(section) 400(a)(3), which covers employees of Jevic or any ERISA
Affiliate.
"Net Worth" shall mean the sum of capital stock, plus paid-in capital, plus
retained earnings, minus treasury stock.
"Notes" shall mean the Revolving Credit Note and the Term Notes.
"Obligations" shall mean all now existing or hereafter arising debts,
obligations, covenants, and duties of payment or performance of every kind,
matured or unmatured, direct or contingent, owing, arising, due, or payable
to the Bank by or from Jevic arising out of this Agreement or any other
Loan Document, including, without limitation, all obligations to repay
principal of and interest on all the Revolving Credit Loan and all Term
Loans, and to pay interest, fees, costs, charges, expenses, professional
fees, and all sums chargeable to Jevic or for which Jevic is liable
- 6 -
<PAGE>
as indemnitor under the Loan Documents, whether or not evidenced by any
note or other instrument.
"Operating Lease" shall mean an operating lease as defined by Generally
Accepted Accounting Principles, excluding all leases the expenses of which
may be charged to a customer of Jevic pursuant to the written terms of the
contract with such customer.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" shall mean, at any time, any Plan (including a Multiemployer
Plan), the funding requirements of which (under ERISA (section) 302 or Code
(section) 412) are, or at any time within the six years immediately
preceding the time in question, were in whole or in part, the
responsibility of Jevic or any ERISA Affiliate.
"Permitted Liens" shall mean (a) any Liens for current taxes, assessments
and other governmental charges not yet due and payable or being contested
in good faith by Jevic by appropriate proceedings and for which adequate
reserves have been established by Jevic as reflected in Jevic's
consolidated financial statements; (b) any mechanic's, materialman's,
carrier's, warehousemen's or similar Liens for sums not yet due or being
contested in good faith by Jevic by appropriate proceedings and for which
adequate reserves have been established by Jevic as reflected in Jevic's
financial statements; (c) easements, rights-of-way, restrictions and other
similar encumbrances on the real property or fixtures of Jevic incurred in
the ordinary course of business which individually or in the aggregate are
not substantial in amount and which do not in any case materially detract
from the value or marketability of the property subject thereto or
interfere with the ordinary conduct of the business of Jevic; (d) Liens
(other than Liens imposed on any property of Jevic pursuant to ERISA or
(section) 412 of the Code) incurred or deposits made in the ordinary course
of business, including Liens in connection with workers' compensation,
unemployment insurance and other types of social security and Liens to
secure performance of tenders, statutory obligations, surety and appeal
bonds (in the case of appeal bonds such Lien shall not secure any
reimbursement or indemnity obligation in an amount greater than $250,000),
bids, leases that are not Capitalized Leases, performance bonds, sales
contracts and other similar obligations, in each case, not incurred in
connection with the obtaining of credit or the payment of a deferred
purchase price, and which do not, in the aggregate, result in a Material
Adverse Effect; (e) Liens existing on the date hereof as set forth in
Schedule 1 hereto other than Liens of the character referred to in clause
(i); and (f) Liens on specific assets purchased whether before or after the
date hereof and any revenue stream directly attributable thereto provided
that such liens are limited to the Revenue Equipment so purchased and the
revenue stream generated therefrom.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, company, business trust or entity, or other entity of
whatever nature.
"Plan" shall mean an employee benefit plan as defined in (section) 3(3) of
ERISA, other than a Multiemployer Plan, whether formal or informal and
whether legally binding or not.
"Potential Default" shall mean an event, condition or circumstance that
with the giving of notice or lapse of time or both would become an Event of
Default.
- 7 -
<PAGE>
"Prohibited Transaction" shall mean a transaction that is prohibited under
Code (section) 4975 or ERISA (section) 406 and not exempt under Code
(section) 4975 or ERISA (section) 408.
"Regulation" shall mean any statute, law, ordinance, regulation, order or
rule of any United States or foreign, federal, state, local or other
government or governmental body, including, without limitation, those
covering or related to banking, financial transactions, securities, public
utilities, environmental control, energy, safety, health, transportation,
bribery, record keeping, zoning, antidiscrimination, antitrust, wages and
hours, employee benefits, and price and wage control matters.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as it may be amended from time to time.
"Regulatory Change" shall mean any change after the date of this Agreement
in any Regulation (including Regulation D) or the adoption or making after
such date of any interpretations, directives or requests of or under any
Regulation (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof applying to a class of banks but excluding any
foreign office of the Bank.
"Release" shall mean without limitation, the presence, leaking, leaching,
pouring, emptying, discharging, spilling, using, generating, manufacturing,
refining, transporting, treating, or storing of Hazardous Substances at,
into, onto, from or about the property or the threat thereof, regardless of
whether the result of an intentional or unintentional action or omission,
and which is in violation of applicable law.
"Reportable Event" shall mean, with respect to a Pension Plan: (a) Any of
the events set forth in ERISA Sections 4043(b) (other than a reportable
event as to which the provision of 30 days' notice to the PBGC is waived
under applicable regulations) or 4063(a) or the regulations thereunder, (b)
an event requiring any Jevic or any ERISA Affiliate to provide security to
a Pension Plan under Code (section) 401(a)(29) and (c) any failure by any
Jevic or any ERISA Affiliate to make payments required by Code
(section) 412(m).
"Revenue Equipment" shall mean over the road chassis and trailers, Qualcomm
satellites, trailer dollys, trailer heaters, fork trucks, automobiles and
miscellaneous equipment used by Jevic in connection with its business.
"Revolver Termination Date" shall have the meaning set forth in
(section) 2.1(a).
"Revolving Loan Commitment" shall have the meaning set forth in
(section) 2.1(a).
"Revolving Loan Commitment Fee" shall have the meaning set forth in
(section) 2.5(a).
"Revolving Credit Loan" shall have the meaning set forth in
(section) 2.1(a).
"Revolving Credit Note" shall have the meaning set forth in
(section) 2.2(a).
- 8 -
<PAGE>
"Solvent" shall mean, with respect to any Person, that the aggregate
present fair saleable value of such Person's assets is in excess of the
total amount of its probable liabilities on its existing debts as they
become absolute and matured, such Person has not incurred debts beyond its
foreseeable ability to pay such debts as they mature, and such Person has
capital adequate to conduct the business it is presently engaged in or is
about to engage in.
"Standby Letter of Credit" shall mean only those standby letters of credit
issued pursuant to a completed application on the form of letter of credit
application required by the Bank at the time of the request for each
Standby Letter of Credit.
"Subsidiary" shall mean a corporation or other entity the shares of stock
or other equity interests of which having ordinary voting power (other than
stock or other equity interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries or both, by Jevic.
"Tangible Net Worth" shall mean Net Worth, minus Intangible Assets.
"Taxes" shall have the meaning set forth in (section) 2.8(e).
"Term Credit Commitment Fee" shall have the meaning set forth in
(section) 2.5(b).
"Term Loan Commitment Termonation Date" shall have the meaning set forth in
(section) 2.1(b).
"Term Loan Commitment" shall have the meaning set forth in
(section) 2.1(b).
"Term Loan" shall have the meaning set forth in (section) 2.1(b).
"Term Note" shall have the meaning set forth in (section) 2.2(b).
"Termination Event" shall mean, with respect to a Pension Plan: (a) a
Reportable Event, (b) the termination of a Pension Plan, or the filing of a
notice of intent to terminate a Pension Plan, or the treatment of a Pension
Plan amendment as a termination under ERISA (section) 4041(c), (c) the
institution of proceedings to terminate a Pension Plan under ERISA
(section) 4042 or (d) the appointment of a trustee to administer any
Pension Plan under ERISA (section) 4042.
"Unfunded Pension Liabilities" shall mean, with respect to any Pension Plan
at any time, the amount determined by taking the accumulated benefit
obligation, as disclosed in accordance with Statement of Accounting
Standards No. 87, over the fair market value of Pension Plan assets.
"Unrecognized Retiree Welfare Liability" shall mean, with respect to any
Plan that provides post-retirement benefits other than pension benefits,
the amount of the accumulated postretirement benefit obligation, as
determined in accordance with Statement of Financial Accounting Standards
No. 106, as of the most recent valuation date. Prior to the date such
statement is applicable to any Jevic, such amount of the obligation shall
be based on an estimate made in good faith.
- 9 -
<PAGE>
1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with Generally Accepted Accounting Principles
consistent with those applied in the preparation of the financial statements
referred to in (section) 3.5, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles.
2. The Credit
2.1 The Loans. Subject to the terms and conditions herein set forth,
CoreStates Bank agrees to make Loans to Jevic as set forth below. All Loans
shall be made to Jevic at the main office of the Bank, Broad and Chestnut
Streets, Philadelphia, Pennsylvania 19101. Loans made hereunder may either be
Revolving Credit Loans ("Revolving Credit Loans") or Term Loans ("Term Loans").
As provided below, Revolving Credit Loans may be requested by Jevic, and made
from time to time prior to the Revolver Termination Date. Term Loans may be
requested by Jevic, and made from to time prior to the Term Commitment
Termination Date.
(a) Revolving Credit Loans. Revolving Credit Loans may be made from time to
time during the period beginning on the date hereof and ending on June 28, 1998
or on the earlier date of termination in full, pursuant to (section) 2.6 or
(section) 8.1 hereof, of the obligations of the Bank under this (section) 2.1
(June 28, 1998 or such earlier date of termination being herein called the
"Revolver Termination Date") in amounts not to exceed at any time outstanding,
in the aggregate, $7,000,000 (such amount, as the same may be reduced pursuant
to (section) 2.6 hereof being hereinafter called the "Revolving Loan
Commitment"). Revolving Credit Loans at the occasion of each borrowing shall be
in aggregate principal amounts at least equal to $250,000 or, if less, than
remaining unused amount of the Revolving Loan Commitment. Jevic shall not be
entitled to any Revolving Credit Loan if, after giving effect to such Loan, the
unpaid amount of the then outstanding Revolving Credit Loans would exceed the
then current Borrowing Base. Prior to the Revolver Termination Date and within
the limits of the Revolving Loan Commitment and the Borrowing Base, Jevic may
borrow, prepay and reborrow Revolving Credit Loans. All Revolving Credit Loans
shall mature and be due and payable on the Revolver Termination Date.
At the end of each Agreement Year, the Revolver Termination Date shall
automatically be extended for one full year unless (1) Jevic shall have notified
CoreStates Bank in writing not more than 90 days nor less than 60 days prior to
the end of the existing Agreement Year that it does not desire an extension of
the Revolver Termination Date, or (2) CoreStates Bank shall have notified Jevic
in writing not less than 30 days prior to the end of the existing Agreement Year
that it is unwilling to extend the Revolver Termination Date on the terms and
conditions set forth herein. The term "Agreement Year" shall mean a one year
period ending on the same month and day as the Revolver Termination Date. The
first Agreement Year will expire on the first anniversary of the date of this
Agreement.
(b) Term Loans. Term Loans may be made from time to time during the period
beginning on the date hereof and ending on June 28, 1997 or on the earlier date
of termination in full, pursuant to (section) 2.6 or (section) 8.1 hereof, of
the obligations of the Bank under this (section) 2.1 (June 28, 1998 or such
earlier date of termination being herein called the "Term Loan Commitment
Termination Date") in amounts not to exceed at any time outstanding, in the
aggregate, $18,000,000 less the aggregate amount of principal outstanding with
respect to all loans from CoreStates to Jevic not made originally under the
terms and conditions of this Agreement (such amount, as the same may be reduced
pursuant to (section) 2.6 hereof being hereinafter called the "Term Loan
Commitment" and such loans not made originally under the terms
- 10 -
<PAGE>
and conditions of this Agreement hereinafter called the "Existing CoreStates
Loans"). Term Loans at the occasion of each borrowing shall be in aggregate
principal amounts at least equal to $250,000 or, if less, than remaining
amount of the unused Term Loan Commitment. Jevic shall not be entitled to
any Term Loan if, after giving effect to such Loan, the unpaid amount of the
then outstanding Term Loans would exceed the Term Loan Commitment.
Jevic may request a new Term Loan or Loans hereunder for the purpose of
refinancing certain existing loans by United Jersey Bank in existence at the
date hereof. At the date hereof, the aggregate principal amount of loans from
United Jersey Bank is approximately $10,500,000. Except for the refinancing of
said loans from United Jersey Bank, the proceeds of Term Loans hereunder will be
used by Jevic solely for the purpose of purchasing Revenue Equipment (including
the purchase of Revenue Equipment previously subject to operating leases with
respect to which Jevic was the lessee) or refinancing Revenue Equipment owed by
it. The amount of each Term Loan shall not exceed 100% of the invoice price of
Revenue Equipment being purchased, or the fair market value of the Revenue
Equipment purchased at termination of an operating lease or refinanced, with the
proceeds of such Term Loan. The fair market value of the Revenue Equipment so
purchased shall be determined by reference to the McLean Hunter National Market
Reports, Inc. Truck Blue Book and Commercial Trailer Blue Book, where such
reports contain an adequate reference to the asset being valued. Simultaneous
with the purchase or refinance of Revenue Equipment with the proceeds of any
Term Loan, Jevic shall grant and the Bank shall have a first priority, perfected
security interest in all such Revenue Equipment, as set forth in the Security
Agreement and shall deliver a Schedule A or supplemental Schedule A thereto.
No Term Loan shall be requested or made for a term exceeding the following:
over the road chassis (72 months), over the road trailers (96 months), Qualcomm
satellites (72 months), trailer dollys (96 months), trailer heaters (96 months),
for trucks (72 months), automobiles (60 months) and miscellaneous shop equipment
(60 months). In each case the months stated shall be for a period of months
immediately following the date purchased by Jevic if purchased new or the date
the Revenue Equipment was first placed in service if purchased upon termination
of an operating lease. Not more than $1,000,000 of the Term Loan Commitment
shall be used for the purchase or refinancing of automobiles or miscellaneous
shop equipment. For financial statement reporting purposes, Jevic agrees that
all Revenue Equipment which is purchased after it has been previously placed in
service shall fully depreciate over a period not to exceed 5 years to a zero
residual value. Principal payments made in respect of any Term Loan may not be
reborrowed. However, Term Loans shall mature as provided in each Term Note and
do not mature on the Term Loan Commitment Termination Date.
(c) Standby Letters of Credit. The Bank, under the terms and subject to the
conditions of this Agreement, agrees to provide standby letters of credit to
Jevic, from time to time prior to the Revolver Termination Date, as requested by
Jevic, provided that (A) the aggregate amount of Standby Letters of Credit
outstanding at any one time shall not exceed $1,000,000 or such lesser amount,
if any, as will, when added to the amount of the Revolving Credit Loans then
outstanding, aggregate $7,000,000 (or such lesser amount as Jevic is entitled to
borrow hereunder at such time by reason of the limitation of the Borrowing Base
or otherwise), (B) no Standby Letter of Credit shall be issued after the
Revolver Termination Date and no Standby Letter of Credit shall be for a term
longer than one year; and (C) no Standby Letter of Credit shall be issued for
other than regulatory bonding, construction bonding or insurance purposes.
11
<PAGE>
Jevic shall request a Standby Letter of Credit by delivering a completed
letter of credit application to the Bank not less than three Business Days
prior to the date specified by Jevic as the date the Standby Letter of
Credit is to be issued. The form of CoreStates' letter of credit application
as currently in effect is set forth as Exhibit E hereto.
Standby Letters of Credit shall not bear interest until drawn upon but
shall each be subject to an annual charge, payable in advance, equal to 1.5% of
the amount of the Standby Letter of Credit.
Within the foregoing limit, Jevic may request issuance of Standby Letters
of Credit, pay them upon a drawing thereunder and request new issuances. Any
obligation of Jevic to pay money in connection with any Standby Letter of Credit
shall be deemed secured as if made as a Loan hereunder. In the event Jevic shall
terminate the Commitment as provided in Section 2.6 and shall pay the
outstanding principal amount of the Revolving Credit Loans in full and with
interest or the Revolver Termination Date shall occur at a time when one or more
Standby Letters of Credit remain outstanding, then Jevic shall furnish to the
Bank within two Business Days such amount of cash, to be held as cash collateral
and invested in certificates of deposit of the Bank, as will pay the maximum
amount which may be drawn by beneficiaries of Standby Letters of Credit
outstanding at the date of such termination or the Revolver Termination Date, as
applicable.
2.2 The Notes.
(a) Revolving Credit Note. The Revolving Credit Loans made by the Bank
shall be evidenced by a single promissory note of Jevic (such promissory note as
it may be amended, extended, modified, restated, replaced, substituted for or
renewed, the "Revolving Credit Note") in principal face amount equal to the
Bank's Revolving Loan Commitment, payable to the order of the Bank and otherwise
in the form attached hereto as Exhibit A. The Revolving Credit Note shall be
dated the Closing Date, shall bear interest at the rate per annum and be payable
as to principal and interest in accordance with the terms hereof. The Revolving
Credit Note shall mature upon the Revolver Termination Date and, upon maturity,
each outstanding Revolving Credit Loan evidenced thereby shall be due and
payable. The Bank shall maintain records of all Loans evidenced by the Revolving
Credit Notes and of all payments thereon, which records shall be conclusive
absent manifest error.
(b) Term Notes. The Term Loans made by the Bank shall be evidenced by
promissory notes of Jevic (such promissory note as it may be amended, extended,
modified, restated, replaced, substituted for or renewed, a "Term Note") in
principal face amount equal to the Bank's Term Loan at any date, payable to the
order of the Bank and otherwise in the form attached hereto as Exhibit B. The
Term Note shall be dated the date of the Term Loan, shall bear interest at the
rate per annum and be payable as to principal and interest in accordance with
the terms hereof. Each Term Note shall mature and be payable on the dates set
forth in the applicable Term Note. The Bank shall maintain records of all Loans
evidenced by Term Notes and of all payments thereon, which records shall be
conclusive absent manifest error.
2.3 Funding Procedures.
(a) Request for Advance. Each request for a Loan or the conversion or
renewal of an interest rate with respect to a Loan shall be made not later than
2:00 p.m. on a Business Day by delivery to the Bank of a written request signed
by Jevic or in the alternative a telephone request followed
12
<PAGE>
promptly by written confirmation of the request, specifying the date, amount
and type of the Loan to be made, converted or renewed, selecting the
interest rate option applicable thereto, and in the case of LIBO Rate Loans,
specifying the Interest Period applicable to such Loans. Each request shall
be received not less than one Business Day prior to the date of the proposed
borrowing, conversion or renewal in the case of Base Rate Loans, two London
Business Days prior to the date of the proposed borrowing, conversion or
renewal in the case of LIBO Rate Loans, and two Business Days prior to the
date of the proposed borrowing, conversion or renewal in the case of "As
Offered" Fixed Rate Loans. No request shall be effective until actually
received in writing by the Bank.
(b) Irrevocability. Upon receipt of a request for a Loan and if the
conditions precedent provided herein shall be satisfied at the time of such
request, the request for a Loan shall not be revocable by Jevic.
(c) Availability of Funds. Unless the Bank knows that any applicable
condition specified herein has not been satisfied, it will make funds
immediately available to Jevic on the date of each Loan by a credit to the
account of Jevic at the Bank's address set forth opposite its name on the
signature page hereof or to such other destination and in such other form as
Jevic may request, in writing.
(d) Funding of Net Amount. If the Bank makes a Loan on a day on which all
or any part of an outstanding Loan from the Bank is to be repaid, the Bank shall
apply the proceeds of its new Loan to make such repayment and only an amount
equal to the difference (if any) between the amount being borrowed and the
amount being repaid shall be made available by the Bank to Jevic as provided in
clause (c).
2.4 Interest. The following interest rates may be applicable to any Loan or
Loans, as requested by Jevic from time to time.
(a) Base Rate. Each Base Rate Loan shall bear interest on the principal
amount thereof from the date made until such Loan is paid in full or converted,
at a rate per annum equal to the Base Rate.
(b) LIBO Rate. Each LIBO Rate Loan shall bear interest on the principal
amount thereof from the date made until such Loan is paid in full, renewed, or
converted, at a rate per annum equal to the LIBO Rate plus 135 basis points.
After receipt of a request for a LIBO Rate Loan, the Bank shall proceed to
determine the LIBO Rate to be applicable thereto. The Bank shall give prompt
notice by telephone or facsimile Jevic of the LIBO Rate thus determined in
respect of each LIBO Rate Loan or any change therein. Not more than twelve LIBO
Rate Loans shall be in existence at any one time in any combination of LIBO
Rates applicable to the Revolving Credit Loan or LIBO Rates applicable to Term
Loans.
(c) "As Offered" Fixed Rate. Each As Offered Fixed Rate Loan shall bear
interest on the principal amount thereof from the date made until such Loan is
paid in full at a rate per annum equal to the "As Offered" Fixed Rate pertaining
to that Loan.
(d) Renewals and Conversions of Loans. On the last day of each Interest
Period, the LIBO Rate Loan then maturing shall automatically be renewed for a
new Interest Period of like duration, unless Jevic shall have given the Bank
notice of a permitted conversion or renewal at for an Interest Period of
different duration as provided in Section 2.3 hereof, or an Event of Default, or
Potential Default exists or would
13
<PAGE>
thereby occur. If no Event of Default or Potential Default exists or would
thereby occur, Jevic shall have the right to convert Base Rate Loans into LIBO
Rate Loans or As Offered Fixed Rate Loans, to convert LIBO Rate Loans into Base
Rate Loans or As Offered Fixed Rate Loans, and to renew LIBO Rate Loans for
Interest Periods of different duration, from time to time, provided that it
shall give the Bank notice of each permitted conversion or renewal as provided
in Section 2.3 hereof, and LIBO Rate Loans may be converted or renewed for
different Interest Periods only as of the last day of the applicable Interest
Period for such Loans. The Bank shall use its best efforts to notify Jevic of
the effectiveness of such conversion or renewal (automatic or not automatic),
and the new interest rate to which the converted or renewed Loan is subject, as
soon as practicable after the conversion or renewal; provided, however, that any
failure to give such notice shall not affect Jevic's obligations or the Bank's
rights and remedies hereunder in any way whatsoever. In the event a LIBO Rate
Loan is not automatically renewed as provided herein and Jevic shall not have
selected an alternative Interest Period for any LIBO Rate Loan maturing as
provided herein, such Loan shall be automatically converted into a Base Rate
Loan on the last day of the Interest Period for such Loan.
(e) Automatic Reinstatement. The liability of Jevic under this Section 2.4
shall continue to be effective or be automatically reinstated, as the case may
be, if at any time payment, in whole or in part, of any of the payments to the
Bank is rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Jevic or any other
Person, or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to Jevic or any other
Person or any substantial part of its property, or otherwise, all as though such
payment had not been made.
2.5 Fees.
(a) Revolving Loan Commitment Fee. Jevic agrees to pay to the Bank as
compensation for the Revolving Loan Commitment a fee (the "Revolving Loan
Commitment Fee" and together with the term Credit Commitment Fee, the
"Commitment Fees") computed at the rate per annum equal to 3/8ths of 1% of the
average daily amount of the unused portion of the Revolving Loan Commitment
accrued from and after the date hereof. For purposes of calculating the
Revolving Loan Commitment Fee, the unused portion of the Revolving Loan
Commitment shall be reduced by the aggregate undrawn face amount of all standby
letters of credit.
(b) Term Credit Commitment Fee. Jevic agrees to pay to the Bank as
compensation for the Term Loan Commitment a fee (the "Term Credit Commitment
Fee") computed at the rate per annum equal to 1/4 of 1% of the average daily
amount of the unused portion of the Term Loan Commitment accrued from and after
the date hereof.
(c) Payment of Commitment Fees. Commitment Fees shall be payable in arrears
on the first day of each January, April, July and October, commencing October 1,
1996 (for the three month period or portion thereof ended on the preceding day),
and on the Revolver Termination Date. The Commitment Fee shall be calculated on
the basis of a 360 day year.
2.6 Reduction or Termination of Commitments.
(a) Voluntary. Jevic may at any time, on not less than two Business Days'
written notice, terminate or permanently reduce the Revolving Loan Commitment or
the Term Loan Commitment,
14
<PAGE>
provided that any reduction shall be in the amount of $250,000 or a multiple
thereof and that no such reduction shall cause the principal amount of Loans
outstanding to exceed the Revolving Loan Commitment or Term Loan Commitment
each as reduced
(b) Revolving Loan Commitment Termination. In the event the Revolving Loan
Commitment is terminated, the Revolver Termination Date shall accelerate and
Jevic shall, simultaneously with such termination, repay the Base Rate Revolving
Credit Loans and LIBO Rate Revolving Credit Loans in accordance with
Section 2.8.
2.7 Voluntary Prepayments.
(a) Base Rate Loans. On one Business Day's notice to the Bank, Jevic may,
at its option, prepay any Base Rate Loan in whole at any time or in part from
time to time, provided that each partial prepayment shall be in the principal
amount of $250,000 or, if greater, then in multiples thereof and, if less than
$250,000 shall be outstanding, in principal amount equal to amount remaining
outstanding.
(b) LIBO Rate Loans. Jevic may, at its option prepay any LIBO Rate Loan
provided that if it shall prepay a LIBO Rate Loan prior to the last day of the
applicable Interest Period, or shall fail to borrow any LIBO Rate Loan on the
date such Loan is to be made, it shall pay to the Bank, in addition to the
principal and interest then to be paid in the case of a prepayment, on such date
of prepayment, the Additional Amount incurred or sustained by the Bank as a
result of such prepayment or failure to borrow as provided in Section 2.3(a).
(c) "As Offered" Fixed Rate Loans. Jevic may, upon two Business Days
written notice to the Bank, prepay any 'As Offered" Fixed Rate Loan, in whole at
any time or in part from time to time without premium or penalty but with
accrued interest to the date of such prepayment on the principal amount being
prepaid, provided that (i) each such partial prepayment shall be in the minimum
principal amount of $250,000, and (ii) simultaneously with such prepayment,
Jevic shall pay the Bank as provided in Section 2.11 all funding costs, loss of
earnings and expenses which may arise in connection with such prepayment as
determined by each the Bank in good faith.
2.8 Payments.
(a) Base Rate Loans. Accrued interest on all Base Rate Loans shall be due
and payable on the first Business Day of each calendar month and upon the
Revolver Termination Date
(b) LIBO Rate Loans. Accrued interest on LIBO Loans with Interest Periods
of one, two or three months shall be due and payable on the last day of such
Interest Period.
(c) "As Offered" Fixed Rate Loans. Accrued interest on all "As Offered"
Fixed Rate Loans shall be due and payable on the first Business Day of each
calendar month and upon the maturity of each such Loan as set forth in the Term
Note applicable thereto.
(d) Form of Payments, Application of Payments, Payment Administration, Etc.
Provided that no Event of Default or Potential Default then exists, all payments
and prepayments shall be applied to the Loans in such order and to such extent
as shall be specified by Jevic, by written notice to the Bank at the time of
such payment or prepayment. Except as otherwise provided herein, all payments of
15
<PAGE>
principal, interest, fees, or other amounts payable by Jevic hereunder shall
be remitted to the Bank at the address set forth opposite its name on the
signature page hereof or at such office or account as the Bank shall specify
to Jevic, in immediately available funds not later than 2:00 p.m. on the day
when due. Whenever any payment is stated as due on a day which is not a
Business Day, the maturity of such payment shall, except as otherwise
provided in the definition of "Interest Period", be extended to the next
succeeding Business Day and interest and commitment fees shall continue to
accrue during such extension. Jevic authorizes the Bank to deduct from any
account of Jevic maintained at the Bank or over which the Bank has control
any amount payable under this Agreement, the Notes or any other Loan
Document which is not paid in a timely manner. The Bank's failure to deliver
any bill, statement or invoice with respect to amounts due under this
Section or under any Loan Document shall not affect Jevic's obligation to
pay any installment of principal, interest or any other amount under this
Agreement when due and payable.
(e) Net Payments. (i) All payments made to the Bank by Jevic hereunder,
under any Note or under any other Loan Document will be made without set off,
counterclaim or other defense. All such payments will be made free and clear of,
and without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or any political subdivision or taxing
authority thereof or therein (but excluding, except as provided below, any tax
imposed on or measured by the gross or net income of the Bank (including all
interest, penalties or similar liabilities related thereto) pursuant to the laws
of the United States of America or any political subdivision thereof, or taxing
authority of the United States of America or any political subdivision thereof,
in which the principal office or applicable lending office of the Bank is
located), and all interest, penalties or similar liabilities with respect
thereto (collectively, together with any amounts payable pursuant to the next
sentence, "Taxes"). Jevic shall also reimburse the Bank, upon the written
request of the Bank, for Taxes imposed on or measured by the gross or net income
of the Bank pursuant to the laws of the United States of America (or any State
or political subdivision thereof) or the jurisdiction (or any political
subdivision or taxing authority thereof) in which the principal office or
applicable lending office of the Bank is located as the Bank shall determine are
payable by the Bank due to the amount of Taxes paid to or on behalf of the Bank
pursuant to this or the preceding sentence. If any Taxes are so levied or
imposed, Jevic agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due hereunder,
under any Note or under any other Loan Document, after withholding or deduction
for or on account of any Taxes, will not be less than the amount provided for
herein or in such Note. Jevic will furnish to the Bank upon request certified
copies of tax receipts evidencing such payment by Jevic. Jevic will indemnify
and hold harmless the Bank, and reimburse the Bank upon its written request, for
the amount of any Taxes so levied or imposed and paid or withheld by the Bank.
(f) Prepayment of LIBO Rate Loans. If any principal of a LIBO Rate Loan
shall be repaid (whether upon prepayment, reduction of the Revolving Loan
Commitment after acceleration or for any other reason) or converted to a Base
Rate Loan pursuant to Section 2.4(c), 2.4(d), 2.4(e) prior to the last day of
the Interest Period applicable to such LIBO Rate Loan or if Jevic fails for any
reason to borrow a LIBO Rate Loan after giving irrevocable notice pursuant to
Section 2.3, Jevic shall pay to the Bank, in addition to the principal and
interest then to be paid, such additional amounts as may be necessary to
compensate the Bank for all direct and indirect costs and losses (including
losses resulting from redeployment of prepaid or unborrowed funds at rates lower
than the cost of such funds to the Bank, and including lost profits incurred or
sustained by the Bank) as a result of such repayment or failure to borrow (the
"Additional Amount"). The Additional Amount (which the Bank shall take
reasonable measures to
16
<PAGE>
minimize) shall be specified in a written notice or certificate delivered to
Jevic by the Bank sustaining such costs or losses. Such notice or
certificate shall contain a calculation in reasonable detail of the
Additional Amount to be compensated and shall be conclusive as to the facts
and the amounts stated therein, absent manifest error.
2.9 Changes in Circumstances: Yield Protection.
(a) If any Regulatory Change or compliance by the Bank with any request
made after the date of this Agreement by the Board of Governors of the Federal
Reserve System or by any Federal Reserve Bank or other central bank or fiscal,
monetary or similar authority (in each case whether or not having the force of
law) shall:
(1) impose, modify or make applicable any reserve, special deposit,
Federal Deposit Insurance Corporation premium or similar requirement or
imposition against assets held by, or deposits in or for the account of, or
loans made by, or any other acquisition of funds for loans or advances by,
the Bank;
(2) impose on the Bank any other condition regarding the Notes;
(3) subject the Bank to, or cause the withdrawal or termination of any
previously granted exemption with respect to, any tax (including any
withholding tax but not including any income tax not currently causing the
Bank to be subject to withholding) or any other levy, impost, duty, charge,
fee or deduction on or from any payments due from Jevic; or
(4) change the basis of taxation of payments from Jevic to the Bank
(other than by reason of a change in the method of taxation of a Bank's net
income);
and the result of any of the foregoing events is to increase the cost to the
Bank of making or maintaining any Loan or to reduce the amount of principal,
interest or fees to be received by the Bank hereunder in respect of any
Loan, the Bank will immediately so notify Jevic. If the Bank determines in
good faith that the effects of the change resulting in such increased cost
or reduced amount cannot reasonably be avoided or the cost thereof
mitigated, then upon notice by the Bank to Jevic, Jevic shall pay to the
Bank on each interest payment date of the Loan, such additional amount as
shall be necessary to compensate the Bank for such increased cost or reduced
amount.
(b) If the Bank shall determine that any Regulation regarding capital
adequacy or the adoption of any Regulation regarding capital adequacy, which
Regulation is applicable to banks (or their holding companies) generally and not
CoreStates Bank (or its holding company) specifically, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank (or its holding company) with
any such request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
the effect of reducing the rate of return on the Bank's capital as a consequence
of its obligations hereunder to a level below that which the Bank could have
achieved but for such adoption, change or compliance (taking into consideration
the Bank's policies with respect to capital adequacy) by an amount deemed by the
Bank to be material, Jevic shall promptly pay to the Bank, upon the demand of
the Bank, such additional amount or amounts as will compensate the Bank for such
reduction.
17
<PAGE>
(c) If the Bank shall determine (which determination shall be, in the
absence of fraud or manifest error, conclusive and binding upon all parties
hereto) that by reason of abnormal circumstances affecting the interbank
eurodollar or applicable eurocurrency market adequate and reasonable means do
not exist for ascertaining the LIBO Rate to be applicable to the requested LIBO
Rate Loan or that eurodollar or eurocurrency funds in amounts sufficient to fund
all the LIBO Rate Loans are not obtainable on reasonable terms, the Bank shall
give notice of such inability or determination by telephone to Jevic at least
two Business Days prior to the date of the proposed Loan and thereupon the
obligations of the Bank to make, convert other Loans to, or renew such LIBO Rate
Loan shall be excused, subject, however, to the right of Jevic at any time
thereafter to submit another request.
(d) Determination by the Bank for purposes of this Section 2.9 of the
effect of any Regulatory Change or other change or circumstance referred to
above on its costs of making or maintaining Loans or on amounts receivable by it
in respect of the Loans and of the additional amounts required to compensate the
Bank in respect of any additional costs, shall be made in good faith and shall
be evidenced by a certificate, signed by an officer of the Bank and delivered to
Jevic, as to the fact and amount of the increased cost incurred by or the
reduced amount accruing to the Bank owing to such event or events. Such
certificate shall be prepared in reasonable detail and shall be conclusive as to
the facts and amounts stated therein, absent manifest error.
(e) The Bank will notify Jevic of any event occurring after the date of
this Agreement that will entitle the Bank to compensation pursuant to this
Section as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Said notice shall be in writing, shall
specify the applicable Section or Sections of this Agreement to which it relates
and shall set forth the amount or amounts then payable pursuant to this Section.
Jevic shall pay the Bank the amount shown as due on such notice within 30 days
after its receipt of the same.
2.10 Illegality. Notwithstanding any other provision in this Agreement, if
the adoption of any applicable Regulation, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
(whether or not having the force of law) of any such authority, central bank, or
comparable agency shall make it unlawful or impossible for the Bank to (1)
maintain its Revolving Loan Commitment or Term Loan Commitment, then upon notice
to Jevic by the Bank, the Revolving Loan Commitment and Term Loan Commitment
shall terminate; or (2) maintain or fund its LIBO Rate Loans, then upon notice
to Jevic of such event, Jevic's outstanding LIBO Rate Loans shall be converted
into Base Rate Loans.
2.11 Indemnity Against Funding Losses or Expenses. Jevic shall indemnify
the Bank against any loss, funding cost, expense or loss of earnings, which the
Bank may, as a consequence of Jevic's failure to accept any "As Offered" Fixed
Rate Loan requested at any time, failure to make a payment on the due date
thereof or the payment, prepayment (voluntary or involuntary) or conversion of
any "As Offered" Fixed Rate Loan on a day other than the maturity thereof. If
the Bank becomes entitled to claim any additional amounts pursuant to this
Section 2.11, it shall promptly notify Jevic thereof. Upon receipt of any such
notice from the Bank, Jevic shall pay to the Bank such amount as will (in the
reasonable determination of that Bank) reimburse the Bank for such loss, funding
cost, expense of loss of earnings. A certificate as to any additional amounts
payable pursuant to the foregoing (including calculations in reasonable detail)
shall be submitted by the Bank with its request to Jevic. Said certificate shall
18
<PAGE>
be conclusive absent manifest error and provided that the determination of
additional amounts payable has been made on a reasonable basis.
3. Representations and Warranties
Jevic represents and warrants to the Bank that:
3.1 Organization, Standing. It (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority necessary to own its
assets, carry on its business and enter into and perform its obligations
hereunder, under each Loan Document to which it is a party, and (iii) is
qualified to do business and is in good standing in each jurisdiction where the
nature of its business or the ownership of its properties requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect.
3.2 Corporate Authority, Validity, Etc. The making and performance of the
Loan Documents to which it is a party are within the power and authority of
Jevic and have been duly authorized by all necessary corporate action. The
making and performance of the Loan Documents do not and under present law will
not require any consent or approval of any of Jevic's shareholders or any other
person, do not and under present law will not violate any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award, do not
violate any provision of its charter or by-laws, do not and will not result in
any breach of any material agreement, lease or instrument to which it is a
party, by which it is bound or to which any of its assets are or may be subject,
and do not and will not give rise to any Lien upon any of its assets. The number
of shares and classes of the capital stock of Jevic and the ownership thereof
are accurately set forth on Schedule 1 attached hereto; all such shares are
validly issued, fully paid and non-assessable, and the issuance and sale thereof
are in compliance with all applicable federal and state securities and other
applicable laws; and the shareholders' ownership thereof is free and clear of
any liens or encumbrances or other contractual restrictions. Further, Jevic is
not in default under any such agreement, lease or instrument except to the
extent such default reasonably could not have a Material Adverse Effect. No
authorizations, approvals or consents of, and no filings or registrations with,
any governmental or regulatory authority or agency are necessary for the
execution, delivery or performance by Jevic of any Loan Document to which Jevic
is a party or for the validity or enforceability thereof. Each Loan Document,
when executed and delivered, will be the legal, valid and binding obligation of
Jevic, enforceable against it in accordance with its terms.
3.3 Litigation. Except as disclosed on Schedule 1, there are no actions,
suits or proceedings pending or, to Jevic's knowledge, threatened against or
affecting Jevic or any assets of Jevic before any court, government agency, or
other tribunal which if adversely determined reasonably could have a Material
Adverse Effect or upon the ability of Jevic to perform under the Loan Documents.
The status (including the tribunal, the nature of the claim and the amount in
controversy) of each such litigation matter as of the date of this Agreement is
set forth in Schedule 1.
3.4 ERISA. (a) Jevic and ERISA Affiliate are in compliance in all material
respects with all applicable provisions of ERISA and the regulations promulgated
thereunder; and, neither Jevic, nor any ERISA Affiliate maintains or contributes
to or has maintained or contributed to any multiemployer plan (as defined in
Section 4001 of ERISA) under which Jevic or any ERISA Affiliate could have any
withdrawal liability; (b) neither Jevic nor any ERISA Affiliate, sponsors or
maintains any Plan under which there
19
<PAGE>
is an accumulated funding deficiency within the meaning of Section 412 of the
Code, whether or not waived; (c) the aggregate liability for accrued benefits
and other ancillary benefits under each Plan that is or will be sponsored or
maintained by Jevic or any ERISA Affiliate (determined on the basis of the
actuarial assumptions prescribed for valuing benefits under terminating
single-employer defined benefit plans under Title IV of ERISA) does not exceed
the aggregate fair market value of the assets under each such defined benefit
pension Plan; (d) the aggregate liability of Jevic and each ERISA Affiliate
arising out of or relating to a failure of any Plan to comply with the
provisions of ERISA or the Code, will not have a Material Adverse Effect; and
(e) there does not exist any unfunded liability (determined on the basis of
actuarial assumptions utilized by the actuary for the plan in preparing the most
recent Annual Report) of Jevic or any ERISA Afflliate under any plan, program or
arrangement providing post-retirement life or health benefits.
3.5 Financial Statements. The financial statements of Jevic as of and for
the Fiscal Years ending December 31, 1994 and December 31, 1995, consisting in
each case of a balance sheet, a statement of operations, a statement of
shareholders' equity, a statement of cash flows and accompanying footnotes, and
the interim financial statements of Jevic as of May 31, 1996 furnished to the
Bank in connection herewith, present fairly, in all material respects, the
financial position, results of operations and operating statistics of Jevic as
of the dates and for the periods referred to, in conformity with Generally
Accepted Accounting Principles. Except as set forth on Schedule 1 hereto, there
are no liabilities, fixed or contingent, which are not reflected in such
financial statements, other than liabilities which are not required to be
reflected in such balance sheets. There has been no Material Adverse Change
since May 31, 1996.
3.6 Not in Default, Judgments, Etc. No Event of Default or Potential
Default under any Loan Document has occurred and is continuing. Jevic has
satisfied all judgments and is not in default with respect to any judgment,
writ, injunction, decree, rule, or regulation of any court, arbitrator, or
federal, state, municipal, or other governmental authority, commission, board
bureau, agency, or instrumentality, domestic or foreign.
3.7 Taxes. Jevic has filed all federal, state, local and foreign tax
returns and reports which it is required by law to file and as to which its
failure to file would have a Material Adverse Effect, and has paid all taxes,
including wage taxes, assessments, withholdings and other governmental charges
which are presently due and payable, other than those being contested in good
faith by appropriate proceedings and disclosed on Schedule 1. The tax charges,
accruals and reserves on the books of Jevic are adequate to pay all such taxes
that have accrued but are not presently due and payable.
3.8 Permits, Licenses, Etc. Jevic possesses all permits, licenses,
franchises, trademarks, trade names, copyrights and patents necessary to the
conduct of its business as presently conducted or as presently proposed to be
conducted, except where the failure to possess the same would not have a
Material Adverse Effect.
3.9 Compliance with Laws, Etc.
(a) Jevic is in compliance in all material respects with all Regulations
applicable to its business (including obtaining all authorizations, consents,
approvals, orders, licenses, exemptions from, and making all filings or
registrations or qualifications with, any court or governmental department,
20
<PAGE>
public body or authority, commission, board, bureau, agency, or
instrumentality), the noncompliance with which reasonably could have a Material
Adverse Effect.
(b) Hazardous Wastes, Substances and Petroleum Products. Jevic has received
all permits and filed all notifications necessary to carry on its business; and
is in compliance in all respects with all Environmental Control Statutes. Jevic
has not given any written or oral notice, nor has it failed to give required
notice, to the Environmental Protection Agency ("EPA") or any state or local
agency with regard to any actual or imminently threatened Release of Hazardous
Substances on properties owned, leased or operated by Jevic or used in
connection with the conduct of its business and operations. Jevic has not
received notice that it is potentially responsible for costs of clean-up or
remediation of any actual or imminently threatened Release of Hazardous
Substances pursuant to any Environmental Control Statute. To the best of Jevic's
knowledge and belief, no real property owned or leased by it is in violation of
any Environmental Laws and no Hazardous Substances are present on said real
property in violation of applicable law. Jevic has not been identified in any
litigation, administrative proceedings or investigation as a potentially
responsible party for any liability under any Environmental Laws.
3.10 Solvency. Jevic is, and after giving effect to the transactions
contemplated hereby, will be, Solvent.
3.11 Subsidiaries, Etc. Jevic does not have any Subsidiaries. Set forth in
Schedule 1 hereto is a complete and correct list, as of the date of this
Agreement, of all Investments held by Jevic in any joint venture or other
Person.
3.12 Title to Properties, Leases. Jevic has good and marketable title to
all assets and properties reflected as being owned by it in its financial
statements as well as to all assets and properties acquired since said date
(except property disposed of since said date in the ordinary course of
business). Except for the Liens set forth in Schedule 1 hereto and any other
Permitted Liens, there are no Liens on any of such assets or properties. It has
the right to, and does, enjoy peaceful and undisturbed possession under all
material leases under which it is leasing property as a lessee. All such leases
are valid, subsisting and in full force and effect, and none of such leases is
in default, except where such default, either individually or in the aggregate,
could not have a Material Adverse Effect.
3.13 Public Utility Holding Company; Investment Company. Jevic is not a
"public utility company" or a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended; or a "public utility" within the
meaning of the Federal Power Act, as amended. Further, it is not an "investment
company" or an "affiliated person" of an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
3.14 Margin Stock. Jevic is not or will not be engaged principally or as
one of its important activities in the business of extending credit for the
purpose of purchasing or carrying or trading in any margin stocks or margin
securities (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System as amended from time to time). It will not use or permit
any proceeds of the Loans to be used, either directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying margin
stocks or margin securities.
-21-
<PAGE>
4. Conditions Precedent
4.1 All Loans. After this Agreement has become effective, the obligation of
the Bank to make any Loan (including but not limited to the first Loan
hereunder) is conditioned upon the following:
(a) Documents. Jevic shall have delivered and the Bank shall have received
a request for a Loan in such form as the Bank may request from time to time. In
the event the request if for a Term Loan, Jevic shall have delivered and the
Bank shall have received a Term Note duly executed, completed and issued in
accordance herewith.
(b) Covenants; Representations. Jevic shall be in compliance with all
covenants, agreements and conditions in each Loan Document and each
representation and warranty contained in each Loan Document shall be true with
the same effect as if such representation or warranty had been made on the date
such Loan is made or issued.
(c) Defaults. Immediately prior to and after giving effect to such
transaction, no Event of Default or Potential Default shall exist.
(d) Material Adverse Change. Since May 31, 1996, there shall not have been
any Material Adverse Change with respect to Jevic, and there shall not be any
other event or circumstance which gives the Bank reasonable grounds to conclude
that Jevic may not or will not be able to perform or observe (in the normal
course) its obligations hereunder and under the Revolving Credit Note, the Term
Notes or the other Loan Documents.
4.2 Conditions to First Loan. The obligation of the Bank to make the first
Loan hereunder is conditioned upon the following, satisfactory to each Bank:
(a) Articles, Bylaws. The Bank shall have received copies of the Articles
or Certificates of Incorporation and Bylaws of Jevic, certified by its Secretary
or Assistant Secretary; together with Certificate of Good Standing from any
jurisdiction where the nature of its business or the ownership of its properties
requires such qualification except where the failure to be so qualified would
not have a Material Adverse Effect.
(b) Evidence of Authorization. The Bank shall have received copies
certified by the Secretary or Assistant Secretary of Jevic or other appropriate
official (in the case of a Person other than Jevic) of all corporate or other
action taken by each Person other than the Bank who is a party to any Loan
Document to authorize its execution and delivery and performance of the Loan
Documents and to authorize the Revolving Credit Loan and the Term Loans,
together with such other related papers as the Bank shall reasonably require.
(c) Legal Opinions. The Bank shall have received a favorable written
opinion in form and substance satisfactory to the Bank from Archer & Greiner,
P.C., counsel for Jevic, which shall be addressed to the Bank and be dated the
date of the first Loan.
(d) Incumbency. The Bank shall have received a certificate signed by the
secretary or assistant secretary of Jevic, together with the true signature of
the officer or officers authorized to execute and deliver the Loan Documents and
certificates thereunder, upon which the Bank shall be entitled to rely
-22-
<PAGE>
conclusively until it shall have received a further certificate of the
secretary or assistant secretary of Jevic amending the prior certificate and
submitting the signature of the officer or officers named in the new
certificate as being authorized to execute and deliver Loan Documents and
certificates thereunder.
(e) Notes. The Bank shall have received the Revolving Credit Note duly
executed, completed and issued in accordance herewith, together with a Term Note
duly executed, completed and issued in accordance herewith if a Term Loan is
requested at such time.
(f) Documents. The Bank shall have received all certificates, instruments
and other documents then required to be delivered pursuant to any Loan
Documents, in each instance in form and substance reasonably satisfactory to it.
(g) Consents. Jevic shall have provided to the Bank evidence satisfactory
to it that all governmental, shareholder and third party consents and approvals
necessary in connection with the transactions contemplated hereby have been
obtained and remain in effect.
(h) Change. No Material Adverse Change shall have occurred since May 31,
1996 and there shall not be any other event or circumstance which gives the Bank
reasonable grounds to conclude that Jevic may not or will not be able to perform
or observe (in the normal course) its obligations hereunder and under the
Revolving Credit Note, the Term Notes and the other Loan Documents.
(i) Other Agreements. Jevic shall have executed and delivered each other
Loan Document required hereunder.
(j) Loan Request. Jevic shall have delivered and the Bank shall have
received a request for a Loan in such form as the Bank may request.
(k) Fees. Jevic shall simultaneously pay or shall have paid all fees due
hereunder or any other Loan Document.
(1) Borrowing Base Certificate. Jevic shall have delivered and the Bank
shall have received a Borrowing Base Certificate dated the date of the first
Loan under this Agreement.
5. Affirmative Covenants
Jevic covenants and agrees that, without the prior written consent of the
Bank, from and after the date hereof and so long as any Commitment is in effect
or any Obligation remains unpaid or outstanding, it will:
5.1 Financial Statements and Reports. Furnish to the Bank the following
financial information:
(a) Annual Statements. No later than one hundred and twenty (120) days
after the end of each fiscal year, its balance sheet as of the end of such year
and the prior year in comparative form, and related statements of operations,
shareholders' equity, and cash flows for the Fiscal Year and the prior Fiscal
Year in comparative form. The financial statements shall be in reasonable detail
with appropriate
-23-
<PAGE>
notes and be prepared in accordance with Generally Accepted Accounting
Principles. The annual financial statements shall be certified (without any
qualification or exception) by independent public accountants of nationally
recognized standing reasonably acceptable to the Bank. Such financial
statements shall be accompanied by a report of such independent certified
public accountants stating that, in the opinion of such accountants, such
financial statements present fairly, in all material respects, the financial
position, and the results of operations and the cash flows of Jevic for the
period then ended in conformity with Generally Accepted Accounting
Principles, except for inconsistencies resulting from changes in accounting
principles and methods agreed to by such accountants and specified in such
report, and that, in the case of such financial statements, the examination
by such accountants of such financial statements has been made in accordance
with generally accepted auditing standards and accordingly included
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements and assessing the accounting principles used and
significant estimates made, as well as evaluating the overall financial
statement presentation. Each financial statement provided under this
subsection (a) shall be accompanied by a certificate signed by such
accountants either stating that during the course of their examination
nothing came to their attention which would cause them to believe that any
event has occurred and is continuing which constitutes an Event of Default
or Potential Default, or describing each such event. In addition to the
annual financial statements, Jevic shall, promptly upon receipt thereof,
furnish to the Bank a copy of each other report submitted to its board of
directors by its independent accountants in connection with any annual,
interim or special audit made by them of the financial records of Jevic.
(b) Quarterly Statements. No later than sixty (60) calendar days after the
end of each Fiscal Quarter of each Fiscal Year, its balance sheet and related
statements of operations, shareholders' equity and cash flows for such quarterly
period and for the period from the beginning of such fiscal year to the end of
such Fiscal Quarter and a corresponding financial statement for the same periods
in the preceding Fiscal Year certified by the chief financial officer of Jevic
as having been prepared in accordance with Generally Accepted Accounting
Principles (subject to changes resulting from audits and year-end adjustments);
provided, however, that if the independent certified public accountants issue a
review report on the quarterly financial statements of Jevic, the financial
statements required by this subsection (b) shall be accompanied by a certificate
signed by such accountants either stating that during the course of their
examination nothing came to their attention which would cause them to believe
that any event has occurred and is continuing which constitutes an Event of
Default or Potential Default, or describing each such event and the remedial
steps being taken by Jevic.
(c) No Default. Within sixty (60) calendar days after the end of each of
the first three Fiscal Quarters of each Fiscal Year and within one hundred and
twenty (120) calendar days after the end of each Fiscal Year, a certificate
signed by the chief financial officer of Jevic certifying that, to the best of
such officer's knowledge, after due inquiry, (i) Jevic has complied with all
covenants, agreements and conditions in each Loan Document and that each
representation and warranty contained in each Loan Document is true and correct
with the same effect as though each such representation and warranty had been
made on the date of such certificate (except to the extent such representation
or warranty related to a specific prior date), and (ii) no event has occurred
and is continuing which constitutes an Event of Default or Potential Default, or
describing each such event and the remedial steps being taken by Jevic.
-24-
<PAGE>
(d) ERISA. All reports and forms filed with respect to all Plans, except as
filed in the normal course of business and that would not result in an adverse
action to be taken under ERISA, and details of related information of a
Reportable Event.
(e) Material Changes. Notification to the Bank of any litigation,
administrative proceeding, investigation, business development, or change in
financial condition which could reasonably have a Material Adverse Effect.
(f) Other Information. Promptly upon request by the Bank from time to time
(which may be on a monthly or other basis), Jevic shall provide such other
information and reports regarding its operations, business affairs, prospects
and financial condition as the Bank may reasonably request.
(g) Borrowing Base Certificates. If the Revolving Loans outstanding at any
time during the previous month shall be equal to or greater than $4,000,000,
Jevic will deliver to the Bank, no later than 30 days after the end of such
calendar month as of the last day of the preceding calendar month, a Borrowing
Base Certificate signed by the chief financial officer, treasurer or controller
of Jevic.
(h) Monthly Receivables Report. If the Revolving Loans outstanding at any
time during the previous month shall be equal to or greater than $4,000,000,
Jevic will deliver to the Bank, no later than 30 days after the end of such
calendar month, an Accounts Receivable Aging Report.
5.2 Corporate Existence. Preserve its corporate existence and material
franchises, licenses, patents, copyrights, trademarks and trade names consistent
with good business practice. Maintain, keep, and preserve all of its properties
(tangible and intangible) necessary or useful in the conduct of its business in
good working order and condition, ordinary wear and tear expected.
5.3 ERISA. Comply in all material respects with the provisions of ERISA to
the extent applicable to any Plan maintained for the employees of Jevic or any
ERISA Affiliate; do or cause to be done all such acts and things that are
required to maintain the qualified status of each Plan and tax exempt status of
each trust forming part of such Plan; not incur any material accumulated funding
deficiency (within the meaning of ERISA and the regulations promulgated
thereunder), or any material liability to the PBGC (as established by ERISA);
not permit any event to occur as described in Section 4042 of ERISA or which may
result in the imposition of a lien on its properties or assets; notify the Bank
in writing promptly after it has come to the attention of senior management of
Jevic of the assertion or threat of any "reportable event" or other event
described in Section 4042 of ERISA (relating to the soundness of a Plan) or the
PBGC's ability to assert a material liability against it or impose a lien on
its, or any ERISA Affiliates', properties or assets; and refrain from engaging
in any Prohibited Transactions or actions causing possible liability under
Section 5.02 of ERISA.
5.4 Compliance with Regulations. Comply in all material respects with all
Regulations applicable to its business, the noncompliance with which reasonably
could have a Material Adverse Effect.
5.5 Conduct of Business; Permits and Approvals, Compliance with Laws.
Continue to engage in an efficient and economical manner in a business of the
same general type as conducted by it on the date of this Agreement; maintain in
full force and effect, its franchises, and all licenses, patents,
-25-
<PAGE>
trademarks, trade names, contracts, permits, approvals and other rights
necessary to the profitable conduct of its business.
5.6 Maintenance of Insurance. Maintain insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof.
5.7 Payment of Debt; Payment of Taxes, Etc. Where the amount involved
exceeds $250,000 or where the non-payment or non-discharge would otherwise have
a Material Adverse Effect on Jevic or any of its assets: promptly pay and
discharge (a) all of its Debt in accordance with the terms thereof; (b) all
taxes, assessments, and governmental charges or levies imposed upon it or upon
its income and profits, upon any of its property, real, personal or mixed, or
upon any part thereof, before the same shall become in default; (c) all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might
become a lien or charge upon such property or any part thereof; provided,
however, that so long as Jevic first notifies the Bank of its intention to do
so, Jevic shall not be required to pay and discharge any such Debt, tax,
assessment, charge, levy or claim so long as the failure to so pay or discharge
does not constitute or result in an Event of Default or a Potential Default
hereunder and so long as no foreclosure or other similar proceedings shall have
been commenced against such property or any part thereof and so long as the
validity thereof shall be contested in good faith by appropriate proceedings
diligently pursued and it shall have set aside on its books adequate reserves
with respect thereto.
5.8 Notice of Events. Promptly upon discovery of any of the following
events, Jevic shall provide telephone notice to the Bank (confirmed within three
(3) calendar days by written notice), describing the event and all action Jevic
proposes to take with respect thereto:
(a) an Event of Default or Potential Default under this Agreement;
(b) any default or event of default under a contract or contracts and
the default or event of default involves payments by the Jevic in an
aggregate amount equal to or in excess of $250,000;
(c) a default or event of default under or as defined in any evidence
of or agreements for Indebtedness for Borrowed Money under which the
Jevic's liability is equal to or in excess of $250,000, singularly or in
the aggregate, whether or not an event of default thereunder has been
declared by any party to such agreement or any event which, upon the lapse
of time or the giving of notice or both, would become an event of default
under any such agreement or instrument or would permit any party to any
such instrument agreement to terminate or suspend any commitment to lend to
Jevic or to declare or to cause any such indebtedness to be accelerated or
payable before it would otherwise be due;
(d) the institution of, any material adverse determination in, or the
entry of any default judgment or order or stipulated judgment or order in,
any suit, action, arbitration, administrative proceeding, criminal
prosecution or governmental investigation against Jevic in which the amount
in controversy is in excess of $250,000, singularly or in the aggregate; or
-26-
<PAGE>
(e) any change in any Regulation, including, without limitation,
changes in tax laws and regulations, which would have a Material Adverse
Effect.
5.9 Inspection Rights. At any time during regular business hours and as
often as reasonably requested of Jevic by the Bank, permit the Bank, or any
authorized officer, employee, agent, or representative of the Bank to examine
and make abstracts from the records and books of account of Jevic, wherever
located, and to visit the properties of Jevic; and to discuss the affairs,
finances, and accounts of Jevic with its Chairman, President, any executive vice
president, its chief financial officer, treasurer, controller or independent
accountants. Each inspection shall be at the expense of the Bank, unless such
inspection shall be made during the continuance of a Potential Default or an
Event of Default (in which event, the expense of such inspection shall be borne
by Jevic). Notwithstanding the foregoing sentence, it is understood and agreed
by Jevic that all expenses in connection with any such inspection which may be
incurred by Jevic, any officers and employees thereof and the attorneys and
independent certified public accountants therefor shall be expenses payable by
Jevic and shall not be expenses of the Bank. Further, it is understood and
agreed by CoreStates that the number of inspection visits shall be limited to
two per year and reasonable prior notice shall be given to Jevic unless an Event
of Default or a Potential Default shall exist.
5.10 Generally Accepted Accounting Principles. Maintain books and records
at all times in accordance with Generally Accepted Accounting Principles.
5.11 Use of Proceeds. Jevic will use the proceeds of the Loans for the
purchase or refinancing of over the road chassis and trailers, Qualcomm
satellites, trailer dollys, trailer heaters, fork trucks, automobiles and
miscellaneous equipment used in connection with its business and for working
capital purposes.
5.12 Further Assurances. Do such further acts and things and execute and
deliver to the Bank such additional assignments, agreements, powers and
instruments, as the Bank may reasonably require or reasonably deem advisable to
carry into affect the purposes of this Agreement or to better assure and confirm
unto the Bank its rights, powers and remedies hereunder.
5.13 Compliance with Material Contracts. Jevic will comply in all material
respects with all obligations, terms, conditions and covenants, as applicable,
in all Debt of Jevic and all instruments and agreements related thereto, and all
other instruments and agreements to which it is a party or by which it is bound
or any of its properties is affected and in respect of which the failure to
comply reasonably could have a Material Adverse Effect.
5.14 Restrictive Covenants in Other Agreements. In the event that Jevic
shall enter into or otherwise become subject to or suffer to exist any agreement
pertaining to Debt which contains covenants or restrictions that are more
restrictive on it than the covenants and restrictions contained in this
Agreement, each and every such covenant and restriction shall be deemed
incorporated herein by reference as fully as if set forth herein. If and to the
extent that any such covenant or restriction shall be inconsistent with or
otherwise be in conflict with any covenant or restriction set forth herein
(other than by reason of its being more restrictive), this Agreement shall
govern.
5.15 Personal Guarantees. In the event that Harry Muhlschlegel and/or Karen
Muhlschlegel shall guarantee any Obligation of Jevic after the date hereof,
Jevic shall cause a simultaneous guarantee
-27-
<PAGE>
by said individuals of the Loans and all other Obligations of Jevic to the
Bank hereunder to be executed and delivered to the Bank, said guarantee to
be on substantially the same terms and conditions as the guarantee of such
other Obligation of Jevic by said individuals and the guarantee to the Bank
shall be secured, parri passu, by the same (or substantially the same)
collateral securing said other guarantee, if such other guarantee is
secured.
6. Negative Covenants
Jevic covenants and agrees that, without the prior written consent of the
Bank, from and after the date hereof and so long as any Commitment is in effect
or any Obligation remains unpaid or outstanding, it will not:
6.1 Consolidation and Merger. Merge or consolidate with or into any
corporation except, if no Potential Default or Event of Default shall have
occurred and be continuing either immediately prior to or upon the consummation
of such transaction, any Person may be merged into Jevic as long as Jevic is the
surviving entity.
6.2 Liens. Create, assume or permit to exist any Lien on any of its
property or assets, whether now owned or hereafter acquired, or upon any income
or profits therefrom, except Permitted Liens.
6.3 Guarantees. Guarantee or otherwise in any way become or be responsible
for indebtedness or obligations (including working capital maintenance,
take-or-pay contracts) of any other Person, contingently or otherwise.
6.4 Margin Stock. Use or permit any proceeds of the Loans to be used,
either directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock within the meaning of Regulation U
of The Board of Governors of the Federal Reserve System, as amended from time to
time.
6.5 Acquisitions and Investments. If an Event of Default or a Potential
Default exists or would exist immediately thereafter: purchase or otherwise
acquire (including without limitation by way of share exchange) any part or
amount of the capital stock or assets of, or make any Investments in any other
Person; or enter into any new business activities or ventures not directly
related to its present business; or create any Subsidiary, except (a) it may
acquire and hold stock, obligations or securities received in settlement of
debts (created in the ordinary course of business) owing to it, and (b) it may
make and own (i) Investments in certificates of deposit or time deposits having
maturities in each case not exceeding one year from the date of issuance thereof
and issued by a Bank, or any FDIC-insured commercial bank incorporated in the
United States or any state thereof having a combined capital and surplus of not
less than $150,000,000, (ii) Investments in marketable direct obligations issued
or unconditionally guaranteed by the United States of America, any agency
thereof, or backed by the full faith and credit of the United States of America,
in each case maturing within one year from the date of issuance or acquisition
thereof, (iii) Investments in commercial paper issued by a corporation
incorporated in the United States or any State thereof maturing no more than one
year from the date of issuance thereof and, at the time of acquisition, having a
rating of A-1 (or better) by Standard & Poor's Corporation or P-1 (or better) by
Moody's Investors Service, Inc., and (iv) Investments in money market mutual
funds all of the assets of which are invested in cash or investments described
in the immediately preceding clauses (i), (ii) and (iii).
-28-
<PAGE>
6.6 Transfer of Assets; Nature of Business. Sell, transfer, pledge, assign
or otherwise dispose of any of its assets unless such sale or disposition shall
be in the ordinary course of its business for value received; or discontinue,
liquidate or change in any material respect any substantial part of its
operations or business.
6.7 Restricted Payments. Make or pay any redemptions, repurchases,
dividends or distributions of any kind with respect to its capital stock except
that (i) dividends may be made and paid as long as the aggregate thereof does
not exceed 50% of its net income (net of any net losses) accumulated after
December 31, 1995, and (ii) dividends may be made and paid to the extent
necessary to permit the payment of income taxes applicable to Jevic by the
stockholders thereof for so long as Jevic shall maintain Sub-Chapter S tax
status under the Code, and (iii) that any dividends made or paid by reason of
clause (ii) which would result in an aggregate of more than 50% of the net
income (net of any net losses) of Jevic accumulated after December 31, 1995
shall reduce the dividends payable under Clause (i) thereafter by such amount.
6.8 Accounting Change. Make or permit any change in financial accounting
policies or financial reporting practices, except as required by Generally
Accepted Accounting Principles or regulations of the Securities and Exchange
Commission.
6.9 Transactions with Affiliates. Enter into any transaction (including,
without limitation, the purchase, sale or exchange of property, the rendering of
any services or the payment of management fees) with any Affiliate, except
transactions in the ordinary course of, and pursuant to the reasonable
requirements of, its business, and in good faith and upon commercially
reasonable terms.
6.10 Negative, Negative Pledge Agreements. Enter into any agreement
providing that it will not create, incur, assume or suffer to exist any
mortgage, pledge, security interest, encumbrance or other lien upon property of
Jevic which is intended to constitute Collateral or upon any Accounts, Chattel
Paper, Instruments or General Intangibles of Jevic, then owned or thereafter
acquired, except for agreements pertaining to Debt in existence at the date of
this Agreement and described in Schedule l hereto and identified as in conflict
with this covenant.
6.11 Restriction on Amendment of This Agreement. Enter into or otherwise
become subject to or suffer to exist any agreement which would require it to
obtain the consent of any other person as a condition to the ability of
CoreStates and Jevic to amend or otherwise modify this Agreement.
7. Financial Covenants
7.1 Borrowing Base. The aggregate principal amount of the Revolving Credit
Loans outstanding shall not at any time exceed the Borrowing Base; provided,
however, that this covenant shall not be deemed breached if, with respect to any
time such aggregate amount exceeds said level, within five Business Days after
the earlier of the date Jevic first has knowledge of such breach or the date of
the next Borrowing Base Certificate disclosing the existence of such breach a
prepayment of the Revolving Credit Loans shall be made in an amount sufficient
to assure continued compliance with this covenant in the future.
-29-
<PAGE>
7.2 Minimum Tangible Net Worth. Tangible Net Worth will not at any time be
less than the sum of (i) $16,000,000 plus (ii) fifty percent (50%) of net income
for each Fiscal Quarter ending after June 30, 1996 without deduction for any net
losses, and (iii) any additions to paid-in capital after June 30, 1996, provided
however any additions to paid-in capital after June 30, 1996 which are made for
the purpose of enabling Jevic to be in compliance with the terms and conditions
of this Agreement or any other Loan Document shall not increase minimum Tangible
Net Worth if at the time of such addition Jevic shall provide written notice of
such purpose to the Bank specifying the amount required therefor. In the event
the sum of the amounts determined in accordance with clause (ii) above on a
Fiscal Quarter basis shall exceed fifty percent (50%) of the net income for the
Fiscal Year of which said Fiscal Quarters are a part, minimum Tangible Net Worth
shall be reduced by the amount of such excess effective on the date the
financial statements required pursuant to Section 5.1(a) shall have been
received by the Bank. At all times prior to any such date(s), minimum Tangible
Net Worth shall include the amounts determined in accordance with clause (ii)
without reduction.
7.3 Debt to Tangible Net Worth. From and after September 30, 1996, the
ratio of Debt (including, without limitation, Debt represented by the Revolving
Credit Notes and the Term Notes) to Tangible Net Worth will not exceed 4.00:1 as
at the end of any fiscal quarter.
7.4 Debt Service Coverage. From and after September 30, 1996, the ratio of
Adjusted EBITDA to Debt Service for the four (4) most recently ended consecutive
Fiscal Quarters to Debt Service will not be less than 1.20:1.
8. Default
8.1 Events of Default. Jevic shall be in default if any one or more of the
following events (each an "Event of Default") occurs:
(a) Payments. Jevic fails to pay any principal of or interest on any
Note when due and payable (whether at maturity, by notice of intention to
prepay, or otherwise) or fails to pay when it is due and payable any other
amount payable under any Loan Document and such failure shall continue for
three Business Days.
(b) Covenants. Jevic fails to observe or perform (1) any term,
condition or covenant set forth in Section 5.2 (first sentence only),
Section 6.1 through 6.11 or Section 8.1(a) of this Agreement, as and when
required, (2) any term, condition or covenant set forth in Sections 5.1(a),
5.1(b), 5.1(c), 5.1(g) or 5.1(h) of this Agreement, as and when required
and such failure shall continue for a period of 3 days or more, or (3) any
term, condition or covenant contained in this Agreement or any other Loan
Document other than as set forth in (1) and (2) above, as and when required
and such failure shall continue for a period of 15 days or more.
(c) Representations, Warranties. Any representation or warranty made
or deemed to be made by Jevic herein or in any Loan Document or in any
exhibit, schedule, report or certificate delivered pursuant hereto or
thereto shall prove to have been false, misleading or incorrect in any
material respect when made or deemed to have been made.
-30-
<PAGE>
(d) Bankruptcy. Jevic is dissolved or liquidated, makes an assignment
for the benefit of creditors, files a petition in bankruptcy, is
adjudicated insolvent or bankrupt, petitions or applies to any tribunal for
any receiver or trustee, commences any proceeding relating to itself under
any bankruptcy, reorganization, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, has commenced against it
any such proceeding which remains undismissed for a period of thirty (30)
days, or indicates its consent to, approval of or acquiescence in any such
proceeding, or any receiver of or trustee for Jevic or any substantial part
of the property of Jevic is appointed, or if any such receivership or
trusteeship to continues undischarged for a period of thirty (30) days.
(e) Certain Other Defaults. Jevic shall fail to pay when due any
Indebtedness for Borrowed Money which singularly or in the aggregate
exceeds $250,000, and such failure shall continue beyond any applicable
cure period, or Jevic shall suffer to exist any default or event of default
in the performance or observance, subject to any applicable grace period,
of any agreement, term, condition or covenant with respect to any agreement
or document relating to Indebtedness for Borrowed Money if the effect of
such default is to permit, with the giving of notice or passage of time or
both, the holders thereof, or any trustee or agent for said holders, to
terminate or suspend any commitment (which is equal to or in excess of
$250,000) to lend money or to cause or declare any portion of any
borrowings thereunder to become due and payable prior to the date on which
it would otherwise be due and payable, provided that during any
applicable cure period the Bank's obligations hereunder to make further
Loans shall be suspended.
(f) Judgments. Any judgments against Jevic or against its assets or
property for amounts in excess of $250,000 in the aggregate remain unpaid,
unstayed on appeal, undischarged, unbonded and undismissed for a period of
thirty (30) days.
(g) Attachments. Any assets of Jevic shall be subject to attachments,
levies, or garnishments for amounts in excess of $250,000 in the aggregate
which have not been dissolved or satisfied within twenty (20) days after
service of notice thereof to Jevic.
(h) Change in Control. Harry Muhlschlegel, Karen Muhlschlegel and
members of their immediate family shall cease to be the beneficial owners
of at least 51% of the outstanding voting and capital stock of Jevic.
(i) Security Interests. Any security interest created pursuant to any
Loan Document (i) shall cease to be in full force and effect, or (ii) shall
cease in any material respect to give the Bank, the Liens, rights, powers
and privileges purported to be created thereby (including, without
limitation, a perfected security interest in, and Lien on, all of the
Collateral), superior to and prior to the rights of all third Persons, and
subject to no other Liens (except as permitted by Section 6.2).
(j) Material Adverse Change. In the determination of the Bank, in its
sole discretion reasonably exercised, (1) a Material Adverse Change shall
have occurred or any event or circumstance shall have occurred which gives
reasonable grounds to conclude that Jevic may not or will not be able to
perform or observe in the normal course its obligations under this
Agreement, the Revolving Credit Notes, the Term Notes, the Security
Agreement or the other Loan Documents, (2) the Bank shall have given Jevic
written notice thereof and (3) at least 15 Business Days shall have elapsed
from the giving of notice as provided in Section 10.6 hereof.
-31-
<PAGE>
THEN and in every such event other than that specified in Section 8.l(d), the
Bank may immediately terminate the Commitments by notice in writing to Jevic and
immediately declare the Revolving Credit Notes, the Term Notes and all other
Obligations, including without limitation accrued interest, to be, and they
shall thereupon forthwith become due and payable without presentment, demand, or
notice of any kind, all of which are hereby expressly waived by Jevic. Upon the
occurrence of any event specified in Section 8.l(d), the Commitments shall
automatically terminate and the Revolving Credit Notes, the Term Notes and all
other Obligations, including without limitation accrued interest, shall
immediately be due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by Jevic. Any date
on which the Loans and such other Obligations are declared due and payable
pursuant to this Section 8.1, shall be the Revolver Termination Date and a Term
Loan Commitment Termination Date for purposes of this Agreement. From and after
the date an Event of Default shall have occurred and for so long as an Event of
Default shall be continuing, the Loans shall bear interest at the Default Rate.
9. Collateral
9.1 Collateral. Except as otherwise specifically set forth herein or in any
other Loan Document, the Loans and their repayment at all times shall be secured
by a first priority, perfected, security interest in the Collateral (as defined
in the Security Agreement, hereinafter referred to as the "Collateral").
9.2 Security Agreement. As security for the punctual payment in full of all
Loans (including all payments of principal, and interest and other costs
contemplated hereby), Jevic at or prior to the funding of the first Loan
hereunder shall execute and deliver to CoreStates a security agreement in the
form and substance attached as Exhibit D hereto (herein referred to as the
"Security Agreement").
10. Miscellaneous
10.1 Waiver. No failure or delay on the part of the Bank or any holder of
any Note in exercising any right, power or remedy under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy under any Loan Document. The
remedies provided under the Loan Documents are cumulative and not exclusive of
any remedies provided by law.
10.2 Amendments. No amendment, modification, termination or waiver of any
Loan Document or any provision thereof nor any consent to any departure by
Jevic therefrom shall be effective unless the same shall have been approved
in writing by the Bank, be in writing and be signed by the Bank and the
Jevic and then any such waiver or consent shall be effective only in the
instance and for the specific purpose for which given. No notice to or
demand on the Jevic shall entitle the Jevic to any other or further notice
or demand in similar or other circumstances.
10.3 Governing Law. The Loan Documents and all rights and obligations of
the parties thereunder shall be governed by and be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
Pennsylvania or federal principles of conflict of laws.
-32-
<PAGE>
10.4 Participations and Assignments. Jevic hereby acknowledges and agrees
that CoreStates may at any time: (a) grant participations in all or any portion
of its Revolving Loan Commitment, Term Loan Commitment, any Note or of its
right, title and interest therein or in or to this Agreement (collectively,
"Participations") to any other lending office of the CoreStates or to any other
bank, lending institution or other entity which has the requisite sophistication
to evaluate the merits and risks of investments in Participations
("Participants"); provided, however, that: (i) all amounts payable by the Jevic
hereunder shall be determined as if CoreStates had not granted such
Participation; and (ii) any agreement pursuant to which CoreStates may grant a
Participation: (x) shall provide that CoreStates shall retain the sole right and
responsibility to enforce the obligations of Jevic hereunder including, without
limitation, the right to approve any amendment, modification or waiver of any
provisions of this Agreement; (y) such participation agreement may provide that
CoreStates will not agree to any modification, amendment or waiver of this
Agreement without the consent of the Participant if such modification, amendment
or waiver would reduce the principal of or rate of interest on any Loan or
postpone the date fixed for any payment of principal of or interest on any Loan;
and (z) shall not relieve CoreStates from its obligations, which shall remain
absolute, to make Loans hereunder; and (b) CoreStates may assign any of its
Loans and its Revolving Loan Commitment (but only with the consent of the Jevic,
which consent shall not be unreasonably withheld), provided that, each such
assignment shall be in an amount of at least $10,000,000 (unless, after giving
effect to such assignment and all other such assignments by CoreStates occurring
simultaneously or substantially simultaneously therewith, CoreStates shall hold
no Revolving Loan Commitment, Term Loan Commitment or Loan hereunder); and (ii)
each such assignment by CoreStates of its Loans, or Revolving Loan Commitment or
Term Loan Commitment shall be made in such manner so that the same portion of
its Loans, Notes, Revolving Loan Commitment and Term Loan Commitment is assigned
to the respective assignee. Upon execution and delivery by the assignee to the
Jevic of an instrument in writing pursuant to which such assignee agrees to
become a "Bank" hereunder having the Commitment(s) and Loans specified in such
instrument, and upon consent thereto by the Jevic, to the extent required above,
the assignee shall have, to the extent of such assignment (unless otherwise
provided in such assignment with the consent of the Jevic), the obligations,
rights and benefits of a bank hereunder holding the Revolving Loan
Commitment(s), Term Loan Commitment(s) and Loans (or portions thereof) assigned
to it, and CoreStates Bank shall, to the extent of such assignment, be released
from the Commitment(s) (or portion(s) thereof) so assigned. Jevic shall not be
obligated to consent to any participation or assignment which would result in
CoreStates retaining less than 51% of the Commitment(s), Loans and Notes.
10.5 Captions. Captions in the Loan Documents are included for convenience
of reference only and shall not constitute a part of any Loan Document for any
other purpose.
10.6 Notices. All notices, requests, demands, directions, declarations and
other communications between the Bank and the Jevic provided for in any Loan
Document shall, except as otherwise expressly provided, be mailed by registered
or certified mail, return receipt requested, or telegraphed, or telefaxed, or
delivered in hand to the applicable party at its address indicated opposite its
name on the signature pages hereto. The foregoing shall be effective and deemed
received three days after being deposited in the mails, postage prepaid,
addressed as aforesaid and shall whenever sent by telegram, telegraph or telefax
or delivered in hand be effective when received. Any party may change its
address by a communication in accordance herewith.
10.7 Expenses; Indemnification. Jevic will from time to time reimburse the
Bank promptly following demand for all out-of-pocket expenses (including the
reasonable fees and expenses of legal
-33-
<PAGE>
counsel) in connection with (i) the preparation of the Loan Documents, (ii) the
making of any Loans, (iii) the administration of the Loan Documents, and (iv)
the enforcement of the Loan Documents; and reimburse the Bank for all
out-of-pocket expenses (including reasonable fees and expenses of legal counsel)
in connection with the enforcement of the Loan Documents. In addition to the
payment of the foregoing expenses, Jevic hereby agrees to indemnify, protect and
hold the Bank and any holder of the Notes and the officers, directors,
employees, agents, affiliates and attorneys of the Bank and such holder
(collectively, the "Indemnitiees") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature, including reasonable
fees and expenses of legal counsel, which may be imposed on, incurred by, or
asserted against such Indemnitee by Jevic or other third parties and arise out
of or relate to this Agreement or the other Loan Documents or any other matter
whatsoever related to the transactions contemplated by or referred to in this
Agreement or the other Loan Documents; provided, however, that Jevic shall have
no obligation to an Indemnitee hereunder to the extent that the liability
incurred by such Indemnitee has been determined by a court of competent
jurisdiction to be the result of gross negligence or willful misconduct of such
Indemnitee.
10.8 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made or deemed made herein shall survive the
execution and delivery of this Agreement, the making of the Loans hereunder and
the execution and delivery of the Notes. Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements of Jevic set forth
in Sections 2.8(f), 2.9, 2.10, and 10.7 shall survive the payment of the Loans
and the termination of this Agreement. This Agreement shall remain in full force
and effect until the latest to occur of the termination of the Revolving Loan
Commitment, the Term Loan Commitment or the repayment in full of all amounts
owed by Jevic under any Loan Document.
10.9 Severabilitv. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Agreement, the Notes
or other Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
the Notes or other Loan Documents or of such provision or obligation in any
other jurisdiction.
10.10 No Fiduciary Relationship. No provision in this Agreement or in any
of the other Loan Documents and no course of dealing between the parties shall
be deemed to create any fiduciary duty by the Bank to Jevic.
10.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. JEVIC AND CORESTATES
EACH HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE EASTERN DISTRICT OF PENNSYLVANIA AND IRREVOCABLY AGREES THAT, ANY
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THE NOTES, THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS MAY BE LITIGATED IN SUCH COURTS. EACH PARTY TO THIS
AGREEMENT ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENT, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, ANY NOTE, OR
SUCH OTHER LOAN DOCUMENT.
-34-
<PAGE>
10.12 WAIVER OF JURY TRIAL. JEVIC AND CORESTATES EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE
LENDER/BORROWER RELATIONSHIP ESTABLISHED HEREBY. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. JEVIC AND CORESTATES EACH ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE TRANSACTION, THAT EACH HAS
ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. JEVIC AND
CORESTATES EACH FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS, MODIFICATIONS, REPLACEMENTS OR RESTATEMENTS TO THIS AGREEMENT, THE
LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.
10.13 Counterparts; Effectiveness. This Agreement and any amendment hereto
or waiver hereof may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement and any amendments hereto
or waivers hereof shall become effective when the Bank shall have received
signed counterparts or notice by telecopy of the signature page that the
counterpart has been signed and is being delivered to it or facsimile that such
counterparts have been signed by all the parties hereto or thereto.
10.14 Use of Defined Terms. All words used herein in the singular or plural
shall be deemed to have been used in the plural or singular where the context or
construction so requires. Any defined term used in the singular preceded by
"any" shall be taken to indicate any number of the members of the relevant
class.
10.15 Offsets. Nothing in this Agreement shall be deemed a waiver or
prohibition of the Bank's right of banker's lien or offset.
10.16 Entire Agreement. This Agreement, the Notes issued hereunder and the
other Loan Documents constitute the entire understanding of the parties hereto
as of the date hereof with respect to the subject matter hereof and thereof and
supersede any prior agreements, written or oral, with respect hereto or thereto.
10.17 Jevic Transportation Services. Inc.. Jevic Transportation, Inc. and
Jevic Transportation Services, Inc. ("JTS") are owned and controlled in common
by Harry Muhlschlegel and Karen Muhlschlegel. Jevic and CoreStates hereby
acknowledge and agree that JTS is not a party to this Agreement and shall not be
deemed bound hereby. Notwithstanding, Jevic will comply with the terms
-35-
<PAGE>
and conditions of this Agreement and the other Loan Documents in dealings or
contact it may have with JTS, including but not limited to compliance with
Section 6.9 hereof.
10.18 Inconsistency with Existing CoreStates Loans. In the event any
representation or covenant contained in the documentation pertaining to any
Existing CoreStates Loan shall be inconsistent with any representation or
covenant contained herein (excluding any payment dates, maturity dates, interest
rates or comparable types of provisions), the representation or covenant
contained in this Agreement shall govern.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be duly executed by their duly authorized representatives as of the date first
above written.
JEVIC TRANSPORTATION, INC.
By /s/ Brian J. Fitzgerald
-------------------------------------
Name
Title
Notices To:
Mr. Brian J. Fitzpatrick
Senior Vice President and Chief Financial Officer
Jevic Transportation, Inc.
600 Creek Road
Delanco, NJ 08075
FAX No. (509) 764-7237
CORESTATES BANK, N.A.
By /s/ Theresa M. Smith
-------------------------------------
Theresa M. Smith
Vice President
Notices To:
Ms. Theresa M. Smith
Vice President
CoreStates Bank. N.A.
Transportation Leasing and Construction Industry Services
FC 1-8-11-24
1339 Chestnut Street
Philadelphia, PA 19107
FAX No. (215) 786-7704
-36-
<PAGE>
Reference Table of Definitions
Definition Page Defined
Accounts Receivable Aging Report........................................... 1
Additional Amount.......................................................... 16
Adjusted EBITDA............................................................ 1
Affiliate.................................................................. 1
Agreement.................................................................. 1
Agreement Year............................................................. 10
As Offered Fixed Rate...................................................... 2
As Offered Fixed Rate Loans................................................ 2
Bank....................................................................... 1
Base Rate.................................................................. 2
Base Rate Loans............................................................ 2
Borrowing Base............................................................. 2
Borrowing Base Certificate................................................. 2
Business Day............................................................... 2
Capitalized Lease.......................................................... 2
Capitalized Lease Obligations.............................................. 2
Closing Date .............................................................. 2
Code ...................................................................... 2
Collateral ................................................................ 32
Commitment Fee ............................................................ 3
Commitment Fees ........................................................... 14
CoreStates ................................................................ 1
CoreStates Bank ........................................................... 1
Debt....................................................................... 3
Debt Service .............................................................. 3
Default Rate .............................................................. 3
Dollars ................................................................... 3
EBITDA..................................................................... 3
Eligible Receivables ...................................................... 3
Environmental Control Statutes ............................................ 3
ERISA...................................................................... 3
ERISA Affiliate ........................................................... 3
Event of Default .......................................................... 30
Existing CoreStates Loans ................................................. 11
Federal Funds Rate ........................................................ 4
Fiscal Quarter ............................................................ 4
Fiscal Year ............................................................... 4
GAAP ...................................................................... 4
Generally Accepted Accounting Principles .................................. 4
Governmental Authority .................................................... 4
Hazardous Substances ...................................................... 4
Indebtedness for Borrowed Money ........................................... 4
Indemnitees ............................................................... 34
-37-
<PAGE>
Intangible Assets ......................................................... 4
Interest Period ........................................................... 5
Investment ................................................................ 5
Jevic ..................................................................... 1
JTS ....................................................................... 35
Letter of Credit .......................................................... 9
LIBO Rate ................................................................. 5
LIBO Rate Loans ........................................................... 6
LIBO Rate Reserve Percentage .............................................. 5
Lien ...................................................................... 6
Loan ...................................................................... 6
Loan Documents ............................................................ 6
Loans ..................................................................... 6
London Business Day ....................................................... 2
Material Adverse Change ................................................... 6
Material Adverse Effect ................................................... 6
Multiemployer Plan ........................................................ 6
Net Worth ................................................................. 6
Notes ..................................................................... 6
Obligations ............................................................... 6
Operating Lease ........................................................... 7
Participants .............................................................. 33
Participations ............................................................ 33
PBGC ...................................................................... 7
Pension Plan .............................................................. 7
Permitted Liens ........................................................... 7
Person .................................................................... 7
Plan ...................................................................... 7
Potential Default ......................................................... 7
Prohibited Transaction .................................................... 8
Regulation ................................................................ 8
Regulation D .............................................................. 8
Regulatory Change ......................................................... 8
Release ................................................................... 8
Reportable Event .......................................................... 8
Revenue Equipment ......................................................... 8
Revolver Termination Date ................................................. 10
Revolving Credit Loans .................................................... 10
Revolving Credit Note ..................................................... 12
Revolving Loan Commitment ................................................. 10
Revolving Loan Commitment Fee ............................................. 14
Security Agreement ........................................................ 32
Solvent ................................................................... 9
Standby Letter of Credit .................................................. 9
Subsidiary ................................................................ 9
Tangible Net Worth ........................................................ 9
Taxes ..................................................................... 16
Term Credit Commitment Fee ................................................ 14
-38-
<PAGE>
Term Loan Commitment ...................................................... 10
Term Loan Commitment Termination Date ..................................... 10
Term Loans ................................................................ 10
Term Note ................................................................. 12
Termination Event ......................................................... 9
Unfunded Pension Liabilities .............................................. 9
Unrecognized Retiree Welfare Liability .................................... 9
-39-
<PAGE>
EXHIBIT A
Form of Revolving Credit Note
$7,000,000 Philadelphia, PA
July __, 1996
For Value Received, JEVIC TRANSPORTATION, INC., a New Jersey corporation
("Jevic"), hereby promises to pay to the order of CORESTATES BANK, N.A. (the
"Bank"), in lawful currency of the United States of America in immediately
available funds at the Bank's offices located at Broad and Chestnut Streets,
Philadelphia, Pennsylvania, on the Revolver Termination Date, or on such earlier
date or dates as provided in the Credit Agreement described below, the principal
sum of SEVEN MILLION DOLLARS ($7,000,000) or, if less, the then unpaid principal
amount of all Revolving Credit Loans made by the Bank pursuant to the Credit
Agreement.
Jevic promises also to pay interest on the unpaid principal amount hereof in
like money at such office from the date hereof until paid at the rates and
at the times provided in the Credit Agreement.
This Note is Revolving Credit Note referred to in, is entitled to the benefits
of and is secured by security interests referred to in the Credit Agreement,
dated as of June 28, 1996 by and between Jevic and the Bank (as such may be
amended, modified, supplemented, restated or replaced from time to time, the
"Credit Agreement"). This Note is subject to voluntary prepayment and mandatory
repayment prior to the Revolver Termination Date, in whole or in part, as
provided in the Credit Agreement.
In case an Event of Default shall occur and be continuing, the principal of and
the accrued interest on this Note may be declared to be due and payable in the
manner and with the effect provided in the Credit Agreement.
Jevic hereby waives presentment, demand, protest or notice of any kind in
connection with this Note.
Notwithstanding the face amount of this Note, the undersigned's liability
hereunder shall be limited at all times to the actual aggregate outstanding
indebtedness to the Bank relating to such Bank's Revolving Credit Loans,
including all principal and interest, together with all fees and expenses as
provided in the Credit Agreement, as established by the Bank's books and records
which shall be conclusive absent manifest error.
Capitalized terms used but not defined herein shall have the respective meanings
assigned to them in the Credit Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA OR FEDERAL
PRINCIPLES OF CONFLICT OF LAWS.
JEVIC TRANSPORTATION INC.
By
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
Form of Term Note
$__,000,00 Philadelphia, PA
[insert date here]
_______________
For Value Received, JEVIC TRANSPORTATION INC., a New Jersey corporation
("Jevic"), hereby promises to pay to the order of CORESTATES BANK, N.A. (the
"Bank"), in lawful currency of the United States of America in immediately
available funds at its offices located at Broad and Chestnut Streets,
Philadelphia, Pennsylvania, the principal sum of_________DOLLARS ($_,000,000) in
___ equal monthly installments of principal each in the amount of $__________due
and payable on the first Business Day of each calendar quarter, and a final
installment in the amount of principal remaining unpaid which shall be due and
payable on______________ , 19_.
[Jevic promises also to pay interest on the unpaid principal amount hereof
in like money at such office from the date hereof until paid at the rates
and at the times provided in the Credit Agreement.]
or
[Jevic promises also to pay interest on the unpaid principal amount hereof in
like money at such office from the date hereof until paid at the times
provided in the Credit Agreement at the annual rate of [insert rate] percent
([ ]%) per annum which is subject to increase upon the occurrence and
continuance of an Event of Default as provided for in the Credit Agreement.]
This Note is one of the Term Notes referred to in, is entitled to the
benefits of and is secured by security interests referred to in the Credit
Agreement, dated as of June 28, 1996 among Jevic and the Bank (as such may
be amended, modified, supplemented, restated or replaced from time to time,
the "Credit Agreement"). This Note is subject to voluntary prepayment and
mandatory repayment, in whole or in part, as provided in the Credit
Agreement. Any prepayment shall be applied to principal in the inverse order
of maturity.
In case an Event of Default shall occur and be continuing, the principal of
and the accrued interest on this Note may be declared to be due and payable
in the manner and with the effect provided in the Credit Agreement.
Jevic hereby waives presentment, demand, protest or notice of any kind in
connection with this Note.
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Credit Agreement.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA
OR FEDERAL PRINCIPLES OF CONFLICT OF LAWS.
JEVIC TRANSPORTATION INC.
By
--------------------------------------
Name:
Title:
2
<PAGE>
EXHIBIT C
Form of Borrowing Base Certificate
[insert date of certificate]
Borrowing Base Certificate
[insert date of information]
To: CoreStates Bank, N.A.
Gentlemen:
This Borrowing Base Certificate is delivered to you pursuant to the terms of
Section 5.1(g) of the Credit Agreement, dated as of June 28, 1996, as currently
in effect. Capitalized terms used without definition below have the same
meanings as they have in the Credit Agreement.
We hereby certify that:
1. No Potential Default or Event of Default has occurred and is continuing as
of the date of this Borrowing Base Certificate.
2. There has been no Material Adverse Change since May 31, 1996, except as
disclosed on the attached schedules.
3. The information set forth on the attached schedules is true, current and
complete as of the date of this Borrowing Base Certificate.
JEVIC TRANSPORTATION INC.
By
--------------------------------------
Name:
Title:
<PAGE>
Jevic Transportation, Inc.
Monthly Computation of Borrowing Base Availability
for the Month of_________, ____________
Collateral Value
1. Total Accounts Receivable $
------------
2. Less: Total Accounts Receivable Which Are Ineligible $( )
------------
3. Total Eligible Accounts Receivable $
------------
4. Line 3 multiplied by 80% x .80
5. Borrowing Base $
------------
Maximum Revolving Credit Loans
6. Revolving Credit Loans Maximum $7,000,000.00
7. less: Letters of Credit Outstanding (Face Amount) $
------------
8. Adjusted Revolving Credit Loans Maximum $
------------
Revolving Credit Loan Usage
9. Revolving Loan Balance (principal) $
------------
10. Availability Under Borrowing Base $
(line 5 minus line 9) ------------
11. Availability As Revolving Credit Loans $
(line 8 minus line 9) ------------
12. Lesser of Line 10 or Line 11 $
------------
13. Amount of Revolving Loan Requested This Date (if any) $
(Not to exceed line 12) ------------
Certification: Jevic Transportation, Inc.
Date: By:
----------------------------------- ------------------------------
2
<PAGE>
EXHIBIT D
Form of Security Agreement
This Security Agreement, dated as of June 28, 1996, by and between JEVIC
TRANSPORTATION INC., a New Jersey corporation, with its main business office
located at 600 Creek Road, Delanco, New Jersey 08075 (the "Debtor") and
CORESTATES BANK, N.A., a national banking association (the "Secured Party").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned in the Credit Agreement.
Preliminary Statement
This Security Agreement is entered into in accordance with and is a
condition precedent to any Loan under the Credit Agreement.
Agreement
The Debtor and the Secured Party, intending to be legally bound, agree as
follows:
1. Definitions.
As used herein the following terms shall have the meanings indicated:
(a) "Collateral" means the Revenue Equipment and such other assets as are
set forth in Schedule A hereto, and all supplemental Schedules A delivered by
the Debtor to the Secured Party from time to time after the date hereof,
together with products and Proceeds (including insurance Proceeds) of any of the
foregoing.
(b) "Credit Agreement" means that certain Credit Agreement, dated as of the
date hereof (as such agreement may be amended, restated, modified, replaced or
substituted hereafter) between the Debtor and CoreStates Bank, N.A.
(c) "Accounts", "Chattel Paper", "Documents of Title", "Equipment",
"General Intangibles", "Instruments", and "Proceeds" shall have the meanings
assigned to them under the Uniform Commercial Code as in effect in the
Commonwealth of Pennsylvania and shall be applicable solely for purposes of the
Collateral.
(d) "Liabilities" means all existing and future indebtedness and other
liabilities, absolute or contingent, direct or indirect, primary or secondary,
of the Debtor to the Bank arising hereunder or in respect of the Revolving
Credit Note or the Term Notes or otherwise in connection with the Credit
Agreement or any Loan Document.
(e) "Prevailing Interest Rate" as of any date means the highest rate of
interest then payable by the Debtor under any Loan (as defined in the Credit
Agreement).
Security Agreement -1-
Jevic Transportation, Inc. Dated as of June 28, 1996
<PAGE>
2. Grant of Security. To secure the payment, promptly when due, and the
punctual performance of all of the Liabilities, the Debtor hereby pledges and
assigns to the Secured Party, and grants to the Secured Party and agrees that
the Secured Party shall have, a general continuing lien upon and security
interest in all the Collateral, which lien and security interest shall be a
general continuing first priority lien upon and security interest in all the
Collateral.
3. Substitution or Release of Collateral. The Debtor may, from time to time
provided there shall not be any Event of Default or Potential Default (as
defined in the Credit Agreement) in existence and no Event of Default or
Potential Default would exist as a result thereof, withdraw assets from the
Collateral provided that the reason for the withdrawal is the sale of the asset
in question or damage to it by reason of accident or otherwise and provided
further that simultaneously therewith a new asset of fair market value at least
equal to the asset withdrawn is made the subject of a supplemental Schedule A
hereto. The fair market value of the asset shall be determined by reference to
the McLean Hunter National Market Reports, Inc. Truck Blue Book and Commercial
Trailer Blue Book, where such reports contain an adequate reference to the asset
being valued. In addition, upon partial prepayment of any Term Loan in
accordance with the Credit Agreement, the Debtor may, provided there shall not
be any Event of Default or Potential Default in existence and no Event of
Default or Potential Default would exist as a result thereof, withdraw assets
from the Collateral in an aggregate fair market value which is not greater than
the aggregate principal amount of the Term Loan prepaid.
4. Books and Records. The Debtor shall faithfully keep complete and
accurate books and records and make all necessary entries therein to reflect the
quantities, costs, current values and locations of all Collateral, the events
and transactions giving rise thereto and all payments, credits and adjustments
applicable thereto, shall keep the Secured Party fully and accurately informed
as to the locations of all such books and records and shall permit the Secured
Party's agents to have such access to them and to any other records pertaining
to the Debtor's business as the Secured Party may request from time to time.
5. Control of and Access to Collateral.
(a) Upon the occurrence of an Event of Default, the Secured Party shall
have the right at any time to take possession of the Collateral or any part
thereof. Notwithstanding any such taking of possession, the Collateral shall
remain at all times at the Debtor's sole risk, and to the full extent permitted
by law the Secured Party shall not be responsible for any loss, damage or
diminution in the value thereof. All costs of transportation, packaging,
custody, processing, storage, and insurance of any unit or item of Collateral
which may be incurred by the Secured Party shall be promptly repaid to the
Secured Party by the Debtor together with interest thereon at the Prevailing
Interest Rate, and the Debtor's liability to the Secured Party for such
repayment with interest shall be included in the Liabilities.
(b) If any item or unit of Collateral is now or hereafter the subject of a
certificate of title or is required by law so to be, the Debtor will promptly
procure the necessary certificate of title and take all steps necessary to cause
the Secured Party's lien or security interest therein to be noted on the face of
such certificate and undertake such other steps as may be necessary to assure
that the Secured Party has a first priority, perfected security interest in each
such item or unit of Collateral, and shall thereafter deposit the original of
such certificate of title with the Secured Party.
Security Agreement -2-
Jevic Transportation, Inc. Dated as of June 28, 1996
<PAGE>
(c) The Debtor shall immediately notify the Secured Party of any event
causing any deterioration, loss or depreciation in value of any substantial
portion of the Collateral and the Debtor's best estimate of the amount of such
deterioration, loss or depreciation.
(d) The Debtor shall afford the Secured Party's agents access to the
Collateral from time to time upon request for purposes of examination,
inspection and appraisal thereof and to verify the Debtor's books and records
pertaining thereto. After an Event of Default and upon the Secured Party's
demand therefor, the Debtor shall assemble the Collateral and make it available
to the Secured Party at such place reasonably convenient to both parties as the
Secured Party may designate, and the Secured Party's rights to such assemblage
shall be enforceable by injunction. If an Event of Default shall not exist, the
Secured Party shall furnish written prior notice to the Debtor reasonably in
advance of any intended examination, inspection, appraisal and verification and
such activity shall commence during the Debtor's normal business hours.
(e) From and after the occurrence of an Event of Default hereunder, the
Debtor shall pay to the Secured Party on demand any and all expenses of
conducting any and all periodic examinations or reviews or causing any periodic
examinations or reviews of Collateral determined to be appropriate by the
Secured Party (including but not limited to reasonable attorneys' fees and legal
expenses) which may be incurred by the Secured Party, with interest at the
Prevailing Interest Rate.
(f) Upon an Event of Default, the Secured Party is hereby granted a license
or other right to use, without charge, Debtor's labels, intellectual property,
or use of any name, trade secrets, tradenames, trademarks and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in advertising for sale, and selling any Collateral and Debtor's rights under
all licenses and all franchise agreements shall inure to the Secured Party's
benefit.
6. Maintenance of Collateral. Subject to the Debtor's business judgment and
reasonable commercial practice, the Debtor shall take good care of the
Collateral and shall afford it suitable preventative maintenance. The Debtor
shall pay the cost of all repairs to or maintenance of the Collateral and shall
not permit anything to be done that might in any way impair the value of any of
the Collateral or any of the security intended to be afforded by this Agreement.
The Debtor shall conscientiously adhere to a well designed internal control
system with respect to the Collateral, and such system shall be capable of
permitting the Debtor and the Secured Party to identify readily at any time the
location and condition of each and every item of Collateral. The Debtor will not
permit any of the Collateral to become or be a fixture.
7. Title to Collateral.
(a) The Debtor has acquired or shall acquire absolute and exclusive title
to each and every item or unit of the Collateral free and clear of all liens,
claims, security interests and other encumbrances, except as permitted under the
Credit Agreement, and the Debtor shall warrant and defend its title to the
Collateral, subject to the rights of the Secured Party, against the claims and
demands of all persons whomsoever. Without limiting the generality of the
foregoing, the Debtor shall not pledge, assign or otherwise encumber, or permit
any liens or security interests (other than those in favor of the Secured Party)
to attach to, any of the Collateral, nor permit any of the Collateral to be
levied upon under any legal process. Notwithstanding the foregoing, mechanics
liens may be created or exist from time to time and such mechanics liens shall
Security Agreement -3-
Jevic Transportation, Inc. Dated as of June 28, 1996
<PAGE>
not be deemed to constitute a breach of this agreement provided the aggregate
amount of such liens at any time does not exceed $50,000.
(b) The Secured Party may, at its sole election but without obligation to
do so, discharge any unpermitted encumbrance pertaining to the Collateral and
all expenses incurred by the Secured Party in so doing, together with interest
thereon at the Prevailing Interest Rate, shall be added to the Liabilities and
shall be payable by the Debtor on demand.
8. Taxes and Liens. The Debtor shall promptly notify the Secured Party in
the event there ever arises against any of the Collateral any lien, assessment
or tax or other liability, whether or not entitled to priority over the Secured
Party's security interest hereunder. In any such event, whether or not such
notice is given, the Secured Party shall have the right (but shall be under no
obligation) to pay any tax or other liability of the Debtor deemed by the
Secured Party in good faith to affect the Secured Party's interests hereunder.
The Debtor shall repay to the Secured Party on demand all sums which the Secured
Party shall have paid under this section in respect of taxes or other
liabilities of the Debtor, with interest thereon at the Prevailing Interest
Rate, and the Debtor's liability to the Secured Party for such repayment with
interest shall be included in the Liabilities. The Secured Party shall be
subrogated to the extent of any such payment by it to all the rights and liens
of the payee against the Debtor's assets.
9. Locations of the Collateral; Name.
(a) If any of the Collateral or any of the Debtor's records concerning any
of the Collateral are at any time to be located on premises leased by the
Debtor, or any premises owned by the Debtor subject to a mortgage or other lien,
the Debtor shall obtain and deliver to the Secured Party, prior to the delivery
of any such Collateral or books or records to such premises, an agreement in
form satisfactory to the Secured Party waiving the landlord's, mortgagee's or
other lienholder's right to enforce against the Collateral or the Debtor's
records concerning the same and assuring the Secured Party's access to such
Collateral and books and records to facilitate the Secured Party's exercise of
its rights to take possession thereof. The location of Debtor's chief executive
office and all locations at which the Debtor maintains a place of business are
set forth in Schedule B, and the Debtor agrees to provide the Secured Party
annually with a list of each location of any such place of business or the
establishment of any additional place of business of the Debtor.
(b) The Debtor represents and warrants that at no time during the past five
(5) years has it been known by or used any other name, including any trade or
fictitious name, except as disclosed in Schedule B.
10. Further Assurances. The Debtor shall continue to conduct its business
in substantially the manner heretofore conducted and will make no material
changes therein which might impair the security of the Secured Party. The Debtor
shall execute and deliver to the Secured Party from time to time all such other
agreements, instruments and other documents (including without limitation all
requested financing and continuation statements) and do all such other and
further acts and things as the Secured Party may reasonably request in order
further to evidence or carry out the intent of this Agreement or to perfect the
liens and security interests created hereby or intended so to be.
Security Agreement -4-
Jevic Transportation, Inc. Dated as of June 28, 1996
<PAGE>
11. Default and Remedies.
(a) The Debtor shall be in default hereunder upon the occurrence of any one
of the following events (each an "Event of Default"):
(i) the Debtor shall fail to pay any amount payable in respect of any
Liability when due (including the expiration of any applicable
grace periods).
(ii) any representation, warranty or information herein, heretofore or
hereafter furnished to the Secured Party by the Debtor in
connection with any of the Liabilities, including any warranty
made by the Debtor through the submission of any schedule,
statement, certificate or other document pursuant to or in
connection with this Agreement, shall be false in any material
respect.
(iii) there shall exist any Potential Default or Event of Default as
defined under the Credit Agreement.
(b) Upon the occurrence of any Event of Default which shall be continuing,
(i) unless the Secured Party elects otherwise, the entire unpaid amount of such
of the Liabilities as are not then otherwise due and payable shall become
immediately due and payable without notice to or demand on the Debtor, (ii) the
Secured Party or its agents may enter the Debtor's premises to exercise the
Secured Party's right to take possession of any Collateral, and (iii) the
Secured Party may at its option exercise from time to time any and all rights
and remedies available to it under the Uniform Commercial Code or otherwise,
including the right to assemble, receipt for, adjust, modify, repair, refurnish
or refurbish (but without any obligation to do so) or foreclose or otherwise
realize upon any of the Collateral and to dispose of any of the Collateral at
one or more public or private sales or other proceedings. The Debtor agrees that
the Secured Party or its nominee may become the purchaser at any such sale or
sales. The Debtor further agrees that ten (10) days shall be reasonable prior
notice of the date of any public sale or other disposition of all or any part of
the Collateral, or of the date on or after which any private sale or other
disposition of the same may be made.
(c) The exercise by the Secured Party of any one right or remedy shall not
be deemed a waiver or release of or any election against any other right or
remedy, and the Secured Party may proceed against the Debtor and the Collateral
and any other collateral granted by the Debtor to the Secured Party under any
other agreement, all in any order and through any available remedies. A waiver
on any one occasion shall not be construed as a waiver or bar on any future
occasion. All property of any kind held at any time by the Secured Party as
Collateral shall stand as one general continuing collateral security for all the
Liabilities and may be retained by the Secured Party as security until all the
Liabilities are fully satisfied. The Debtor shall pay to the Secured Party on
demand any and all expenses (including reasonably attorneys' fees and legal
expenses) which may have been incurred by the Secured Party with interest at the
Prevailing Interest Rate (i) in the prosecution or defense of any action growing
out of or connected with the subject matter of this Agreement, the Liabilities,
the Collateral or any of the Secured Party's rights therein or thereto; or (ii)
in connection with the custody, preservation, use, operation, preparation for
sale or sale of any of the Collateral, the incurring of all of which are hereby
authorized to the extent the Secured Party deems the same advisable. The
Debtor's liability to the Secured Party for any such payment with interest shall
be included in the Liabilities. The Proceeds of any Collateral received by the
Secured Party at any time before or after default, whether from a sale or other
Security Agreement -5-
Jevic Transportation, Inc. Dated as of June 28, 1996
<PAGE>
disposition of Collateral or otherwise, or the Collateral itself, may be applied
to the payment in full or in part of such of the Liabilities and in such order
and manner as the Secured Party may elect. The Debtor to the extent of its
rights in the Collateral waives and releases any right to require the Secured
Party to collect any of the Liabilities from any other of the Collateral or any
other collateral then held by the Secured Party under any theory of marshalling
of assets or otherwise.
12. Power of Attorney. The Debtor hereby irrevocably appoints any officer,
employee or agent of the Secured Party as the Debtor's true and lawful
attorney-in-fact with power to (i) endorse the Debtor's name upon any notes,
checks, drafts, money orders, or other instruments or payments or other
Collateral that may come into the Secured Party's possession; (ii) sign and
endorse the Debtor's name upon any Documents of Title, invoices, freight or
express bills, assignments, verifications and notices in connection with any of
the Collateral, and any instruments or documents relating thereto or to the
Debtor's rights therein; and (iii) execute in the Debtor's name and file one or
more financing, amendment and continuation statements covering the Collateral.
Any such attorney of the Debtor shall have full power to do any and all things
necessary to be done with respect to the above transactions as fully and
effectually as the Debtor might do, and the Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof.
13. Financing Statements. The Debtor shall execute all financing statements
and amendments thereto as the Secured Party may request from time to time to
evidence the security interest granted to the Secured Party hereunder and will
pay all filing fees and taxes, if any, necessary to effect the filing thereof.
Wherever permitted by law, the Debtor authorizes the Secured Party to file
financing statements with respect to the Collateral without the signature of the
Debtor. A copy of this Agreement or a copy of any financing statement prepared
in connection with this Agreement may itself be filed as a financing statement.
14. Miscellaneous.
(a) This Agreement shall commence on the date hereof and shall continue in
full force and effect so long as any of the Liabilities shall exist from time to
time.
(b) No modification or waiver of any provision hereof shall be effective
unless the same is in writing and signed by the party against whom its
enforcement is sought. This Agreement and any amendment hereto or waiver of any
provision hereof may be signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
(c) The representations, warranties, covenants and agreements contained
herein are all material and continuing, and any breach of them shall constitute
a material breach of this Agreement.
(d) All the rights and remedies of the Secured Party hereunder shall be
concurrent and cumulative with and not alternative to or in lieu of the Secured
Party's rights and remedies under any other agreement or agreements.
(e) This Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns, except that the Debtor shall not assign
any of the its rights hereunder without the Secured Party's prior written
consent.
Security Agreement -6-
Jevic Transportation, Inc. Dated as of June 28, 1996
<PAGE>
(f) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(g) No persons other than the Debtor and the Secured Party, and the
assignees of the Secured Party, are intended to be benefitted hereby or shall
have any rights hereunder, as third-party beneficiaries or otherwise.
(h) The Debtor acknowledges that this Agreement and the obligations of the
Debtor hereunder and the security created or intended to be created hereby have
constituted, and were intended by the Debtor to constitute, a material
inducement to the Secured Party to enter into the Credit Agreement and other
agreements referred to therein, knowing that the Secured Party will rely upon
this Agreement. The Debtor intends to be legally bound hereby.
(i) This Agreement shall be deemed to be a contract made under and shall be
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to Pennsylvania or federal principles of the conflict of laws.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be duly executed by their duly authorized representatives as of the date first
above written.
Debtor
JEVIC TRANSPORTATION, INC.
By
------------------------------------
Name
Title
Notices To:
Mr. Brian J. Fitzpatrick
Senior Vice President and Chief Financial Officer
Jevic Transportation, Inc.
600 Creek Road
Delanco, NJ
08075 FAX No. (609) 764-7237
-7-
<PAGE>
Secured Party
CORESTATES BANK, N.A.
By
-----------------------------------
Theresa M. Smith
Vice President
Notices To:
Ms. Theresa M. Smith
Vice President
CoreStates Bank, N.A.
Transportation Leasing and Construction Industry Services
FC 1-8-11-24
1339 Chestnut Street
Philadelphia, PA 19107
FAX No. (215) 786-7704
-8-
<PAGE>
SCHEDULE A TO SECURITY AGREEMENT
[insert date|
This Schedule "A" is an integral part of the Security Agreement dated as of
June 28, 1996 between Jevic Transportation, Inc. (the "Debtor") and
CoreStates Bank, N.A., Philadelphia, Pennsylvania 19101.
The Debtor hereby grants to CoreStates Bank a security interest in all
property described below, subject to the terms and conditions of the
Security Agreement referred to above, which property shall be included in
the Collateral.
JEVIC TRANSPORTATION, INC.
By
--------------------------------------
Name
Title
<PAGE>
SCHEDULE B TO SECURITY AGREEMENT
1. The location of the Debtor's chief executive office and all locations at
which the Debtor maintains a place of business are as follows:
Chief executive office: 600 Creek Road, Delanco, New Jersey 08075
Other locations: 4200 West 35th Place, Chicago, IL 65032
655 Goodman Road, Concord, NH 28025
476 Hartford Turnpike, Shrewsbury, MA 01545
48 Ironside Court, Willingboro, NJ 08046
3934 Thurmond Road, Conley, GA 39026
2. During the past five years the Debtor has not used or been known by any
other name, including any trade or fictitious name.
<PAGE>
EXHIBIT E
Form of Letter of Credit Application
<PAGE>
APPLICATION AND AGREEMENT FOR IRREVOCABLE
STANDBY LETTER OF CREDIT
[LOGO]
(For Bank Use Only) CoreStates
- -------------------------------- Letter of Credit Department
L/C No. FC 1-2-10-49
- -------------------------------- 401 Market Street
P.O. Box 13866
Philadelphia, PA 19101-3866
Date
----------------------------------
TO CORESTATES BANK, N.A.*, A NATIONAL BANKING ASSOCIATION (THE "BANK")
We Request the Bank to issue an irrevocable Standby Letter of Credit on the
following terms and conditions by:
/ / Full Telex Transmission / / U.S. Mail / /Overnight Carrier
AVAILABLE BY DRAFT(S) AT SIGHT ON THE BANK OR ITS CORRESPONDENT AT THE BANK'S
OPTION OR THE BANK MAY WAIVE THE DRAFT REQUIREMENT.
- -------------------------------------------------------------------------------
NAME OF ADVISING BANK OR FOREIGN BANK FOR ACCOUNT OF (APPLICANT)
ISSUING A GUARANTEE IN FAVOR OF THE
BENEFICIARY STATED BELOW.
- -------------------------------------------------------------------------------
IN FAVOR OF (BENEFICIARY) CURRENCY AND AMOUNT
----------------------------------
Drafts are to be drawn and
presented to
/ / The Bank / / Advising Bank
/ / Any Negotiating
Bank on or before:
----------------
(Expiration Date)
- -------------------------------------------------------------------------------
Banking charges, other than the Bank's, are for the
/ /applicant's / / beneficiary's account
- -------------------------------------------------------------------------------
COVERING (Brief description of merchandise, if any, Bid Tender No.,
Contract No., etc.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DOCUMENTS REQUIRED
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL INSTRUCTIONS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THE OPENING OF THIS CREDIT IS SUBJECT TO THE TERMS AND CONDITIONS AS SET FORTH
IN THE AGREEMENT (STANDBY LETTER OF CREDIT) APPEARING ON PAGES 2 AND 3 HEREOF
TO WHICH WE AGREE.
<PAGE>
AGREEMENT FOR STANDBY LETTER OF CREDIT
In consideration of the Bank issuing its Standby Letter of Credit
("Credit"), substantially according to the foregoing instructions, intending to
be legally bound:
1. The undersigned agrees to pay the Bank in United States currency on
demand, or, in any event, upon the presentation of any sight draft or
the majority of any time draft drawn or purporting to be drawn under
or in connection with the Credit, the value of the Credit or of each
draft purporting to be drawn thereunder, together with the Bank's
commission, fees and all expenses paid or incurred by the Bank in
connection with the Credit, and interest, at a rate to be determined
by the Bank, per annum equal to three percent (3%) in excess of the
Bank's Prime Rate from the date of any payment by it to the date of
reimbursement by the undersigned. "Prime Rate" is defined as the rate
of interest for loans established by the Bank from time to time as its
prime rate. The per annum rate of interest payable by the undersigned
under this Agreement shall change each time the Prime Rate changes,
effective on and as of the date of such change. No provision hereof
shall create or imply any obligation or agreement by the Bank to
extend credit to the undersigned or to refrain from requiring payment
when due or demanded hereunder. As to drafts payable in currency other
than United States currency, the undersigned agrees to pay the Bank an
amount in United States currency equivalent to the actual cost to the
Bank of settlement of the Bank's obligations under each such draft.
2. The undersigned hereby grants to the Bank an absolute security
interest in and unqualified right to the possession and disposal of
all property, including shipping documents and documents of title,
owned by us or any one of us in or coming into the Bank's possession
or custody, and in any deposit balances now or hereafter held now or
hereafter held by the Bank for our or any of our account, together
with the proceeds of each and all of the foregoing until such time as
all the obligations and liabilities of us or any of us to the Bank
under or with reference to the Credit or any other obligations or
liabilities of us, or any of us, to the Bank, now or hereafter
incurred have been fully paid and discharged. Such security interest
shall be independent of the Bank's right of setoff. The undersigned
agrees to deliver and assign to the Bank, upon demand, security of a
value and character satisfactory to the Bank, or to make such cash
deposits with the Bank as the Bank may require to further secure our
obligation hereunder.
3. The undersigned agrees that the transactions covered by or related to
this application are not prohibited under the Foreign Assets Control
Regulations, other regulations of a similar nature in effect from time
to time with regard to specified foreign countries or the Transaction
Control Regulations of the United States Treasury Department and that
all transactions covered by or related to the application conform in
every respect to all existing United States Government Regulations.
Neither we nor the beneficiaries are "designated nationals" or
"specially designated nationals" under such Regulations.
4. The undersigned agrees to indemnify, defend and save the Bank and the
Bank's correspondents harmless from and against all losses, damages,
claims, liabilities, costs or expenses, including reasonable counsel
fees, in any way arising from or in connection with the Credit. The
beneficiaries of the Credit shall be deemed our agents and we assume
all risks of their acts or omissions.
5. The undersigned agrees to reimburse the Bank on demand for any costs
of issuing, maintaining or paying the Credit whether in the nature of
reserves, special deposits, capital or other requirements against
credits issued by the Bank or in the form of assessments or other fees
imposed on such credits, resulting from any law or regulation now or
hereafter in existence or the enforcement or interpretation thereof.
The Bank may determine such costs by any reasonable method and the
Bank's determination in the absence of manifest error shall be
conclusive.
6. The undersigned agrees the Bank shall not be deemed to have waived any
of the Bank's rights hereunder unless the Bank or its authorized agent
shall have signed a written waiver thereof. No such waiver, unless it
expressly so states, shall be effective as to any transaction which
occurs subsequent to the date of such waiver nor as to any
continuation of a breach after such waiver.
7. If the undersigned consists of more than one person (including any
individual, bank, business corporation, partnership, or other form of
legal entity; such persons shall be jointly and severally liable
under this Agreement and, notwithstanding the fact that one or more of
such persons may have executed this Agreement as a sponsor, a
guarantor or in some other capacity, each such person makes each and
all of these promises, pledges, covenants and agreements and shall be
directly, unconditionally and fully liable to the Bank hereunder.
Page 2
<PAGE>
8. IN ANY LEGAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER, EACH UNDERSIGNED PARTY HEREBY IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN ANY COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA WHERE THE
BANK MAINTAINS AN OFFICE AND AGREES NOT TO RAISE ANY OBJECTION TO SUCH
JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH
PROCEEDING IN SUCH COUNTY. EACH UNDERSIGNED PARTY AGREES THAT SERVICE
OF PROCESS IN ANY SUCH PROCEEDING MAY BE DULY EFFECTED UPON IT BY
MAILING A COPY THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID, TO EACH
UNDERSIGNED PARTY.
9. EACH UNDERSIGNED PARTY HEREBY WAIVES, AND THE BANK BY ITS ACCEPTANCE
HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO
THE AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO, ACCEPT
OR RELY UPON THIS AGREEMENT.
10. The Credit and this Agreement shall be subject to the Uniform Customs
and Practice for Documentary Credits (1983 Revision), International
Chamber of Commerce Publication No. 400 or the most recent revision
thereof, the terms of which are known to us, and the same shall be
considered as incorporated herein. The Credit and this Agreement shall
be construed in accordance with the laws of the Commonwealth of
Pennsylvania.
--------------------------------------------------------
TYPE OR PRINT NAME OF COMPANY, INDIVIDUAL OR CORPORATION
- ----------------- --------------------------------------------------------
DATE SIGNED AUTHORIZED SIGNATURE(S) AND TITLE(S)
AND
If the Credit is being issued at the request of a correspondent bank, other
principal or guarantor, then:
--------------------------------------------------------
TYPE OR PRINT CORRESPONDENT BANK, OTHER PRINCIPAL
OR GUARANTOR NAME
- ----------------- --------------------------------------------------------
DATE SIGNED OFFICIAL SIGNATURE(S) AND TITLE(S)
NOTE: Page 4 is to be completed by the
Relationship Manager or
Branch Personnel only.
- -------------------------------------------------------------------------------
* CoreStates Bank, N.A. also conducts business as Philadelphia National Bank,
as CoreStates First Pennsylvania Bank and as CoreStates Hamilton Bank.
Page 3
<PAGE>
REQUEST FOR ISSUANCE
OF STANDBY LETTER OF CREDIT
**TO BE COMPLETED BY THE BANK RELATIONSHIP MANAGER OR BRANCH PERSONNEL**
Print or type name of person completing this section:
--------------------------
To: International Operations
Letter of Credit Dept.
F.C. 1-2-10-49
Please issue a Standby Letter of Credit as previously described complying with
the following instructions:
Date of request: Amount:
----------------------- ----------------------------
Place this liability on the Loan Information System to:
------------------------
- -------------------------------------------------------------------------------
(applicant or other guarantor name)
Name of relationship manager for this Letter of Credit:
------------------------
Find code of relationship manager:
---------------------------------------------
Telephone extension of relationship manager:
-----------------------------------
BILLING INSTRUCTIONS:
Fee Rate: % per annum or flat fee of
------- ---------------
/ /Send bill to: / / applicant / / relationship manager
/ / Charge applicant's account number:
-------------------
Credit the revenue (fees) collected to responsibility center number:
-----------
DOCUMENT DISTRIBUTION:
Send original Letter of Credit to: / / beneficiary / / relationship manager
Send copy Letter of Credit to: / / applicant / / relationship manager
Send original and copy(ies) to: / / other:
--------------------------------
SPECIAL INSTRUCTIONS:
Is EVERGREEN language required? / / Yes / / No
If yes, what is the number of days notification required for customary
non-renewal notice?
/ / Thirty Days / / Sixty Days / / Ninety Days / / Other:
----------------
Date:
----------------- ----------------------------------------------------
Signature of relationship manager or other branch
personnal completing this section
Page 3
<PAGE>
SCHEDULE 1
Disclosure Schedule
Section 3.2 Stock Ownership
Shares Percent of
Name of Shareholder Owned Outstanding Shares
------------------- ----- ------------------
Harry Muhlschlegel 97 shs 48.50%
Karen Muhlschlegel 97 shs 48.50%
Jeffrey Muhlschlegel Income Trust 2 shs 1.00%
Jennifer Muhlschlegel Income Trust 2 shs 1.00%
Vicki Whittall Income Trust 2 shs 1.00%
------- ------
200 shs 100.00%
Section 3.5 Additional Indebtedness Not Shown In Financial Statements.
First Union $3,414,417
Midlantic $ 213,723
----------
$3,628,140
EXHIBIT 10.17
Security Agreement
This Security Agreement, dated as of June 28, 1996, by and between JEVIC
TRANSPORTATION INC., a New Jersey corporation, with its main business office
located at 600 Creek Road, Delanco, New Jersey 08075 (the "Debtor") and
CORESTATES BANK, N.A., a national banking association (the "Secured Party").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned in the Credit Agreement.
Preliminary Statement
This Security Agreement is entered into in accordance with and is a
condition precedent to any Loan under the Credit Agreement.
Agreement
The Debtor and the Secured Party, intending to be legally bound, agree as
follows
1. Definitions.
As used herein the following terms shall have the meanings indicated:
(a) "Collateral" means the Revenue Equipment and such other assets as are
set forth in Schedule A hereto, and all supplemental Schedules A delivered by
the Debtor to the Secured Party from time to time after the date hereof,
together with products and Proceeds (including insurance Proceeds) of any of the
foregoing.
(b) "Credit Agreement" means that certain Credit Agreement, dated as of the
date hereof (as such agreement may be amended, restated, modified, replaced or
substituted hereafter) between the Debtor and CoreStates Bank, N.A.
(c) "Accounts", "Chattel Paper", "Documents of Title", "Equipment",
"General Intangibles", "Instruments", and "Proceeds" shall have the meanings
assigned to them under the Uniform Commercial Code as in effect in the
Commonwealth of Pennsylvania and shall be applicable solely for purposes of the
Collateral.
(d) "Liabilities" means all existing and future indebtedness and other
liabilities, absolute or contingent, direct or indirect, primary or secondary,
of the Debtor to the Bank arising hereunder or in respect of the Revolving
Credit Note or the Term Notes or otherwise in connection with the Credit
Agreement or any Loan Document.
(e) "Prevailing Interest Rate" as of any date means the highest rate of
interest then payable by the Debtor under any Loan (as defined in the Credit
Agreement).
- 1 -
<PAGE>
2. Grant of Security. To secure the payment, promptly when due, and the
punctual performance of all of the Liabilities, the Debtor hereby pledges and
assigns to the Secured Party, and grants to the Secured Party and agrees that
the Secured Party shall have, a general continuing lien upon and security
interest in all the Collateral, which lien and security interest shall be a
general continuing first priority lien upon and security interest in all the
Collateral.
3. Substitution or Release of Collateral. The Debtor may, from time to time
provided there shall not be any Event of Default or Potential Default (as
defined in the Credit Agreement) in existence and no Event of Default or
Potential Default would exist as a result thereof, withdraw assets from the
Collateral provided that the reason for the withdrawal is the sale of the asset
in question or damage to it by reason of accident or otherwise and provided
further that simultaneously therewith a new asset of fair market value at least
equal to the asset withdrawn is made the subject of a supplemental Schedule A
hereto. The fair market value of the asset shall be determined by reference to
the McLean Hunter National Market Reports, Inc. Truck Blue Book and Commercial
Trailer Blue Book, where such reports contain an adequate reference to the asset
being valued. In addition, upon partial prepayment of any Term Loan in
accordance with the Credit Agreement, the Debtor may, provided there shall not
be any Event of Default or Potential Default in existence and no Event of
Default or Potential Default would exist as a result thereof, withdraw assets
from the Collateral in an aggregate fair market value which is not greater than
the aggregate principal amount of the Term Loan prepaid.
4. Books and Records. The Debtor shall faithfully keep complete and
accurate books and records and make all necessary entries therein to reflect the
quantities, costs, current values and locations of all Collateral, the events
and transactions giving rise thereto and all payments, credits and adjustments
applicable thereto, shall keep the Secured Party fully and accurately informed
as to the locations of all such books and records and shall permit the Secured
Party's agents to have such access to them and to any other records pertaining
to the Debtor's business as the Secured Party may request from time to time.
5. Control of and Access to Collateral.
(a) Upon the occurrence of an Event of Default, the Secured Party shall
have the right at any time to take possession of the Collateral or any part
thereof. Notwithstanding any such taking of possession, the Collateral shall
remain at all times at the Debtor's sole risk, and to the full extent permitted
by law the Secured Party shall not be responsible for any loss, damage or
diminution in the value thereof. All costs of transportation, packaging,
custody, processing, storage, and insurance of any unit or item of Collateral
which may be incurred by the Secured Party shall be promptly repaid to the
Secured Party by the Debtor together with interest thereon at the Prevailing
Interest Rate, and the Debtor's liability to the Secured Party for such
repayment with interest shall be included in the Liabilities.
(b) If any item or unit of Collateral is now or hereafter the subject of a
certificate of title or is required by law so to be, the Debtor will promptly
procure the necessary certificate of title and take all steps necessary to cause
the Secured Party's lien or security interest therein to be noted on the face of
such certificate and undertake such other steps as may be necessary to assure
that the Secured Party has a first priority, perfected security interest in each
such item or unit of Collateral, and shall thereafter deposit the original of
such certificate of title with the Secured Party.
- 2 -
<PAGE>
(c) The Debtor shall immediately notify the Secured Party of any event
causing any deterioration, loss or depreciation in value of any substantial
portion of the Collateral and the Debtor's best estimate of the amount of such
deterioration, loss or depreciation.
(d) The Debtor shall afford the Secured Party's agents access to the
Collateral from time to time upon request for purposes of examination,
inspection and appraisal thereof and to verify the Debtor's books and records
pertaining thereto. After an Event of Default and upon the Secured Party's
demand therefor, the Debtor shall assemble the Collateral and make it available
to the Secured Party at such place reasonably convenient to both parties as the
Secured Party may designate, and the Secured Party's rights to such assemblage
shall be enforceable by injunction. If an Event of Default shall not exist, the
Secured Party shall furnish written prior notice to the Debtor reasonably in
advance of any intended examination, inspection, appraisal and verification and
such activity shall commence during the Debtor's normal business hours.
(e) From and after the occurrence of an Event of Default hereunder, the
Debtor shall pay to the Secured Party on demand any and all expenses of
conducting any and all periodic examinations or reviews or causing any periodic
examinations or reviews of Collateral determined to be appropriate by the
Secured Party (including but not limited to reasonable attorneys' fees and legal
expenses) which may be incurred by the Secured Party, with interest at the
Prevailing Interest Rate.
(f) Upon an Event of Default, the Secured Party is hereby granted a license
or other right to use, without charge, Debtor's labels, intellectual property,
or use of any name, trade secrets, tradenames, trademarks and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in advertising for sale, and selling any Collateral and Debtor's rights under
all licenses and all franchise agreements shall inure to the Secured Party's
benefit.
6. Maintenance of Collateral. Subject to the Debtor's business judgment and
reasonable commercial practice, the Debtor shall take good care of the
Collateral and shall afford it suitable preventative maintenance. The Debtor
shall pay the cost of all repairs to or maintenance of the Collateral and shall
not permit anything to be done that might in any way impair the value of any of
the Collateral or any of the security intended to be afforded by this Agreement.
The Debtor shall conscientiously adhere to a well designed internal control
system with respect to the Collateral, and such system shall be capable of
permitting the Debtor and the Secured Party to identify readily at any time the
location and condition of each and every item of Collateral. The Debtor will not
permit any of the Collateral to become or be a fixture.
7. Title to Collateral.
(a) The Debtor has acquired or shall acquire absolute and exclusive title
to each and every item or unit of the Collateral free and clear of all liens,
claims, security interests and other encumbrances, except as permitted under the
Credit Agreement, and the Debtor shall warrant and defend its title to the
Collateral, subject to the rights of the Secured Party, against the claims and
demands of all persons whomsoever. Without limiting the generality of the
foregoing, the Debtor shall not pledge, assign or otherwise encumber, or permit
any liens or security interests (other than those in favor of the Secured Party)
to attach to, any of the Collateral, nor permit any of the Collateral to be
levied upon under any legal process. Notwithstanding the foregoing, mechanics
liens may be created or exist from time to time
- 3 -
<PAGE>
and such mechanics liens shall not be deemed to constitute a breach of this
agreement provided the aggregate amount of such liens at any time does not
exceed $50,000.
(b) The Secured Party may, at its sole election but without obligation to
do so, discharge any unpermitted encumbrance pertaining to the Collateral and
all expenses incurred by the Secured Party in so doing, together with interest
thereon at the Prevailing Interest Rate, shall be added to the Liabilities and
shall be payable by the Debtor on demand.
8. Taxes and Liens. The Debtor shall promptly notify the Secured Party in
the event there ever arises against any of the Collateral any lien, assessment
or tax or other liability, whether or not entitled to priority over the Secured
Party's security interest hereunder. In any such event, whether or not such
notice is given, the Secured Party shall have the right (but shall be under no
obligation) to pay any tax or other liability of the Debtor deemed by the
Secured Party in good faith to affect the Secured Party's interests hereunder.
The Debtor shall repay to the Secured Party on demand all sums which the Secured
Party shall have paid under this section in respect of taxes or other
liabilities of the Debtor, with interest thereon at the Prevailing Interest
Rate, and the Debtor's liability to the Secured Party for such repayment with
interest shall be included in the Liabilities. The Secured Party shall be
subrogated to the extent of any such payment by it to all the rights and liens
of the payee against the Debtor's assets.
9. Locations of the Collateral; Name.
(a) If any of the Collateral or any of the Debtor's records concerning any
of the Collateral are at any time to be located on premises leased by the
Debtor, or any premises owned by the Debtor subject to a mortgage or other lien,
the Debtor shall obtain and deliver to the Secured Party, prior to the delivery
of any such Collateral or books or records to such premises, an agreement in
form satisfactory to the Secured Party waiving the landlord's, mortgagee's or
other lienholder's right to enforce against the Collateral or the Debtor's
records concerning the same and assuring the Secured Party's access to such
Collateral and books and records to facilitate the Secured Party's exercise of
its rights to take possession thereof. The location of Debtor's chief executive
office and all locations at which the Debtor maintains a place of business are
set forth in Schedule B, and the Debtor agrees to provide the Secured Party
annually with a list of each location of any such place of business or the
establishment of any additional place of business of the Debtor.
(b) The Debtor represents and warrants that at no time during the past five
(5) years has it been known by or used any other name, including any trade or
fictitious name, except as disclosed in Schedule B.
10. Further Assurances. The Debtor shall continue to conduct its business
in substantially the manner heretofore conducted and will make no material
changes therein which might impair the security of the Secured Party. The Debtor
shall execute and deliver to the Secured Party from time to time all such other
agreements, instruments and other documents (including without limitation all
requested financing and continuation statements) and do all such other and
further acts and things as the Secured Party may reasonably request in order
further to evidence or carry out the intent of this Agreement or to perfect the
liens and security interests created hereby or intended so to be.
- 4 -
<PAGE>
11. Default and Remedies.
(a) The Debtor shall be in default hereunder upon the occurrence of any one
of the following events (each an "Event of Default"):
(i) the Debtor shall fail to pay any amount payable in respect of any
Liability when due (including the expiration of any applicable grace periods).
(ii) any representation, warranty or information herein, heretofore or
hereafter furnished to the Secured Party by the Debtor in connection with any of
the Liabilities, including any warranty made by the Debtor through the
submission of any schedule, statement, certificate or other document pursuant to
or in connection with this Agreement, shall be false in any material respect.
(iii) there shall exist any Potential Default or Event of Default as
defined under the Credit Agreement.
(b) Upon the occurrence of any Event of Default which shall be continuing,
(i) unless the Secured Party elects otherwise, the entire unpaid amount of such
of the Liabilities as are not then otherwise due and payable shall become
immediately due and payable without notice to or demand on the Debtor, (ii) the
Secured Party or its agents may enter the Debtor's premises to exercise the
Secured Party's right to take possession of any Collateral, and (iii) the
Secured Party may at its option exercise from time to time any and all rights
and remedies available to it under the Uniform Commercial Code or otherwise,
including the right to assemble, receipt for, adjust, modify, repair, refurnish
or refurbish (but without any obligation to do so) or foreclose or otherwise
realize upon any of the Collateral and to dispose of any of the Collateral at
one or more public or private sales or other proceedings. The Debtor agrees that
the Secured Party or its nominee may become the purchaser at any such sale or
sales. The Debtor further agrees that ten (10) days shall be reasonable prior
notice of the date of any public sale or other disposition of all or any part of
the Collateral, or of the date on or after which any private sale or other
disposition of the same may be made.
(c) The exercise by the Secured Party of any one right or remedy shall not
be deemed a waiver or release of or any election against any other right or
remedy, and the Secured Party may proceed against the Debtor and the Collateral
and any other collateral granted by the Debtor to the Secured Party under any
other agreement, all in any order and through any available remedies. A waiver
on any one occasion shall not be construed as a waiver or bar on any future
occasion. All property of any kind held at any time by the Secured Party as
Collateral shall stand as one general continuing collateral security for all the
Liabilities and may be retained by the Secured Party as security until all the
Liabilities are fully satisfied. The Debtor shall pay to the Secured Party on
demand any and all expenses (including reasonably attorneys' fees and legal
expenses) which may have been incurred by the Secured Party with interest at the
Prevailing Interest Rate (i) in the prosecution or defense of any action growing
out of or connected with the subject matter of this Agreement, the Liabilities,
the Collateral or any of the Secured Party's rights therein or thereto; or (ii)
in connection with the custody, preservation, use, operation, preparation for
sale or sale of any of the Collateral, the incurring of all of which are hereby
authorized to the extent the Secured Party deems the same advisable. The
Debtor's liability to the Secured Party for any such payment with interest shall
be included in the Liabilities. The Proceeds of any Collateral received by the
Secured Party at any time before or after default, whether from a sale or other
disposition
- 5 -
<PAGE>
of Collateral or otherwise, or the Collateral itself, may be applied to the
payment in full or in part of such of the Liabilities and in such order and
manner as the Secured Party may elect. The Debtor to the extent of its rights in
the Collateral waives and releases any right to require the Secured Party to
collect any of the Liabilities from any other of the Collateral or any other
collateral then held by the Secured Party under any theory of marshalling of
assets or otherwise.
12. Power of Attorney. The Debtor hereby irrevocably appoints any officer,
employee or agent of the Secured Party as the Debtor's true and lawful
attorney-in-fact with power to (i) endorse the Debtor's name upon any notes,
checks, drafts, money orders, or other instruments or payments or other
Collateral that may come into the Secured Party's possession; (ii) sign and
endorse the Debtor's name upon any Documents of Title, invoices, freight or
express bills, assignments, verifications and notices in connection with any of
the Collateral, and any instruments or documents relating thereto or to the
Debtor's rights therein; and (iii) execute in the Debtor's name and file one or
more financing, amendment and continuation statements covering the Collateral.
Any such attorney of the Debtor shall have full power to do any and all things
necessary to be done with respect to the above transactions as fully and
effectually as the Debtor might do, and the Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof.
13. Financing Statements. The Debtor shall execute all financing statements
and amendments thereto as the Secured Party may request from time to time to
evidence the security interest granted to the Secured Party hereunder and will
pay all filing fees and taxes, if any, necessary to effect the filing thereof.
Wherever permitted by law, the Debtor authorizes the Secured Party to file
financing statements with respect to the Collateral without the signature of the
Debtor. A copy of this Agreement or a copy of any financing statement prepared
in connection with this Agreement may itself be filed as a financing statement.
14. Miscellaneous.
(a) This Agreement shall commence on the date hereof and shall continue in
full force and effect so long as any of the Liabilities shall exist from time to
time.
(b) No modification or waiver of any provision hereof shall be effective
unless the same is in writing and signed by the party against whom its
enforcement is sought. This Agreement and any amendment hereto or waiver of any
provision hereof may be signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
(c) The representations, warranties, covenants and agreements contained
herein are all material and continuing, and any breach of them shall constitute
a material breach of this Agreement.
(d) All the rights and remedies of the Secured Party hereunder shall be
concurrent and cumulative with and not alternative to or in lieu of the Secured
Party's rights and remedies under any other agreement or agreements.
(e) This Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns, except that the Debtor shall not assign
any of the its rights hereunder without the Secured Party's prior written
consent.
- 6 -
<PAGE>
(f) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(g) No persons other than the Debtor and the Secured Party, and the
assignees of the Secured Party, are intended to be benefitted hereby or shall
have any rights hereunder, as third-party beneficiaries or otherwise.
(h) The Debtor acknowledges that this Agreement and the obligations of
the Debtor hereunder and the security created or intended to be created hereby
have constituted, and were intended by the Debtor to constitute, a material
inducement to the Secured Party to enter into the Credit Agreement and
- 7 -
<PAGE>
other agreements referred to therein, knowing that the Secured Party will rely
upon this Agreement. The Debtor intends to be legally bound hereby.
This Agreement shall be deemed to be a contract made under and shall be
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to Pennsylvania or federal principles of the conflict of laws.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be duly executed by their duly authorized representatives as of the date first
above written.
Debtor
JEVIC TRANSPORTATION, INC.
By /s/ Brian J. Fitzpatrick
---------------------------------
Name
Title
Notices To:
Mr. Brian J. Fitzpatrick
Senior Vice President and Chief Financial Officer
Jevic Transportation, Inc.
600 Creek Road
Delanco, NJ 08075
FAX No. (609) 764-7237
Secured Party
CORESTATES BANK, N.A
By /s/ Theresa M. Smith
---------------------------------
Theresa M. Smith
Vice President
Notices To:
Ms. Theresa M. Smith
Vice President
CoreStates Bank, N.A.
Transportation Leasing and Construction Industry Services
FC 1-8-11-24
1339 Chestnut Street
Philadelphia, PA 19107
FAX No (215) 786-7704
<PAGE>
SCHEDULE A TO SECURITY AGREEMENT
[insert date]
This Schedule "A" is an integral part of the Security Agreement dated as of June
28, 1996 between Jevic Transportation, Inc. (the "Debtor") and CoreStates Bank,
N.A., Philadelphia, Pennsylvania 19101.
The Debtor hereby grants to CoreStates Bank a security interest in all
property described below, subject to the terms and conditions of the
Security Agreement referred to above, which property shall be included in
the Collateral.
JEVIC TRANSPORTATION, INC.
By
---------------------------------
Name
Title
<PAGE>
SCHEDULE B TO SECURITY AGREEMENT
1. The location of the Debtor's chief executive office and all locations at
which the Debtor maintains a place of business are as follows:
Chief executive office: 600 Creek Road, Delanco, New Jersey 08075
Other locations: 4200 West 35th Place, Chicago, IL 65032
655 Goodman Road, Concord, NH 28025
476 Hartford Turnpike, Shrewsbury, MA 01545
48 Ironside Court, Willingboro, NJ 08046
3934 Thurmond Road, Conley, GA 39026
2. During the past five years the Debtor has not used or been known by any
other name, including any trade or fictitious name.
EXHIBIT 10.18
Loan No. 5908795-001
PROMISSORY NOTE
(600 Creek Road, Delanco, New Jersey)
$5,625,000.00 October 31, 1995
FOR VALUE RECEIVED, Jevic Transportation, Inc., a New Jersey corporation
("BORROWER"), promises to pay to the order of MetLife Capital Financial
Corporation ("METLIFE") at METLIFE's office at 10900 N.E. 4th St., Suite 500,
Bellevue, Washington 98004, attention: Real Estate Department, or at such other
address as the holder hereof may from time to time designate in writing, the
principal sum of Five Million, Six Hundred Twenty-Five Thousand and no
hundredths Dollars ($5,625,000.00) together with interest from the date the
proceeds of the loan (the "Loan") evidenced by this Promissory Note (this
"Note") are initially disbursed until maturity on the principal balance from
time to time remaining unpaid hereon at the rate of eight and thirty-five
hundredths percent (8.35%) per annum (computed on the basis of a 360-day year of
twelve (12) consecutive thirty (30)-day months) in installments as follows: (i)
interest only in advance at the rate of $1,304.69 per day shall be due and
payable on the date the proceeds of the Loan are initially disbursed to or for
the benefit of BORROWER (including, without limitation, disbursement into an
escrow for the benefit of BORROWER) for the period beginning on the date of such
disbursement and ending on the last day of the month during which such
disbursement occurs; and (ii) one hundred nineteen (119) installments of
principal and interest in the amount of $44,726.85 each shall be payable
commencing on the first day of the second month following the month in which the
proceeds of the loan evidenced by this Note are initially disbursed and
continuing on the first day of each and every succeeding month until the first
day of the one hundred twentieth (120) month following the date the proceeds of
the Loan are initially disbursed at which time all then unpaid principal and
interest hereon shall be due and payable.
If any payment shall not be paid when due and shall remain unpaid for ten
(10) days, BORROWER shall pay an additional charge equal to five percent (5.00%)
of the delinquent payment or the highest additional charge permitted by law,
whichever is less.
Upon not less than thirty (30) days' advance written notice to METLIFE at
any time after the fifth (5th) anniversary of the due date of the first monthly
principal and interest payment due under this Note, and upon payment of the
Prepayment Premium, BORROWER shall have the right to prepay all, but not less
than all, of the outstanding balance of this Note on any regularly scheduled
principal and interest payment date. The Prepayment Premium shall be determined
by (i) calculating the decrease (expressed in basis points) in the current
weekly average yield of ten (10)-year U.S. Treasury Notes (as published in
Federal Reserve Statistical Release H.15 [5191) (the "Index") from the Friday
immediately preceding the date of the original proposal letter dated June
<PAGE>
28, 1995, from METLIFE to BORROWER, to the Friday immediately preceding the week
in which the prepayment is made, (ii) dividing the decrease by 100, (iii)
multiplying the result by the following described applicable premium factor (the
"Premium Factor"), and (iv) multiplying the product by the principal balance to
be prepaid. If the Index is unchanged or has increased from the Friday
immediately preceding the date of the proposal letter to the Friday immediately
preceding the prepayment date, no Prepayment Premium shall be due. The Premium
Factor shall be the amount shown on the following chart for the month in which
prepayment occurs:
No. Mos. Premium
Remaining (Years) Factor
--------- ------- ------
120 - 109 (10) .074
108 - 97 ( 9) .068
96 - 85 ( 8) .063
84 - 73 ( 7) .057
72 - 61 ( 6) .051
60 - 49 ( 5) .044
48 - 37 ( 4) .037
36 - 25 ( 3) .030
24 - 13 ( 2) .022
12 - 1 ( 1) .014
If the Federal Reserve Board ceases to publish Statistical Release H.15 [519],
then the decrease in the weekly average yield of ten (10)-year U.S. Treasury
Notes will be determined from another source designated by METLIFE. Prepayment
prior to the fifth (5th) anniversary of the due date of the first monthly
principal and interest payment due under this Note will not be permitted.
If METLIFE at any time accelerates this Note after an Event of Default
(defined below), then BORROWER shall be obligated to pay the Prepayment Premium
in accordance with the foregoing schedule. The Prepayment Premium shall not be
payable with respect to condemnation awards or insurance proceeds from fire or
other casualty which METLIFE applies to prepayment, nor with respect to
BORROWER's prepayment of the Note in full during the last three (3) months of
the term of this Note unless an Event of Default has occurred. BORROWER
expressly acknowledges that such Prepayment Premium is not a penalty but is
intended solely to compensate METLIFE for the loss of its bargain and the
reimbursement of internal expenses and administrative fees and expenses incurred
by METLIFE.
BORROWER shall be liable on this Note and on all the representations,
warranties, indemnities and covenants in the Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Filing ("Mortgage") covering the
property (the "Property") securing this Note and all other documents executed or
delivered in connection herewith (the "Loan Documents").
2.
<PAGE>
Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Mortgage:
(a) Failure of or refusal by BORROWER to make any payment of principal,
interest, or Prepayment Premium upon this Note when due, and such failure or
refusal shall continue for a period of ten (10) days after written notice is
given to BORROWER by METLIFE specifying such failure; or
(b) Failure of BORROWER within the time required by the Mortgage to make
any payment for taxes, insurance or for reserves for such payments, or any other
payment necessary to prevent filing of or discharge of any lien, and such
failure shall continue for a period of ten (10) days after written notice is
given to BORROWER by METLIFE specifying such failure; or
(c) Failure by BORROWER to observe or perform any obligations of BORROWER
to METLIFE on or with respect to any transactions, debts, undertakings or
agreements other than the transaction evidenced by this Note following the
giving of any notice required thereunder and/or the expiration of any applicable
period of grace provided thereby; or
(d) Failure of BORROWER to make any payment or perform any obligation under
any superior liens or encumbrances on the Property, within the time required
thereunder following the giving of any notice required thereunder and/or the
expiration of any applicable period of grace provided thereby, or commencement
of any suit or other action to foreclose any superior liens or encumbrances; or
(e) Failure by BORROWER to observe or perform any of its obligations under
lease agreements, if any, covering the Property following the giving of any
notice required thereunder and/or the expiration of any applicable period of
grace required thereby; or
(f) The Property is transferred or any agreement to transfer any part or
interest in the Property in any manner whatsoever is made or entered into
without the prior written consent of METLIFE, except as specifically allowed
under the Mortgage, including without limitation creating or allowing any liens
on the Property or leasing any portion of the Property; or
(g) Filing by BORROWER of a voluntary petition in bankruptcy or filing by
BORROWER of any petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, or similar relief for
itself under any present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief for debtors, or
the seeking, consenting to, or acquiescing by BORROWER in the appointment of any
trustee, receiver, custodian, conservator or liquidator for BORROWER, any part
of the Property, or any of the income or rents of the Property, or the making by
BORROWER of any general assignment for the benefit of creditors, or the
inability of or failure by BORROWER to pay its debts generally as they become
due, or the insolvency on a balance sheet basis or business failure of BORROWER,
or the making or suffering of a preference within the meaning of federal
3.
<PAGE>
bankruptcy law or the making of a fraudulent transfer under applicable federal
or state law, or concealment by BORROWER of any of its property in fraud of
creditors, or the imposition of a lien upon any of the Property of BORROWER
which is not discharged in the manner permitted by the Mortgage, or the giving
of notice by BORROWER to any governmental body of insolvency or suspension of
operations; or
(h) Filing of a petition against BORROWER seeking any reorganization,
arrangement, composition, readjustment, liquidation, or similar relief under any
present or future federal, state or other law or regulation relating to
bankruptcy, insolvency or other relief for debts, or the appointment of any
trustee, receiver, custodian, conservator or liquidator of BORROWER, of any part
of the Property or of any of the income or rents of the Property, unless such
petition shall be dismissed within sixty (60) days after such filing, but in any
event prior to the entry of an order, judgment or decree approving such
petition; or
(i) The institution of any proceeding for the dissolution or termination of
BORROWER voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets, liabilities or net
worth of BORROWER or any of the guarantors (if any) of the indebtedness
evidenced by this Note from the assets, liabilities or net worth of BORROWER or
any of the guarantors (if any) of the indebtedness evidenced by this Note
previously disclosed to METLIFE; or
(k) Any warranty, representation or statement furnished to METLIFE by or on
behalf of BORROWER under this Note, the Mortgage, or any of the Loan Documents
shall prove to have been false or misleading in any material respect; or
(1) Failure of BORROWER to observe or perform any other covenant or
condition contained in the Mortgage and such default shall continue for thirty
(30) days (or such other cure period as may be expressed therein) after notice
is given to BORROWER specifying the nature of the failure, or if the default
cannot be cured within such applicable cure period, BORROWER fails within such
time to commence and pursue curative action with reasonable diligence or fails
at any time after expiration of such applicable cure period to continue with
reasonable diligence all necessary curative actions. No notice of default and no
opportunity to cure shall be required as to defaults under Section 22 of the
Mortgage; or
(m) Failure of BORROWER to observe or perform any other obligation under
any other Loan Document when such observance or performance is due, and such
failure shall continue beyond the applicable cure period set forth in such Loan
Document, or if the default cannot be cured within such applicable cure period,
BORROWER fails within such time to commence and pursue curative action with
reasonable diligence or fails at any time after expiration of such applicable
cure period to continue with reasonable diligence all necessary curative
actions; or
(n) BORROWER's abandonment of the Property; or
4.
<PAGE>
(o) Any of the foregoing events occur with respect to any tenant, if any,
of the Property, with respect to any guarantor, if any, of any of BORROWER's
obligations in connection with the indebtedness evidenced by this Note or with
respect to any guarantor (if any) of any tenant's obligations relating to the
Property, or such guarantor (if any) dies or becomes incompetent.
Upon the occurrence of any of the foregoing events of default, METLIFE
shall have the option to declare the entire amount of principal and interest due
under this Note immediately due and payable without notice or demand, and
METLIFE may exercise any of its rights under this Note and any document executed
or delivered herewith. After acceleration or maturity, BORROWER shall pay
interest on the outstanding principal balance of this Note at the rate of five
percent (5.00%) per annum above Chase Manhattan Bank's prime interest rate in
effect from time to time, or fifteen percent (15.00%) per annum, whichever is
higher, provided that such interest rate shall not exceed the maximum interest
rate permitted by law.
All payments of the principal and interest on this Note shall be made in
coin or currency of the United States of America which at the time shall be the
legal tender for the payment of public and private debts.
If this Note is placed in the hands of an attorney for collection, BORROWER
agrees to pay reasonable attorneys' fees and costs incurred by METLIFE in
connection therewith, and in the event suit or action is instituted to enforce
or interpret this Note (including without limitation efforts to modify or vacate
any automatic stay or injunction), the prevailing party shall be entitled to
recover all expenses reasonably incurred at, before or after trial and on
appeal, whether or not taxable as costs, or in any bankruptcy proceeding, or in
connection with post-judgment collection efforts, including, without limitation,
attorneys' fees, witness fees (expert and otherwise), deposition costs, copying
charges and other expenses.
This Note shall be governed and construed in accordance with the laws of
the State of New Jersey applicable to contracts made and to be performed therein
(excluding choice-of-law principles). BORROWER hereby irrevocably submits to the
jurisdiction of any state or federal court sitting in New Jersey in any action
or proceeding brought to enforce or otherwise arising out of or relating to this
Note, and hereby waives any objection to venue in any such court and any claim
that such forum is an inconvenient forum.
This Note is given in a commercial transaction for business purposes.
This Note may be declared due prior to its expressed maturity date, all in
the events, on the terms, and in the manner provided for in the Mortgage.
BORROWER and all sureties, endorsers, guarantors and other parties now or
hereafter liable for the payment of this Note, in whole or
5.
<PAGE>
in part, hereby severally (i) waive demand, notice of demand, presentment for
payment, notice of nonpayment, notice of default, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notices,
and further waive diligence in collecting this Note or in enforcing any of the
security for this Note; (ii) agree to any substitution, subordination, exchange
or release of any security for this Note or the release of any party primarily
or secondarily liable for the payment of this Note; (iii) agree that METLIFE
shall not be required to first institute suit or exhaust its remedies hereon
against BORROWER or others liable or to become liable for the payment of this
Note or to enforce its rights against any security for the payment of this Note;
and (iv) consent to any extension of time for the payment of this Note, or any
installment hereof, made by agreement by METLIFE with any person now or
hereafter liable for the payment of this Note, even if BORROWER is not a party
to such agreement.
All agreements between BORROWER and METLIFE, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the final maturity
of this Note or otherwise, shall the interest contracted for, charged, received,
paid or agreed to be paid to METLIFE exceed the maximum amount permissible under
the applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to METLIFE in excess of the maximum amount permissible
under applicable law, the interest payable to METLIFE shall be reduced to the
maximum amount permissible under applicable law; and if from any circumstance
METLIFE shall ever receive anything of value deemed interest by applicable law
in excess of the maximum amount permissible under applicable law, an amount
equal to the excessive interest shall be applied to the outstanding principal
balance hereof, or if such excessive amount of interest exceeds the unpaid
balance of principal hereof, such excess shall be refunded to BORROWER. All
interest paid or agreed to be paid to METLIFE shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full period (including any renewal or extension) until payment in full of the
principal so that the interest hereon for such full period shall not exceed the
maximum amount permissible under applicable law. METLIFE expressly disavows any
intent to contract for, charge or receive interest in an amount which exceeds
the maximum amount permissible under applicable law. This paragraph shall
control all agreements between BORROWER and METLIFE.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING
ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED
IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY
CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN
AGREEMENT.
6.
<PAGE>
IN WITNESS WHEREOF, BORROWER has executed or caused this Note to be
executed by its duly authorized officers under seal as of the year and day first
written above.
JEVIC TRANSPORTATION, INC.,
a New Jersey corporation
By: /s/ Brian J. Fitzpatrick
------------------------------
Title: SVP & CFO
------------------------------
Attest: Gregory J. Conquest
------------------------------
Title: TREASURER
------------------------------
[CORPORATE SEAL]
7.
Prepared by, recording requested by,
and after recording, return to:
Hunter, Maclean, Exley & Dunn, P.C.
200 East Saint Julian Street
Savannah, Georgia 31401
/s/ Roland B. Williams
- ---------------------------------
Roland B. Williams
MetLife Capital Financial Corporation
Loan Number: 5908795-001
MORTAGE SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING
(600 Creek Road, Delanco, New Jersey)
THIS MORTGAGE (herein "Instrument"), made as of October 31, 1995, among the
Mortgagor, JEVIC TRANSPORTATION, INC., a New Jersey corporation, whose mailing
address is 600 Creek Road, Riverside, New Jersey 08075 (herein "Borrower"), in
favor of the Mortgagee, METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware
corporation, whose mailing address is Real Estate Department, 10900 N.E. 4th
Street, Suite 500, Bellevue, Washington 98004 (herein "METLIFE"),
W I T N E S S E T H :
THAT, WHEREAS, Borrower is justly indebted to METLIFE in the sum of Five
Million Six Hundred Twenty-Five Thousand and no hundredths Dollars
($5,625,000.00), as evidenced by a certain Note (aa hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing, and. for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower irrevocably mortgages to METLIFE all of Borrower's right,
title and interest, now owned or hereafter acquired, including any reversion or
remainder interest, in the real property located in the Township of Delanco,
County of Burlington, State of New Jersey, commonly known as 600 Creek Road, and
more particularly described on Exhibit A attached hereto and incorporated herein
including all heretofore or hereafter alleys and streets abutting the property,
and all easements, rights, appurtenances, tenements, hereditaments, rents,
royalties, mineral, oil and gee rights and profits, water, water rights, and
water stock appurtenant to the property (collectively "Premises");
<PAGE>
TOGETHER with all of Borrower's estate, right, title and interest, now
owned or hereafter acquired, in:
(a) all buildings, structures, improvements, parking areas, landscaping,,
and fixtures now or hereafter erected on, attached to, or used or adapted for
use in the operation of the Premises; including but without being limited to,
all heating, air conditioning and incinerating apparatus and equipment; all
boilers, engines, motors, dynamos, generating equipment, piping and plumbing
fixtures, water heaters, ranges, cooking apparatus and mechanical kitchen
equipment, refrigerators, freezers, cooling, ventilating, sprinkling and vacuum
cleaning systems, fire extinguishing apparatus, gas and electric fixtures,
carpeting, floor coverings, underpadding, elevators, escalators, partitions,
mantels, built-in mirrors, window shades, blinds, draperies, screens, storm
sash, awnings, signs, furnishings of public spaces, halls and lobbies, and
shrubbery and plants, and including also all interest of any owner of the
Premises in any of such items hereafter at any time acquired under conditional
sale contract, chattel mortgage or other title retaining or security instrument,
all of which property mentioned in this clause (a) shall be deemed part of the
realty covered by this Instrument and not severable wholly or in part without
material injury to the freehold of the Premises (all of the foregoing together
with replacements and additions thereto are referred to herein as
("Improvements"); and
(b) all compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (i) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (inclouding change of grade), sale or transfer in lieu
of condemnation, or fire, earthquake or other casualty, or (ii) any injury to or
decrease in the value of the Improvements for any reason whatsoever;
(c) return premiums or other payments upon any insurance any time provided
for the benefit of or naming METLIFE, and refunds or rebates of taxes or
assesments on the Premises;
(d) all the right, title and interest of Borrower in, to and under all
written and oral leases and rental agreements (including extensions, renewals
and subleases; all of the foregoing shall be referred to collectively herein aa
the "Leases"), if any, now or hereafter affecting the Premises including,
without limitation, all rents, issues, profits and other revenues and income
from the renting, leasing or bailment of improvements and equipment, all
guaranties of tenants' performance under the Leases, and all rights and claims
of any kind that Borrower may have against any tenant under the Leases or in
connection with the termination or rejection of the Leases in a bankruptcy or
insolvency proceeding;
(e) plans, specifications, contracts and agreements relating to the design
or construction of the Improvements; Borrower's rights under any payment,
performance, or other bond in connection with the design or construction of the
Improvements; all landscaping and
2
<PAGE>
construction materials, supplies, and equipment used or to be used or consumed
in connection with construction of the Improvements, whether stored on the
Premises or at some other location; and contracts, agreements, and purchase
orders with contractors, subcontractors, suppliers, and materialmen incidental
to the design or construction of the Improvements;
(f) all contracts, accounts,_ rights claims or causes of action pertaining
solely to the ownership of the Premises or the Improvements, including, without
limitation, all options or contracts to acquire other property for use in
connection with operation or development of the Premises or Improvements,
management contracts, service or supply contracts, permits and licenses to use
and/or occupy the Premises or the Improvements;
(g) all books, records, surveys, reports and other documents related solely
to the ownership and/or operation of the Premises, the Improvements, or the
Leases; and
(h) all additions, accessions, replacements, substitutions, proceeds and
products of any of the foregoing.
METLIFE does not claim any interest in, and the term Property shall not
include, Borrower's telephone communications or other office equipment,
forklifts, tractors, trailers, vehicles, rolling stock, equipment leases not
financed through METLIFE, accounts, deposits, receivables, general intangibles,
or the proceeds (including but not limited to insurance proceeds) of any of the
foregoing. The Premises, the Improvements, the Leases and all of the rest of the
foregoing property are herein referred to as the "Property."
TO HAVE AND TO HOLD the Property and all parts, rights, members and
appurtenances thereof to the use, benefit and behoof of METLIFE and its
successors and assigns in fee simple forever.
TO SECURE TO METLIFE (a) the repayment of the indebtedness evidenced by
Borrower's note dated of even date herewith in the principal sum of Five Million
Six Hundred Twenty-Five Thousand and no hundredths Dollars ($5,625,000.00), with
interest thereon as set forth in the note, and all renewals, extensions and
modifications thereof (herein "Note"); (b) the repayment of any future advances,
with interest thereon, made by METLIFE to Borrower pursuant to Section 28 hereof
(herein "Future Advances"); (c) the payment of all other sums, with interest
thereon, advanced in accordance herewith to protect the security of this
Instrument or to fulfill any of Borrower's obligations hereunder or under the
other Loan Documents (as defined below); and (d) the performance of the
covenants and agreements of Borrower contained herein or in the other Loan
Documents. The indebtedness and obligations described in clauses (a)- (d) above
are collectively referred to herein as the "Indebtedness." The Note, this
Instrument, and all other documents evidencing, securing or guaranteeing the
Indebtedness (except any Certificate and Indemnity Agreement Regarding Hazardous
Substances), as the same may be modified or amended from time to time, are
referred to herein as the "Loan Documents." The terms of the Note secured hereby
may provide that the
3
<PAGE>
interest rate or payment terms or balance due may be indexed, adjusted, renewed,
or renegotiated from time to time, and this Instrument shall continue to secure
the Note notwithstanding any such indexing, adjustment, renewal or
renegotiation.
Borrower represents and warrants that Borrower has good, marketable and
insurable title to, and has the right to mortgage an indefeasible fee simple
estate in, the Premises, Improvements, rents, and leases, and the right to
convey the other Property, that the Property is unencumbered except as disclosed
in writing to and approved by METLIFE prior to the date hereof, and that
Borrower will warrant and forever defend the title to the Property against all
claims and demands, subject only to the permitted exceptions set forth in
Schedule 1 attached hereto.
Borrower represents, warrants, covenants and agrees for the benefit of
METLIFE as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when due
the principal of and interest on the Indebtedness, any prepayment and other
charges provided in the Loan Documents and all other sums secured by this
Instrument.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the occurrence of an
Event of Default (hereinafter defined), and at METLIFE's sole option at any time
thereafter, Borrower shall pay in addition to each monthly payment on the Note,
one-twelfth of the annual real estate taxes, insurance premiums, assessments,
water and sewer rates, and other charges (herein "Impositions") payable with
respect to the Property (as estimated by METLIFE in its reasonable discretion),
to be held by METLIFE without interest to Borrower, for the payment of such
obligations.
If the amount of such additional payments held by METLIFE ("Funds") at the
time of the annual accounting thereof shall exceed the amount deemed necessary
by METLIFE to provide for the payment of Impositions as they fall due, such
excess shall be at Borrower's option, either repaid to Borrower or credited to
Borrower on the next monthly installment or installments of Funds due. If at any
time the amount of the Funds held by METLIFE shall be less than the amount
deemed necessary by METLIFE to pay Impositions as they fall due, Borrower shall
pay to METLIFE any amount necessary to make up the deficiency within thirty (30)
days after notice from METLIFE to Borrower requesting payment thereof.
Upon the occurrence of an Event of Default (as hereinafter defined),
METLIFE may apply, in any amount and in any order as METLIFE shall determine in
METLIFE's sole discretion, any Funds held by METLIFE at the time of application
(i) to pay Impositions which are now or will hereafter become due, or (ii) as a
credit against sums secured by this Instrument. Upon payment in full of all sums
secured by this Instrument, METLIFE shall refund to Borrower any Funds held by
METLIFE.
3. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise, each
complete installment payment received by METLIFE from Borrower under the Note or
this Instrument shall be applied by METLIFE
4
<PAGE>
first in payment of amounts payable to METLIFE by Borrower under Section 2
hereof, if any, then to interest payable on the Note, then to principal of the
Note, and then to interest and principal on any Future Advances in such order as
METLIFE, at METLIFE's sole discretion, shall determine. Upon the occurrence of
an Event of Default, METLIFE may apply, in any amount and in any order as
METLIFE shall determine in METLIFE's sole discretion, any payments received by
METLIFE under the Note or this Instrument. Any partial payment received by
METLIFE shall, at METLIFE's option, be held in a non-interest bearing account
until METLIFE receives funds sufficient to equal a complete installment payment.
4. CHARGES, LIENS. Borrower shall pay all Impositions attributable to the
Property in the manner provided under Section 2 hereof or, if not paid in such
manner, by Borrower making payment, when due, directly to the payee thereof, or
in such other manner as METLIFE may designate in writing. If requested by
METLIFE, Borrower shall promptly furnish to METLIFE all notices of Impositions
which become due, and in the event Borrower shall make payment directly,
Borrower shall promptly furnish to METLIFE receipts evidencing such payments.
Borrower shall promptly discharge any lien which has, or may have, priority over
or equality with, the lien of this Instrument, and Borrower shall pay, when due,
the claims of all persons supplying labor or materials to or in connection with
the Property. Without METLIFE's prior written permission, Borrower shall not
allow any lien inferior to this Instrument to be perfected against the Property.
If any lien inferior to this Instrument is filed against the Property without
METLIFE's prior written permission and without the consent of Borrower, Borrower
shall, within thirty (30) days after receiving notice of the filing of such
lien, cause such lien to be released of record and deliver evidence of such
release to METLIFE.
5. INSURANCE. Borrower shall obtain and maintain the following types of
insurance upon and relating to the Property:
(a) "All Risk" property and fire insurance (with extended coverage
endorsement including malicious mischief and vandalism) in an amount not
less than the full replacement value of the Property (with a deductible not
to exceed $5,000 and with co- insurance limited to a maximum of 10% of the
amount of the policy naming METLIFE under a lender's loss payee endorsement
(form 438BFU or equivalent) and including agreed amount, inflation guard,
replacement cost and waiver of subrogation endorsements;
(b) Comprehensive general liability insurance in an amount not less
than $2,000,000.00 insuring against personal injury, death and property
damage and naming METLIFE additional insured;
(c) Business interruption insurance covering loss of rental or other
income (including all expenses payable by tenants) in an amount sufficient
to pay all sums due under this Instrument for up to six (6) months; and
(d) Such other types of insurance or endorsements to existing
insurance as may be reasonably required from time to time by METLIFE.
5
<PAGE>
Upon the reasonable request of METLIFE, Borrower shall increase the
coverages under any of the insurance policies required to be maintained
hereunder or otherwise modify such policies in accordance with METLIFE's
request. All of the insurance policies required hereunder shall be issued by
corporate insurers licensed to do business in the state in which the Property is
located and rated A:X or better by A.M. Best Company, and shall be in form
reasonably acceptable to METLIFE. If and to the extent that the Property is
located within an area that has been or is hereafter designated or identified as
an area having special flood hazards by the Department of Housing and Urban
Development or such other official as shall from time to time be authorized by
federal or state law to make such designation pursuant to any national or state
program of flood insurance, Borrower shall carry flood insurance with respect to
the Property in amounts not less than the maximum limit of coverage then
available with respect to the Property or the amount of the Indebtedness,
whichever is less. Certificates of all insurance required to be maintained
hereunder shall be delivered to METLIFE, along with evidence of payment in full
of all premiums required thereunder, contemporaneously with Borrower's execution
of this Instrument. All such certificates shall be in form acceptable to METLIFE
and shall require the insurance company to give to METLIFE at least thirty (30)
days' prior written notice before canceling the policy for any reason or
materially amending it. Certificates evidencing all renewal and substitute
policies of insurance shall be delivered to METLIFE, along with evidence of the
payment in full of all premiums required thereunder, at least fifteen (15) days
before termination of the policies being renewed or substituted. If any loss
shall occur at any time when an Event of Default shall have occurred and be
continuing, METLIFE shall be entitled to the benefit of all insurance policies
held or maintained by Borrower, to the same extent as if same had been made
payable to METLIFE, and upon foreclosure hereunder, METLIFE shall become the
owner thereof. METLIFE shall have the right, but not the obligation, to make
premium payments, at Borrower's expense, to prevent any cancellation,
endorsement, alteration or reissuance of any policy of insurance maintained by
Borrower, and such payments shall be accepted by the insurer to prevent same.
If any act or occurrence of any kind or nature (including any casualty for
which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Borrower will
give prompt written notice thereof to METLIFE. All insurance proceeds paid or
payable in connection with any Loss shall be paid to METLIFE. If (i) no Event of
Default has occurred and is continuing hereunder, (ii) Borrower provides
evidence satisfactory to METLIFE of its ability to pay all amounts becoming due
under the Note during the pendency of any restoration or repairs to or
replacement of the Property, and (iii) the available insurance proceeds are, in
METLIFE's judgment, sufficient to fully and completely restore, repair or
replace the Property, Borrower shall have the right to apply all insurance
proceeds received in connection with such Loss either (a) to restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such Loss, or (b) to the payment of the
Indebtedness in such order as METLIFE may elect. If an Event of Default has
occurred and is continuing hereunder
6
<PAGE>
at the time of such Loss, if METLIFE determines that Borrower will be unable to
pay all amounts becoming due under the Note during the pendency of any
restoration or repairs to or replacement of the Property, if the available
insurance proceeds are insufficient, in METLIFE's judgment, to fully and
completely restore, repair or replace the Property or if METLIFE believes that
one or more tenants (if any) of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, then all of the insurance proceeds payable with respect to such
Loss will be applied to the payment of the Indebtedness, or if so instructed by
METLIFE, Borrower will promptly, at Borrower's sole cost and expense and
regardless of whether sufficient insurance proceeds shall be available, commence
to restore, repair, replace and rebuild the Property as nearly as possible to
its value, condition, character immediately prior to such Loss. Borrower shall
diligently prosecute any restoration, repairs or replacement of the Property
undertaken by or on behalf of Borrower pursuant to this Section 5. All such work
shall be conducted pursuant to written contracts approved by METLIFE in writing.
Notwithstanding anything contained herein to the contrary, in the event the
insurance proceeds received by METLIFE following any Loss are insufficient in
METLIFE's judgment to fully and completely restore, repair or replace the
Property to its condition and character as it existed immediately prior to such
Loss, and if Borrower has complied with all of the other conditions described in
this Section 5, Borrower may elect to restore, repair or replace the Property if
it first deposits with METLIFE such additional sums as METLIFE determines are
necessary in order to fully and completely restore, repair or replace the
Property to its condition and character as it existed immediately prior to such
Loss. In the event any insurance proceeds remain following the restoration,
repair or replacement of the Property, such proceeds shall be applied to the
Indebtedness in such order as METLIFE may elect.
6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a) shall not commit
waste or permit impairment or deterioration of the Property, (b) shall not
abandon the Property, (c) shall restore or repair promptly and in a good and
workmanlike manner all or any part of the Property to the equivalent (in value,
character) of its original condition, or such other condition as METLIFE may
approve in writing, in the event of any damage, injury or loss thereto, whether
or not insurance proceeds are available to cover in whole or in part the costs
of such restoration or repair, (d) shall keep the Property, including all
improvements, fixtures, equipment, machinery and appliances thereon, in good
repair and shall replace fixtures, equipment, machinery and appliances on the
Property when necessary to keep such items in good repair, (e) shall comply with
all laws, ordinances, regulations and requirements of any governmental body
applicable to the Property, (f) if all or part of the Property is for rent or
lease, then METLIFE, at its option after the occurrence of an Event of Default,
may require Borrower to provide for professional management of the Property by a
property manager satisfactory to METLIFE pursuant to a contract approved by
METLIFE in writing, unless such requirement shall be waived by METLIFE in
writing, (g) (if any part of the Property is let to a tenant or tenants) shall
generally operate and maintain the Property in a manner to ensure maximum
rentals, and (h) shall give notice in writing to METLIFE of and,
7
<PAGE>
unless otherwise directed in writing by METLIFE, appear in and defend any action
or proceeding purporting to affect the Property, the security of this Instrument
or the rights or powers of METLIFE hereunder. Neither Borrower nor any tenant or
other person, without the written approval of METLIFE, shall remove, demolish or
alter any improvement now existing or hereafter erected on the Property or any
fixture, equipment, machinery or appliance in or on the Property except when
incident to the replacement of fixtures, equipment, machinery and appliances
with items of like kind.
Borrower represents, warrants and covenants that the Property is and shall
be in compliance with all applicable provisions of the Americans with
Disabilities Act of 1990 and all of the regulations promulgated thereunder, as
the same may be amended from time to time.
7. USE OF PROPERTY. Unless required by applicable law or unless METLIFE has
otherwise agreed in writing, Borrower shall not allow changes in the use for
which all or any part of the Property was intended at the time this Instrument
was executed. Borrower shall not, without METLIFE's prior written consent which
shall not be unreasonably withheld if Borrower shall have provided to METLIFE an
MAI appraisal showing that the value of the Property will not be decreased
thereby, (i) initiate or acquiesce in a change in the zoning classification
(including any variance under any existing zoning ordinance applicable to the
Property), (ii) change the use of the Property to a non-conforming use under
applicable zoning ordinances, or (iii) file any subdivision or parcel map
affecting the Property. Borrower shall not, without METLIFE'S prior written
consent which shall not be unreasonably withheld if METLIFE is satisfied that
the value of the Property shall not be decreased thereby, amend, modify or
consent to any easement or covenants, conditions and restrictions pertaining to
the Property.
B. PROTECTION OF METLIFE'S SECURITY. If Borrower fails to perform any of
the covenants and agreements contained in this Instrument, or if any action or
proceeding is commenced which affects the Property or title thereto or the
interest of METLIFE therein, including, but not limited to, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then METLIFE at METLIFE's option may make such
appearances, disburse such sums and take such action as METLIFE deems necessary,
in its sole discretion, to protect METLIFE's interest, including, but not
limited to, (i) disbursement of attorneys' fees, (ii) entry upon the Property to
make repairs, and (iii) procurement of satisfactory insurance as provided in
Section 5 hereof.
Any amounts disbursed by METLIFE pursuant to this Section 8, with interest
thereon, shall become additional Indebtedness of Borrower secured by this
Instrument. Unless Borrower and METLIFE agree to other terms of payment, such
amounts shall be immediately due and payable and shall bear interest from the
date of disbursement at the rate stated in the Note as applicable after default.
Borrower hereby covenants and agrees that METLIFE shall be subrogated to the
lien of any mortgage or other lien discharged, in whole or in part, by the
Indebtedness. Nothing contained in this Section 8 shall require METLIFE to incur
any expense or take any action hereunder.
8
<PAGE>
9. INSPECTION. METLIFE may make or cause to be made reasonable entries upon
the Property to inspect the interior and exterior thereof.
10. FINANCIAL DATA. Borrower will furnish to METLIFE, and will cause any
guarantor, if any, of the Indebtedness to furnish METLIFE on request, within one
hundred twenty (120) days after the close of its fiscal year (i) annual balance
sheet and profit and loss statements prepared in accordance with generally
accepted accounting principles and practices consistently applied and, if
METLIFE so requires, accompanied by the annual audit report of an independent
certified public accountant reasonably acceptable to METLIFE, (ii) an annual
operating statement, together with a complete rent roll (if applicable) and
other supporting data reflecting all material information with respect to the
operation of the Property and Improvements, and (iii) all other financial
information and reports that METLIFE may from time to time reasonably request,
including, if METLIFE so requires, income tax returns of Borrower.
11. CONDEMNATION. If the Property, or any part thereof, shall be condemned
for any reason or otherwise taken for public or quasi-public use under the power
of eminent domain, or be transferred in lieu thereof, all damages or other
amounts awarded for the taking of, or injury to, the Property shall be paid to
METLIFE who shall have the right, in its sole and absolute discretion, to apply
the amounts so received against (a) the costs and expenses of METLIFE, including
reasonable attorneys' fees incurred in connection with collection of such
amounts, and (b) the balance against the Indebtedness; provided, however, that
if (i) no Event of Default shall have occurred and be continuing hereunder, (ii)
Borrower provides evidence reasonably satisfactory to METLIFE of its ability to
pay all amounts becoming due under the Note during the pendency of any
restoration or repairs to or replacement of the Property, (iii) METLIFE
determines, in its reasonable judgment, that the proceeds of such award are
sufficient to restore, repair, replace and rebuild the Property as nearly as
possible to its value, condition and character immediately prior to such taking
(or, if the proceeds of such award are insufficient for such purpose, if
Borrower provides additional sums to METLIFE's satisfaction so that the
aggregate of such sums and the proceeds of such award will be sufficient for
such purpose), and (iv) Borrower provides evidence satisfactory to METLIFE that
none of the tenants (if any) of the Property will terminate their lease
agreements as a result of either the condemnation or taking or the repairs to or
replacement of the Property, the proceeds of such award, together with
additional sums provided by Borrower, shall be placed in a separate account for
the benefit of METLIFE and Borrower to be used to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such taking. All work to be performed in connection
therewith shall be pursuant to a written contract therefor, which contract shall
be subject to the prior approval of METLIFE. To the extent that any funds remain
after the Property has been so restored and repaired, the same shall be applied
against the Indebtedness in such order as METLIFE may elect. To enforce its
rights hereunder, METLIFE shall be entitled to participate in and control any
condemnation proceedings and to be represented therein by counsel of its own
choice, and Borrower will deliver, or cause to be
9
<PAGE>
delivered to METLIFE such instruments as may be requested by it from time to
time to permit such participation. In the event METLIFE, as a result of any such
judgment, decree or award, believes that the payment or performance of any of
the Indebtedness is impaired, METLIFE may declare all of the Indebtedness
immediately due and payable.
12. BORROWER AND LIEN NOT RELEASED. From time to time, METLIFE may, at
METLIFE's option, without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or of any junior lienholder or guarantors, if
any, without liability on METLIFE's part and notwithstanding Borrower's breach
of any covenant or agreement of Borrower in this Instrument, extend the time for
payment of the Indebtedness or any part thereof, reduce the payments thereon,
release anyone liable on any of the Indebtedness, accept an extension or
modification or renewal note or notes therefor, release from the lien of this
Instrument any part of the Property, release other or additional security,
reconvey any part of the Property, consent to any map or plan of the Property,
consent to the granting of any easement, join in any extension or subordination
agreement, and agree in writing with Borrower to modify the rate of interest or
period of amortization of the Note or change the amount of the monthly
installments payable thereunder. Any actions taken by METLIFE pursuant to the
terms of this Section 12 shall not affect the obligation of Borrower or
Borrower's successors or assigns to pay the sums secured by this Instrument and
to observe the covenants of Borrower contained herein, shall not affect the
guaranty of any person, corporation, partnership or other entity for payment of
the Indebtedness, and shall not affect the lien or priority of the lien hereof
on the Property. Borrower shall pay METLIFE a service charge, together with such
title insurance premiums and attorneys' fees as may be incurred at METLIFE's
option, for any such action if taken at Borrower's request.
13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by METLIFE in
exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or
remedy. The acceptance by METLIFE of payment of any sum secured by this
Instrument after the due date of such payment shall not be a waiver of METLIFE's
right to either require prompt payment when due of all other sums so secured or
to declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by METLIFE shall not
be a waiver of METLIFE's right to accelerate the maturity of the Indebtedness
secured by this Instrument, nor shall METLIFE's receipt of any awards, proceeds
or damages under Sections 5 and 11 hereof operate to cure or waive Borrower's
default in payment of sums secured by this Instrument.
14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is intended
to be a security agreement pursuant to the Uniform Commercial Code for any of
the items specified above as part of the Property which, under applicable law,
may be subject to a security interest pursuant to the Uniform Commercial Code,
and Borrower hereby grants and conveys to METLIFE a first and prior security
interest in all of the Property that constitutes personally, whether now owned
or hereafter acquired. Borrower agrees that METLIFE may file this
10
<PAGE>
Instrument, or a reproduction thereof, in the real estate records or other
appropriate index, as a financing statement for any of the items specified above
as part of the Property. Any reproduction of this Instrument or of any other
security agreement or financing statement shall be sufficient as a financing
statement. In addition, Borrower agrees to execute and deliver to METLIFE, upon
METLIFE's request, any financing statements, as well as extensions, renewals and
amendments thereof, and reproductions of this Instrument in such form as METLIFE
may require to perfect a security interest with respect to the foregoing items.
Borrower shall pay all costs of filing such financing statements and any
extensions, renewals, amendments and releases thereof, and shall pay all costs
and expenses of any record searches for financing statements METLIFE may
require. Without the prior written consent of METLIFE, Borrower shall not create
or suffer to be created pursuant to the Uniform Commercial Code any other
security interest in said items, including replacements and additions thereto.
Upon the occurrence of an Event of Default, METLIFE shall have the remedies of a
secured party under the Uniform Commercial Code, and METLIFE may also invoke the
remedies provided in Section 26 of this Instrument as to such items. In
exercising any of said remedies METLIFE may proceed against the items of real
property and any items of personal property specified above separately or
together and in any order whatsoever, without in any way affecting the
availability of METLIFE's remedies under the Uniform Commercial Code or of the
remedies provided in Section 26 of this Instrument. Within ten (10) days
following any request therefor by METLIFE, Borrower shall prepare and deliver to
METLIFE a written inventory specifically listing all of the personal property
covered by the security interest herein granted, which inventory shall be
certified by Borrower as being true, correct, and complete.
15. LEASES OF THE PROPERTY. As of the date hereof, there are no Leases (as
hereinafter defined) affecting the Property; however, if there shall be, in the
future, Borrower shall comply with and observe Borrower's obligations as
landlord under all Leases of the Property or any part thereof. All Leases
hereafter entered into will be in form and substance subject to the approval of
METLIFE, which shall not be unreasonably withheld. All Leases of the Property
shall specifically provide that such Leases are subordinate to this Instrument;
that the tenant attorns to METLIFE, such attornment to be effective upon
METLIFE's acquisition of title to the Property; that the tenant agrees to
execute such further evidences of attornment as METLIFE may from time to time
request; that the attornment of the tenant shall not be terminated by
foreclosure; and that METLIFE may, at METLIFE's option, accept or reject such
attornments. Borrower shall not, without METLIFE's written consent, request or
consent to the subordination of any Lease of all or any part of the Property to
any lien subordinate to this Instrument. If Borrower becomes aware that any
tenant proposes to do, or is doing, any act or thing which may give rise to any
right of set-off against rent, Borrower shall (i) take such steps as shall be
reasonably calculated to prevent the accrual of any right to a set-off against
rent, (ii) immediately notify METLIFE thereof in writing and of the amount of
said set-offs, and (iii) within ten (10) days after such accrual, reimburse the
tenant who shall have acquired such right to set-off or take such other steps as
shall effectively discharge such setoff and as shall assure that rents
11
<PAGE>
thereafter due shall continue to be payable without set-off or deduction. Upon
METLIFE's receipt of notice of the occurrence of any default or violation by
Borrower of any of its obligations under the Leases, METLIFE shall have the
immediate right, but not the duty or obligation, without prior written notice to
Borrower or to any third party, to enter upon the Property and to take such
actions as METLIFE may deem necessary to cure the default or violation by
Borrower under the Leases. The costs incurred by METLIFE in taking any such
actions pursuant to this paragraph shall become part of the Indebtedness, shall
bear interest at the rate provided in the Note, and shall be payable by Borrower
to METLIFE on demand. METLIFE shall have no liability to Borrower or to any
third party for any actions taken by METLIFE or not taken pursuant to this
paragraph.
16. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER;
ASSUMPTION. METLIFE may, at its option, declare all sums secured by this
Instrument to be immediately due and payable, and METLIFE may invoke any
remedies permitted by Section 26 of this Instrument, if title to the Property is
changed without the prior written consent of METLIFE, which consent shall be at
METLIFE's sole discretion. Any transfer of any interest in the Property or in
the income therefrom, by sale, lease (except for leases to tenants in the
ordinary course of managing income property which are approved by METLIFE
pursuant to Section 15 of this Instrument), contract, mortgage, deed of trust,
further encumbrance or otherwise (including any such transfers as security for
additional financing of the Property), and any change in the ownership interests
in Borrower (including any change in the ownership interests of any legal
entities which comprise or control Borrower) which change results in the control
of Borrower by any unrelated third party not currently having an ownership
interest in Borrower, except transfers and changes in ownership by devise or
descent, shall be considered a change of title. METLIFE shall have the right to
condition its consent to any proposed sale or transfer described in this Section
17 upon, among other things, METLIFE's approval of the transferee's
creditworthiness and management ability and the transferee's execution, prior to
the sale or transfer, of a written assumption agreement containing such terms as
METLIFE may require, including, if required by METLIFE, the imposition of an
assumption fee of one percent (1%) of the then outstanding balance of the
Indebtedness, except that a transfer of the Property to a limited liability
company will be permitted without payment of such one percent (1%) fee;
provided, however, that Borrower will be responsible for payment of all of
METLIFE's third-party costs, including but not limited to attorney's fees,
recording costs, and title charges. Consent by METLIFE to one transfer of the
Property shall not constitute consent to subsequent transfers or waiver of the
provisions of this Section 17. No transfer by Borrower shall relieve Borrower of
liability for payment of the Indebtedness.
12
<PAGE>
18. NOTICE. Except for any notice required under applicable law to be given
in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Instrument or under the Note shall
be in writing, signed by the party giving such notice, election, demand or
request, and shall be delivered personally, by telegram, or sent by registered,
certified, or Express United States mail, postage prepaid, or by Federal Express
or similar service requiring a receipt, to the other party at the address stated
above, or to such other party and at such other address within the United States
of America as any party may designate in writing as provided herein. The date of
receipt of such notice, election, demand or request shall be the earliest of (i)
the date of actual receipt, (ii) three (3) days after the date of mailing by
registered or certified mail, (iii) one (1) day after the date of mailing by
Express Mail or the delivery (for redelivery) to Federal Express or another
similar service requiring a receipt, or (iv) the date of personal delivery (or
refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS. The covenants and agreements herein contained shall bind, and the
rights hereunder shall inure to, the respective heirs, successors and assigns of
METLIFE and Borrower, subject to the provisions of Section 17 hereof. If
Borrower is comprised of more than one person or entity, whether as individuals,
partners, partnerships or corporations, each such person or entity shall be
jointly and severally liable for Borrower's obligations hereunder. In exercising
any rights hereunder or taking any actions provided for herein, METLIFE may act
through its employees, agents or independent contractors as authorized by
METLIFE. The captions and headings of the sections of this Instrument are for
convenience only and are not to be used to interpret or define the provisions
hereof.
20. [INTENTIONALLY DELETED.]
21. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Property held by METLIFE or by any other party,
METLIFE shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. METLIFE shall have
the right to determine the order in which any or all portions of the
Indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Borrower, any party who consents to
this Instrument and any party who now or hereafter acquires a security interest
in the Property and who has actual or constructive notice hereof hereby waives
any and all right to require the marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein.
22. HAZARDOUS WASTE. Borrower has furnished to METLIFE a Phase I
Environmental Assessment dated October 9, 1995, prepared by Terra Nova, and an
Environmental Questionnaire dated September 8, 1995 (collectively, the
"Report"). Except as disclosed to METLIFE in the Report, Borrower has received
no notification of any kind suggesting that the Property or any adjacent
property is or may be contaminated with any hazardous waste or materials or is
or may be required to be cleaned up in
13
<PAGE>
accordance with any applicable law or regulation; and Borrower further
represents and warrants that, except as previously disclosed to METLIFE in
writing, to the best of its knowledge as of the date hereof after due and
diligent inquiry, there are no hazardous waste or materials located in, on or
under the Property or any adjacent property, or incorporated in any
Improvements, nor has the Property or any adjacent property ever been used as a
landfill or a waste disposal site, or a manufacturing, handling, storage,
distribution or disposal facility for hazardous waste or materials. As used
herein, the term "hazardous waste or materials" includes any substance or
material defined in or designated as hazardous or toxic wastes, hazardous or
toxic material, a hazardous, toxic or radioactive substance, or other similar
term, by any federal, state or local statute, regulation or ordinance now or
hereafter in effect. Borrower shall promptly comply with all statutes,
regulations and ordinances, and with all orders, decrees or judgments of
governmental authorities or courts having jurisdiction, relating to the use,
collection, treatment, disposal, storage, control, removal or cleanup of
hazardous waste or materials in, on or under the Property or any adjacent
property, or incorporated in any Improvements, at Borrower's expense. Borrower
agrees to notify METLIFE immediately if Borrower becomes aware of (a) any
material environmental problem or liability with respect to the Property or any
Other Property, or (b) any lien, action or notice resulting from violation of
any of the Applicable Laws. In either such event, at its own cost, Borrower will
(i) obtain and furnish to METLIFE, at METLIFE's request, an environmental audit
or survey from an expert satisfactory to METLIFE with respect to the Property
and (ii) proceed in a timely manner to take all actions which are necessary or
desirable to comply with Applicable Laws, affecting the Property including
removal, containment or any other remedial action required by Applicable Laws.
Following the completion of any such actions, Borrower shall proceed in a timely
manner to restore the Property to its former state of productive use. In the
event that Borrower fails to immediately obtain such audit or inspection,
METLIFE or its agents may perform or obtain such audit or inspection at
Borrower's sole cost and expense. METLIFE may, but is not obligated to, enter
upon the Property and take such actions and incur such costs and expenses to
effect such compliance as it deems advisable to protect its interest in the
Property; and whether or not Borrower has actual knowledge of the existence of
hazardous waste or materials on the Property or any adjacent property as of the
date hereof, Borrower shall reimburse METLIFE as provided in Section 23 below
for the full amount of all costs and expenses incurred by METLIFE prior to
METLIFE acquiring title to the Property through foreclosure or acceptance of a
deed in lieu of foreclosure, in connection with such compliance activities.
Borrower agrees that it will not under any circumstances assert that either this
Instrument or any of the Loan Documents shall put METLIFE in the position of an
owner of the Property prior to any acquisition of the Property by METLIFE. The
rights granted to METLIFE herein and in the other Loan Documents are granted
solely for the protection of METLIFE's lien and security interest covering the
Property, and do not grant to METLIFE the right to control Borrower's actions,
decisions or policies regarding hazardous waste or materials.
23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay within ten (10) days
after written demand from METLIFE all sums advanced by
14
<PAGE>
METLIFE and all costs and expenses incurred by METLIFE after an Event of Default
in taking any actions pursuant to the Loan Documents, including attorneys' fees
and disbursements, accountants' fees, appraisal and inspection fees and the
costs for title reports and guaranties, together with interest thereon at the
rate applicable under the Note after an Event of Default from the date such
costs were advanced or incurred. All such costs and expenses incurred by
METLIFE, and advances made, shall constitute advances under this Instrument to
protect the Property and shall be secured by and have the same priority as the
lien of this Instrument. If Borrower fails to pay any such advances, costs and
expenses and interest thereon, METLIFE may apply any undisbursed loan proceeds
to pay the same, and, without foreclosing the lien of this Instrument, may at
its option commence an independent action against Borrower for the recovery of
the costs, expenses and/or advances, with interest, together with costs of suit,
costs of title reports and guaranty of title, disbursements of counsel and
reasonable attorneys' fees incurred therein or in any appeal therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and valuable
consideration, the receipt of which is hereby acknowledged, to secure the
Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell,
transfer, assign, convey, set over and deliver unto METLIFE all right, title and
interest of Borrower in, to and under the Leases of the Property, and all
guaranties, amendments, extensions and renewals of said Leases and any of them,
and all rents, income and profits which may now or hereafter be or become due or
owing under the Leases, and any of them, or on account of the use of the
Property.
Borrower represents, warrants, covenants and agrees with METLIFE that there
are currently no Leases affecting the Property; however, if there shall be in
the future any Leases affecting the Property:
(a) The sole ownership of the entire lessor's interest in the Leases
shall be vested in Borrower, and Borrower shall not, perform any acts or
execute any other instruments which might prevent METLIFE from fully
exercising its rights with respect to the Leases under any of the terms,
covenants and conditions of this Instrument.
(b) The Leases shall be valid and enforceable in accordance with their
terms and shall not be altered, modified, amended, terminated, canceled,
renewed or surrendered except as approved in writing by METLIFE, which
approval shall not be unreasonably withheld. The terms and conditions of
the Leases shall not be waived in any manner whatsoever except as approved
in writing by METLIFE, which approval shall not be unreasonably withheld.
(c) Borrower shall not materially alter the term or the amount of rent
payable under any Lease without prior written notice to METLIFE and
METLIFE's consent, which shall not be unreasonably withheld.
(d) Borrower shall give prompt written notice to METLIFE of any notice
received by Borrower claiming that a default has occurred
15
<PAGE>
under any of the Leases on the part of Borrower, together with a complete
copy of any such notice.
(e) Each of the Leases shall remain in full force and effect irrespective
of any merger of the interest of lessor and any lessee under any of the leases.
(f) Borrower will not permit any Lease to become subordinate to any lien
other than the lien of this Instrument.
This assignment is absolute, is effective immediately, and is irrevocable
by Borrower so long as the Indebtedness remains outstanding. Notwithstanding the
foregoing, until a Notice is sent to Borrower in writing that an Event of
Default has occurred (which notice is hereafter called a "Notice"), Borrower may
receive, collect and enjoy the rents, income and profits accruing from the
Property.
Upon the occurrence of an Event of Default hereunder, METLIFE may, at its
option, after service of a Notice, receive and collect all such rents, income
and profits from the Property as they become due. METLIFE shall thereafter
continue to receive and collect all such rents, income and profits, as long as
such default or defaults shall exist, and during the pendency of any foreclosure
proceedings.
Borrower hereby irrevocably appoints METLIFE its true and lawful attorney
with power of substitution and with full power for METLIFE in its own name and
capacity or in the name and capacity of Borrower, from and after service of a
Notice, to demand, collect, receive and give complete acquittances for any and
all rents, income and profits accruing from the Property, either in its own name
or in the name of Borrower or otherwise, which METLIFE may deem necessary or
desirable in order to collect and enforce the payment of the rents, income and
profits of and from the Property. Lessees of the Property are hereby expressly
authorized and directed, following receipt of a Notice from METLIFE, to pay any
and all amounts due Borrower pursuant to the Leases to METLIFE or such nominee
as METLIFE may designate in a writing delivered to and received by such lessees,
and the lessees of the Property are expressly relieved of any and all duty,
liability or obligation to Borrower in respect of all payments so made.
Upon the occurrence of any Event of Default, from and after service of a
Notice, METLIFE is hereby vested with full power to use all measures, legal and
equitable, deemed by it to be necessary or proper to enforce this Section 24 and
to collect the rents, income and profits assigned hereunder, including the right
of METLIFE or its designee, to enter upon the Property, or any part thereof, and
take possession of all or any part of the Property together with all personal
property, fixtures, documents, books, records, papers and accounts of Borrower
relating thereto, and METLIFE may exclude Borrower, its agents and servants,
wholly therefrom. Borrower hereby grants full power and authority to METLIFE to
exercise all rights, privileges and powers herein granted at any and all times
after service of a Notice, with full power to use and apply all of the rents and
other income herein assigned to the payment of the costs of managing and
operating the Property and of any
16
<PAGE>
indebtedness or liability of Borrower to METLIFE, including but not limited
to the payment of taxes, special assessments, insurance premiums, damage
claims, the costs of maintaining, repairing, rebuilding and restoring the
improvements on the Property or of making the same rentable, reasonable
attorneys' fees incurred in connection with the enforcement of this
Instrument, and of principal and interest payments due from Borrower to
METLIFE on the Note and this Instrument, all in such order as METLIFE may
determine. METLIFE shall be under no obligation to exercise or prosecute any
of the rights or claims assigned to it hereunder or to perform or carry out
any of the obligations of the lessor under any of the Leases and does not
assume any of the liabilities in connection with or arising or growing out
of the covenants and agreements of Borrower in the Leases. It is further
understood that the assignment set forth in this Section 24 shall not
operate to place responsibility for the control, care, management or repair
of the Property, or parts thereof, upon METLIFE, nor shall it operate to
make METLIFE liable for the performance of any of the terms and conditions
of any of the Leases, or for any waste of the Property by any lessee under
any of the Leases, or any other person, or for any dangerous or defective
condition of the Property or for any negligence in the management, upkeep,
repair or control of the Property resulting in loss or injury or death to
any lessee, licensee, employee or stranger.
25. DEFAULT. The following shall each constitute an event of default
("Event of Default"):
(a) Failure of or refusal by Borrower to pay any portion of the sums
secured by this Instrument when due, and such failure or refusal shall
continue for a period of ten (10) days after written notice is given to
Borrower by METLIFE specifying such failure; or
(b) Failure of Borrower within the time required by this Instrument to
make any payment for taxes, insurance or for reserves for such payments, or
any other payment necessary to prevent filing of or discharge of any lien,
and such failure shall continue for a period of ten (10) days after written
notice is given to Borrower by METLIFE specifying such failure; or
(c) Failure by Borrower to observe or perform any obligations of
Borrower to METLIFE on or with respect to any transactions, debts,
undertakings or agreements other than the transaction evidenced by the
Note, following the giving of any notice required and/or the expiration of
any applicable period of grace provided thereby; or
(d) Failure of Borrower to make any payment or perform any obligation
under any superior liens or encumbrances on the Property, within the time
required thereunder following the giving of any notice required and/or the
expiration of any applicable period of grace provided thereby, or
commencement of any suit or other action to foreclose any superior liens or
encumbrances; or
(e) Failure by Borrower to observe or perform any of its obligations
under any Leases (if any), following the giving of any
notice required
17
<PAGE>
thereunder and/or the expiration of any applicable period of grace provided
thereby; or
(f) The Property is transferred or any agreement to transfer any part
or interest in the Property in any manner whatsoever is made or entered
into without the prior written consent of METLIFE, except as specifically
allowed under this Instrument, including without limitation creating or
allowing any liens on the Property or leasing any portion of the Property;
or
(g) Filing by Borrower of a voluntary petition in bankruptcy or filing
by Borrower of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, or
similar relief for itself under any present or future federal, state or
other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or the seeking, consenting to, or acquiescing by
Borrower in the appointment of any trustee, receiver, custodian,
conservator or liquidator for Borrower, any part of the Property, or any of
the income or rents of the Property, or the making by Borrower of any
general assignment for the benefit of creditors, or the inability of or
failure by Borrower to pay its debts generally as they become due, or the
insolvency on a balance sheet basis or business failure of Borrower, or the
making or suffering of a preference within the meaning of federal
bankruptcy law or the making of a fraudulent transfer under applicable
federal or state law, or concealment by Borrower of any of its property in
fraud of creditors, or the imposition of a lien upon any of the property of
Borrower which is not discharged in the manner permitted by Section 4 of
this Instrument, or the giving of notice by Borrower to any governmental
body of insolvency or suspension of operations; or
(h) Filing of a petition against Borrower seeking any reorganization,
arrangement, composition, readjustment, liquidation, or similar relief
under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the
appointment of any trustee, receiver, custodian, conservator or liquidator
of Borrower, of any part of the Property or of any of the income or rents
of the Property, unless such petition shall be dismissed within sixty (60)
days after such filing, but in any event prior to the entry of an order,
judgment or decree approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of Borrower voluntarily, involuntarily, or by operation of law;
or
(j) A material adverse change occurs in the assets, liabilities or net
worth of Borrower or any of the guarantors (if any) of the indebtedness
evidenced by the Note from the assets, liabilities or net worth of Borrower
or any of the guarantors of the indebtedness evidenced by the Note
previously disclosed to METLIFE; or
18
<PAGE>
(k) Any warranty, representation or statement furnished to METLIFE by
or on behalf of Borrower under the Note, this Instrument, any of the other
Loan Documents or the Certificate and Indemnity Agreement Regarding
Hazardous Substances, shall prove to have been false or misleading in any
material respect; or
(1) Failure of Borrower to observe or perform any other covenant or
condition contained herein and such default shall continue for thirty (30)
days (or such other cure period as may be expressed) after notice is given
to Borrower specifying the nature of the failure or if the default cannot
be cured within such applicable cure period, Borrower fails within such
time to commence and pursue curative action with reasonable diligence or
fails at any time after expiration of such applicable cure period to
continue with reasonable diligence all necessary curative actions;
provided, however, that no notice of default and no opportunity to cure
shall be required with respect to defaults under Section 22 hereof; or
(m) Failure of Borrower to observe or perform any other obligation
under any other Loan Document or the Certificate and Indemnity Regarding
Hazardous Substances when such observance or performance is due, and such
failure shall continue beyond the applicable cure period set forth in such
Loan Document, or if the default cannot be cured within such applicable
cure period, Borrower fails within such time to commence and pursue
curative action with reasonable diligence or fails at any time after
expiration of such applicable cure period to continue with reasonable
diligence all necessary curative actions; or
(n) Borrower's abandonment of the Property; or
(o) Any of the foregoing events occur with respect to any tenant (if
any) of the Property, with respect to any guarantor (if any) of any of
Borrower's obligations in connection with the Indebtedness or with respect
to any guarantor of any tenant's obligations relating to the Property, or
such guarantor dies or becomes incompetent.
26. RIGHTS AND REMEDIES ON DEFAULT.
26.1 Remedies. Upon the occurrence of any Event of Default and at any time
thereafter, METLIFE may exercise any one or more of the following rights and
remedies:
(a) METLIFE may declare all sums secured by this Instrument
immediately due and payable, including any prepayment premium which
Borrower would be required to pay.
(b) METLIFE shall have the right to foreclose this Instrument in
accordance with applicable law.
(c) In the event of any foreclosure, to the extent permitted by
applicable law, METLIFE will be entitled to a judgment which will provide
that if the foreclosure sale proceeds are insufficient to
19
<PAGE>
satisfy the judgment, execution may issue for any amount by which the
unpaid balance of the obligations secured by this Instrument exceeds the
net sale proceeds payable to METLIFE.
(d) With respect to all or any part of the Property that constitutes
personally, METLIFE shall have all rights and remedies of secured party
under the Uniform Commercial Code.
(e) METLIFE shall have the right to have a receiver appointed to take
possession of any or all of the Property, with the power to protect and
preserve the Property, to operate the Property preceding foreclosure or
sale, to collect all the rents and revenues from the Property and apply the
proceeds, over and above cost of the receivership, against the sums due
under this Instrument, and to exercise all of the rights with respect to
the Property described in Section 24 above. The receiver may serve without
bond if permitted by law. METLIFE's right to the appointment of a receiver
shall exist whether or not apparent value of the Property exceeds the sums
due under this Instrument by a substantial amount. Employment by METLIFE
shall not disqualify a person from serving as a receiver.
(f) In the event Borrower remains in possession of the Property after
the Property is sold as provided above or METLIFE otherwise becomes
entitled to possession of the Property upon default of Borrower, Borrower
shall become a tenant at will of METLIFE or the purchaser of the Property
and shall pay a reasonable rental for use of the Property while in
Borrower's possession.
(g) METLIFE shall have any other right or remedy provided in this
Instrument, the Note, or any other Loan Document or instrument delivered by
Borrower in connection therewith, or available at law, in equity or
otherwise.
(h) METLIFE shall have all the rights and remedies set forth in
Sections 23 and 24.
26.2 Sale of the Property. In exercising its rights and
remedies, METLIFE may, at METLIFE's sole discretion, cause all or any part of
the Property to be sold as a whole or in parcels, and certain portions of the
Property may be sold without selling other portions. METLIFE may bid at any
public sale on all or any portion of the Property.
26.3 Notice of Sale. [DELETED.]
26.4 Waiver; Election of Remedies. A waiver by either party of a breach of
a provision of this Instrument shall not constitute a waiver of or prejudice the
party's right otherwise to demand strict compliance with that provision or any
other provision. Election by METLIFE to pursue any remedy shall not exclude
pursuit of any other remedy, and all remedies of METLIFE under this Instrument
are cumulative and not exclusive. An election to make expenditures or take
action to perform an obligation of Borrower shall not affect METLIFE's right to
declare a default and exercise its remedies under this Instrument.
20
<PAGE>
27. SATISFACTION OF MORTGAGE. Upon payment of all sums secured by this
Instrument, METLIFE shall execute a satisfaction of this Instrument and shall
surrender this Instrument and all notes evidencing Indebtedness secured by this
Instrument to the person or persona legally entitled thereto. Such person or
persons shall pay METLIFE's Pa costs incurred in connection with satisfaction of
this Instrument.
28. FUTURE ADVANCES. Upon request of Borrower, METLIFE, at METLIFE's option
so long as this Instrument secures Indebtedness held by METLIFE, may make Future
Advances to Borrower. Such Future Advances, with interest thereon, shall be
secured by this Instrument when evidenced by promissory notes stating that said
notes are secured hereby.
29. IMPOSITION OF TAX BY STATE.
29.1 State Taxes Covered. (This Section does not have any reference to
METLIFE'S income taxes, state, federal or local.) The following constitute state
taxes to which this Section applies:
(a) A specific tax upon mortgages or upon all or any part of the
indebtedness secured by a mortgage.
(b) A specific tax on a mortgagor which the taxpayer is authorized or
required to deduct from payments on the indebtedness secured by a mortgage.
(c) A tax on a mortgage chargeable against the mortgagee or the holder
of the note secured.
(d) A specific tax on all or any portion of the indebtedness or on
payments of principal and interest made by a mortgagor.
29.2 Remedies. If any state tax to which this Section applies is enacted
subsequent to the date of this Instrument, this shall have the same effect
as an Event of Default, and METLIFE may exercise any or all of the remedies
available to it unless the following conditions are met:
(a) Borrower may lawfully pay the tax or charge imposed by state tax,
and
(b) Borrower pays the tax or charge within thirty (30) days after
notice from METLIFE that the tax has been levied.
30. ATTORNEYS' FEES. In the event suit or action is instituted to enforce
or interpret any of the terms of this Instrument (including without limitation
efforts to modify or vacate any automatic stay or injunction), the prevailing
party shall be entitled to recover all expenses reasonably incurred at, before
and after trial and on appeal whether or not taxable as costs, or in any
bankruptcy proceeding including, without limitation, attorneys' fees, witness
fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining
21
<PAGE>
title reports, surveyor reports, and title insurance, incurred by METLIFE
that are necessary at any time in METLIFE's reasonable opinion for the
protection of its interest or enforcement of its rights shall become a part
of the Indebtedness payable on demand and shall bear interest from the date
of expenditure until repaid at the interest rate as provided in the Note.
The term "attorneys' fees" as used in the Loan Documents shall be deemed to
mean such fees as are reasonable and are actually incurred.
31. GOVERNING LAW; SEVERABILITY. This Instrument shall be governed by the
law of the State of New Jersey applicable to contracts made and to be performed
therein (excluding choice-of-law principles). In the event that any provision or
clause of this Instrument or the Note conflicts with applicable law, such
conflict shall not affect other provisions of this Instrument or the Note which
can be given effect without the conflicting provision, and to this end the
provisions of this Instrument and the Note are declared to be severable.
32. TIME OF ESSENCE. Time is of the essence of this Instrument.
33. CHANGES IN WRITING. This Instrument and any of its terms may only be
changed, waived, discharged or terminated by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. Any agreement subsequently made by Borrower or METLIFE
relating to this Instrument shall be superior to the rights of the holder of any
intervening lien or encumbrance.
34. NO OFFSET. Borrower's obligation to make payments and perform all
obligations, covenants and warranties under this Instrument and under the Note
shall be absolute and unconditional and shall not be affected by any
circumstance, including without limitation any setoff, counterclaim, abatement,
suspension, recoupment, deduction, defense or other right that Borrower or any
guarantor may have or claim against METLIFE or any entity participating in
making the loan secured hereby. The foregoing provisions of this section,
however, do not constitute a waiver of any claim or demand which Borrower or any
guarantor may have in damages or otherwise against METLIFE or any other person,
or preclude Borrower from maintaining a separate action thereon; provided,
however, that Borrower waives any right it may have at law or in equity to
consolidate such separate action with any action or proceeding brought by
METLIFE.
35. MAXIMUM INTEREST CHARGES. Notwithstanding anything contained herein or
in any of the Loan Documents to the contrary, in no event shall METLIFE be
entitled to receive interest on the loan secured by this Instrument (the
"Loan") in amounts which, when added to all of the other interest charged,
paid to or received by METLIFE on the Loan, causes the rate of interest on
the Loan to exceed the highest lawful rate. Borrower and METLIFE intend to
comply with the applicable law governing the highest lawful rate and the
maximum amount of interest payable on or in connection with the Loan. If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Loan Documents, or contracted for, charged,
taken, reserved or
22
<PAGE>
received with respect to the Loan, or if acceleration of the final maturity
date of the Loan or if any prepayment by Borrower results in Borrower having
paid or demand having been made on Borrower to pay, any interest in excess
of the amount permitted by applicable law, then all excess amounts
theretofore collected by METLIFE shall be credited on the principal balance
of the Note (or, if the Note has been or would thereby be paid in full, such
excess amounts shall be refunded to Borrower), and the provisions of the
Note, this Instrument and any demand on Borrower shall immediately be deemed
reformed and the amounts thereafter collectible thereunder and hereunder
shall be reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for thereunder and
hereunder. The right to accelerate the final maturity date of the Loan does
not include the right to accelerate any interest which has not otherwise
accrued on the date of such acceleration, and METLIFE does not intend to
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to METLIFE for the use, forbearance or detention of the
Loan shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread through the full term of the Loan until
payment in full so that the rate or amount of interest on account of the
Loan does not exceed the applicable usury ceiling. By execution of this
Instrument, Borrower acknowledges that it believes the Loan to be
nonusurious and agrees that if, at any time, Borrower should have reason to
believe that the Loan is in fact usurious, it will give METLIFE written
notice of its belief and the reasons why Borrower believes the Loan to be
usurious, and Borrower agrees that METLIFE shall have ninety (90) days
following its receipt of such written notice in which to make appropriate
refund or other adjustment in order to correct such condition if it in fact
exists.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS
AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY
THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER
TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN
CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE
THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN
AGREEMENT.
BORROWER ACKNOWLEDGES RECEIPT OF A TRUE COPY HEREOF,
PROVIDED WITHOUT CHARGE.
23
<PAGE>
IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused the
same to be executed by its representatives thereunto duly authorized.
JEVIC TRANSPORTATION, INC.,
a New Jersey corporation
By: /s/ Brian J. Fitzpatrick
---------------------------------------
Titles: SVP/CFO
-----------------------------------
Attest: Gregory J. Conquest
----------------------------------
Title: Treasurer
-----------------------------------
[CORPORATE SEAL]
Exhibits:
Exhibit A - Description of Property
Schedule 1 - Permitted Exceptions
24
<PAGE>
STATE OF NEW JERSEY )
) ss.
COUNTY OF CAMDEN )
ACKNOWLEDGEMENT
PERSONALLY before me, the undersigned, a Notary Public in and for said
State, appeared Brian J. Fitzpatrick and Gregory J. Conquest, to be well-known
and known by me [or proven upon basis of credible evidence] to be the [Vice]
President, and the Treasurer, respectively, of Jevic Transportation, Inc., a New
Jersey corporation, the corporation that executed the within instrument, and
known to me to be the persons whose signatures appear on the within instrument
on behalf of such corporation therein named, and acknowledged to me that they
executed such instrument as their own free act and deed and that such
corporation executed the within instrument as its own free act and deed,
pursuant to its by-laws or a resolution of its board of directors for the uses
and purposes set forth therein.
WITNESS my hand and official seal this 1st day of November, 1995.
/s/ Judith Ann Mancine
---------------------------------------
Notary Public
[SEAL]
Judith Ann Mancine
A Notary Public of New Jersey
My Commission Expires August 19, 1999
25
<PAGE>
EXHIBIT A
ALL THAT CERTAIN land and premises situate in the TOWNSHIP of DELANCO,
County of BURLINGTON and State of New Jersey, bounded and described as follows:
TRACT # I
ALL THAT CERTAIN land and premises situate in the Township of Delanco,
County of Burlington and State of New Jersey, being more particularly described
as follows:
BEGINNING at a point in the Northeasterly Right of Way line of Creek Road
(33 feet wide), said beginning point also being in the Southwesterly corner of
Lot 13F in Block 2000 as shown on the official tax map of Delanco Township;
thence
(1) along the Southeasterly line of said Lot 13F, North 43 degrees 55
minutes 00 seconds East a distance of 497.27 feet to a point; thence
(2) along the Northeasterly line of Lots 3F, 13E, 13D and 13A in said Block
2000, North 24 degrees 55 minutes 30 seconds West a distance of 1060.64 feet to
a point in the Southeasterly line of Lot 9 in Block 2000 aforesaid; thence
(3) partially along the Southeasterly line of said Lot 9 and continuing in
a straight line along the Southeasterly line of Lots 10 and 11B and partially
along the Southeasterly line of Lot 11 in said Block 2000, as shown on aforesaid
tax map, North 65 degrees 00 minutes 53 seconds East a distance of 803.06 feet
to a point in the said Southeasterly line of Lot 11; thence
(4) along the Southwesterly line of Lot 13C in Block 2000, as shown on said
tax map, South 24 degrees 59 minutes 00 seconds East a distance of 1309.14 feet
to a point; thence
(5) partially along the Southeasterly line of said Lot 13C, North 66
degrees 28 minutes 00 seconds East a distance of 5.91 feet to a point therein;
thence
(6) along the Northwesterly line of Lot 13H-2 and partially along the
Northwesterly line of Lot 13H-1 in Block 2000, as shown on said tax map, South
24 degrees 37 minutes 55 seconds West a distance of 718.06 feet to an angle
point therein; thence
(7) continuing along the Northwesterly line of said Lot 13H-I South 43
degrees 55 minutes 00 seconds West a distance of 485.73 feet to a point in the
aforementioned Northeasterly right of way. Line of Creek Road; thence
(8) along said right of way line, North 46 degrees 05 minutes 00 seconds
West a distance of 760.71 feet to the point and place of beginning.
BEING Tax Block 2000, Lot 13.03 on the tax map.
(Continued)
<PAGE>
(Continued)
TRACT #2:
ALL THAT CERTAIN land and premises situate in the Township of Delanco,
County of Burlington and State of New Jersey, being more particularly described
as follows:
BEGINNING at a point in the third course of Tract No. 3 described above,
said point being 255.66 feet Southwesterly along said third course from its
point of termination; thence
(1) along said third course in reverse, South 65 degrees 00 minutes 53
seconds West a distance of 51.04 feet to a point therein; thence
(2) along the Easterly line of Lot 9 in Block 2000, as shown on the
official tax map of Delanco Township, North 13 degrees 24 minutes 07 seconds
West a distance of 521.15 feet to a point in the Southerly right of way line of
Coopertown Road (33 feet wide); thence
(3) along said right of way line of Coopertown Road, South 77 degrees 42
minutes 37 seconds East a distance of 55.49 feet to a point therein; thence
(4) along the Westerly line of Lot 11 in Block 2000, as shown on said tax
map parallel to the second course herein and distant 50.00 feet Easterly as
measured at right angles therefrom, South 13 degrees 24 minutes 07 seconds East
a distance of 486.84 feet to the point of beginning.
BEING Lot 11.02, Block 2000 on the tax map.
<PAGE>
Loan No: 5908795-001
SCHEDULE 1
(600 Creek Road, Delanco, New Jersey)
Permitted Exceptions:
1. Subject to a 100 foot wide side and rear and a 150 foot front
setback line as shown on Subdivision Plat Lot 138 Block 2000 made by
Taylor Engineering Company; dated 4/24/85. Affects Tract 1.
2. Right of Way as contained in Deed Book 4290, page 319, Burlington
County, N.J., records. Affects Tract 1.
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") dated as of August
12, 1997 (the "Effective Date"), is entered into by and between Jevic
Transportation, Inc. ("Jevic") and Jevic Transportation Systems, Inc. ("JTS"),
an affiliate of Jevic.
WITNESSETH:
1. Services.
a. JTS hereby employs Jevic to perform the following administrative
services ("Services") in accordance with the terms and conditions set forth
in this Agreement. Jevic will, upon request, provide services to JTS
relating to employee payroll, records and benefits administration, benefits
planning and design, records management, insurance, certain treasury
operations, cash administration and other services. Upon request of JTS,
Jevic may also from time to time perform such other services, which, in the
opinion of Jevic and JTS, are proper and advisable in assisting JTS to
administer its business affairs and operations.
b. As an aid in providing the Services, Jevic will undertake the
following activities:
(1) representatives of Jevic will at JTS's request periodically
visit JTS's offices to review issues that may arise in the areas
specified in paragraph 2(a); and
(2) Jevic will, upon request, review and prepare written comments
for JTS on documents made available to Jevic by JTS with respect to
the areas specified in paragraph 2(a).
2. Term. The initial term of this Agreement will extend for a period of one
(1) year from the Effective Date. After expiration of Initial Term, Agreement
shall extend automatically for successive one (1) year terms unless JTS provides
to Jevic written notice of its intentions not to exercise automatic renewal
granted herein ninety (90) days prior to commencement of the next one (1) year
term.
3. Payment To Jevic.
a. JTS will pay Jevic as a monthly fee an amount equal to the actual
cost incurred by Jevic in providing the Services hereunder. Any federal,
state or local excise taxes or sales taxes imposed on the provision of
Services shall be billed to JTS under paragraph 5(c) below.
b. JTS will reimburse Jevic for all reasonable business and travel
expenses and any other unanticipated or extraordinary out-of-pocket
expenses incurred by Jevic in the performance of its obligations hereunder.
<PAGE>
c. Any fees or expenses payable pursuant to this Agreement shall be
payable by JTS monthly by the fifteenth day following Jevic's presentation
to JTS of a written invoice of charges. Upon JTS's request, Jevic will
provide any further documentation required in support of such invoice.
Delinquent payment of any invoice provided hereunder shall be subject to a
finance charge in the amount of 1.25% per month as calculated beginning
sixty (60) days from the date of the invoice. Notice of any disputed
charges must be received by Jevic from JTS within sixty (60) days from the
date of the invoice in question. Credit for any disputed charges, approved
after review of notice received, will be applied in the invoice for the
calendar month immediately following the calendar month in which such
approval was granted. Nothing herein shall be construed to grant JTS any
right of set-off against Jevic or relieve JTS of its responsibility to pay
in full all charges as shown on each invoice.
4. Performance of Services. JTS will retain and exercise exclusive
direction and control over the management and properties of its business. Jevic
will have no authority to exercise any such direction or control. Jevic will
direct all correspondence, reports, and written communications solely to JTS.
Jevic will use its best efforts to provide the Services to JTS, and, in so
doing, to exercise the same degree of diligence and care it exercises in the
conduct of its own business. Jevic will not subcontract any of its obligations
hereunder or enter into any contract on behalf of JTS without the prior written
approval of JTS. Jevic shall not be liable to JTS for any claims, liabilities,
damages or other losses (including attorneys' fees) arising out of the
performance of any Services hereunder.
5. Audit.
a. JTS shall have the annual right to conduct an audit of Jevic's
books and records relating to the Services hereunder, by JTS's internal or
external auditors.
b. If JTS has a reasonable basis for suspecting that Jevic is in
breach of the Agreement, JTS shall have the right to perform an audit of
Jevic, separate and independent, from the right to audit as set forth in
paragraph 5(a), in order to determine if such a breach exists.
c. If, as a result of the audits performed pursuant to this Section 5,
JTS believes Jevic has breached the Agreement, Jevic shall have sixty (60)
days to perform an audit of its own and remedy any breach.
6. Independent Contractor. Jevic will act as an independent contractor in
the performance of its obligations under this Agreement. Jevic will retain
control of the manner and method of performance of its obligations under this
Agreement, and JTS will have the right of supervision merely as to the results
of the performance of the Services. Jevic will be responsible for payment of all
taxes, except federal, state and local excise or sales taxes on the Services,
arising out of Jevic's activities in accordance with this Agreement, including
by way of illustration but not limitation, federal and state income tax, social
security tax, unemployment insurance tax, and any other tax or business license
fee as required.
<PAGE>
7. Non-Disclosure and Ownership.
a. Jevic agrees that all information obtained by Jevic as a result of
its performance of its obligations under this Agreement which concerns the
personal, financial, organizational, managerial, operational or other
affairs and resources of JTS will be treated confidentially by Jevic will
not be revealed to any other person, firm or organization except as
disclosure may be required by law or where the information has been
previously placed in the public domain other than by Jevic. This clause
will survive the termination of this Agreement.
b. Jevic agrees that all files, computer programs, tapes, records,
materials, data, papers, reports, and other information relating to JTS
which Jevic obtains as a result of its performance of its obligations under
this Agreement are vested in and owned by JTS as its exclusive property.
Jevic will return to JTS all such property owned by JTS and which is in
Jevic's possession upon termination of this Agreement or at any earlier
time immediately upon JTS's request. This clause will survive the
termination of this Agreement.
8. Hold Harmless. In providing the Services, Jevic shall not be liable to
JTS for and JTS shall hold Jevic harmless from any and all claims, losses,
liabilities, costs or expenses, including reasonable attorneys' fees and
interest and penalties arising from the performance of any Services hereunder
except to the extent that Jevic has made an error or omission which resulted
from the gross negligence or willful and wanton misconduct of Jevic's employees.
In no event shall Jevic be liable for any consequential damages, including lost
profits, loss of use of facilities or injury to the goodwill of JTS.
9. Notices. Any notices or other written communication to be given or
served hereunder will be deemed duly served if delivered personally or mailed by
registered mail, postage prepaid, and addressed as set forth below; provided,
however, that nothing contained herein shall be construed so as to limit the
ability of the parties to mutually agree for provision of notice in some other
manner or form.
If to JTS:
Jevic Transportation Services, Inc.
600 Creek Road
P.O. Box 5157
Delanco, NJ 08075
Attention: President
If to Jevic:
Jevic Transportation, Inc.
600 Creek Road
P.O. Box 5157
Delanco, NJ 08075
Attention: Vice President and Chief Financial Officer
<PAGE>
or at such other address as the parties may subsequently designate to the other
by notice served as herein provided.
10. Binding Effect. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
Neither JTS nor Jevic may assign any of its rights or responsibilities hereunder
to any person without the prior written consent of the other.
11. Entire Agreement. The parties agree that this Agreement sets forth
their entire agreement, and there are no promises or understandings other than
those expressly stated herein.
12. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New Jersey.
13. Captions. Captions used in this Agreement are not part of this
Agreement, and are for the convenience of reference only, and do not affect the
meaning or construction of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
JEVIC TRANSPORTATION, INC.
By: /s/ Paul J. Karvois
------------------------------------
Name: Paul J. Karvois
Title: President
JEVIC TRANSPORTATION SERVICES, INC.
By: /s/ Harry J. Muhlschlegel
------------------------------------
Name: Harry J. Muhlschlegel
Title: President
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.
August 13, 1997
JEVIC TRANSPORTATION, INC.
Certified Corporate Resolutions
Karen B. Muhlschlegel hereby certifies that: (a) she is the duly
elected and acting Secretary of Jevic Transportation, Inc., a corporation duly
organized and existing under the laws of the State of New Jersey (the
"Company"); (b) attached hereto and hereby incorporated herein by reference is a
true copy of resolutions duly adopted by the board of directors of the Company;
and (c) such resolutions have not subsequently been rescinded, amended or
otherwise modified and are still in full force and effect.
August 7, 1997 /s/ Karen B. Muhlschlegel
-------------------------
Karen B. Muhlschlegel
<PAGE>
FURTHER RESOLVED, that any director or officer of the Company signing
the Registration Statement or any amendment thereto, or any new registration
statement registering additional securities in connection with the Offering
pursuant to Rule 462(b) under the Act (a "Rule 462(b) Registration Statement")
on behalf of the Company be and hereby is authorized to have his or her name
affixed thereto by the holder of a power of attorney executed and delivered for
such purpose; and
FURTHER RESOLVED, that the execution and delivery by the officers and
directors of the Company who execute the Registration Statement of a power of
attorney appointing each of Harry J. Muhlschlegel and Karen Muhlschlegel to be
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for each of such directors and officers and in his respective
name, place and stead, in any and all capacities to sign any amendment(s) to the
Registration Statement, including any post-effective amendment(s) and any Rule
462(b) Registration Statements, to file the same with the Commission and to
perform all other acts necessary in connection with any matter relating to the
Registration Statement and any amendment(s) or post-effective amendment(s)
thereto be and they hereby are approved, authorized and confirmed in all
respects;
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1995 DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1994 JAN-01-1995 JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1994 DEC-31-1995 DEC-31-1996 JUN-30-1997
<CASH> 0 1,146 2,403 4,842
<SECURITIES> 0 0 0 0
<RECEIVABLES> 0 14,980 18,277 20,074
<ALLOWANCES> 0 (500) (1,154) (1,381)
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 0 19,050 22,035 27,165
<PP&E> 0 61,503 81,539 92,062
<DEPRECIATION> 0 (14,545) (22,572) (24,636
)
<TOTAL-ASSETS> 0 66,427 82,355 96,047
<CURRENT-LIABILITIES> 0 21,777 27,952 30,507
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 0 1,014 1,128 1,128
<OTHER-SE> 0 17,222 22,943 26,100
<TOTAL-LIABILITY-AND-EQUITY> 0 66,427 82,355 96,047
<SALES> 119,299 125,973 154,799 90,417
<TOTAL-REVENUES> 119,299 125,973 154,799 90,417
<CGS> 0 0 0 0
<TOTAL-COSTS> 107,562 119,923 145,409 84,308
<OTHER-EXPENSES> (106) (153) (200) (55)
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 1,080 1,773 2,966 1,629
<INCOME-PRETAX> 10,763 4,430 6,624 4,535
<INCOME-TAX> 351 191 429 180
<INCOME-CONTINUING> 10,412 4,239 6,195 4,355
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 10,412 4,239 6,195 4,355
<EPS-PRIMARY> 0 0 0 0
<EPS-DILUTED> 0 0 0 0
</TABLE>
