<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
JEVIC TRANSPORTATION, INC.
(NAME OF SUBJECT COMPANY)
JEVIC TRANSPORTATION, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, NO PAR VALUE
(TITLE OF CLASS OF SECURITIES)
47719P107
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
HARRY J. MUHLSCHLEGEL
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
600 CREEK ROAD
DELANCO, NEW JERSEY 08075
(609) 461-7111
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
------------------------
WITH A COPY TO:
BARRY M. ABELSON, ESQ.
ROBERT A. FRIEDEL, ESQ.
PEPPER HAMILTON LLP
3000 TWO LOGAN SQUARE
PHILADELPHIA, PA 19103
(215) 981-4000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Jevic Transportation, Inc., a New Jersey
corporation (the "Company"). The principal executive offices of the Company are
located at 600 Creek Road Delanco, New Jersey 08075. The classes of securities
to which this Statement relates are the Company's Common Stock, no par value,
and Class A Common Stock, no par value, (the "Company Stock" or the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer disclosed in a Tender Offer
Statement on Schedule 14D-1 dated June 9, 1999 (the "Schedule 14D-1") filed by
Yellow Corporation, a Delaware corporation ("Parent"), and its wholly-owned
subsidiary JPF Acquisition Corp., a New Jersey corporation (the "Purchaser" and,
together with Parent, the "Bidder"), to purchase all of the outstanding Shares
at a price of $14.00 per Share, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated June 9, 1999 (the "Offer to Purchase") and
the related Letter of Transmittal (which, as amended from time to time, together
with any amendments and supplements thereto, collectively constitute the
"Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 6, 1999 (the "Merger Agreement"), by and among Parent, the Purchaser
and the Company. The Merger Agreement provides, among other things, that as soon
as practicable after the satisfaction or waiver of the conditions set forth in
the Merger Agreement, Purchaser will be merged with and into the Company (the
"Merger"), with the Company surviving as a wholly-owned subsidiary of Parent
(the "Surviving Corporation"). A copy of the Merger Agreement is filed herewith
as Exhibit 1 to this Schedule 14D-9 and is incorporated herein by reference.
As set forth in the Schedule 14D-1, the principal executive offices of
Parent and Purchaser are P.O. Box 7563, 10990 Roe Avenue, Overland Park, Kansas
66211.
ITEM 3. IDENTITY AND BACKGROUND.
(a) NAME AND ADDRESS OF THE COMPANY. The name and address of the Company,
which is the person filing this Statement, are set forth in Item 1 above.
(b) MATERIAL CONTRACTS, ETC.
(1) Between the Company and Its Executive Officers, Directors and
Affiliates
General
Certain contracts, agreements, arrangements and understandings between the
Company and its executive officers, directors or affiliates are described in an
"Information Statement Pursuant to Section 14(f) of the Securities Exchange Act
of 1934 and Rule 14f-1 Thereunder" (the "Information Statement") dated the date
hereof, which is attached hereto as Annex II and incorporated herein by
reference in its entirety.
Stock Options
On March 18, 1999, the Company granted 10,000 options to purchase shares of
Company Common Stock at $6.25 per share, the fair market value on the date of
grant, to each of Paul J. Karvois, Brian J. Fitzpatrick, Joseph A. Librizzi and
Raymond M. Conlin under its 1997 Incentive Plan. The options vest with respect
to 40% of the shares purchasable upon the exercise of the option on the second
anniversary of the date of grant and will vest as to an additional 20% of the
shares on each of the three succeeding anniversaries. The options expire ten
years after the date of grant, subject to the earlier termination upon the
occurrence of certain events.
Employment Agreements
The Company entered into employment agreements (the "Employment
Agreements") dated June 4, 1999 with Paul J. Karvois, Brian J. Fitzpatrick,
Joseph A. Librizzi and Raymond M. Conlin (each, an
2
<PAGE> 3
"Executive Officer"). Pursuant to such Employment Agreements, each Executive
Officer will continue his employment in his current position receiving base
salary, a minimum target bonus, and other Company benefits. Parent is also a
party to these Employment Agreements and has agreed to cause the Surviving
Corporation to satisfy the Company's obligations thereunder after the date on
which the Purchaser purchases Shares pursuant to the Offer (the "Purchase
Date"). In addition, under the Employment Agreements, Parent agrees to grant to
the Executive Officers as of the Purchase Date stock options to purchase Parent
common stock (Mr. Karvois - 30,000 shares; Mr. Fitzpatrick - 20,000 shares; Mr.
Librizzi - 20,000 shares; and Mr. Conlin - 20,000 shares) and to cause the
Surviving Corporation to provide certain specified perquisites after the
Purchase Date. With respect to calendar years after the Purchase Date, the
Executive Officers will be entitled to participate in Parent's stock option
plans on terms and conditions substantially similar to those generally
applicable to executives of Parent and its subsidiaries. The Employment
Agreements recognize the Company's obligation to pay benefits under certain
Severance Agreements (as defined below) entered into between the Company and the
Executive Officers (if the conditions set forth in such Severance Agreements are
met), but vary the terms of the Severance Agreements effective as of the
Purchase Date so that certain contemplated changes in an Executive Officer's
responsibilities and benefits after the Purchase Date will not be considered
"Good Reason" entitling the Executive Officer upon termination of employment to
benefits under the applicable Severance Agreement. Copies of these Employment
Agreements are filed herewith as Exhibits 2 through 5 respectively and are
incorporated herein by reference.
Severance Agreements
The Company entered into Severance Agreements dated April 5, 1999 with each
Executive Officer, which were amended and restated on June 4, 1999 (as amended
and restated, the "Severance Agreements"). Under the Severance Agreements, on
the Purchase Date, the Executive Officers will receive bonuses in an aggregate
amount of $875,000 (Mr. Karvois - $315,000; Mr. Fitzpatrick - $280,000; Mr.
Librizzi - $225,000; and Mr. Conlin - $55,000). The Severance Agreements provide
certain additional benefits to each Executive Officer if, within two years after
the Purchase Date, (i) he is terminated by the Company without cause or (ii) he
resigns for good reason. In such circumstances, the Executive Officer will be
entitled to receive a lump sum payment equal to two times the sum of (a) the
Executive Officer's salary, at the greater of his salary immediately prior to
the Purchase Date or on the date of termination, plus (b) the Executive
Officer's bonus, at the greater of his target bonus for the year of his
termination or the best actual bonus he received in the five previous years. As
part of the amendment and restatement of the Severance Agreements, the Executive
Officers agreed to forego the right to receive the additional benefits described
above as a result of any resignation without good reason following six months
after a change of control of the Company. Copies of these Severance Agreements
are filed herewith as Exhibits 6 through 9 respectively and are incorporated
herein by reference.
Indemnification
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,
3
<PAGE> 4
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 of 1933 and the Securities
Exchange Act of 1934.
(2) Between the Company and Parent, Their Executive Officers, Directors
and Affiliates
The Merger Agreement
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to prior satisfaction or waiver
of certain conditions of the Offer set forth in the Merger Agreement (the "Offer
Conditions"), the Purchaser will purchase all Shares validly tendered pursuant
to the Offer at a price of $14.00 per Share, net to the seller in cash, without
interest thereon. The Merger Agreement provides that, without the prior written
consent of the Company, the Purchaser will not decrease the price per share of
Class A Common Stock (the "Class A Common Shares") or Common Stock (the "Common
Shares") or change the form of consideration payable in the Offer, decrease the
number of Shares sought to be purchased in the Offer, change the Offer
Conditions, waive or reduce the condition that there be validly tendered and not
withdrawn prior to the expiration date for the Offer that number of Shares which
represents at least 51% of the outstanding Common Shares on a fully diluted
basis (including Common Shares issuable upon conversion of Class A Common
Shares) on the date of purchase (the "Minimum Condition"), impose additional
conditions to the Offer or amend any other term of the Offer in any manner
adverse to the holders of any Shares; provided, however, that if all the Offer
Conditions are then satisfied or waived, the Parent, in order to permit the
Merger to become effective without a meeting of the Company's shareholders (the
"Shareholders") in accordance with Section 14A:10-5.1 of the NJCL, shall have
the right (i) to extend the Offer for a period or periods aggregating up to ten
business days from the then effective Expiration Date and (ii) thereafter to
extend the Offer with the prior written consent of the Company; and provided,
further, that if Parent elects to extend the Offer pursuant to clause (i) above,
Parent and the Purchaser shall be deemed to have permanently and irrevocably
waived all of the Offer Conditions (other than the Minimum Condition and the
conditions set forth in clause (a) of the Offer Conditions); and provided,
further, that the Purchaser may extend the Offer to the extent any Offer
Conditions have not been satisfied on the applicable Expiration Date.
Recommendation. The Merger Agreement provides that, subject to the
conditions thereof, the Board of Directors of the Company has (i) determined
that the Offer and the Merger are fair to and in the best interests of the
Company and its Shareholders, (ii) irrevocably approved the Tender and Voting
Agreement (as defined below), the Offer and the Merger in accordance with
Section 14A:10A-1 of the NJCL (and for purposes of any other applicable state
takeover law), and (iii) resolved to recommend acceptance of the Offer and
approval and adoption of the Merger and the Merger Agreement by the Company's
Shareholders (in accordance with the requirements of the Company's Restated
Certificate of Incorporation and applicable law).
4
<PAGE> 5
The Merger. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions thereof, and in accordance
with the NJCL, at the time the Merger becomes effective in accordance with
applicable law (the "Effective Time"), the Purchaser will be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
the Purchaser will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation"). The Merger Agreement provides that
Parent, the Purchaser and the Company shall use their reasonable best efforts to
consummate the Merger as soon as practicable.
Under the NJCL, the approval of the Board of Directors of the Company and
the affirmative vote of holders of a majority of the outstanding Shares is
required to approve and adopt the Merger Agreement and the transactions
contemplated thereby, including the Merger. Section 14A:10A-4 of the NJCL
prevents certain "business combinations" with an "interested stockholder"
(generally, any person who owns or has the right to acquire 10% or more of a
corporation's outstanding voting stock) for a period of five years following the
time such person became an interested stockholder, unless, among other things,
prior to the time the interested stockholder became such the board of directors
of the corporation approved the business combination. Section 14A:10A-5 of the
NJCL further provides that a business combination is permissible if approved by
two-thirds of the outstanding shares of voting stock of the Company, excluding
voting stock held by any "interested stockholder," or if certain price criteria
and procedural standards are satisfied.
The Board of Directors of the Company has unanimously approved the Offer,
the Merger, the Merger Agreement and the Tender and Voting Agreement and the
transactions contemplated thereby for the purposes of Section 14A:10A-4 of the
NJCL.
Pursuant to the Merger Agreement, the Company will, if required by the
Company's Restated Certificate of Incorporation and/or applicable law in order
to consummate the Merger, duly call, give notice of, convene and hold a special
meeting of its Shareholders (the "Special Meeting") as soon as practicable
following the acceptance for payment and purchase of the Shares by the Purchaser
pursuant to the Offer for the purpose of considering and taking action upon the
Merger and the adoption of the Merger Agreement. The Merger Agreement provides
that the Company will (a) prepare and file with the Commission a preliminary
proxy or information statement and (b) use its reasonable best efforts to (x)
obtain and furnish the information required to be included by the Commission in
a definitive proxy or information statement (the "Statement") and (y) obtain the
necessary approvals of the Merger and the Merger Agreement from its
Shareholders. The Board of Directors of the Company, subject to the fiduciary
obligation of the Board under applicable law, will include in the Statement the
recommendation of the Board that the Shareholders of the Company vote in favor
of the approval of the Merger and the Merger Agreement. Parent agrees that it
will vote, or cause to be voted, all of the Shares then owned by it and the
Purchaser or any of its other subsidiaries in favor of the Merger and adoption
of the Merger Agreement. If the Purchaser acquires at least a majority of the
Shares on a fully diluted basis, pursuant to the Offer or otherwise, the
Purchaser will have sufficient voting power to approve the Merger, even if no
other Shareholder votes in favor of the Merger.
The Merger Agreement provides that in the event that Parent, the Purchaser
or any other subsidiary of Parent acquires at least 90% of the outstanding Class
A Common Shares and at least 90% of the outstanding Common Shares on a fully
diluted basis, pursuant to the Offer or otherwise, Parent, the Purchaser and the
Company will, at the request of the Parent and subject to the terms and
conditions of the Merger Agreement, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of Shareholders of the Company, in accordance
with Section 14A:10-5.1 of the NJCL.
Conversion of Securities. At the Effective Time, each Share issued and
outstanding prior to the Effective Time shall be converted into the right to
receive in cash the Merger Price. Shares held by Parent, the Purchaser, any
wholly owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly owned subsidiary of the Company ("Excluded Shares")
shall be canceled and retired.
Pursuant to the Merger Agreement, the Board of Directors of the Company has
adopted such resolutions, and has agreed to take such other actions as may be
necessary, so that each outstanding option (an "Option") granted under the
Company's 1994 Stock Option Plan and 1997 Incentive Plan (collectively, the
"Option
5
<PAGE> 6
Plans"), whether or not then exercisable or vested, shall become fully
exercisable and vested and, except to the extent that Parent or the Purchaser
and the holder of any such Option otherwise agree, immediately following
consummation of the Offer or, at the option of Parent, the Effective Time, the
Company shall pay to such holders of Options an amount in respect thereof equal
to the product of (A) the excess of the Merger Price over the exercise price
thereof and (B) the number of Shares subject thereto (such payment to be net of
taxes required by law to be withheld with respect thereto); provided that the
foregoing shall be subject to the obtaining of any necessary consents of holders
of awards of Options under the Option Plans, it being agreed that the Company
will use its best efforts to obtain any such consent.
Board of Directors. Upon payment by the Purchaser for Shares pursuant to
the Offer representing at least a majority of the votes entitled to be cast by
all holders of Shares and from time to time thereafter so long as the Purchaser
and/or Parent (and/or their respective wholly-owned subsidiaries) continue to
hold at least such number of Shares, Parent will be entitled to designate such
number of directors, rounded up to the next whole number, on the Company's Board
of Directors as is equal to the product of the total number of directors on the
Company's Board (determined after giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Parent or its affiliates bears to the
total number of Shares outstanding. The Company shall, upon request of Parent,
promptly take all actions necessary to cause Parent's designees to be so
elected, including, if necessary, seeking the resignations of one or more
existing directors. If Parent's designees are so elected, prior to the Effective
Time the Board shall always have at least one member who is neither an officer,
director, stockholder or designee of Parent or any of its affiliates. The
Company's obligation to appoint Parent's designees to the Board of Directors is
subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and the
Purchaser with respect to, among other things, its organization and
qualifications, capitalization, authority, financial statements, public filings,
litigation, compliance with law, employee benefit plans, intellectual property,
material contracts, insurance, labor matters, real property matters, suppliers
and customers, accounts receivable, "Year 2000" compliance, environmental
matters, granting of certain approvals, opinion of financial advisor,
information in the Statement, tax status and the absence of material adverse
change on the Company or any of its subsidiaries since March 31, 1999. Parent
and the Purchaser have made customary representations and warranties to the
Company with respect to, among other things, its organization and
qualifications, authority, public filings, information in the Statement and
financing for the Offer.
Covenants. The Merger Agreement contains certain restrictive covenants as
to the conduct of the Company, Parent, the Purchaser and the Surviving
Corporation in contemplation of the Merger including, without limitation, access
by Parent and the Purchaser to information concerning the Company, use of
reasonable best efforts to consummate the Merger, use of reasonable best efforts
to ensure that the Offer Conditions are satisfied, and notification of the other
parties of certain matters.
Conduct of Business of the Company. Pursuant to the Merger Agreement, the
Company has agreed that, except with the prior written consent of Parent or as
otherwise required by the Merger Agreement, during the period from execution of
the Merger Agreement to the Effective Time, the Company and its subsidiaries
will conduct operations only in the ordinary course of business consistent with
past practice and will use reasonable best efforts to preserve intact the
business organization of the Company and each of its subsidiaries, to keep
available the services of its and their present officers and employees, and to
preserve the good will of those having business relationships with it.
No Solicitation. Pursuant to the Merger Agreement, the Company has
represented and warranted to, and covenanted and agreed with, Parent and the
Purchaser that neither the Company nor any of its subsidiaries has any
agreement, arrangement or understanding with any potential acquiror that,
directly or indirectly, would be violated, or require any payments, by reason of
the execution, delivery and/or consummation of the Merger Agreement. The Merger
Agreement provides that the Company shall, and shall cause its subsidiaries and
its and their officers, directors, employees, investment bankers, attorneys and
other agents and representatives to, immediately cease any existing discussions
or negotiations with any person other
6
<PAGE> 7
than Parent or the Purchaser (a "Third Party") heretofore conducted with respect
to any Acquisition Transaction (as hereinafter defined). The Merger Agreement
provides that the Company and the Board of Directors of the Company shall not,
and the Company shall cause its subsidiaries and its and their respective
officers, directors, employees, investment bankers, attorneys and other agents
and representatives not to, directly or indirectly, (w) withdraw or modify (or
resolve to withdraw or modify) in a manner adverse to Parent the approval or
recommendation of the Board of Directors of the Company of the Merger Agreement
or any of the transactions contemplated thereby or recommend (or resolve to
recommend) an Acquisition Transaction with a Third Party to the Shareholders,
(x) solicit, initiate, continue, facilitate or encourage (including by way of
furnishing or disclosing non-public information) any inquiries, proposals or
offers from any Third Party with respect to, or that could reasonably be
expected to lead to, any acquisition or purchase of a material portion of the
assets or business of, or a 15% or more voting equity interest in (including by
way of a tender offer), or any amalgamation, merger, consolidation or business
combination with, or any recapitalization or restructuring, or any similar
transaction involving, the Company or any of its subsidiaries (the foregoing
being referred to collectively as an "Acquisition Transaction"), or (y)
negotiate, explore or otherwise communicate in any way with any Third Party with
respect to any Acquisition Transaction or enter into, approve or recommend any
agreement, arrangement or understanding requiring the Company to abandon,
terminate or fail to consummate the Offer and/or the Merger or any other
transaction contemplated by the Merger Agreement. The Merger Agreement provides
that notwithstanding anything to the contrary in the foregoing, the Company may,
prior to the purchase of Shares pursuant to the Offer, in response to an
unsolicited written proposal with respect to an Acquisition Transaction
involving the acquisition of all of the Shares (or all or substantially all of
the assets of the Company and its subsidiaries) from a Third Party or in
response to an unsolicited all cash tender offer for any and all Shares (i)
furnish or disclose non-public information to such Third Party, (ii) negotiate,
discuss or otherwise communicate with such Third Party and (iii) in the case of
an unsolicited all cash tender offer for any and all Shares, withdraw or modify
(or resolve to withdraw or modify) in a manner adverse to Parent the approval or
recommendation of the Merger Agreement and the transactions contemplated thereby
or recommend (or resolve to recommend) an Acquisition Transaction with a Third
Party to Shareholders, in each case only if the Board of Directors of the
Company determines in good faith: (1) (after consultation with Janney Montgomery
Scott Inc.) that such proposal or such unsolicited all cash tender offer, as the
case may be, is more favorable to the Shareholders from a financial point of
view than the transaction contemplated by the Merger Agreement (including any
adjustment to the terms and conditions proposed by Parent and the Purchaser in
response to such proposal or such unsolicited all cash tender offer, as the case
may be), (2) (after consultation with Janney Montgomery Scott Inc.) that
sufficient financing is obtainable with respect to such proposal or such
unsolicited all cash tender offer, as the case may be, such that the proposed
Acquisition Transaction will be consummated without material delay and (3) that
the proposed Acquisition Transaction (including, if applicable, such an
unsolicited all cash tender offer) is not subject to any regulatory approvals
that could reasonably be expected to prevent or materially delay its
consummation (a proposal with respect to an Acquisition Transaction (including,
if applicable, such an unsolicited all cash tender offer) meeting the
requirements of clauses (1) through (3) is referred to herein as a "Superior
Proposal"). The Merger Agreement also provides that prior to furnishing or
disclosing any non-public information to, or entering into negotiations,
discussions or other communications with, such Third Party, the Company shall
receive from such Third Party an executed confidentiality agreement with terms
no less favorable in the aggregate to the Company than those contained in the
Confidentiality Agreement between the Company and Parent (the "Confidentiality
Agreement"), but which confidentiality agreement shall not provide for any
exclusive right to negotiate with the Company or any payments by the Company.
The Merger Agreement also provides that the Company shall provide to Parent
copies of all such non-public information delivered to such Third Party
concurrently with such delivery. The Merger Agreement provides that,
notwithstanding the foregoing, the Company and the Board of Directors of the
Company shall not, and the Company shall cause its affiliates not to, withdraw
or modify (or resolve to withdraw or modify) in a manner adverse to Parent the
approval or recommendation of this Agreement or any of the transactions
contemplated hereby, or recommend (or resolve to recommend) an Acquisition
Transaction with a Third Party to Shareholders or enter into a definitive
agreement with respect to a Superior Proposal unless (w) the Company has given
Parent three business days' notice of the intention of the Board of Directors to
withdraw or modify (or resolve to withdraw or modify) in a manner adverse to
Parent the
7
<PAGE> 8
approval or recommendation of the Merger Agreement or any of the transactions
contemplated thereby, or recommend (or resolve to recommend) an Acquisition
Transaction with a Third Party to the Shareholders or the intention of the
Company to enter into such definitive agreement, as the case may be, (x) if
Parent makes a counter-proposal within such three business day period, the Board
of Directors of the Company shall have determined, in light of any such
counter-proposal, that the Third Party Acquisition Transaction proposal is still
a Superior Proposal, (y) the Company concurrently terminates the Merger
Agreement in accordance with the terms thereof and pays any Termination Fee (as
defined) required under the termination provisions of the Merger Agreement and
agrees to pay any other amounts required under such provisions, and (z) with
respect to a definitive agreement, such agreement permits the Company to
terminate it if it receives a Superior Proposal, such termination and related
provisions to be on terms no less favorable to the Company, including as to fees
and reimbursement of expenses, as those contained in the Merger Agreement.
The Merger Agreement provides that the Company shall promptly (but in any
event within one day of the Company becoming aware of same) advise Parent of the
receipt by the Company, any of its subsidiaries or any of its or their bankers,
attorneys or other agents or representatives of any inquiries or proposals
relating to an Acquisition Transaction and of certain actions taken with respect
thereto. The Merger Agreement provides that the Company shall promptly (but in
any event within one day of the Company becoming aware of same) provide Parent
with a copy of any such inquiry or proposal in writing and a written statement
with respect to any such inquiries or proposals not in writing, which statement
shall include the identity of the parties making such inquiries or proposal and
the material terms thereof. The Merger Agreement provides that the Company
shall, from time to time, promptly (but in any event within one day of the
Company becoming aware of same) inform Parent of the status and content of and
developments with respect to any discussions regarding any Acquisition
Transaction with a Third Party, including (i) the calling of meetings of the
Board of Directors of the Company to take action with respect to such
Acquisition Transaction, (ii) the execution of any letters of intent, memoranda
of understanding or similar non-binding agreements with respect to such
Acquisition Transaction, (iii) the waiver of any standstill agreement to which
the Company is or becomes a party, (iv) the determination by the Board of
Directors of the Company to recommend to the Shareholders that they approve or
accept a Superior Proposal or withdraw or modify in a manner adverse to the
Parent its approval or recommendation of the Merger Agreement or the
transactions contemplated thereby, (v) the determination by the Company to
publicly disclose receipt of a Superior Proposal and (vi) the waiver by the
Company of any confidentiality agreement with a person proposing a Superior
Proposal. The Merger Agreement provides that for the avoidance of doubt, the
Company agrees that it will not enter into any definitive agreement with respect
to a Superior Proposal unless and until Parent has been given notice of the
identity of the parties making such Superior Proposal, the terms thereof and
developments referred to in the preceding sentence and the intent to enter into
such a definitive agreement at least three business days prior to the entering
into such agreement.
State Takeover Laws. The Merger Agreement provides that the Company shall,
upon the request of the Purchaser, take all reasonable steps to assist in any
challenge by the Purchaser to the validity or applicability to the transactions
contemplated by the Merger Agreement, including the Offer and the Merger, and
the Tender and Voting Agreement of any state takeover law. The Merger Agreement
provides that the Board of Directors of the Company shall not amend, modify or
rescind the approval of any purchase of Shares in the Offer for purposes of
Section 14A:10A-1 of the NJCL.
Indemnification. Pursuant to the Merger Agreement, all rights to
indemnification now existing in favor of any director or officer of the Company,
as provided in the Company's Restated Certificate of Incorporation or by laws,
in an agreement between any such person and the Company, or otherwise in effect
on the date thereof shall survive the Merger and shall continue in full force
and effect indefinitely after the Effective Time. The Merger Agreement provides
that Parent also agrees to indemnify all current and former directors and
officers of the Company ("Indemnified Parties") to the fullest extent permitted
by applicable law with respect to all acts and omissions arising out of such
individuals' services as officers or directors of the Company or any of its
subsidiaries or as trustees or fiduciaries of any plan for the benefit of
employees occurring prior to the Effective Time. The Merger Agreement provides
that without limitation of the foregoing, in the event any such Indemnified
Party is or becomes involved in any capacity in any action, proceeding or
investigation in
8
<PAGE> 9
connection with any matter, including, without limitation, the transactions
contemplated by the Merger Agreement, occurring prior to, and including, the
Effective Time, Parent will pay as incurred such Indemnified Party's reasonable
legal and other expenses of counsel selected by the Indemnified Party and
reasonably acceptable to Parent (including the cost of any investigation,
preparation and settlement) incurred in connection therewith; provided, however,
that Parent shall not, in connection with any one such action or proceeding or
separate but substantially similar actions or proceedings arising out of the
same general allegations be liable for fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all Indemnified Parties. The Merger Agreement provides that Parent shall be
entitled to participate in the defense of any such action or proceeding, and
counsel selected by the Indemnified Party shall, to the extent consistent with
their professional responsibilities, cooperate with Parent and any counsel
designated by Parent. The Merger Agreement provides that Parent shall pay all
reasonable expenses, including attorneys' fees, that may be incurred by any
Indemnified Party in enforcing the indemnity and other obligations provided for
in the Merger Agreement.
The Merger Agreement provides that Parent agrees that the Company and, from
and after the Effective Time, the Surviving Corporation shall cause to be
maintained in effect for not less than six years from the Effective Time the
current policies of the directors' and officers' liability insurance maintained
by the Company; provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
be required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date of the Merger Agreement and if the
Surviving Corporation is unable to obtain the insurance required by the Merger
Agreement it shall obtain as much comparable insurance as possible for an annual
premium equal to such maximum amount.
Employee Matters. The Merger Agreement provides that on and after the
Effective Time, Parent shall cause the Surviving Corporation and its
subsidiaries to promptly pay or provide when due all compensation and benefits
earned through or prior to the Effective Time as provided pursuant to the terms
of any Company employee benefit plans disclosed to Parent ("Company Plans") for
all employees (and former employees) and directors (and former directors) of the
Company and its subsidiaries. Pursuant to the Merger Agreement, Parent and
Company have agreed that the Surviving Corporation and its subsidiaries shall
pay promptly or provide when due all compensation and benefits required to be
paid pursuant to the terms of any individual agreement with any employee, former
employee, director or former director in effect as of the date of the Merger
Agreement and disclosed to Parent.
The Merger Agreement provides that if employees of the Surviving
Corporation and its subsidiaries become eligible to participate in a medical,
dental or health plan of Parent or its subsidiaries, Parent shall cause such
plan to (i) waive any preexisting condition limitations for conditions under the
applicable medical, health or dental plans of the Company and its subsidiaries
(other than any limitation already in effect with respect to the applicable
employee that has not been satisfied as of the Effective Time under the
applicable Company Plan) and (ii) honor any deductible and out-of-pocket
expenses incurred by the employees and their beneficiaries under such plans
during the portion of the calendar year prior to such participation.
Waiver. The Merger Agreement provides that, prior to the Effective Time,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in the
representations and warranties contained in the Merger Agreement by any other
party or in any document, certificate or writing delivered pursuant thereto by
any other party or (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
9
<PAGE> 10
Termination. The Merger Agreement provides that it may be terminated and
the Merger contemplated thereby may be abandoned at any time prior to the
Effective Time, whether or not approval thereof by the Shareholders has been
obtained:
(a) by the mutual written consent of Parent and the Company;
(b) by the Company if the Company is not in material breach of any of
its representations, warranties, covenants or agreements contained in the
Merger Agreement and if (i) the Purchaser fails to commence the Offer as
provided in the Merger Agreement, (ii) the Purchaser shall not have
accepted for payment and paid for Shares pursuant to the Offer in
accordance with the terms hereof on or before August 31, 1999 (provided
that if the only unsatisfied condition to the Offer at August 31, 1999 is
the expiration or termination of all applicable waiting periods relating to
the Offer under the HSR Act, termination pursuant to this clause (ii) may
not occur until after October 31, 1999), (iii) the Purchaser fails to
purchase validly tendered Shares in violation of the terms of the Offer or
the Merger Agreement or (iv) the Merger shall not have occurred on or
before December 31, 1999;
(c) by Parent or the Company if the Offer is terminated or withdrawn
pursuant to its terms without any Shares being purchased in the Offer;
provided that Parent may terminate the Merger Agreement pursuant to this
clause only if Parent's or the Purchaser's termination or withdrawal of the
Offer is not in violation of the terms of the Merger Agreement or the
Offer;
(d) by Parent or the Company if any court or other government or
subdivision thereof, or any administrative governmental or regulatory
authority, agency, commission, tribunal or body, domestic, foreign or
supranational (a "Governmental Entity") shall have issued, enacted,
entered, promulgated or enforced any order, judgment, decree, injunction,
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, judgment, decree,
injunction, ruling or other action shall have become final and
nonappealable;
(e) by the Company if prior to the purchase by the Purchaser of any
Shares in the Offer (i) there shall have occurred, on the part of Parent or
the Purchaser, a material breach of any representation or warranty,
covenant or agreement contained in the Merger Agreement which is not
curable or, if curable, is not cured within ten business days after written
notice of such breach is given by the Company to the party committing the
breach or (ii)(A)(x) the Company proposes entering into a definitive
agreement with respect to a Superior Proposal or (y) the Board of Directors
of the Company recommends a Third Party Acquisition Transaction which is an
unsolicited all cash tender offer for any and all Shares and which
constitutes a Superior Proposal, (B) the Company gives Parent the three
business days' notice as required pursuant to the Merger Agreement, (C) if
a counter-proposal was made by Parent within such three business day
period, the Board of Directors of the Company has determined, in light of
the counter-proposal, that the Third Party Acquisition Transaction (or
proposal therefor) is still a Superior Proposal as required by the Merger
Agreement, and (D) the Company pays any Termination Fee (as defined below)
and any other amounts required under the Merger Agreement;
(f) by Parent if prior to the purchase by the Purchaser of any Shares
in the Offer (i) there shall have occurred, on the part of the Company, a
material breach of any representation, warranty, covenant or agreement
contained in the Merger Agreement which is not curable or, if curable, is
not cured within ten business days after written notice of such breach is
given by Parent to the Company or (ii) there shall have occurred, on the
part of any shareholder party to the Tender and Voting Agreement, a
material breach of any representation, warranty, covenant or agreement
contained in the Tender and Voting Agreement which is not curable or, if
curable, is not cured within five business days after written notice of
such breach is given by Parent to the applicable shareholder or (iii) if
the Board of Directors of the Company or committee thereof shall have
withdrawn or modified (or shall have resolved to withdraw or modify) in a
manner adverse to Parent, its approval or recommendation of the Merger
Agreement or any of the transactions contemplated thereby or shall have
recommended (or resolved to recommend) an Acquisition Transaction (other
than the Offer and Merger) to the Shareholders; or
10
<PAGE> 11
(g) by Parent if it is not in material breach of its obligations under
the Merger Agreement or under the Offer and no Shares shall have been
purchased pursuant to the Offer on or before August 31, 1999 (provided that
if the only unsatisfied condition to the Offer at August 31, 1999 is the
expiration or termination of all applicable waiting periods relating to the
Offer under the HSR Act, termination pursuant to this clause (g) may not
occur until October 31, 1999).
Fees and Expenses.
(a) The Merger Agreement provides that whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Offer, the
Merger Agreement and the transactions contemplated thereby shall be paid by the
party incurring such expenses.
(b) The Merger Agreement provides that in the event it is terminated
pursuant to clause (e)(ii) or clause (f)(iii) under "-- Termination" above, then
the Company shall (i) promptly reimburse Parent for the documented fees and
expenses of Parent and the Purchaser related to the Merger Agreement and the
transactions contemplated thereby not to exceed $1.0 million, and (ii) promptly
pay Parent a termination fee (a "Termination Fee") of $4.75 million, in each
case by wire transfer of same day funds to an account designated by Parent as a
condition of such termination. In the event the Merger Agreement is terminated
pursuant to clause (f)(i) or clause (f)(ii) under "-- Termination" above, the
Company shall promptly reimburse Parent for the documented fees and expenses of
Parent and the Purchaser related to the Merger Agreement and the transactions
contemplated hereby not to exceed $1.0 million by wire transfer of same day
funds to an account designated by Parent.
(c) The Merger Agreement provides that in the event that (i) prior to the
termination of the Merger Agreement, a Third Party shall have made a proposal
regarding an Acquisition Transaction and (ii) thereafter (x) such proposal is
publicly disclosed and August 31, 1999 occurs (or, if the only unsatisfied
condition to the Offer at August 31, 1999 is the expiration or termination of
all applicable waiting periods relating to the Offer under the HSR Act, October
31, 1999 occurs) without the Minimum Condition being satisfied (other than as a
result of a material breach of the Merger Agreement by Parent or the Purchaser
that has not been cured within the time period set forth in the Merger
Agreement) or (y) the Merger Agreement is terminated (A) by the Company pursuant
to clause (b)(ii) or clause (c) under "-- Termination" above or (B) by Parent
pursuant to clause (f)(i), clause (f)(ii) or clause (g) under "-- Termination"
above, and, in each case, at the time the event giving rise to the right to so
terminate the Merger Agreement, such Third Party Acquisition Transaction
proposal shall not have been withdrawn and (iii) prior to twelve months after
any termination of the Merger Agreement the Company shall have entered into an
agreement for a Third Party Acquisition Transaction which constitutes a Superior
Proposal, or a Third Party Acquisition Transaction which constitutes a Superior
Proposal shall have been consummated, then the Company shall promptly, but in no
event later than immediately prior to, and as a condition of, entering into such
definitive agreement, or, if there is no such definitive agreement then
immediately upon consummation of the Acquisition Transaction, reimburse Parent
for the documented fees and expenses of Parent and the Purchaser relating the
Merger Agreement and the transactions contemplated thereby (to the extent not
previously reimbursed and without duplication of any amounts pursuant to clause
(b) above) not to exceed $1.0 million and pay Parent a Termination Fee of $4.75
million (it being understood that only one Termination Fee shall be payable
pursuant to clause (b) above and this clause (c) in the aggregate), which
amounts shall be payable by wire transfer of same day funds to an account
designated by Parent.
The Tender and Voting Agreement
Concurrently with the execution and delivery of the Merger Agreement, the
Company, Parent, Purchaser and the holders of the Class A Common Shares (the
"Class A Common Shareholders") entered into the Tender and Voting Agreement (the
"Tender and Voting Agreement").
Tender of Shares. Pursuant to the Tender and Voting Agreement, Parent and
the Purchaser have jointly and severally agreed: (i) subject to the Offer
Conditions and the other terms and conditions of the Merger Agreement, that the
Purchaser will purchase all Shares tendered pursuant to the Offer as promptly as
practicable following commencement of the Offer and that the Purchaser will
consummate the Merger in
11
<PAGE> 12
accordance with the terms of the Merger Agreement; and (ii) not to decrease the
price per share to be paid to the Company's shareholders in the Offer below
$14.00 per share. Pursuant to the Tender and Voting Agreement, each Class A
Common Shareholder has agreed to (i) tender such Class A Common Shareholder's
Class A Common Shares ("Subject Shares") other than Contributed Shares (as
defined below), if applicable, into the Offer promptly, and in any event no
later than the fifth business day following the commencement of the Offer, or,
if such Class A Common Shareholder has not received the Offer Documents (as
defined in the Merger Agreement) by such time, within two business days
following receipt of such documents, and (ii) not withdraw any Subject Shares so
tendered. Each of Harry J. Muhlschlegel and Karen B. Muhlschlegel shall be
permitted to not tender into the Offer 18,875 of their Subject Shares (for a
total of 37,750 Subject Shares, collectively herein referred to as the
"Contributed Shares"), provided that, so long as the Purchaser notifies Mr. and
Mrs. Muhlschlegel at least eight hours prior to the purchase of Shares by
Purchaser pursuant to the Offer, Mr. and Mrs. Muhlschlegel shall be obligated to
contribute their respective Contributed Shares to the capital of the Company
prior to the purchase of Shares by Purchaser pursuant to the Offer. The
foregoing obligations of the parties to the Tender and Voting Agreement shall
terminate on the Termination Date. As used in the Tender and Voting Agreement,
"Termination Date" means the date the Merger Agreement is terminated in
accordance with its terms.
Transfer of Subject Shares. The Tender and Voting Agreement provides that,
until the Termination Date, each Class A Common Shareholder will not, except as
required pursuant to the terms of the Tender and Voting Agreement, (i) sell,
offer to sell, pledge or otherwise dispose of any of such Class A Common
Shareholder's Subject Shares; (ii) enter into any contract, option or other
agreement or understanding with respect to any transfer of any or all of such
Subject Shares or any interest therein; (iii) grant any proxy, power-
of-attorney or other authorization or consent in or with respect to such Subject
Shares; (iv) deposit such Subject Shares into a voting trust or enter into a
voting agreement or assignment with respect to the Subject Shares; or (v) take
any other action with respect to such Subject Shares that would in any way
restrict, limit or interfere with the performance of such Class A Common
Shareholder's obligations under the Tender and Voting Agreement.
No Solicitation. The Tender and Voting Agreement provides that each Class
A Common Shareholder represents and warrants to, and covenants and agrees with,
Parent and the Purchaser that such Class A Common Shareholder does not have any
agreement, arrangement or understanding with any potential acquiror of the
Company that, directly or indirectly, would be violated, or require any
payments, by reason of the execution, delivery and/or consummation of the Tender
and Voting Agreement.
The Tender and Voting Agreement also provides that each Class A Common
Shareholder shall, and shall cause its agents and representatives to,
immediately cease any existing discussions or negotiations with any Third Party
heretofore conducted with respect to any Acquisition Transaction. The Tender and
Voting Agreement provides that, until the Termination Date, each Class A Common
Shareholder shall not, and shall cause its agents and representatives not to,
directly or indirectly, (x) solicit, initiate, continue, facilitate or encourage
(including by way of furnishing or disclosing non-public information) any
inquiries, proposals or offers from any Third Party with respect to, or that
could reasonably be expected to lead to, any Acquisition Transaction or (y)
negotiate, explore or otherwise communicate in any way with any Third Party with
respect to any Acquisition Transaction. The Tender and Voting Agreement provides
that if the Board of Directors of the Company determines that a Third Party
proposal for an Acquisition Transaction constitutes a Superior Proposal in
accordance with the provisions of the Merger Agreement discussed above under
"-- The Merger Agreement -- No Solicitation," then, notwithstanding the
provisions of this paragraph, the Class A Common Shareholders shall be permitted
to negotiate, discuss or otherwise communicate with such Third Party with
respect to a tender and voting agreement with terms no less favorable in the
aggregate to each Class A Common Shareholder than those contained in the Tender
and Voting Agreement; provided that no Class A Common Shareholder shall enter
into any such tender and voting agreement (i) prior to the Termination Date or
(ii) with any Third Party with whom negotiations for an Acquisition Transaction
had taken place prior to the Termination Date, if such tender and voting
agreement contains provisions less favorable in the aggregate to such Class A
Common Shareholder than those contained in the Tender and Voting Agreement. In
addition, the provisions of this paragraph shall not be deemed to prohibit any
Class A Common Shareholder who is an
12
<PAGE> 13
officer or director of the Company from taking actions permitted to be taken by
an officer or director, as the case may be, in such Class A Common Shareholder's
capacity as an officer and/or director, as the case may be, of the Company.
The Tender and Voting Agreement further provides that until the Termination
Date, each Class A Common Shareholder shall promptly (but in any event within
one day of such Class A Common Shareholder becoming aware of same) (i) advise
Parent of the receipt by such Class A Common Shareholder or any of its agents or
representatives of any inquiries or proposals relating to an Acquisition
Transaction, (ii) provide Parent with a copy of any such inquiry or proposal in
writing and a written statement with respect to any such inquiries or proposals
not in writing, which statement shall include the identity of the parties making
such inquiries or proposal and the material terms thereof and (iii) inform
Parent of the status and content of and developments with respect to any
discussions regarding any Acquisition Transaction with a Third Party.
Voting of Subject Shares. The Tender and Voting Agreement provides that,
until the Termination Date, each Class A Common Shareholder shall, at any
meeting of the stockholders of the Company, however called, or in connection
with any written consent of the stockholders of the Company, vote (or cause to
be voted) all Shares beneficially owned by such Class A Common Shareholder (i)
in favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and the Tender and Voting Agreement and any
actions required in furtherance thereof; (ii) against any other Acquisition
Transaction and against any action or agreement that would impede, frustrate,
prevent or nullify the Merger Agreement or the Tender and Voting Agreement or
the transactions contemplated thereby, or result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions to the Merger in the Merger Agreement not being fulfilled; and (iii)
if requested by Parent, in favor of a stockholder resolution proposed by Parent
in accordance with the New Jersey Act, the purpose of which is to cause the
Offer and the Merger to be consummated and which does not relate to election of
directors. A copy of the Tender and Voting Agreement is filed herewith as
Exhibit 10 and is incorporated herein by reference.
Best Efforts. The Tender and Voting Agreement provides that, subject to
the terms and conditions thereof, until the Termination Date, each Class A
Common Shareholder agrees to use all reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Tender and Voting Agreement and
the Merger Agreement. The Tender and Voting Agreement provides that, until the
Termination Date, each Class A Common Shareholder shall properly consult with
Parent and the Purchaser and provide any necessary information and material with
respect to all filings with any Governmental Entity in connection with the
Tender and Voting Agreement and the Merger Agreement and the transactions
contemplated thereby.
Confidentiality Agreement
Pursuant to a December 22, 1998 Confidentiality Agreement between the
Company and Parent, Parent contractually agreed (i) not to disclose any
information obtained during its due diligence investigation of the Company to
any person not actively and directly participating in the investigation or
negotiations with the Company, (ii) not to use any information obtained for a
purpose other than a possible transaction with the Company, or (iii) to destroy
any information obtained if the transaction is not completed. In addition, in
consideration of its receipt of the information, Parent agreed that for a period
of three years it would not (a) acquire, seek to acquire or cause to acquire the
assets, business, Shares or rights related thereto of the Company (b) make or
participate in any solicitation of a proxy to vote or influence any votes with
respect to the Shares, (c) form, join or participate in a group with respect to
voting the Shares, (d) arrange or participate in any financing to purchase
Shares or assets of the Company, (e) solicit employees of the Company or (f)
enter into any discussions, negotiations or understandings with or advise,
assist or encourage any third party with respect to any of the foregoing, in
each case without the Company's prior written consent. A copy of the
Confidentiality Agreement is filed herewith as Exhibit 11 and is incorporated
herein by reference.
13
<PAGE> 14
Except as described in this Item 3(b) or incorporated herein by reference,
to the knowledge of the Company, as of the date hereof, there are no material
contracts, agreements, arrangements or undertakings, or any actual or potential
conflicts of interest between the Company or its affiliates and (1) its
executive officers, directors or affiliates or (2) the Bidder or its executive
officers, directors or affiliates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has unanimously determined that each
of the transactions contemplated by the Merger Agreement, including the Offer
and the Merger, are fair to and in the best interests of the shareholders of the
Company and unanimously recommends that the Company's shareholders accept the
Offer and tender their Shares to Purchaser pursuant to the Offer.
A letter to the Company's shareholders communicating the Board of
Director's recommendation and a press release announcing the execution of the
Merger Agreement are filed herewith as Exhibits 12 and 13, respectively, and are
incorporated herein by reference.
(b) REASONS FOR THE BOARD'S RECOMMENDATION
Background of the Offer and Merger
In late October 1998, Samuel A. Woodward, Senior Vice President of
Operations and Planning of Parent, contacted Harry J. Muhlschlegel, Chief
Executive Officer and Chairman of the Board of the Company, to discuss the
possibility of exploring a strategic relationship between Parent and the
Company.
On November 10, 1998, Mr. Woodward met with Mr. Muhlschlegel and Brian J.
Fitzpatrick, Senior Vice President and Chief Financial Officer of the Company,
and discussed possible strategic relationships between Parent and the Company.
At this meeting, the participants concluded that discussions concerning a
possible strategic alliance or business combination involving Parent and the
Company should continue.
On December 15, 1998, Mr. Woodward met with Messrs. Muhlschlegel, Karvois
and Fitzpatrick. At this meeting, Mr. Woodward indicated that Parent was
primarily interested in pursuing a business combination with the Company. After
the December 15, 1998 meeting, the Company's legal counsel distributed a form of
confidentiality agreement to Parent, which was negotiated over the course of the
following week and was executed by Parent and the Company on December 23, 1998.
On January 8, 1999, Mr. Woodward contacted Mr. Muhlschlegel to schedule a
meeting at which Parent could further explore the potential benefits to both
companies of a business combination. On January 12, 1999, Mr. Woodward, William
F. Martin, Jr., General Counsel of the Company, and the president of Parent's
information services subsidiary met with Messrs. Muhlschlegel, Karvois and
Fitzpatrick and the Company's legal counsel to explore such benefits and to
preliminarily discuss the structure of a potential business combination.
On February 18, 1999, Mr. Muhlschlegel contacted Mr. Woodward to further
discuss the potential operating benefits that could result from a business
combination and to schedule a meeting where representatives of Parent could meet
with a larger group of management of the Company. On March 2, 1999, Mr. Woodward
and certain operations personnel of Parent met with Messrs. Muhlschlegel,
Karvois and Fitzpatrick and certain operations personnel of the Company to
discuss potential operating benefits that could result from a business
combination.
On March 18, 1999, at a meeting of the Company's Board of Directors, Mr.
Muhlschlegel discussed the status of discussions with Parent.
On March 24, 1999, Mr. Woodward contacted Messrs. Muhlschlegel, Karvois and
Fitzpatrick to arrange to have them meet with A. Maurice Myers, Chief Executive
Officer of Parent, and H.A. Trucksess, III, Senior Vice President and Chief
Financial Officer of Parent. On March 29, 1999, Messrs. Myers and Trucksess met
with Mr. Muhlschlegel, Karvois and Fitzpatrick to discuss the status of
discussions between the
14
<PAGE> 15
parties. At this meeting, it was determined that the parties would proceed with
negotiations with respect to the terms of a business combination.
On April 9, 1999, Mr. Woodward contacted Mr. Muhlschlegel to schedule
meetings at which the parties would begin negotiating the terms of a business
combination. On April 15, 1999, the Company's legal counsel contacted Mr. Martin
to discuss the agenda of such meetings, which were scheduled for April 28-29,
1999. On April 28, 1999, Messrs. Myers, Martin and Woodward met with Messrs.
Muhlschlegel, Karvois and Fitzpatrick and the Company's legal counsel for a
dinner discussion in anticipation of a formal negotiating session the following
day. On April 29, 1999, Mr. Martin, together with legal counsel to Parent and a
representative of J. P. Morgan & Co., financial advisor to Parent, commenced
such negotiations with Messrs. Muhlschlegel, Karvois and Fitzpatrick and the
Company's legal counsel.
The Company engaged Janney Montgomery Scott Inc. ("Janney") as the
Company's financial advisor effective as of April 28, 1999.
During the period from May 1, 1999 through May 17, 1999, representatives of
J.P. Morgan & Co. and Janney conferred and discussed the potential financial
impact of combining the two companies.
On May 17, 1999, Mr. Martin of Parent, together with Parent's legal and
financial advisors, met with the Company's legal and financial advisors to
continue to negotiate the terms of a transaction. On May 18, 1999, tentative
agreement on the form of the transaction and the consideration to the Company's
shareholders was reached in discussions between Mr. Myers and Mr. Muhlschlegel,
subject to continuing due diligence and negotiation and the approval of the
Boards of Directors of Parent and the Company.
On May 20, 1999, Parent's legal counsel distributed first drafts of the
Merger Agreement and the Tender and Voting Agreement to the Company and its
counsel.
On May 20, 1999, the Company's Board of Directors met to discuss the
developments in the negotiations with Parent concerning a business combination
transaction. The Board authorized the Company's management to continue to
negotiate the terms of the transaction, subject to Board approval of any
negotiated transaction. The Board also discussed the potential risks and
benefits which would be involved in a solicitation of interest from parties
other than Parent, including the possibility of a higher offer, the risk of
Parent terminating negotiations and the risk of damage to the Company's business
that might arise in the event of premature disclosure of the possible sale of
the Company. The Board requested that Mr. Muhlschlegel indicate its possible
interest in engaging in a solicitation of interest from third parties to Mr.
Myers. Following the Board meeting, Mr. Muhlschlegel contacted Mr. Myers and
informed him that the Company's Board of Directors was considering soliciting
from third parties other offers to purchase the Company. Mr. Myers informed Mr.
Muhlschlegel that in the event the Company's Board determined to solicit other
offers, he could not assure Mr. Muhlschlegel that Parent would continue to be
willing to proceed with a transaction. Mr. Myers also informed Mr. Muhlschlegel
that in the event the Company's Board agreed not to solicit any offers from
third parties, the Merger Agreement would not contain provisions of a nature
that would be preclusive with respect to unsolicited third party proposals.
On May 21, 1999, at a meeting of the Company's Board of Directors, Mr.
Muhlschlegel reviewed his discussion of the day before with Mr. Myers. On the
basis of that discussion and the Board's continued consideration, including
consultations with the Company's legal counsel and financial advisor, the Board
authorized the Company's management to continue to negotiate with Parent and not
to solicit third party indications of interest. On May 21, 1999, Mr.
Muhlschlegel contacted Mr. Myers and informed him that the Company's Board had
determined not to solicit third party offers on the condition that the Merger
Agreement not contain provisions of a nature that would be preclusive with
respect to third party proposals. Mr. Myers informed Mr. Muhlschlegel that
Parent was willing to proceed with the transaction on this basis.
On May 24, 1999, Mr. Martin contacted Mr. Fitzpatrick to schedule Parent's
legal, tax and accounting due diligence review. During May 26-28, 1999,
representatives of Parent conducted their legal, tax and accounting due
diligence. On May 26, 1999, Mr. Myers contacted Mr. Muhlschlegel and indicated
Parent's interest in revising certain severance agreements of certain officers
of the Company and in having certain officers of the Company enter into
employment agreements with Parent to provide appropriate incentives to
15
<PAGE> 16
retain such officers on a long term basis. On May 27, 1999, Mr. Muhlschlegel
contacted Mr. Myers and scheduled a meeting at which Mr. Myers could discuss
these employment matters with the applicable officers of the Company.
On May 28, 1999, Mr. Martin, together with Parent's legal counsel,
contacted the Company's legal counsel to discuss the Company's comments on the
drafts of the Merger Agreement and the Tender and Voting Agreement. On the basis
of these discussions, revised drafts of the Merger Agreement and the Tender and
Voting Agreement were thereafter distributed to the Company and its legal
counsel.
On June 2, 1999, Mr. Myers met with officers of the Company and negotiated
Parent's proposed amendments to their severance agreements and the proposed
employment agreements. In addition, Mr. Martin, together with Parent's legal
counsel, contacted the Company's legal counsel to discuss the Company's comments
on the revised drafts of Merger Agreement and the Tender and Voting Agreement.
On this basis of these discussions, revised drafts of the Merger Agreement and
the Tender and Voting Agreement were distributed to the Company and its counsel.
During June 3-6, 1999 the parties' respective legal counsel and financial
advisors conferred to finalize the Merger Agreement and the Tender and Voting
Agreement and related documentation.
On June 4, 1999, Mr. Myers contacted Mr. Muhlschlegel and informed him that
the Board of Directors of Parent had unanimously approved the Merger Agreement
and the Tender Voting Agreement, subject to the finalization of the Merger
Agreement and the Tender and Voting Agreement and related documentation.
On June 4, 1999, the Board of Directors of the Company held a meeting at
which management, its financial advisor and its legal counsel reviewed the
status of negotiations with Parent. Legal counsel again advised the Board with
respect to certain legal matters and reviewed the principal aspects of the
Merger Agreement, including termination fee and expense reimbursement provisions
and provisions concerning the ability of the Company to negotiate with third
parties concerning unsolicited Superior Proposals, as well as the Tender and
Voting Agreement, Employment Agreements and Amended and Restated Severance
Agreements. The financial advisor delivered its oral opinion to the Board as to
the fairness of the $14.00 cash consideration to be paid to the Company's
shareholders. The Board of the Company then analyzed and discussed the Offer,
the Merger Agreement and the transactions contemplated thereby, the Tender and
Voting Agreement, the Employment Agreements and the Amended and Restated
Severance Agreements. Thereafter, the Board unanimously resolved to approve the
Merger Agreement, the Offer and the Merger and to recommend that the
Shareholders accept the Offer and adopt and approve the Merger Agreement subject
to the finalization of the Merger Agreement and the Tender and Voting Agreement
and related documentation. Following the Board meeting, Mr. Muhlschlegel
contacted Mr. Myers and informed him of the Board's action.
On June 6, 1999, the Merger Agreement and the Tender and Voting Agreement
were executed and delivered by the parties thereto, and the applicable officers
of the Company executed and delivered the amendments to their severance
agreements and executed their employment agreements.
On June 7, 1999, the terms of the Merger Agreement and the Tender and
Voting Agreement were publicly announced.
Reasons for Recommendation
In reaching the determination and recommendation discussed in Item 4(a)
above, the Board considered a number of factors, including:
1. The Board's familiarity with the business, assets, financial
condition, results of operations, business plans and current business
strategy and future prospects of the Company, the nature of the industry in
which the Company operates and the Company's competitive position in such
industry.
2. The Board's belief that the consideration to be received by the
Company's shareholders in the Offer and Merger fairly reflects the
Company's intrinsic value.
16
<PAGE> 17
3. The Board's view that a sale of the Company at this time is in the
best interest of the Company and its shareholders in light of: (a) the
Company's historical operating performance; (b) the Company's historical
financial results; and (c) the market price and performance of the
Company's Common Stock. The Board also considered the prospect of
increasing competition in the Company's industry and, as a result, the
increased need for continued investment in the Company's business in order
to maintain competitiveness.
4. The opinion of Janney presented to the Company's Board on June 4,
1999, to the effect that the consideration to be paid to the Company's
shareholders in the proposed acquisition by Purchaser is fair to the
shareholders of the Company from a financial point of view. In considering
such opinion, the Company's Board was aware that, upon completion of the
Merger, Janney becomes entitled to certain fees described in Item 5 below
in connection with its engagement by the Company.
5. The presentation of Janney in connection with such opinion, as to
various financial and other considerations deemed relevant to the Board's
evaluation of the Offer and the Merger, including (i) the terms and
conditions of the Merger Agreement; (ii) the business, financial condition,
results of operations and prospects of the Company; (iii) the financial
terms of certain business combinations that Janney deemed relevant; (iv)
selected financial and stock market data for certain other publicly traded
companies that Janney deemed relevant; (v) the recent trading history of
the Company's common stock; and (vi) other financial studies and analyses
that Janney deemed appropriate.
6. The fact that the Company's shareholders will realize the entire
value of the purchase price without the risk of post-closing
indemnification obligations.
7. The fact that the consideration to be paid to the Company's
shareholders in the Offer and Merger is all cash.
8. The fact that there are no unusual requirements or conditions to
the Offer and the Merger.
9. The terms and conditions of the Merger Agreement, which the Board
views as favorable to the Company's shareholders.
10. The Board's ability (i) to provide non-public information to and
negotiate with a third party concerning a possible acquisition of the
Company, and (ii) to withdraw or modify its approval or recommendation of
the Offer, the Merger and the transactions contemplated by the Merger
Agreement, in each case in response to an unsolicited Superior Proposal.
11. The Company's ability to terminate the Merger Agreement if it
receives a Superior Proposal, subject to the payment to Parent of a
termination fee of $4.75 million and reimbursement for expenses up to $1
million, and subject to satisfaction of certain other conditions.
12. Purchaser's ability to conclude the transaction expeditiously and
without any financing contingency.
The foregoing discussion of factors considered and given weight by the
Company Board is not intended to be exhaustive. In view of the variety of
factors considered in connection with its evaluation of the Offer and the
Merger, the Company Board did not find it practicable to, and did not, quantify
or otherwise assign relative weights to the specific factors considered in
reaching its determinations and recommendations. In addition, individual members
of the Company Board may have given different weights to different factors in
reaching their own respective determinations.
Opinion of Financial Advisor
The Board retained Janney as its financial advisor to review the Merger and
the Offer (together, the "Transaction") and to render an opinion as to the
fairness, from a financial point of view, of the consideration to be received by
the shareholders of the Company. As described herein, Janney's opinion, dated
June 4, 1999, together with the related presentation to the Board, was only one
of many factors taken into consideration by the Board in making its
determination to approve the Transaction.
17
<PAGE> 18
At the June 4, 1999 meeting of the Company's Board, representatives of
Janney made a presentation with respect to the Transaction and rendered to the
Board its oral opinion, subsequently confirmed in writing as of the same date,
that, as of such date, and based on the assumptions made, matters considered and
limits of the review undertaken by Janney, the consideration to be received in
the Transaction was fair to the Company's shareholders from a financial point of
view.
THE FULL TEXT OF JANNEY'S WRITTEN OPINION, DATED JUNE 4, 1999, WHICH SETS
FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON REVIEW
UNDERTAKEN, IS ATTACHED TO THIS SCHEDULE 14D-9 AS ANNEX I AND IS INCORPORATED
HEREIN BY REFERENCE. JANNEY'S OPINION IS DIRECTED TO THE BOARD OF DIRECTORS OF
THE COMPANY AND ADDRESSES THE FAIRNESS OF THE CONSIDERATION TO BE RECEIVED IN
THE TRANSACTION BY THE COMPANY'S SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW.
JANNEY'S OPINION DOES NOT ADDRESS THE UNDERLYING DECISION OF THE COMPANY TO
ENGAGE IN THE TRANSACTION AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
SHAREHOLDER AS TO WHETHER SUCH SHAREHOLDER SHOULD TENDER THEIR SHARES OR HOW
SUCH SHAREHOLDER SHOULD VOTE OR AS TO ANY OTHER ACTION SUCH SHAREHOLDER SHOULD
TAKE IN CONNECTION WITH THE TRANSACTION. THE DISCUSSION OF THE JANNEY OPINION
SET FORTH IN THIS SCHEDULE 14D-9 IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE FULL TEXT OF SUCH OPINION.
In connection with its opinion, Janney reviewed certain publicly available
financial information and other information concerning the Company and certain
internal analyses and other information furnished to it by the Company. Janney
also held discussions with the members of management of the Company regarding
this information and the business and prospects of the Company. Janney did not
independently verify any of the information described above and for purposes of
its opinion assumed the accuracy, completeness and fairness of all such
information. Janney did not make and it was not provided with an independent
evaluation or appraisal of the assets of the Company. With respect to the
financial forecast information furnished by or discussed with the Company,
Janney assumed that such information was prepared on the basis of reasonable
assumptions and reflected the best currently available judgments and estimates
of the management of the Company as to the likely future financial performance
of the Company. Janney's opinion is necessarily based on market, economic and
other conditions as they existed and should be evaluated as of the date of such
opinion.
In reaching its opinion, Janney (i) reviewed selected financial and stock
market data for the Company and certain other publicly traded companies; (ii)
reviewed the recent trading history of the Company's common stock; (iii)
reviewed the financial terms of certain recent business combinations; (iv)
performed discounted cash flow analysis for the Company; (v) reviewed the terms
of the Merger Agreement and certain related documents in draft form; and (vi)
performed such other analyses, and considered such other factors, as it deemed
appropriate. Janney assumed that the final terms of the Merger Agreement and
certain related documents reviewed by it in draft form would not vary materially
from the drafts reviewed by it.
The following is a brief summary of the material factors considered and
analyses performed by Janney and presented to the Board of Directors at its
meeting on June 4, 1999.
Historical Operating Results and Financial Condition
In rendering its opinion, Janney reviewed and analyzed the historical and
current financial information of the Company which included (i) the Company's
recent financial statements and (ii) the Company's recent revenue growth and
operating performance trends.
Projections
Janney analyzed the Company's projections in support of its fairness
opinion. The projections were not reviewed by independent auditors and were not
prepared in accordance with generally accepted accounting principles. Such
projections were based on numerous estimates and other assumptions and are
inherently
18
<PAGE> 19
subject to significant uncertainties and contingencies. There is no assurance
that the projections will be achieved and the use thereof by Janney should not
be regarded as an indication that the Company or any other person considers such
estimates an accurate prediction of future events.
Historical Stock Price Performance
Janney reviewed and analyzed the reported daily closing market prices and
trading volume of the Shares for the period from the Company's initial public
offering on October 7, 1997 until June 3, 1999. Since October 7, 1997, the
Shares closed at a high of $18.875 per share on November 6, 1997; over the past
year (June 4, 1998 to June 3, 1999), the Shares closed at a high of $13.00 on
June 10, 1998; and over the past six months (December 4, 1998 to June 3, 1999)
the Shares closed at a high of $11.25 on June 3, 1999. Since October 7, 1997,
the Shares closed at a low of $5.375 on March 2, 1999. The last date on which
the Shares closed at or above $14.00 per share was May 19, 1998.
Janney also compared the movement of the closing prices of the Shares with
the movement of (i) the Standard & Poor's 500 composite average (the "S&P 500"),
(ii) the Standard & Poor's Small Cap Truckers Index ("S&P Truckers Index") and
(iii) a less-than-truckload carrier composite average (the "LTL Composite"),
consisting of American Freightways Corporation, Arnold Industries, Inc., Motor
Cargo Industries Inc., Old Dominion Freight Line, Inc., USFreightways
Corporation and Vitran Corporation Inc. On a relative basis, the Shares
underperformed the S&P 500, the S&P Truckers Index and the LTL Composite since
the date of the Company's initial public offering; underperformed the S&P 500,
the S&P Truckers Index and the LTL Composite over the past year; and
outperformed the S&P 500 and S&P Truckers Index, but underperformed the LTL
Composite, over the past six months. The historical stock price performance
review was presented to the Board to provide background information and to add
context to the other analyses performed by Janney, as described below. In
addition, the fact that the Shares underperformed the indicated indices over the
indicated periods, that the last date on which the Shares closed at or above
$14.00 per share was May 19, 1998 and that the Shares closed at $11.25 on June
3, 1999, at $9.625 on May 28, 1999 (one week prior to June 4) and at $9.50 on
May 7, 1999 (four weeks prior to June 4),was consistent with a determination
that the consideration to be received by the Company's shareholders in the
Transaction was fair to such shareholders from a financial point of view.
Analysis of Selected Publicly Traded Comparable Companies
Using publicly available information, Janney compared the operating and
financial performance, capitalization and stock market valuation for the Company
with respective corresponding data and ratios for certain similar publicly
traded companies. Janney selected these companies from the universe of possible
companies based upon Janney's view as to the comparability of financial and
operating characteristics for these companies to the Company. With respect to
each such analysis, Janney made such comparisons among the following companies:
American Freightways Corporation, Arnold Industries, Inc., Motor Cargo
Industries Inc., Old Dominion Freight Line, Inc., USFreightways Corporation and
Vitran Corporation Inc. (the "Comparable Companies").
Among other multiples calculated and reviewed by Janney were the Comparable
Companies' (a) common stock equity market value ("Equity Value") to historical
and estimated net income and (b) Equity Value adjusted for debt and cash
("Enterprise Value") to latest twelve months ("LTM") revenue, earnings before
interest and taxes ("EBIT") and earnings before interest, taxes, depreciation
and amortization ("EBITDA"). The financial information used in connection with
the multiples set forth below assumed 10,733,847 Shares outstanding, net debt of
the Company of $42,377,000, and was based on the latest reported 12 month period
as derived from publicly available information and on estimated EPS for calendar
years 1999 and 2000 for the Comparable Companies as reported as the consensus
estimates by First Call Corporation.
Janney noted that: (i) the Enterprise Value of the Comparable Companies as
a multiple of LTM revenue ranged from 0.4x to 1.0x, with an adjusted average
(adjusted to exclude the highest and lowest values before averaging) of 0.6x;
applying these multiples to the Company's LTM revenue of $237.1 million results
in low, high and adjusted average per share values of $4.38, $17.72 and $8.44,
respectively; (ii) the Enterprise Value
19
<PAGE> 20
of the Comparable Companies as a multiple of LTM EBITDA ranged from 2.9x to
6.4x, with an adjusted average of 4.7x; applying these multiples to the
Company's LTM EBITDA of $33.4 million results in low, high and adjusted average
per share values of $5.03, $15.87 and $10.71, respectively; (iii) the Enterprise
Value of the Comparable Companies as a multiple of LTM EBIT ranged from 5.5x to
11.9x, with an adjusted average of 7.7x; applying these multiples to the
Company's LTM EBIT of $17.8 million results in low, high and adjusted average
per share values of $5.18, $15.82 and $8.84, respectively; (iv) the Equity Value
of the Comparable Companies as a multiple of LTM net income ranged from 9.0x to
20.5x, with an adjusted average of 11.1x; applying these multiples to the
Company's LTM net income of $9.6 million results in low, high and adjusted
average per share values of $8.12, $18.42 and $9.98, respectively; (v) the
Equity Value of the Comparable Companies as a multiple of estimated calendar
year 1999 net income ranged from 6.3x to 15.2x, with an adjusted average of
10.2x; applying these multiples to the Company's estimate for calendar year 1999
net income of $12.4 million results in low, high and adjusted average per share
values of $7.25, $17.56 and $11.75, respectively; and (vi) the Equity Value of
the Comparable Companies as a multiple of estimated calendar year 2000 net
income ranged from 5.5x to 13.3x, with an adjusted average of 8.6x; applying
these multiplies to the Company's estimate for calendar year 2000 net income of
$15.2 million results in low, high and adjusted average per share values of
$7.76, $18.83 and $12.22, respectively.
Based on the foregoing comparisons, Janney noted that the $14.00 per share
value of the consideration to be received by shareholders represented an Equity
Value which, as a multiple of the Company's historical and estimated future
financial results set forth above, was above the adjusted average per share
trading values of the Comparable Companies and that this fact supported a
determination that the consideration to be received in the Transaction was fair
to the Company's shareholders from a financial point of view.
Analyses of Selected Comparable Transactions
Janney reviewed the financial terms, to the extent publicly available, of
five completed acquisitions since January 1, 1998 in the trucking industry (US
Xpress / PST Vans; Transport Corp. of America / North Star Transport; Apollo
Management / MTL Inc.; US Xpress / Victory Express; FDX Corp. / Caliber Systems)
(the "Comparable Transactions"). Because data from completed transactions must
be evaluated in the context of market conditions prevailing at the time of the
acquisition, Janney noted that a review of transactions completed before 1998
would be of more limited value. Janney calculated various financial multiples
based on publicly available information for each of the Comparable Transactions
and applied these multiples to the Company's financial results. All multiples
for the Comparable Transactions were based on information available at the time
of announcement of such transaction, without taking into account differing
market and other conditions during the period during which such transactions
occurred.
Janney noted that: (i) the Enterprise Value of the Comparable Transactions
as a multiple of LTM revenue ranged from 0.4x to 0.8x, with an adjusted average
of 0.7x; applying these multiples to the Company's LTM revenue of $237.1 million
results in low, high and adjusted. average per share values of $3.86, $14.54 and
$10.70, respectively; (ii) the Enterprise Value of the Comparable Transactions
as a multiple of LTM EBITDA ranged from 3.6x to 7.8x, with an adjusted average
of 5.7x; applying these multiples to the Company's LTM EBITDA of $33.4 million
results in low, high and adjusted average per share values of $7.33, $20.34 and
$13.85, respectively; (iii) the Equity Value of the Comparable Transactions as a
multiple of LTM net income ranged from 5.7x to 170.1x, with an adjusted average
of 17.9x; applying the multiples to the Company's LTM net income of $9.6 million
results in low, high and adjusted average per share values of $5.13, $153.09 and
$16.09, respectively; and (iv) the Equity Values of the Comparable Transactions
as a multiple of shareholders' equity ranged from 0.9x to 3.3x, with an adjusted
average of 1.9x; applying these multiples to the Company's shareholders' equity
of $77.9 million results in low, high and adjusted average per share values of
$6.46, $23.87 and $13.46, respectively.
Based on the foregoing comparisons, Janney noted that the $14.00 per share
value of the consideration to be received by shareholders represented an Equity
Value which, as a multiple of the Company's historical financial results and
condition set forth above, was within the range of the Comparable Transactions
and that this fact supported a determination that the consideration to be
received in the Transaction was fair to the Company's shareholders from a
financial point of view.
20
<PAGE> 21
Discounted Cash Flow Analysis
Janney prepared a discounted cash flow analysis of the future unleveraged
free cash flows that the Company's operations could be expected to generate
during various periods using projections provided to Janney by the Company.
Unleveraged free cash flows of the Company were projected over a period ending
December 31, 2003. A terminal value was calculated utilizing an exit multiple
between 4.5x and 6.5x projected EBITDA in 2003. Such terminal values were based
upon a review of the trading characteristics of the common stock of selected
publicly traded trucking companies. The estimated future unleveraged free cash
flows and the terminal value were discounted to present values using a range of
discount rates from between 6% and 14%. Janney arrived at such discount rates
based on its judgement of the weighted average cost of capital of selected
publicly traded trucking companies. After subtracting the present value of
payments due to debtholders, Janney arrived at a range of estimated per share
values for the Shares of between $7.22 and $24.04. Based on a midpoint exit
multiple of 5.5x EBITDA in the year 2003, and a midpoint discount rate of 10%,
this analysis produced a midpoint per share value of $14.50 for the Shares.
Based on the foregoing analysis, Janney noted that the $14.00 per share
value of the consideration to be received by shareholders represented an Equity
Value which was within the valuation range of the Discounted Cash Flow Analysis,
and that this fact supported a determination that the consideration to be
received in the Transaction was fair to the Company's shareholders from a
financial point of view.
Market and Economic Factors
In rendering its opinion, Janney considered, among other factors, the
condition of the U.S. stock markets and the current level of economic activity,
particularly in the trucking industry. No company used in the analysis of
certain other publicly traded companies nor any transaction used in the analysis
of selected mergers and acquisitions summarized above are identical to the
Company or the Transaction. In addition, Janney believes that both the analysis
of certain other publicly traded companies and the analysis of selected mergers
and acquisitions are not simply mathematical. Rather, such analyses must take
into account differences in the financial and operating characteristics of these
companies and other factors, such as general economic conditions, conditions in
the markets in which such companies compete and strategies and operating plans
for such companies, that could affect the public trading value and acquisition
value of these companies.
In arriving at its opinion, Janney did not ascribe a specific range of
values to the Company, but made its determination as to the fairness, from a
financial point of view, of the consideration to be received by the shareholders
of the Company in the Transaction on the basis of a variety of financial and
comparative analyses, including those described above. The summary of analyses
performed by Janney as set forth above does not purport to be a complete
description of the analyses underlying Janney's opinion. The presentation of a
fairness opinion is a complex analytic process involving various determinations
as to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances and, therefore,
such an opinion is not readily susceptible to partial or summary description.
The estimates contained in such analyses and the ranges of valuations resulting
from any particular analysis are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or less
favorable than those suggested by such analyses. In addition, analyses relating
to the value of the business or securities do not purport to be appraisals or to
reflect the prices at which businesses, companies or securities actually may be
sold. Accordingly, such analyses and estimates are inherently subject to
substantial uncertainty. In arriving at its opinion, Janney made qualitative
judgements as to the significance and relevance of each analysis and factor
considered by it. Accordingly, Janney believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors,
without considering all analyses and factors, could create an incomplete view of
the processes underlying such analyses and its opinion.
Janney is a nationally recognized investment banking firm and, as part of
its investment banking activities, is regularly engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of securities, private
placements and valuations for corporate and other purposes. The Board retained
Janney to act as its financial advisor based on Janney's qualifications,
reputation and experience. Pursuant to the terms of Janney's engagement, the fee
payable to
21
<PAGE> 22
Janney upon consummation of the Transaction will be equal to 0.3% of the total
value of the Transaction, or approximately $600,000. In addition, the Company
has agreed to reimburse Janney for its reasonable out-of-pocket expenses and to
indemnify Janney for certain costs, expenses and liabilities related to or
arising out of Janney's rendering of services under its engagement as financial
advisor, or to contribute to payments Janney may be required to make in respect
thereof.
Certain Projections
The Company does not as a matter of policy make public forecasts or
projections as to future performance or earnings. However, in the course of
discussions with Parent, the Company prepared projections of its anticipated
future operating performance for the four calendar years ending December 31,
2002. Certain of these projections are summarized below.
Such projections were prepared assuming that the sale had not occurred and
upon estimates and assumptions (including with respect to industry performance,
general economic and business conditions, taxes and other matters) that
inherently are subject to material uncertainties and risk, all of which are
difficult to quantify and many of which are beyond the control of the Company.
The projections were not prepared with a view to public disclosure or compliance
with the published guidelines of the Commission or the guidelines established by
the American Institute of Certified Public Accountants regarding projections or
forecasts and are included herein only because such information was provided to
Parent. The Company's internal operating projections are, in general, prepared
solely for internal use in connection with capital budgeting and other
management decisions and are subjective in many respects and thus susceptible to
various interpretations. Certain assumptions on which the projections were based
related to the achievement of strategic goals, objectives and targets over the
applicable periods that are more favorable than historical results. There can be
no assurance that the assumptions made in preparing the projections will prove
accurate, and actual results may be materially greater or less than those
contained in the projections. Neither the Company nor any person assumes any
responsibility for the accuracy of any of the projections. Neither the Company's
independent auditors, nor any other independent accountants or financial
advisors, have compiled, examined or performed any procedures with respect to
the projections contained herein, nor have they expressed any opinion or any
form of assurance on such information or its achievability, and assume no
responsibility for, and disclaim any association with, the projections. The
inclusion of the projections should not be regarded as an indication that the
Company, or any other person who received such information, considers it an
accurate prediction of future events. The Company does not intend to update,
revise or correct such projections if they become inaccurate (even in the short
term).
The projections below constitute forward looking statements and involve
numerous risks and uncertainties. The Company's actual results may differ
significantly from those discussed herein. Factors that might cause such a
difference include, but are not limited to, the effect of changing economic or
business conditions and the impact of competition and other factors.
Set forth below is a summary of the projections for the four calendar years
ended December 31, 2002:
PROJECTED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PROJECTED FOR THE YEAR ENDING DECEMBER 31,
--------------------------------------------
1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating Revenues.............. $278,297 $320,042 $368,048 $423,255
Operating Income................ 23,509 28,804 33,124 38,093
Income Before Taxes............. 20,521 25,151 28,924 33,263
Net Income...................... 12,415 15,217 17,499 20,124
-------- -------- -------- --------
Earnings Per Share.............. $ 1.15 $ 1.41 $ 1.62 $ 1.86
</TABLE>
22
<PAGE> 23
Material assumptions on which the projections were based include the
following:
(i) Revenue growth is based upon an estimated 23.1% growth rate from
1998 to 1999, with a projected 15.0% growth rate thereafter. The Company
believes that revenue growth will come from (a) additional business from
existing customers, (b) new business from new customers in the Company's
current primary markets, (c) additional business in geographical regions in
which the Company has during 1998 either opened or significantly expanded a
terminal and (d) investment and expansion into new regions and lanes.
(ii) Operating expense growth is based upon projected revenue growth
and an assumption that the Company's operating ratio will decrease from
92.6% in 1998 to 91.6% in 1999 and 91.0% thereafter. Selected cost trends
underlying the assumed reduction in operating ratio include the following:
(a) Salaries, wages and benefits are projected to increase from
50.5% of revenue in 1998 to 52.6% of revenue in 1999, then decrease to
51.0% of revenue in 2000 through 2002. The increase in 1999 is due in
large part to the increased use of salaried drivers, a trend which began
in late 1998, and an increase in late 1998 in the Company's non-driver
employees. Further, to attract and retain experienced drivers, the
Company increased the start rates for certain drivers in 1998. Going
forward, the Company expects a stabilization in both the non-driver
headcount and in the mix of Company drivers versus owner-operators.
Taken with the projected increase in revenues, this stabilization and
shift in driver mix is projected to result in a reduction from 1999 in
salaries, wages, and benefits as a percentage of revenue for the years
2000 through 2002.
(b) Supplies and other expenses are projected to decrease from
17.4% of revenue in 1998 to 15.8% of revenue in 1999, then increase to
16.5% of revenue in 2000 through 2002. The decrease in 1999 is due in
part to historically low fuel prices, and to the Company increasingly
owning, rather than leasing, equipment and terminals. In addition, a
portion of this expense item is fixed cost in nature, so it declines as
a percentage of revenue as revenue increases. The projection of 16.5%
for the years 2000 through 2002 reflects various factors, including an
anticipated increase in the cost of fuel from historical lows as a
percentage of revenue.
(c) Purchased transportation is projected to decrease from 12.0% of
revenue in 1998 to 10.1% of revenue in 1999, then increase to 11.0% of
revenue in 2000 through 2002. The trend in decreasing purchased
transportation for 1999 relates to the trend in decreasing independent
contractors and increasing salaried drivers. For the years 2000 through
2002, purchased transportation is projected consistent with the
Company's anticipated mix between salaried drivers, independent
contractors and third-party purchased transportation, all as a
percentage of revenue.
(d) Depreciation and amortization are projected to increase to 6.7%
of revenue in 1999 from 6.5% of revenue in 1998, then decrease to 6.5%
of revenue in 2000 through 2002, based on projected equipment
requirements and revenue growth.
(e) Operating taxes and licenses are projected to increase from
4.6% of revenue in 1998 to 4.7% of revenue in 1999, then decrease to
4.4% of revenue in the years 2000 through 2002. The increase in 1999
reflects various vehicle fees and fuel taxes associated with the
Company's increased use of Company owned vehicles beginning in late
1998. Projections for the years 2000 through 2002 are based on
anticipated steady levels of driver and vehicle mix as a percentage of
revenue growth.
(f) Insurance and claims are projected to decrease from 1.8% of
revenue in 1998 to 1.7% percent of revenue in 1999. The Company has
historically had insurance costs and claims experience of under 1.8% of
revenue. Going forward the Company may benefit from favorable premium
levels provided by a new insurance provider as of April, 1998. Insurance
costs and claims are projected at 1.7% of revenue for the years 2000
through 2002.
(g) Interest expense is projected to increase from 0.6% of revenue
in 1998 to 1.1% of revenue in 1999. The increase is largely due to
increased percentages of owned equipment and higher working capital
requirements. Interest expense is projected for the years 2000 through
2002 at 1.2% of revenue.
23
<PAGE> 24
(h) Income Taxes are projected at 39.5% of projected pre-tax
income. The projected tax rate is based on current and anticipated
experience.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to the terms of a letter agreement dated April 28, 1999 (the
"Engagement Letter"), the Company retained Janney as its financial advisor in
evaluating the terms of the Offer and the Merger and to render an opinion as to
the fairness, from a financial point of view, of the consideration to be
received by the shareholders of the Company pursuant to the Offer and the
Merger. A copy of Janney's opinion is attached to this Schedule 14D-9 as Exhibit
14 and incorporated herein by reference. The Company has agreed to pay Janney
(a) 0.3% of the total fair market value (at the time of closing) of the
aggregate consideration paid or payable to the Company or the Company's
shareholders in connection with an acquisition transaction with Parent, or (b)
0.5% of the total fair market value (at the time of closing) of the aggregate
consideration paid or payable to the Company or the Company's shareholders in
connection with an acquisition transaction with a company other than Parent.
The Company has also agreed to reimburse Janney for reasonable
out-of-pocket expenses, including the fees and expenses of legal counsel, and to
indemnify Janney and certain related parties against certain liabilities,
including liabilities under the federal securities laws, arising out of Janney's
engagement.
Except as disclosed herein, neither the Company nor any person acting on
its behalf has employed, retained or compensated any person to make
solicitations or recommendations to the Company's stockholders with respect to
the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) RECENT TRANSACTIONS. There have been no transactions in the Shares
during the past 60 days by the Company or, to the best of the Company's
knowledge, by any executive officer, director, affiliate or subsidiary of the
Company.
(b) INTENT WITH RESPECT TO SECURITIES. To the best knowledge of the
Company, all of its executive officers, directors, affiliates and subsidiaries
currently intend to tender pursuant to the Offer all Shares held of record or
beneficially owned by them.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) NEGOTIATIONS. Except as set forth in this Schedule 14D-9, the Company
is not engaged in any negotiation in response to the Offer which relates to or
would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) TRANSACTIONS. Except as described in Item 3(b) and Item 4 above (the
provisions of which are hereby incorporated by reference), there are no
transactions, board resolutions, agreements in principle or signed contracts in
response to the Offer which relate to or would result in one or more of the
matters referred to in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The Information Statement attached hereto as Annex II is being furnished to
the Company's shareholders in connection with the possible designation by
Purchaser, pursuant to the Merger Agreement, of certain persons to be appointed
to the Company's Board other than at a meeting of the Company's shareholders,
and such information is incorporated herein by reference.
24
<PAGE> 25
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Agreement and Plan of Merger dated June 6, 1999, by and among
the Company, Parent and Purchaser.
Exhibit 2. Employment Agreement of Paul J. Karvois.
Exhibit 3. Employment Agreement of Brian J. Fitzpatrick.
Exhibit 4. Employment Agreement of Joseph A. Librizzi.
Exhibit 5. Employment Agreement of Raymond M. Conlin.
Exhibit 6. Amended and Restated Severance Agreement of Paul J. Karvois.
Exhibit 7. Amended and Restated Severance Agreement of Brian J.
Fitzpatrick.
Exhibit 8. Amended and Restated Severance Agreement of Joseph A.
Librizzi.
Exhibit 9. Amended and Restated Severance Agreement of Raymond M. Conlin.
Exhibit 10. Tender and Voting Agreement among Parent, Purchaser and
Certain Shareholders of the Company.
Exhibit 11. Confidentiality Agreement dated December 22, 1998, by and
between the Company and Parent.
Exhibit 12. Letter to Shareholders, dated June 9, 1999.*
Exhibit 13. Press Release of the Company, dated June 7, 1999.
Exhibit 14. Opinion of Janney Montgomery Scott, Inc. dated June 4, 1999.*
- ---------------
* Included in copies of the Schedule 14D-9 mailed to shareholders.
25
<PAGE> 26
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
By:
/s/ Harry J. Muhlschlegel
------------------------------------
Harry J. Muhlschlegel
Chairman of the Board Chief
Executive Officer
Dated: June 9, 1999
26
<PAGE> 27
ANNEX I
JANNEY MONTGOMERY SCOTT
INVESTMENT BANKING
June 4, 1999
Board of Directors
Jevic Transportation, Inc.
700 Creek Road
Delanco, NJ 08075
Dear Members of the Board:
You have requested our opinion with respect to the fairness, from a
financial point of view, to the shareholders of Jevic Transportation, Inc. (the
"Company") of the consideration to be received by such shareholders pursuant to
the Agreement and Plan of Merger (the "Agreement") dated June 6, 1999 by and
among Yellow Corporation, JPF Acquisition Corp. (together, "Yellow") and the
Company.
Under the terms of the Agreement, Yellow will commence a tender offer (the
"Tender Offer") to purchase all of the issued and outstanding common stock of
the Company for $14.00 per share, in cash (the "Merger Consideration"), and
after acceptance for payment of all shares tendered and not withdrawn in the
Tender Offer, the Company would be merged with and into JPF Acquisition Corp.
(the "Merger" and, together with the Tender Offer, the "Transaction") and the
holders of all issued and outstanding shares of common stock not purchased
pursuant to the Tender Offer, other than Yellow or its affiliates, would be
entitled to receive the Merger Consideration, or such greater amount as may be
paid in the Tender Offer. The terms and conditions of the Merger are more fully
set forth in the Agreement.
In reaching our opinion, we (i) reviewed selected financial and stock
market data for the Company and certain other publicly traded companies; (ii)
reviewed the recent trading history of the Company's common stock; (iii)
reviewed the financial terms of certain recent business combinations; (iv)
performed discounted cash flow analysis for the Company; (v) reviewed the terms
of the Agreement and certain related documents in draft form; and (vi) performed
such other analyses, and considered such other factors, as we deemed
appropriate. In addition, we held discussions with the management of the Company
regarding the Company's business, operating results, financial condition and
prospects.
In connection with our review, we have relied upon the accuracy and
completeness of all information provided to us by the Company and its
representatives, and we have not attempted to independently verify any such
information. We have also relied upon the assessment of the management of the
Company regarding the Company's business and prospects, and assumed that the
budgets and financial projections of the Company were prepared by management on
the basis of reasonable assumptions and reflected the best currently available
estimates and good faith judgments of the future financial performance of the
Company. We have also assumed that the final terms of the Agreement and certain
related documents reviewed by us in draft form will not vary materially from the
drafts reviewed by us. We have not made an independent evaluation or appraisal
of the Company's assets and liabilities. Our opinion is necessarily based on
financial, market, economic and other conditions as they exist and can be
evaluated as of the date of this letter. We undertake no obligation to update
this opinion to reflect any developments occurring after the date hereof.
Janney Montgomery Scott Inc. ("Janney") is acting as financial advisor to
the Company in connection with the Transaction and will receive customary fees
in connection with, and upon completion of, the
<PAGE> 28
Board of Directors
June 4, 1999
Page 2
Transaction. In addition, the Company has agreed to indemnify Janney against
certain liabilities arising out of the rendering of this opinion. Janney is a
nationally recognized investment banking firm and, as part of its investment
banking activities, is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of securities, private placements and
valuations for corporate and other purposes.
It is understood that this letter is for the information of the Board of
Directors of the Company in evaluating the Transaction and does not constitute a
recommendation to any shareholder of the Company as to whether such shareholder
should tender their shares in the Tender Offer or as to how such shareholder
should vote their shares in the Merger. This opinion may not be used for any
other purpose, and may not be quoted or referred to, in whole or in part,
without our prior written consent, except that this opinion may be included in
its entirety in any filing with the Securities and Exchange Commission and any
documents mailed to the Company's shareholders in connection with the
Transaction.
Based upon the foregoing, we are of the opinion, as of the date hereof,
that the Merger Consideration to be received by the shareholders of the Company
pursuant to the Agreement is fair to the shareholders of the Company from a
financial point of view.
Very truly yours,
/S/ JANNEY MONTGOMERY SCOTT INC.
<PAGE> 29
ANNEX II
JEVIC TRANSPORTATION, INC.
600 CREEK ROAD
DELANCO, NEW JERSEY 08075
------------------------
INFORMATION STATEMENT PURSUANT
TO SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S SHAREHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
------------------------
This Information Statement is being mailed on or about June 9, 1999 by
Jevic Transportation, Inc., a New Jersey corporation (the "Company"), together
with the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), to the holders of record of shares of Company Common Stock
and Class A Common Stock, no par value, (the "Stock" or the "Shares"). You are
receiving this Information Statement in connection with the possible election of
persons designated by Yellow Corporation, a Delaware corporation (the "Parent"),
to the Board of Directors of the Company (the "Board of Directors" or the
"Board").
Pursuant to an Agreement and Plan of Merger, dated June 6, 1999 (the
"Merger Agreement"), among the Company, the Parent and JPF Acquisition Corp., a
New Jersey corporation and a wholly owned subsidiary of the Parent (the
"Purchaser"), the Purchaser has commenced a tender offer (the "Offer") for all
of the issued and outstanding Shares, at a price of $14.00 per Share, net to the
seller in cash, and following the consummation of the Offer, the Purchaser will
be merged with and into the Company (the "Merger"), with the Company surviving
as a wholly owned subsidiary of Parent. The Offer is currently scheduled to
expire at 12:00 midnight, Eastern Standard Time, on July 7, 1999, at which time,
if the Offer is not extended and all conditions to the Offer have not been
satisfied or waived, Purchaser is obligated to purchase all Shares validly
tendered pursuant to the Offer not withdrawn.
The Merger Agreement provides that, promptly after the purchase of and
payment for a majority in voting power of the outstanding Shares pursuant to the
Offer, the Parent will be entitled to designate such number of directors as will
give the Parent representation on the Board proportionate to its ownership
interest in the Shares, rounded up to the next whole number. The Merger
Agreement requires the Company to take all actions necessary (other than the
calling of a shareholders meeting) to cause designees of the Parent (the "Parent
Designees") to be elected to the Board under the circumstances described
therein. This Information Statement is being mailed to shareholders of the
Company pursuant to Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14f-1 promulgated thereunder.
Certain other documents (including the Merger Agreement) were filed with
the Securities and Exchange Commission (the "SEC") as exhibits to the Schedule
14D-9 and as exhibits to the Tender Offer Statement on Schedule 14D-1 of the
Purchaser and the Parent (the "Schedule 14D-1"). The exhibits to the
<PAGE> 30
Schedule 14D-9 and the Schedule 14D-1 may be examined at, and copies thereof may
be obtained from, the regional offices of and public reference facilities
maintained by the SEC (except that the exhibits thereto cannot be obtained from
the regional offices of the SEC) in the manner set forth in Section 7 of the
Offer to Purchase, as well as on the World Wide Web site maintained by the SEC
on the Internet at http://www.sec.gov.
IN THE EVENT THAT THE PARENT OR THE PURCHASER DOES NOT ACQUIRE ANY SHARES
PURSUANT TO THE OFFER, OR TERMINATES THE OFFER, OR IF THE MERGER AGREEMENT IS
TERMINATED PURSUANT TO ITS TERMS BY THE PARENT, THE PURCHASER OR THE COMPANY
PRIOR TO THE ELECTION OR APPOINTMENT OF THE PARENT DESIGNEES, NEITHER THE PARENT
NOR THE PURCHASER WILL HAVE ANY RIGHT UNDER THE MERGER AGREEMENT TO HAVE THE
PARENT DESIGNEES ELECTED OR APPOINTED TO THE COMPANY'S BOARD OF DIRECTORS.
No action is required by the shareholders of the Company in connection with
the election or appointment of the Parent Designees to the Board. However,
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the mailing to the Company's shareholders of the information set
forth in this Information Statement prior to a change in a majority of the
Company's directors otherwise than at a meeting of the Company's shareholders.
The information contained in this Information Statement concerning the
Parent, the Purchaser and the Parent Designees has been furnished to the Company
by such persons, and the Company assumes no responsibility for the accuracy or
completeness of such information. The Schedule 14D-1 indicates that the
principal executive offices of the Purchaser and the Parent are located at 10990
Roe Avenue, P.O. Box 7563, Overland Park, Kansas 66211.
2
<PAGE> 31
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
GENERAL
The Company has two classes of voting securities outstanding: Common Stock
and Class A Common Stock. Each share of Common Stock entitles the holder thereof
to one vote, and each share of Class A Common Stock entitles the holder thereof
to two votes. As of June 4, 1999, 4,994,303 shares of Common Stock were issued
and outstanding, 5,739,544 shares of Class A Common Stock were issued and
outstanding and 1,564,056 shares of Common Stock were reserved for issuance upon
the exercise of certain options outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 4, 1999 the beneficial ownership
of Stock of each director, each executive officer, all directors and executive
officers as a group, and each person known to the Company who owns more than 5%
of the issued and outstanding Stock. Unless otherwise indicated, beneficial
ownership is direct.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------------------ ---------- --------
<S> <C> <C>
Bruce D. Burdick and George K. Reynolds, III................ 1,345,631(1) 14.14%
Capital Guardian Trust Company.............................. 593,500(2) 11.93%
333 South Hope Street, 55th Floor, Los Angeles, CA 90071
Dalton, Greiner, Hartman, Maher & Co........................ 495,100(3) 9.95%
1100 Fifth Avenue South, Suite 301, Naples, FL 34102
The Hartford Mutual Funds and Wellington Management Company,
LLP....................................................... 486,900(4) 9.78%
Putnam Investments, Inc..................................... 403,714(5) 8.11%
One Post Office Square, Boston, MA 02109
Harry J. Muhlschlegel....................................... 2,494,717(6) 33.39%
Jevic Transportation, Inc., 600 Creek Road, Delanco, New
Jersey 08075
Karen B. Muhlschlegel....................................... 2,494,852(6) 33.39%
Jevic Transportation, Inc., 600 Creek Road, Delanco, New
Jersey 08075
Gordon R. Bowker............................................ 10,000 *
Jevic Transportation, Inc., 600 Creek Road, Delanco, New
Jersey 08075
Samuel H. Jones, Jr. ....................................... 15,000 *
Jevic Transportation, Inc., 600 Creek Road, Delanco, New
Jersey 08075
Paul J. Karvois............................................. 28,433(7) *
Jevic Transportation, Inc., 600 Creek Road, Delanco, New
Jersey 08075
Brian J. Fitzpatrick........................................ 27,933(7) *
Jevic Transportation, Inc., 600 Creek Road, Delanco, New
Jersey 08075
Joseph A. Librizzi.......................................... 700(8) *
Jevic Transportation, Inc., 600 Creek Road, Delanco, New
Jersey 08075
Raymond M. Conlin........................................... 1,567 *
Jevic Transportation, Inc., 600 Creek Road, Delanco, New
Jersey 08075
All directors and executive officers as a group (8
persons).................................................. 5,073,202(9) 50.91%
</TABLE>
- ---------------
* Less than 1%.
(1) Messrs. Burdick and Reynolds each own 1,000 shares of stock for their own
account. The remaining 1,343,631 shares are held by Messrs. Burdick and
Reynolds as trustees pursuant to trusts for the benefit of
3
<PAGE> 32
members of the Muhlschlegel family. Of such 1,343,631 shares, 749,975 are
shares of Class A Common Stock, reflected on an as-converted basis. Each
share of Class A Common Stock is convertible into one share of Common Stock
and is entitled to two votes per share on all matters on which holders of
Common Stock are entitled to vote. The address of Mr. Burdick is 148
Catherine Lane, Grass Valley, California 95945, and the address of Mr.
Reynolds is Gordon, Feinblatt, Rothman, Hoffberger and Hollander, LLC, The
Garrett Building, 233 East Redwood Street, Baltimore, Maryland 21202.
(2) Capital Guardian Trust Company is a bank, as defined in Section 3(a)(g) of
the Securities Exchange Act of 1934, and is deemed to have beneficial
ownership of these shares as a result of its serving as the investment
manager of various institutional accounts. The information set forth herein
is based on a Schedule 13G dated February 12, 1999 filed by Capital Guardian
Trust Company with the SEC.
(3) Dalton, Greiner, Hartman, Maher & Co. is an investment adviser registered
with the Securities and Exchange Commission under Section 203 of the
Investment Advisers Act of 1940, as amended. The company is deemed to have
beneficial ownership of these shares which are owned of record by its
investment advisory clients. The information set forth herein is based on a
Schedule 13G dated February 1, 1999 filed by Dalton, Greiner, Hartman, Maher
& Co. with the SEC.
(4) The Hartford Mutual Funds, P.O. Box 2999, Hartford, CT 06115, is an
investment company registered with the Securities and Exchange Commission
under Section 8 of the Investment Company Act and is deemed to have
beneficial ownership of these shares which are owned by its Hartford Capital
Appreciation Fund. Wellington Management Company, LLP, 75 State Street,
Boston, MA 02109, is an investment adviser registered with the Securities
and Exchange Commission under Section 203 of the Investment Advisers Act of
1940, as amended, and is the sub-investment adviser of the Hartford Capital
Appreciation Fund. Wellington Management Company, LLP is deemed to have
beneficial ownership of these shares which are owned of record by its
investment advisory clients. The information set forth herein is based on a
Schedule 13G/A dated February 9, 1999 filed by The Hartford Mutual Funds and
a Schedule 13G/A dated February 10, 1999 filed by Wellington Management
Company, LLP with the SEC.
(5) Certain Putnam investment managers (together with their parent corporations,
Putnam Investments, Inc. and Marsh & McLennan Companies, Inc.) are
considered the beneficial owners of these shares which were acquired for
investment purposes by such investment managers for certain of their
advisory clients. The information set forth herein is based on a Schedule
13G/A dated January 26, 1998 filed by Putnam Investments, Inc. with the SEC.
(6) The shares owned by Mr. and Mrs. Muhlschlegel are shares of Class A Common
Stock and are reflected on an as-converted basis. Shares of Class A Common
Stock are entitled to two votes per share and vote with the Common Stock on
all matters on which holders of Common Stock are entitled to vote. Each
share of Class A Common Stock is convertible into one share of Common Stock.
(7) Includes 27,433 shares of Common Stock purchasable upon the exercise of
stock options.
(8) These shares are held by Mr. Librizzi jointly with his wife.
(9) Includes 54,866 shares of Common Stock purchasable upon the exercise of
stock options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors and
executive officers, and persons who own more than 10% of the Common Stock, to
file with the Commission initial reports of ownership and reports of changes in
ownership of the Common Stock and other equity securities of the Company. To the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the year ended December 31, 1998, all Section 16(a) filing
requirements applicable to the Company's officers, directors and greater than
ten-percent beneficial owners were complied with, except that Mr. Conlin filed
his initial statement of beneficial ownership late and Mr. Bowker filed one form
late relating to one transaction.
4
<PAGE> 33
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
CURRENT DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
TERM AS
DIRECTOR
NAME AGE POSITION WITH THE COMPANY EXPIRES
- ---- --- ------------------------- --------
<S> <C> <C> <C>
Harry J. Muhlschlegel(1).................. 52 Chairman and Chief Executive Officer 2000
Karen B. Muhlschlegel..................... 52 Director 2002
Gordon R. Bowker(1)(2).................... 71 Director 2001
Samuel H. Jones, Jr.(1)(2)................ 65 Director 2001
Paul J. Karvois........................... 44 President, Chief Operating Officer and 2002
Director
Brian J. Fitzpatrick...................... 39 Senior Vice President and Chief Financial
Officer
Joseph A. Librizzi........................ 50 Senior Vice President -- Marketing and
Sales
Raymond M. Conlin......................... 36 Senior Vice President -- Administration
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Harry J. Muhlschlegel has over 29 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 has over 29 years of experience in the trucking
industry. She co-founded Jevic along with her husband, Harry Muhlschlegel, in
1981 and has served as a Vice President, Secretary and a director of the Company
since its inception.
Gordon R. Bowker joined the Company as a director upon completion of its
October 1997 initial public offering. Mr. Bowker served in various positions
with Ryder System, Inc. from 1964 to 1973, most recently as Group Vice
President, a senior officer reporting directly to the President. Since 1973, Mr.
Bowker has been the owner and President of Bowker, Brown & Co., a management
consulting firm serving transportation related companies in the areas of truck
renting and leasing, business appraisal and sales and divestitures. Mr. Bowker
has served on the Arbitration Panel of the New York Stock Exchange since 1988,
and has served on the Arbitration Board of the National Association of
Securities Dealers since 1991.
Samuel H. Jones, Jr. also joined the Company as a director upon completion
of the October 1997 initial public offering. Since 1971, Mr. Jones has been the
owner and President of S-J Transportation, Co., a company specializing in the
transportation of industrial waste nationwide and in two Canadian provinces.
Since 1991, he has been the owner and President of S-J Venture Capital Company.
In addition, Mr. Jones currently serves as a director of MetaCreations, Inc. and
Fulton Financial Corporation, as well as a number of privately-held
organizations.
Paul J. Karvois became Jevic's President and Chief Operating Officer in
March 1997 and he was elected as a director in August 1997. He joined the
Company in January 1992 as Director of Insurance. Later in 1992, he created the
Company's risk management group and became Director of Risk Management. Mr.
Karvois was promoted to the position of Senior Vice President -- Marketing and
Sales in December 1993. Prior to joining the Company, Mr. Karvois had 21 years
of marketing, sales and operations experience in the trucking industry, serving
in a variety of positions with truckload and LTL carriers.
Brian J. Fitzpatrick joined the Company in September 1993 as Senior Vice
President -- Finance in order to create the Company's financial and
administrative division. He was elected to the office of Chief Financial Officer
in February 1995, in which capacity he is additionally responsible for
developing overall financial strategies and technology systems for the Company.
Prior to joining the Company, Mr. Fitzpatrick had 12 years of commercial banking
experience.
5
<PAGE> 34
Joseph A. 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 Operations and Sales, holding executive
positions in the LTL industry for both regional and national companies.
Raymond M. Conlin was elected to the office of Senior Vice
President -- Administration in October 1998. Mr. Conlin joined the Company in
June 1993 and Director of Insurance and later in that year assumed the role of
Director of Risk Management. Mr. Conlin was promoted to the position of Vice
President -- Administration in June 1995. Prior to joining the Company, Mr.
Conlin had eight years of financial, sales and operations experience in the
transportation industry.
RIGHT TO DESIGNATE DIRECTORS; THE PARENT DESIGNEES
Upon payment by Purchaser for Shares pursuant to the Offer representing at
least a majority of the votes entitled to be cast by all holders of Shares and
from time to time thereafter so long as Purchaser and/or Parent (and/or their
respective wholly-owned subsidiaries) continue to hold at least such number of
Shares, Parent will be entitled to designate such number of directors, rounded
up to the next whole number, on the Company's Board of Directors as is equal to
the product of the total number of directors on the Company's Board (determined
after giving effect to directors elected pursuant to this sentence) multiplied
by the percentage that the aggregate number of Shares beneficially owned by
Parent or its affiliates bears to the total number of Shares outstanding (the
"Parent Designees"). The Company shall, upon request of Parent, promptly take
all actions necessary to cause the Parent Designees to be so elected, including,
if necessary, seeking the resignations of one or more existing directors. If the
Parent Designees are so elected, prior to the Effective Time the Board shall
always have at least one member who is neither an officer, director, stockholder
or designee of Parent or any of its affiliates. The Company's obligation to
appoint the Parent Designees to the Board of Directors is subject to compliance
with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
Set forth below is certain information with respect to the initial Parent
Designees:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION OR EMPLOYMENT,
PRINCIPAL BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST 5 YEARS
- -------------------------- --- -----------------------------------------------
<S> <C> <C>
A. Maurice Myers 52 Chairman of Parent (since July 1996). President and
c/o Yellow Corporation Chief Executive Officer of Parent (since March 1996).
P.O. Box 7563 Formerly President and Chief Operating Officer America
10990 Roe Avenue West Airlines, Inc., Phoenix, AZ (January
Overland Park, KS 66211 1994 - December 1995); President and Chief Executive
Officer of Aloha Air Group, Inc., Honolulu, HI (August
1983 - December 1993); Director of Hawaiian Electric
Industries, Inc.
William F. Martin, Jr. 51 Senior Vice President -- Legal/Corporate Secretary of
c/o Yellow Corporation Parent (since December 1993); Vice President and
P.O. Box 7563 Secretary of Parent (prior to December 1993); Vice
10990 Roe Avenue President and Secretary of Yellow Freight (prior to
Overland Park, KS 66211 May 1992).
H.A. Trucksess, III 49 Senior Vice President -- Finance and Chief Financial
c/o Yellow Corporation Officer of Parent (since June 1994) and Treasurer of
P.O. Box 7563 Parent (since December 1995); Vice President and Chief
10990 Roe Avenue Financial Officer of Preston Corporation (prior to
Overland Park, KS 66211 June 1994).
Samuel A. Woodward 49 Senior Vice President -- Operations and Planning of
c/o Yellow Corporation Parent (since July 1996); Senior Vice President and
P.O. Box 7563 Managing Officer of SH&E, a management consulting
10990 Roe Avenue business (prior to July 1996).
Overland Park, KS 66211
</TABLE>
To the Company's knowledge, none of the Parent Designees (i) is currently a
director of, or holds any position with, the Company, (ii) has a familial
relationship with any of the directors or executive officers of the Company or
(iii) beneficially owns any securities (or rights to acquire any securities) of
the Company.
6
<PAGE> 35
The Company has been advised by Parent that, to Parent's knowledge, none of
the Parent Designees has been involved in any transaction with the Company or
any of its directors, executive officers or affiliates that is required to be
disclosed pursuant to the rules and regulations of the Commission, except as may
be disclosed herein or in the Schedule 14D-9.
Parent has advised the Company that each of the persons listed in the table
above has consented to act as a director, and that none of such persons has
during the past five years been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was, or is, subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws or is
involved in any other legal proceeding required to be disclosed under Item
401(f) of Regulation S-K promulgated by the Commission.
GENERAL INFORMATION ABOUT BOARD OF DIRECTORS
During the year ended December 31, 1998, the Board of Directors held six
meetings. During that period each Director attended at least than 75% of the
aggregate of the total number of meetings of the Board of Directors and
committees of the Board of Directors on which he or she served.
The Company's Board of Directors has an Audit Committee and a Compensation
Committee, but does not have a standing nominating committee. The Audit
Committee makes recommendations to the Board regarding the annual selection of
independent public accountants, audits annually the Company's books and records,
and reviews recommendations made by the accounting firm as a result of their
audit. The Audit Committee also periodically reviews the activities of the
Company's audit staff and the adequacy of the Company's internal controls.
During 1998, the Audit Committee held one meeting. The Compensation Committee is
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. The Compensation Committee
met three times in 1998.
The Company pays each director who is not also an employee of the Company
(an "outside director") an annual fee of $500 for each Board meeting and each
committee meeting attended by such director in person. The Company will also
reimburse directors for expenses incurred in connection with their activities as
directors.
The Company's 1997 Incentive Plan provides for the automatic grant of stock
options to outside directors to purchase 12,500 shares of the Company's Common
Stock upon their initial election by the shareholders as a director of the
Company at a per share purchase price equal to the fair market price of the
Common Stock on the date of grant. 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. The options expire ten years after the date of grant
or, if the director leaves the Company, the shorter of ten years after the date
of grant or thirty days after the director leaves. In addition, upon each
election of any outside director to the Board by the shareholders in or after
the third year following such director's preceding election to the Board, a
non-qualified option to purchase an additional 5,000 shares of the Company's
Common Stock will be made to the director at an exercise price equal to the fair
market price of the Common Stock on the date of grant, with vesting and
expiration provisions identical to those noted above.
EXECUTIVE COMPENSATION
The following table sets forth, with respect to services rendered during
1998, 1997 and 1996, the total compensation paid by the Company to the Company's
Chief Executive Officer and each other executive officer whose total annual
salary and bonus exceeded $100,000 during 1998 (the "named executive officers").
7
<PAGE> 36
Except as disclosed in the Schedule 14D-9, the Company has no written employment
agreements with any of the named executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------- ------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) (1)
--------------------------- ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Harry J. Muhlschlegel............... 1998 $505,000 -- -- $28,394
Chief Executive Officer and 1997 $514,712 -- -- $31,405
Chairman of the Board 1996 $505,000 -- -- $32,139
Paul J. Karvois..................... 1998 $270,793 -- -- $11,202
President and Chief Operating 1997 $233,755 $75,000 75,000 $11,652
Officer
1996 $123,077 $25,000 -- $11,499
Brian J. Fitzpatrick................ 1998 $186,198 -- -- $ 8,828
Senior Vice President and 1997 $179,362 $50,000 10,000 $ 9,345
Chief Financial Officer 1996 $158,703 $25,000 -- $ 8,909
William F. English(2)............... 1998 $106,745 -- -- $ 6,671
(Former) Senior Vice President -- 1997 $152,905 $30,000 10,000 $ 7,349
Operations 1996 $140,400 $25,000 -- $ 7,268
Joseph A. Librizzi(3)............... 1998 $145,680 -- 50,000 $ 1,350
Senior Vice President -- Marketing 1997 $ 92,072 $30,000 10,000 --
&
Sales
Raymond M. Conlin(4)................ 1998 $105,029 -- 50,000 $ 1,493
Senior Vice President --
Administration
</TABLE>
- ---------------
(1) Amounts include matching contributions made by the Company under the 401(k)
Plan on behalf of the executives in the following amounts: Mr. Muhlschlegel,
$1,000; Mr. Karvois, $1,250; Mr. Fitzpatrick, $1,000; Mr. Librizzi, $1,350;
and Mr. Conlin, $1,493. 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 Mrs.
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. Accordingly, compensation amounts include the following amounts
representing the value of the premium payments by the Company in a given
year projected on an actuarial basis assuming that each executive retires at
age 65 and the agreements are then terminated: Mr. Muhlschlegel, $27,394;
Mr. Karvois, $9,952; Mr. Fitzpatrick, $7,828; and Mr. English, $6,671.
(2) Mr. English's employment with the Company terminated in September 1998.
(3) Mr. Librizzi was elected as an officer of the Company in March 1997.
(4) Mr. Conlin was elected as an officer of the Company in October 1998.
8
<PAGE> 37
STOCK OPTIONS GRANTED TO CERTAIN EXECUTIVE OFFICERS DURING 1998
Under the 1997 Incentive Plan, options to purchase Common Stock are
available for grant to directors, officers and other key employees of the
Company. The following table sets forth certain information regarding options
for the purchase of Common Stock that were awarded to the named executive
officers during 1998.
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE GAIN
% OF TOTAL AT ASSUMED ANNUAL RATES
OPTIONS OF STOCK APPRECIATION
SECURITIES GRANTED TO EXERCISE FOR OPTION TERMS
UNDERLYING EMPLOYEES OR BASE COMPOUNDED ANNUALLY
OPTIONS IN LAST PRICE EXPIRATION --------------------------
NAME GRANTED(#) Fiscal Year ($/SH) DATE(1) 5% 10%
---- ---------- ----------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harry J. Muhlschlegel..... -- -- -- -- -- --
Paul J. Karvois........... -- -- -- -- -- --
Brian J. Fitzpatrick...... -- -- -- -- -- --
William F. English........ -- -- -- -- -- --
Joseph A. Librizzi........ 50,000 45.5% $6.875 10/23/08 $216,183 $547,849
Raymond M. Conlin......... 50,000 45.5% $6.875 10/23/08 $216,183 $547,849
</TABLE>
- ---------------
(1) The stock options were granted under the Company's 1997 Incentive Plan. The
options vest with respect to 40% of the shares purchasable upon exercise of
the option on the second anniversary of the date of grant (October 23, 1998)
and will vest as to an additional 20% of the shares on each of the three
succeeding anniversaries. The options expire ten years after the date of
grant, subject to earlier termination upon the occurrence of certain events.
STOCK OPTIONS EXERCISED BY CERTAIN EXECUTIVE OFFICERS DURING 1998 AND HELD BY
CERTAIN EXECUTIVE OFFICERS AT DECEMBER 31, 1998
The following table sets forth certain information regarding options for
the purchase of Common Stock that were exercised and/or held by the named
executive officers:
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT FY-END(#) MONEY OPTIONS AT FY-END($)
-------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Harry J. Muhlschlegel.............. 0 0 -- --
Paul J. Karvois.................... 27,433 184,731 0 0
Brian J. Fitzpatrick............... 27,433 119,731 0 0
William F. English................. 0 0 -- --
Joseph A. Librizzi................. 0 60,000 -- $50,000
Raymond M. Conlin.................. 0 55,400 -- $55,400
</TABLE>
SEVERANCE AGREEMENTS
The Company entered into Severance Agreements with Paul J. Karvois, Brian
J. Fitzpatrick, Joseph A. Librizzi and Raymond M. Conlin (each, an "Executive"),
each dated April 5, 1999, that provide certain benefits to the Executive if,
following a "change of control" (as defined) (i) he is terminated by the Company
without cause, (ii) he resigns for good reason, or (iii) he resigns more than
six months following the change in control. In such circumstances, the Executive
will be entitled to receive a lump sum payment equal to two times the sum of (a)
the Executive's salary, at the greater of his salary immediately prior to the
change of control or on the date of termination, plus (b) the Executive's bonus,
at the greater of his target bonus for the
9
<PAGE> 38
year of his termination or the best actual bonus he received in the five
previous years. The purchase of the Shares in the Offer and consummation of the
Merger will be deemed a change of control under these agreements, requiring the
payments set forth in the agreements to be paid by the Surviving Corporation. On
June 6, 1999, each Executive entered into an Amended and Restated Severance
Agreement with the Company and Parent which superseded and replaced the
Severance Agreements, and which are described in the Company's Schedule 14D-9.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Harry J. Muhlschlegel, a member of the Compensation Committee, is the Chief
Executive Officer of the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company consists of Harry Muhlschlegel,
the Company's Chief Executive Officer, and Gordon R. Bowker and Samuel H. Jones,
Jr., the Company's two outside directors. The Compensation Committee establishes
the salaries of the executive officers of the Company, incentives and other
forms of compensation and benefit plans and also administers the Company's 1994
Stock Option Plan and 1997 Incentive Plan.
Jevic's compensation program is designed to attract and retain experienced
executives and motivate them for both the short and long term. The executive
compensation program is comprised of four elements: competitive base salary,
benefits comparable to those shared by the general employee population, annual
bonus, and long term incentives linked to corporate performance.
BASE SALARY
Base salary for the Company's executive officers is determined by a
combination of several factors, salary market rates, valuation of the individual
executive officer's performance; performance of the company; and contribution to
the corporation. The various factors considered in the base salary decisions are
not formally weighted and the Committee uses subjective judgment in making its
decisions.
ANNUAL BONUS
The annual bonus rewards achievement of annual targets of both corporate
and personal performance. Key performance measures are revenue growth, operating
income growth and quality of service, as defined by on-time performance.
Notwithstanding the Company's record revenues, operating income and net income
in 1998, the Compensation Committee determined not to award the Company's
executive officers any cash bonus in 1998 as the growth in operating income and
net income did not compare favorably with the goals set forth in the Company's
financial plan for 1998.
LONG TERM INCENTIVE COMPENSATION
Jevic believes its executives should have a substantial stake in the risks
and rewards of stockholders. Grants of stock options will be used to align
management's interests with stockholders' interests and encourage long-term
investment and interest in overall Company performance. The Company's 1997
Incentive Plan provides for the granting of stock options to eligible employees
including executive officers.
During 1998, the Compensation Committee approved the grant of stock options
to one newly elected executive officer upon his being promoted and one other
executive officer based on his record of service for the Company, as reflected
elsewhere in this Proxy Statement under "Option Grants in Year Ended December
31, 1998."
10
<PAGE> 39
CEO COMPENSATION
In accordance with the compensation philosophy and process described above,
the Compensation Committee has continued Mr. Muhlschlegel's base salary at
$505,000. Mr. Muhlschlegel declined to be considered for an increase in his base
salary. The Compensation Committee will annually review Mr. Muhlschlegel's
compensation based upon the same criteria with respect to executive officer
compensation generally.
LIMITS OF DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on
the allowable tax deduction of compensation paid by a publicly-held corporation
to its Chief Executive Officer and its other four most highly compensated
executive officers employed at year-end, subject to certain pre-established
objective performance-based exceptions. The Committee intends to take Section
162(m) into account when formulating its compensation policies for the Company's
Chief Executive Officer and its other Executive Officers and to comply with
Section 162(m), if and where the Committee determines compliance to be
practicable and in the best interests of the Company and its stockholders.
Harry J. Muhlschlegel
Gordon R. Bowker
Samuel H. Jones, Jr.
The above report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Information Statement into any
filing under the Securities Act of 1933, as amended, or the Exchange Act and
shall not otherwise be deemed filed under such Acts.
11
<PAGE> 40
PERFORMANCE GRAPH
The following Stock Performance Chart compares the Company's cumulative
total shareholder return on its Common Stock for the period from October 7, 1997
(the date the Common Stock commenced trading on the Nasdaq National Market) to
December 31, 1998 (the date the Company's 1998 fiscal year ended), with the
cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's Small Cap Trucking Group Index. The comparison assumes $100
was invested on October 7, 1997 in the Company's Common Stock and in each of the
foregoing indices and assumes reinvestment of dividends.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
JEVIC TRANSPORTATION S&P 500 INDEX S&P TRUCKERS-SMALL
-------------------- ------------- ------------------
<S> <C> <C> <C>
'7 0ct 97' 100.00 100.00 100.00
'1997' 107.50 92.76 88.93
'1998' 52.50 119.27 98.02
</TABLE>
12
<PAGE> 41
CERTAIN TRANSACTIONS AND TRANSACTIONS
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 1998. On or prior to completion of the tender offer
which is the subject of the Schedule 14D-9, the Company and the Muhlschlegels
will amend this lease to provide that either party may terminate the lease on
six months' notice to the other party.
In April 1997, grantor annuity trusts for Harry and Karen Muhlschlegel
borrowed a total of $438,065 from the Company. The loans were repaid in full on
February 27, 1998. Interest for 1998 was $4,299.
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.
JEVIC TRANSPORTATION, INC.
June 9, 1999
13
<PAGE> 42
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Exhibit 1. Agreement and Plan of Merger dated June 6, 1999, by and among
the Company, Parent and Purchaser.
Exhibit 2. Employment Agreement of Paul J. Karvois.
Exhibit 3. Employment Agreement of Brian J. Fitzpatrick.
Exhibit 4. Employment Agreement of Joseph A. Librizzi.
Exhibit 5. Employment Agreement of Raymond M. Conlin.
Exhibit 6. Amended and Restated Severance Agreement of Paul J. Karvois.
Exhibit 7. Amended and Restated Severance Agreement of Brian J.
Fitzpatrick.
Exhibit 8. Amended and Restated Severance Agreement of Joseph A.
Librizzi.
Exhibit 9. Amended and Restated Severance Agreement of Raymond M. Conlin.
Exhibit 10. Tender and Voting Agreement among Parent, Purchaser and
Certain Shareholders of the Company.
Exhibit 11. Confidentiality Agreement dated December 22, 1998, by and
between the Company and Parent.
Exhibit 12. Letter to Shareholders, dated June 9, 1999.*
Exhibit 13. Press Release of the Company, dated June 7, 1999.
Exhibit 14. Opinion of Janney Montgomery Scott, Inc. dated June 4, 1999.*
</TABLE>
<PAGE> 1
EXHIBIT 1
AGREEMENT
AND
PLAN OF MERGER
DATED AS OF JUNE 6, 1999
BY AND AMONG
YELLOW CORPORATION,
JPF ACQUISITION CORP.
AND
JEVIC TRANSPORTATION, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE OFFER
SECTION 1.01. The Offer................................................... 1
SECTION 1.02. Company Actions............................................. 2
SECTION 1.03. Directors................................................... 3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger.................................................. 4
SECTION 2.02. Effective Time; Closing..................................... 4
SECTION 2.03. Effects of the Merger....................................... 4
SECTION 2.04. Certificate of Incorporation and ByLaws of the Surviving 4
Corporation.................................................
SECTION 2.05. Directors................................................... 4
SECTION 2.06. Officers.................................................... 4
SECTION 2.07. Conversion of Shares........................................ 4
SECTION 2.08. Conversion of Purchaser Common Stock........................ 4
SECTION 2.09. Company Option Plans........................................ 5
SECTION 2.10. Shareholders' Meeting....................................... 5
SECTION 2.11. Merger Without Meeting of Shareholders...................... 5
SECTION 2.12. Earliest Consummation....................................... 6
ARTICLE III
PAYMENT FOR SHARES
SECTION 3.01. Payment for Shares.......................................... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization and Qualification; Subsidiaries................ 7
SECTION 4.02. Authority Relative to This Agreement........................ 7
SECTION 4.03. No Conflict; Required Filings and Consents.................. 7
SECTION 4.04. Certain Approvals........................................... 8
SECTION 4.05. Opinion of Financial Advisor................................ 8
SECTION 4.06. Brokers..................................................... 8
SECTION 4.07. Capitalization.............................................. 8
SECTION 4.08. SEC Reports and Financial Statements........................ 9
SECTION 4.09. Information................................................. 10
SECTION 4.10. Litigation.................................................. 10
SECTION 4.11. Compliance with Applicable Laws............................. 10
SECTION 4.12. Employee Benefit Plans...................................... 10
SECTION 4.13. Intellectual Property....................................... 12
SECTION 4.14. Environmental Matters....................................... 12
SECTION 4.15. Material Adverse Change..................................... 14
SECTION 4.16. Taxes....................................................... 14
SECTION 4.17. Labor Matters............................................... 15
SECTION 4.18. Material Contracts.......................................... 16
SECTION 4.19. Insurance................................................... 16
SECTION 4.20. Real Property............................................... 16
SECTION 4.21. Suppliers and Customers..................................... 17
SECTION 4.22. Accounts Receivable......................................... 17
SECTION 4.23. Owner/Operators, Agents and Contractors..................... 17
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 4.24. Year 2000................................................... 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
SECTION 5.01. Organization and Qualification.............................. 18
SECTION 5.02. Authority Relative to this Agreement........................ 18
SECTION 5.03. No Conflict; Required Filings and Consents.................. 18
SECTION 5.04. Information................................................. 19
SECTION 5.05. Financing................................................... 19
ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of Business of the Company.......................... 19
SECTION 6.02. Access to Information....................................... 21
SECTION 6.03. Reasonable Best Efforts..................................... 21
SECTION 6.04. Public Announcements........................................ 21
SECTION 6.05. Indemnification............................................. 21
SECTION 6.06. No Solicitation............................................. 22
SECTION 6.07. Notification of Certain Matters............................. 24
SECTION 6.08. State Takeover Laws......................................... 24
SECTION 6.09. Employee Matters............................................ 24
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01. Conditions to Each Party's Obligation to Effect the 25
Merger......................................................
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01. Termination................................................. 25
SECTION 8.02. Effect of Termination....................................... 26
SECTION 8.03. Fees and Expenses........................................... 26
SECTION 8.04. Amendment................................................... 27
SECTION 8.05. Extension; Waiver........................................... 27
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Non-Survival of Representations and Warranties.............. 27
SECTION 9.02. Entire Agreement; Assignment................................ 27
SECTION 9.03. Validity.................................................... 28
SECTION 9.04. Notices..................................................... 28
SECTION 9.05. Governing Law; Jurisdiction................................. 28
SECTION 9.06. Descriptive Headings........................................ 28
SECTION 9.07. Counterparts................................................ 28
SECTION 9.08. Parties in Interest......................................... 29
SECTION 9.09. Certain Definitions......................................... 29
SECTION 9.10. Remedies.................................................... 29
ANNEX I -- CONDITIONS TO THE OFFER
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 6, 1999, by and among Yellow
Corporation, a Delaware corporation ("Parent"), JPF Acquisition Corp., a New
Jersey corporation and an indirect wholly-owned subsidiary of Parent (the
"Purchaser"), and Jevic Transportation, Inc., a New Jersey corporation (the
"Company").
WHEREAS, as a condition and inducement to Parent's willingness to enter
into this Agreement, Parent, the Purchaser and the holders of shares of Class A
Common Stock, no par value (the "Class A Common Shares"), of the Company have
entered into a Tender, Voting and Option Agreement, dated the date hereof (the
"Tender and Voting Agreement");
WHEREAS, the Board of Directors of the Company has approved the Tender and
Voting Agreement and the transactions contemplated thereby;
WHEREAS, the respective Boards of Directors of Parent, the Purchaser and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause the
Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all of the shares of
Class A Common Shares and all of the shares of Common Stock, no par value, of
the Company (the "Common Shares" and, together with Class A Common Shares, the
"Shares") at a price per Share of $14.00 net to the seller in cash (such price,
as it may hereafter be increased in accordance with the terms of this Agreement,
the "Offer Price") upon the terms and subject to the conditions set forth in
this Agreement;
WHEREAS, the Board of Directors of the Company has unanimously approved
this Agreement, the Offer and the Merger (as hereinafter defined), has
determined that the Offer and the Merger are fair and in the best interests of
the Company's shareholders (the "Shareholders") and is recommending that the
Shareholders accept the Offer and tender all their Shares and adopt and approve
this Agreement;
WHEREAS, the respective Boards of Directors of Parent, the Purchaser and
the Company have approved the merger of the Purchaser with and into the Company,
as set forth below (the "Merger"), in accordance with the New Jersey Business
Corporation Act (the "New Jersey Act") and upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
Class A Common Share and Common Share not owned directly or indirectly by Parent
or the Company will be converted into the right to receive the Offer Price in
cash;
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer.
(a) So long as none of the events set forth in clauses (a) through (i) of
Annex I hereto ("conditions to the Offer") shall have occurred or exist, the
Purchaser shall, and Parent shall cause the Purchaser to, commence (within the
meaning of Rule 14d-2(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) as promptly as practicable after the date hereof, but in any
event not later than June 14, 1999, the Offer for all outstanding Shares at the
Offer Price, net to the seller in cash. The initial expiration date for the
Offer shall be the twentieth business day from and after the date the Offer is
commenced,
<PAGE> 5
including the date of commencement as the first business day in accordance with
Rule 14d-2 under the Exchange Act. As promptly as practicable, the Purchaser
shall file with the Securities and Exchange Commission (the "SEC" or the
"Commission") the Purchaser's Tender Offer Statement on Schedule 14D-1 (together
with any supplements or amendments thereto, the "Offer Documents"), which shall
contain (as an exhibit thereto) the Purchaser's Offer to Purchase (the "Offer to
Purchase") which shall be mailed to the holders of Shares with respect to the
Offer. The obligation of the Purchaser to accept for payment or pay for any
Shares tendered pursuant to the Offer will be subject only to the satisfaction
or waiver of the conditions to the Offer. Without the prior written consent of
the Company, the Purchaser shall not decrease the price per Share or change the
form of consideration payable in the Offer, decrease the number of Shares sought
to be purchased in the Offer, change the conditions to the Offer, waive or
reduce the Minimum Condition (as defined in Annex I), impose additional
conditions to the Offer or amend any other term of the Offer in any manner
adverse to the holders of Shares; provided, however, that if all of the
conditions to the Offer are then satisfied or waived, the Parent, in order to
permit the Merger to become effective without a meeting of Shareholders in
accordance with Section 14A:10-5.1 of the New Jersey Act, shall have the right
(i) to extend the Offer for a period or periods aggregating up to ten business
days from the then effective expiration date and (ii) thereafter to extend the
Offer with the prior written consent of the Company; provided, further, that if
Parent elects to extend the Offer pursuant to clause (i) above, Parent and the
Purchaser shall be deemed to have permanently and irrevocably waived all of the
conditions to the Offer (other than the Minimum Condition and the conditions set
forth in clause (a) of the conditions to the Offer) and provided, further, that
Parent may extend the Offer to the extent any conditions to the Offer have not
been satisfied on the applicable expiration date. Subject to the terms of the
Offer and this Agreement and the satisfaction or waiver of all the conditions of
the Offer as of any expiration date, Parent will accept for payment and pay for
all Shares validly tendered and not withdrawn pursuant to the Offer as soon as
practicable after such expiration date of the Offer.
(b) Parent and Purchaser hereby represent and warrant to the Company that
the Offer Documents will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Shareholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or the Purchaser
with respect to information supplied by or on behalf of the Company in writing
for inclusion in the Offer Documents. Each of Parent and the Purchaser, on the
one hand, and the Company, on the other hand, agrees promptly to correct any
information provided by or on behalf of it for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect, and the Purchaser further agrees to take (and Parent shall cause the
Purchaser to take) all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to Shareholders, in
each case as and to the extent required by applicable federal securities laws.
SECTION 1.02. Company Actions.
(a) Contemporaneously with the filing of the Offer Documents, the Company
shall file with the SEC and mail to the Shareholders a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Schedule 14D-9 will set forth, and the Company hereby represents,
that the Board of Directors of the Company, at a meeting duly called and held on
June 3, 1999 (the "Company Board Meeting"), has (i) determined that the Offer
and the Merger are fair to and in the best interests of the Company and its
Shareholders, (ii) irrevocably approved the Tender and Voting Agreement, the
Offer and the Merger in accordance with Section 14A:10A-1 of the New Jersey Act
(and for purposes of any other applicable state takeover law) and (iii) resolved
to recommend acceptance of the Offer and approval and adoption of the Merger and
this Agreement by the Company's Shareholders (in accordance with the
requirements of the Company's Restated Certificate of Incorporation and of
applicable law); provided, however, that, subject to Section 8.03, such
recommendation may be withdrawn, modified or amended to the extent that the
Board of Directors of the Company determines reasonably and in good faith that
it is necessary under applicable law to do so in the exercise of its fiduciary
2
<PAGE> 6
obligations after being advised with respect thereto by outside counsel;
provided, further, however, that notwithstanding any withdrawal, modification or
amendment of such recommendation, the Company agrees that if the Purchaser
purchases Shares pursuant to the Offer, this Agreement shall be submitted to the
Shareholders for approval and adoption at the Special Meeting (if a vote of
Shareholders is required to effect the Merger) whether or not the Board of
Directors determines at any time subsequent to the Company Board Meeting that
this Agreement is no longer advisable and recommends that Shareholders reject
it.
(b) The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to information supplied by or on behalf of the Parent or Purchaser in
writing for inclusion in the Schedule 14D-9. Each of the Company, on the one
hand, and Parent and the Purchaser, on the other hand, agrees promptly to
correct any information provided by either of them for use in the Schedule 14D-9
if and to the extent that it shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the Shareholders, in each case as and to the extent required by
applicable federal securities law.
(c) In connection with the Offer, the Company will promptly furnish the
Purchaser with such information and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with communicating the
Offer to the record and beneficial holders of the Securities, including, without
limitation, its stockholders list, mailing labels, security position listings
and non-objecting beneficial owners list.
(d) To the knowledge of the Company, all of its directors and executive
officers intend to tender their Shares pursuant to the Offer.
SECTION 1.03. Directors.
(a) Subject to compliance with applicable law, promptly upon the payment by
the Purchaser for Shares pursuant to the Offer representing at least a majority
of the votes entitled to be cast by all holders of Shares, and from time to time
thereafter so long as the Purchaser and/or Parent (and/or their respective
wholly-owned subsidiaries) continue to hold at least such number of Shares,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as is equal to
the product of the total number of directors on the Board of Directors of the
Company (determined after giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent or its affiliates bears to the total number of
Shares then outstanding, and the Company shall, upon request of Parent, promptly
take all actions necessary to cause Parent's designees to be so elected,
including, if necessary, seeking the resignations of one or more existing
directors; provided, however, that prior to the Effective Time (as defined in
Section 2.02), the Board shall always have at least one member who is neither an
officer, director or designee of the Parent ("Purchaser Insiders").
(b) The Company's obligations to appoint Parent's designees to the Board
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
The Company shall promptly take all actions required pursuant to such Section
and Rule in order to fulfill its obligations under this Section 1.03 and shall
include in the Schedule 14D-9 such information with respect to the Company and
its officers and directors as is required under such Section and Rule in order
to fulfill its obligations under this Section 1.03. Parent will supply any
information with respect to itself and its officers, directors and affiliates
required by such Section and Rule to the Company.
(c) From and after the election or appointment of Parent's designees
pursuant to this Section 1.03 and prior to the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or the
3
<PAGE> 7
Purchaser or waiver of any of the Company's rights hereunder, or any other
action taken by the Board of Directors of the Company in connection with this
Agreement, will require the concurrence of a majority of the directors of the
Company then in office who are not Purchaser Insiders.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the satisfaction
or waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the New Jersey Act, at the Effective Time (as
defined in Section 2.02) the Purchaser shall be merged with and into the
Company. Following the Merger, the separate corporate existence of the Purchaser
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation").
SECTION 2.02. Effective Time; Closing. As soon as practicable but in no
event later than the fifth business day after the satisfaction or waiver of the
conditions described in Article VII hereof, (a) if a vote of Shareholders is
required to effect the Merger, the Company and the Purchaser shall execute in
the manner required by the New Jersey Act and deliver to the Secretary of State
of the State of New Jersey a duly executed and verified certificate of merger or
(b) if the Merger may be consummated without a vote of Shareholders, Purchaser
shall execute in the manner required by the New Jersey Act and deliver to the
Secretary of State of New Jersey a duly executed and verified certificate of
merger. The parties shall take such other and further actions as may be required
by law to make the Merger effective. The Merger shall become effective upon
filing of the certificate of merger, unless a later time is specified in such
certificate. The time the Merger becomes effective in accordance with applicable
law is referred to as the "Effective Time."
SECTION 2.03. Effects of the Merger. The Merger shall have the effects
set forth in Section 14A:10-6 of the New Jersey Act.
SECTION 2.04. Certificate of Incorporation and ByLaws of the Surviving
Corporation.
(a) The certificate of incorporation of the Purchaser, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
(b) Subject to the provisions of Section 6.05 of this Agreement, the
by-laws of the Purchaser in effect at the Effective Time shall be the by-laws of
the Surviving Corporation, until thereafter amended in accordance with the
provisions thereof and hereof and applicable law.
SECTION 2.05. Directors. Subject to applicable law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.06. Officers. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.07. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof, each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares held by Parent, the Purchaser, any direct or indirect wholly-owned
subsidiary of Parent, in the treasury of the Company or by any direct or
indirect wholly-owned subsidiary of the Company, which Shares, by virtue of the
Merger and without any action on the part of the holder thereof, shall be
canceled and retired and shall cease to exist with no payment being made with
respect thereto ("Excluded Shares")) shall be converted into the right to
receive in cash the Offer Price (the "Merger Price").
SECTION 2.08. Conversion of Purchaser Common Stock. At the Effective
Time, each share of common stock, no par value, of the Purchaser issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and
4
<PAGE> 8
become one validly issued, fully paid and nonassessable shares of common stock,
no par value, of the Surviving Corporation.
SECTION 2.09. Company Option Plans. The Board of Directors of the Company
has adopted such resolutions, and shall take such other actions as may be
necessary, so that each outstanding option (an "Option") granted under the
Company's 1994 Stock Option Plan and 1997 Incentive Plan (collectively, the
"Option Plans"), whether or not then exercisable or vested, shall become fully
exercisable and vested and, except to the extent that Parent or the Purchaser
and holder of any such Option otherwise agree, immediately following
consummation of the Offer, the Company shall pay to such holders of Options an
amount in respect thereof equal to the product of (i) the excess of the Merger
Price over the exercise price thereof and (ii) the number of Shares subject
thereto (such payment to be net of taxes required by law to be withheld with
respect thereto); provided that the foregoing shall be subject to the obtaining
of any necessary consents of holders of awards of Options under the Option
Plans, it being agreed that the Company will use its best efforts to obtain any
such consent.
SECTION 2.10. Shareholders' Meeting.
(a) If required by the Company's Restated Certificate of Incorporation
and/or applicable law in order to consummate the Merger, the Company, acting
through its Board of Directors, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special meeting of
its Shareholders (the "Special Meeting") as soon as practicable following
the acceptance for payment of and payment for Shares by the Purchaser
pursuant to the Offer for the purpose of considering and taking action upon
this Agreement, whether or not the Board of Directors determines at any
time subsequent to the Company Board Meeting that this Agreement is no
longer advisable and recommends that Shareholders reject it;
(ii) prepare and file with the SEC a preliminary proxy statement or,
if the Purchaser shall have accepted for payment and purchased Shares
permitting the Purchaser to cast at least a majority of the votes entitled
to be cast by all holders of Shares on a fully diluted basis, information
statement relating to the Merger and this Agreement and use its reasonable
best efforts (x) to obtain and furnish the information required to be
included by the SEC in the Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments made by the
SEC with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement (the "Statement") to be
mailed to its Shareholders and (y) to obtain the necessary approvals of the
Merger and this Agreement by its Shareholders; and
(iii) subject to the fiduciary obligations of the Board of Directors
of the Company under applicable law as advised by outside counsel, include
in the Statement the recommendation of the Board of Directors of the
Company that Shareholders vote in favor of the approval of the Merger and
the adoption of this Agreement; provided, however, that notwithstanding any
withdrawal, modification or amendment of the recommendation of the Board of
Directors of the Company made at the Company Board Meeting, the Company
agrees that if the Purchaser purchases Shares pursuant to the Offer, this
Agreement shall be submitted to the Shareholders for approval and adoption
at the Special Meeting whether or not the Board of Directors determines at
any time subsequent to the Company Board Meeting that this Agreement is no
longer advisable and recommends that Shareholders reject it.
(b) Parent agrees that it will vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other subsidiaries in favor
of the approval of the Merger and the adoption of this Agreement.
SECTION 2.11. Merger Without Meeting of Shareholders. Notwithstanding
Section 2.10, in the event that Parent, the Purchaser or any other subsidiary of
Parent shall acquire at least 90% of the outstanding Class A Common Shares and
90% of the outstanding Common Shares pursuant to the Offer, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the acceptance for payment of and payment
for Shares by the Purchaser pursuant to the Offer without a meeting of
Shareholders, in accordance with Section 14A:10-5.1 of the New Jersey Act.
5
<PAGE> 9
SECTION 2.12. Earliest Consummation. Each party hereto shall use its
reasonable best efforts to consummate the Merger as soon as practicable.
ARTICLE III
PAYMENT FOR SHARES
SECTION 3.01. Payment for Shares.
(a) From and after the Effective Time, a bank or trust company or stock
transfer agent mutually acceptable to Parent and the Company (pursuant to an
agreement satisfactory to Parent and the Company) shall act as paying agent (the
"Paying Agent") in effecting the payment of the Merger Price in respect of
certificates (the "Certificates") that, prior to the Effective Time, represented
Shares entitled to payment of the Merger Price pursuant to Section 2.07.
(b) Promptly after the Effective Time, the Paying Agent shall mail to each
record holder of Certificates (other than Certificates representing Excluded
Shares) a form of letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Paying Agent and instructions
for use in surrendering such Certificates and receiving the aggregate Merger
Price in respect thereof. Upon the surrender of each such Certificate, Parent
shall make funds available to the Paying Agent to enable it to, and the Paying
Agent shall, pay the holder of such Certificate the Merger Price multiplied by
the number of Shares formerly represented by such Certificate in consideration
therefor, and such Certificate shall forthwith be canceled. Until so
surrendered, each such Certificate (other than Certificates representing
Excluded Shares) shall represent solely the right to receive the aggregate
Merger Price relating thereto. No interest or dividends shall be paid or accrued
on the Merger Price. If the Merger Price (or any portion thereof) is to be
delivered to any person other than the person in whose name the Certificate
surrendered is registered, it shall be a condition to such right to receive such
Merger Price that the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person surrendering such
Certificates shall pay to the Paying Agent any transfer or other taxes required
by reason of the payment of the Merger Price to a person other than the
registered holder of the Certificate surrendered, or shall establish to the
satisfaction of the Paying Agent that such tax has been paid or is not
applicable.
(c) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the holder of such Certificate,
the Paying Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the Merger Price deliverable in respect thereof, provided that the
holder of such Certificate shall, as a condition precedent to the payment
thereof, give the Surviving Corporation a bond in such sum as it may direct or
otherwise indemnify the Surviving Corporation in a manner satisfactory to it
against any claim that may be made against it with respect to the Certificate
claimed to have been lost, stolen or destroyed.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent,
they shall be surrendered and canceled in return for the payment of the
aggregate Merger Price relating thereto, as provided in this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser that except
as set forth in the section or subsection of the Company Disclosure Statement
corresponding to the section or subsection of this
6
<PAGE> 10
Article IV delivered to Parent and the Purchaser prior to the execution hereof
(the "Company Disclosure Statement"):
SECTION 4.01. Organization and Qualification; Subsidiaries. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey. Each subsidiary (as
defined in Section 9.09) of the Company (the "Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The Company and each of the
Subsidiaries has the requisite corporate power and authority to own,
operate or lease its properties and to carry on its business as it is now
being conducted, and is duly qualified or licensed to do business, and is
in good standing, in each jurisdiction in which the nature of its business
or the properties owned, operated or leased by it makes such qualification,
licensing or good standing necessary, except where the failures to have
such power or authority, or the failures to be so qualified, licensed or in
good standing, individually, and in the aggregate, would not have a
Material Adverse Effect on the Company (as defined below). The Company does
not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation (other than a Subsidiary),
partnership, joint venture or other business association or entity. The
term "Material Adverse Effect on the Company" means any change in, or
effect on, the business, results of operations, assets, condition
(financial or otherwise) or prospects of the Company or any of the
Subsidiaries that is or could reasonably be expected to be materially
adverse to the Company and the Subsidiaries taken as a whole.
SECTION 4.02. Authority Relative to This Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and the Tender and Voting Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Tender and Voting Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby have been duly and validly authorized and approved by the Board of
Directors of the Company and no other corporate proceedings on the part of
the Company are necessary to authorize or approve this Agreement or the
Tender and Voting Agreement or to consummate the transactions contemplated
hereby or thereby (other than, with respect to the Merger, the approval and
adoption of the Merger and this Agreement by holders of a majority of the
outstanding Shares to the extent required by the Company's Restated
Certificate of Incorporation and by applicable law). This Agreement has
been duly and validly executed and delivered by the Company and, assuming
the due and valid authorization, execution and delivery of this Agreement
by Parent and the Purchaser, constitutes valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally (the "Bankruptcy Exceptions")
and (ii) is subject to general principles of equity and any implied
covenant of good faith and fair dealing. The Board of Directors of the
Company has, at the Company Board Meeting, approved and adopted this
Agreement, the Offer, the Merger, the Tender and Voting Agreement and the
other transactions contemplated hereby and thereby, determined that the
Offer Price to be received by the holders of Shares pursuant to the Offer
and the Merger is fair to the Shareholders, recommended that the
Shareholders approve and adopt this Agreement, the Merger and the other
transactions contemplated hereby and tender their Shares pursuant to the
Offer and approved the submission of this Agreement to the Shareholders at
the Special Meeting (if required to consummate the Merger) if the Purchaser
purchases Shares pursuant to the Offer whether or not the Board of
Directors of the Company determines at any time subsequent to the Company
Board Meeting that this Agreement no longer advisable and recommends that
Shareholders reject it.
SECTION 4.03. No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by the
Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will
require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being
a "Consent"), any government or subdivision thereof, or any administrative,
governmental or regulatory authority, agency, commission, tribunal or
7
<PAGE> 11
body, domestic, foreign or supranational (a "Governmental Entity") or
person who is not a Governmental Entity, except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of a
certificate of merger pursuant to the New Jersey Act, (iii) applicable
state takeover and environmental statutes and (iv) compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act").
(b) Except as set forth in clause (a) of this Section 4.03, none of
the execution and delivery of this Agreement by the Company, the
consummation by the Company of the transactions contemplated hereby or
compliance by the Company with any of the provisions hereof will (i)
conflict with or violate the Restated Certificate of Incorporation or
bylaws of the Company or the comparable organizational documents of any of
the Subsidiaries, (ii) conflict with or violate any statute, ordinance,
rule, regulation, order, judgment or decree applicable to the Company or
the Subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a
violation or breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, or result in any loss of any material benefit or the creation of any
Lien (as defined) on any of the property or assets of the Company or any of
the Subsidiaries (any of the foregoing referred to in clause (ii) or this
clause (iii) being a "Violation") pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of the Subsidiaries is
a party or by which the Company or any of the Subsidiaries or any of their
respective properties may be bound or affected, except for Violations
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
SECTION 4.04. Certain Approvals. The Board of Directors of the
Company has taken appropriate irrevocable action (a) such that the
provisions of Section 14A:10A-1 of the New Jersey Act will not apply to the
Offer, the Merger or any of the other transactions contemplated by this
Agreement or the Tender and Voting Agreement and (b) such that the
provisions of any other state takeover law will not be applicable to the
Offer, the Merger or any of the other transactions contemplated by this
Agreement or the Tender and Voting Agreement.
SECTION 4.05. Opinion of Financial Advisor. The Company has received
the written opinion of Janney Montgomery Scott Inc. to the effect that, as
of the date hereof, the Offer Price is fair to the Shareholders from a
financial point of view.
SECTION 4.06. Brokers. Except for the engagement of Janney
Montgomery Scott Inc. (a copy of whose engagement letter previously has
been delivered by the Company to Parent), none of the Company, any of the
Subsidiaries or any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement.
SECTION 4.07. Capitalization. The Company has heretofore made
available to Parent and the Purchaser a complete and correct copy of the
Restated Certificate of Incorporation and the by-laws, each as amended to
the date hereof, of the Company. The authorized capital stock of the
Company consists of 10,000,000 Class A Common Shares, 40,000,000 Common
Shares and 10,000,000 shares of Preferred Stock, no par value (the
"Preferred Stock"). As of the close of business on the day prior to
execution of this Agreement, there were no shares of Preferred Stock issued
or outstanding. As of the close of business on the day prior to execution
of this Agreement, (i) there were 5,739,544 Class A Common Shares issued,
none of which were owned by the Company or a wholly-owned Subsidiary and
(ii) there were 4,994,303 Common Shares issued, none of which were owned by
the Company or a wholly-owned Subsidiary. The Company has no shares of
capital stock reserved for issuance, except that, as of the day prior to
execution of this Agreement, there were 1,564,056 Common Shares reserved
for issuance pursuant to Options outstanding on the date hereof pursuant to
the Option Plans as listed in Section 4.07 of the Company Disclosure
Statement. Since the day prior to execution of this Agreement, the Company
has not issued any Options or shares of capital stock except pursuant to
the exercise of Options outstanding as of such date and in accordance with
their terms or pursuant to the conversion of Class A
8
<PAGE> 12
Shares into Common Shares. All the outstanding Shares are, and all Common
Shares which may be issued pursuant to the exercise of outstanding Options
will be, when issued in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and nonassessable. There are no
bonds, debentures, notes or other indebtedness having general voting rights
(or convertible into securities having such rights) ("Voting Debt") of the
Company or any of the Subsidiaries issued and outstanding. Except for the
Options, there are no existing options, warrants, calls, subscriptions or
other rights, agreements, arrangements or commitments of any character,
relating to the issued or unissued capital stock of the Company or any of
the Subsidiaries, obligating the Company or any of the Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any
shares of capital stock or Voting Debt of, or other equity interest in, the
Company or any of the Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests or obligations of the
Company or any of the Subsidiaries to grant, extend or enter into any such
option, warrant, call, subscription or other right, agreement, arrangement
or commitment. There are no outstanding contractual obligations of the
Company or any of the Subsidiaries to repurchase, redeem or otherwise
acquire any capital stock of the Company or any of its Subsidiaries. Each
of the outstanding shares of capital stock of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and such shares of the Subsidiaries as are owned by the
Company or by a wholly owned Subsidiary are free and clear of any lien,
claim, option, charge, security interest, limitation, encumbrance and
restriction of any kind (any of the foregoing being a "Lien"). Section 4.07
of the Company Disclosure Statement contains a complete list as of the date
hereof of each Subsidiary and sets forth with respect to each of the
Subsidiaries its name and jurisdiction of organization and the number of
shares of capital stock or share capital owned by the Company and each
other person.
SECTION 4.08. SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements required to be
filed by the Company with the SEC until the date hereof (the "SEC
Reports"). As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended, and the rules and regulations of the
SEC promulgated thereunder applicable, as the case may be, to such SEC
Reports, and, as of their respective dates, none of the SEC Reports
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) The consolidated balance sheets as of December 31, 1998 and 1997
and the related consolidated statements of income, shareholders' equity and
cash flows (including the notes thereto) for each of the three years in the
period ended December 31, 1998 (including the related notes and schedules
thereto) of the Company contained in the Company's Form 10-K for the year
ended December 31, 1998 included in the SEC Reports present fairly the
consolidated financial position and the consolidated results of operations
and cash flows of the Company and its consolidated subsidiaries as of the
dates or for the periods presented therein in conformity with United States
generally accepted accounting principles applied on a consistent basis as
of and during the periods involved ("GAAP").
(c) The consolidated balance sheets and the related statements of
income and cash flows (including in each case the related notes thereto) of
the Company contained in the Forms 10-Q for the periods ended March 31,
1999 included in the SEC Reports (collectively, the "Quarterly Financial
Statements") have been prepared in accordance with the requirements for
interim financial statements contained in Regulation S-X under the Exchange
Act. The Quarterly Financial Statements reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly and
do present fairly the consolidated financial position, results of
operations and cash flows of the Company and its consolidated Subsidiaries
for the period presented therein in conformity with GAAP applied on a
consistent basis during the periods involved.
(d) The Company and the Subsidiaries have no liabilities or
obligations of any nature (whether absolute, accrued, contingent,
unmatured, unaccrued, unliquidated, unasserted, conditional or otherwise)
9
<PAGE> 13
except for liabilities or obligations (i) reflected or reserved against on
the balance sheet as at March 31, 1999 included in the Quarterly Financial
Statements (the "Company Balance Sheet"), (ii) incurred in the ordinary
course of business consistent with past practice since such date or (iii)
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
SECTION 4.09. Information. None of the information supplied by the
Company in writing specifically for inclusion or incorporation by reference
in (i) the Offer Documents, (ii) the Schedule 14D-9 (including the
information included therein in order to comply with Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder), (iii) the Statement or (iv) any
other document to be filed with the SEC or any other Governmental Entity in
connection with the transactions contemplated by this Agreement (the "Other
Filings") will, at the respective times filed with the SEC or other
Governmental Entity and, in addition, in the case of the Statement, at the
date it or any amendment or supplement is mailed to Shareholders, at the
time of the Special Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by the Company with
respect to statements made therein based on information supplied by or on
behalf of Parent or the Purchaser in writing specifically for inclusion in
the Statement.
SECTION 4.10. Litigation. There is no suit, action or proceeding
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of the Subsidiaries, except for suits, actions
and proceedings that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company, nor is there any judgment, decree,
injunction or order of any Governmental Entity or arbitrator outstanding
against the Company or any of the Subsidiaries, except for judgments,
decrees, injunctions and orders that would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
SECTION 4.11. Compliance with Applicable Laws. The Company and the
Subsidiaries have been in compliance with all laws, regulations and orders
of any Governmental Entity applicable to it or the Subsidiaries, except for
such failures so to comply which, individually and in the aggregate, would
not have a Material Adverse Effect on the Company. The business operations
of the Company and the Subsidiaries have not been conducted in violation of
any law, ordinance or regulation of any Governmental Entity, except for
possible violations which, individually or in the aggregate, would not have
a Material Adverse Effect on the Company. Neither the Company, any
Subsidiary nor any director, officer, agent, employee or other person
associated with or acting on behalf of any of them has (i) used any
corporate or other funds for unlawful contributions, payments, gifts or
entertainment or made any unlawful expenditures relating to political
activity, or made any direct or indirect unlawful payments to governmental
officials or others or established or maintained any unlawful or unrecorded
funds in violation of Section 30A of the Exchange Act or (ii) accepted or
received any unlawful contributions, payments, gifts or expenditures.
SECTION 4.12. Employee Benefit Plans.
(a) Section 4.12 of the Company Disclosure Statement includes a
complete list of all bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, savings, welfare, deferred
compensation, employment, termination, severance, incentive, or other
employee benefit plans, programs and agreements providing benefits to any
employee, former employee, director or former director of the Company or
any of the Subsidiaries sponsored or maintained by or on behalf of the
Company or any of the Subsidiaries or to which the Company or any of the
Subsidiaries contributes or is obligated to contribute (collectively, the
"Plans"). Without limiting the generality of the foregoing, the term
"Plans" includes all employee welfare benefit plans within the meaning of
Section 3(l) of the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder ("ERISA") and all employee pension
benefit plans within the meaning of Section 3(2) of ERISA.
10
<PAGE> 14
(b) With respect to each Plan, the Company has made available to
Parent a true, correct and complete copy of: (i) all plan documents,
benefit schedules, trust agreements, and insurance contracts and other
funding vehicles; (ii) the most recent Annual Report (Form 5500 Series) and
accompanying schedule, if any; (iii) the current summary plan description,
if any; (iv) the most recent annual financial report, if any; (v) the most
recent actuarial report, if any; and (vi) the most recent determination
letter from the Internal Revenue Service (the "IRS"), if any.
(c) The Company and each of the Subsidiaries has complied, and is now
in compliance, in all material respects with all provisions of ERISA, the
Code and all laws and regulations applicable to the Plans. With respect to
each Plan that is intended to be a "qualified plan" within the meaning of
Section 401(a) of the Code, the IRS has issued a favorable determination
letter, and to the knowledge of the Company nothing has occurred at the
date hereof that would reasonably be expected to cause the loss of such
qualification.
(d) All contributions required to be made to any Plan by applicable
law or regulation or by any plan document or other contractual undertaking,
and all premiums due or payable with respect to insurance policies funding
any Plan, for any period through the date hereof have been timely made or
paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected in the financial statements of
the Company included in the SEC Reports to the extent required under
generally accepted accounting principles.
(e) With respect to each plan which is subject to Title IV or Section
302 of ERISA or Section 412 of the Code maintained or contributed to (or
required to be contributed to) by the Company, any Subsidiary or any ERISA
Affiliate (as hereinafter defined), (i) there does not now exist, nor do
any circumstances exist that could result in, any liability of the Company
or any of the Subsidiaries under Title IV of ERISA (other than for the
payment of premiums, all of which have been paid when due), (ii) neither
the Company nor any of the Subsidiaries has incurred any accumulated
funding deficiency within the meaning of Section 302 of ERISA or Section
412 of the Code (whether or not waived) and there has been no waiver or
application for a waiver of any minimum funding standard or extension of
any amortization period under Section 412 of the Code or Part 3 of Subtitle
B of Title I of ERISA, (iii) no "reportable event" (as such term is defined
in Section 4043 of ERISA and the regulations thereunder) has occurred or is
expected to occur, (iv) no notice of intent to terminate has been filed
with the Pension Benefit Guaranty Corporation, (v) the Pension Benefit
Guaranty Corporation has not instituted any proceedings to terminate the
plan or to appoint a trustee to administer the plan, and (vi) there has
been no event requiring disclosure under Section 4063(a) of ERISA. For
purposes of this Section 4.12, the term "ERISA Affiliate" shall mean any
business or entity (whether or not incorporated) which is a member of the
same "controlled group of corporations", under "common control" or an
"affiliated service group" with the Company or any Subsidiary within the
meaning of Section 414(b), (c) or (m) of the Code, or is under "common
control" with the Company or any Subsidiary within the meaning of Section
4001(a)(14) of ERISA.
(f) Neither the Company nor any Subsidiary nor any ERISA Affiliate has
been required to contribute to, or incurred any withdrawal liability
(within the meaning of Section 4201 of ERISA) with respect to any plan
which is a multiemployer plan as defined in ERISA Section 3(37) (a
"Multiemployer Plan"). Neither the Company nor any Subsidiary nor any ERISA
Affiliate has completely or partially withdrawn from any Multiemployer
Plan. No Multiemployer Plan as to which the Company, any Subsidiary or any
ERISA Affiliate is required to contribute is in reorganization within the
meaning of Part 3 of Subtitle E of Title IV of ERISA. The Company has
delivered to Parent a schedule showing the contributions of the Company,
any of the Subsidiaries, and any ERISA Affiliates to each of the
Multiemployer Plans for the most recent five plan years.
(g) The execution of, and performance of the transactions contemplated
in, this Agreement will not, either alone or upon the occurrence of
subsequent events, result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any employee or former employee of the Company or any of the
Subsidiaries. The only severance agreements or severance policies
applicable to the
11
<PAGE> 15
Company or any of the Subsidiaries in the event of a change of control of
the Company are the agreements referred to in Section 4.12 of the Company
Disclosure Statement.
(h) There are no pending actions, claims or lawsuits which have been
asserted, instituted or, to the knowledge of the Company, threatened in
connection with any of the Plans (other than routine claims for benefits).
(i) Neither the Company nor any of the Subsidiaries maintains or
contributes to any plan or arrangement which provides or has any liability
to provide life insurance or medical or other welfare benefits to any
employee, former employee, director or former director upon his retirement
or termination of service, and neither the Company nor any of the
Subsidiaries has ever represented, promised or contracted (whether in oral
or written form) to any employee, former employee, director or former
director that such benefits would be provided.
(j) The Company and the Subsidiaries are in compliance with the
continuation coverage provisions of Section 601 et seq. of ERISA and
Section 4980B of the Code.
SECTION 4.13. Intellectual Property.
(a) Except as would not, individually and in the aggregate, have a
Material Adverse Effect on the Company, (i) the Company and each of the
Subsidiaries owns, has the right to acquire or is licensed or otherwise has
the right to use (in each case, clear of any Liens of any kind), all
Intellectual Property (as defined below) used in or necessary for the
conduct of its business as currently conducted, (ii) except for
Intellectual Property which is the subject of a patent application of which
the Company has no knowledge, no claims are pending or, to the knowledge of
the Company, threatened that the Company or any of the Subsidiaries is
infringing on or otherwise violating the rights of any person with regard
to any Intellectual Property and (iii) to the knowledge of the Company, no
person is infringing on or otherwise violating any right of the Company or
any of the Subsidiaries with respect to any Intellectual Property owned by
and/or licensed to the Company or the Subsidiaries.
(b) For purposes of this Agreement, "Intellectual Property" shall mean
patents, copyrights, trademarks (registered or unregistered), service
marks, brand names, trade dress, trade names, computer software programs
and applications (including imbedded software), the goodwill associated
with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing; and trade
secrets and rights in any jurisdiction to limit the use or disclosure
thereof by any person.
SECTION 4.14 Environmental Matters. Except as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect on the Company, (i) no Hazardous Substances (as defined below) are
present at, on or under any real property currently or, to the Company's
knowledge, formerly owned, leased or operated by the Company or any
Subsidiary to an extent or in a manner or condition now requiring
investigation, response, corrective action or other action, or, to the
Company's knowledge, that could result in liability of, or costs to, the
Company or any of the Subsidiaries, under any Environmental Law (as defined
below), (ii) there is currently no civil, criminal or administrative
action, suit, demand, hearing, proceeding notice of violation,
investigation, notice or demand letter, or request for information pending
or to the knowledge of the Company, threatened, under any Environmental Law
against the Company or any of the Subsidiaries, (iii) the Company and the
Subsidiaries have not received any claims or notices alleging liability
under any Environmental Law, and the Company has no knowledge of any
circumstances that would reasonably be expected to result in such claims or
notices, (iv) the Company and each of the Subsidiaries are currently in
compliance, and within the period of applicable statutes of limitation have
complied, with all, and, to the Company's knowledge, have no liability
under any, applicable Environmental Laws, (v) the Company has not been
notified about any property or facility currently or, to the Company's
knowledge as of the date hereof, formerly owned, leased or operated by the
Company or any of the Subsidiaries or any of their respective
predecessors-in-interest, or at which Hazardous Substances of the Company
or any of the Subsidiaries have been stored, treated or disposed of is
listed or proposed for listing on the National Priorities List or
12
<PAGE> 16
the Comprehensive Environmental Response, Compensation and Liability
Information System, both promulgated under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or on any
comparable state or foreign list established under any Environmental Law,
(vi) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not affect the
validity or require the transfer of any Environmental Permits held by the
Company or any of the Subsidiaries, and will not require any notification,
disclosure, registration, reporting, filing, investigation, remediation or
other action under any Environmental Law, (vii) no friable asbestos is
present in, on, or at any property, facility or equipment of the Company or
any of the Subsidiaries, (viii) there are no past or present events,
conditions, activities, or practices which could reasonably be expected to
prevent the Company and the Subsidiaries' compliance with any Environmental
Law, or which would reasonably be expected to give rise to any liability of
the Company or any of the Subsidiaries under any Environmental Law, (ix) no
Lien has been asserted or recorded, or to the knowledge of the Company and
each of the Subsidiaries threatened, under any Environmental Law with
respect to any assets, facility, inventory, or property currently owned,
leased or operated by the Company or any of the Subsidiaries, (x) neither
the Company nor any of the Subsidiaries has assumed by contract or
agreement any liabilities or obligations arising under any Environmental
Law including, without limitation, any such liabilities or obligations with
respect to formerly owned, leased or operated real property or facilities,
or former divisions or subsidiaries, (xi) neither the Company nor any of
the Subsidiaries has entered into or agreed to any judgment, decree or
order by any judicial or administrative tribunal or agency and neither the
Company nor any of the Subsidiaries is subject to any judgment, decree
order or agreement, in each case relating to compliance with any
Environmental Law or requiring the Company or any of the Subsidiaries to
conduct any investigation, response, corrective or other action with
respect to any Hazardous Materials under any Environmental Law, and (xii)
there are no underground storage tanks or above storage tanks or related
piping at any real property owned, operated or leased by the Company or any
of the Subsidiaries, and any former such tanks and piping on any such
property which have been removed or closed, have been removed or closed in
accordance with applicable Environmental Laws.
For purposes of this Agreement, the term "Environmental Laws" means
the common law and all applicable federal, state, local and foreign laws,
rules, regulations, codes, orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder relating to pollution
or protection of human health and safety or the environment (including,
without limitation, ambient air, indoor air, surface water, ground water,
land surface, subsurface strata, and natural resources such as wetlands,
flora, fauna), including without limitation, laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials into the
environment, or otherwise relating to the manufacture, processing,
generation, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. For purposes of this Agreement, the term
"Hazardous Materials" means any pollutant, contaminant, toxic, hazardous or
extremely hazardous substance, constituent or waste, or any other
constituent, waste, chemical, compound, material or substance, including
without limitation, petroleum or any petroleum product, including crude oil
or any fraction thereof, subject to regulation by or that can give rise to
liability under any Environmental Law. For purposes of this Agreement, the
term "Environmental Permit" means any permit, license, approval, consent or
other authorization provided or issued by any government or regulatory
authority pursuant to an Environmental Law.
The Company has made available to the Purchaser and Parent all records
and files, including, but not limited to, all assessments, reports,
studies, audits, analyses, tests and data in the possession or control of
the Company or any Subsidiary relating to the existence of Hazardous
Materials at facilities or properties currently or formerly owned,
operated, leased or used by the Company or any of the Subsidiaries or in
any way concerning compliance by the Company and any Subsidiaries with, or
liability of any of them, under, any Environmental Law.
13
<PAGE> 17
SECTION 4.15. Material Adverse Change.
(a) Since March 31, 1999, there has not been any change, or any
development that is reasonably likely to result in a change, in the
business, results of operations, assets, condition (financial or otherwise)
or prospects of the Company or any of the Subsidiaries that is materially
adverse, or is reasonably expected to be materially adverse, to the Company
and the Subsidiaries taken as a whole. Since March 31, 1999, the Company
and the Subsidiaries have conducted their businesses only in the ordinary
course of business consistent with past practices and there has not been,
directly or indirectly:
(i) any declaration, setting aside or payment of any dividend or
other distribution with respect to any capital stock of the Company;
(ii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for
shares of the Company's capital stock;
(iii) any payment or granting by the Company or any of the
Subsidiaries of any increase in compensation to any director, officer
or, other than in the ordinary course of business consistent with past
practice, employee of the Company or any of the Subsidiaries;
(iv) any granting by the Company or any of the Subsidiaries to any
such director, officer or, other than in the ordinary course of business
consistent with past practice, employee of any increase in severance or
termination pay;
(v) any entry by the Company or any of the Subsidiaries into any
employment, severance or termination agreement with any such director,
officer or, other than in the ordinary course of business consistent
with past practice;
(vi) any adoption or increase in payments to or benefits under any
profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement or other employee benefit plan for or with any
employees of the Company or any of the Subsidiaries;
(vii) any change in accounting methods, principles or practices by
the Company or any of the Subsidiaries, except insofar as may have been
required by changes in GAAP; or
(viii) any agreement to do any of the things described in the
preceding clauses (i) through (vii).
SECTION 4.16. Taxes. (i) The Company and each Subsidiary have
prepared and timely filed with the appropriate governmental agencies all
Tax Returns required to be filed for any period (or portion thereof)
through the date hereof, taking into account any extension of time to file
granted to or obtained on behalf of the Company and/or such Subsidiary, and
each such Tax Return is accurate and complete; (ii) the Company and each
Subsidiary have timely paid all Taxes due and payable by them through the
date hereof and have made adequate provision (in accordance with GAAP) for
any Taxes attributable to any taxable period (or portion thereof) of the
Company and/or such Subsidiary ending on or prior to the date hereof that
are not yet due and payable; (iii) the Company and each Subsidiary have
withheld and paid in a timely manner all Taxes required to have been
withheld and paid by them; (iv) any deficiencies or assessments asserted in
writing against the Company and/or any Subsidiary by any taxing authority
through the date hereof have been paid or fully and finally settled; (v)
neither the Company nor any Subsidiary is presently under examination or
audit by any taxing authority and, to the best knowledge of the Company, no
examination or audit of the Company or any Subsidiary is pending or
threatened by any taxing authority; (vi) no extension of the period for
assessment or collection of any Tax of the Company or any Subsidiary is
currently in effect and no extension of time within which to file any Tax
Return of the Company or any Subsidiary has been requested, which Tax
Return has not since been filed; (vii) neither the Company nor any
Subsidiary has made or agreed to make or was or is required to make any
adjustment under Section 481 of the Code (or any similar provision of
state, local or foreign law); (viii) there are no Tax sharing agreements or
arrangements to which the Company or any Subsidiary is a party other than
the Tax Indemnity Agreement dated October 3, 1997; (ix) neither the Company
nor any
14
<PAGE> 18
Subsidiary has made an election under Section 341(f) of the Code (or any
similar provision of state, local or foreign law); (x) neither the Company
nor any Subsidiary is a party to any agreement or arrangement that provides
for the payment of any amount, or the provision of any other benefit, that
could constitute a "parachute payment" within the meaning of Section 280G
of the Code (or any similar provision of state, local or foreign law); (xi)
no stock of the Company is a "United States real property interest," within
the meaning of Section 897(c) of the Code; and (xii) the Company has
delivered to Purchaser true and complete copies of (a) all Federal, state,
local and foreign income or franchise Tax Returns filed by the Company
and/or any Subsidiary for all open years (except for those Tax Returns that
have not yet been filed) and (b) any audit reports issued by the IRS or any
other taxing authority with respect to any period that is still open.
SECTION 4.17. Labor Matters.
(a) Neither the Company nor any of the Subsidiaries is party to any
collective bargaining or other labor union contract. There are no petitions
for union representation election, labor disputes, strikes, work stoppages,
work slowdowns, "work-to-rule" actions or similar actions against the
Company or any of the Subsidiaries pending or, to the Company's knowledge,
threatened which may interfere with the respective business activities of
the Company or any of the Subsidiaries. There is no unfair labor practice
charge or complaint against the Company or any Subsidiary pending or, to
the knowledge of the Company, threatened before the national Labor
Relations Board or any similar state or foreign agency. To the knowledge of
the Company, no charges with respect to or relating to the Company or any
Subsidiary are pending before the Equal Employment Opportunity Commission
or any other Governmental Entity responsible for the prevention of unlawful
employment practices or any Governmental Entity responsible for the
enforcement of employee health and safety (including under the Occupational
Safety and Health Act and the regulations thereunder). The Company has not
received notice of the intent of any federal, state, local or foreign
agency responsible for the enforcement of labor or employment laws or
employee health and safety laws to conduct an investigation with respect to
or relating to the Company or any Subsidiary and no such investigation is
in progress. There are no complaints, lawsuits or other proceedings pending
or, to the knowledge of the Company, threatened in any forum by or on
behalf of any present or former employee of the Company or any Subsidiary,
any applicant for employment or classes of the foregoing alleging any
breach by the Company or any Subsidiary of any express or implied contract
of employment, any laws governing employment or the termination thereof or
other discriminatory, wrongful or tortious conduct in connection with the
employment relationship or any employee health and safety laws.
(b) The Company and each of the Subsidiaries has paid in full, or
fully accrued for in the financial statements of the Company, all wages,
salaries, commissions, bonuses, severance payments, vacation payments,
holiday pay, sick pay, pay in lieu of compensatory time and other
compensation due or to become due to all current and former employees of
the Company and each Subsidiary for all services performed by any of them
on or prior to the date hereof. The Company and each of its Subsidiaries
has withheld and paid in a timely manner all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee
or independent contractor. The Company and the Subsidiaries are in
compliance with all applicable federal, state, local and foreign laws,
rules and regulations relating to the employment of labor including,
without limitation, laws, rules and regulations relating to payment of
wages, employment and employment practices, terms and conditions of
employment, hours, immigration, discrimination, child labor, occupational
health and safety, collective bargaining and the payment and withholding of
taxes and other sums required by governmental authorities.
(c) Since the enactment of the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), (i) neither the Company nor any
Subsidiary has effectuated a "plant closing" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of the Company or any
Subsidiary, (ii) there has not occurred a "mass Layoff" (as defined in the
WARN Act) affecting any site of employment or facility of the Company or
any Subsidiary; nor has the Company or any Subsidiary been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state, local or
15
<PAGE> 19
foreign law or regulation, and (iii) none of the employees of the Company
or any Subsidiary has suffered an "employment loss" (as defined in the WARN
Act) during the six-month period prior to the date of this Agreement.
SECTION 4.18. Material Contracts. There are no (i) agreements of the
Company or any of the Subsidiaries containing an unexpired covenant not to
compete or similar restriction applying to the Company or any of the
Subsidiaries, (ii) interest rate, currency or commodity hedging, swap or
similar derivative transactions to which the Company or any of the
Subsidiaries is a party, (iii) providing for payment based on revenues,
sales or profits, (iv) agreements between the Company or any of the
Subsidiaries, on the one hand, and any affiliate of the Company, on the
other hand or (iv) other contracts or amendments thereto that would be
required to be filed and have not been filed as an exhibit to a Form 10-K
filed by the Company with the SEC as of the date of this Agreement
(collectively, the "Material Contracts"). Assuming each Material Contract
constitutes a valid and binding obligation of each other party thereto,
each Material Contract is a valid and binding obligation of the Company or
the applicable Subsidiary, as the case may be. To the Company's knowledge,
each Material Contract is a valid and binding obligation of each other
party thereto, and each such Material Contract is in full force and effect
and is enforceable by the Company or the applicable Subsidiary in
accordance with its terms, except as such enforcement may be limited by the
Bankruptcy Exceptions and subject to general principles of equity (whether
considered in a proceeding at law or in equity) and any implied covenant of
good faith and fair dealing. To the best knowledge of the Company, there
are no existing defaults (or circumstances or events that, with the giving
of notice or lapse of time or both would become defaults) of the Company,
any Subsidiary or any third party under any of the Material Contracts.
SECTION 4.19. Insurance. The Company and the Subsidiaries have
obtained and maintained in full force and effect insurance with responsible
and reputable insurance companies or associations in such amounts, on such
terms and covering such risks, as is consistent with industry practice for
companies (i) engaged in similar businesses and (ii) of at least similar
size to that of the Company and the Subsidiaries, and have maintained in
full force and effect public liability insurance, insurance against claims
for personal injury or death or property damage occurring in connection
with any of the activities of the Company or the Subsidiaries or any of the
properties owned, occupied or controlled by the Company or any of the
Subsidiaries, in such amount as reasonably deemed necessary by the Company.
Section 4.19 of the Company Disclosure Statement sets forth a complete and
correct list of all insurance policies (including a brief summary of the
nature and terms thereof and any amounts paid or payable to the Company or
any of the Subsidiaries thereunder, or, lieu thereof, a copy of the cover
page for each such policy) providing coverage in favor of the Company or
any of the Subsidiaries or any of their respective properties. Each such
policy is in full force and effect, no notice of termination, cancellation
or reservation of rights has been received with respect to any such policy,
there is no material default with respect to any provision contained in any
such policy, and there has not been any failure to give any notice or
present any claim under any such policy in a timely fashion or in the
manner or detail required by any such policy, except for any such failures
to be in full force and effect, any such terminations, cancellations,
reservations or defaults, or any such failures to give notice or present
claims which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company Balance Sheet reflects adequate
reserves for any insurance programs which require (or have required) the
Company or any of the Subsidiaries to retain a portion of each loss,
including, but not limited to, deductible and self-insurance programs.
SECTION 4.20. Real Property. Section 4.20 of the Company Disclosure
Statement identifies all real property owned, leased or used by the Company
or any of the Subsidiaries in the conduct of its business. The Company and
each of the Subsidiaries has good and marketable title to all of its owned
properties and assets, free and clear of all liens (statutory or
otherwise), mortgages, chattels, pledges, privileges, security interests,
hypothecations or encumbrances, except for those disclosed in the financial
statements included in the SEC Report and except for liens for taxes not
yet due and payable and such liens or other imperfections of title, if any,
as do not materially detract from the value of or interfere with the
present use of the property affected thereby; and all leases pursuant to
which the Company or any of
16
<PAGE> 20
the Subsidiaries lease from others real property are valid and effective in
accordance with their respective terms except where the lack of such
validity and effectiveness would not have a Material Adverse Effect on the
Company.
SECTION 4.21. Suppliers and Customers. Except as would not,
individually and in the aggregate, have a Material Adverse Effect on the
Company, since March 31, 1999, no licensor, vendor, supplier, licensee or
customer of the Company or any of the Subsidiaries has canceled or
otherwise modified its relationship with the Company or any of the
Subsidiaries other than consistent with past practice and, to the Company's
knowledge, (i) no such person has notified the Company or any Subsidiary of
its intention to do so, and (ii) the consummation of the transactions
contemplated hereby will not adversely affect any of such relationships.
SECTION 4.22. Accounts Receivable. Subject to any reserves set forth
in the Company Balance Sheet, the accounts receivable shown in the Company
Balance Sheet arose in the ordinary course of business, were not, as of the
date of the Company Balance Sheet, subject to any material discount,
contingency, claim of offset or recoupment or counterclaim, and
represented, as of the date of the Company Balance Sheet, bona fide claims
against debtors for sales, leases, licenses and other charges. All accounts
receivable of the Company and the Subsidiaries arising after the date of
the Company Balance Sheet through the date of this Agreement arose in the
ordinary course of business and, as of the date of this Agreement, are not
subject to any material discount, contingency, claim of offset or
recoupment or counterclaim, except for normal reserves consistent with past
practice. The amount carried for doubtful accounts and allowances disclosed
in the Company Balance Sheet is believed by the Company as of the date of
this Agreement to be sufficient to provide for any losses which may be
sustained or realization of the accounts receivable shown in the Company
Balance Sheet.
SECTION 4.23. Owner/Operators, Agents and Contractors. The Company
and/or the Subsidiaries utilize, and have previously utilized,
owner/operators, contractors, agents, or other individuals in their
operations for whom the Company and/or the Subsidiaries have adopted the
position that said owner/operators, contractors, agents or other
individuals are not employees for tax reporting and withholding or any
other purpose. The procedures adopted and implemented by the Company and/or
the Subsidiaries for the utilization of said owner/operators, contractors,
agents and other individuals have been designed to comply in all material
respects with the criteria set forth in all applicable federal or state
statutes, rules, regulations, orders, opinions and other authority for the
treatment by the Company and/or the Subsidiaries of said owner/operators,
contractors, agents and other individuals as non-employees.
SECTION 4.24. Year 2000. Either (i) all Information Systems and
Equipment (as defined below) are in all material respects either Year 2000
Compliant (as defined below) or (ii) any reprogramming, remediation, or any
other corrective action, including the internal testing of all such
Information Systems and Equipment, will be completed in all material
respects by August 31, 1999. Further, to the extent that such
reprogramming/remediation and testing action is required, the cost thereof,
as well as the cost of the reasonably foreseeable consequence of failure to
become Year 2000 Compliant, to the Company and the Subsidiaries (including,
without limitation, reprogramming errors and the failure of other systems
or equipment) will not result in a Material Adverse Effect on the Company.
"Year 2000 Compliant" means that all Information Systems and Equipment
accurately process date data (including, but not limited to, calculating,
comparing and sequencing), before, during and after the year 2000, as well
as same and multi-century dates, or between the years 1999 and 2000, taking
into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing
with, other Information Systems and Equipment, shall accurately accept,
release and exchange date data, and shall in all material respects continue
to function in the same manner as it performs today and shall not otherwise
materially impair the accuracy or functionality of Information Systems and
Equipment.
"Information Systems and Equipment" means all computer hardware,
firmware and software, as well as other information processing systems, or
any equipment containing embedded microchips,
17
<PAGE> 21
whether directly owned, licensed, leased, operated or otherwise controlled
by the Company or any of the Subsidiaries, including through third-party
service providers, and which, in whole or in part, are used, operated,
relied upon, or integral to, the Company's or any of the Subsidiaries'
conduct of their business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser, jointly and severally, represent and warrant to
the Company as follows:
SECTION 5.01. Organization and Qualification. Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New Jersey. Each of Parent and the Purchaser has the requisite
corporate power and authority to own, operate or lease its properties and
to carry on its business as it is now being conducted, and is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good
standing necessary, except where the failure to have such power or
authority, or the failure to be so qualified, licensed or in good standing,
would not have a Material Adverse Effect on Parent (as defined below). The
term "Material Adverse Effect on Parent" means any change or prospective
change in, or effect or prospective effect on, the business, results of
operations, condition (financial or otherwise) of prospects of Parent or
any of its subsidiaries that is or could reasonably be expected to be
materially adverse to Parent and its subsidiaries taken as a whole.
SECTION 5.02. Authority Relative to this Agreement. Each of Parent
and the Purchaser has all necessary corporate power and authority to
execute and deliver this Agreement and the Tender and Voting Agreement and
to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Tender and Voting
Agreement by Parent and the Purchaser and the consummation by Parent and
the Purchaser of the transactions contemplated hereby and thereby have been
duly and validly authorized and approved by the respective Boards of
Directors of Parent and the Purchaser and no other corporate proceedings on
the part of Parent or the Purchaser are necessary to authorize or approve
this Agreement and the Tender and Voting Agreement or to consummate the
transactions contemplated hereby and thereby. This Agreement and the Tender
and Voting Agreement have been duly executed and delivered by each of
Parent and the Purchaser and, assuming the due and valid authorization,
execution and delivery by the Company (and, with respect to the Tender and
Voting Agreement, the other parties thereto), constitute valid and binding
obligations of each of Parent and the Purchaser enforceable against each of
them in accordance with its terms, except that such enforceability (i) may
be limited by the Bankruptcy Exceptions and (ii) is subject to general
principles of equity.
SECTION 5.03. No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the Tender
and Voting Agreement by Parent and the Purchaser, the consummation by
Parent and the Purchaser of the transactions contemplated hereby or thereby
or compliance by Parent and the Purchaser with any of the provisions hereof
or thereof will require any Consent of any Governmental Entity or person
who is not a Governmental Entity, except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of a
certificate of merger pursuant to the New Jersey Act, (iii) applicable
state takeover and environmental statutes and (iv) compliance with the HSR
Act.
(b) Except as set forth in clause (a) of this Section 5.03, none of
the execution and delivery of this Agreement by Parent or the Purchaser,
the consummation by Parent or the Purchaser of the transactions
contemplated hereby or compliance by Parent or the Purchaser with any of
the provisions hereof will (i) conflict with or violate the organizational
documents of Parent or the Purchaser, (ii) conflict with or violate any
statute, ordinance, rule, regulation, order, judgment or decree applicable
to Parent or the Purchaser, or any of their subsidiaries, or by which any
of them or any of their respective properties or
18
<PAGE> 22
assets may be bound or affected, or (iii) result in a Violation pursuant to
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or the
Purchaser, or any of their respective subsidiaries, is a party or by which
any of their respective properties or assets may be bound or affected.
SECTION 5.04. Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion
in (i) the Offer Documents, (ii) the Schedule 14D-9 (including the
information included therein in order to comply with Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder), (iii) the Statement or (iv) the
Other Filings will, at the respective times filed with the SEC or such
other Governmental Entity and, in addition, in the case of the Statement,
at the date it or any amendment or supplement is mailed to Shareholders, at
the time of the Special Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 5.05. Financing. Parent has available sufficient cash in
immediately available funds, together with available credit lines, to pay
or to cause the Purchaser to pay the Offer Price with respect to all Shares
permitted to be outstanding pursuant to this Agreement.
ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of Business of the Company. Except as required by
this Agreement or with the prior written consent of Parent, during the period
from the date of this Agreement to the Effective Time, the Company will, and
will cause each of the Subsidiaries to, conduct its operations only in the
ordinary course of business consistent with past practice and will use its
reasonable best efforts, and will cause each of the Subsidiaries to use its
reasonable best efforts, to preserve intact the business organization of the
Company and each of the Subsidiaries, to keep available the services of its and
their present officers and employees, and to preserve the good will of those
having business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise required or permitted by this Agreement or as
set forth in Section 6.01 of the Company Disclosure Statement, the Company will
not, and will not permit any of the Subsidiaries to, prior to the Effective
Time, without the prior written consent of Parent:
(a) adopt any amendment to its certificate of incorporation or by laws
or comparable organizational documents;
(b) except for issuances of capital stock of the Subsidiaries to the
Company or a wholly-owned Subsidiary, issue, reissue or sell, or authorize
the issuance, reissuance or sale of (i) additional shares of capital stock
of any class, or securities convertible into capital stock of any class, or
any rights, warrants or options to acquire any convertible securities or
capital stock, other than the issuance of Common Shares pursuant to: (A)
the exercise of Options outstanding on the date hereof pursuant to the
terms thereof as in effect on the date hereof or as modified as
contemplated by Section 2.10, or (B) the conversion of Class A Common
Shares, or (ii) any other securities in respect of, in lieu of, or in
substitution for, Shares outstanding on the date hereof;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, capital stock, rights thereto or other assets, securities
or property or any combination thereof) in respect of any class or series
of its capital stock other than between any of the Company and any of the
wholly-owned Subsidiaries;
(d) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem or purchase or otherwise acquire,
any shares of its capital stock, or any of its other securities;
(e) except for (A) increases in salary, wages and benefits of
non-executive officers or employees of the Company or the Subsidiaries in
the ordinary course of business consistent with past practice, (B)
increases in salary, wages and benefits granted to officers and employees
of the Company or the Subsidiaries in conjunction with new hires,
promotions or other changes in job status in the ordinary
19
<PAGE> 23
course of business consistent with past practice, or (C) increases in
salary, wages and benefits to employees of the Company pursuant to
collective bargaining agreements entered into in the ordinary course of
business consistent with past practice, (i) increase the compensation or
fringe benefits payable or to become payable to its directors, officers or
employees (whether from the Company or any of the Subsidiaries), or (ii)
pay any benefit not required by any existing plan or arrangement, or (iii)
grant any severance or termination pay (except pursuant to existing
agreements, plans or policies and as required by such agreements, plans or
polices), or (iv) enter into any employment or severance agreement with,
any director, officer or other employee of the Company or any of the
Subsidiaries, or (v) establish, adopt, enter into, or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, savings, welfare, deferred
compensation, employment, termination, severance or other employee benefit
plan, agreement, trust, fund, policy or arrangement for the benefit or
welfare of any directors, officers or current or former employees, except
in each case to the extent required by applicable law or regulation;
(f) acquire, sell, lease, mortgage, encumber or dispose of any assets
(other than inventory) or securities with a value, individually or in the
aggregate, in excess of $20.0 million, in the case of rolling stock, or
$3.0 million in the case of other assets or securities, or enter into any
commitment to do any of the foregoing or enter into any material commitment
or transaction outside the ordinary course of business consistent with past
practice other than transactions between a wholly-owned Subsidiary and the
Company or another wholly-owned Subsidiary of the Company;
(g) (i) incur, assume or pre-pay any long-term debt or incur or assume
any short-term debt, except that the Company and the Subsidiaries may
incur, assume or pre-pay debt in the ordinary course of business consistent
with past practice under existing lines of credit, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except
in the ordinary course of business consistent with past practice, or (iii)
make any loans, advances or capital contributions to, or investments in,
any other person except in the ordinary course of business consistent with
past practice and except for loans, advances, capital contributions or
investments between any wholly-owned Subsidiary and the Company or another
wholly-owned Subsidiary;
(h) modify, amend or terminate any of the Material Contracts or waive,
release or assign any rights or claims thereunder, except in the ordinary
course of business and consistent with past practice;
(i) change any of the accounting methods used by it unless required by
GAAP, make any material Tax election or change or revoke any material Tax
election already made, adopt, request or consent to any new material Tax
accounting method, change any material Tax accounting method unless
required by applicable law, enter into any material closing agreement,
settle any material Tax claim or assessment or consent to any material Tax
claim or assessment or any waiver of the statute of limitations for any
such claim or assessment;
(j) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of the Subsidiaries (other than the
Merger);
(k) pay, discharge or satisfy, or fail to pay, discharge or satisfy,
any claim, liability or obligation (contingent or otherwise), other than in
the ordinary course of business and consistent with past practice;
(l) take, or agree to commit to take, any action that would or is
reasonably likely to result in any of the conditions to the Merger set
forth in Article VII or any of the conditions to the Offer not being
satisfied, or would make any representation or warranty of the Company
contained herein inaccurate in any material respect at, or as of any time
prior to, the Effective Time, or that would materially impair the ability
of the Company to consummate the Merger in accordance with the terms
thereof or materially delay such consummation; or
(m) enter into an agreement, contract, commitment or arrangement to do
any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
20
<PAGE> 24
SECTION 6.02. Access to Information. From the date hereof until the
Effective Time, the Company will, and will cause the Subsidiaries, and each of
its and their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, provide
Parent, the Purchaser and any person providing financing for the Offer or the
Merger ("Financing Sources") and their respective officers, employees, counsel,
advisors, representatives (collectively, the "Parent Representatives")
reasonable access, during normal business hours and upon reasonable notice, to
the officers and employees, offices and other facilities and to the books and
records of the Company and the Subsidiaries, as will permit Parent and the
Purchaser to make inspections of such as either of them may reasonably require
during normal business hours and will cause the Company Representatives and the
Company's Subsidiaries to furnish Parent, the Purchaser and the Parent
Representatives to the extent available with such other information with respect
to the business, operations and prospects of the Company and the Subsidiaries
during normal business hours as Parent and the Purchaser may from time to time
reasonably request. Unless otherwise required by law, Parent and the Purchaser
will, and will cause the Parent Representatives to, hold any such information in
confidence until such time as such information otherwise becomes publicly
available through no wrongful act of Parent, the Purchaser or the Parent
Representatives. The Company agrees to make reasonably available its executive
officers for presentations to any Financing Sources. In the event of termination
of this Agreement for any reason, Parent and the Purchaser will, and will cause
the Parent Representatives to, return to the Company all copies of written
information furnished by the Company or any of the Company Representatives to
Parent or the Purchaser or the Parent Representatives and destroy all memoranda,
notes and other writings prepared by Parent, the Purchaser or the Parent
Representatives based upon or including the information furnished by the Company
or any of the Company Representatives to Parent or the Purchaser or the Parent
Representatives (and Parent will certify to the Company that such destruction
has occurred).
SECTION 6.03. Reasonable Best Efforts. Subject to the terms and
conditions herein provided and to applicable legal requirements, each of the
parties hereto agrees to use its reasonable best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, and to assist and cooperate
with the other parties hereto in doing, as promptly as practicable, all things
necessary, proper or advisable under applicable laws and regulations to ensure
that the conditions set forth in Annex I and Article VII are satisfied and to
consummate and make effective the transactions contemplated by the Offer and
this Agreement.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective subsidiaries, should be discovered by the Company or Parent, as
the case may be, and which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
SECTION 6.04. Public Announcements. So long as this Agreement is in
effect, Parent, the Purchaser and the Company agree to use reasonable efforts to
consult with each other before issuing any press release or otherwise making any
public statement with respect to the transactions contemplated by this
Agreement.
SECTION 6.05. Indemnification.
(a) Parent agrees that all rights to indemnification now existing in favor
of any director or officer of the Company as provided in the Company's Restated
Certificate of Incorporation or by laws, in an agreement between any such person
and the Company, or otherwise in effect on the date hereof shall survive the
Merger and shall continue in full force and effect indefinitely after the
Effective Time. Parent also agrees to indemnify all current and former directors
and officers of the Company ("Indemnified Parties") to the fullest extent
permitted by applicable law with respect to all acts and omissions arising out
of such individuals' services as officers or directors of the Company or any of
the Subsidiaries or as trustees or fiduciaries of any plan for the benefit of
employees occurring prior to the Effective Time. Without limitation of the
foregoing, in the event any such Indemnified Party is or becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter, including, without limitation, the transactions contemplated by this
Agreement,
21
<PAGE> 25
occurring prior to, and including, the Effective Time, Parent will pay as
incurred such Indemnified Party's reasonable legal and other expenses of counsel
selected by the Indemnified Party and reasonably acceptable to Parent (including
the cost of any investigation, preparation and settlement) incurred in
connection therewith; provided, however, that Parent shall not, in connection
with any one such action or proceeding or separate but substantially similar
actions or proceedings arising out of the same general allegations be liable for
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) at any time for all Indemnified Parties. Parent shall be
entitled to participate in the defense of any such action or proceeding, and
counsel selected by the Indemnified Party shall, to the extent consistent with
their professional responsibilities, cooperate with Parent and any counsel
designated by Parent. Parent shall pay all reasonable expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 6.05.
(b) Parent agrees that the Company and, from and after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of the directors'
and officers' liability insurance maintained by the Company; provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous; and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
provided, further, that the Surviving Corporation shall not be required to pay
an annual premium in excess of 200% of the last annual premium paid by the
Company prior to the date hereof and if the Surviving Corporation is unable to
obtain the insurance required by this Section 6.05(b) it shall obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount.
SECTION 6.06. No Solicitation.
(a) The Company represents and warrants to, and covenants and agrees with,
Parent and the Purchaser that neither the Company nor any of the Subsidiaries
has any agreement, arrangement or understanding with any potential acquiror
that, directly or indirectly, would be violated, or require any payments, by
reason of the execution, delivery and/or consummation of this Agreement. The
Company shall, and shall cause the Subsidiaries and its and their officers,
directors, employees, investment bankers, attorneys and other agents and
representatives to, immediately cease any existing discussions or negotiations
with any person other than Parent or the Purchaser (a "Third Party") heretofore
conducted with respect to any Acquisition Transaction (as hereinafter defined).
The Company and the Board of Directors of the Company shall not, and the Company
shall cause the Subsidiaries and its and their respective officers, directors,
employees, investment bankers, attorneys and other agents and representatives
not to, directly or indirectly, (w) withdraw or modify (or resolve to withdraw
or modify) in a manner adverse to Parent the approval or recommendation of the
Board of Directors of the Company of this Agreement or any of the transactions
contemplated hereby or recommend (or resolve to recommend) an Acquisition
Transaction with a Third Party to the Shareholders, (x) solicit, initiate,
continue, facilitate or encourage (including by way of furnishing or disclosing
non-public information) any inquiries, proposals or offers from any Third Party
with respect to, or that could reasonably be expected to lead to, any
acquisition or purchase of a material portion of the assets or business of, or a
15% or more voting equity interest in (including by way of a tender offer), or
any amalgamation, merger, consolidation or business combination with, or any
recapitalization or restructuring, or any similar transaction involving, the
Company or any of the Subsidiaries (the foregoing being referred to collectively
as an "Acquisition Transaction"), or (y) negotiate, explore or otherwise
communicate in any way with any Third Party with respect to any Acquisition
Transaction or enter into, approve or recommend any agreement, arrangement or
understanding requiring the Company to abandon, terminate or fail to consummate
the Offer and/or the Merger or any other transaction contemplated hereby.
Notwithstanding anything to the contrary in the foregoing, the Company may,
prior to the purchase of Shares pursuant to the Offer, in response to an
unsolicited written proposal with respect to an Acquisition Transaction
involving the acquisition of all of the Shares (or all or substantially all of
the assets of the Company and the Subsidiaries) from a Third Party or in
response to an unsolicited all cash tender offer for any and all Shares (i)
furnish or disclose non-public information to such Third Party, (ii) negotiate,
discuss or otherwise communicate with such Third Party and (iii) in the case of
an unsolicited all cash tender offer for any and all Shares, withdraw or modify
(or resolve to
22
<PAGE> 26
withdraw or modify) in a manner adverse to Parent the approval or recommendation
of this Agreement and the transactions contemplated hereby or recommend (or
resolve to recommend) an Acquisition Transaction with a Third Party to
Shareholders, in each case only if the Board of Directors of the Company
determines in good faith: (1) (after consultation with Janney Montgomery Scott
Inc.) that such proposal or such unsolicited all cash tender offer, as the case
may be, is more favorable to the Shareholders from a financial point of view
than the transaction contemplated hereby (including any adjustment to the terms
and conditions proposed by Parent and the Purchaser in response to such proposal
or such unsolicited all cash tender offer, as the case may be), (2) (after
consultation with Janney Montgomery Scott Inc.) that sufficient financing is
obtainable with respect to such proposal or such unsolicited all cash tender
offer, as the case may be, such that the proposed Acquisition Transaction will
be consummated without material delay and (3) that the proposed Acquisition
Transaction (including, if applicable, such an unsolicited all cash tender
offer) is not subject to any regulatory approvals that could reasonably be
expected to prevent or materially delay its consummation (a proposal with
respect to an Acquisition Transaction (including, if applicable, such an
unsolicited all cash tender offer) meeting the requirements of clauses (1)
through (3) is referred to herein as a "Superior Proposal"). Prior to furnishing
or disclosing any non-public information to, or entering into negotiations,
discussions or other communications with, such Third Party, the Company shall
receive from such Third Party an executed confidentiality agreement with terms
no less favorable in the aggregate to the Company than those contained in the
Confidentiality Agreement between the Company and Parent (the "Confidentiality
Agreement"), but which confidentiality agreement shall not provide for any
exclusive right to negotiate with the Company or any payments by the Company.
The Company shall provide to Parent copies of all such non-public information
delivered to such Third Party concurrently with such delivery. Notwithstanding
the foregoing, the Company and the Board of Directors of the Company shall not,
and the Company shall cause its affiliates not to, withdraw or modify (or
resolve to withdraw or modify) in a manner adverse to Parent the approval or
recommendation of this Agreement or any of the transactions contemplated hereby,
or recommend (or resolve to recommend) an Acquisition Transaction with a Third
Party to the Shareholders or enter into a definitive agreement with respect to a
Superior Proposal unless (w) the Company has given Parent three business days'
notice of the intention of the Board of Directors to withdraw or modify (or
resolve to withdraw or modify) in a manner adverse to Parent the approval or
recommendation of this Agreement or any of the transactions contemplated hereby,
or recommend (or resolve to recommend) an Acquisition Transaction with a Third
Party to the Shareholders or the intention of the Company to enter into such
definitive agreement, as the case may be, (x) if Parent makes a counter-proposal
within such three business day period, the Board of Directors of the Company
shall have determined, in light of any such counter-proposal, that the Third
Party Acquisition Transaction proposal is still a Superior Proposal, (y) the
Company concurrently terminates this Agreement in accordance with the terms
hereof and pays any Termination Fee (as defined) required under Section 8.03(b)
and agrees to pay any other amounts required under such Section 8.03(b), and (z)
with respect to a definitive agreement, such agreement permits the Company to
terminate it if it receives a Superior Proposal, such termination and related
provisions to be on terms no less favorable to the Company, including as to fees
and reimbursement of expenses, as those contained herein.
(b) The Company shall promptly (but in any event within one day of the
Company becoming aware of same) advise Parent of the receipt by the Company, any
of the Subsidiaries or any of its or their bankers, attorneys or other agents or
representatives of any inquiries or proposals relating to an Acquisition
Transaction and any actions taken pursuant to Section 6.08(a). The Company shall
promptly (but in any event within one day of the Company becoming aware of same)
provide Parent with a copy of any such inquiry or proposal in writing and a
written statement with respect to any such inquiries or proposals not in
writing, which statement shall include the identity of the parties making such
inquiries or proposal and the material terms thereof. The Company shall, from
time to time, promptly (but in any event within one day of the Company becoming
aware of same) inform Parent of the status and content of and developments with
respect to any discussions regarding any Acquisition Transaction with a Third
Party, including (i) the calling of meetings of the Board of Directors of the
Company to take action with respect to such Acquisition Transaction, (ii) the
execution of any letters of intent, memoranda of understanding or similar
non-binding agreements with respect to such Acquisition Transaction, (iii) the
waiver of any standstill agreement to which the Company is or becomes a party,
(iv) the determination by the Board of Directors of the Company to recommend to
the Shareholders
23
<PAGE> 27
that they approve or accept a Superior Proposal or withdraw or modify in a
manner adverse to the Parent its approval or recommendation of this Agreement or
the transactions contemplated hereby, (v) the determination by the Company to
publicly disclose receipt of a Superior Proposal and (vi) the waiver by the
Company of any confidentiality agreement with a person proposing a Superior
Proposal. For the avoidance of doubt, the Company agrees that it will not enter
into any definitive agreement with respect to a Superior Proposal unless and
until Parent has been given notice of the identity of the parties making such
Superior Proposal, the terms thereof and developments referred to in the
preceding sentence and the intent to enter into such a definitive agreement at
least three business days prior to the entering into such agreement.
SECTION 6.07. Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (i) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time or (ii)
to cause any covenant, condition or agreement hereunder not to be complied with
or satisfied in all material respects and (b) any failure of the Company or
Parent, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder in any material
respect; provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the obligations
of any party hereunder.
SECTION 6.08. State Takeover Laws. The Company shall, upon the request of
the Purchaser, take all reasonable steps to assist in any challenge by the
Purchaser to the validity or applicability to the transactions contemplated by
this Agreement, including the Offer and the Merger, and the Tender and Voting
Agreement of any state takeover law. The Board of Directors of the Company shall
not amend, modify or rescind the approval of any purchase of Shares in the Offer
for purposes of Section 14A:10A-1 of the New Jersey Act.
SECTION 6.09. Employee Matters.
(a) On and after the Effective Time, Parent shall cause the Surviving
Corporation and its subsidiaries to promptly pay or provide when due all
compensation and benefits earned through or prior to the Effective Time as
provided pursuant to the terms of any Company Plans disclosed in the Company
Disclosure Statement for all employees (and former employees) and directors (and
former directors) of the Company and its subsidiaries. Parent and the Company
agree that the Surviving Corporation and its subsidiaries shall pay promptly or
provide when due all compensation and benefits required to be paid pursuant to
the terms of any individual agreement with any employee, former employee,
director or former director in effect as of the date hereof and disclosed in the
Company Disclosure Schedule.
(b) If employees of the Surviving Corporation and its subsidiaries become
eligible to participate in a medical, dental or health plan of Parent or its
subsidiaries, Parent shall cause such plan to (i) waive any preexisting
condition limitations for conditions under the applicable medical, health or
dental plans of the Company and its subsidiaries (other than any limitation
already in effect with respect to the applicable employee that has not been
satisfied as of the Effective Time under the applicable Company Plan) and (ii)
honor any deductible and out-of-pocket expenses incurred by the employees and
their beneficiaries under such plans during the portion of the calendar year
prior to such participation.
(c) Nothing in this Section 6.09 shall require the continued employment of
any person or prevent the Company and/or the Surviving Corporation and their
subsidiaries from taking any action or refraining from taking any action that
the Company and its subsidiaries prior to the Effective Time, could have taken
or refrained from taking.
24
<PAGE> 28
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of Parent, the Purchaser and the Company to
consummate the Merger are subject to the satisfaction or waiver in writing by
each party hereto, at or before the Effective Time, of each of the following
conditions:
(a) Purchase of Shares. The Purchaser shall have accepted for payment
and paid for Shares pursuant to the Offer in accordance with the terms
hereof.
(b) Shareholder Approval. The Shareholders shall have duly approved
and adopted this Agreement and the transactions contemplated by this
Agreement, to the extent required under applicable law.
(c) Injunctions; Illegality. The consummation of the Merger shall not
be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any
Governmental Entity and there shall not have been any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by any
Governmental Entity which prevents the consummation of the Merger.
(d) Antitrust. The expiration or termination of all applicable
waiting periods relating to the Merger under the HSR Act and any applicable
foreign antitrust laws, if applicable, shall have occurred.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, whether or not approval thereof by the Shareholders has been obtained:
(a) by the mutual written consent of Parent and the Company;
(b) by the Company if the Company is not in material breach of any of
its representations, warranties, covenants or agreements contained in this
Agreement and if (i) the Purchaser fails to commence the Offer as provided
in Section 1.01 hereof, (ii) the Purchaser shall not have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the
terms thereof on or before August 31, 1999 (provided that if the only
unsatisfied condition to the Offer at August 31, 1999 is the expiration or
termination of all applicable waiting periods relating to the Offer under
the HSR Act, termination pursuant to this clause (ii) may not occur until
after October 31, 1999), (iii) the Purchaser fails to purchase validly
tendered Shares in violation of the terms of the Offer or this Agreement or
(iv) the Merger shall not have occurred on or before December 31, 1999;
(c) by Parent or the Company if the Offer is terminated or withdrawn
pursuant to its terms without any Shares being purchased thereunder;
provided that Parent may terminate this Agreement pursuant to this Section
8.01(c) only if Parent's or the Purchaser's termination or withdrawal of
the Offer is not in violation of the terms of this Agreement or the Offer;
(d) by Parent or the Company if any court or other Governmental Entity
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Offer or the Merger and
such order, judgment, decree, injunction, ruling or other action shall have
become final and nonappealable;
(e) by the Company if prior to the purchase by the Purchaser of any
Shares in the Offer (i) there shall have occurred, on the part of Parent or
the Purchaser, a material breach of any representation or warranty,
covenant or agreement contained in this Agreement which is not curable or,
if curable, is not cured within ten business days after written notice of
such breach is given by the Company to the party committing the breach or
(ii) (A) (x) the Company proposes entering into a definitive agreement with
respect to a Superior Proposal or (y) the Board of Directors of the Company
recommends a Third Party
25
<PAGE> 29
Acquisition Transaction which is an unsolicited all cash tender offer for
any and all Shares and which constitutes a Superior Proposal, (B) the
Company gives Parent the three business days' notice as required pursuant
to the last sentence of Section 6.06(a), (C) if a counter-proposal was made
by Parent within such three business day period, the Board of Directors of
the Company has determined, in light of the counter-proposal, that the
Third Party Acquisition Transaction (or proposal therefor) is still a
Superior Proposal as required by the last sentence of Section 6.06(a) and
(D) the Company pays any Termination Fee and any other amounts required
under Section 8.03(b);
(f) by Parent if prior to the purchase by the Purchaser of any Shares
in the Offer (i) there shall have occurred, on the part of the Company, a
material breach of any representation, warranty, covenant or agreement
contained in this Agreement which is not curable or, if curable, is not
cured within ten business days after written notice of such breach is given
by Parent to the Company, (ii) there shall have occurred, on the part of
any shareholder party to the Tender and Voting Agreement, a material breach
of any representation, warranty, covenant or agreement contained in the
Tender and Voting Agreement which is not curable or, if curable, is not
cured within five business days after written notice of such breach is
given by Parent to the applicable shareholder or (iii) if the Board of
Directors of the Company or committee thereof shall have withdrawn or
modified (or shall have resolved to withdraw or modify) in a manner adverse
to Parent, its approval or recommendation of this Agreement or any of the
transactions contemplated hereby or shall have recommended (or resolved to
recommend) an Acquisition Transaction (other than the Offer and Merger) to
the Shareholders; or
(g) by Parent if it is not in material breach of its obligations
hereunder or under the Offer and no Shares shall have been purchased
pursuant to the Offer on or before August 31, 1999 (provided that if the
only unsatisfied condition to the Offer at August 31, 1999 is the
expiration or termination of all applicable waiting periods relating to the
Offer under the HSR Act, termination pursuant to this clause (g) may not
occur until October 31, 1999).
SECTION 8.02. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of this Section
8.02, Section 8.03 and the last sentence of Section 6.08, which shall survive
any such termination. Nothing contained in this Section 8.02 shall relieve any
party from liability for any breach of this Agreement or the Confidentiality
Agreement.
SECTION 8.03. Fees and Expenses.
(a) Whether or not the Merger is consummated, all costs and expenses
incurred in connection with the Offer, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
(b) In the event this Agreement is terminated pursuant to Section
8.01(e)(ii) or 8.01(f)(iii), then the Company shall (i) promptly reimburse
Parent for the documented fees and expenses of Parent and the Purchaser related
to this Agreement and the transactions contemplated hereby not to exceed $1.0
million and (ii) promptly pay Parent a Termination Fee of $4.75 million, in each
case by wire transfer of same day funds to an account designated by Parent as a
condition of such termination. In the event this Agreement is terminated
pursuant to Section 8.01(f)(i) or 8.01(f)(ii), the Company shall promptly
reimburse Parent for the documented fees and expenses of Parent and the
Purchaser related to this Agreement and the transactions contemplated hereby not
to exceed $1.0 million by wire transfer of same day funds to an account
designated by Parent.
(c) In the event that (i) prior to the termination of this Agreement, a
Third Party shall have made a proposal regarding an Acquisition Transaction and
(ii) thereafter (x) such proposal is publicly disclosed and August 31, 1999
occurs (or, if the only unsatisfied condition to the Offer at August 31, 1999 is
the expiration or termination of all applicable waiting periods relating to the
Offer under the HSR Act, October 31, 1999 occurs) without the Minimum Condition
being satisfied (other than as a result of a material breach hereof by Parent or
the Purchaser that has not been cured within the time period set forth in
Article VIII of this
26
<PAGE> 30
Agreement) or (y) the Agreement is terminated (A) by the Company pursuant to
Section 8.01(b)(ii) or 8.01(c) or (B) by Parent pursuant to 8.01(f)(i),
8.01(f)(ii) or 8.01(g) and, in each case, at the time the event giving rise to
the right to so terminate this Agreement, such Third Party Acquisition
Transaction proposal shall not have been withdrawn, and (iii) prior to twelve
months after any termination of this Agreement the Company shall have entered
into a definitive agreement for a Third Party Acquisition Transaction which
constitutes a Superior Proposal, or a Third Party Acquisition Transaction which
constitutes a Superior Proposal shall have been consummated, then the Company
shall promptly, but in no event later than immediately prior to, and as a
condition of, entering into such definitive agreement, or, if there is no such
definitive agreement then immediately upon consummation of the Acquisition
Transaction, reimburse Parent for the documented fees and expenses of Parent and
the Purchaser relating to this Agreement and the transactions contemplated
hereby (to the extent not previously reimbursed and without duplication of any
amounts reimbursed pursuant to Section 8.03(b))not to exceed $1.0 million and
pay Parent a Termination Fee of $4.75 million (it being understood that only one
Termination Fee shall be payable pursuant to Section 8.03(b) and 8.03(c) in the
aggregate), which amounts shall be payable by wire transfer of same day funds to
an account designated by Parent.
(d) The Company acknowledges that the agreements contained in Section
8.03(b) and (c) are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, Parent and Purchaser would not
enter into this Agreement; accordingly, if the Company fails to promptly pay the
amount due pursuant to Section 8.03(b) and (c), and, in order to obtain such
payment, Parent or the Purchaser commences a suit that results in a judgment
against the Company for the fee and expenses set forth in Sections 8.03(b) and
(c), the Company shall pay to Parent its costs and expenses (including
reasonable attorneys' fees) in connection with such suit.
SECTION 8.04. Amendment. Subject to Section 1.03(c), this Agreement may
be amended by the Company, Parent and the Purchaser at any time before or after
any approval of this Agreement by the Shareholders but, after any such approval,
no amendment shall be made which decreases the Merger Price or which adversely
affects the rights of the Shareholders hereunder without the approval of such
Shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties.
SECTION 8.05. Extension; Waiver. Subject to Section 1.03(c), at any time
prior to the Effective Time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other party or in any document, certificate or writing delivered
pursuant hereto by any other party or (iii) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
SECTION 9.02. Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments referred to
herein), the Tender and Voting Agreement and the Confidentiality Agreement
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder will be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other party. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
27
<PAGE> 31
SECTION 9.03. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.04. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile (with
receipt confirmed) to the respective parties as follows:
If to Parent or the Purchaser:
Yellow Corporation
10990 Roe Avenue
Overland Park, KS 66207
Attention: William F. Martin, Jr.,
General Counsel
Fax: (913) 696-6116
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: W. Leslie Duffy, Esq.
Fax: 212-269-5420
If to the Company:
Jevic Transportation, Inc.
600 Creek Road
Delanco, NJ 08075
Attention: Harry J. Muhlschlegel
Chief Executive Officer and
Chairman of the Board
Fax: (609) 764-7237
with a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, PA 19103
Attention: Barry M. Abelson
Fax: 215-981-4750
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05. Governing Law; Jurisdiction. (a) This Agreement shall be
governed by and construed in accordance with the laws of the State of New
Jersey, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
(b) In addition, each of the parties hereto agrees that it will not bring
any action relating to this Agreement or any of the transactions contemplated
hereby in any court other than a federal or state court sitting in the State of
New Jersey.
SECTION 9.06. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.07. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
28
<PAGE> 32
SECTION 9.08. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and, except with respect
to Sections 2.09, 3.02 and 6.05, nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.09. Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean any
other person directly or indirectly controlling, controlled by, or under
common control with, that person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that person, whether
through the ownership of voting securities, by contract or otherwise;
(b) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act);
(c) the term "subsidiary" or "subsidiaries", means, with respect to
Parent, the Company, or any other person, any corporation, partnership,
joint venture or other legal entity of which Parent, the Company or such
other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of
the vote for the election of the board of directors or other governing body
of such corporation or other legal entity;
(d) The term "Tax" or "Taxes" means (i) all federal, state, local or
foreign taxes, charges, fees, imposts, levies or other assessments,
including, without limitation, all net income, alternative minimum, gross
receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance,
stamp, occupation, property and estimated taxes, customs duties, fees,
assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or other additional amounts imposed by
any taxing authority in connection with any item described in clause (i)
and (iii) all transferee, successor, joint and several or contractual
liability (including, without limitation, liability pursuant to Treas. Reg.
sec. 1.1502-6 (or any similar state, local or foreign provision)) in
respect of any items described in clause (i) or (ii);
(e) The term "Tax Return" means all returns, declarations, reports,
estimates, information returns and statements required to be filed in
respect of any Taxes; and
(f) the term "Termination Fee" means a fee payable by the Company to
Parent pursuant to Section 8.03(b) or Section 8.03(c) of this Agreement.
SECTION 9.10. Remedies. Except as set forth below, the parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, and, accordingly, it is agreed that
the parties shall be entitled to an injunction or injunctions to prevent such
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity. In the event of a termination of this Agreement pursuant to which a
Termination Fee is paid pursuant to Section 8.03 hereof, the receipt of such
Termination Fee shall serve as payment of liquidated damages with respect to any
breach of this Agreement by the party paying such Termination Fee giving rise to
such termination, and receipt of such Termination Fee shall be the sole and
exclusive remedy (at law or in equity) with respect to any such breach.
29
<PAGE> 33
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
YELLOW CORPORATION
By: /s/ A. MAURICE MYERS
------------------------------------
Name: A. Maurice Myers
Title: President and Chief Executive
Officer
JPF ACQUISITION CORP.
By: /s/ WILLIAM F. MARTIN, JR.
------------------------------------
Name: William F. Martin, Jr.
Title: Vice President
JEVIC TRANSPORTATION, INC.
By: /s/ HARRY J. MUHLSCHLEGEL
------------------------------------
Name: Harry J. Muhlschlegel
Title: Chairman and Chief Executive
Officer
30
<PAGE> 34
ANNEX I
Conditions to the Offer. Notwithstanding any other provisions of the
Offer, in addition to (and not in limitation of) the Purchaser's right to extend
and amend the Offer at any time in its sole discretion (subject to the terms of
the Merger Agreement), the Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act, pay for, and may delay the acceptance for
payment of or, subject to the regulations referred to above, the payment for,
any tendered Shares, and may terminate or amend the Offer, if (i) there are not
validly tendered and not withdrawn prior to the expiration date for the Offer
(the "Expiration Date") that number of Shares which represent at least 51% of
the outstanding Common Shares on a fully diluted basis (including Common Shares
issuable upon conversion of Class A Common Shares) on the date of purchase (the
"Minimum Condition"), (ii) all of the outstanding Class A Shares are not validly
tendered and not withdrawn prior to the Expiration Date, (iii) any applicable
waiting periods under the HSR Act or any applicable foreign antitrust statute
shall not have expired or (iv) at any time on or after June 6, 1999 and before
the expiration of the Offer, any of the following events shall occur:
(a) any law, statute, rule, regulation, ordinance or injunction is
enacted, entered, enforced, promulgated or deemed applicable to the Offer
or the Merger, or any other action is taken by any Governmental Entity that
would reasonably be expected to, directly or indirectly, (i) make illegal
or otherwise directly or indirectly restrain or prohibit the acquisition by
Parent or Purchaser of any Shares under the Offer or the making or
consummation of the Offer or the Merger, the performance by the Company of
any of its material obligations under the Merger Agreement or the
consummation of any purchase of Shares contemplated by the Merger
Agreement, (ii) prohibit or limit the ownership or operation by the
Company, Parent or any of their respective subsidiaries of any portion of
the business or assets of the Company or any Subsidiary or of Parent or any
of its subsidiaries or compel the Company or Parent to dispose of or hold
separate any portion of the business or assets of the Company or any
Subsidiary or of Parent or any of its subsidiaries as a result of the Offer
or the Merger, (iii) impose limitations on the ability of Parent or the
Purchaser to acquire or hold, or exercise full rights of ownership of, any
Shares accepted for payment pursuant to the Offer, including, without
limitation, the right to vote such Shares on all matters properly presented
to the shareholders of the Company or (iv) prohibit Parent or any of its
subsidiaries from effectively controlling any portion of the business or
operations of the Company or any Subsidiary; or
(b) the Company and the Purchaser and Parent shall have reached an
agreement that the Offer or the Merger Agreement be terminated, or the
Merger Agreement shall have been terminated in accordance with its terms;
or
(c) any event shall have occurred or condition exist that has or could
reasonably be expected to have, a Material Adverse Effect on the Company
(as defined in the Merger Agreement); or
(d) (i) the Board of Directors of the Company or any committee thereof
withdraws or modifies in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approves or recommends any proposal for an Acquisition
Transaction with a Third Party or (ii) the Company enters into any
agreement to consummate any Acquisition Transaction with a Third Party; or
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are not qualified as to materiality are not
true and correct or the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality would
not be true and correct, but for such qualification, and the events or
conditions giving rise to such representations and warranties not being
true and correct but for such qualification could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, in each case at the date of the Merger Agreement or at the
scheduled expiration of the Offer (as though made as of such date, except
that those representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date) which have
not been cured within the time period specified in Article VIII of the
Merger Agreement or the Purchaser shall have failed to receive a
certificate executed
1
<PAGE> 35
by the President or a Vice President of the Company, dated as of the
scheduled expiration date, to the effect that the conditions set forth in
this clause (e) have not occurred; or
(f) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Merger Agreement or the Purchaser shall have failed to receive a
certificate executed by the President or a Vice President of the Company,
dated as of the scheduled expiration of the Offer, that the conditions set
forth in this clause (f) have not occurred; or
(g) any shareholder party to any Tender and Voting Agreement shall
have breached or failed to perform in any material respect any of such
shareholder's obligations, covenants or agreements thereunder; or
(h) all Consents of Governmental Entities and other Persons (other
than lenders) listed in Section 4.05 of the Company Disclosure Statement
shall not have been obtained with no material adverse conditions attached
and no material expense imposed on the Company or any of the Subsidiaries;
or
(i) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ Stock Market, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States (whether or not mandatory), (iii) a commencement of a
war, armed hostilities or other international or national calamity directly
or indirectly involving the United States, (iv) any limitation (whether or
not mandatory) by any United States governmental authority on the extension
of credit generally by banks or other financial institutions, or (v) a
change in general financial, bank or capital market conditions which
materially and adversely affects the ability of financial institutions in
the United States to extend credit or syndicate loans or (vi) in the case
of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof.
The foregoing conditions are for the benefit of Parent and the Purchaser
and may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such conditions and may be waived by Parent or the Purchaser
in whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
2
<PAGE> 1
EXHIBIT 2
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of this fourth day of June, 1999 is made by and
among JEVIC TRANSPORTATION, INC., a New Jersey corporation (the "Company"),
YELLOW CORPORATION, a Delaware corporation ("Yellow"), and Paul J. Karvois, (the
"Executive").
WHEREAS, Yellow and the Company are currently engaged in the
negotiation of an Agreement and Plan of Merger (the "Purchase Agreement")
pursuant to which Yellow would, through an indirect wholly owned subsidiary,
acquire all the shares of common stock of the Company; and
WHEREAS, the Boards of Directors of the Company and Yellow have
approved the employment of the Executive on the terms and conditions set forth
in this Agreement; and
WHEREAS, the Executive is willing, for the considerations provided, to
continue in the employment of the Company on the terms and conditions set forth
in this Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment. The Company hereby agrees to continue to
employ the Executive, and the Executive hereby accepts such
continued employment, upon the terms and conditions set forth
in this Agreement. On and after the effective date of the
merger of the "Purchaser" (as defined in the Purchase
Agreement) into the Company contemplated by the Purchase
Agreement (the "Merger Date"), Yellow shall cause the
"Surviving Corporation" as defined in the Purchase Agreement
to satisfy the Company's obligations under this Agreement;
provided, however, that Yellow shall have no obligations or
liabilities under this Agreement unless and until the
Effective Date (as defined below) occurs. On and after the
Merger Date, said Surviving Corporation shall be the "Company"
for purposes of this Agreement.
2. Term. This Agreement shall become effective on, and the
term (the "Term") of the Executive's employment under this
Agreement shall commence on, the date on which the Purchaser
purchases shares of the Company's stock pursuant to a tender
offer (the "Effective Date") and shall continue until the date
of termination of the Executive's employment with the Company.
3. Position and Duties. During the Term, the Executive shall
serve as President of the Company, and shall have such
responsibilities and authority as is commensurate with such
office. The Executive shall devote substantially all of his
working time and efforts to the business and affairs of the
Company.
<PAGE> 2
4. Compensation. During the Term, the Company shall provide
the Executive with the following compensation and other
benefits:
(a) Base Salary. The Company shall pay the Executive
base salary at the initial rate of $275,120 per
annum, which shall be payable in accordance with the
standard payroll practices of the Company. At no time
during the Term shall the Executive's base salary be
decreased from the rate then in effect except with
the written consent of the Executive.
(b) Bonus. During the Term, the Executive shall
participate in the annual bonus program maintained
for the executive officers of the Company. The
Executive's target bonus for each fiscal year during
the Term shall be no less than 40% of his annual base
salary for that year.
(c) Other Company, Benefits. During the Term, the
Executive shall be entitled to participate in, and to
receive benefits under, the benefit plans and
programs that are at the applicable time available to
executives of the Company generally and on terms and
conditions that are no less favorable than those
applicable to executives of the Company generally.
(d) Stock Options. As of the Effective Date, Yellow
shall grant to the Executive an option to purchase
30,000 shares of common stock of Yellow with the
following principal terms: (i) an exercise price
equal to the closing price of Yellow common stock as
reported by NASDAQ on June 4, 1999, (ii) vesting and
becoming exercisable at the rate of 25% on the first
anniversary of the Effective Date, 25% on the second
anniversary, 25% on the third anniversary, and the
remaining 25% on the fourth anniversary, and (iii)
other terms and conditions substantially similar to
stock options granted to executives generally under
Yellow's 1996 Stock Option Plan. With respect to
calendar years beginning after the Effective Date,
the Executive during the Term shall participate in
Yellow's stock option plans on terms and conditions
substantially similar to those generally applicable
to executives of Yellow and its subsidiaries.
(e) Perquisites. On and after the Effective Date,
Yellow shall cause the Company during the Term to
provide to the Executive the perquisites listed in
Appendix A hereto.
<PAGE> 3
5. Right to Terminate Employment. The Company reserves the
right to terminate the Executive's employment hereunder at any
time, subject, however, to the termination procedures set
forth in Section 7 of the Amended and Restated Severance
Agreement dated as of June 4, 1999 between the Company and the
Executive (the "Severance Agreement") to the extent such
procedures are then applicable pursuant to the terms of the
Severance Agreement. The Executive reserves the right to
resign from employment with the Company at any time, subject,
however, to any limitations on such right that may then be
applicable pursuant to the terms of the Severance Agreement.
6. Relationship of this Agreement to Severance Agreement.
Nothing in this Agreement shall affect in any way the rights
and obligations of the Company and the Executive under the
Severance Agreement, except that the Executive hereby agrees
to the following modifications of the Severance Agreement,
effective as of the Effective Date:
(i) an act or failure to act constituting "Good Reason" as
described in subsection (i) of Section 15 (M) of the Severance
Agreement shall not be deemed to occur on or after the
Effective Date so long as the Executive has the title,
responsibilities and authority set forth in Section 3 of this
Agreement (notwithstanding changes in the Executive's status,
responsibilities and authority resulting from the Company's
ceasing to be a separate public company), and
(ii) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15 (M) of the
Severance Agreement shall not be deemed to occur by reason of
the cessation of the Executive's participation in the
Company's stock option and other stock-based plans so long as
Yellow complies with Section 4 (d) of this Agreement on and
after the Effective Date, and
(iii) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15(M) of the
Severance Agreement shall not be deemed to occur by reason of
the limitation of the Executive's target bonus to the level
provided for in Section 4 (b) of this Agreement, and
(iv) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15 (M) of the
Severance Agreement shall not be deemed to occur by reason of
the elimination or modification of any perquisites or fringe
benefits enjoyed by the Executive before the Effective Date
(other than benefits under any Company "employee benefit plan"
as defined in Section 3 (3) of the Employee Retirement Income
Security Act of 1974, as amended) so long as the Company
provides the perquisites set forth in Appendix A hereto, and
<PAGE> 4
(v) Yellow's execution of this Agreement shall be deemed to
fully satisfy the Company's obligations pursuant to Section
9.1 of the Severance Agreement.
7. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed
by the party against whom such waiver, modification or
discharge is sought to be enforced (with such signature, in
the case of the Company or Yellow, to be made by a duly
authorized officer thereof). No waiver by any party hereto at
any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any
party which are not expressly set forth in this Agreement. The
validity, interpretation, and construction of this Agreement
shall be governed by the laws of the State of New Jersey.
Payments provided for hereunder shall be paid net of
withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed.
IN WITNESS WHEREOF, this Agreement has been executed, as of
the date first written, on behalf of the Company by its duly
authorized officer, on behalf of Yellow by its duly authorized
officer, and by the Executive.
JEVIC TRANSPORTATION, INC
/s/ Karen B. Muhlschlegel By: /s/ Harry J. Muhlschlegel
- ------------------------------------- -----------------------------
Secretary
YELLOW CORPORATION
/s/ William F. Martin, Jr. By: /s/ H.A. Trucksess III
- ------------------------------------- -----------------------------
Secretary
EXECUTIVE
By: /s/ Paul J. Karvois
-----------------------------
<PAGE> 5
APPENDIX A
Under Section 4 (e) of the Employment Agreement between the Executive,
Jevic Transportation, Inc. and Yellow Corporation the following perquisites
shall be provided:
(A) Car Allowance. Executive will be entitled to continuance
of car allowance under Jevic Transportation, Inc. policy dated
March 5, 1996.
(B) Vacation. Executive will be entitled to annual vacation
at least equal to that currently provided as an employee of
Jevic Transportation, Inc. under their current policy and
practice.
(C) Supplemental Retirement Plan. Continued eligibility to
participate in Jevic Transportation's Non-Qualified
Supplemental Retirement Arrangements through Fidelity
Investments.
(D) Split Dollar Life Insurance. Continued participation in
the Split Dollar Life Insurance Program currently provided as
an Executive of Jevic Transportation, Inc.
(E) Financial Planning / Tax Preparation. Executive will be
entitled to an annual reimbursement of expenses in conjunction
with personal financial planning and/or income tax return
preparation not to exceed $3,500.
(F) Executive Physical. Executive is entitled to an annual
physical examination plus travel expenses at the Mayo Clinic
Executive Health Program located in Scottsdale, Arizona.
(G) Country Club Membership. Executive is entitled to
reimbursement of up to $27,500 toward the initiation fee to
join a Country Club, plus up to $250 monthly toward such
club's dues.
<PAGE> 1
EXHIBIT 3
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of this fourth day of June, 1999 is made by and
among JEVIC TRANSPORTATION, INC., a New Jersey corporation (the "Company"),
YELLOW CORPORATION, a Delaware corporation ("Yellow"), and Brian J. Fitzpatrick,
(the "Executive").
WHEREAS, Yellow and the Company are currently engaged in the
negotiation of an Agreement and Plan of Merger (the "Purchase Agreement")
pursuant to which Yellow would, through an indirect wholly owned subsidiary,
acquire all the shares of common stock of the Company; and
WHEREAS, the Boards of Directors of the Company and Yellow have
approved the employment of the Executive on the terms and conditions set forth
in this Agreement; and
WHEREAS, the Executive is willing, for the considerations provided, to
continue in the employment of the Company on the terms and conditions set forth
in this Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment. The Company hereby agrees to continue to
employ the Executive, and the Executive hereby accepts such
continued employment, upon the terms and conditions set forth
in this Agreement. On and after the effective date of the
merger of the "Purchaser" (as defined in the Purchase
Agreement) into the Company contemplated by the Purchase
Agreement (the "Merger Date"), Yellow shall cause the
"Surviving Corporation" as defined in the Purchase Agreement
to satisfy the Company's obligations under this Agreement;
provided, however, that Yellow shall have no obligations or
liabilities under this Agreement unless and until the
Effective Date (as defined below) occurs. On and after the
Merger Date, said Surviving Corporation shall be the "Company"
for purposes of this Agreement.
2. Term. This Agreement shall become effective on, and the
term (the "Term") of the Executive's employment under this
Agreement shall commence on, the date on which the Purchaser
purchases shares of the Company's stock pursuant to a tender
offer (the "Effective Date") and shall continue until the date
of termination of the Executive's employment with the Company.
3. Position and Duties. During the Term, the Executive shall
serve as Senior Vice President - CFO of the Company, and shall
have such responsibilities and authority as is commensurate
with such office. The Executive shall devote substantially all
of his working time and efforts to the business and affairs of
the Company.
<PAGE> 2
4. Compensation. During the Term, the Company shall provide
the Executive with the following compensation and other
benefits:
(a) Base Salary. The Company shall pay the Executive
base salary at the initial rate of $191,200 per
annum, which shall be payable in accordance with the
standard payroll practices of the Company. At no time
during the Term shall the Executive's base salary be
decreased from the rate then in effect except with
the written consent of the Executive.
(b) Bonus. During the Term, the Executive shall
participate in the annual bonus program maintained
for the executive officers of the Company. The
Executive's target bonus for each fiscal year during
the Term shall be no less than 30% of his annual base
salary for that year.
(c) Other Company, Benefits. During the Term, the
Executive shall be entitled to participate in, and to
receive benefits under, the benefit plans and
programs that are at the applicable time available to
executives of the Company generally and on terms and
conditions that are no less favorable than those
applicable to executives of the Company generally.
(d) Stock Options. As of the Effective Date, Yellow
shall grant to the Executive an option to purchase
20,000 shares of common stock of Yellow with the
following principal terms: (i) an exercise price
equal to the closing price of Yellow common stock as
reported by NASDAQ on June 4, 1999, (ii) vesting and
becoming exercisable at the rate of 25% on the first
anniversary of the Effective Date, 25% on the second
anniversary, 25% on the third anniversary, and the
remaining 25% on the fourth anniversary, and (iii)
other terms and conditions substantially similar to
stock options granted to executives generally under
Yellow's 1996 Stock Option Plan. With respect to
calendar years beginning after the Effective Date,
the Executive during the Term shall participate in
Yellow's stock option plans on terms and conditions
substantially similar to those generally applicable
to executives of Yellow and its subsidiaries.
(e) Perquisites. On and after the Effective Date,
Yellow shall cause the Company during the Term to
provide to the Executive the perquisites listed in
Appendix A hereto.
<PAGE> 3
5. Right to Terminate Employment. The Company reserves the
right to terminate the Executive's employment hereunder at any
time, subject, however, to the termination procedures set
forth in Section 7 of the Amended and Restated Severance
Agreement dated as of June 4, 1999 between the Company and
the Executive (the "Severance Agreement") to the extent such
procedures are then applicable pursuant to the terms of the
Severance Agreement. The Executive reserves the right to
resign from employment with the Company at any time, subject,
however, to any limitations on such right that may then be
applicable pursuant to the terms of the Severance Agreement.
6. Relationship of this Agreement to Severance Agreement.
Nothing in this Agreement shall affect in any way the rights
and obligations of the Company and the Executive under the
Severance Agreement, except that the Executive hereby agrees
to the following modifications of the Severance Agreement,
effective as of the Effective Date:
(i) an act or failure to act constituting "Good Reason" as
described in subsection (i) of Section 15 (M) of the Severance
Agreement shall not be deemed to occur on or after the
Effective Date so long as the Executive has the title,
responsibilities and authority set forth in Section 3 of this
Agreement (notwithstanding changes in the Executive's status,
responsibilities and authority resulting from the Company's
ceasing to be a separate public company), and
(ii) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15 (M) of the
Severance Agreement shall not be deemed to occur by reason of
the cessation of the Executive's participation in the
Company's stock option and other stock-based plans so long as
Yellow complies with Section 4 (d) of this Agreement on and
after the Effective Date, and
(iii) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15(M) of the
Severance Agreement shall not be deemed to occur by reason of
the limitation of the Executive's target bonus to the level
provided for in Section 4 (b) of this Agreement, and
(iv) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15 (M) of the
Severance Agreement shall not be deemed to occur by reason of
the elimination or modification of any perquisites or fringe
benefits enjoyed by the Executive before the Effective Date
(other than benefits under any Company "employee benefit plan"
as defined in Section 3 (3) of the Employee Retirement Income
Security Act of 1974, as amended) so long as the Company
provides the perquisites set forth in Appendix A hereto, and
<PAGE> 4
(v) Yellow's execution of this Agreement shall be deemed to
fully satisfy the Company's obligations pursuant to Section
9.1 of the Severance Agreement.
7. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed
by the party against whom such waiver, modification or
discharge is sought to be enforced (with such signature, in
the case of the Company or Yellow, to be made by a duly
authorized officer thereof). No waiver by any party hereto at
any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any
party which are not expressly set forth in this Agreement. The
validity, interpretation, and construction of this Agreement
shall be governed by the laws of the State of New Jersey.
Payments provided for hereunder shall be paid net of
withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed.
IN WITNESS WHEREOF, this Agreement has been executed, as of
the date first written, on behalf of the Company by its duly
authorized officer, on behalf of Yellow by its duly authorized
officer, and by the Executive.
JEVIC TRANSPORTATION, INC
/s/ Karen B. Muhlschlegel By: /s/ Harry J. Muhlschlegel
- ------------------------------------- -------------------------------
Secretary
YELLOW CORPORATION
/s/ William F. Martin, Jr. By: /s/ H.A. Trucksess III
- ------------------------------------- -------------------------------
Secretary
EXECUTIVE
By: /s/ Brian J. Fitzpatrick
-------------------------------
<PAGE> 5
APPENDIX A
Under Section 4 (e) of the Employment Agreement between the Executive,
Jevic Transportation, Inc. and Yellow Corporation the following perquisites
shall be provided:
(A) Car Allowance. Executive shall be provided a car or car
allowance at least equal to that provided under Jevic
Transportation, Inc.'s policy dated March 5, 1996.
(B) Vacation. Executive will be entitled to annual vacation
at least equal to that currently provided as an employee of
Jevic Transportation under their current policy and practice.
(C) Supplemental Retirement Plan. Continued eligibility to
participate in Jevic Transportation's non-qualified
supplemental retirement arrangements through Fidelity
Investments.
(D) Split Dollar Life Insurance. Continued participation in
the Split Dollar Life Insurance Program currently provided as
an Executive of Jevic.
(E) Financial Planning / Tax Preparation. Executive will be
entitled to an annual reimbursement of expenses in conjunction
with personal financial planning and/or income tax return
preparation not to exceed $1,500.
(F) Executive Physical. Executive will be reimbursed up to
$350 annually for expenses in conjunction with a physical
examination. This benefit shall be in addition to any amounts
otherwise payable under Jevic's Medical Benefit Plan.
<PAGE> 1
EXHIBIT 4
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of this fourth day of June, 1999 is made by
and among JEVIC TRANSPORTATION, INC., a New Jersey corporation (the "Company"),
YELLOW CORPORATION, a Delaware corporation ("Yellow"), and Joseph A. Librizzi,
(the "Executive").
WHEREAS, Yellow and the Company are currently engaged in the
negotiation of an Agreement and Plan of Merger (the "Purchase Agreement")
pursuant to which Yellow would, through an indirect wholly owned subsidiary,
acquire all the shares of common stock of the Company; and
WHEREAS, the Boards of Directors of the Company and Yellow have
approved the employment of the Executive on the terms and conditions set forth
in this Agreement; and
WHEREAS, the Executive is willing, for the considerations provided, to
continue in the employment of the Company on the terms and conditions set forth
in this Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment. The Company hereby agrees to continue to employ
the Executive, and the Executive hereby accepts such continued
employment, upon the terms and conditions set forth in this
Agreement. On and after the effective date of the merger of the
"Purchaser" (as defined in the Purchase Agreement) into the Company
contemplated by the Purchase Agreement (the "Merger Date"), Yellow
shall cause the "Surviving Corporation" as defined in the Purchase
Agreement to satisfy the Company's obligations under this Agreement;
provided, however, that Yellow shall have no obligations or
liabilities under this Agreement unless and until the Effective Date
(as defined below) occurs. On and after the Merger Date, said
Surviving Corporation shall be the "Company" for purposes of this
Agreement.
2. Term. This Agreement shall become effective on, and the term
(the "Term") of the Executive's employment under this Agreement
shall commence on, the date on which the Purchaser purchases shares
of the Company's stock pursuant to a tender offer (the "Effective
Date") and shall continue until the date of termination of the
Executive's employment with the Company.
3. Position and Duties. During the Term, the Executive shall
serve as Senior Vice President - Marketing and Sales of the
Company, and shall have such responsibilities and authority as is
commensurate with such office. The Executive shall devote
substantially all of his working time and efforts to the business
and affairs of the Company.
<PAGE> 2
4. Compensation. During the Term, the Company shall provide the
Executive with the following compensation and other benefits:
(a) Base Salary. The Company shall pay the Executive base
salary at the initial rate of $154,200 per annum, which shall
be payable in accordance with the standard payroll practices
of the Company. At no time during the Term shall the
Executive's base salary be decreased from the rate then in
effect except with the written consent of the Executive.
(b) Bonus. During the Term, the Executive shall participate
in the annual bonus program maintained for the executive
officers of the Company. The Executive's target bonus for each
fiscal year during the Term shall be no less than 30% of his
annual base salary for that year.
(c) Other Company, Benefits. During the Term, the Executive
shall be entitled to participate in, and to receive benefits
under, the benefit plans and programs that are at the
applicable time available to executives of the Company
generally and on terms and conditions that are no less
favorable than those applicable to executives of the Company
generally.
(d) Stock Options. As of the Effective Date, Yellow shall
grant to the Executive an option to purchase 20,000 shares of
common stock of Yellow with the following principal terms: (i)
an exercise price equal to the closing price of Yellow common
stock as reported by NASDAQ on June 4, 1999, (ii) vesting and
becoming exercisable at the rate of 25% on the first
anniversary of the Effective Date, 25% on the second
anniversary, 25% on the third anniversary, and the remaining
25% on the fourth anniversary, and (iii) other terms and
conditions substantially similar to stock options granted to
executives generally under Yellow's 1996 Stock Option Plan.
With respect to calendar years beginning after the Effective
Date, the Executive during the Term shall participate in
Yellow's stock option plans on terms and conditions
substantially similar to those generally applicable to
executives of Yellow and its subsidiaries.
(e) Perquisites. On and after the Effective Date, Yellow
shall cause the Company during the Term to provide to the
Executive the perquisites listed in Appendix A hereto.
<PAGE> 3
5. Right to Terminate Employment. The Company reserves the right
to terminate the Executive's employment hereunder at any time,
subject, however, to the termination procedures set forth in
Section 7 of the Amended and Restated Severance Agreement dated as
of June 4, 1999 between the Company and the Executive (the
"Severance Agreement")to the extent such procedures are then
applicable pursuant to the terms of the Severance Agreement. The
Executive reserves the right to resign from employment with the
Company at any time, subject, however, to any limitations on such
right that may then be applicable pursuant to the terms of the
Severance Agreement.
6. Relationship of this Agreement to Severance Agreement. Nothing
in this Agreement shall affect in any way the rights and
obligations of the Company and the Executive under the Severance
Agreement, except that the Executive hereby agrees to the following
modifications of the Severance Agreement, effective as of the
Effective Date:
(i) an act or failure to act constituting "Good Reason" as
described in subsection (i) of Section 15 (M) of the Severance
Agreement shall not be deemed to occur on or after the Effective
Date so long as the Executive has the title, responsibilities and
authority set forth in Section 3 of this Agreement (notwithstanding
changes in the Executive's status, responsibilities and authority
resulting from the Company's ceasing to be a separate public
company), and
(ii) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15 (M) of the
Severance Agreement shall not be deemed to occur by reason of the
cessation of the Executive's participation in the Company's stock
option and other stock-based plans so long as Yellow complies with
Section 4 (d) of this Agreement on and after the Effective Date,
and
(iii) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15(M) of the
Severance Agreement shall not be deemed to occur by reason of the
limitation of the Executive's target bonus to the level provided
for in Section 4 (b) of this Agreement, and
(iv) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15 (M) of the
Severance Agreement shall not be deemed to occur by reason of the
elimination or modification of any perquisites or fringe benefits
enjoyed by the Executive before the Effective Date (other than
benefits under any Company "employee benefit plan" as defined in
Section 3 (3) of the Employee Retirement Income Security Act of
1974, as amended) so long as the Company provides the perquisites
set forth in Appendix A hereto, and
<PAGE> 4
(v) Yellow's execution of this Agreement shall be deemed to fully
satisfy the Company's obligations pursuant to Section 9.1 of the
Severance Agreement.
7. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the party against whom such
waiver, modification or discharge is sought to be enforced (with
such signature, in the case of the Company or Yellow, to be made by
a duly authorized officer thereof). No waiver by any party hereto
at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior
or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by any party which are not expressly set
forth in this Agreement. The validity, interpretation, and
construction of this Agreement shall be governed by the laws of the
State of New Jersey. Payments provided for hereunder shall be paid
net of withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed.
IN WITNESS WHEREOF, this Agreement has been executed, as of the
date first written, on behalf of the Company by its duly authorized
officer, on behalf of Yellow by its duly authorized officer, and by
the Executive.
JEVIC TRANSPORTATION, INC
/s/ Karen B. Muhlschlegel By: /s/ Harry J. Muhlschlegel
- ----------------------------------- -------------------------------------
Secretary
YELLOW CORPORATION
/s/ William F. Martin, Jr. By: /s/ H.A. Trucksess III
- ----------------------------------- -------------------------------------
Secretary
EXECUTIVE
By: /s/ Joseph A. Librizzi
-------------------------------------
<PAGE> 5
APPENDIX A
Under Section 4 (e) of the Employment Agreement between the Executive,
Jevic Transportation, Inc. and Yellow Corporation the following perquisites
shall be provided:
(A) Car Allowance. Executive shall be provided a car or car
allowance at least equal to that provided under Jevic
Transportation, Inc.'s policy dated March 5, 1996.
(B) Vacation. Executive will be entitled to annual vacation at
least equal to that currently provided as an employee of Jevic
Transportation under their current policy and practice.
(C) Supplemental Retirement Plan. Continued eligibility to
participate in Jevic Transportation's non-qualified supplemental
retirement arrangements through Fidelity Investments.
(D) Split Dollar Life Insurance. Continued participation in the
Split Dollar Life Insurance Program currently provided as an
Executive of Jevic.
(E) Financial Planning / Tax Preparation. Executive will be
entitled to an annual reimbursement of expenses in conjunction with
personal financial planning and/or income tax return preparation
not to exceed $1,500.
(F) Executive Physical. Executive will be reimbursed up to $350
annually for expenses in conjunction with a physical examination.
This benefit shall be in addition to any amounts otherwise payable
under Jevic's Medical Benefit Plan.
<PAGE> 1
EXHIBIT 5
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of this fourth day of June, 1999 is made by and
among JEVIC TRANSPORTATION, INC., a New Jersey corporation (the "Company"),
YELLOW CORPORATION, a Delaware corporation ("Yellow"), and Raymond M. Conlin,
(the "Executive").
WHEREAS, Yellow and the Company are currently engaged in the
negotiation of an Agreement and Plan of Merger (the "Purchase Agreement")
pursuant to which Yellow would, through an indirect wholly owned subsidiary,
acquire all the shares of common stock of the Company; and
WHEREAS, the Boards of Directors of the Company and Yellow have
approved the employment of the Executive on the terms and conditions set forth
in this Agreement; and
WHEREAS, the Executive is willing, for the considerations provided, to
continue in the employment of the Company on the terms and conditions set forth
in this Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment. The Company hereby agrees to continue to
employ the Executive, and the Executive hereby accepts such
continued employment, upon the terms and conditions set forth
in this Agreement. On and after the effective date of the
merger of the "Purchaser" (as defined in the Purchase
Agreement) into the Company contemplated by the Purchase
Agreement (the "Merger Date"), Yellow shall cause the
"Surviving Corporation" as defined in the Purchase Agreement
to satisfy the Company's obligations under this Agreement;
provided, however, that Yellow shall have no obligations or
liabilities under this Agreement unless and until the
Effective Date, (as defined below) occurs. On and after the
Merger Date, said Surviving Corporation shall be the "Company"
for purposes of this Agreement.
2. Term. This Agreement shall become effective on, and the
term (the "Term") of the Executive's employment under this
Agreement shall commence on, the date on which the Purchaser
purchases shares of the Company's stock pursuant to a tender
offer (the "Effective Date") and shall continue until the date
of termination of the Executive's employment with the Company.
3. Position and Duties. During the Term, the Executive
shall serve as Senior Vice President Administration of the
Company, and shall have such responsibilities and authority as
is commensurate with such office. The Executive shall devote
substantially all of his working time and efforts to the
business and affairs of the Company.
<PAGE> 2
4. Compensation. During the Term, the Company shall
provide the Executive with the following compensation and
other benefits:
(a) Base Salary. The Company shall pay the Executive
base salary at the initial rate of $135,000 per
annum, which shall be payable in accordance with the
standard payroll practices of the Company. At no time
during the Term shall the Executive's base salary be
decreased from the rate then in effect except with
the written consent of the Executive.
(b) Bonus. During the Term, the Executive shall
participate in the annual bonus program maintained
for the executive officers of the Company. The
Executive's target bonus for each fiscal year during
the Term shall be no less than 30% of his annual base
salary for that year.
(c) Other Company, Benefits. During the Term, the
Executive shall be entitled to participate in, and to
receive benefits under, the benefit plans and
programs that are at the applicable time available to
executives of the Company generally and on terms and
conditions that are no less favorable than those
applicable to executives of the Company generally.
(d) Stock Options. As of the Effective Date, Yellow
shall grant to the Executive an option to purchase
20,000 shares of common stock of Yellow with the
following principal terms: (i) an exercise price
equal to the closing price of Yellow common stock as
reported by NASDAQ on June 4, 1999, (ii) vesting and
becoming exercisable at the rate of 25% on the first
anniversary of the Effective Date, 25% on the second
anniversary, 25% on the third anniversary, and the
remaining 25% on the fourth anniversary, and (iii)
other terms and conditions substantially similar to
stock options granted to executives generally under
Yellow's 1996 Stock Option Plan. With respect to
calendar years beginning after the Effective Date,
the Executive during the Term shall participate in
Yellow's stock option plans on terms and conditions
substantially similar to those generally applicable
to executives of Yellow and its subsidiaries.
(e) Perquisites. On and after the Effective Date,
Yellow shall cause the Company during the Term to
provide to the Executive the perquisites listed in
Appendix A hereto.
<PAGE> 3
5. Right to Terminate Employment. The Company reserves the
right to terminate the Executive's employment hereunder at any
time, subject, however, to the termination procedures set
forth in Section 7 of the Amended and Restated Severance
Agreement dated as of June 4, 1999 between the Company and the
Executive (the "Severance Agreement") to the extent such
procedures are then applicable pursuant to the terms of the
Severance Agreement. The Executive reserves the right to
resign from employment with the Company at any time, subject,
however, to any limitations on such right that may then be
applicable pursuant to the terms of the Severance Agreement.
6. Relationship of this Agreement to Severance Agreement.
Nothing in this Agreement shall affect in any way the rights
and obligations of the Company and the Executive under the
Severance Agreement, except that the Executive hereby agrees
to the following modifications of the Severance Agreement,
effective as of the Effective Date:
(i) an act or failure to act constituting "Good Reason" as
described in subsection (i) of Section 15 (M) of the Severance
Agreement shall not be deemed to occur on or after the
Effective Date so long as the Executive has the title,
responsibilities and authority set forth in Section 3 of this
Agreement (notwithstanding changes in the Executive's status,
responsibilities and authority resulting from the Company's
ceasing to be a separate public company), and
(ii) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15 (M) of the
Severance Agreement shall not be deemed to occur by reason of
the cessation of the Executive's participation in the
Company's stock option and other stock-based plans so long as
Yellow complies with Section 4 (d) of this Agreement on and
after the Effective Date, and
(iii) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15(M) of the
Severance Agreement shall not be deemed to occur by reason of
the limitation of the Executive's target bonus to the level
provided for in Section 4 (b) of this Agreement, and
(iv) an act or failure to act constituting "Good Reason" as
described in subsection (v) or (vi) of Section 15 (M) of the
Severance Agreement shall not be deemed to occur by reason of
the elimination or modification of any perquisites or fringe
benefits enjoyed by the Executive before the Effective Date
(other than benefits under any Company "employee benefit plan"
as defined in Section 3 (3) of the Employee Retirement Income
Security Act of 1974, as amended) so long as the Company
provides the perquisites set forth in Appendix A hereto, and
<PAGE> 4
(v) Yellow's execution of this Agreement shall be deemed to
fully satisfy the Company's obligations pursuant to Section
9.1 of the Severance Agreement.
7. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed
by the party against whom such waiver, modification or
discharge is sought to be enforced (with such signature, in
the case of the Company or Yellow, to be made by a duly
authorized officer thereof). No waiver by any party hereto at
any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any
party which are not expressly set forth in this Agreement. The
validity, interpretation, and construction of this Agreement
shall be governed by the laws of the State of New Jersey.
Payments provided for hereunder shall be paid net of
withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed.
IN WITNESS WHEREOF, this Agreement has been executed, as of
the date first written, on behalf of the Company by its duly
authorized officer, on behalf of Yellow by its duly authorized
officer, and by the Executive.
JEVIC TRANSPORTATION, INC
/s/ Karen B. Muhlschlegel By: /s/ Harry J. Muhlschlegel
- ------------------------------------- --------------------------------
Secretary
YELLOW CORPORATION
/s/ William F. Martin, Jr. By: /s/ H.A. Trucksess III
- ------------------------------------- --------------------------------
Secretary
EXECUTIVE
By: /s/ Raymond M. Conlin
--------------------------------
<PAGE> 5
APPENDIX A
Under Section 4 (e) of the Employment Agreement between the Executive,
Jevic Transportation, Inc. and Yellow Corporation the following perquisites
shall be provided:
(A) Car Allowance. Executive shall be provided a car or car
allowance at least equal to that provided under Jevic
Transportation, Inc.'s policy dated March 5, 1996.
(B) Vacation. Executive will be entitled to annual vacation
at least equal to that currently provided as an employee of
Jevic Transportation under their current policy and practice.
(C) Supplemental Retirement Plan. Continued eligibility to
participate in Jevic Transportation's non-qualified
supplemental retirement arrangements through Fidelity
Investments.
(D) Split Dollar Life Insurance. Continued participation in
the Split Dollar Life Insurance Program currently provided as
an Executive of Jevic.
(E) Financial Planning/Tax Preparation. Executive will be
entitled to an annual reimbursement of expenses in conjunction
with personal financial planning and/or income tax return
preparation not to exceed $1,500.
(F) Executive Physical. Executive will be reimbursed up to
$350 annually for expenses in conjunction with a physical
examination. This benefit shall be in addition to any amounts
otherwise payable under Jevic's Medical Benefit Plan.
<PAGE> 1
EXHIBIT 6
AMENDED AND RESTATED
SEVERANCE AGREEMENT
THIS AGREEMENT is made by and between JEVIC TRANSPORTATION,
INC., a New Jersey corporation (the "Company"), and PAUL J. KARVOIS (the
"Executive").
WHEREAS, the Company considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control (as defined in the last Section hereof)
exists and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control; and
WHEREAS, the Company and Executive entered into a severance
agreement relating to the same matters, dated as of April 5, 1999 ("Prior
Agreement"); and
WHEREAS, the Company and Executive wish to and do hereby
amend and restate the Prior Agreement, which is specifically superseded by the
terms hereof;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, this Company and the Executive hereby agree
as follows:
1. Defined Terms. The definition of capitalized terms used
in, this Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the
date on which shares of common stock of the Company are purchased pursuant to
the tender offer by Yellow Corporation and/or a subsidiary of Yellow
Corporation ("Effective Date"), and shall continue in effect through December
31, 2001; provided, however, that commencing on January 1, 2002 and each
January 1 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than September 30 of the
preceding year, the Company or the Executive shall have given notice not to
extend this Agreement or a Change in Control shall have occurred prior to such
January 1; and further provided, however, if a Change in Control shall have
occurred during the term of this Agreement, this Agreement shall continue in
effect for a period ending on the last day of the twenty-fourth calendar month
beginning after the month in which such Change in Control occurred.
<PAGE> 2
3. Company's Covenants Summarized. To induce the Executive to
remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control and during the term of this Agreement. Except as
provided in Article 5, Section 9.1, or Section 6.2 hereof, no amount or benefit
shall be payable under this Agreement unless there shall have been (or,
pursuant to Section 6.1 hereof, there shall be deemed to have been) a
termination of the Executive's employment with the Company following a Change
in Control. This Agreement shall not be construed as creating an express or
implied contract of employment and, except as otherwise agreed in writing
between the Executive and the Company, the Executive shall not have any right
to be retained in the employ of the Company.
4. The Executive's Covenants.
4.1. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control
during the term of this Agreement, the Executive will remain in the employ of
the Company until the earliest of (i) a date which is three (3) months after
the date of such Potential Change in Control, (ii) the date of a Change in
Control, (iii) the date of termination by the Executive of the Executive's
employment for Good Reason (determined by treating the Potential Change in
Control as a Change in Control in applying the definition of Good Reason under
Section 15(M)(i) through (vii) hereof) or by reason of death, Disability or
retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.
4.2. While the Executive is employed by the Company and
for a period of one year after the effective date of Executive's termination of
employment if Executive's employment is terminated following a Change in
Control (or before a Change in Control but following a Potential Change in
Control under the circumstances set forth in Section 6.1) and Executive
receives any payment under Section 6.1 of this Agreement, the Executive
covenants and agrees that he will not, whether for himself or for any other
person, business, partnership, association, firm, company or corporation,
directly or indirectly, call upon, solicit, divert or take away or attempt to
solicit, divert or take away, any of the customers or employees of the Company
that are or were customers or employees at any time during his employment with
the Company. The Executive acknowledges that the Company would be irreparably
injured by a violation of this Section 4.2, and agrees that the Company, in
addition to other remedies available to it for such breach or threatened
breach, shall be entitled to a preliminary injunction, temporary restraining
order or other equitable relief restraining the Executive from any actual or
threatened breach of this Section 4.2 without any bond or other security being
required.
-2-
<PAGE> 3
5. Compensation Other Than Severance Payments.
5.1. Following a Change in Control and during the term of
this Agreement, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the Executive's full salary
to the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the
terms of any compensation or benefit plan, program or arrangement maintained by
the Company during such period, until the Executive's employment is terminated
by the Company for Disability. Nothing in this Section 5.1 shall entitle
Executive to any Company-provided insured or uninsured disability, sick pay or
other similar wage replacement benefits in addition to the Company's payment of
salary during the period of illness.
5.2. If the Executive's employment shall be terminated
for any reason following a Change in Control and during the term of this
Agreement, the Company shall pay the Executive's full salary to the Executive
through the Date of Termination at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable to
the Executive through the Date of Termination under the terms of any
compensation or benefit plan, program or arrangement maintained by the Company
during such period.
5.3. If the Executive's employment shall be terminated
for any reason following a Change in Control and during the term of this
Agreement, the Company shall pay the Executive's normal post-termination
compensation and benefits to the Executive and such payments become due. Such
post-termination compensation and benefits shall be determined under, and paid
in accordance with, this Company's retirement, insurance and other compensation
or benefit plans, programs and arrangements.
5.4. Whether or not the Executive's employment has been
terminated, following a Change in Control, the Company (or any successor to the
Company in connection with such Change in Control) shall upon the Executive's
demand purchase from the Executive any shares of Company or successor company
stock then held by the Executive (the "Shares"). The Company and any successor
shall not be under any such obligation at any time that there exists an
established market for the Shares. The Company also shall not be under any such
obligation at any time that the Executive's right to demand the purchase of the
Shares, or the exercise of that right, would prohibit pooling of interests
accounting in any acquisition of or by the Company. The price of such Shares
shall be the greater of their fair market value or the per share consideration
paid in connection with such Change in Control, if any. The purchase price for
such Shares shall be paid by the Company or any successor in a single sum of
cash within seven days following such demand, except as the Executive and
Company may agree otherwise.
5.5. Whether or not the Executive's employment is later
terminated, upon purchase of shares of common stock of the Company pursuant to
the tender offer by Yellow Corporation and/or a subsidiary of the Yellow
Corporation, the Company shall pay to the
-3-
<PAGE> 4
Executive a single sum of $315,000 less any required withholding as further
set forth in Section 11.
6. Severance Payments.
6.1. The Company shall pay the Executive the payments
described in this Section 6.1 (the "Severance Payments") upon the termination
of the Executive's employment following a Change in Control and during the term
of this Agreement, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of death or Disability more than six months following the Change in
Control, or (iii) by the Executive without Good Reason. The Company shall pay
the Executive the Severance Payments upon termination of the Executive's
employment following a Potential Change in Control but before a Change in
Control and during the term of this Agreement, in addition to the payments and
benefits described in Section 5 hereof, if:
(i) the termination is initiated, caused or directed
by any Person who has initiated a transaction the consummation of which would
result in a Change in Control; and
(ii) the termination would have been by the
Executive for Good Reason or by the Company without Cause if a Change in
Control had occurred on the date of the Potential Change in Control.
(A) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination and in lieu of any
severance benefit otherwise payable to the Executive, the Company shall pay to
the Executive a lump sum severance payment, in cash, equal to the Applicable
Multiplier times the sum of (i) the highest of the Executive's annual base
salary in effect immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based, or such salary in
effect immediately prior to the Change in Control, or such salary in effect
immediately prior to a Potential Change in Control, and (ii) the higher of (x)
the target bonus for the year in which the Notice of Termination is provided or
(y) the highest of the actual bonuses paid or payable to the Executive for any
of the five years completed immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan,
the Company shall pay to the Executive a lump sum amount, in cash, equal to the
sum of (i) any bonus amount which has been allocated or awarded to the
Executive for a completed fiscal year or other measuring period preceding the
Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof
or otherwise) and (ii) a pro rata portion to the Date of Termination of the
aggregate value of all contingent bonus awards to the Executive for all
uncompleted periods calculated as to each such award by assuming the
achievement of the target performance level
-4-
<PAGE> 5
within the performance range established with respect to such award and basing
such pro-rata portion upon the portion of the award period that has elapsed as
of the Date of Termination;
(C) For (i) a twelve (12) month period after the
Date of Termination if Executive has one year or less of continuous service as
an employee of the Company, (ii) a twenty-four (24) month period after the Date
of Termination if Executive has more than one year but not more than two years
of continuous service as an employee of the Company, and (iii) a thirty-six
(36) month period after the Date of Termination if Executive has more than two
years of continuous service as an employee of the Company, the Company shall
arrange to provide the Executive with life, disability, accident and health
insurance benefits (and specifically including Executive's split-dollar life
insurance arrangement now in effect), and all other material benefits or
perquisites substantially similar to those which the Executive is receiving
immediately prior to the Notice of Termination (without giving effect to any
reduction in such benefits subsequent to a Change in Control if such reduction
constitutes Good Reason); Notwithstanding any other provision of this
Agreement, the Company shall continue to fund Executive's split-dollar life
insurance arrangement until dividends payable under the policy are sufficient
to pay premiums under the policy. Benefits otherwise receivable by the
Executive pursuant to this Section 6.1(C) shall be reduced to the extent
comparable benefits are actually received by or made available to the Executive
without cost during the above-referenced period. In addition, any such benefits
actually received by the Executive shall be reported to the Company by the
Executive.
6.2. (A) Whether or not the Executive becomes
entitled to the Severance Payments, if any of the Total Payments will be
subject to the Excise Tax, the Company shall pay to the Executive an additional
amount (the "Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income tax and Excise Tax upon the payment provided
for by this Section 6.2, shall be equal to the excess of the Total Payments
over the payment provided for by this Section 6.2.
(B) For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amount of such Excise
Tax, (i) any payments or benefits received or to be received by the Executive
in connection with a Change in Control or the Executive's termination of
employment, whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person (the
"Total Payments"), shall be treated as "parachute payments" (within the meaning
of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel
selected by the Company's independent auditors and reasonably, acceptable to
the Executive, such payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of section 280G(b)(4)(A) of
the Code, and all "excess parachute payments" (within the meaning of section
280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless,
in the opinion of such tax counsel, such excess parachute payments (in whole or
in part) represent reasonable compensation for
-5-
<PAGE> 6
services actually rendered (within the meaning of section 280G(b)(4)(B) of the
Code), or are otherwise not subject to the Excise Tax, and (ii) the value of
any noncash benefits or any deferred payment or benefit shall be determined by
the Company's independent auditors in accordance with the principles of actions
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made, FICA taxes at the highest rate
applicable with respect to wages in excess of the Social Security taxable wage
base in effect for the year of payment, and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination (or such other time as is hereinafter
described), net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Executive's employment (or such other time as is
hereinafter described), the Executive shall repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by the
Executive to the extent that such repayment results in a reduction in Excise
Tax or a federal, state or local income tax deduction) plus interest on the
amount of such repayment at the rate provided in section 1274(b)(2)(3) of the
Code. In the event that the Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination of the Executive's
employment (or such other time as is hereinafter described) (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest, penalties or
addition payable by the Executive with respect to such excess) at the time that
the amount of such excess is finally determined. The Executive and the Company
shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Total Payments. If an Executive
who remains in the employ of the Company becomes entitled to the payment
provided for by this paragraph, such payment shall be made no later than the
later of (i) the fifth day following the date on which the Executive notifies
the Company that he is subject to the Excise Tax and (ii) twenty days prior to
the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof
(other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof
shall be made not later than the fifth day following the Date of Termination,
unless Executive elects a later date of payment for all or any part thereof;
provided, however, that, if the amounts of such payments cannot be finally
determined on or before such day, the Company shall pay to the Executive on
such day an estimate, as determined in good faith by the Company of the minimum
amount of such payments to which the Executive is clearly entitled and shall
pay the remainder of such payments (together
-6-
<PAGE> 7
with interest at the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(9) of the
Code). At the time that payments are made under this section, the Company shall
provide the Executive with a written statement setting forth the manner in
which such payments were calculated and the basis for such calculations
including, without limitation, any opinions or other advice the Company has
received from outside counsel, auditors or consultants (and any such opinions
or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all
legal fees and expenses incurred in good faith by the Executive as a result of
a termination of the Executive's employment following a Change in Control and
during the term of this Agreement (including all such fees and expenses, if
any, incurred in disputing in good faith any such termination or in seeking in
good faith to obtain or enforce any benefit or right provided by this Agreement
or in connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code to any payment or benefit provided
hereunder). For purposes of this Section 6.4, an Executive shall be deemed to
have acted in good faith unless an arbitrator finds that the Executive's action
resulting in such legal fees and expenses was excessive. Such payments shall be
made within five (5) business days after delivery of the Executive's written
request for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1. After a Change in Control and during the term of
this Agreement, any purported termination of the Executive's employment (other
than by reason of death) shall be communicated by written Notice of Termination
from one party hereto to the other party hereto in accordance with Section 10
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of Termination
for Cause issued by the Company is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (after reasonable
notice to the Executive and an opportunity for the Executive, together with the
Executive's Counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Executive engaged in conduct set forth in
clause (i) or (ii) of the definition of Cause herein, and specifying the
particulars thereof in detail.
-7-
<PAGE> 8
7.2. "Date of Termination," with respect to any purported
termination of the Executive's employment after a Change in Control and during
the term of this Agreement, shall mean (i) If the Executive's employment is
terminated for Disability, thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated by for any other reason, the
date specified in the Notice of Termination (which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except in
the case of a termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60)
days from the date such Notice of Termination is given).
7.3. If within fifteen (15) days after any Notice of
Termination is given or, if later, prior to the Date of Termination (as
determined without regard to this Section 7.3), either party notifies the other
party that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved, either by mutual
written agreement of the parties or by a final judgment, order or decree of a
court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall be extended
by a notice of dispute provided by the Executive only if such notice in given
in good faith and the Executive pursues the resolution of such dispute with
reasonable diligence.
7.4. If a purported termination occurs following a Change
in Control and during the term of this Agreement, and such termination is
disputed in accordance with Section 7.3 hereof, the Company shall continue to
pay the Executive the full compensation in effect when the notice giving rise
to the dispute was given (including, but not limited to, salary) and continue
the Executive as a participant in all compensation, benefit and insurance plans
in which the Executive was participating when the notice giving rise to the
dispute was given until the Date of Termination, determined in accordance with
Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all
other amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
6 or Section 7.4 hereof. Further, the amount of any payment or benefit provided
for in such Section 6 (other than Section 6.1(C)) or such Section 7.4 shall not
be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
-8-
<PAGE> 9
9. Successors; Binding Agreement.
9.1. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any such successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to compensation from
the Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death
of the Executive) if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or mailed by
United states registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other address
as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Jevic Transportation, Inc.
700 Creek Road
P.O. Box 5157
Delanco, NJ 08075
To the Executive:
Name
Address
City, State ZIP
-9-
<PAGE> 10
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall he deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, and construction of this Agreement
shall be governed by the laws of the State of New Jersey. Payments provided for
hereunder shall be paid net withholding required under federal, state or local
law and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under Sections 5, 6, and 7 which
arise during the term of this Agreement shall survive the expiration of the
term of this Agreement.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. Counterparts; Coordination with Employment Agreement.
13.1. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instruments.
13.2. The terms of this Agreement shall be coordinated
with and applied in conjunction with the terms of the Executive's employment
agreement, if any, with the Company. In general, it is the intent of the
parties that, subsequent to a Change in Control and during the term of this
Agreement, the provisions of this Agreement shall supersede and substitute for
those provisions of the employment agreement relating to the Executive's
entitlement to benefits in connection with any termination of the Executive's
employment, but shall not supersede for any period the provisions of such
employment agreement pertaining to the terms of the Executive's employment.
Except for circumstances relating to a termination of employment following a
Change in Control during the term of this Agreement, as provided for herein,
all terms and conditions of the Executive's employment with the Company shall
be governed by the terms of the Executive's employment agreement (including but
not limited to any such term granting additional years of service to the
Executive for purposes of any of the Company's employee benefit plans).
14. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and determined
by the Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing
and shall set forth the specific reasons for the denial and the specific
-10-
<PAGE> 11
provisions of this Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that the
Executive's claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Burlington County, New Jersey in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however,
that the Executive shall be entitled to seek specific performance of the
Executive's right to be paid until the Date of Termination during the pendency
of any dispute or controversy arising under or in connection with this
Agreement.
15. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated below:
(A) "Applicable Multiplier" means two, except as
otherwise specifically provided herein with the consent of the Executive.
(B) "Base Amount" shall have the meaning defined in
section 280G(b)(3) of the Code.
(C) "Board" shall mean the Board of Directors of the
Company.
(D) "Cause" for termination by the Company of the
Executive's employment, after any Potential Change in Control or Change in
Control, shall mean the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Executive pursuant to Section
7.1 hereof) after a written demand for substantial performance is delivered to
the Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties. For purposes of this definition, no act, or failure to act,
on the Executive's part shall be "willful" unless done, or omitted to be done,
by the Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the Company.
(E) A "Change in Control" shall be deemed to have
occurred if the events set forth in any one of the following paragraphs shall
have occurred:
(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 Securities Exchange Act of 1934, as amended (the "1934 Act")) of
"Beneficial Ownership" (as the term beneficial ownership is used for purposes
of Rule 13d-3 promulgated under the 1934 Act) of fifty
-11-
<PAGE> 12
percent (50%) or more of the combined voting power of the Company's then
outstanding voting securities (the "Voting Securities"); 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
corporation resulting from or surviving such merger, reorganization or
consolidation in substantially the same proportion as their ownership of the
Voting Securities immediately before such merger, reorganization or
consolidation, or (B) (1) a complete liquidation or dissolution of the Company
or (2) 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 corporation
resulting from or surviving such share exchange in substantially the same
proportion as the ownership of the Voting Securities outstanding immediately
before such share exchange.
Notwithstanding the foregoing, a Change in Control shall not
include any event, circumstance or transaction occurring during the six-month
period following a Potential Change in Control which Potential Change in
Control results from the action of any entity or group which includes the
Executive (a "Management Group").
(F) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time. References to specific sections of the code
shall include any successors thereto.
(G) "Company" shall mean Jevic Transportation, Inc.,
a New Jersey corporation, and any successor to its business or assets which
assumes and agrees to perform this Agreement by operation of law, or otherwise
(except in determining, under Section 15(E) hereof, whether or not any Change
in Control of the Company has occurred in connection with such succession).
(H) "Date of Termination" shall have the meaning
stated in Section 7.2 hereof.
(I) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment if the Executive is
absent from full-time employment and qualifies for disability benefits under
the Company's long-term disability plan
-12-
<PAGE> 13
(or would so qualify but for any waiting period under that plan). In the
absence of any such plan, the determination of Disability shall be made by the
Board.
(J) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(K) "Excise Tax" shall mean any excise tax imposed
under section 4999 of the Code.
(L) "Executive" shall mean the individual named in
the first paragraph of this Agreement.
(M) "Good Reason" for termination by the Executive
of the Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described in paragraph (i), (v), (vi) or (vii) hereof, such act
or failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(i) the assignment by the Company to the
Executive of any duties inconsistent with the Executive's status as an
executive of the Company or a material adverse alteration in the nature or
status of the Executive's responsibilities from those in effect immediately
prior to the Change in Control or Potential Change in Control or any change in
Executive's title or status;
(ii) any reduction by the Company in the
Executive's annual base salary as in affect on the date hereof or as the same
may be increased from time to time;
(iii) the relocation by the Company of its
principal executive offices to a location more than 30 miles from the location
of such office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the Company's principal
executive offices except for required travel on the Company's business to an
extent substantially consistent with the Executive's present business travel
obligations;
(iv) the failure by the Company to pay to the
Executive any portion of the Executive's current compensation, or to pay to the
Executive any portion of an installment of deferred compensation under any
deferred compensation program of the Company, within seven (7) days of the date
such compensation is due;
-13-
<PAGE> 14
(v) the failure by the Company to continue in
effect any compensation plan in which the Executive participates immediately
prior to the Change in Control which is material to the Executive's total
compensation, including but not limited to any bonus plan and any similar or
substitute plan adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to continue the
Executive's participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Change in Control;
(vi) the failure by the Company to continue to
provide the Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance, medical,
health and accident, disability or other material benefit or perquisite plan in
which the Executive was participating at the time of the Change in Control, and
specifically including those benefits set forth in Section 6.1(c) hereof, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of the Change in Control,
or the failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled on the basis of years of
service with the Company in accordance, with the Company's normal vacation
policy in effect at the time of the Change in Control; or
(vii) any purported termination by the Company of
the Executive's employment which is not effected for Cause and pursuant to a
Notice of Termination satisfying the requirements of Section 7.1; for purposes
of this Agreement, no such purported termination shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
(N) "Gross-Up Payment" shall have the meaning given
in Section 6.2 hereof.
(O) "Notice of Termination" shall have the meaning
stated in Section 7.1 hereof.
(P) "Person" shall have the meaning given in section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof; provided, however, that a Person shall not include (i) the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its subsidiaries, (iii)
an underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
-14-
<PAGE> 15
(Q) "Potential Change in Control" shall be deemed to
have occurred if the events set forth in any one of the following paragraphs
shall have occurred:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) the Company or any Person publicly announces
an intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(iii) any Person who both (x) is on the date
hereof or subsequently becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing at least 10% or more of the combined
voting power of the Company's then outstanding securities and (y) increases his
or her beneficial ownership of such securities by 5% or more over the
percentage so owned by such Person on the date hereof; or
(iv) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(R) "Severance Payments" shall mean those payments
described in Section 6.1 hereof.
(S) "Total Payments" shall mean those payments
described in Section 6.2 hereof.
16. Prior Agreements Superseded. Effective on the Effective
Date, this Agreement supersedes and replaces any previous Agreement between the
Company and Executive on the same subject.
IN WITNESS WHEREOF, this Agreement has been executed as of
the 4th day of June, 1999, on behalf of this Company by its duly authorized
officer and by the Executive.
ATTEST: JEVIC TRANSPORTATION, INC.
/s/ KAREN B. MUHLSCHLEGEL By: /s/ HARRY J. MUHLSCHLEGEL
- ----------------------------- --------------------------------
Secretary Harry J. Muhlschlegel
Chief Executive Officer
EXECUTIVE
By: /s/ PAUL J. KARVOIS
--------------------------------
Paul J. Karvois
-15-
<PAGE> 1
EXHIBIT 7
AMENDED AND RESTATED
SEVERANCE AGREEMENT
THIS AGREEMENT is made by and between JEVIC TRANSPORTATION, INC., a New
Jersey corporation (the "Company"), and BRIAN J. FITZPATRICK (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
Change in Control (as defined in the last Section hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control; and
WHEREAS, the Company and Executive entered into a severance agreement
relating to the same matters, dated as of April 5, 1999 ("Prior
Agreement"); and
WHEREAS, the Company and Executive wish to and do hereby amend and
restate the Prior Agreement, which is specifically superseded by the terms
hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, this Company and the Executive hereby agree as
follows:
1. Defined Terms. The definition of capitalized terms used in,
this Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
on which shares of common stock of the Company are purchased pursuant to the
tender offer by Yellow Corporation and/or a subsidiary of Yellow Corporation
("Effective Date"), and shall continue in effect through December 31, 2001;
provided, however, that commencing on January 1, 2002 and each January 1
thereafter, the term of this Agreement shall automatically be extended for one
additional year unless, not later than September 30 of the preceding year, the
Company or the Executive shall have given notice not to extend this Agreement or
a Change in Control shall have occurred prior to such January 1; and further
provided, however, if a Change in Control shall have occurred during the term of
this Agreement, this Agreement shall continue in effect for a period ending on
the last day of the twenty-fourth calendar month beginning after the month in
which such Change in Control occurred.
<PAGE> 2
3. Company's Covenants Summarized. To induce the Executive to
remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control and during the term of this Agreement. Except as
provided in Article 5, Section 9.1, or Section 6.2 hereof, no amount or benefit
shall be payable under this Agreement unless there shall have been (or, pursuant
to Section 6.1 hereof, there shall be deemed to have been) a termination of the
Executive's employment with the Company following a Change in Control. This
Agreement shall not be construed as creating an express or implied contract of
employment and, except as otherwise agreed in writing between the Executive and
the Company, the Executive shall not have any right to be retained in the employ
of the Company.
4. The Executive's Covenants.
4.1. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control
during the term of this Agreement, the Executive will remain in the employ of
the Company until the earliest of (i) a date which is three (3) months after the
date of such Potential Change in Control, (ii) the date of a Change in Control,
(iii) the date of termination by the Executive of the Executive's employment for
Good Reason (determined by treating the Potential Change in Control as a Change
in Control in applying the definition of Good Reason under Section 15(M)(i)
through (vii) hereof) or by reason of death, Disability or retirement, or (iv)
the termination by the Company of the Executive's employment for any reason.
4.2. While the Executive is employed by the Company and
for a period of one year after the effective date of Executive's termination of
employment if Executive's employment is terminated following a Change in Control
(or before a Change in Control but following a Potential Change in Control under
the circumstances set forth in Section 6.1) and Executive receives any payment
under Section 6.1 of this Agreement, the Executive covenants and agrees that he
will not, whether for himself or for any other person, business, partnership,
association, firm, company or corporation, directly or indirectly, call upon,
solicit, divert or take away or attempt to solicit, divert or take away, any of
the customers or employees of the Company that are or were customers or
employees at any time during his employment with the Company. The Executive
acknowledges that the Company would be irreparably injured by a violation of
this Section 4.2, and agrees that the Company, in addition to other remedies
available to it for such breach or threatened breach, shall be entitled to a
preliminary injunction, temporary restraining order or other equitable relief
restraining the Executive from any actual or threatened breach of this Section
4.2 without any bond or other security being required.
-2-
<PAGE> 3
5. Compensation Other Than Severance Payments.
5.1. Following a Change in Control and during the term of
this Agreement, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the Executive's full salary to
the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the
terms of any compensation or benefit plan, program or arrangement maintained by
the Company during such period, until the Executive's employment is terminated
by the Company for Disability. Nothing in this Section 5.1 shall entitle
Executive to any Company-provided insured or uninsured disability, sick pay or
other similar wage replacement benefits in addition to the Company's payment of
salary during the period of illness.
5.2. If the Executive's employment shall be terminated for
any reason following a Change in Control and during the term of this Agreement,
the Company shall pay the Executive's full salary to the Executive through the
Date of Termination at the rate in effect at the time the Notice of Termination
is given, together with all compensation and benefits payable to the Executive
through the Date of Termination under the terms of any compensation or benefit
plan, program or arrangement maintained by the Company during such period.
5.3. If the Executive's employment shall be terminated for
any reason following a Change in Control and during the term of this Agreement,
the Company shall pay the Executive's normal post-termination compensation and
benefits to the Executive and such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
with, this Company's retirement, insurance and other compensation or benefit
plans, programs and arrangements.
5.4. Whether or not the Executive's employment has been
terminated, following a Change in Control, the Company (or any successor to the
Company in connection with such Change in Control) shall upon the Executive's
demand purchase from the Executive any shares of Company or successor company
stock then held by the Executive (the "Shares"). The Company and any successor
shall not be under any such obligation at any time that there exists an
established market for the Shares. The Company also shall not be under any such
obligation at any time that the Executive's right to demand the purchase of the
Shares, or the exercise of that right, would prohibit pooling of interests
accounting in any acquisition of or by the Company. The price of such Shares
shall be the greater of their fair market value or the per share consideration
paid in connection with such Change in Control, if any. The purchase price for
such Shares shall be paid by the Company or any successor in a single sum of
cash within seven days following such demand, except as the Executive and
Company may agree otherwise.
5.5. Whether or not the Executive's employment is later
terminated, upon purchase of shares of common stock of the Company pursuant to
the tender offer by Yellow Corporation and/or a subsidiary of Yellow
-3-
<PAGE> 4
Corporation, the Company shall pay to the Executive a single sum of $280,000
less any required withholding as further set forth in Section 11.
6. Severance Payments.
6.1. The Company shall pay the Executive the payments
described in this Section 6.1 (the "Severance Payments") upon the termination of
the Executive's employment following a Change in Control and during the term of
this Agreement, in addition to the payments and benefits described in Section 5
hereof, unless such termination is (i) by the Company for Cause, (ii) by reason
of death or Disability more than six months following the Change in Control, or
(iii) by the Executive without Good Reason. The Company shall pay the Executive
the Severance Payments upon termination of the Executive's employment following
a Potential Change in Control but before a Change in Control and during the term
of this Agreement, in addition to the payments and benefits described in Section
5 hereof, if:
(i) the termination is initiated, caused or
directed by any Person who has initiated a transaction the consummation of which
would result in a Change in Control; and
(ii) the termination would have been by the
Executive for Good Reason or by the Company without Cause if a Change in Control
had occurred on the date of the Potential Change in Control.
(A) In lieu of any further salary payments to
the Executive for periods subsequent to the Date of Termination and in lieu of
any severance benefit otherwise payable to the Executive, the Company shall pay
to the Executive a lump sum severance payment, in cash, equal to the Applicable
Multiplier times the sum of (i) the highest of the Executive's annual base
salary in effect immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based, or such salary in
effect immediately prior to the Change in Control, or such salary in effect
immediately prior to a Potential Change in Control, and (ii) the higher of (x)
the target bonus for the year in which the Notice of Termination is provided or
(y) the highest of the actual bonuses paid or payable to the Executive for any
of the five years completed immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus
plan, the Company shall pay to the Executive a lump sum amount, in cash, equal
to the sum of (i) any bonus amount which has been allocated or awarded to the
Executive for a completed fiscal year or other measuring period preceding the
Date of Termination but has not yet been paid (pursuant to Section 5.2 hereof or
otherwise) and (ii) a pro rata portion to the Date of Termination of the
aggregate value of all contingent bonus awards to the Executive for all
uncompleted periods calculated as to each such award by assuming the achievement
of the target performance level
-4-
<PAGE> 5
within the performance range established with respect to such award and basing
such pro-rata portion upon the portion of the award period that has elapsed as
of the Date of Termination;
(C) For (i) a twelve (12) month period after the
Date of Termination if Executive has one year or less of continuous service as
an employee of the Company, (ii) a twenty-four (24) month period after the Date
of Termination if Executive has more than one year but not more than two years
of continuous service as an employee of the Company, and (iii) a thirty-six (36)
month period after the Date of Termination if Executive has more than two years
of continuous service as an employee of the Company, the Company shall arrange
to provide the Executive with life, disability, accident and health insurance
benefits (and specifically including Executive's split-dollar life insurance
arrangement now in effect), and all other material benefits or perquisites
substantially similar to those which the Executive is receiving immediately
prior to the Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control if such reduction constitutes
Good Reason); Notwithstanding any other provision of this Agreement, the Company
shall continue to fund Executive's split-dollar life insurance arrangement until
dividends payable under the policy are sufficient to pay premiums under the
policy. Benefits otherwise receivable by the Executive pursuant to this Section
6.1(C) shall be reduced to the extent comparable benefits are actually received
by or made available to the Executive without cost during the above-referenced
period. In addition, any such benefits actually received by the Executive shall
be reported to the Company by the Executive.
6.2. (A) Whether or not the Executive becomes entitled to
the Severance Payments, if any of the Total Payments will be subject to the
Excise Tax, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments and any federal, state and
local income tax and Excise Tax upon the payment provided for by this Section
6.2, shall be equal to the excess of the Total Payments over the payment
provided for by this Section 6.2.
(B) For purposes of determining whether any of
the Total Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any payments or benefits received or to be received by the
Executive in connection with a Change in Control or the Executive's termination
of employment, whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any Person whose actions result
in a Change in Control or any Person affiliated with the Company or such Person
(the "Total Payments"), shall be treated as "parachute payments" (within the
meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel
selected by the Company's independent auditors and reasonably, acceptable to the
Executive, such payments or benefits (in whole or in part) do not constitute
parachute payments, including by reason of section 280G(b)(4)(A) of the Code,
and all "excess parachute payments" (within the meaning of section 280G(b)(1) of
the Code) shall be treated as subject to the Excise Tax unless, in the opinion
of such tax counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for
-5-
<PAGE> 6
services actually rendered (within the meaning of section 280G(b)(4)(B) of the
Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any
noncash benefits or any deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the principles of actions
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made, FICA taxes at the highest rate
applicable with respect to wages in excess of the Social Security taxable wage
base in effect for the year of payment, and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination (or such other time as is hereinafter
described), net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account hereunder
at the time of termination of the Executive's employment (or such other time as
is hereinafter described), the Executive shall repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by the
Executive to the extent that such repayment results in a reduction in Excise Tax
or a federal, state or local income tax deduction) plus interest on the amount
of such repayment at the rate provided in section 1274(b)(2)(3) of the Code. In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of the Executive's employment
(or such other time as is hereinafter described) (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or addition payable by the
Executive with respect to such excess) at the time that the amount of such
excess is finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for Excise
Tax with respect to the Total Payments. If an Executive who remains in the
employ of the Company becomes entitled to the payment provided for by this
paragraph, such payment shall be made no later than the later of (i) the fifth
day following the date on which the Executive notifies the Company that he is
subject to the Excise Tax and (ii) twenty days prior to the date on which the
Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof
(other than Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof
shall be made not later than the fifth day following the Date of Termination,
unless Executive elects a later date of payment for all or any part thereof;
provided, however, that, if the amounts of such payments cannot be finally
determined on or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Company of the minimum
amount of such payments to which the Executive is clearly entitled and shall pay
the remainder of such payments (together
-6-
<PAGE> 7
with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth (5th) business day after demand by the Company (together with interest
at the rate provided in section 1274(b)(2)(9) of the Code). At the time that
payments are made under this section, the Company shall provide the Executive
with a written statement setting forth the manner in which such payments were
calculated and the basis for such calculations including, without limitation,
any opinions or other advice the Company has received from outside counsel,
auditors or consultants (and any such opinions or advice which are in writing
shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal
fees and expenses incurred in good faith by the Executive as a result of a
termination of the Executive's employment following a Change in Control and
during the term of this Agreement (including all such fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code to any payment or benefit provided
hereunder). For purposes of this Section 6.4, an Executive shall be deemed to
have acted in good faith unless an arbitrator finds that the Executive's action
resulting in such legal fees and expenses was excessive. Such payments shall be
made within five (5) business days after delivery of the Executive's written
request for payment accompanied with such evidence of fees and expenses incurred
as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1. After a Change in Control and during the term of this
Agreement, any purported termination of the Executive's employment (other than
by reason of death) shall be communicated by written Notice of Termination from
one party hereto to the other party hereto in accordance with Section 10 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. Further, a Notice of Termination for Cause issued by
the Company is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board which was called and held for the purpose
of considering such termination (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive's Counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the Executive engaged in conduct set forth in clause (i) or (ii) of the
definition of Cause herein, and specifying the particulars thereof in detail.
-7-
<PAGE> 8
7.2. "Date of Termination," with respect to any purported
termination of the Executive's employment after a Change in Control and during
the term of this Agreement, shall mean (i) If the Executive's employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated by for any other reason, the
date specified in the Notice of Termination (which, in the case of a termination
by the Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive, shall
not be less than fifteen (15) days nor more than sixty (60) days from the date
such Notice of Termination is given).
7.3. If within fifteen (15) days after any Notice of
Termination is given or, if later, prior to the Date of Termination (as
determined without regard to this Section 7.3), either party notifies the other
party that a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally resolved, either by mutual
written agreement of the parties or by a final judgment, order or decree of a
court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall be extended by
a notice of dispute provided by the Executive only if such notice in given in
good faith and the Executive pursues the resolution of such dispute with
reasonable diligence.
7.4. If a purported termination occurs following a Change
in Control and during the term of this Agreement, and such termination is
disputed in accordance with Section 7.3 hereof, the Company shall continue to
pay the Executive the full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given until the Date of Termination, determined in accordance with Section
7.3 hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section 6
or Section 7.4 hereof. Further, the amount of any payment or benefit provided
for in such Section 6 (other than Section 6.1(C)) or such Section 7.4 shall not
be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
-8-
<PAGE> 9
9. Successors; Binding Agreement.
9.1. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any such successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
9.2. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when personally delivered or mailed by United
states registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
To the Company:
Jevic Transportation, Inc.
700 Creek Road
P.O. Box 5157
Delanco, NJ 08075
To the Executive:
Name
Address
City, State ZIP
-9-
<PAGE> 10
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall he deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, and construction of this Agreement shall be governed by the laws
of the State of New Jersey. Payments provided for hereunder shall be paid net
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 5, 6, and 7 which arise during the term of this
Agreement shall survive the expiration of the term of this Agreement.
12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts; Coordination with Employment Agreement.
13.1. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instruments.
13.2. The terms of this Agreement shall be coordinated with
and applied in conjunction with the terms of the Executive's employment
agreement, if any, with the Company. In general, it is the intent of the parties
that, subsequent to a Change in Control and during the term of this Agreement,
the provisions of this Agreement shall supersede and substitute for those
provisions of the employment agreement relating to the Executive's entitlement
to benefits in connection with any termination of the Executive's employment,
but shall not supersede for any period the provisions of such employment
agreement pertaining to the terms of the Executive's employment. Except for
circumstances relating to a termination of employment following a Change in
Control during the term of this Agreement, as provided for herein, all terms and
conditions of the Executive's employment with the Company shall be governed by
the terms of the Executive's employment agreement (including but not limited to
any such term granting additional years of service to the Executive for purposes
of any of the Company's employee benefit plans).
14. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and determined
by the Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific
-10-
<PAGE> 11
provisions of this Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Burlington County, New Jersey in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that the
Executive shall be entitled to seek specific performance of the Executive's
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(A) "Applicable Multiplier" means two, except as
otherwise specifically provided herein with the consent of the Executive.
(B) "Base Amount" shall have the meaning defined
in section 280G(b)(3) of the Code.
(C) "Board" shall mean the Board of Directors of
the Company.
(D) "Cause" for termination by the Company of
the Executive's employment, after any Potential Change in Control or Change in
Control, shall mean the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)
after a written demand for substantial performance is delivered to the Executive
by the Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive's
duties. For purposes of this definition, no act, or failure to act, on the
Executive's part shall be "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
act, or failure to act, was in the best interest of the Company.
(E) A "Change in Control" shall be deemed to
have occurred if the events set forth in any one of the following paragraphs
shall have occurred:
(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 Securities Exchange Act of 1934, as amended (the
"1934 Act")) of "Beneficial Ownership" (as the term beneficial ownership is used
for purposes of Rule 13d-3 promulgated under the 1934 Act) of fifty
-11-
<PAGE> 12
percent (50%) or more of the combined voting power of the Company's then
outstanding voting securities (the "Voting Securities"); 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 corporation resulting from or surviving such merger,
reorganization or consolidation in substantially the same proportion as their
ownership of the Voting Securities immediately before such merger,
reorganization or consolidation, or (B) (1) a complete liquidation or
dissolution of the Company or (2) 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
corporation resulting from or surviving such share exchange in substantially the
same proportion as the ownership of the Voting Securities outstanding
immediately before such share exchange.
Notwithstanding the foregoing, a Change in Control shall not
include any event, circumstance or transaction occurring during the six-month
period following a Potential Change in Control which Potential Change in Control
results from the action of any entity or group which includes the Executive (a
"Management Group").
(F) "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time. References to specific sections of the
code shall include any successors thereto.
(G) "Company" shall mean Jevic Transportation,
Inc., a New Jersey corporation, and any successor to its business or assets
which assumes and agrees to perform this Agreement by operation of law, or
otherwise (except in determining, under Section 15(E) hereof, whether or not any
Change in Control of the Company has occurred in connection with such
succession).
(H) "Date of Termination" shall have the meaning
stated in Section 7.2 hereof.
(I) "Disability" shall be deemed the reason for
the termination by the Company of the Executive's employment if the Executive is
absent from full-time employment and qualifies for disability benefits under the
Company's long-term disability plan
-12-
<PAGE> 13
(or would so qualify but for any waiting period under that plan). In the absence
of any such plan, the determination of Disability shall be made by the Board.
(J) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(K) "Excise Tax" shall mean any excise tax
imposed under section 4999 of the Code.
(L) "Executive" shall mean the individual named
in the first paragraph of this Agreement.
(M) "Good Reason" for termination by the
Executive of the Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described in paragraph (i), (v), (vi) or (vii) hereof, such act
or failure to act is corrected prior to the Date of Termination specified in the
Notice of Termination given in respect thereof:
(i) the assignment by the Company to
the Executive of any duties inconsistent with the Executive's status as an
executive of the Company or a material adverse alteration in the nature or
status of the Executive's responsibilities from those in effect immediately
prior to the Change in Control or Potential Change in Control or any change in
Executive's title or status;
(ii) any reduction by the Company in the
Executive's annual base salary as in affect on the date hereof or as the same
may be increased from time to time;
(iii) the relocation by the Company of
its principal executive offices to a location more than 30 miles from the
location of such office immediately prior to the Change in Control or the
Company's requiring the Executive to be based anywhere other than the Company's
principal executive offices except for required travel on the Company's business
to an extent substantially consistent with the Executive's present business
travel obligations;
(iv) the failure by the Company to pay
to the Executive any portion of the Executive's current compensation, or to pay
to the Executive any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within seven (7) days of the
date such compensation is due;
(v) the failure by the Company to
continue in effect any compensation plan in which the Executive participates
immediately prior to the Change in
-13-
<PAGE> 14
Control which is material to the Executive's total compensation, including but
not limited to any bonus plan and any similar or substitute plan adopted prior
to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such plan,
or the failure by the Company to continue the Executive's participation therein
(or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level of the
Executive's participation relative to other participants, as existed at the time
of the Change in Control;
(vi) the failure by the Company to
continue to provide the Executive with benefits substantially similar to those
enjoyed by the Executive under any of the Company's pension, life insurance,
medical, health and accident, disability or other material benefit or perquisite
plan in which the Executive was participating at the time of the Change in
Control, and specifically including those benefits set forth in Section 6.1(c)
hereof, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive the Executive of
any material fringe benefit enjoyed by the Executive at the time of the Change
in Control, or the failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is entitled on the basis of
years of service with the Company in accordance, with the Company's normal
vacation policy in effect at the time of the Change in Control; or
(vii) any purported termination by the
Company of the Executive's employment which is not effected for Cause and
pursuant to a Notice of Termination satisfying the requirements of Section 7.1;
for purposes of this Agreement, no such purported termination shall be
effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or failure
to act constituting Good Reason hereunder.
(N) "Gross-Up Payment" shall have the meaning
given in Section 6.2 hereof.
(O) "Notice of Termination" shall have the
meaning stated in Section 7.1 hereof.
(P) "Person" shall have the meaning given in
section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof; provided, however, that a Person shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
-14-
<PAGE> 15
(Q) "Potential Change in Control" shall be
deemed to have occurred if the events set forth in any one of the following
paragraphs shall have occurred:
(i) the Company enters into an
agreement, the consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(iii) any Person who both (x) is on the
date hereof or subsequently becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing at least 10% or more of
the combined voting power of the Company's then outstanding securities and (y)
increases his or her beneficial ownership of such securities by 5% or more over
the percentage so owned by such Person on the date hereof; or
(iv) the Board adopts a resolution to
the effect that, for purposes of this Agreement, a Potential Change in Control
has occurred.
(R) "Severance Payments" shall mean those
payments described in Section 6.1 hereof.
(S) "Total Payments" shall mean those payments
described in Section 6.2 hereof.
16. Prior Agreements Superseded. Effective on the Effective Date,
this Agreement supersedes and replaces any previous Agreement between the
Company and Executive on the same subject.
IN WITNESS WHEREOF, this Agreement has been executed as of the 4th day
of June, 1999, on behalf of this Company by its duly authorized officer and by
the Executive.
ATTEST: JEVIC TRANSPORTATION, INC.
/s/ KAREN B. MUHLSCHLEGEL By: /s/ HARRY J. MUHLSCHLEGEL
- ------------------------------- ---------------------------------
Secretary Harry J. Muhlschlegel
Chief Executive Officer
EXECUTIVE
By: /s/ BRIAN J. FITZPATRICK
---------------------------------
Brian J. Fitzpatrick
-15-
<PAGE> 1
EXHIBIT 8
AMENDED AND RESTATED
SEVERANCE AGREEMENT
THIS AGREEMENT is made by and between JEVIC TRANSPORTATION, INC., a
New Jersey corporation (the "Company"), and JOSEPH A. LIBRIZZI (the
"Executive").
WHEREAS, the Company considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control (as defined in the last Section hereof)
exists and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control; and
WHEREAS, the Company and Executive entered into a severance agreement
relating to the same matters, dated as of April 5, 1999 ("Prior Agreement"); and
WHEREAS, the Company and Executive wish to and do hereby amend and
restate the Prior Agreement, which is specifically superseded by the terms
hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, this Company and the Executive hereby agree as
follows:
1. Defined Terms. The definition of capitalized terms used in, this
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date on
which shares of common stock of the Company are purchased pursuant to the
tender offer by Yellow Corporation and/or a subsidiary of Yellow Corporation
("Effective Date"), and shall continue in effect through December 31, 2001;
provided, however, that commencing on January 1, 2002 and each January 1
thereafter, the term of this Agreement shall automatically be extended for one
additional year unless, not later than September 30 of the preceding year, the
Company or the Executive shall have given notice not to extend this Agreement
or a Change in Control shall have occurred prior to such January 1; and further
provided, however, if a Change in Control shall have occurred during the term
of this Agreement, this Agreement shall continue in effect for a period ending
on the last day of the twenty-fourth calendar month beginning after the month
in which such Change in Control occurred.
<PAGE> 2
3. Company's Covenants Summarized. To induce the Executive to remain
in the employ of the Company and in consideration of the Executive's covenants
set forth in Section 4 hereof, the Company agrees, under the conditions
described herein, to pay the Executive the Severance Payments described in
Section 6.1 hereof and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated following a
Change in Control and during the term of this Agreement. Except as provided in
Article 5, Section 9.1, or Section 6.2 hereof, no amount or benefit shall be
payable under this Agreement unless there shall have been (or, pursuant to
Section 6.1 hereof, there shall be deemed to have been) a termination of the
Executive's employment with the Company following a Change in Control. This
Agreement shall not be construed as creating an express or implied contract of
employment and, except as otherwise agreed in writing between the Executive and
the Company, the Executive shall not have any right to be retained in the
employ of the Company.
4. The Executive's Covenants.
4.1. The Executive agrees that, subject to the terms and conditions
of this Agreement, in the event of a Potential Change in Control during the
term of this Agreement, the Executive will remain in the employ of the Company
until the earliest of (i) a date which is three (3) months after the date of
such Potential Change in Control, (ii) the date of a Change in Control, (iii)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined by treating the Potential Change in Control as a Change in
Control in applying the definition of Good Reason under Section 15(M)(i)
through (vii) hereof) or by reason of death, Disability or retirement, or (iv)
the termination by the Company of the Executive's employment for any reason.
4.2. While the Executive is employed by the Company and for a
period of one year after the effective date of Executive's termination of
employment if Executive's employment is terminated following a Change in
Control (or before a Change in Control but following a Potential Change in
Control under the circumstances set forth in Section 6.1) and Executive
receives any payment under Section 6.1 of this Agreement, the Executive
covenants and agrees that he will not, whether for himself or for any other
person, business, partnership, association, firm, company or corporation,
directly or indirectly, call upon, solicit, divert or take away or attempt to
solicit, divert or take away, any of the customers or employees of the Company
that are or were customers or employees at any time during his employment with
the Company. The Executive acknowledges that the Company would be irreparably
injured by a violation of this Section 4.2, and agrees that the Company, in
addition to other remedies available to it for such breach or threatened
breach, shall be entitled to a preliminary injunction, temporary restraining
order or other equitable relief restraining the Executive from any actual or
threatened breach of this Section 4.2 without any bond or other security being
required.
-2-
<PAGE> 3
5. Compensation Other Than Severance Payments.
5.1. Following a Change in Control and during the term of this
Agreement, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the Executive's full salary
to the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the
terms of any compensation or benefit plan, program or arrangement maintained by
the Company during such period, until the Executive's employment is terminated
by the Company for Disability. Nothing in this Section 5.1 shall entitle
Executive to any Company-provided insured or uninsured disability, sick pay or
other similar wage replacement benefits in addition to the Company's payment of
salary during the period of illness.
5.2. If the Executive's employment shall be terminated for any
reason following a Change in Control and during the term of this Agreement, the
Company shall pay the Executive's full salary to the Executive through the Date
of Termination at the rate in effect at the time the Notice of Termination is
given, together with all compensation and benefits payable to the Executive
through the Date of Termination under the terms of any compensation or benefit
plan, program or arrangement maintained by the Company during such period.
5.3. If the Executive's employment shall be terminated for any
reason following a Change in Control and during the term of this Agreement, the
Company shall pay the Executive's normal post-termination compensation and
benefits to the Executive and such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
with, this Company's retirement, insurance and other compensation or benefit
plans, programs and arrangements.
5.4. Whether or not the Executive's employment has been terminated,
following a Change in Control, the Company (or any successor to the Company in
connection with such Change in Control) shall upon the Executive's demand
purchase from the Executive any shares of Company or successor company stock
then held by the Executive (the "Shares"). The Company and any successor shall
not be under any such obligation at any time that there exists an established
market for the Shares. The Company also shall not be under any such obligation
at any time that the Executive's right to demand the purchase of the Shares, or
the exercise of that right, would prohibit pooling of interests accounting in
any acquisition of or by the Company. The price of such Shares shall be the
greater of their fair market value or the per share consideration paid in
connection with such Change in Control, if any. The purchase price for such
Shares shall be paid by the Company or any successor in a single sum of cash
within seven days following such demand, except as the Executive and Company
may agree otherwise.
5.5. Whether or not the Executive's employment is later terminated,
upon purchase of shares of common stock of the Company pursuant to the tender
offer by Yellow
-3-
<PAGE> 4
Corporation and/or a subsidiary of Yellow Corporation, the Company shall pay to
the Executive a single sum of $225,000 less any required withholding as
further set forth in Section 11.
6. Severance Payments.
6.1. The Company shall pay the Executive the payments described in
this Section 6.1 (the "Severance Payments") upon the termination of the
Executive's employment following a Change in Control and during the term of
this Agreement, in addition to the payments and benefits described in Section 5
hereof, unless such termination is (i) by the Company for Cause, (ii) by reason
of death or Disability more than six months following the Change in Control, or
(iii) by the Executive without Good Reason. The Company shall pay the Executive
the Severance Payments upon termination of the Executive's employment following
a Potential Change in Control but before a Change in Control and during the
term of this Agreement, in addition to the payments and benefits described in
Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any
Person who has initiated a transaction the consummation of which would result
in a Change in Control; and
(ii) the termination would have been by the Executive for Good
Reason or by the Company without Cause if a Change in Control had occurred on
the date of the Potential Change in Control.
(A) In lieu of any further salary payments to the Executive
for periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive, the Company shall pay to the
Executive a lump sum severance payment, in cash, equal to the Applicable
Multiplier times the sum of (i) the highest of the Executive's annual base
salary in effect immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based, or such salary in
effect immediately prior to the Change in Control, or such salary in effect
immediately prior to a Potential Change in Control, and (ii) the higher of (x)
the target bonus for the year in which the Notice of Termination is provided or
(y) the highest of the actual bonuses paid or payable to the Executive for any
of the five years completed immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the
Company shall pay to the Executive a lump sum amount, in cash, equal to the sum
of (i) any bonus amount which has been allocated or awarded to the Executive
for a completed fiscal year or other measuring period preceding the Date of
Termination but has not yet been paid (pursuant to Section 5.2 hereof or
otherwise) and (ii) a pro rata portion to the Date of Termination of the
aggregate value of all contingent bonus awards to the Executive for all
uncompleted periods calculated as to each such award by assuming the
achievement of the target performance level
-4-
<PAGE> 5
within the performance range established with respect to such award and basing
such pro-rata portion upon the portion of the award period that has elapsed as
of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of
Termination if Executive has one year or less of continuous service as an
employee of the Company, (ii) a twenty-four (24) month period after the Date of
Termination if Executive has more than one year but not more than two years of
continuous service as an employee of the Company, and (iii) a thirty-six (36)
month period after the Date of Termination if Executive has more than two years
of continuous service as an employee of the Company, the Company shall arrange
to provide the Executive with life, disability, accident and health insurance
benefits (and specifically including Executive's split-dollar life insurance
arrangement now in effect), and all other material benefits or perquisites
substantially similar to those which the Executive is receiving immediately
prior to the Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control if such reduction constitutes
Good Reason); Notwithstanding any other provision of this Agreement, the
Company shall continue to fund Executive's split-dollar life insurance
arrangement until dividends payable under the policy are sufficient to pay
premiums under the policy. Benefits otherwise receivable by the Executive
pursuant to this Section 6.1(C) shall be reduced to the extent comparable
benefits are actually received by or made available to the Executive without
cost during the above-referenced period. In addition, any such benefits
actually received by the Executive shall be reported to the Company by the
Executive.
6.2. (A) Whether or not the Executive becomes entitled to the
Severance Payments, if any of the Total Payments will be subject to the Excise
Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Total Payments and any federal, state and local income
tax and Excise Tax upon the payment provided for by this Section 6.2, shall be
equal to the excess of the Total Payments over the payment provided for by this
Section 6.2.
(B) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any payments or benefits received or to be received by the Executive in
connection with a Change in Control or the Executive's termination of
employment, whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person (the
"Total Payments"), shall be treated as "parachute payments" (within the meaning
of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel
selected by the Company's independent auditors and reasonably, acceptable to
the Executive, such payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of section 280G(b)(4)(A) of
the Code, and all "excess parachute payments" (within the meaning of section
280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless,
in the opinion of such tax counsel, such excess parachute payments (in whole or
in part) represent reasonable compensation for
-5-
<PAGE> 6
services actually rendered (within the meaning of section 280G(b)(4)(B) of the
Code), or are otherwise not subject to the Excise Tax, and (ii) the value of
any noncash benefits or any deferred payment or benefit shall be determined by
the Company's independent auditors in accordance with the principles of actions
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made, FICA taxes at the highest rate
applicable with respect to wages in excess of the Social Security taxable wage
base in effect for the year of payment, and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination (or such other time as is hereinafter
described), net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Executive's employment (or such other time as is
hereinafter described), the Executive shall repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by the
Executive to the extent that such repayment results in a reduction in Excise
Tax or a federal, state or local income tax deduction) plus interest on the
amount of such repayment at the rate provided in section 1274(b)(2)(3) of the
Code. In the event that the Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination of the Executive's
employment (or such other time as is hereinafter described) (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest, penalties or
addition payable by the Executive with respect to such excess) at the time that
the amount of such excess is finally determined. The Executive and the Company
shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Total Payments. If an Executive
who remains in the employ of the Company becomes entitled to the payment
provided for by this paragraph, such payment shall be made no later than the
later of (i) the fifth day following the date on which the Executive notifies
the Company that he is subject to the Excise Tax and (ii) twenty days prior to
the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than
Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made
not later than the fifth day following the Date of Termination, unless
Executive elects a later date of payment for all or any part thereof; provided,
however, that, if the amounts of such payments cannot be finally determined on
or before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Company of the minimum amount of
such payments to which the Executive is clearly entitled and shall pay the
remainder of such payments (together
-6-
<PAGE> 7
with interest at the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(9) of the
Code). At the time that payments are made under this section, the Company shall
provide the Executive with a written statement setting forth the manner in
which such payments were calculated and the basis for such calculations
including, without limitation, any opinions or other advice the Company has
received from outside counsel, auditors or consultants (and any such opinions
or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and
expenses incurred in good faith by the Executive as a result of a termination
of the Executive's employment following a Change in Control and during the term
of this Agreement (including all such fees and expenses, if any, incurred in
disputing in good faith any such termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code to any payment or benefit provided
hereunder). For purposes of this Section 6.4, an Executive shall be deemed to
have acted in good faith unless an arbitrator finds that the Executive's action
resulting in such legal fees and expenses was excessive. Such payments shall be
made within five (5) business days after delivery of the Executive's written
request for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1. After a Change in Control and during the term of this
Agreement, any purported termination of the Executive's employment (other than
by reason of death) shall be communicated by written Notice of Termination from
one party hereto to the other party hereto in accordance with Section 10
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of Termination
for Cause issued by the Company is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (after reasonable
notice to the Executive and an opportunity for the Executive, together with the
Executive's Counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Executive engaged in conduct set forth in
clause (i) or (ii) of the definition of Cause herein, and specifying the
particulars thereof in detail.
-7-
<PAGE> 8
7.2. "Date of Termination," with respect to any purported
termination of the Executive's employment after a Change in Control and during
the term of this Agreement, shall mean (i) If the Executive's employment is
terminated for Disability, thirty (30) days after Notice of Termination is
given (provided that the Executive shall not have returned to the full-time
performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated by for any other reason, the
date specified in the Notice of Termination (which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except in
the case of a termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60)
days from the date such Notice of Termination is given).
7.3. If within fifteen (15) days after any Notice of Termination is
given or, if later, prior to the Date of Termination (as determined without
regard to this Section 7.3), either party notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice
of dispute provided by the Executive only if such notice in given in good faith
and the Executive pursues the resolution of such dispute with reasonable
diligence.
7.4. If a purported termination occurs following a Change in
Control and during the term of this Agreement, and such termination is disputed
in accordance with Section 7.3 hereof, the Company shall continue to pay the
Executive the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the
dispute was given until the Date of Termination, determined in accordance with
Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all
other amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
6 or Section 7.4 hereof. Further, the amount of any payment or benefit provided
for in such Section 6 (other than Section 6.1(C)) or such Section 7.4 shall not
be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
-8-
<PAGE> 9
9. Successors; Binding Agreement.
9.1. In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any such successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for
Good Reason after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death
of the Executive) if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or mailed by United
states registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
To the Company:
Jevic Transportation, Inc.
700 Creek Road
P.O. Box 5157
Delanco, NJ 08075
To the Executive:
Name
Address
City, State ZIP
-9-
<PAGE> 10
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall he deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, and construction of this Agreement shall be
governed by the laws of the State of New Jersey. Payments provided for
hereunder shall be paid net withholding required under federal, state or local
law and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under Sections 5, 6, and 7 which
arise during the term of this Agreement shall survive the expiration of the
term of this Agreement.
12. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts; Coordination with Employment Agreement.
13.1. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instruments.
13.2. The terms of this Agreement shall be coordinated with and
applied in conjunction with the terms of the Executive's employment agreement,
if any, with the Company. In general, it is the intent of the parties that,
subsequent to a Change in Control and during the term of this Agreement, the
provisions of this Agreement shall supersede and substitute for those
provisions of the employment agreement relating to the Executive's entitlement
to benefits in connection with any termination of the Executive's employment,
but shall not supersede for any period the provisions of such employment
agreement pertaining to the terms of the Executive's employment. Except for
circumstances relating to a termination of employment following a Change in
Control during the term of this Agreement, as provided for herein, all terms
and conditions of the Executive's employment with the Company shall be governed
by the terms of the Executive's employment agreement (including but not limited
to any such term granting additional years of service to the Executive for
purposes of any of the Company's employee benefit plans).
14. Settlement of Disputes; Arbitration. All claims by the Executive
for benefits under this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a claim for benefits
under this Agreement shall be delivered to the Executive in writing and shall
set forth the specific reasons for the denial and the specific
-10-
<PAGE> 11
provisions of this Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that the
Executive's claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Burlington County, New Jersey in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however,
that the Executive shall be entitled to seek specific performance of the
Executive's right to be paid until the Date of Termination during the pendency
of any dispute or controversy arising under or in connection with this
Agreement.
15. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
(A) "Applicable Multiplier" means two, except as otherwise
specifically provided herein with the consent of the Executive.
(B) "Base Amount" shall have the meaning defined in section
280G(b)(3) of the Code.
(C) "Board" shall mean the Board of Directors of the
Company.
(D) "Cause" for termination by the Company of the
Executive's employment, after any Potential Change in Control or Change in
Control, shall mean the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Executive pursuant to Section
7.1 hereof) after a written demand for substantial performance is delivered to
the Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties. For purposes of this definition, no act, or failure to act,
on the Executive's part shall be "willful" unless done, or omitted to be done,
by the Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the Company.
(E) A "Change in Control" shall be deemed to have occurred
if the events set forth in any one of the following paragraphs shall have
occurred:
(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 Securities Exchange Act of 1934, as amended (the "1934 Act")) of
"Beneficial Ownership" (as the term beneficial ownership is used for purposes
of Rule 13d-3 promulgated under the 1934 Act) of fifty
-11-
<PAGE> 12
percent (50%) or more of the combined voting power of the Company's then
outstanding voting securities (the "Voting Securities"); 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
corporation resulting from or surviving such merger, reorganization or
consolidation in substantially the same proportion as their ownership of the
Voting Securities immediately before such merger, reorganization or
consolidation, or (B) (1) a complete liquidation or dissolution of the Company
or (2) 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 corporation
resulting from or surviving such share exchange in substantially the same
proportion as the ownership of the Voting Securities outstanding immediately
before such share exchange.
Notwithstanding the foregoing, a Change in Control shall not include
any event, circumstance or transaction occurring during the six-month period
following a Potential Change in Control which Potential Change in Control
results from the action of any entity or group which includes the Executive (a
"Management Group").
(F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time. References to specific sections of the code shall
include any successors thereto.
(G) "Company" shall mean Jevic Transportation, Inc., a New
Jersey corporation, and any successor to its business or assets which assumes
and agrees to perform this Agreement by operation of law, or otherwise (except
in determining, under Section 15(E) hereof, whether or not any Change in
Control of the Company has occurred in connection with such succession).
(H) "Date of Termination" shall have the meaning stated in
Section 7.2 hereof.
(I) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment if the Executive is
absent from full-time employment and qualifies for disability benefits under
the Company's long-term disability plan
-12-
<PAGE> 13
(or would so qualify but for any waiting period under that plan). In the
absence of any such plan, the determination of Disability shall be made by the
Board.
(J) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(K) "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.
(L) "Executive" shall mean the individual named in the
first paragraph of this Agreement.
(M) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act or failure to
act described in paragraph (i), (v), (vi) or (vii) hereof, such act or failure
to act is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(i) the assignment by the Company to the Executive of
any duties inconsistent with the Executive's status as an executive of the
Company or a material adverse alteration in the nature or status of the
Executive's responsibilities from those in effect immediately prior to the
Change in Control or Potential Change in Control or any change in Executive's
title or status;
(ii) any reduction by the Company in the Executive's
annual base salary as in affect on the date hereof or as the same may be
increased from time to time;
(iii) the relocation by the Company of its principal
executive offices to a location more than 30 miles from the location of such
office immediately prior to the Change in Control or the Company's requiring
the Executive to be based anywhere other than the Company's principal executive
offices except for required travel on the Company's business to an extent
substantially consistent with the Executive's present business travel
obligations;
(iv) the failure by the Company to pay to the Executive
any portion of the Executive's current compensation, or to pay to the Executive
any portion of an installment of deferred compensation under any deferred
compensation program of the Company, within seven (7) days of the date such
compensation is due;
(v) the failure by the Company to continue in effect
any compensation plan in which the Executive participates immediately prior to
the Change in
-13-
<PAGE> 14
Control which is material to the Executive's total compensation, including but
not limited to any bonus plan and any similar or substitute plan adopted prior
to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided and the level
of the Executive's participation relative to other participants, as existed at
the time of the Change in Control;
(vi) the failure by the Company to continue to provide
the Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, life insurance, medical, health
and accident, disability or other material benefit or perquisite plan in which
the Executive was participating at the time of the Change in Control, and
specifically including those benefits set forth in Section 6.1(c) hereof, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of the Change in Control,
or the failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled on the basis of years of
service with the Company in accordance, with the Company's normal vacation
policy in effect at the time of the Change in Control; or
(vii) any purported termination by the Company of the
Executive's employment which is not effected for Cause and pursuant to a Notice
of Termination satisfying the requirements of Section 7.1; for purposes of this
Agreement, no such purported termination shall be effective.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(N) "Gross-Up Payment" shall have the meaning given in
Section 6.2 hereof.
(O) "Notice of Termination" shall have the meaning stated
in Section 7.1 hereof.
(P) "Person" shall have the meaning given in section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof; provided, however, that a Person shall not include (i) the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its subsidiaries, (iii)
an underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
-14-
<PAGE> 15
(Q) "Potential Change in Control" shall be deemed to have
occurred if the events set forth in any one of the following paragraphs shall
have occurred:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(iii) any Person who both (x) is on the date hereof or
subsequently becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing at least 10% or more of the combined
voting power of the Company's then outstanding securities and (y) increases his
or her beneficial ownership of such securities by 5% or more over the
percentage so owned by such Person on the date hereof; or
(iv) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has occurred.
(R) "Severance Payments" shall mean those payments
described in Section 6.1 hereof.
(S) "Total Payments" shall mean those payments described in
Section 6.2 hereof.
16. Prior Agreements Superseded. Effective on the Effective Date, this
Agreement supersedes and replaces any previous Agreement between the Company
and Executive on the same subject.
IN WITNESS WHEREOF, this Agreement has been executed as of the 4th day
of June, 1999, on behalf of this Company by its duly authorized officer and by
the Executive.
ATTEST: JEVIC TRANSPORTATION, INC.
/s/ KAREN B. MUHLSCHLEGEL By: /s/ HARRY J. MUHLSCHLEGEL
- ----------------------------------- --------------------------------
Secretary Harry J. Muhlschlegel
Chief Executive Officer
EXECUTIVE
By: /s/ JOSEPH A. LIBRIZZI
--------------------------------
Joseph A. Librizzi
-15-
<PAGE> 1
EXHIBIT 9
AMENDED AND RESTATED
SEVERANCE AGREEMENT
THIS AGREEMENT is made by and between JEVIC TRANSPORTATION, INC., a
New Jersey corporation (the "Company"), and RAYMOND M. CONLIN (the
"Executive").
WHEREAS, the Company considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control (as defined in the last Section hereof)
exists and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control; and
WHEREAS, the Company and Executive entered into a severance agreement
relating to the same matters, dated as of April 5, 1999 ("Prior
Agreement"); and
WHEREAS, the Company and Executive wish to and do hereby amend and
restate the Prior Agreement, which is specifically superseded by the terms
hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, this Company and the Executive hereby agree as
follows:
1. Defined Terms. The definition of capitalized terms used in, this
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date on
which shares of common stock of the Company are purchased pursuant to the
tender offer by Yellow Corporation and/or a subsidiary of Yellow Corporation
("Effective Date"), and shall continue in effect through December 31, 2001;
provided, however, that commencing on January 1, 2002 and each January 1
thereafter, the term of this Agreement shall automatically be extended for one
additional year unless, not later than September 30 of the preceding year, the
Company or the Executive shall have given notice not to extend this Agreement
or a Change in Control shall have occurred prior to such January 1; and further
provided, however, if a Change in Control shall have occurred during the term
of this Agreement, this Agreement shall continue in effect for a period ending
on the last day of the twenty-fourth calendar month beginning after the month
in which such Change in Control occurred.
<PAGE> 2
3. Company's Covenants Summarized. To induce the Executive to remain
in the employ of the Company and in consideration of the Executive's covenants
set forth in Section 4 hereof, the Company agrees, under the conditions
described herein, to pay the Executive the Severance Payments described in
Section 6.1 hereof and the other payments and benefits described herein in the
event the Executive's employment with the Company is terminated following a
Change in Control and during the term of this Agreement. Except as provided in
Article 5, Section 9.1, or Section 6.2 hereof, no amount or benefit shall be
payable under this Agreement unless there shall have been (or, pursuant to
Section 6.1 hereof, there shall be deemed to have been) a termination of the
Executive's employment with the Company following a Change in Control. This
Agreement shall not be construed as creating an express or implied contract of
employment and, except as otherwise agreed in writing between the Executive and
the Company, the Executive shall not have any right to be retained in the
employ of the Company.
4. The Executive's Covenants.
4.1. The Executive agrees that, subject to the terms and conditions
of this Agreement, in the event of a Potential Change in Control during the
term of this Agreement, the Executive will remain in the employ of the Company
until the earliest of (i) a date which is three (3) months after the date of
such Potential Change in Control, (ii) the date of a Change in Control, (iii)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined by treating the Potential Change in Control as a Change in
Control in applying the definition of Good Reason under Section 15(M)(i)
through (vii) hereof) or by reason of death, Disability or retirement, or (iv)
the termination by the Company of the Executive's employment for any reason.
4.2. While the Executive is employed by the Company and for a
period of one year after the effective date of Executive's termination of
employment if Executive's employment is terminated following a Change in
Control (or before a Change in Control but following a Potential Change in
Control under the circumstances set forth in Section 6.1) and Executive
receives any payment under Section 6.1 of this Agreement, the Executive
covenants and agrees that he will not, whether for himself or for any other
person, business, partnership, association, firm, company or corporation,
directly or indirectly, call upon, solicit, divert or take away or attempt to
solicit, divert or take away, any of the customers or employees of the Company
that are or were customers or employees at any time during his employment with
the Company. The Executive acknowledges that the Company would be irreparably
injured by a violation of this Section 4.2, and agrees that the Company, in
addition to other remedies available to it for such breach or threatened
breach, shall be entitled to a preliminary injunction, temporary restraining
order or other equitable relief restraining the Executive from any actual or
threatened breach of this Section 4.2 without any bond or other security being
required.
-2-
<PAGE> 3
5. Compensation Other Than Severance Payments.
5.1. Following a Change in Control and during the term of this
Agreement, during any period that the Executive fails to perform the
Executive's full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the Executive's full salary
to the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the
terms of any compensation or benefit plan, program or arrangement maintained by
the Company during such period, until the Executive's employment is terminated
by the Company for Disability. Nothing in this Section 5.1 shall entitle
Executive to any Company-provided insured or uninsured disability, sick pay or
other similar wage replacement benefits in addition to the Company's payment of
salary during the period of illness.
5.2. If the Executive's employment shall be terminated for any
reason following a Change in Control and during the term of this Agreement, the
Company shall pay the Executive's full salary to the Executive through the Date
of Termination at the rate in effect at the time the Notice of Termination is
given, together with all compensation and benefits payable to the Executive
through the Date of Termination under the terms of any compensation or benefit
plan, program or arrangement maintained by the Company during such period.
5.3. If the Executive's employment shall be terminated for any
reason following a Change in Control and during the term of this Agreement, the
Company shall pay the Executive's normal post-termination compensation and
benefits to the Executive and such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
with, this Company's retirement, insurance and other compensation or benefit
plans, programs and arrangements.
5.4. Whether or not the Executive's employment has been terminated,
following a Change in Control, the Company (or any successor to the Company in
connection with such Change in Control) shall upon the Executive's demand
purchase from the Executive any shares of Company or successor company stock
then held by the Executive (the "Shares"). The Company and any successor shall
not be under any such obligation at any time that there exists an established
market for the Shares. The Company also shall not be under any such obligation
at any time that the Executive's right to demand the purchase of the Shares, or
the exercise of that right, would prohibit pooling of interests accounting in
any acquisition of or by the Company. The price of such Shares shall be the
greater of their fair market value or the per share consideration paid in
connection with such Change in Control, if any. The purchase price for such
Shares shall be paid by the Company or any successor in a single sum of cash
within seven days following such demand, except as the Executive and Company
may agree otherwise.
5.5. Whether or not the Executive's employment is later terminated,
upon purchase of shares of common stock of the Company pursuant to the tender
offer by Yellow
-3-
<PAGE> 4
Corporation and/or a subsidiary of Yellow Corporation, the Company shall pay to
the Executive a single sum of $55,000, less any required withholding as
further set forth in Section 11.
6. Severance Payments.
6.1. The Company shall pay the Executive the payments described in
this Section 6.1 (the "Severance Payments") upon the termination of the
Executive's employment following a Change in Control and during the term of
this Agreement, in addition to the payments and benefits described in Section 5
hereof, unless such termination is (i) by the Company for Cause, (ii) by reason
of death or Disability more than six months following the Change in Control, or
(iii) by the Executive without Good Reason. The Company shall pay the Executive
the Severance Payments upon termination of the Executive's employment following
a Potential Change in Control but before a Change in Control and during the
term of this Agreement, in addition to the payments and benefits described in
Section 5 hereof, if:
(i) the termination is initiated, caused or directed by any
Person who has initiated a transaction the consummation of which would result
in a Change in Control; and
(ii) the termination would have been by the Executive for Good
Reason or by the Company without Cause if a Change in Control had occurred on
the date of the Potential Change in Control.
(A) In lieu of any further salary payments to the Executive
for periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive, the Company shall pay to the
Executive a lump sum severance payment, in cash, equal to the Applicable
Multiplier times the sum of (i) the highest of the Executive's annual base
salary in effect immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based, or such salary in
effect immediately prior to the Change in Control, or such salary in effect
immediately prior to a Potential Change in Control, and (ii) the higher of (x)
the target bonus for the year in which the Notice of Termination is provided or
(y) the highest of the actual bonuses paid or payable to the Executive for any
of the five years completed immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based.
(B) Notwithstanding any provision of any bonus plan, the
Company shall pay to the Executive a lump sum amount, in cash, equal to the sum
of (i) any bonus amount which has been allocated or awarded to the Executive
for a completed fiscal year or other measuring period preceding the Date of
Termination but has not yet been paid (pursuant to Section 5.2 hereof or
otherwise) and (ii) a pro rata portion to the Date of Termination of the
aggregate value of all contingent bonus awards to the Executive for all
uncompleted periods calculated as to each such award by assuming the
achievement of the target performance level
-4-
<PAGE> 5
within the performance range established with respect to such award and basing
such pro-rata portion upon the portion of the award period that has elapsed as
of the Date of Termination;
(C) For (i) a twelve (12) month period after the Date of
Termination if Executive has one year or less of continuous service as an
employee of the Company, (ii) a twenty-four (24) month period after the Date of
Termination if Executive has more than one year but not more than two years of
continuous service as an employee of the Company, and (iii) a thirty-six (36)
month period after the Date of Termination if Executive has more than two years
of continuous service as an employee of the Company, the Company shall arrange
to provide the Executive with life, disability, accident and health insurance
benefits (and specifically including Executive's split-dollar life insurance
arrangement now in effect), and all other material benefits or perquisites
substantially similar to those which the Executive is receiving immediately
prior to the Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control if such reduction constitutes
Good Reason); Notwithstanding any other provision of this Agreement, the
Company shall continue to fund Executive's split-dollar life insurance
arrangement until dividends payable under the policy are sufficient to pay
premiums under the policy. Benefits otherwise receivable by the Executive
pursuant to this Section 6.1(C) shall be reduced to the extent comparable
benefits are actually received by or made available to the Executive without
cost during the above-referenced period. In addition, any such benefits
actually received by the Executive shall be reported to the Company by the
Executive.
6.2. (A) Whether or not the Executive becomes entitled to the
Severance Payments, if any of the Total Payments will be subject to the Excise
Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after deduction
of any Excise Tax on the Total Payments and any federal, state and local income
tax and Excise Tax upon the payment provided for by this Section 6.2, shall be
equal to the excess of the Total Payments over the payment provided for by this
Section 6.2.
(B) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any payments or benefits received or to be received by the Executive in
connection with a Change in Control or the Executive's termination of
employment, whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person (the
"Total Payments"), shall be treated as "parachute payments" (within the meaning
of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel
selected by the Company's independent auditors and reasonably, acceptable to
the Executive, such payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of section 280G(b)(4)(A) of
the Code, and all "excess parachute payments" (within the meaning of section
280G(b)(1) of the Code) shall be treated as subject to the Excise Tax unless,
in the opinion of such tax counsel, such excess parachute payments (in whole or
in part) represent reasonable compensation for
-5-
<PAGE> 6
services actually rendered (within the meaning of section 280G(b)(4)(B) of the
Code), or are otherwise not subject to the Excise Tax, and (ii) the value of
any noncash benefits or any deferred payment or benefit shall be determined by
the Company's independent auditors in accordance with the principles of actions
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made, FICA taxes at the highest rate
applicable with respect to wages in excess of the Social Security taxable wage
base in effect for the year of payment, and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination (or such other time as is hereinafter
described), net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(C) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Executive's employment (or such other time as is
hereinafter described), the Executive shall repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by the
Executive to the extent that such repayment results in a reduction in Excise
Tax or a federal, state or local income tax deduction) plus interest on the
amount of such repayment at the rate provided in section 1274(b)(2)(3) of the
Code. In the event that the Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination of the Executive's
employment (or such other time as is hereinafter described) (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest, penalties or
addition payable by the Executive with respect to such excess) at the time that
the amount of such excess is finally determined. The Executive and the Company
shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Total Payments. If an Executive
who remains in the employ of the Company becomes entitled to the payment
provided for by this paragraph, such payment shall be made no later than the
later of (i) the fifth day following the date on which the Executive notifies
the Company that he is subject to the Excise Tax and (ii) twenty days prior to
the date on which the Excise Tax is initially due.
6.3. The payments provided for in Section 6.1 hereof (other than
Section 6.1(C)), in Section 6.2 hereof, and in Section 5.5 hereof shall be made
not later than the fifth day following the Date of Termination, unless
Executive elects a later date of payment for all or any part thereof; provided,
however, that, if the amounts of such payments cannot be finally determined on
or before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Company of the minimum amount of
such payments to which the Executive is clearly entitled and shall pay the
remainder of such payments (together
-6-
<PAGE> 7
with interest at the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(9) of the
Code). At the time that payments are made under this section, the Company shall
provide the Executive with a written statement setting forth the manner in
which such payments were calculated and the basis for such calculations
including, without limitation, any opinions or other advice the Company has
received from outside counsel, auditors or consultants (and any such opinions
or advice which are in writing shall be attached to the statement).
6.4. The Company also shall pay to the Executive all legal fees and
expenses incurred in good faith by the Executive as a result of a termination
of the Executive's employment following a Change in Control and during the term
of this Agreement (including all such fees and expenses, if any, incurred in
disputing in good faith any such termination or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code to any payment or benefit provided
hereunder). For purposes of this Section 6.4, an Executive shall be deemed to
have acted in good faith unless an arbitrator finds that the Executive's action
resulting in such legal fees and expenses was excessive. Such payments shall be
made within five (5) business days after delivery of the Executive's written
request for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1. After a Change in Control and during the term of this
Agreement, any purported termination of the Executive's employment (other than
by reason of death) shall be communicated by written Notice of Termination from
one party hereto to the other party hereto in accordance with Section 10
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of Termination
for Cause issued by the Company is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (after reasonable
notice to the Executive and an opportunity for the Executive, together with the
Executive's Counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Executive engaged in conduct set forth in
clause (i) or (ii) of the definition of Cause herein, and specifying the
particulars thereof in detail.
-7-
<PAGE> 8
7.2. "Date of Termination," with respect to any purported
termination of the Executive's employment after a Change in Control and during
the term of this Agreement,
shall mean (i) If the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated by for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by
the Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days from the
date such Notice of Termination is given).
7.3. If within fifteen (15) days after any Notice of Termination is
given or, if later, prior to the Date of Termination (as determined without
regard to this Section 7.3), either party notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice
of dispute provided by the Executive only if such notice in given in good faith
and the Executive pursues the resolution of such dispute with reasonable
diligence.
7.4. If a purported termination occurs following a Change in
Control and during the term of this Agreement, and such termination is disputed
in accordance with Section 7.3 hereof, the Company shall continue to pay the
Executive the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the
dispute was given until the Date of Termination, determined in accordance with
Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all
other amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section
6 or Section 7.4 hereof. Further, the amount of any payment or benefit provided
for in such Section 6 (other than Section 6.1(C)) or such Section 7.4 shall not
be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
-8-
<PAGE> 9
9. Successors; Binding Agreement.
9.1. In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any such successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for
Good Reason after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death
of the Executive) if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or mailed by United
states registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
To the Company:
Jevic Transportation, Inc.
700 Creek Road
P.O. Box 5157
Delanco, NJ 08075
To the Executive:
Name
Address
City, State ZIP
-9-
<PAGE> 10
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall he deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, and construction of this Agreement shall be
governed by the laws of the State of New Jersey. Payments provided for
hereunder shall be paid net withholding required under federal, state or local
law and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under Sections 5, 6, and 7 which
arise during the term of this Agreement shall survive the expiration of the
term of this Agreement.
12. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts; Coordination with Employment Agreement.
13.1. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instruments.
13.2. The terms of this Agreement shall be coordinated with and
applied in conjunction with the terms of the Executive's employment agreement,
if any, with the Company. In general, it is the intent of the parties that,
subsequent to a Change in Control and during the term of this Agreement, the
provisions of this Agreement shall supersede and substitute for those
provisions of the employment agreement relating to the Executive's entitlement
to benefits in connection with any termination of the Executive's employment,
but shall not supersede for any period the provisions of such employment
agreement pertaining to the terms of the Executive's employment. Except for
circumstances relating to a termination of employment following a Change in
Control during the term of this Agreement, as provided for herein, all terms
and conditions of the Executive's employment with the Company shall be governed
by the terms of the Executive's employment agreement (including but not limited
to any such term granting additional years of service to the Executive for
purposes of any of the Company's employee benefit plans).
14. Settlement of Disputes; Arbitration. All claims by the Executive
for benefits under this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a claim for benefits
under this Agreement shall be delivered to the Executive in writing and shall
set forth the specific reasons for the denial and the specific
-10-
<PAGE> 11
provisions of this Agreement relied upon. The Board shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the
Board within sixty (60) days after notification by the Board that the
Executive's claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Burlington County, New Jersey in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however,
that the Executive shall be entitled to seek specific performance of the
Executive's right to be paid until the Date of Termination during the pendency
of any dispute or controversy arising under or in connection with this
Agreement.
15. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
(A) "Applicable Multiplier" means two, except as otherwise
specifically provided herein with the consent of the Executive.
(B) "Base Amount" shall have the meaning defined in section
280G(b)(3) of the Code.
(C) "Board" shall mean the Board of Directors of the Company.
(D) "Cause" for termination by the Company of the Executive's
employment, after any Potential Change in Control or Change in Control, shall
mean the willful and continued failure by the Executive to substantially
perform the Executive's duties with the Company (other than any such failure
resulting from the Executive's incapacity due to physical or mental illness or
any such actual or anticipated failure after the issuance of a Notice of
Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)
after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties. For purposes of this definition, no act, or failure to act,
on the Executive's part shall be "willful" unless done, or omitted to be done,
by the Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the Company.
(E) A "Change in Control" shall be deemed to have occurred if
the events set forth in any one of the following paragraphs shall have
occurred:
(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 Securities Exchange Act of 1934, as amended (the "1934 Act")) of
"Beneficial Ownership" (as the term beneficial ownership is used for purposes
of Rule 13d-3 promulgated under the 1934 Act) of fifty
-11-
<PAGE> 12
percent (50%) or more of the combined voting power of the Company's then
outstanding voting securities (the "Voting Securities"); 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
corporation resulting from or surviving such merger, reorganization or
consolidation in substantially the same proportion as their ownership of the
Voting Securities immediately before such merger, reorganization or
consolidation, or (B) (1) a complete liquidation or dissolution of the Company
or (2) 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 corporation resulting
from or surviving such share exchange in substantially the same proportion as
the ownership of the Voting Securities outstanding immediately before such
share exchange.
Notwithstanding the foregoing, a Change in Control shall not
include any event, circumstance or transaction occurring during the six-month
period following a Potential Change in Control which Potential Change in
Control results from the action of any entity or group which includes the
Executive (a "Management Group").
(F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time. References to specific sections of the code shall
include any successors thereto.
(G) "Company" shall mean Jevic Transportation, Inc., a New
Jersey corporation, and any successor to its business or assets which assumes
and agrees to perform this Agreement by operation of law, or otherwise (except
in determining, under Section 15(E) hereof, whether or not any Change in
Control of the Company has occurred in connection with such succession).
(H) "Date of Termination" shall have the meaning stated in
Section 7.2 hereof.
(I) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment if the Executive is
absent from full-time employment and qualifies for disability benefits under
the Company's long-term disability plan
-12-
<PAGE> 13
(or would so qualify but for any waiting period under that plan). In the
absence of any such plan, the determination of Disability shall be made by the
Board.
(J) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(K) "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.
(L) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(M) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act or failure to
act described in paragraph (i), (v), (vi) or (vii) hereof, such act or failure
to act is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(i) the assignment by the Company to the Executive of any
duties inconsistent with the Executive's status as an executive of the Company
or a material adverse alteration in the nature or status of the Executive's
responsibilities from those in effect immediately prior to the Change in
Control or Potential Change in Control or any change in Executive's title or
status;
(ii) any reduction by the Company in the Executive's
annual base salary as in affect on the date hereof or as the same may be
increased from time to time;
(iii) the relocation by the Company of its principal
executive offices to a location more than 30 miles from the location of such
office immediately prior to the Change in Control or the Company's requiring
the Executive to be based anywhere other than the Company's principal executive
offices except for required travel on the Company's business to an extent
substantially consistent with the Executive's present business travel
obligations;
(iv) the failure by the Company to pay to the Executive
any portion of the Executive's current compensation, or to pay to the Executive
any portion of an installment of deferred compensation under any deferred
compensation program of the Company, within seven (7) days of the date such
compensation is due;
(v) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately prior to the
Change in
-13-
<PAGE> 14
Control which is material to the Executive's total compensation, including but
not limited to any bonus plan and any similar or substitute plan adopted prior
to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan, or the failure by the Company to continue the Executive's participation
therein (or in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided and the level
of the Executive's participation relative to other participants, as existed at
the time of the Change in Control;
(vi) the failure by the Company to continue to provide
the Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, life insurance, medical, health
and accident, disability or other material benefit or perquisite plan in which
the Executive was participating at the time of the Change in Control, and
specifically including those benefits set forth in Section 6.1(c) hereof, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of the Change in Control,
or the failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled on the basis of years of
service with the Company in accordance, with the Company's normal vacation
policy in effect at the time of the Change in Control; or
(vii) any purported termination by the Company of the
Executive's employment which is not effected for Cause and pursuant to a Notice
of Termination satisfying the requirements of Section 7.1; for purposes of this
Agreement, no such purported termination shall be effective.
The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(N) "Gross-Up Payment" shall have the meaning given in Section
6.2 hereof.
(O) "Notice of Termination" shall have the meaning stated in
Section 7.1 hereof.
(P) "Person" shall have the meaning given in section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
provided, however, that a Person shall not include (i) the Company or any of
its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
-14-
<PAGE> 15
(Q) "Potential Change in Control" shall be deemed to have
occurred if the events set forth in any one of the following paragraphs shall
have occurred:
(i) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(ii) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(iii) any Person who both (x) is on the date hereof or
subsequently becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing at least 10% or more of the combined
voting power of the Company's then outstanding securities and (y) increases his
or her beneficial ownership of such securities by 5% or more over the
percentage so owned by such Person on the date hereof; or
(iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(R) "Severance Payments" shall mean those payments described
in Section 6.1 hereof.
(S) "Total Payments" shall mean those payments described in
Section 6.2 hereof.
16. Prior Agreements Superseded. Effective on the Effective Date, this
Agreement supersedes and replaces any previous Agreement between the Company
and Executive on the same subject.
IN WITNESS WHEREOF, this Agreement has been executed as of the 6th day
of June, 1999, on behalf of this Company by its duly authorized officer and by
the Executive.
ATTEST: JEVIC TRANSPORTATION, INC.
/s/ KAREN B. MUHLSCHLEGEL By: /s/ HARRY J. MUHLSCHLEGEL
- ---------------------------------- -------------------------------------
Secretary Harry J. Muhlschlegel
Chief Executive Officer
EXECUTIVE
By: /s/ RAYMOND M. CONLIN
-------------------------------------
Raymond M. Conlin
-15-
<PAGE> 1
EXHIBIT 10
TENDER AND VOTING AGREEMENT
TENDER AND VOTING AGREEMENT, dated as of June 6, 1999, among Yellow
Corporation, a Delaware corporation ("Parent"), JPF Acquisition Corp., a New
Jersey corporation and a wholly owned subsidiary of Parent (the "Purchaser"),
and Harry J. Muhlschlegel, Karen B. Muhlschlegel, the Harry J. Muhlschlegel
Grantor Retained Annuity Trust dated 3/27/99, the Karen B. Muhlschlegel Grantor
Retained Annuity Trust dated 3/7/99, the Vicki L. Whithall 1996 Trust, the
Jeffrey Muhlschlegel 1996 Trust and the Jennifer B. Muhlschlegel 1996 Trust
(each, a "Stockholder" and, together, the "Stockholders").
WITNESSETH
WHEREAS, each Stockholder is the owner of that number of shares of Class A
Common Stock, no par value ("Class A Common Shares"), of Jevic Transportation,
Inc. (the "Company") set forth opposite the name of such Stockholder on Annex A
attached hereto (such Stockholder's "Subject Shares");
WHEREAS, Parent, the Purchaser and the Company have entered into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"), which provides, among other things, that
upon the terms and subject to the conditions therein, the Purchaser will (i)
make a cash tender offer (the "Offer") for all of the outstanding Class A Common
Shares and all of the outstanding shares of Common Stock, no par value ("Common
Shares" and, together with the Class A Common Shares, the "Shares"), of the
Company and (ii) after expiration of the Offer, merge with and into the Company
(the "Merger");
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and the Purchaser have required that the Stockholders and the
Company agree, and the Stockholders and the Company have agreed, to enter into
this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Representations and Warranties of the Stockholders. Each
Stockholder represents and warrants to Parent and the Purchaser as follows:
(a) Such Stockholder is the sole record and beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of such Stockholder's Subject Shares and,
there exist no liens, claims, security interests, options, proxies,
voting agreements, charges, obligations, understandings, arrangements or
other encumbrances of any nature whatsoever, except for restrictions
applicable thereto under federal and state securities laws ("Liens"),
affecting such Subject Shares.
(b) Such Stockholder's Subject Shares and the certificates
representing such Subject Shares are now and at all times until the
Termination Date (as defined herein) will be held by such Stockholder
free and clear of all Liens, except for the Liens arising hereunder.
(c) This Agreement has been duly and validly executed and delivered
by such Stockholder and, assuming due authorization, execution and
delivery by Parent and the Purchaser, constitutes a valid and binding
agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms, except to the extent that enforceability may
be limited by applicable bankruptcy or other laws affecting the
enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(d) The execution and delivery of this Agreement by such
Stockholder does not, and the performance by such Stockholder of its
obligations hereunder will not, constitute a violation of, conflict
with, result in a default (or an event which, with notice or lapse of
time or both, would result in a default) under, or result in the
creation of any Lien on any of such Stockholder's Subject Shares
<PAGE> 2
under, (i) any contract, commitment, agreement, partnership agreement,
understanding, arrangement or restriction of any kind to which such
Stockholder is a party or by which such Stockholder is bound, (ii) any
judgment, writ, decree, order or ruling applicable to such Stockholder
or (iii) any law applicable to such Stockholder.
(e) To such Stockholder's knowledge, neither the execution and
delivery of this Agreement nor the performance of Stockholder's
obligations hereunder will require any consent, authorization or
approval of, filing with or notice to, any court, administrative agency
or other governmental body or authority other than any required notices
or filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), state antitrust laws or the federal
securities laws.
(f) Except for such Stockholder's Subject Shares, such Stockholder
does not, directly or indirectly, own beneficially or of record any
Shares or any option, warrant or other right to acquire Shares nor is
such Stockholder subject to any contract, commitment, arrangement,
understanding or relationship that allows or obligates it to vote or
acquire any security of the Company.
2. Representation and Warranties of Parent and the Purchaser. Parent
and the Purchaser jointly and severally represent and warrant to each
Stockholder as follows:
(a) Each of Parent and the Purchaser is duly organized and validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement.
This Agreement has been duly and validly executed and delivered by each
of Parent and the Purchaser and constitutes the legal, valid and binding
obligation of each of Parent and the Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(b) The execution and delivery of this Agreement by each of Parent
and the Purchaser does not, and the performance by each of Parent and
the Purchaser of its obligations hereunder will not, constitute a
violation of, conflict with, or result in a default (or an event which,
with notice or lapse of time or both, would result in a default) under,
its charter or bylaws or any contract, commitment, agreement,
understanding, arrangement or restriction of any kind to which Parent or
the Purchaser is a party or by which Parent or the Purchaser is bound or
any judgment, writ, decree, order or ruling applicable to Parent or the
Purchaser.
(c) Neither the execution and delivery of this Agreement nor the
performance by each of Parent and the Purchaser of its obligations
hereunder will violate any order, writ, injunction, judgment, law,
decree, statute, rule or regulation applicable to Parent or the
Purchaser or require any consent, authorization or approval of, filing
with, or notice to, any court, administrative agency or other
governmental body or authority other than any required notices or
filings pursuant to the HSR Act, state antitrust laws or the federal
securities laws.
3. Tender of Shares.
(a) Parent and the Purchaser jointly and severally agree:
(i) subject to the conditions of the Offer set forth in Annex A
to the Merger Agreement and the other terms and conditions of the
Merger Agreement, that the Purchaser will purchase all Shares
tendered pursuant to the Offer as promptly as practicable following
commencement of the Offer and that the Purchaser will consummate the
Merger in accordance with the terms of the Merger Agreement;
<PAGE> 3
(ii) not to decrease the price per share to be paid to the
Company's shareholders in the Offer below $14.00 per share; and
(iii) the provisions of Sections 3(a)(i) and 3(a)(ii) shall
survive the termination of this Agreement.
(b) Each Stockholder will (i) tender such Stockholder's Subject
Shares (other than such Stockholder's Excluded Shares (as defined
below), if applicable) into the Offer promptly, and in any event no
later than the fifth business day following the commencement of the
Offer, or, if such Stockholder has not received the Offer Documents (as
defined in the Merger Agreement) by such time, within two business days
following receipt of such documents, and (ii) not withdraw any Subject
Shares so tendered. Each of Harry J. Muhlschlegel and Karen B.
Muhlschlegel shall be permitted to not tender into the Offer 18,875 of
their Subject Shares (for a total of 37,750 Subject Shares, collectively
herein referred to as the "Excluded Shares"); provided that, so long as
the Purchaser notifies Mr. and Mrs. Muhlschlegel at least eight hours
prior to the purchase of Shares by the Purchaser pursuant to the Offer,
Mr. and Mrs. Muhlschlegel shall be obligated to contribute their
respective Excluded Shares to the capital of the Company prior to the
purchase of Shares by the Purchaser pursuant to the Offer. Upon the
purchase of all such Stockholder's Subject Shares pursuant to the Offer
in accordance with this Section 3, this Agreement will terminate. Each
Stockholder will receive the same price per Share received by other
stockholders of the Company in the Offer with respect to Subject Shares
tendered by it in the Offer. In the event that, notwithstanding the
provisions of the first sentence of this Section 3(b), any Subject
Shares are for any reason withdrawn from the Offer or are not purchased
pursuant to the Offer, such Subject Shares will remain subject to the
terms of this Agreement. Each Stockholder acknowledges that the
Purchaser's obligation to accept for payment and pay for the Subject
Shares in the Offer is subject to all the terms and conditions of the
Offer. On the date the Subject Shares are accepted for payment and
purchased by the Purchaser pursuant to the Offer, the Purchaser shall
make payment by wire transfer or other method (as agreed by the
Purchaser and such Stockholder) of the purchase price for such Subject
Shares to an account designated by such Stockholder.
(c) Each Stockholder hereby agrees to permit Parent and the
Purchaser to publish and disclose in the Offer Documents and, if
approval of the shareholders of the Company is required under applicable
law, the Statement (as defined in the Merger Agreement), its identity
and ownership of Shares and the nature of its commitments, arrangements
and understandings under this Agreement.
(d) The obligations of the parties under this Section 3 shall
terminate on the Termination Date.
4. Termination Date. As used in this Agreement, "Termination Date"
means the date the Merger Agreement is terminated in accordance with its
terms.
5. Transfer of Subject Shares. Until the Termination Date, each
Stockholder will not, except as required pursuant to the terms of this
Agreement, (i) sell, offer to sell, pledge or otherwise dispose of any of
such Stockholder's Subject Shares; (ii) enter into any contract, option or
other agreement or understanding with respect to any transfer of any or all
of such Subject Shares or any interest therein; (iii) grant any proxy,
power-of-attorney or other authorization or consent in or with respect to
such Subject Shares; (iv) deposit such Subject Shares into a voting trust
or enter into a voting agreement or assignment with respect to the Subject
Shares; or (v) take any other action with respect to such Subject Shares
that would in any way restrict, limit or interfere with the performance of
such Stockholder's obligations hereunder.
6. No Solicitation.
(a) Each Stockholder represents and warrants to, and covenants and
agrees with, Parent and the Purchaser that such Stockholder does not have
any agreement, arrangement or understanding with any potential acquiror of
the Company that, directly or indirectly, would be violated, or require any
payments, by reason of the execution, delivery and/or consummation of this
Agreement.
<PAGE> 4
(b) Each Stockholder shall, and shall cause its agents and
representatives to, immediately cease any existing discussions or
negotiations with any Third Party (as defined in the Merger Agreement)
heretofore conducted with respect to any Acquisition Transaction (as
defined in the Merger Agreement). Until the Termination Date, each
Stockholder shall not, and shall cause its agents and representatives not
to, directly or indirectly, (x) solicit, initiate, continue, facilitate or
encourage (including by way of furnishing or disclosing non-public
information) any inquiries, proposals or offers from any Third Party with
respect to, or that could reasonably be expected to lead to, any
Acquisition Transaction or (y) negotiate, explore or otherwise communicate
in any way with any Third Party with respect to any Acquisition
Transaction. If the Board of Directors of the Company determines that a
Third Party proposal for an Acquisition Transaction constitutes a Superior
Proposal (as defined in the Merger Agreement) in accordance with the
provisions of Section 6.06 of the Merger Agreement, then, notwithstanding
the provisions of this Section 6(b), the Stockholders shall be permitted to
negotiate, discuss or otherwise communicate with such Third Party with
respect to a tender and voting agreement with terms no less favorable in
the aggregate to each Stockholder than those contained in this Agreement;
provided that no Stockholder shall enter into any such tender and voting
agreement (i) prior to the Termination Date or (ii) with any Third Party
with whom negotiations for an Acquisition Transaction had taken place prior
to the Termination Date if such tender and voting agreement contains
provisions less favorable in the aggregate to such Stockholder than those
contained in this Agreement. In addition, the provisions of this Section
6(b) shall not be deemed to prohibit any Stockholder who is an officer or
director of the Company from taking actions permitted to be taken by an
officer or director, as the case may be, in such Stockholder's capacity as
an officer and/or director, as the case may be, of the Company.
(c) Until the Termination Date, each Stockholder shall promptly (but
in any event within one day of such Stockholder becoming aware of same) (i)
advise Parent of the receipt by such Stockholder or any of its agents or
representatives of any inquiries or proposals relating to an Acquisition
Transaction, (ii) provide Parent with a copy of any such inquiry or
proposal in writing and a written statement with respect to any such
inquiries or proposals not in writing, which statement shall include the
identity of the parties making such inquiries or proposal and the material
terms thereof and (iii) inform Parent of the status and content of and
developments with respect to any discussions regarding any Acquisition
Transaction with a Third Party.
7. Voting of Subject Shares.
(a) Voting of Subject Shares. Until the Termination Date, each
Stockholder shall, at any meeting of the stockholders of the Company,
however called, or in connection with any written consent of the
stockholders of the Company, vote (or cause to be voted) all Shares
beneficially owned by such Stockholder (i) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the
approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement and this Agreement and any actions required in
furtherance thereof and hereof; (ii) against any other Acquisition
Transaction and against any action or agreement that would impede,
frustrate, prevent or nullify the Merger Agreement or this Agreement or the
transactions contemplated hereby and thereby, or result in a breach in any
respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement or which would
result in any of the conditions to the Merger in the Merger Agreement not
being fulfilled; and (iii) if requested by Parent, in favor of a
stockholder resolution proposed by Parent in accordance with the New Jersey
Act, the purpose of which is to cause the Offer and the Merger to be
consummated and which does not relate to election of directors.
(b) Best Efforts. Subject to the terms and conditions of this
Agreement, until the Termination Date, each Stockholder agrees to use all
reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Merger Agreement. Until
the Termination Date, each Stockholder shall properly consult with Parent
and the Purchaser and provide any necessary information and material with
respect to all filings with any
<PAGE> 5
Governmental Entity in connection with this Agreement and the Merger
Agreement and the transactions contemplated hereby and thereby.
8. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to
the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations hereunder
shall attach to the Subject Shares and shall be binding upon any person or
entity to which record or beneficial ownership of the Subject Shares shall
pass, whether by operation of law or otherwise, including, without
limitation, any Stockholder's administrators or successors. Notwithstanding
any transfer of Subject Shares, the transferor shall remain liable for the
performance of all obligations of the transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other parties
hereto, provided that Parent or the Purchaser may assign, in its sole
discretion, its rights and obligations hereunder to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve
Parent or the Purchaser of its obligations hereunder if such assignee does
not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except
upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by hand
delivery or telecopy (with a confirmation copy sent for next day delivery
via courier service, such as Federal Express), or by any courier service,
such as Federal Express, providing proof of delivery. All communications
hereunder shall be delivered to the respective parties at the following
addresses:
If to a Stockholder:
At the address of such Stockholder set forth on Annex A, with copies as
set forth on such Annex A.
If to Parent
or the Purchaser:
Yellow Corporation
10990 Roe Avenue
Overland Park, KS 66207
Attention: William F. Martin, General Counsel
Telephone No.: (913) 696-6106
Telecopy No.: (913) 696-6116
Copy to: Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: W. Leslie Duffy
Telephone No.: (212) 701-3000
Telecopy No.: (212) 269-5420
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth
above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not
<PAGE> 6
affect any other provision or portion of any provision in such
jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision
or portion of any provision had never been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained
in this Agreement will cause each of the other parties to sustain damages
for which it would not have an adequate remedy at law for money damages,
and therefore in the event of any such breach the aggrieved party shall be
entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise
of any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not
constitute a waiver by such party of its right to exercise any such or
other right, power or remedy or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or
entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey, without giving effect
to the principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any right
to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, Parent, the Purchaser, the Stockholders and the Company
have caused this Agreement to be duly executed as of the day and year first
above written.
YELLOW CORPORATION
By: /s/ A. MAURICE MYERS
------------------------------------
Name: A. Maurice Myers
Title: President and Chief Executive
Officer
JPF ACQUISITION CORP.
By: /s/ WILLIAM F. MARTIN, JR.
------------------------------------
Name: William F. Martin, Jr.
Title: Vice President
/s/ HARRY J. MUHLSCHLEGEL
--------------------------------------
Harry J. Muhlschlegel
<PAGE> 7
/s/ KAREN B. MUHLSCHLEGEL
--------------------------------------
Karen B. Muhlschlegel
HARRY J. MUHLSCHLEGEL GRANTOR RETAINED
ANNUITY TRUST DATED 3/27/99
By: /s/ HARRY J. MUHLSCHLEGEL
------------------------------------
Name: Harry J. Muhlschlegel
Title: Trustee
KAREN B. MUHLSCHLEGEL GRANTOR RETAINED
ANNUITY TRUST DATED 3/27/99
By: /s/ KAREN B. MUHLSCHLEGEL
------------------------------------
Name: Karen B. Muhlschlegel
Title: Trustee
VICKI L. WHITTALL 1996 TRUST
By: /s/ BRUCE D. BURDICK
------------------------------------
Name: Bruce D. Burdick
Title: Trustee
By: /s/ GEORGE K. REYNOLDS, III
------------------------------------
Name: George K. Reynolds, III
Title: Trustee
JEFFREY MUHLSCHLEGEL 1996 TRUST
By: /s/ BRUCE D. BURDICK
------------------------------------
Name: Bruce D. Burdick
Title: Trustee
By: /s/ GEORGE K. REYNOLDS, III
------------------------------------
Name: George K. Reynolds, III
Title: Trustee
JENNIFER B. MUHLSCHLEGEL 1996 TRUST
By: /s/ BRUCE D. BURDICK
------------------------------------
Name: Bruce D. Burdick
Title: Trustee
By: /s/ GEORGE K. REYNOLDS, III
------------------------------------
Name: George K. Reynolds, III
Title: Trustee
<PAGE> 1
EXHIBIT 11
JEVIC TRANSPORTATION, INC.
600 Creek Road
P.O. Box 5157
Delanco, NJ 08075
December 22, 1998
Yellow Corporation
10990 Roe Avenue
Overland Park, KS 66211-1213
Attn: William F. Martin, Jr.
Senior Vice President
Dear Sirs:
In order to enable you to evaluate a possible transaction
between Jevic Transportation, Inc. (together with its subsidiary and affiliated
companies, the "Company") and you (the "Possible Transaction"), there will be
provided to you certain proprietary, nonpublic, confidential information
concerning the Company, its subsidiaries and their properties, operations and
finances.
1. All information about the Company furnished by the Company and by
its affiliates, directors, officers, employees, agents and financing sources
(all such persons are collectively referred to herein as "representatives"),
whether furnished to you or to your representatives before or after the date
hereof, is referred to in this letter agreement as "Proprietary Information".
For purposes of this agreement, Proprietary Information (a) shall include all
documents which are prepared by you and your representatives, including all
correspondence, memoranda, notes, summaries, analyses, studies, models, extracts
of and documents and records reflecting, based on or derived from Proprietary
Information as well as all copies and other reproductions thereof, whether in
writing or stored or maintained in or by electronic, magnetic or other means,
media or devices (all such documents and writings which are prepared by you or
your representatives are sometimes referred to herein as "Evaluation
Documents"), and (b) shall not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by you
or your representatives in violation of this agreement, (ii) was available to
you on a nonconfidential basis prior to its disclosure by the Company or its
representatives, or (iii) becomes available to you on a nonconfidential basis
from a person other than the Company or its representatives who is not known to
you to be otherwise bound by a confidentiality agreement with the Company or its
representatives or prohibited from transmitting the information to you. As used
in this letter, the term "person" shall be broadly interpreted to include,
without limitation, any corporation, company, partnership and individual.
<PAGE> 2
2. Unless otherwise agreed to in writing by the Company or as permitted
by paragraph 3 hereof, you agree that (a) you and your representatives will keep
all Proprietary Information confidential and not disclose or reveal any
Proprietary Information to any person other than those of your representatives
who are actively and directly participating in the evaluation of the Possible
Transaction or who otherwise need to know the Proprietary Information for the
purpose of evaluating the Possible Transaction, and cause your representatives
to observe the terms of this letter agreement, (b) you and your representatives
will not use Proprietary Information for any purpose other than in connection
with the evaluation of the Possible Transaction and (c) you and your
representatives will not disclose to any person (other than to your
representatives actively and directly participating in or evaluating the
Possible Transaction) any information about the Possible Transaction, or the
terms, conditions or other facts relating thereto, including the fact that
discussions are taking place with respect thereto or the status thereof, or the
fact that the Proprietary Information has been made available to you. You will
be responsible for any breach of the terms hereunder by you or your
representatives.
3. In the event that you or any of your representatives is requested
pursuant to , or required by, applicable law or regulation or by legal process
to disclose any Proprietary Information concerning the Company or the Possible
Transaction (including any facts or information referred to in paragraph 2(c)
above), you agree that you will provide the Company with prompt notice of such
request(s) or the receipt(s) of legal process so as to enable the Company to
seek an appropriate protective order, to consult with you with respect to the
Company or you taking steps to resist or narrow the scope of such request or
process, and/or to waive compliance in whole or in part with your agreement to
maintain the confidentiality of the Proprietary Information. If and to the
extent that after the foregoing notice, in the absence of a protective order or
receipt of a waiver under this letter agreement, you or your representatives
are, in the opinion of your counsel, compelled to disclose Proprietary
Information or other information concerning the Company or the Possible
Transaction or risk being liable for contempt or suffer censure or penalty or
violate applicable laws or regulations, you and your representatives may
disclose such Proprietary Information or other information without liability to
the Company under this letter agreement.
4. If you determine that you do not wish to proceed with the Possible
Transaction, you will promptly advise us of that decision. In that case, or in
any case, you agree that you will, upon the Company's request, promptly deliver
to the Company all of the Proprietary Information in your possession or control
or in the possession or control of any of your representatives. You may,
however, destroy such of the Proprietary Information as constitutes Evaluation
Documents in your and your representatives' possession or control, whether
prepared by you or your representatives, in which case you will do so promptly
and, if requested by the Company, you will provide a written statement by an
officer of your organization familiar with your consideration of the Possible
Transaction certifying that all such Evaluation Documents, including all copies
thereof, have been destroyed.
5. In consideration of your receipt of the Proprietary Information, you
hereby agree that for a period of three (3) years from the date hereof neither
you, nor your affiliates, as defined in rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange
-2-
<PAGE> 3
Act"), will (and you and they will not assist or encourage others to), directly
or indirectly, unless specifically requested in writing to do so in advance or
consented prior thereto in writing by the Company:
(a) acquire or agree, offer, seek or propose to acquire, or cause
to be acquired, ownership (including, but not limited to,
beneficial ownership as defined in Rule 13d-3 under the
Exchange Act) of any of the assets or business of the Company
or of any of its subsidiaries or any voting securities issued
by the Company or any of its subsidiaries, or any rights or
options to acquire such ownership (including from a third
party); or
(b) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are defined under Regulation 14A of
the Exchange Act) to vote or seek to advise or influence in
any manner whatsoever any person or entity with respect to the
voting of any securities of the Company or any of its
subsidiaries; or
(c) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect
to any voting securities of the Company or any of its
subsidiaries; or
(d) arrange, or in any way participate in, any financing for the
purchase of any voting securities or securities convertible or
exchangeable into or exercisable for any voting securities or
assets of the Company of any of its subsidiaries; or
(e) otherwise act, whether alone or in concert with others, to
seek to propose to the Company, any subsidiary of the Company
or any of their stockholders any merger, business combination,
restructuring, recapitalization or similar transaction to or
with the Company or any of its subsidiaries or otherwise seek
or propose to influence or control the Company's management or
policies; or
(f) solicit for employment, or seek to negotiate or influence the
terms and conditions of employment of, any employees of the
Company or any of its subsidiaries with whom you have direct
contact in connection with your evaluation of or our
discussions concerning the Possible Transaction; or
(g) enter into any discussions, negotiations, arrangements or
understandings with or advise, assist or encourage any third
party with respect to any of the foregoing.
In addition, you also agree during such three (3)-year period not to
(a) request the Company directly or indirectly to amend or waive any provision
of this paragraph 5 (including this sentence) or (b) take any action designed to
or which can reasonably be expected to require
-3-
<PAGE> 4
the Company to make a public announcement regarding any of the matters referred
to in this paragraph 5.
6. Although the Proprietary Information contains information which the
Company believes to be relevant for the purpose of your evaluation of the
Possible Transaction, neither the Company nor any of its representatives makes
hereunder any representation or warranty, express or implied, as to the accuracy
or completeness of the Proprietary Information delivered or made available to
you. Neither the Company nor its representatives shall have any liability to you
or your representatives relating to or arising from the use of the Proprietary
Information. Only those representations and warranties that are made in a
definitive agreement effecting the Possible Transaction when, as and if one is
executed, and subject to such limitations and restrictions as may be specified
in such agreement, shall have any legal effect.
7. Without prejudice to the rights and remedies otherwise available to
the parties, you agree that the Company shall be entitled to equitable relief by
way of injunction if you or any of your representatives breach or threaten to
breach any of the provisions of this letter agreement. It is understood that any
failure or delay by a party in exercising any right, power or privilege
hereunder shall not operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof.
8. This letter agreement constitutes the entire and exclusive agreement
between the parties respecting the subject matter hereof, superseding all prior
discussions, agreements or arrangements, whether oral or written, with respect
to the subject matter hereof. It may not be amended unless in writing and signed
by both parties. You acknowledge that the Company and its representatives have
no obligations to you of any kind respecting the Possible Transaction, that
there is no assurance that the Possible Transaction will be considered,
negotiated, agreed to or completed, and that an alternative transaction with a
person other than you may be considered, negotiated, agreed to or completed by
the Company without notice to you.
9. The Company agrees that it will not disclose to any person (other
than to its representatives actively and directly participating in or evaluating
the Possible Transaction) any information about the Possible Transaction, or the
terms, conditions or other facts relating thereto, including the fact that
discussions are taking place with respect thereto or the status thereof, or the
fact that the Proprietary Information has been made available to you, unless
otherwise agreed in writing by you or required by applicable law or regulation
or by legal process.
10. This letter agreement may be executed and delivered by facsimile
signature in one or more counterparts, each of which shall constitute an
original instrument and all of which, together, shall constitute the same letter
agreement.
11. This letter agreement, its interpretation and enforcement, shall be
governed by the laws of the State of New Jersey applicable to agreements made
and to be performed wholly therein.
-4-
<PAGE> 5
Please confirm your agreement with the foregoing by signing and
returning to the undersigned the duplicate copy of this letter enclosed
herewith.
Yours truly,
JEVIC TRANSPORTATION, INC.
By: /s/ Harry J. Muhlschlegel
------------------------------------
Harry J. Muhlschlegel, Chairman
and Chief Executive Officer
Accepted and Agreed
YELLOW CORPORATION
By: /s/ William F. Martin, Jr.
-------------------------------
William F. Martin, Jr.,
Senior Vice President
-5-
<PAGE> 1
EXHIBIT 12
[JEVIC TRANSPORTATION INC. LETTERHEAD]
June 9, 1999
To Our Shareholders:
I am pleased to inform you that on June 6, 1999, Jevic Transportation, Inc.
(the "Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Yellow Corporation ("Parent") and JPF Acquisition Corp. (the
"Purchaser"), a wholly owned subsidiary of Parent. Upon the terms and subject to
the conditions set forth in the Offer to Purchase dated June 9, 1999 (the "Offer
to Purchase") and the related Letter of Transmittal, copies of which are being
mailed to you on or about June 9, 1999, the Purchaser has commenced a tender
offer (the "Offer") to purchase all of the outstanding shares of Common Stock
and Class A Common Stock (collectively, the "Shares") of the Company for $14.00
per Share in cash. Under the terms of the Merger Agreement, following the
successful completion of the Offer, the Purchaser will be merged (the "Merger")
with and into the Company and all Shares not purchased in the Offer will be
converted into the right to receive $14.00 per Share in cash.
Your Board of Directors has unanimously approved the Merger Agreement, the
Offer and the Merger and has unanimously determined that the terms of the Merger
Agreement are fair to, and in the best interests of, the Company's shareholders.
The Board of Directors unanimously recommends that the Company's shareholders
accept the Offer, tender their Shares in the Offer and approve and adopt the
Merger Agreement and the Merger.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Janney Montgomery Scott Inc., the
Company's financial advisor, that the $14.00 per Share in cash to be received by
the shareholders in the Offer and the Merger is fair from a financial point of
view. A copy of the fairness opinion is attached as Annex I to the Schedule
14D-9, and shareholders are urged to read the opinion in its entirety.
Sincerely,
/s/ Harry J. Muhlschlegel
Harry J. Muhlschlegel
Chairman of the Board and
Chief Executive Officer
<PAGE> 1
EXHIBIT 13
JEVIC TRANSPORTATION INC.
Company Headquarters
700 Creek Road
Delanco NJ 08075
Analyst Contact: Brian Fitzpatrick 1-800-257-0427
Media Contact: Peter A. Robinson 609-764-6794
6/7/99
FOR IMMEDIATE RELEASE:
JEVIC TRANSPORTATION INC. AGREES TO BE ACQUIRED
FOR $14 PER SHARE IN CASH
DELANCO, NJ - June 7, 1999 - Jevic Transportation Inc (Nasdaq: JEVC) announced
today that it had entered into a definitive agreement under which Yellow
Corporation (Nasdaq: YELL) will commence a tender offer to acquire all shares of
Jevic stock at a cash price of $14 per share. Upon completion of the tender,
Jevic will become part of Yellow Corporation's newly formed multi-regional
transportation services holding company. The new carrier group would become one
of the nation's largest multi-regional LTL transportation companies.
The value of the acquisition, including debt assumption, is approximately $200
million. It will be financed through cash on-hand at Yellow Corporation and
existing Yellow Corporation debt facilities and could be completed early in the
third quarter of 1999. Completion of the tender offer and subsequent merger is
subject to certain customary conditions, including the receipt of regulatory
approval.
The merger agreement is subject to termination by Jevic in the event it receives
a superior unsolicited third party offer, subject to the payment to Yellow
Corporation of a termination fee of $4.75 million and reimbursement of up to $1
million of Yellow Corporation's expenses, and subject to satisfaction of certain
other conditions.
-more-
<PAGE> 2
Jevic also announced members of its management and certain related family
trusts have agreed to tender their Jevic shares, constituting approximately 53%
of the outstanding shares of Jevic stock, to Yellow Corporation. This agreement
would terminate in the event Jevic's merger agreement with Yellow Corporation
were to terminate.
"Joining a group of excellent regional companies is an exciting opportunity for
Jevic," said Harry Muhlschlegel, who will remain as Chief Executive Officer of
Jevic. "Of most importance to our employees and customers are the vast benefits
this transaction provides. This agreement will provide the necessary resources
required for swifter and deeper target market penetration. And this will have an
immediate and very positive impact on our ability to expand our geographic reach
for our customers. We see both cost saving and revenue generating
opportunities."
Jevic is a fully integrated regional and inter-regional less-than-truckload and
partial-truckload carrier of general commodity freight in the United States.
Jevic's operating system combines the high revenue yield characteristics of
less-than-truckload carriers with the operating flexibility and low fixed costs
of truckload carriers. Jevic, a New Jersey corporation, has its headquarters and
main regional facility in Delanco, New Jersey, in the Philadelphia Metropolitan
area.
