-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CqkaCTh7TEW1KevbnBWARqAW7N6DL0MuXARX8xZTYcKQxLY753tiA9Tt4cvEiAvA ZVuHt4lmSLI9kaq4VWYBGg== 0000950115-98-001424.txt : 19980817 0000950115-98-001424.hdr.sgml : 19980817 ACCESSION NUMBER: 0000950115-98-001424 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JEVIC TRANSPORTATION INC CENTRAL INDEX KEY: 0001044066 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 222373402 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23095 FILM NUMBER: 98688539 BUSINESS ADDRESS: STREET 1: 600 CREEK RD P O BOX 5157 CITY: DELANCO STATE: NJ ZIP: 08075 BUSINESS PHONE: 6094617111 10-Q 1 QUARTERLY REPORT - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 Or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission file number 000-23095 JEVIC TRANSPORTATION, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) New Jersey 22-2373402 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 Creek Road, Delanco, NJ 08075 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) 609-461-7111 ---------------------------------------------------- (Registrant's telephone number, including area code) N/A ---------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No -- -- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Equity, no par value, 10,667,909 shares outstanding as of July 20, 1998, consisting of two series: Class A Common Stock, no par value, 5,739,544 shares outstanding as of July 20, 1998 Common Stock, no par value, 4,938,365 shares outstanding as of July 20, 1998 - -------------------------------------------------------------------------------- JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES INDEX
Page ---- Part I. Financial Information Item 1. Consolidated Financial Statements (unaudited) Consolidated Balance Sheets--June 30, 1998 and December 31, 1997 1 Consolidated Statements of Income--Three and six months ended June 30, 1998 and 1997 2 Consolidated Statements of Cash Flows-- Six months ended June 30, 1998 and 1997 3 Notes to Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders 12 Item 6. Exhibits and Reports on Form 8-K 12
Item 1. Consolidated Financial Statements JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share information)
June 30, December 31, 1998 1997 ---- ---- (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents .......................................................... $ 4,354 $ 7,185 Accounts receivable, less allowance for doubtful accounts of $1,426 and $1,527 ................................................................ 22,331 21,792 Prepaid expenses and other ......................................................... 3,733 3,172 Deferred income taxes .............................................................. 2,201 1,862 --------- --------- Total current assets ...................................................... 32,619 34,011 PROPERTY AND EQUIPMENT, net ............................................................ 86,754 77,894 OTHER ASSETS ........................................................................... 1,261 1,463 --------- --------- $ 120,634 $ 113,368 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt and capital lease obligations ...................................................................... $ 1,883 $ 1,976 Accounts payable and accrued expenses .............................................. 13,823 12,514 Claims and insurance reserves ...................................................... 4,432 3,917 Deferred freight revenues .......................................................... 1,992 1,752 --------- --------- Total current liabilities ................................................ 22,130 20,159 --------- --------- LONG-TERM DEBT ......................................................................... 14,744 15,679 --------- --------- DEFERRED INCOME TAXES .................................................................. 12,877 11,782 --------- --------- OTHER LIABILITIES ...................................................................... 37 211 --------- --------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, no par value, 10,000,000 shares authorized; none issued and outstanding ...................................................... -- -- Common stock, no par value, 40,000,000 shares authorized; 4,938,365 and 4,918,656 issued and outstanding, respectively ..................................................................... -- -- Class A common stock, no par value, 10,000,000 shares authorized; 5,739,544 shares issued and outstanding .............................. -- -- Additional paid-in capital ......................................................... 72,031 71,816 Accumulated deficit ................................................................ (1,185) (6,279) --------- --------- Total shareholders' equity ............................................... 70,846 65,537 --------- --------- $ 120,634 $ 113,368 ========= =========
The accompanying notes are an integral part of these statements. 1 JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share information) (unaudited)
Three Months Ended Six Months Ended June 30, June 30, ----------------------- ------------------------ 1998 1997 1998 1997 ---- ---- ---- ---- OPERATING REVENUES ......................................................... $ 54,580 $ 46,137 $ 109,480 $ 90,417 --------- --------- --------- --------- OPERATING EXPENSES: Salaries, wages and benefits ........................................... 27,637 23,845 55,366 46,583 Supplies and other expenses ............................................ 9,140 8,633 18,691 17,371 Purchased transportation ............................................... 6,475 3,953 12,835 8,595 Depreciation and amortization .......................................... 3,635 2,760 7,180 5,382 Operating taxes and licenses ........................................... 2,474 2,137 5,024 4,302 Insurance and claims ................................................... 671 1,005 2,021 1,975 (Gain) loss on sale of equipment ....................................... (422) 72 (418) 100 --------- --------- --------- --------- 49,610 42,405 100,699 84,308 --------- --------- --------- --------- Operating income .................................................. 4,970 3,732 8,781 6,109 INTEREST EXPENSE, net ...................................................... 286 870 541 1,629 OTHER INCOME, net .......................................................... (63) (24) (92) (55) --------- --------- --------- --------- Income before income taxes ........................................ 4,747 2,886 8,332 4,535 INCOME TAXES ............................................................... 1,875 98 3,237 180 --------- --------- --------- --------- NET INCOME ................................................................. $ 2,872 $ 2,788 $ 5,095 $ 4,355 ========= ========= ========= ========= Basic net income per share ............................................. $ 0.27 $ 0.41 $ 0.48 $ 0.64 ========= ========= ========= ========= Diluted net income per share ........................................... $ 0.27 $ 0.40 $ 0.47 $ 0.62 ========= ========= ========= =========
The accompanying notes are an integral part of these statements. 2 JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Six Months Ended June 30, ------------------------ 1998 1997 ---- ---- OPERATING ACTIVITIES: Net income ......................................................................................... $ 5,095 $ 4,355 Adjustments to reconcile net income to net cash provided by operating activities -- Depreciation and amortization ................................................................ 7,180 5,382 (Gain) loss on sale of equipment ............................................................. (418) 100 Provision for bad debts ...................................................................... (2) 483 Deferred income tax provision ................................................................ 756 75 Changes in assets and liabilities-- Increase in accounts receivable .......................................................... (537) (2,053) Increase in prepaid expenses and other ................................................... (561) (1,086) (Increase) decrease in other assets ..................................................... 202 (103) Increase (decrease) in accounts payable and accrued expenses .............................................................................. 1,113 (711) Increase in claims and insurance reserves ................................................ 514 46 Increase in accrued income taxes ......................................................... 22 60 Increase in deferred freight revenues .................................................... 240 163 -------- -------- Net cash provided by operating activities .......................................... 13,604 6,711 -------- -------- INVESTING ACTIVITIES: Proceeds from sale of equipment .................................................................... 1,548 241 Capital expenditures ............................................................................... (17,171) (14,180) -------- -------- Net cash used in investing activities .............................................. (15,623) (13,939) -------- -------- FINANCING ACTIVITIES: Payments of long-term debt ......................................................................... (1,027) (4,294) Proceeds from issuance of long-term debt ........................................................... -- 15,539 Payments of capital lease obligations .............................................................. -- (380) Distributions to shareholder ....................................................................... -- (1,198) Proceeds from Employee Stock Purchase Plan ......................................................... 215 -- -------- -------- Net cash provided by (used in) financing activities.......................................................................... (812) 9,667 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............................................................................... (2,831) 2,439 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................................................................................ 7,185 2,403 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD ............................................................... $ 4,354 $ 4,842 ======== ========
The accompanying notes are an integral part of these statements. 3 JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. Basis of Presentation The accompanying unaudited consolidated financial statements of Jevic Transportation, Inc. and subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and six month periods ended June 30, 1998, are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. 2. Earnings Per Share Basic and diluted net income per share have been computed under the guidelines of Statement of Financial Accounting Standards No. 128, "Earnings per Share." Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period, adjusted for the dilutive effect of common stock equivalents, consisting of dilutive common stock options using the treasury stock method. The table below sets forth the reconciliation of basic to diluted net income per share (in thousands, except per share amounts):
Three Months Ended June 30, ------------------------------------------------------------- 1998 1997 --------------------------- ------------------------- Per Per Net Share Net Share Income Shares Amount Income Shares Amount ------ ------ ------ ------ ------ ------ Basic net income per share .......................... $2,872 10,672 $0.27 $2,788 6,858 $0.41 Effect of dilutive securities .......................... -- 162 0.00 -- 175 (0.01) ------ ------ ----- ------ ----- ----- Diluted net income per share ........................... $2,872 10,834 $0.27 $2,788 7,033 $0.40 ====== ====== ===== ====== ===== =====
4 JEVIC TRANSPORTATION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Six Months Ended June 30, ------------------------------------------------------------- 1998 1997 --------------------------- ------------------------- Per Per Net Share Net Share Income Shares Amount Income Shares Amount ------ ------ ------ ------ ------ ------ Basic net income per share .............................. $5,095 10,667 $0.48 $4,355 6,858 $0.64 Effect of dilutive securities .......................... -- 178 (0.01) -- 166 (0.02) ------ ------ ----- ------ ----- ----- Diluted net income per share ........................... $5,095 10,845 $0.47 $4,355 7,024 $0.62 ====== ====== ===== ====== ===== =====
5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Jevic was founded in 1981 after the deregulation of the trucking industry, and has developed an operating system which combines the high revenue yield characteristics of a typical LTL carrier with the operating flexibility and low fixed costs of a truckload carrier. Most other motor carriers have continued to specialize as either truckload, moving one shipment at a time, or less-than-truckload, moving multiple small shipments through networks of up to 500 terminals. The Company's system uses a small number of regional facilities which serve as origination points for consolidation of both small and large shipments. The shipments are then loaded onto line-haul trailers in a sequence which permits direct unloading at each shipment's destination, eliminating the need to rehandle individual shipments at one or more breakbulk terminals. Management focuses on adjusting freight mix to maximize asset utilization. The Company maintains a high percentage of variable costs in order to minimize the impact of short-term swings in demand. Because of the distinct nature of Jevic's operating system, the Company believes that profitability measures and expense ratios traditionally used to evaluate truckload or less-than-truckload carriers are generally not meaningful. Jevic's results of operations have been impacted by two key trends. First, Jevic has been increasing the percentage of its shipments transported by owner-operators, who supply their own tractor and bear all associated expenses in return for a contracted rate. As a result, purchased transportation has increased as a percentage of operating revenues, offset by a reduction, as a percentage of operating revenues, of drivers' salaries, wages and benefits, depreciation, fuel, operating taxes and licenses and other supplies and operating expenses. Additionally, Jevic has shifted from a policy of leasing revenue equipment to purchasing revenue equipment. As a result, depreciation and interest expense has increased as a percentage of operating revenues while lease expense, which is included in supplies and other expenses, has decreased. 6 Results of Operations The following table sets forth for the periods indicated the percentage of operating revenues represented by certain items in the Company's statements of income:
Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 1998 1997 1998 1997 ---- ---- ---- ---- Operating revenues .............................................................. 100.0% 100.0% 100.0% 100.0% ----- ----- ----- ----- Operating expenses: Salaries, wages and benefits ................................................ 50.6 51.7 50.6 51.5 Supplies and other expenses ................................................. 16.7 18.7 17.1 19.2 Purchased transportation .................................................... 11.9 8.6 11.7 9.5 Depreciation and amortization ............................................... 6.7 6.0 6.6 6.0 Operating taxes and licenses ................................................ 4.5 4.6 4.6 4.8 Insurance and claims ........................................................ 1.2 2.2 1.8 2.2 (Gain) loss on sale of equipment ............................................ (0.7) 0.1 (0.4) 0.1 ----- ----- ----- ----- 90.9 91.9 92.0 93.3 ----- ----- ----- ----- Operating income ................................................................ 9.1 8.1 8.0 6.7 Interest expense, net ........................................................... 0.5 1.9 0.5 1.8 Other income, net ............................................................... (0.1) (0.1) (0.1) (0.1) ----- ----- ----- ----- Income before income taxes ...................................................... 8.7% 6.3% 7.6% 5.0% ===== ===== ===== =====
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997 Operating Revenues Operating revenues increased 18.4% for the three months ended June 30, 1998 to $54.6 million from $46.1 million for the comparable period of 1997. The increase resulted primarily from a 14.6% increase in total shipments. In addition, revenue per shipment increased 3.2% to $288 for the three months ended June 30, 1998 from $279 during the three months ended June 30, 1997. Operating Expenses Operating expenses increased 17.0% to $49.6 million for the three months ended June 30, 1998 from $42.4 million for the comparable period of 1997. As a percentage of operating revenues, operating expenses decreased to 90.9% for the three months ended June 30, 1998 from 91.9% for the comparable period of 1997. This increase in operating expenses is primarily due to increased revenues, as the majority of the Company's operating expenses are variable in nature. The percentage decrease was the result of the Company's increased use of owner-operators, a reduction in fuel prices and a reduction in insurance and claims expense. Salaries, wages and benefits increased 16.0% to $27.6 million for the three months ended June 30, 1998 from $23.8 million for the comparable period of 1997. As a percentage of operating revenues, salaries, wages and benefits decreased to 50.6% for the three months ended June 30, 1998 from 51.7% for the comparable period of 1997. This percentage decrease was primarily due to the Company's increased use of owner-operators and outside line-haul transportation in 1998. 7 Supplies and other expenses, which primarily consist of operating leases, fuel, tolls, tires, parts and bad debt expense, increased 5.8% to $9.1 million for the three months ended June 30, 1998 from $8.6 million for the comparable period of 1997. As a percentage of operating revenues, supplies and other expenses decreased to 16.7% for the three months ended June 30, 1998 from 18.7% for the comparable period of 1997. This percentage decrease was due to the Company's continuing shift toward the purchase of revenue equipment rather than leasing such equipment under operating leases, lower fuel prices, the Company's increased use of owner-operators in 1998 and a reduction in bad debt expense in 1998 as a result of improved collection procedures. Purchased transportation increased 62.5% to $6.5 million for the three months ended June 30, 1998 from $4.0 million for the comparable period of 1997. As a percentage of operating revenues, purchased transportation increased to 11.9% for the three months ended June 30, 1998 from 8.6% for the comparable period of 1997. The increase was primarily due to the increased use of owner-operators to supplement the Company's fleet and the increased use of outside line-haul transportation. Depreciation and amortization expense increased 28.6% to $3.6 million for the three months ended June 30, 1998 from $2.8 million for the comparable period of 1997. As a percentage of operating revenues, depreciation and amortization increased to 6.7% for the three months ended June 30, 1998 from 6.0% for the comparable period of 1997. The increase was primarily attributable to the Company's continuing shift toward the purchase of additional and replacement revenue equipment rather than leasing such equipment under operating leases and the Company's purchase of computer hardware. Operating taxes and licenses increased 19.0% to $2.5 million for the three months ended June 30, 1998 from $2.1 million for the comparable period of 1997. As a percentage of operating revenues, operating taxes and licenses decreased to 4.5% for the three months ended June 30, 1998 from 4.6% for the comparable period of 1997. This percentage decrease was primarily attributable to a decrease in fuel taxes due to the Company's increased use of outside line-haul transportation and owner-operators, who pay for their own taxes and licenses. Insurance and claims decreased 30.0% to $700,000 for the three months ended June 30, 1998 from $1.0 million for the comparable period of 1997. As a percentage of operating revenues, insurance and claims decreased to 1.2% for the three months ended June 30, 1998 from 2.2% for the comparable period of 1997. The percentage decrease was attributable to favorable development of claims and reduced premiums on renegotiated insurance coverages that were effective April 1, 1998. Interest Expense Interest expense decreased 66.7% to $300,000 for the three months ended June 30, 1998 from $900,000 for the comparable period of 1997. As a percentage of operating revenues, interest expense decreased to 0.5% for the three months ended June 30, 1998 from 1.9% for the comparable period of 1997. Interest expense decreased due to the Company having paid off debt with part of the proceeds of the initial public offering in October 1997. Income Taxes Income taxes increased to $1.9 million for the three months ended June 30, 1998 from $98,000 for the comparable period of 1997. In the second quarter of 1998 the Company was subject to corporate federal and state income taxes. Prior to the Company's initial public offering in October 1997 the Company was an S corporation, and, accordingly, was not subject to corporate income taxes, except for certain states for certain periods. 8 Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997 Operating Revenues Operating revenues increased 21.1% for the three months ended June 30, 1998 to $109.5 million from $90.4 million for the comparable period of 1997. The increase resulted primarily from a 15.2% increase in total shipments. In addition, revenue per shipment increased 5.1% to $289 for the six months ended June 30, 1998 from $275 during the six months ended June 30, 1997. Operating Expenses Operating expenses increased 19.5% to $100.7 million for the six months ended June 30, 1998 from $84.3 million for the comparable period of 1997. As a percentage of operating revenues, operating expenses decreased to 92.0% for the six months ended June 30, 1998 from 93.3% for the comparable period of 1997. This increase in operating expenses is primarily due to increased revenues, as the majority of the Company's operating expenses are variable in nature. The percentage decrease was the result of the Company's increased use of owner-operators, a reduction in fuel prices and a reduction in insurance and claims expense. Salaries, wages and benefits increased 18.9% to $55.4 million for the six months ended June 30, 1998 from $46.6 million for the comparable period of 1997. As a percentage of operating revenues, salaries, wages and benefits decreased to 50.6% for the six months ended June 30, 1998 from 51.5% for the comparable period of 1997. This percentage decrease was primarily due to the Company's increased use of owner-operators and outside line-haul transportation in 1998. Supplies and other expenses, which primarily consist of operating leases, fuel, tolls, tires, parts and bad debt expense, increased 7.5% to $18.7 million for the six months ended June 30, 1998 from $17.4 million for the comparable period of 1997. As a percentage of operating revenues, supplies and other expenses decreased to 17.1% for the six months ended June 30, 1998 from 19.2% for the comparable period of 1997. This percentage decrease was due to the Company's continuing shift toward the purchase of revenue equipment rather than leasing such equipment under operating leases, lower fuel prices, the Company's increased use of owner-operators in 1998 and a reduction in bad debt expense in 1998 as a result of improved collection procedures. Purchased transportation increased 48.8% to $12.8 million for the six months ended June 30, 1998 from $8.6 million for the comparable period of 1997. As a percentage of operating revenues, purchased transportation increased to 11.7% for the six months ended June 30, 1998 from 9.5% for the comparable period of 1997. The increase was primarily due to the increased use of owner-operators to supplement the Company's fleet and the increased use of outside line-haul transportation. Depreciation and amortization expense increased 33.3% to $7.2 million for the six months ended June 30, 1998 from $5.4 million for the comparable period of 1997. As a percentage of operating revenues, depreciation and amortization increased to 6.6% for the six months ended June 30, 1998 from 6.0% for the comparable period of 1997. The increase was primarily attributable to the Company's continuing shift toward the purchase of additional and replacement revenue equipment rather than leasing such equipment under operating leases and the Company's purchase of computer hardware. Operating taxes and licenses increased 16.3% to $5.0 million for the six months ended June 30, 1998 from $4.3 million for the comparable period of 1997. As a percentage of operating revenues, operating taxes and licenses decreased to 4.6% for the six months ended June 30, 1998 from 4.8% for the comparable period of 1997. This percentage decrease was primarily attributable to a decrease in 9 fuel taxes due to the Company's increased use of outside line-haul transportation and owner-operators, who pay for their own taxes and licenses. Insurance and claims remained flat at $2.0 million for the six months ended June 30, 1998 and the comparable period of 1997. As a percentage of operating revenues, insurance and claims decreased to 1.8% for the six months ended June 30, 1998 from 2.2% for the comparable period of 1997. The percentage decrease was attributable to favorable development of claims and reduced premiums on renegotiated insurance coverages that were effective April 1, 1998. Interest Expense Interest expense decreased 68.8% to $500,000 for the six months ended June 30, 1998 from $1.6 million for the comparable period of 1997. As a percentage of operating revenues, interest expense decreased to 0.5% for the six months ended June 30, 1998 from 1.8% for the comparable period of 1997. Interest expense decreased due to the Company having paid off debt with part of the proceeds of the initial public offering in October 1997. Income Taxes Income taxes increased to $3.2 million for the six months ended June 30, 1998 from $180,000 for the comparable period of 1997. In the first six months of 1998 the Company was subject to corporate federal and state income taxes. Prior to the Company's initial public offering in October 1997 the Company was an S corporation, and, accordingly, was not subject to corporate income taxes, except for certain states for certain periods. Liquidity and Capital Resources The Company's primary sources of liquidity have been funds provided by operations, equipment leases and bank borrowings. Net cash provided by operating activities was approximately $13.6 million for the first six months of 1998 compared to $6.7 million for the corresponding period in 1997. The increase in cash provided by operations is primarily attributable to the Company's increased income before depreciation and amortization expense in 1998, a smaller increase in accounts receivable in 1998 compared to 1997, and the timing of certain payments, resulting in increased accounts payable in 1998. Capital expenditures, net of trade-in allowances, totaled approximately $17.2 million during the first six months of 1998 compared to $14.2 million in the comparable period of 1997. For the six months ended June 30, 1998, the $17.2 million of capital expenditures were comprised of $10.1 million of revenue equipment, $6.5 million for facilities and $600,000 of other equipment. The Company generally purchases new line-haul tractors and replaces them after three years. Regional and local tractors are replaced after five years, depending on levels of use. The Company generated cash proceeds from sales of used tractors of $1.5 million in the six months ended June 30, 1998 versus $241,000 in the comparable period of the prior year. Net cash used in financing activities was approximately $812,000 for the six months ended June 30, 1998 compared to net cash provided of $9.7 million for the comparable period of 1997. At June 30, 1998, total borrowings under long-term debt totaled $16.6 million, maturing through 2007, and obligations relating to operating leases totaled $8.6 million through 2013, of which $1.8 million related to a facility lease with the Company's founders. 10 On June 22, 1998, Jevic signed an agreement with First Union National Bank for a $35 million credit facility. The new credit facility replaces the $25 million facility that Jevic had previously with CoreStates Bank, N.A., which was acquired by First Union. The credit facility includes a $10 million working capital revolving line of credit, with borrowings limited to 80% of the Company's eligible accounts receivable, as defined, and a $25 million equipment revolving line of credit used to purchase or refinance revenue equipment. At June 30, 1998, there was $4.6 million outstanding under the equipment revolver and $525,000 of outstanding standby letters of credit under the working capital revolver. The equipment revolving line of credit is secured by a first priority, perfected security interest in the revenue equipment purchased or refinanced. The rate of interest on both lines of credit is, at the Company's election, either the Bank's base rate (higher of the Federal Funds Rate plus 1/2 of 1% or the prime commercial lending rate of First Union) or a rate based on the London Interbank Offered Rate (LIBOR). The working capital line of credit expires in June 2003; the equipment line of credit expires in June 2000. The agreement allows the Company to convert outstanding amounts under the equipment revolver to term loans if the line of credit is not renewed. The credit facility contains covenants made by the Company which limit its ability to make business acquisitions and pay dividends on its capital stock, including the Common Stock, among other things. The Company believes that its cash and cash equivalents, funds generated from operations and available borrowings under its current or future credit facilities will be sufficient to fund the Company's activities at least through 1999. While the Company intends to selectively pursue acquisitions of companies that are complementary with its operations, the Company currently does not have any commitments or agreements for any business acquisitions. Inflation The Company does not believe that inflation has had a material impact on its results of operations for the past three years. Seasonality In the trucking industry, revenues generally follow a seasonal pattern as customers reduce shipments during and after the winter holiday season. In addition, highway transportation can be adversely affected depending upon the severity of the weather in various sections of the country during the winter months. The Company's operating expenses have historically been higher in winter months, due primarily to decreased fuel efficiency and increased maintenance costs for revenue equipment in colder weather. Accordingly, the Company's results of operations may fluctuate to reflect such seasonality. Year 2000 Costs Many computer systems were not designed to handle dates beyond the year 1999, and, therefore, computer hardware and software will need to be modified prior to the year 2000 in order to remain functional. The company is in the process of upgrading its primary computer platform in order to provide increased enterprise computing and additional disaster recovery capabilities. This new system was designed to be Year 2000 compliant. Management is in the process of determining whether all of the Company's other computer systems are Year 2000 compliant. Management does not expect the costs associated with any required conversions of such other systems to ensure Year 2000 compliance to be significant. In the event that any of the Company's significant vendors or customers do not successfully achieve Year 2000 compliance on a timely basis, the Company's 11 business or operations could be adversely affected. To minimize this risk, the Company has begun to contact all mission critical vendors to determine their Year 2000 compliance status. Cautionary Statement for Forward Looking Information Statements included in this Management's Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made above. These include, but are not limited to, general economic factors, availability of employee drivers and owner-operators, capital requirements, competition, acquisition of revenue equipment, unionization, fuel, seasonality, claims exposure and insurance costs, difficulty in managing growth, regulation, environmental hazards and dependence on key personnel. Further information on these and other factors which could affect the Company's financial results can be found in the Company's periodic reports on forms 10-K and 10-Q. Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders On May 15, 1998, the Annual Meeting of Shareholders of Jevic Transportation, Inc. was held. The shareholders re-elected two nominees from the existing Board of Directors to three year terms expiring in 2001. The shareholders also approved the designation of Arthur Andersen LLP as independent auditors. The number of votes cast for and withheld from the election of each director is set forth below. Election of Directors: For Withheld --- -------- Gordon R. Bowker 14,606,290 500 Samuel H. Jones, Jr. 14,606,190 600 The number of votes cast for, against and abstentions relating to the designation of Arthur Andersen LLP as independent auditors is set forth below.
For Against Abstain --- ------- ------- Approval of designation of Arthur Andersen LLP as independent auditors 14,606,240 550 0
Item 6. Exhibits and Reports on Form 8-K a. Exhibits * Exhibit 10.21 - Amended and Restated Credit Agreement between Jevic Transportation, Inc. and First Union National Bank, Dated June 22, 1998 * Exhibit 27.1 - Financial Data Schedule b. Reports on Form 8-K - None 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized, on the 14th day of August, 1998. JEVIC TRANSPORTATION, INC. By: --------------------------- Harry J. Muhlschlegel Chief Executive Officer By: --------------------------- Brian J. Fitzpatrick Senior Vice President and Chief Financial Officer EX-10.21 2 AMENDED AND RESTATED CREDIT AGREEMENT Exhibit 10.21 ================================================================================ Amended and Restated CREDIT AGREEMENT $35,000,000 between JEVIC TRANSPORTATION, INC. and FIRST UNION NATIONAL BANK Dated June 22, 1998 ================================================================================ Table of Contents 1. Certain Definitions...........................................................................................1 1.1 Definitions.....................................................................................1 1.2 Accounting Terms...............................................................................10 2. The Credit...................................................................................................10 2.1 The Loans......................................................................................10 (a) Equipment Revolving Credit Loans. ....................................................10 (b) Working Capital Revolving Credit Loans. ..............................................11 (c) Standby Letters of Credit. ...........................................................12 2.2 The Notes......................................................................................13 (a) Equipment Revolving Credit Note.......................................................13 (b) Working Capital Revolving Credit Note.................................................13 2.3 Funding Procedures.............................................................................13 (a) Request for Advance...................................................................13 (b) Irrevocability........................................................................14 (c) Availability of Funds.................................................................14 (d) Funding of Net Amount.................................................................14 2.4 Interest.......................................................................................14 (a) Base Rate.............................................................................14 (b) LIBO Rate.............................................................................15 (c) Renewals and Conversions of Loans.....................................................15 (d) Automatic Reinstatement...............................................................16 2.5 Fees...........................................................................................16 (a) Structuring and Arranging Fee.........................................................16 (b) Equipment Revolving Loan Commitment Fee...............................................16 (c) Working Capital Revolving Loan Commitment Fee.........................................16 (d) Payment of Commitment Fees............................................................16 2.6 Reduction or Termination of Commitments........................................................16 (a) Voluntary Reductions or Terminations..................................................16 (b) Equipment Revolving Loan Commitment Termination.......................................17 (c) Working Capital Revolving Loan Commitment Termination.................................17 2.7 Voluntary Prepayments..........................................................................17 (a) Base Rate Loans.......................................................................17 (b) LIBO Rate Loans.......................................................................17 2.8 Payments.......................................................................................17 (a) Base Rate Loans.......................................................................17 (b) LIBO Rate Loans.......................................................................17 (c) Form of Payments, Application of Payments, Payment Administration, Etc...........................................................17 (d) Net Payments..........................................................................18 (e) Prepayment of LIBO Rate Loans.........................................................18 2.9 Changes in Circumstances; Yield Protection.....................................................19 2.10 Illegality.....................................................................................20
- i - 3. Representations and Warranties...............................................................................21 3.1 Organization, Standing.........................................................................21 3.2 Corporate Authority, Validity, Etc.............................................................21 3.3 Litigation.....................................................................................21 3.4 ERISA..........................................................................................21 3.5 Financial Statements...........................................................................22 3.6 Not in Default, Judgments, Etc.................................................................22 3.7 Taxes..........................................................................................22 3.8 Permits, Licenses, Etc.........................................................................22 3.9 Compliance with Laws, Etc......................................................................22 3.10 Solvency.......................................................................................23 3.11 Subsidiaries, Etc..............................................................................23 3.12 Title to Properties, Leases....................................................................23 3.13 Public Utility Holding Company; Investment Company.............................................23 3.14 Margin Stock...................................................................................23 4. Conditions Precedent.........................................................................................24 4.1 All Loans......................................................................................24 (a) Documents.............................................................................24 (b) Covenants; Representations............................................................24 (c) Defaults..............................................................................24 (d) Material Adverse Change...............................................................24 (e) Borrowing Base Certificate............................................................24 4.2 Conditions to First Loan.......................................................................24 (a) Articles, Bylaws......................................................................24 (b) Evidence of Authorization.............................................................24 (c) Legal Opinions........................................................................24 (d) Incumbency............................................................................25 (e) Notes.................................................................................25 (f) Documents.............................................................................25 (g) Consents..............................................................................25 (h) Change................................................................................25 (i) Other Agreements......................................................................25 (j) Fees..................................................................................25 5. Affirmative Covenants........................................................................................25 5.1 Financial Statements and Reports...............................................................25 (a) Annual Statements.....................................................................25 (b) Quarterly Statements..................................................................26 (c) No Default............................................................................26 (d) ERISA.................................................................................26 (e) Material Changes......................................................................27 (f) Other Information.....................................................................27 (g) Borrowing Base Certificates...........................................................27 (h) Monthly Receivables Report............................................................27 5.2 Corporate Existence............................................................................27 5.3 ERISA..........................................................................................27
- ii - 5.4 Compliance with Regulations....................................................................27 5.5 Conduct of Business; Permits and Approvals, Compliance with Laws...............................27 5.6 Maintenance of Insurance.......................................................................28 5.7 Payment of Debt; Payment of Taxes, Etc.........................................................28 5.8 Notice of Events...............................................................................28 5.9 Inspection Rights..............................................................................29 5.10 Generally Accepted Accounting Principles.......................................................29 5.11 Use of Proceeds................................................................................29 5.12 Further Assurances.............................................................................29 5.13 Compliance with Material Contracts.............................................................29 5.14 Restrictive Covenants in Other Agreements......................................................29 6. Negative Covenants...........................................................................................30 6.1 Consolidation and Merger.......................................................................30 6.2 Debt...........................................................................................30 6.3 Liens..........................................................................................30 6.4 Guarantees.....................................................................................30 6.5 Margin Stock...................................................................................30 6.6 Acquisitions and Investments...................................................................30 6.7 Transfer of Assets; Nature of Business.........................................................31 6.8 Restricted Payments............................................................................31 6.9 Accounting Change..............................................................................31 6.10 Transactions with Affiliates...................................................................31 6.11 Gross Operating Leases and TRAC Leases.........................................................31 6.12 Restriction on Amendment of This Agreement.....................................................31 7. Financial Covenants..........................................................................................31 7.1 Borrowing Base.................................................................................31 7.2 Senior Debt:Cash Flow Ratio....................................................................32 7.3 Senior Debt:Capital Ratio......................................................................32 8. Default......................................................................................................32 8.1 Events of Default..............................................................................32 (a) Payments..............................................................................32 (b) Covenants.............................................................................32 (c) Representations, Warranties...........................................................32 (d) Bankruptcy............................................................................32 (e) Certain Other Defaults................................................................32 (f) Judgments.............................................................................33 (g) Attachments...........................................................................33 (h) Change in Control.....................................................................33 (i) Security Interests....................................................................33 (j) Material Adverse Change...............................................................33 9. Collateral...................................................................................................34 9.1 Collateral.....................................................................................34 9.2 Security Agreement.............................................................................34
- iii - 10. Miscellaneous...............................................................................................34 10.1 Waiver.........................................................................................34 10.2 Amendments.....................................................................................34 10.3 Governing Law..................................................................................34 10.4 Participations and Assignments.................................................................34 (a) Captions..............................................................................35 10.5 Notices........................................................................................35 10.6 Expenses; Indemnification......................................................................35 10.7 Survival of Warranties and Certain Agreements..................................................36 10.8 Severability...................................................................................36 10.9 No Fiduciary Relationship......................................................................36 10.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.................................................36 10.11 WAIVER OF JURY TRIAL...........................................................................36 10.12 Counterparts; Effectiveness....................................................................37 10.13 Use of Defined Terms...........................................................................37 10.14 Offsets........................................................................................37 10.15 Entire Agreement...............................................................................37 10.16 Inconsistency with Existing First Union Loans..................................................38 - ----------------------------------------------------------------------- EXHIBIT A EQUIPMENT REVOLVING CREDIT NOTE EXHIBIT B WORKING CAPITAL REVOLVING CREDIT NOTE EXHIBIT C BORROWING BASE CERTIFICATE EXHIBIT D SECURITY AGREEMENT EXHIBIT E LETTER OF CREDIT APPLICATION SCHEDULE 1 DEPRECIATION SCHEDULE 2 MISCELLANEOUS INFORMATION
- iv - Amended and Restated Credit Agreement This Credit Agreement, dated June 22, 1998 (this "Agreement"), is entered into by and between JEVIC TRANSPORTATION, INC., a New Jersey corporation ("Jevic") and FIRST UNION NATIONAL BANK ("First Union" or the "Bank"). Preliminary Statement WHEREAS, Jevic and First Union are parties to a Credit Agreement, dated as of June 28, 1996 (the "1996 Credit Agreement"), providing for revolving credit loans in an aggregate amount not to exceed $25,000,000 the proceeds of which may be used for the purchase or refinancing of over the road chassis and trailers, Qualcomm satellites, trailer dollys, trailer heaters, fork trucks, automobiles and miscellaneous equipment used in connection with Jevic's business. WHEREAS, Jevic and First Union have agreed to amend and restate the 1996 Credit Agreement as provided herein which, among other things, adds a credit facility for revolving credit loans in an aggregate amount not to exceed an additional $10,000,000 the proceeds of which may be used for general or working capital purposes. NOW, THEREFORE, in consideration of the premises and promises hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions 1.1 Definitions. "Accounts Receivable Aging Report" shall mean a report in summary form of the status of accounts receivable in form and substance reasonably satisfactory to the Bank. "Additional Amount" shall have the meaning set forth in ss.2.8(e). "Affiliate" shall mean any Person: (1) which directly or indirectly controls, or is controlled by, or is under common control with Jevic; (2) which directly or indirectly beneficially owns or holds ten percent (10%) or more of any class of voting stock of Jevic; or (3) ten percent (10%) or more of whose voting stock of which is directly or indirectly beneficially owned or held by Jevic. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. "Agreement" shall mean this Credit Agreement, as amended, supplemented, modified, replaced, substituted for or restated from time to time and all exhibits and schedules attached hereto. "Agreement Year" shall have the meaning set forth in ss.2.1(a). - 1 - "Applicable Margin" shall have the margin applicable to Base Rate and to LIBO Rate as set forth in ss.2.4. "Base Rate" shall mean, for any day, the higher of the Federal Funds Rate plus 1/2 of 1% or the prime commercial lending rate of First Union, as announced from time to time at its head office, calculated on the basis of the actual number of days elapsed in a year of 360 days. "Base Rate Loans" shall mean Equipment Revolving Credit Loans and Working Capital Revolving Credit Loans accruing interest based on the Base Rate. "Borrowing Base" shall mean for the Equipment Revolving Credit Loans an amount which is equal to 100% of the net book value of the Eligible Equipment, and for the Working Capital Revolving Credit Loans an amount which is equal to 80% of the Eligible Receivables. "Borrowing Base Certificate" shall mean a certificate in substantially the form attached hereto as Exhibit C hereto which shall be signed by the chief financial officer, treasurer or controller of Jevic. "Business Day" shall mean any day other than a Saturday, Sunday, or other day on which commercial banks in Philadelphia are authorized or required to close under the laws of the Commonwealth of Pennsylvania and, if the applicable day relates to a LIBO Rate Loan, or notice with respect to a LIBO Rate Loan, a day on which dealings in Dollar deposits are also carried on in the London interbank market and banks are open for business in London ("London Business Day"). "Capitalized Lease" shall mean all lease obligations of any Person for any property (whether real, personal or mixed) which have been or should be capitalized on the books of the lessee in accordance with General Accepted Accounting Principles. "Capitalized Lease Obligations" with respect to any Person, shall mean the aggregate amount which, in accordance with GAAP, is required to be reported as a liability on the balance sheet of such Person at such time in respect of such Person's interest as lessee under a Capital Lease. "Cash Flow" shall mean, for any period, without duplication, the amounts for such period, taken as a single accounting period, of (i) net income, (ii) non-cash charges (iii) interest expense, and (iv) to the extent reducing net income, income tax expenses of Jevic. "Closing Date" shall mean the date closing shall occur. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and all rules and regulations with respect thereto in effect from time to time. "Commitment" shall mean the Equipment Revolving Loan Commitment and the Working Capital Revolving Loan Commitment. "Commitment Fees" shall have the meaning set forth in ss.2.5(c). - 2 - "Debt" shall mean, as of any date of determination with respect to Jevic, without duplication, (i) all items which in accordance with Generally Accepted Accounting Principles would be included in determining total liabilities as shown on the liability side of a consolidated balance sheet of Jevic as of the date on which Debt is to be determined, (ii) all indebtedness of others with respect to which Jevic has become liable by way of a guarantee or endorsement (other than for collection or deposit in the ordinary course of business), (iii) all contingent liabilities of Jevic, and (iv) Capitalized Lease Obligations. "Default Rate" on any Loan shall mean 2% per annum above the Base Rate. "Dollars" shall mean the lawful currency of the United States of America. "EBITDA" shall mean the sum of (i) operating income, plus (ii) depreciation and amortization, plus (iii) the net proceeds from the sale or other disposal of Revenue Equipment as stated in the notes to the financial statements, but not including any gain of such sale(s) included in net income before income taxes. "Eligible Equipment" shall mean all Revenue Equipment pledged to the Bank as Collateral (as defined in the Security Agreement) and in which the Bank has a first priority, perfected security interest. Eligible Equipment shall be depreciated as set forth on Schedule 1 hereto. The net book value of Eligible Equipment shall be the purchase price of said Equipment to Jevic after deduction of depreciation in accordance with the depreciation policies described on Schedule 1 hereto. On December 31 of the year immediately following the year in which an item of Revenue Equipment has been depreciated to its salvage value, said item of Revenue Equipment shall cease to be included in Eligible Equipment at its salvage value. "Eligible Receivables" shall mean accounts receivable by Jevic which (1) arose in the ordinary course of business of Jevic, (2) have been fully earned by completed performance on the part of Jevic, (3) are not subject to any prior assignment, claim, lien, security interest or other limitation on the absolute title of Jevic thereto, (4) with respect a specific invoice, has not been paid in whole or in part, (5) are not more than 90 days from the invoice date, (6) are not more than 90 days past due, (7) are freely assignable, (8) are not questionable as to collectibility, and (9) the account debtor is not located outside of the United States of America or Canada. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time. "ERISA Affiliate" shall mean any corporation which is a member of the same controlled group of corporations as Jevic within the meaning of ss.414(b) of the Code, or any trade or business which is under common control with Jevic within the meaning of ss.414(c) of the Code. "Event of Default" shall have the meaning set forth in ss.8.1. "Environmental Control Statutes" shall mean each and every applicable federal, state, county or municipal environmental statute, ordinance, rule, regulation, order, directive or requirement, together with all successor statutes, ordinances, rules, regulations, orders, directives or requirements, of any - 3 - Governmental Authority, including without limitation laws in any way related to Hazardous Substances. "Equipment Revolver Termination Date" shall have the meaning set forth in ss.2.1. "Equipment Revolving Credit Loans" shall have the meaning set forth in ss.2.1. "Equipment Revolving Credit Note" shall have the meaning set forth in ss.2.2. "Equipment Revolving Loan Commitment" shall have the meaning set forth in ss.2.1. "Equipment Revolving Loan Commitment Fee" shall have the meaning set forth in ss.2.5(a), 2.5(b). "Federal Funds Rate" shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day. "Fiscal Quarter" shall mean a fiscal quarter of Jevic, which shall be any quarterly period ending on March 31, June 30, September 30 or December 31 of any year. "Fiscal Year" shall mean a fiscal year of Jevic, which shall end on December 31. "Generally Accepted Accounting Principles" or "GAAP" shall mean generally accepted accounting principles as in effect from time to time in the United States, consistently applied. "Governmental Authority" shall mean the federal, state, county or municipal government, or any department, agency, bureau or other similar type body obtaining authority therefrom or created pursuant to any laws, including without limitation Environmental Control Statutes. "Hazardous Substances" shall mean without limitation, any regulated substance, toxic substance, hazardous substance, hazardous waste, pollution, pollutant or contaminant, as defined or referred to in the New Jersey Environmental Rights Act, N.J.S.A. 2A: 35A-1 et seg.; the New Jersey Spill Compensation and Control Act, N.J.S.A.26:2C-1 et seg.; the Resource Conservation and Recovery Act, as amended, 15 U.S.C., ss.2601 et seg.; the Comprehensive Environmental Response, Compensation and Liability Act, 33 U.S.C. ss.1251 et seg.; the Hazardous Substances Discharge: Reports and Notices Act, N.J.S.A. 13: 1K-15 et seg.; the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seg.; the New Jersey Underground storage of Hazardous Substances Act, N.J.S.A. 58:L10A-21 et seg.; (P.L. 1986 Ch. 102), and the federal underground storage tank law, Subtitle I of the Resource Conservation and Recovery Act, as amended, P.L. 98-616, 42 U.S.C. ss.6901 et seg.; together with any amendments thereto, regulations promulgated thereunder and all substitutions thereof, as well as words of similar purport or meaning referred to in any other federal, state, county or municipal environmental statute, ordinance, rule or regulation. - 4 - "Indebtedness for Borrowed Money" shall mean (i) all indebtedness, liabilities, and obligations, now existing or hereafter arising, for money borrowed by Jevic, whether or not evidenced by any note, indenture, or agreement (including, without limitation, the Notes and any indebtedness for money borrowed from an Affiliate) and (ii) all indebtedness of others for money borrowed (including indebtedness of an Affiliate) with respect to which Jevic has become liable by way of a guarantee or indemnity. For purposes of this definition, Jevic's borrowings from its Subsidiaries are excluded. "Intangible Assets" shall mean all assets which would be classed as intangible assets under GAAP consistently applied, including, without limitation, goodwill (whether representing the excess of cost over book value of assets acquired or otherwise), patents, trademarks, trade names, copyrights, franchises, and deferred charges (including, without limitation, unamortized debt discount and expense, organization costs, and research and development costs). For purposes of this definition, prepayments of taxes, license fees and other expenses shall not be deemed Intangible Assets. "Interest Period" shall mean with respect to any LIBO Rate Loan, each period commencing on the date any such Loan is made, or, with respect to a Loan being renewed, the last day of the next preceding Interest Period with respect to a Loan, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day of the calendar month) in the first, second or third calendar month thereafter in the case of Equipment Revolving Credit Loans or in the first, second, third or fourth week or first, second or third calendar month thereafter in the case of Working Capital Revolving Credit Loans, as selected under the procedures specified in ss.2.3, if the Bank is then offering LIBO Rate Loans for such period; provided that each LIBO Rate Loan Interest Period which would otherwise end on a day which is not a Business Day (or, for purposes of Loans to be repaid on a London Business Day, such day is not a London Business Day) shall end on the next succeeding Business Day (or London Business Day, as appropriate) unless such next succeeding Business Day (or London Business Day, as appropriate) falls in the next succeeding calendar month, in which case the Interest Period shall end on the next preceding Business Day (or London Business Day, as appropriate). "Investment" in any Person shall mean (a) the acquisition (whether for cash, property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of such Person; (b) any deposit with, or advance, loan or other extension of credit to, such Person (other than any such deposit, advance, loan or extension of credit having a term not exceeding 90 days in the case of unaffiliated Persons and 120 days in the case of Affiliates representing the purchase price of inventory or supplies purchased in the ordinary course of business) or guarantee or assumption of, or other contingent obligation with respect to, Indebtedness for Borrowed Money or other liability of such Person; and (c) (without duplication of the amounts included in (a) and (b)) any amount that may, pursuant to the terms of such investment, be required to be paid, deposited, advanced, lent or extended to or guaranteed or assumed on behalf of such Person. "LIBO Rate" shall mean, for the applicable Interest Period, (i) the rate, rounded upwards to the next one-sixteenth of one percent, determined by the Bank two London Business Days prior to the date of the corresponding LIBO Rate Loan, at which the Bank is offered deposits in dollars at approximately 11:00 A.M., London time by leading banks in the interbank eurodollar or eurocurrency market for delivery on the date of such Loan in an amount and for a period comparable - 5 - to the amount and Interest Period of such Loan and in like funds, divided by (ii) a number equal to one (1.0) minus the LIBO Rate Reserve Percentage. The LIBO Rate shall be adjusted automatically with respect to any LIBO Rate Loan outstanding on the effective date of any change in the LIBO Rate Reserve Percentage, as of such effective date. LIBO Rate shall be calculated on the basis of the number of days elapsed in a year of 360 days. "LIBO Rate Reserve Percentage" shall mean, for any LIBO Rate Loan for any Interest Period therefor, the daily average of the stated maximum rate (expressed as a decimal) at which reserves (including any marginal, supplemental, or emergency reserves) are required to be maintained during such Interest Period under Regulation D by the Bank against "Eurocurrency liabilities" (as such terms is used in Regulation D) but without benefit of credit proration, exemptions, or offsets that might otherwise be available to the Bank from time to time under Regulation D. Without limiting the effect of the foregoing, the LIBO Rate Reserve Percentage shall reflect any other reserves required to be maintained by the Bank against (1) any category of liabilities which includes deposits by reference to which the rate for LIBO Rate Loans is to be determined; or (2) any category of extension of credit or other assets which include LIBO Rate Loans. "LIBO Rate Loans" shall mean Equipment Revolving Credit Loans and Working Capital Revolving Credit Loans accruing interest based on the LIBO Rate. "Lien" shall mean any lien, mortgage, security interest, chattel mortgage, pledge or other encumbrance (statutory or otherwise) of any kind securing satisfaction of an Obligation, including any agreement to give any of the foregoing, any conditional sales or other title retention agreement, any lease in the nature thereof, and the filing of or the agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction or similar evidence of any encumbrance, whether within or outside the United States. "Loan" or "Loans" shall mean an Equipment Revolving Credit Loan or a Working Capital Revolving Credit Loan taken individually, and Equipment Revolving Credit Loans or Working Capital Revolving Credit Loans taken together. "Loan Documents" shall mean this Agreement, the Equipment Revolving Credit Note, the Working Capital Revolving Credit, the Security Agreement, and all other documents directly related or incidental to said documents, the Loans or the Collateral. "Material Adverse Change" shall mean any event or condition which, in the reasonable determination of the Bank, could result in a material adverse change in the financial condition, business, properties, profits or prospects of Jevic or which gives reasonable grounds to conclude that Jevic may not or will not be able to perform or observe (in the normal course) its obligations under the Loan Documents to which it is a party, including but not limited to the Notes. "Material Adverse Effect" shall mean a material adverse effect (i) on the financial condition, business, properties, or profits of Jevic, (ii) the ability of Jevic to perform its obligations under this Agreement, the Equipment Revolving Credit Note, the Working Capital Revolving Credit Note, and the other Loan Documents, or (iii) the legality, validity or enforceability of this Agreement, the Equipment Revolving Credit Note, the Working Capital Revolving Credit Note or the rights and remedies of the holders of the Loans. - 6 - "Multiemployer Plan" shall mean a multiemployer plan as defined in ERISA ss.4001(a)(3), which covers employees of Jevic or any ERISA Affiliate. "Net Worth" shall mean the sum of capital stock, plus paid-in capital, plus retained earnings, minus treasury stock. "Notes" shall mean the Equipment Revolving Credit Note and the Working Capital Revolving Credit Note. "Obligations" shall mean all now existing or hereafter arising debts, obligations, covenants, and duties of payment or performance of every kind, matured or unmatured, direct or contingent, owing, arising, due, or payable to the Bank by or from Jevic arising out of this Agreement or any other Loan Document, including, without limitation, all obligations to repay principal of and interest on the Equipment Revolving Credit Loan and the Working Capital Revolving Credit Loans, and to pay interest, fees, costs, charges, expenses, professional fees, and all sums chargeable to Jevic or for which Jevic is liable as indemnitor under the Loan Documents, whether or not evidenced by any note or other instrument. "Operating Lease" shall mean an operating lease as defined by Generally Accepted Accounting Principles, excluding all leases the expenses of which may be charged to a customer of Jevic pursuant to the written terms of the contract with such customer. "PBGC" shall mean the Pension Benefit Guaranty Corporation and any successor thereto. "Pension Plan" shall mean, at any time, any Plan (including a Multiemployer Plan), the funding requirements of which (under ERISA ss.302 or Code ss.412) are, or at any time within the six years immediately preceding the time in question, were in whole or in part, the responsibility of Jevic or any ERISA Affiliate. "Permitted Liens" shall mean (a) any Liens for current taxes, assessments and other governmental charges not yet due and payable or being contested in good faith by Jevic by appropriate proceedings and for which adequate reserves have been established by Jevic as reflected in Jevic's consolidated financial statements; (b) any mechanic's, materialman's, carrier's, warehousemen's or similar Liens for sums not yet due or being contested in good faith by Jevic by appropriate proceedings and for which adequate reserves have been established by Jevic as reflected in Jevic's financial statements; (c) easements, rights-of-way, restrictions and other similar encumbrances on the real property or fixtures of Jevic incurred in the ordinary course of business which individually or in the aggregate are not substantial in amount and which do not in any case materially detract from the value or marketability of the property subject thereto or interfere with the ordinary conduct of the business of Jevic; (d) Liens (other than Liens imposed on any property of Jevic pursuant to ERISA or ss.412 of the Code) incurred or deposits made in the ordinary course of business, including Liens in connection with workers' compensation, unemployment insurance and other types of social security and Liens to secure performance of tenders, statutory obligations, surety and appeal bonds (in the case of appeal bonds such Lien shall not secure any reimbursement or indemnity obligation in an amount greater than $500,000), bids, leases that are not Capitalized Leases, performance bonds, sales contracts and other similar obligations, in each case, not incurred in connection with the obtaining of credit or the payment of a deferred purchase price, and which do not, in the aggregate, result in - 7 - a Material Adverse Effect; (e) Liens existing on the date hereof as set forth in Schedule 2 hereto other than Liens of the character referred to in clause (f); and (f) Liens on specific assets purchased whether before or after the date hereof and any revenue stream directly attributable thereto provided that such liens are limited to the specific assets so purchased and the revenue stream generated therefrom. "Person" shall mean any individual, corporation, partnership, joint venture, association, company, business trust or entity, or other entity of whatever nature. "Plan" shall mean an employee benefit plan as defined in ss.3(3) of ERISA, other than a Multiemployer Plan, whether formal or informal and whether legally binding or not. "Potential Default" shall mean an event, condition or circumstance that with the giving of notice or lapse of time or both would become an Event of Default. "Prohibited Transaction" shall mean a transaction that is prohibited under Code ss.4975 or ERISA ss.406 and not exempt under Code ss.4975 or ERISA ss.408. "Regulation" shall mean any statute, law, ordinance, regulation, order or rule of any United States or foreign, federal, state, local or other government or governmental body, including, without limitation, those covering or related to banking, financial transactions, securities, public utilities, environmental control, energy, safety, health, transportation, bribery, record keeping, zoning, antidiscrimination, antitrust, wages and hours, employee benefits, and price and wage control matters. "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System, as it may be amended from time to time. "Regulatory Change" shall mean any change after the date of this Agreement in any Regulation (including Regulation D) or the adoption or making after such date of any interpretations, directives or requests of or under any Regulation (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof applying to a class of banks but excluding any foreign office of the Bank. "Release" shall mean without limitation, the presence, leaking, leaching, pouring, emptying, discharging, spilling, using, generating, manufacturing, refining, transporting, treating, or storing of Hazardous Substances at, into, onto, from or about the property or the threat thereof, regardless of whether the result of an intentional or unintentional action or omission, and which is in violation of applicable law. "Reportable Event" shall mean, with respect to a Pension Plan: (a) Any of the events set forth in ERISA Sections 4043(b) (other than a reportable event as to which the provision of 30 days' notice to the PBGC is waived under applicable regulations) or 4063(a) or the regulations thereunder, (b) an event requiring any Jevic or any ERISA Affiliate to provide security to a Pension Plan under Code ss.401(a)(29) and (c) any failure by any Jevic or any ERISA Affiliate to make payments required by Code ss.412(m). - 8 - "Revenue Equipment" shall mean over the road chassis and trailers, Qualcomm satellites, trailer dollys, trailer heaters, fork trucks, automobiles and miscellaneous equipment used by Jevic in connection with its business. "Senior Debt:Cash Flow Ratio" shall mean the ratio which Indebtedness for Money Borrowed which is not subordinated to any other Debt represents to EBITDA. "Senior Debt:Capital Ratio" shall mean the ratio which Indebtedness for Money Borrowed which is not subordinated to any other Debt represents to the sum of all Indebtedness for Money Borrowed (whether subordinated or not) and Tangible Net Worth at the time of the calculation. This ratio shall be determined as of the end of each calendar quarter. "Solvent" shall mean, with respect to any Person, that the aggregate present fair saleable value of such Person's assets is in excess of the total amount of its probable liabilities on its existing debts as they become absolute and matured, such Person has not incurred debts beyond its foreseeable ability to pay such debts as they mature, and such Person has capital adequate to conduct the business it is presently engaged in or is about to engage in. "Standby Letter of Credit" shall mean only those standby letters of credit issued pursuant to a completed application on the form of letter of credit application required by the Bank at the time of the request for each Standby Letter of Credit. "Subsidiary" shall mean a corporation or other entity the shares of stock or other equity interests of which having ordinary voting power (other than stock or other equity interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries or both, by Jevic. "Tangible Net Worth" shall mean Net Worth, minus Intangible Assets. "Taxes" shall have the meaning set forth in ss.2.8(d). "Termination Event" shall mean, with respect to a Pension Plan: (a) a Reportable Event, (b) the termination of a Pension Plan, or the filing of a notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan amendment as a termination under ERISA ss.4041(c), (c) the institution of proceedings to terminate a Pension Plan under ERISA ss.4042 or (d) the appointment of a trustee to administer any Pension Plan under ERISA ss.4042. "Unfunded Pension Liabilities" shall mean, with respect to any Pension Plan at any time, the amount determined by taking the accumulated benefit obligation, as disclosed in accordance with Statement of Accounting Standards No. 87, over the fair market value of Pension Plan assets. "Unrecognized Retiree Welfare Liability" shall mean, with respect to any Plan that provides post-retirement benefits other than pension benefits, the amount of the accumulated post-retirement benefit obligation, as determined in accordance with Statement of Financial Accounting Standards No. 106, as of the most recent valuation date. Prior to the date such statement is applicable to any Jevic, such amount of the obligation shall be based on an estimate made in good faith. - 9 - "Working Capital Revolver Termination Date" shall have the meaning set forth in ss.2.1. "Working Capital Revolving Credit Loans" shall have the meaning set forth in ss.2.1. "Working Capital Revolving Credit Note" shall have the meaning set forth in ss.2.2. "Working Capital Revolving Loan Commitment" shall have the meaning set forth in ss.2.1. "Working Capital Revolving Loan Commitment Fee" shall have the meaning set forth in ss.2.5(c). 1.2 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with Generally Accepted Accounting Principles consistent with those applied in the preparation of the financial statements referred to in ss.3.5, and all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles. 2. The Credit 2.1 The Loans. Subject to the terms and conditions herein set forth, First Union agrees to make Loans to Jevic as set forth below. All Loans shall be made to Jevic at the main office of the Bank, Broad and Chestnut Streets, Philadelphia, Pennsylvania 19101. Loans made hereunder may either be Equipment Revolving Credit Loans ("Equipment Revolving Credit Loans") or Working Capital Revolving Credit Loans ("Working Capital Revolving Credit Loans"). As provided below, Equipment Revolving Credit Loans may be requested by Jevic, and made from time to time prior to the Equipment Revolver Termination Date. Working Capital Revolving Credit Loans may be requested by Jevic, and made from to time prior to the Working Capital Revolver Termination Date. (a) Equipment Revolving Credit Loans. Equipment Revolving Credit Loans may be made from time to time during the period beginning on the date hereof and ending on June 22, 2000 or on the earlier date of termination in full, pursuant to ss.2.6 or ss.8.1 hereof, of the obligations of the Bank under this ss.2.1 (June 22, 2000 or such earlier date of termination being herein called the "Equipment Revolver Termination Date") in amounts not to exceed at any time outstanding, in the aggregate, $25,000,000 (such amount, as the same may be reduced pursuant to ss.2.6 hereof being hereinafter called the "Equipment Revolving Loan Commitment"). Equipment Revolving Credit Loans at the occasion of each borrowing shall be in aggregate principal amounts at least equal to $250,000 in the case of Base Rate Loans, or, if less, the remaining unused amount of the Equipment Revolving Loan Commitment, and $1,000,000 in the case of LIBO Rate Loans. Jevic shall not be entitled to any Equipment Revolving Credit Loan if, after giving effect to such Loan, the unpaid amount of the then outstanding Equipment Revolving Credit Loans would exceed the then current Borrowing Base for Equipment Revolving Credit Loans. Prior to the Equipment Revolver Termination Date and within the limits of the Equipment Revolving Loan Commitment and the Borrowing Base for Equipment Revolving Credit Loans, Jevic may borrow, prepay and reborrow Equipment Revolving Credit Loans. No Equipment Revolving Credit Loans shall mature and be due and payable on the Equipment Revolver Termination Date. Annually, not more than one hundred twenty (120) days nor less than sixty (60) days prior to the end of the existing Agreement Year, Jevic may request in writing to First Union that the Equipment Revolver - 10 - Termination Date be extended for one full year. The term "Agreement Year" shall mean a one year period ending on the same month and day as the Equipment Revolver Termination Date. If First Union is willing to establish a new Equipment Revolver Termination Date, it will advise Jevic, in writing, not more than thirty (30) days after receipt by First Union of a request from Jevic for a new Equipment Revolver Termination Date, that the Equipment Revolver Termination Date has been extended for one full year (stating the date of the new Equipment Revolver Termination Date) and this Agreement shall be deemed amended to such extent. If written notice is not so given by First Union, the Equipment Revolver Termination Date shall not be deemed extended. If the Equipment Revolver Termination Date is not extended, then Jevic may, at its option, convert the existing Equipment Revolving Credit Loans to a term payment schedule, and the total principal and interest due under such Loans then shall be payable monthly, with interest, over a period of time not to exceed six (6) years from the Equipment Revolver Termination Date, in accordance with the corresponding monthly reduction in the Borrowing Base for Equipment Revolving Credit Loans; provided, however, that upon choosing to convert the existing Equipment Revolving Credit Loans, Jevic shall deliver to First Union a payment schedule setting forth the reduction, on a month-to-month basis, of the Borrowing Base over a period of time not to exceed six (6) years from the date on which such conversion is selected by Jevic. During any said deferred payment period, the Equipment Revolving Credit Loans shall bear interest at the rates set forth in ss.2.4 as elected by Jevic from time to time. (b) Working Capital Revolving Credit Loans. Working Capital Revolving Credit Loans may be made from time to time during the period beginning on the date hereof and ending on June 22, 2003 or on the earlier date of termination in full, pursuant to ss.2.6 or ss.8.1 hereof, of the obligations of the Bank under this ss.2.1 (June 22, 2003 or such earlier date of termination being herein called the "Working Capital Revolver Termination Date") in amounts not to exceed at any time outstanding, in the aggregate, $10,000,000 (such amount, as the same may be reduced pursuant to ss.2.6 hereof being hereinafter called the "Working Capital Revolving Loan Commitment"). Working Capital Revolving Credit Loans at the occasion of each borrowing shall be in aggregate principal amounts at least equal to $250,000 in the case of Base Rate Loans and $1,000,000 in the case of LIBO Rate Loans. Jevic shall not be entitled to any Working Capital Revolving Credit Loan if, after giving effect to such Loan, the unpaid amount of the then outstanding Working Capital Revolving Credit Loans would exceed the then current Borrowing Base for Working Capital Revolving Credit Loans. Prior to the Working Capital Revolver Termination Date and within the limits of the Revolving Loan Commitment and the Borrowing Base, Jevic may borrow, prepay and reborrow Working Capital Revolving Credit Loans. All Working Capital Revolving Credit Loans shall mature and be due and payable on the Working Capital Revolver Termination Date. (c) Standby Letters of Credit. The Bank, under the terms and subject to the conditions of this Agreement, agrees to provide standby letters of credit to Jevic, from time to time prior to the Working Capital Revolver Termination Date, as requested by Jevic, provided that (A) the aggregate amount of Standby Letters of Credit outstanding at any one time shall not exceed $3,000,000 or such lesser amount, if any, as will, when added to the amount of the Working Capital Revolving Credit Loans then outstanding, aggregate $10,000,000 (or such lesser amount as Jevic is entitled to borrow hereunder at such time by reason of the limitation of the Borrowing Base or otherwise), (B) no Standby Letter of Credit shall be issued after the Working Capital Revolver Termination Date and no Standby Letter of Credit shall be for a term longer than one year; and (C) no Standby Letter of Credit shall be issued for other than regulatory bonding, construction bonding or insurance purposes. - 11 - Jevic shall request a Standby Letter of Credit by delivering a completed letter of credit application to the Bank not less than three Business Days prior to the date specified by Jevic as the date the Standby Letter of Credit is to be issued. The form of First Union's letter of credit application as currently in effect is set forth as Exhibit E hereto. Standby Letters of Credit shall not bear interest until drawn upon but shall each be subject to an annual charge, payable in advance, equal to the percentage of the amount of the Standby Letter of Credit as set forth in the table below: Senior Debt:Capital Ratio Annual Percentage ------------------------- ----------------- 35% or less 1.00% More than 35% 1.25% The Senior Debt:Capital Ratio shall be measured as of the most recently ended fiscal quarter of Jevic. Annual charges for Standby Letters of Credit will not be adjusted during interim periods between renewals. Within the foregoing limit, Jevic may request issuance of Standby Letters of Credit, pay them upon a drawing thereunder and request new issuances. In the event Jevic shall terminate the Commitment as provided in ss.2.6 and shall pay the outstanding principal amount of the Working Capital Revolving Credit Loans in full and with interest or the Working Capital Revolver Termination Date shall occur at a time when one or more Standby Letters of Credit remain outstanding, then Jevic shall furnish to the Bank within two Business Days such amount of cash, to be held as cash collateral and invested in certificates of deposit of the Bank, as will pay the maximum amount which may be drawn by beneficiaries of Standby Letters of Credit outstanding at the date of such termination or the Working Capital Revolver Termination Date, as applicable. Standby Letters of Credit requested by Jevic and issued by the Bank pursuant to the terms of the 1996 Credit Agreement, and outstanding as of the date hereof, shall be deemed to have been requested by Jevic and issued by the Bank hereunder. There will be no additional annual charges on such Standby Letters of Credit until their renewal. 2.2 The Notes. (a) Equipment Revolving Credit Note. The Equipment Revolving Credit Loans made by the Bank shall be evidenced by a single promissory note of Jevic (such promissory note as it may be amended, extended, modified, restated, replaced, substituted for or renewed, the "Equipment Revolving Credit Note") in principal face amount equal to the Bank's Equipment Revolving Loan Commitment, payable to the order of the Bank and otherwise in the form attached hereto as Exhibit A. The Equipment Revolving Credit Note shall be dated the Closing Date, shall bear interest at the rate per annum and be payable as to principal and interest in accordance with the terms hereof. The Equipment Revolving Credit Note shall mature upon the Equipment Revolver Termination Date and, upon maturity, each outstanding Equipment Revolving Credit Loan evidenced thereby shall be due and payable unless Jevic shall have elected a deferred pay off of the principal thereof as permitted in ss.2.1(a), in which the Equipment Revolving Credit Loan shall be due and payable monthly as contemplated thereby. The Bank shall maintain records of all Loans evidenced by the Equipment Revolving Credit Note and of all payments thereon, which records shall - 12 - be conclusive absent manifest error. The Equipment Revolving Credit Note shall be deemed to be an amendment and restatement of the Revolving Credit Note dated June 28, 1996 executed and delivered in accordance with the 1996 Credit Agreement and shall be substituted for and replace said Revolving Credit Note in its entirety. (b) Working Capital Revolving Credit Note. The Working Capital Revolving Credit Loans made by the Bank shall be evidenced by a single promissory note of Jevic (such promissory note as it may be amended, extended, modified, restated, replaced, substituted for or renewed, the "Working Capital Revolving Credit Note") in principal face amount equal to the Bank's Working Capital Revolving Loan Commitment, payable to the order of the Bank and otherwise in the form attached hereto as Exhibit B. The Working Capital Revolving Credit Note shall be dated the Closing Date, shall bear interest at the rate per annum and be payable as to principal and interest in accordance with the terms hereof. The Working Capital Revolving Credit Note shall mature upon the Working Capital Revolver Termination Date and, upon maturity, each outstanding Working Capital Revolving Credit Loan evidenced thereby shall be due and payable. The Bank shall maintain records of all Loans evidenced by the Working Capital Revolving Credit Notes and of all payments thereon, which records shall be conclusive absent manifest error. 2.3 Funding Procedures. (a) Request for Advance. Each request for a Loan, or the conversion or renewal of an interest rate with respect to a Loan, shall be made not later than 2:00 p.m. on a Business Day by delivery to the Bank of a written request signed by Jevic or, in the alternative, a telephone request followed promptly by written confirmation of the request, specifying the date, amount and type of the Loan to be made, converted or renewed, selecting the interest rate option applicable thereto, and in the case of LIBO Rate Loans, specifying the Interest Period applicable to such Loans. Each request shall be received not less than one Business Day prior to the date of the proposed borrowing, conversion or renewal in the case of Base Rate Loans, and two London Business Days prior to the date of the proposed borrowing, conversion or renewal in the case of LIBO Rate Loans. No request shall be effective until actually received in writing by the Bank. (b) Irrevocability. Upon receipt of a request for a Loan and if the conditions precedent provided herein shall be satisfied at the time of such request, the request for a Loan shall not be revocable by Jevic. (c) Availability of Funds. Unless the Bank knows that any applicable condition specified herein has not been satisfied, it will make funds immediately available to Jevic on the date of each Loan by a credit to the account of Jevic at the Bank's address set forth opposite its name on the signature page hereof or to such other destination and in such other form as Jevic may request, in writing. (d) Funding of Net Amount. If the Bank makes a Loan on a day on which all or any part of an outstanding Loan from the Bank is to be repaid, the Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall be made available by the Bank to Jevic as provided in clause (c). - 13 - 2.4 Interest. The following interest rates may be applicable to any Loan or Loans, as requested by Jevic from time to time. (a) Base Rate. Each Base Rate Loan shall bear interest on the principal amount thereof from the date made until such Loan is paid in full or converted, at a rate per annum equal to the Base Rate plus the Applicable Margin. The Applicable Margin for Base Rate Loans outstanding through October 22, 1998 shall be zero. Thereafter, the Applicable Margin for Base Rate Loans shall be as follows:
Equipment Revolving Working Capital Revolving Senior Debt:Capital Ratio Credit Loans Credit Loans - ---------------------- ------------------- ------------------------ 25% or less (0.50)% (0.50)% More than 25% but not more than 35% (0.25)% (0.25)% More than 35% -0- -0-
The Senior Debt: Capital Ratio shall be measured as of the most recently ended fiscal quarter of Jevic. Each change in the Applicable Margin for Base Rate Loans shall take effect on the first day of the month following receipt by the Bank of the certificate required to be provided periodically by Jevic pursuant to Section 5.1(c) hereof. (b) LIBO Rate. Each LIBO Rate Loan shall bear interest on the principal amount thereof from the date made until such Loan is paid in full, renewed, or converted, at a rate per annum equal to the LIBO Rate plus the Applicable Margin for LIBO Rate Loans. After receipt of a request for a LIBO Rate Loan, the Bank shall proceed to determine the LIBO Rate to be applicable thereto. The Bank shall give prompt notice by telephone or facsimile to Jevic of the LIBO Rate thus determined in respect of each LIBO Rate Loan or any change therein. Not more than twelve LIBO Rate Loans shall be in existence at any one time in any combination of LIBO Rates applicable to the Equipment Revolving Credit Loan or LIBO Rates applicable to Working Capital Revolving Credit Loan. The Applicable Margin for LIBO Rate Loans shall be as follows: - 14 -
Equipment Revolving Working Capital Revolving Senior Debt:Capital Ratio Credit Loans Credit Loans - ---------------------- ------------------- ------------------------ 25% or less 0.60% 0.55% More than 25% but not more than 35% 0.70% 0.60% More than 35% but not more than 45% 0.85% 0.75% More than 45% but not more than 55% 1.00% 0.90% More than 55% 1.25% 1.15%
The Senior Debt:Capital Ratio shall be measured as of the most recently ended fiscal quarter of Jevic. Each change in the Applicable Margin for LIBO Rate Loans shall take effect on the first day of the month following receipt by the Bank of the certificate required to be provided periodically by Jevic pursuant to Section 5.1(c) hereof. (c) Renewals and Conversions of Loans. On the last day of each Interest Period, the LIBO Rate Loan then maturing shall automatically be renewed for a new Interest Period of like duration, unless Jevic shall have given the Bank notice of a permitted conversion or renewal at for an Interest Period of different duration as provided in ss.2.3 hereof, or an Event of Default, or Potential Default exists or would thereby occur. If no Event of Default or Potential Default exists or would thereby occur, Jevic shall have the right to convert Base Rate Loans into LIBO Rate Loans, to convert LIBO Rate Loans into Base Rate Loans, and to renew LIBO Rate Loans for Interest Periods of different duration, from time to time, provided that it shall give the Bank notice of each permitted conversion or renewal as provided in ss.2.3 hereof, and LIBO Rate Loans may be converted or renewed for different Interest Periods only as of the last day of the applicable Interest Period for such Loans. The Bank shall use its best efforts to notify Jevic of the effectiveness of such conversion or renewal (automatic or not automatic), and the new interest rate to which the converted or renewed Loan is subject, as soon as practicable after the conversion or renewal; provided, however, that any failure to give such notice shall not affect Jevic's obligations or the Bank's rights and remedies hereunder in any way whatsoever. In the event a LIBO Rate Loan is not automatically renewed as provided herein and Jevic shall not have selected an alternative Interest Period for any LIBO Rate Loan maturing as provided herein, such Loan shall be automatically converted into a Base Rate Loan on the last day of the Interest Period for such Loan. (d) Automatic Reinstatement. The liability of Jevic under this ss.2.4 shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the payments to the Bank is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Jevic or any other Person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with -15- respect to Jevic or any other Person or any substantial part of its property, or otherwise, all as though such payment had not been made. 2.5 Fees. (a) Structuring and Arranging Fee. Jevic agrees to pay to the Bank on the Closing Date a structuring and arranging fee (the "Closing Fee") in the amount of 1/8 of 1% of the sum of the Equipment Revolving Loan Commitment and the Working Capital Revolving Loan Commitment at the time this Agreement is executed and delivered by both parties. (b) Equipment Revolving Loan Commitment Fee. Jevic agrees to pay to the Bank as compensation for the Equipment Revolving Loan Commitment a fee (the "Equipment Revolving Loan Commitment Fee") computed at the rate per annum equal to 1/5th of 1% of the average daily amount of the unused portion of the Equipment Revolving Loan Commitment accrued from and after the date hereof. (c) Working Capital Revolving Loan Commitment Fee. Jevic agrees to pay to the Bank as compensation for the Working Capital Revolving Loan Commitment a fee (the "Working Capital Revolving Loan Commitment Fee" and together with the Equipment Revolving Loan Commitment Fee, the "Commitment Fees") computed at the rate per annum equal to 1/4th of 1% of the average daily amount of the unused portion of the Working Capital Revolving Loan Commitment accrued from and after the date hereof. For purposes of calculating the Working Capital Revolving Loan Commitment Fee, the unused portion of the Working Capital Revolving Loan Commitment shall be reduced by the aggregate undrawn face amount of all Standby Letters of Credit. (d) Payment of Commitment Fees. Commitment Fees shall be payable in arrears on the first day of each January, April, July and October, commencing July 1, 1998 (for the three month period or portion thereof ended on the preceding day), on the Equipment Revolver Termination Date, and on the Working Capital Revolver Termination Date. Commitment Fees shall be calculated on the basis of a 360 day year. 2.6 Reduction or Termination of Commitments. (a) Voluntary Reductions or Terminations. Jevic may at any time, on not less than two Business Days' written notice, terminate or permanently reduce the Equipment Revolving Loan Commitment or the Working Capital Revolving Loan Commitment, provided that any reduction shall be in the amount of $250,000 or a multiple thereof and that no such reduction shall cause the principal amount of Loans outstanding to exceed the Equipment Revolving Loan Commitment or Working Capital Revolving Loan Commitment each as reduced. (b) Equipment Revolving Loan Commitment Termination. In the event the Equipment Revolving Loan Commitment is terminated in full or Jevic does not amortize the Equipment Revolving Credit Loans over the applicable amortization period, the Equipment Revolver Termination Date shall accelerate and Jevic shall, simultaneously with such termination, repay the Base Rate Equipment Revolving Credit Loans and LIBO Rate Equipment Revolving Credit Loans in accordance with Section 2.8, without any prepayment penalty, other than, if applicable, as set forth in Section 2.8(e). -16- (c) Working Capital Revolving Loan Commitment Termination. In the event the Working Capital Revolving Loan Commitment is terminated, the Working Capital Revolver Termination Date shall accelerate and Jevic shall, simultaneously with such termination, repay the Base Rate Working Capital Revolving Credit Loans and LIBO Rate Working Capital Revolving Credit Loans in accordance with Section 2.8. 2.7 Voluntary Prepayments. (a) Base Rate Loans. On one Business Day's notice to the Bank, Jevic may, at its option, prepay any Base Rate Loan in whole at any time or in part from time to time, provided that each partial prepayment shall be in the principal amount of $250,000 or, if greater, then in multiples thereof and, if less than $250,000 shall be outstanding, in principal amount equal to amount remaining outstanding. (b) LIBO Rate Loans. Jevic may, at its option prepay any LIBO Rate Loan provided that any such prepayment shall be the minimum principal amount of $1,000,000 and if it shall pay a LIBO Rate Loan prior to the last day of the applicable Interest Period, or shall fail to borrow any LIBO Rate Loan on the date such Loan is to be made, it shall pay to the Bank, in addition to the principal and interest then to be paid in the case of a prepayment, on such date of prepayment, the Additional Amount incurred or sustained by the Bank as a result of such prepayment or failure to borrow as provided in ss.2.3(a). 2.8 Payments. (a) Base Rate Loans. Accrued interest on all Base Rate Loans shall be due and payable on the first Business Day of each calendar month, upon the Equipment Revolver Termination Date, and upon the Working Capital Revolver Termination Date. (b) LIBO Rate Loans. Accrued interest on LIBO Rate Loans shall be due and payable on the last day of the applicable Interest Period. (c) Form of Payments, Application of Payments, Payment Administration, Etc. Provided that no Event of Default or Potential Default then exists, all payments and prepayments shall be applied to the Loans in such order and to such extent as shall be specified by Jevic, by written notice to the Bank at the time of such payment or prepayment. Except as otherwise provided herein, all payments of principal, interest, fees, or other amounts payable by Jevic hereunder shall be remitted to the Bank at the address set forth opposite its name on the signature page hereof or at such office or account as the Bank shall specify to Jevic, in immediately available funds not later than 2:00 p.m. on the day when due. Whenever any payment is stated as due on a day which is not a Business Day, the maturity of such payment shall, except as otherwise provided in the definition of "Interest Period", be extended to the next succeeding Business Day and interest and commitment fees shall continue to accrue during such extension. Jevic authorizes the Bank to deduct from any account of Jevic maintained at the Bank or over which the Bank has control any amount payable under this Agreement, the Notes or any other Loan Document which is not paid in a timely manner. The Bank's failure to deliver any bill, statement or invoice with respect to amounts due under this Section or under any Loan Document shall not affect Jevic's obligation to pay any installment of principal, interest or any other amount under this Agreement when due and payable. (d) Net Payments. (i) All payments made to the Bank by Jevic hereunder, under any Note or under any other Loan Document will be made without set off, counterclaim or other defense. All - 17 - such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or any political subdivision or taxing authority thereof or therein (but excluding, except as provided below, any tax imposed on or measured by the gross or net income of the Bank (including all interest, penalties or similar liabilities related thereto) pursuant to the laws of the United States of America or any political subdivision thereof, or taxing authority of the United States of America or any political subdivision thereof, in which the principal office or applicable lending office of the Bank is located), and all interest, penalties or similar liabilities with respect thereto (collectively, together with any amounts payable pursuant to the next sentence, "Taxes"). Jevic shall also reimburse the Bank, upon the written request of the Bank, for Taxes imposed on or measured by the gross or net income of the Bank pursuant to the laws of the United States of America (or any State or political subdivision thereof), or the jurisdiction (or any political subdivision or taxing authority thereof) in which the principal office or applicable lending office of the Bank is located as the Bank shall determine are payable by the Bank due to the amount of Taxes paid to or on behalf of the Bank pursuant to this or the preceding sentence. If any Taxes are so levied or imposed, Jevic agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due hereunder, under any Note or under any other Loan Document, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Note. Jevic will furnish to the Bank upon request certified copies of tax receipts evidencing such payment by Jevic. Jevic will indemnify and hold harmless the Bank, and reimburse the Bank upon its written request, for the amount of any Taxes so levied or imposed and paid or withheld by the Bank. (e) Prepayment of LIBO Rate Loans. If any principal of a LIBO Rate Loan shall be repaid (whether upon prepayment, reduction of the Equipment Revolving Loan Commitment, reduction of the Working Capital Revolving Loan Commitment, or for any other reason) or converted to a Base Rate Loan pursuant to ss.2.4(c) prior to the last day of the Interest Period applicable to such LIBO Rate Loan or if Jevic fails for any reason to borrow a LIBO Rate Loan after giving irrevocable notice pursuant to ss.2.3, Jevic shall pay to the Bank, in addition to the principal and interest then to be paid, such additional amounts as may be necessary to compensate the Bank for all direct and indirect costs and losses (including losses resulting from redeployment of prepaid or unborrowed funds at rates lower than the cost of such funds to the Bank, and including lost profits incurred or sustained by the Bank) as a result of such repayment or failure to borrow (the "Additional Amount"). The Additional Amount (which the Bank shall take reasonable measures to minimize) shall be specified in a written notice or certificate delivered to Jevic by the Bank sustaining such costs or losses. Such notice or certificate shall contain a calculation in reasonable detail of the Additional Amount to be compensated and shall be conclusive as to the facts and the amounts stated therein, absent manifest error. 2.9 Changes in Circumstances; Yield Protection. (a) If any Regulatory Change or compliance by the Bank with any request made after the date of this Agreement by the Board of Governors of the Federal Reserve System or by any Federal Reserve Bank or other central bank or fiscal, monetary or similar authority (in each case whether or not having the force of law) shall: (1) impose, modify or make applicable any reserve, special deposit, Federal Deposit Insurance Corporation premium or similar requirement or imposition against assets held by, or deposits in or for the account of, or loans made by, or any other acquisition of funds for loans or advances by, the Bank; -18- (2) impose on the Bank any other condition regarding the Notes; (3) subject the Bank to, or cause the withdrawal or termination of any previously granted exemption with respect to, any tax (including any withholding tax but not including any income tax not currently causing the Bank to be subject to withholding) or any other levy, impost, duty, charge, fee or deduction on or from any payments due from Jevic; or (4) change the basis of taxation of payments from Jevic to the Bank (other than by reason of a change in the method of taxation of a Bank's net income); and the result of any of the foregoing events is to increase the cost to the Bank of making or maintaining any Loan or to reduce the amount of principal, interest or fees to be received by the Bank hereunder in respect of any Loan, the Bank will immediately so notify Jevic. If the Bank determines in good faith that the effects of the change resulting in such increased cost or reduced amount cannot reasonably be avoided or the cost thereof mitigated, then upon notice by the Bank to Jevic, Jevic shall pay to the Bank on each interest payment date of the Loan, such additional amount as shall be necessary to compensate the Bank for such increased cost or reduced amount. (b) If the Bank shall determine that any Regulation regarding capital adequacy or the adoption of any Regulation regarding capital adequacy, which Regulation is applicable to banks (or their holding companies) generally and not First Union (or its holding company) specifically, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank (or its holding company) with any such request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has the effect of reducing the rate of return on the Bank's capital as a consequence of its obligations hereunder to a level below that which the Bank could have achieved but for such adoption, change or compliance (taking into consideration the Bank's policies with respect to capital adequacy) by an amount deemed by the Bank to be material, Jevic shall promptly pay to the Bank, upon the demand of the Bank, such additional amount or amounts as will compensate the Bank for such reduction. (c) If the Bank shall determine (which determination shall be, in the absence of fraud or manifest error, conclusive and binding upon all parties hereto) that by reason of abnormal circumstances affecting the interbank eurodollar or applicable eurocurrency market adequate and reasonable means do not exist for ascertaining the LIBO Rate to be applicable to the requested LIBO Rate Loan or that eurodollar or eurocurrency funds in amounts sufficient to fund all the LIBO Rate Loans are not obtainable on reasonable terms, the Bank shall give notice of such inability or determination by telephone to Jevic at least two Business Days prior to the date of the proposed Loan and thereupon the obligations of the Bank to make, convert other Loans to, or renew such LIBO Rate Loan shall be excused, subject, however, to the right of Jevic at any time thereafter to submit another request. (d) Determination by the Bank for purposes of this Section 2.9 of the effect of any Regulatory Change or other change or circumstance referred to above on its costs of making or maintaining Loans or on amounts receivable by it in respect of the Loans and of the additional amounts required to compensate the Bank in respect of any additional costs, shall be made in good faith and shall be evidenced by a certificate, signed by an officer of the Bank and delivered to Jevic, as to the fact and amount of the - 19 - increased cost incurred by or the reduced amount accruing to the Bank owing to such event or events. Such certificate shall be prepared in reasonable detail and shall be conclusive as to the facts and amounts stated therein, absent manifest error. (e) The Bank will notify Jevic of any event occurring after the date of this Agreement that will entitle the Bank to compensation pursuant to this Section as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. Said notice shall be in writing, shall specify the applicable Section or Sections of this Agreement to which it relates and shall set forth the amount of amounts then payable pursuant to this Section. Jevic shall pay the Bank the amount shown as due on such notice within 30 days after its receipt of the same. 2.10 Illegality. Notwithstanding any other provision in this Agreement, if the adoption of any applicable Regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive (whether or not having the force of law) of any such authority, central bank, or comparable agency shall make it unlawful or impossible for the Bank to (1) maintain its Equipment Revolving Loan Commitment or Working Capital Revolving Loan Commitment, then upon notice to Jevic by the Bank, the Equipment Revolving Loan Commitment and Working Capital Revolving Loan Commitment shall terminate; or (2) maintain or fund its LIBO Rate Loans, then upon notice to Jevic of such event, Jevic's outstanding LIBO Rate Loans shall be converted into Base Rate Loans. 3. Representations and Warranties Jevic represents and warrants to the Bank that: 3.1 Organization, Standing. It (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) has the corporate power and authority necessary to own its assets, carry on its business and enter into and perform its obligations hereunder, under each Loan Document to which it is a party, and (iii) is qualified to do business and is in good standing in each jurisdiction where the nature of its business or the ownership of its properties requires such qualification, except where the failure to be so qualified would not have a Material Adverse Effect. 3.2 Corporate Authority, Validity, Etc. The making and performance of the Loan Documents to which it is a party are within the power and authority of Jevic and have been duly authorized by all necessary corporate action. The making and performance of the Loan Documents do not and under present law will not require any consent or approval of any of Jevic's shareholders or any other Person, do not and under present law will not violate any law, rule, regulation order, writ, judgment, injunction, decree, determination or award, do not violate any provision of its charter or by-laws, do not and will not result in any breach of any material agreement, lease or instrument to which it is a party, by which it is bound or to which any of its assets are or may be subject, and do not and will not give rise to any Lien upon any of its assets. Further, Jevic is not in default under any such agreement, lease or instrument except to the extent such default reasonably could not have a Material Adverse Effect. No authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency are necessary for the execution, delivery or performance by Jevic of any Loan Document to which Jevic is a party or for the - 20 - validity or enforceability thereof. Each Loan Document, when executed and delivered, will be the legal, valid and binding obligation of Jevic, enforceable against it in accordance with its terms. 3.3 Litigation. Except as disclosed on Schedule 2, there are no actions, suits or proceedings pending or, to Jevic's knowledge, threatened against or affecting Jevic or any assets of Jevic before any court, government agency, or other tribunal which if adversely determined reasonably could have a Material Adverse Effect or upon the ability of Jevic to perform under the Loan Documents. The status (including the tribunal, the nature of the claim and the amount in controversy) of each such litigation matter as of the date of this Agreement is set forth in Schedule 2. 3.4 ERISA. (a) Jevic and ERISA Affiliate are in compliance in all material respects with all applicable provisions of ERISA and the regulations promulgated thereunder; and, neither Jevic, nor any ERISA Affiliate maintains or contributes to or has maintained or contributed to any multiemployer plan (as defined in ss.4001 of ERISA) under which Jevic or any ERISA Affiliate could have any withdrawal liability; (b) neither Jevic nor any ERISA Affiliate, sponsors or maintains any Plan under which there is an accumulated funding deficiency within the meaning of ss.412 of the Code, whether or not waived; (c) the aggregate liability for accrued benefits and other ancillary benefits under each Plan that is or will be sponsored or maintained by Jevic or any ERISA Affiliate (determined on the basis of the actuarial assumptions prescribed for valuing benefits under terminating single-employer defined benefit plans under Title IV of ERISA) does not exceed the aggregate fair market value of the assets under each such defined benefit pension Plan; (d) the aggregate liability of Jevic and each ERISA Affiliate arising out of or relating to a failure of any Plan to comply with the provisions of ERISA or the Code, will not have a Material Adverse Effect; and (e) there does not exist any unfunded liability (determined on the basis of actuarial assumptions utilized by the actuary for the plan in preparing the most recent Annual Report) of Jevic or any ERISA Affiliate under any plan, program or arrangement providing post-retirement life or health benefits. 3.5 Financial Statements. The financial statements of Jevic as of and for the Fiscal Years ending December 31, 1996 and December 31, 1997, consisting in each case of a balance sheet, a statement of operations, a statement of shareholders' equity, a statement of cash flows and accompanying footnotes, and the interim financial statements of Jevic as of March 31, 1998 furnished to the Bank in connection herewith, present fairly, in all material respects, the financial position, results of operations and operating statistics of Jevic as of the dates and for the periods referred to, in conformity with Generally Accepted Accounting Principles. Except as set forth on Schedule 2 hereto, there are no liabilities, fixed or contingent, which are not reflected in such financial statements, other than liabilities which are not required to be reflected in such balance sheets. There has been no Material Adverse Change since March 31, 1998. 3.6 Not in Default, Judgments, Etc.. No Event of Default or Potential Default under any Loan Document has occurred and is continuing. Jevic has satisfied all judgments and is not in default with respect to any judgment, writ, injunction, decree, rule, or regulation of any court, arbitrator, or federal, state, municipal, or other governmental authority, commission, board bureau, agency, or instrumentality, domestic or foreign. 3.7 Taxes. Jevic has filed all federal, state, local and foreign tax returns and reports which it is required by law to file and as to which its failure to file would have a Material Adverse Effect, and has paid all taxes, including wage taxes, assessments, withholdings and other governmental charges which are presently due and payable, other than those being contested in good faith by appropriate proceedings and - 21 - disclosed on Schedule 2. The tax charges, accruals and reserves on the books of Jevic are adequate to pay all such taxes that have accrued but are not presently due and payable. 3.8 Permits, Licenses, Etc. Jevic possesses all permits, licenses, franchises, trademarks, trade names, copyrights and patents necessary to the conduct of its business as presently conducted or as presently proposed to be conducted, except where the failure to possess the same would not have a Material Adverse Effect. 3.9 Compliance with Laws, Etc. (a) Jevic is in compliance in all material respects with all Regulations applicable to its business (including obtaining all authorizations, consents, approvals, orders, licenses, exemptions from, and making all filings or registrations or qualifications with, any court or governmental department, public body or authority, commission, board, bureau, agency, or instrumentality), the noncompliance with which reasonably could have a Material Adverse Effect. (b) Hazardous Wastes, Substances and Petroleum Products. Jevic has received all permits and filed all notifications necessary to carry on its business; and is in compliance in all respects with all Environmental Control Statutes. Jevic has not given any written or oral notice, nor has it failed to give required notice, to the Environmental Protection Agency ("EPA") or any state or local agency with regard to any actual or imminently threatened Release of Hazardous Substances on properties owned, leased or operated by Jevic or used in connection with the conduct of its business and operations. Jevic has not received notice that it is potentially responsible for costs of clean-up or remediation of any actual or imminently threatened Release of Hazardous Substances pursuant to any Environmental Control Statute. To the best of Jevic's knowledge and belief, no real property owned or leased by it is in violation of any Environmental Laws and no Hazardous Substances are present on said real property in violation of applicable law. Jevic has not been identified in any litigation, administrative proceedings or investigation as a potentially responsible party for any liability under any Environmental Laws. 3.10 Solvency. Jevic is, and after giving effect to the transactions contemplated hereby, will be, Solvent. 3.11 Subsidiaries, Etc. Jevic does not have any Subsidiaries except as set forth in Schedule 2 hereto. Set forth in Schedule 2 hereto is a complete and correct list, as of the date of this Agreement, of all Investments held by Jevic in any joint venture or other Person. 3.12 Title to Properties, Leases. Jevic has good and marketable title to all assets and properties reflected as being owned by it in its financial statements as well as to all assets and properties acquired since said date (except property disposed of since said date in the ordinary course of business). Except for the Liens set forth in Schedule 2 hereto and any other Permitted Liens, there are no Liens on any of such assets or properties. It has the right to, and does, enjoy peaceful and undisturbed possession under all material leases under which it is leasing property as a lessee. All such leases are valid, subsisting and in full force and effect, and none of such leases is in default, except where such default, either individually or in the aggregate, could not have a Material Adverse Effect. 3.13 Public Utility Holding Company; Investment Company. Jevic is not a "public utility company" or a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of - 22- a "holding company" or of a "subsidiary company" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended; or a "public utility" within the meaning of the Federal Power Act, as amended. Further, it is not an "investment company" or an "affiliated person" of an "investment company" or a company "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended. 3.14 Margin Stock. Jevic is not or will not be engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying or trading in any margin stocks or margin securities (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System as amended from time to time). It will not use or permit any proceeds of the Loans to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stocks or margin securities. 4. Conditions Precedent 4.1 All Loans. After this Agreement has become effective, the obligation of the Bank to make any Loan (including but not limited to the first Loan hereunder) is conditioned upon the following: (a) Documents. Jevic shall have delivered and the Bank shall have received a request for a Loan in such form as the Bank may request from time to time. (b) Covenants; Representations. Jevic shall be in compliance with all covenants, agreements and conditions in each Loan Document and each representation and warranty contained in each Loan Document shall be true with the same effect as if such representation or warranty had been made on the date such Loan is made or issued. (c) Defaults. Immediately prior to and after giving effect to such transaction, no Event of Default or Potential Default shall exist. (d) Material Adverse Change. Since March 31, 1998, there shall not have been any Material Adverse Change with respect to Jevic, and there shall not be any other event or circumstance which gives the Bank reasonable grounds to conclude that Jevic may not or will not be able to perform or observe (in the normal course) its obligations hereunder and under the Revolving Credit Note, the Term Notes or the other Loan Documents. (e) Borrowing Base Certificate. Jevic shall have delivered and the Bank shall have received a Borrowing Base Certificate dated the date of each Loan under this Agreement. 4.2 Conditions to First Loan. The obligation of the Bank to make the first Loan hereunder is conditioned upon the following: satisfactory to each Bank: (a) Articles, Bylaws. The Bank shall have received copies of the Articles or Certificates of Incorporation and Bylaws of Jevic, certified by its Secretary or Assistant Secretary; together with Certificate of Good Standing from any jurisdiction where the nature of its business or the ownership -23- of its properties requires such qualification except where the failure to be so qualified would not have a Material Adverse Effect. (b) Evidence of Authorization. The Bank shall have received copies certified by the Secretary or Assistant Secretary of Jevic or other appropriate official (in the case of a Person other than Jevic) of all corporate or other action taken by each Person other than the Bank who is a party to any Loan Document to authorize its execution and delivery and performance of the Loan Documents and to authorize the Equipment Revolving Credit Loan and the Working Capital Revolving Credit Loan, together with such other related papers as the Bank shall reasonably require. (c) Legal Opinions. The Bank shall have received a favorable written opinion in form and substance satisfactory to the Bank from Archer & Greiner, P.C., counsel for Jevic, which shall be addressed to the Bank and be dated the date of the first Loan. (d) Incumbency. The Bank shall have received a certificate signed by the secretary or assistant secretary of Jevic, together with the true signature of the officer or officers authorized to execute and deliver the Loan Documents and certificates thereunder, upon which the Bank shall be entitled to rely conclusively until it shall have received a further certificate of the secretary or assistant secretary of Jevic amending the prior certificate and submitting the signature of the officer or officers named in the new certificate as being authorized to execute and deliver Loan Documents and certificates thereunder. (e) Notes. The Bank shall have received the Equipment Revolving Credit Note and the Working Capital Revolving Credit Note duly executed, completed and issued in accordance herewith. (f) Documents. The Bank shall have received all certificates, instruments and other documents then required to be delivered pursuant to any Loan Documents, in each instance in form and substance reasonably satisfactory to it. (g) Consents. Jevic shall have provided to the Bank evidence satisfactory to it that all governmental, shareholder and third party consents and approvals necessary in connection with the transactions contemplated hereby have been obtained and remain in effect. (h) Change. No Material Adverse Change shall have occurred since March 31, 1998 and there shall not be any other event or circumstance which gives the Bank reasonable grounds to conclude that Jevic may not or will not be able to perform or observe (in the normal course) its obligations hereunder and under the Revolving Credit Note, the Term Notes and the other Loan Documents. (i) Other Agreements. Jevic shall have executed and delivered each other Loan Document required hereunder. (j) Fees. Jevic shall simultaneously pay or shall have paid all fees due hereunder or any other Loan Document. -24- 5. Affirmative Covenants Jevic covenants and agrees that, without the prior written consent of the Bank, from and after the date hereof and so long as any Commitment is in effect or any Obligation remains unpaid or outstanding, it will: 5.1 Financial Statements and Reports. Furnish to the Bank the following financial information: (a) Annual Statements. No later than one hundred and twenty (120) days after the end of each Fiscal Year, its balance sheet as of the end of such year and the prior year in comparative form, and related statements of operations, shareholders' equity, and cash flows for the Fiscal Year and the prior Fiscal Year in comparative form. The financial statements shall be in reasonable detail with appropriate notes and be prepared in accordance with Generally Accepted Accounting Principles. The annual financial statements shall be certified (without any qualification or exception) by independent public accountants of nationally recognized standing reasonably acceptable to the Bank. Such financial statements shall be accompanied by a report of such independent certified public accountants stating that, in the opinion of such accountants, such financial statements present fairly, in all material respects, the financial position, and the results of operations and the cash flows of Jevic for the period then ended in conformity with Generally Accepted Accounting Principles, except for inconsistencies resulting from changes in accounting principles and methods agreed to by such accountants and specified in such report, and that, in the case of such financial statements, the examination by such accountants of such financial statements has been made in accordance with generally accepted auditing standards and accordingly included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and assessing the accounting principles used and significant estimates made, as well as evaluating the overall financial statement presentation. Each financial statement provided under this subsection (a) shall be accompanied by a certificate signed by such accountants either stating that during the course of their examination nothing came to their attention which would cause them to believe that any event has occurred and is continuing which constitutes an Event of Default or Potential Default, or describing each such event. In addition to the annual financial statements, Jevic shall, promptly upon receipt thereof, furnish to the Bank a copy of each other report submitted to its board of directors by its independent accountants in connection with any annual, interim or special audit made by them of the financial records of Jevic. (b) Quarterly Statements. No later than sixty (60) calendar days after the end of each Fiscal Quarter of each Fiscal Year, its balance sheet and related statements of operations, shareholders' equity and cash flows for such quarterly period and for the period from the beginning of such fiscal year to the end of such Fiscal Quarter and the corresponding financial statements (other than the balance sheet) for the same periods in the preceding Fiscal Year certified by the chief financial officer of Jevic as having been prepared in accordance with Generally Accepted Accounting Principles (subject to changes resulting from audits and year-end adjustments); provided, however, that if the independent certified public accountants issue a review report on the quarterly financial statements of Jevic, the financial statements required by this subsection (b) shall be accompanied by a certificate signed by such accountants either stating that during the course of their examination nothing came to their attention which would cause them to believe that any event has occurred and is continuing which constitutes an Event of Default or Potential Default, or describing each such event and the remedial steps being taken by Jevic. (c) No Default. Within sixty (60) calendar days after the end of each of the first three Fiscal Quarters of each Fiscal Year and within one hundred and twenty (120) calendar days after the end of each Fiscal Year, a certificate signed by the chief financial officer of Jevic certifying that, to the best of such officer's knowledge, after due inquiry, (i) Jevic has complied with all covenants, agreements and conditions -25- in each Loan Document and that each representation and warranty contained in each Loan Document is true and correct with the same effect as though each such representation and warranty had been made on the date of such certificate (except to the extent such representation or warranty related to a specific prior date), and (ii) no event has occurred and is continuing which constitutes an Event of Default or Potential Default, or describing each such event and the remedial steps being taken by Jevic. (d) ERISA. All reports and forms filed with respect to all Plans, except as filed in the normal course of business and that would not result in an adverse action to be taken under ERISA, and details of related information of a Reportable Event. (e) Material Changes. Notification to the Bank of any litigation, administrative proceeding, investigation, business development, or change in financial condition which could reasonably have a Material Adverse Effect. (f) Other Information. Promptly upon request by the Bank from time to time (which may be on a monthly or other basis), Jevic shall provide such other information and reports regarding its operations, business affairs, prospects and financial condition as the Bank may reasonably request. (g) Borrowing Base Certificates. If there are Loans outstanding and Jevic shall not have delivered a Borrowing Base Certificate to the Bank during any calendar month, it will deliver to the Bank, no later than 30 days after the end of such calendar month as of the last day of the preceding calendar month, a Borrowing Base Certificate signed by the chief financial officer, treasurer or controller of Jevic. (h) Monthly Receivables Report. If there are Loans outstanding, Jevic will deliver to the Bank, no later than 30 days after the end of such calendar month, an Accounts Receivable Aging Report. 5.2 Corporate Existence. Preserve its corporate existence and material franchises, licenses, patents, copyrights, trademarks and trade names consistent with good business practice. Maintain, keep, and preserve all of its properties (tangible and intangible) necessary or useful in the conduct of its business in good working order and condition, ordinary wear and tear expected. 5.3 ERISA. Comply in all material respects with the provisions of ERISA to the extent applicable to any Plan maintained for the employees of Jevic or any ERISA Affiliate; do or cause to be done all such acts and things that are required to maintain the qualified status of each Plan and tax exempt status of each trust forming part of such Plan; not incur any material accumulated funding deficiency (within the meaning of ERISA and the regulations promulgated thereunder), or any material liability to the PBGC (as established by ERISA); not permit any event to occur as described in ss.4042 of ERISA or which may result in the imposition of a lien on its properties or assets; notify the Bank in writing promptly after it has come to the attention of senior management of Jevic of the assertion or threat of any "reportable event" or other event described in ss.4042 of ERISA (relating to the soundness of a Plan) or the PBGC's ability to assert a material liability against it or impose a lien on its, or any ERISA Affiliates', properties or assets; and refrain from engaging in any Prohibited Transactions or actions causing possible liability under ss.5.02 of ERISA. 5.4 Compliance with Regulations. Comply in all material respects with all Regulations applicable to its business, the noncompliance with which reasonably could have a Material Adverse Effect. -26- 5.5 Conduct of Business; Permits and Approvals, Compliance with Laws. Continue to engage in an efficient and economical manner in a business of the same general type as conducted by it on the date of this Agreement; maintain in full force and effect, its franchises, and all licenses, patents, trademarks, trade names, contracts, permits, approvals and other rights necessary to the profitable conduct of its business. 5.6 Maintenance of Insurance. Maintain insurance with financially sound and reputable insurance companies or associations in such amounts and covering such risks as are usually carried by companies engaged in the same or a similar business and similarly situated, which insurance may provide for reasonable deductibility from coverage thereof. 5.7 Payment of Debt; Payment of Taxes, Etc. Where the amount involved exceeds $500,000 or where the non-payment or non-discharge would otherwise have a Material Adverse Effect on Jevic or any of its assets: promptly pay and discharge (a) all of its Debt in accordance with the terms thereof; (b) all taxes, assessments, and governmental charges or levies imposed upon it or upon its income and profits, upon any of its property, real, personal or mixed, or upon any part thereof, before the same shall become in default; (c) all lawful claims for labor, materials and supplies or otherwise, which, if unpaid, might become a lien or charge upon such property or any part thereof; provided, however, that so long as Jevic first notifies the Bank of its intention to do so, Jevic shall not be required to pay and discharge any such Debt, tax, assessment, charge, levy or claim so long as the failure to so pay or discharge does not constitute or result in an Event of Default or a Potential Default hereunder and so long as no foreclosure or other similar proceedings shall have been commenced against such property or any part thereof and so long as the validity thereof shall be contested in good faith by appropriate proceedings diligently pursued and it shall have set aside on its books adequate reserves with respect thereto. 5.8 Notice of Events. Promptly upon discovery of any of the following events, Jevic shall provide telephone notice to the Bank (confirmed within three (3) calendar days by written notice), describing the event and all action Jevic proposes to take with respect thereto: (a) an Event of Default or Potential Default under this Agreement; (b) any default or event of default under a contract or contracts and the default or event of default involves payments by the Jevic in an aggregate amount equal to or in excess of $500,000; (c) a default or event of default under or as defined in any evidence of or agreements for Indebtedness for Borrowed Money under which the Jevic's liability is equal to or in excess of $500,000, singularly or in the aggregate, whether or not an event of default thereunder has been declared by any party to such agreement or any event which, upon the lapse of time or the giving of notice or both, would become an event of default under any such agreement or instrument or would permit any party to any such instrument agreement to terminate or suspend any commitment to lend to Jevic or to declare or to cause any such indebtedness to be accelerated or payable before it would otherwise be due; (d) the institution of, any material adverse determination in, or the entry of any default judgment or order or stipulated judgment or order in, any suit, action, arbitration, administrative proceeding, criminal prosecution or governmental investigation against Jevic -27- in which the amount in controversy is in excess of $500,000, singularly or in the aggregate; or (e) any change in any Regulation, including, without limitation, changes in tax laws and regulations, which would have a Material Adverse Effect. 5.9 Inspection Rights. At any time during regular business hours and as often as reasonably requested of Jevic by the Bank, permit the Bank, or any authorized officer, employee, agent, or representative of the Bank to examine and make abstracts from the records and books of account of Jevic, wherever located, and to visit the properties of Jevic; and to discuss the affairs, finances, and accounts of Jevic with its Chairman, President, any executive vice president, it chief financial officer, treasurer, controller or independent accountants. Each inspection shall be at the expense of the Bank, unless such inspection shall be made during the continuance of a Potential Default or an Event of Default (in which event, the expense of such inspection shall be borne by Jevic). Notwithstanding the foregoing sentence, it is understood and agreed by Jevic that all expenses in connection with any such inspection which may be incurred by Jevic, any officers and employees thereof and the attorneys and independent certified public accountants therefor shall be expenses payable by Jevic and shall not be expenses of the Bank. Further, it is understood and agreed by First Union that the number of inspection visits shall be limited to two per year and reasonable prior notice shall be given to Jevic unless an Event of Default or a Potential Default shall exist. 5.10 Generally Accepted Accounting Principles. Maintain books and records at all times in accordance with Generally Accepted Accounting Principles. 5.11 Use of Proceeds. Jevic will use the proceeds of the Loans for the purchase or refinancing of over the road chassis and trailers, Qualcomm satellites, trailer dollys, trailer heaters, fork trucks, automobiles and miscellaneous equipment used in connection with its business and for working capital purposes. 5.12 Further Assurances. Do such further acts and things and execute and deliver to the Bank such additional assignments, agreements, powers and instruments, as the Bank may reasonably require or reasonably deem advisable to carry into affect the purposes of this Agreement or to better assure and confirm unto the Bank its rights, powers and remedies hereunder. 5.13 Compliance with Material Contracts. Jevic will comply in all material respects with all obligations, terms, conditions and covenants, as applicable, in all Debt of Jevic and all instruments and agreements related thereto, and all other instruments and agreements to which it is a party or by which it is bound or any of its properties is affected and in respect of which the failure to comply reasonably could have a Material Adverse Effect. 5.14 Restrictive Covenants in Other Agreements. In the event that Jevic shall enter into or otherwise become subject to or suffer to exist any agreement pertaining to Debt which contains covenants or restrictions that are more restrictive on it than the covenants and restrictions contained in this Agreement, each and every such covenant and restriction as in effect from time to time shall be deemed incorporated herein by reference as fully as if set forth herein. If and to the extent that any such covenant or restriction shall be inconsistent with or otherwise be in conflict with any covenant or restriction set forth herein (other than by reason of its being more restrictive), this Agreement shall govern. - 28 - 6. Negative Covenants Jevic covenants and agrees that, without the prior written consent of the Bank, from and after the date hereof and so long as any Commitment is in effect or any Obligation remains unpaid or outstanding, it will not: 6.1 Consolidation and Merger. Merge or consolidate with or into any corporation except, if no Potential Default or Event of Default shall have occurred and be continuing either immediately prior to or upon the consummation of such transaction, any Person may be merged into Jevic as long as (a) Jevic is the surviving entity, (b) the event is not deemed to be a "change in control" for purposes of Item 1 in Jevic's filing of the Securities and Exchange Commission's current report on Form 8K, (c) the board members of Jevic at the time of the merger hold a majority of seats on the board of the surviving entity, and (d) the Person had been, prior to the merger, in a business similar to that of Jevic. 6.2 Debt. Advance, borrow, or assume any Debt or other obligations for working capital purposes (including, but not limited to, Working Capital Revolving Credit Loans hereunder) which, in the aggregate at any time, exceed eighty percent (80%) of the Eligible Accounts Receivable. 6.3 Liens. Create, assume or permit to exist any Lien on any of its property or assets, whether now owned or hereafter acquired, or upon any income or profits therefrom, except Permitted Liens. 6.4 Guarantees. Guarantee or otherwise in any way become or be responsible for indebtedness or obligations (including working capital maintenance, take-or-pay contracts) of any other Person, contingently or otherwise, in an aggregate amount equal to or exceeding ten percent (10%) of the Tangible Net Worth of Jevic. 6.5 Margin Stock. Use or permit any proceeds of the Loans to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock within the meaning of Regulation U of The Board of Governors of the Federal Reserve System, as amended from time to time. 6.6 Acquisitions and Investments. If an Event of Default or a Potential Default exists or would exist immediately thereafter: purchase or otherwise acquire (including without limitation by way of share exchange) any part or amount of the capital stock or assets of, or make any Investments in any other Person; or enter into any new business activities or ventures not directly related to its present business; or create any Subsidiary, except (a) it may acquire and hold stock, obligations or securities received in settlement of debts (created in the ordinary course of business) owing to it, and (b) it may make and own (i) Investments in certificates of deposit or time deposits having maturities in each case not exceeding one year from the date of issuance thereof and issued by a Bank, or any FDIC-insured commercial bank incorporated in the United States or any state thereof having a combined capital and surplus of not less than $150,000,000, (ii) Investments in marketable direct obligations issued or unconditionally guaranteed by the United States of America, any agency thereof, or backed by the full faith and credit of the United States of America, in each case maturing within one year from the date of issuance or acquisition thereof, (iii) Investments in -29- commercial paper issued by a corporation incorporated in the United States or any State thereof maturing no more than one year from the date of issuance thereof and, at the time of acquisition, having a rating of A-1 (or better) by Standard & Poor's Corporation or P-1 (or better) by Moody's Investors Service, Inc., (iv) Investments in money market mutual funds all of the assets of which are invested in cash or investments described in the immediately preceding clauses (i), (ii) and (iii), and (v) strategic business investments, in an amount not to exceed $3,000,000, in business enterprises similar to Jevic or complementary to Jevic. 6.7 Transfer of Assets; Nature of Business. Sell, transfer, pledge, assign or otherwise dispose of any of its assets unless such sale or disposition shall be in the ordinary course of its business for value received; or discontinue, liquidate or change in any material respect any substantial part of its operations or business. 6.8 Restricted Payments. Make or pay any redemptions, repurchases, dividends or distributions of any kind with respect to its capital stock except that dividends may be made and paid as long as the aggregate thereof does not exceed 50% of its net income (net of any net losses) accumulated after December 31, 1997. 6.9 Accounting Change. Make or permit any change in financial accounting policies or financial reporting practices, except as required by Generally Accepted Accounting Principles or regulations of the Securities and Exchange Commission. 6.10 Transactions with Affiliates. Enter into any transaction (including, without limitation, the purchase, sale or exchange of property, the rendering of any services or the payment of management fees) with any Affiliate, except transactions in the ordinary course of, and pursuant to the reasonable requirements of, its business, and in good faith and upon commercially reasonable terms. 6.11 Gross Operating Leases and TRAC Leases. Enter into gross operating leases or leases involving terminal rental adjustment clauses ("TRAC Leases") which, in the aggregate, involve annual lease payments in excess of $4,000,000. 6.12 Restriction on Amendment of This Agreement. Enter into or otherwise become subject to or suffer to exist any agreement which would require it to obtain the consent of any other Person as a condition to the ability of First Union and Jevic to amend or otherwise modify this Agreement. 7. Financial Covenants Jevic covenants and agrees that, without the prior written consent of the Bank, from and after the date hereof and so long as any Commitment is in effect or any Obligation remains unpaid or outstanding: 7.1 Borrowing Base. The aggregate principal amount of the Loans outstanding shall not at any time exceed the Borrowing Base; provided, however, that this covenant shall not be deemed breached if, with respect to any time such aggregate amount exceeds said level, within five Business Days after the earlier of the date Jevic first has knowledge of such breach or the date of the next Borrowing Base Certificate disclosing the existence of such breach a prepayment of the Loans shall be made in an amount sufficient to assure continued compliance with this covenant in the future. -30- 7.2 Senior Debt:Cash Flow Ratio. The Senior Debt:Cash Flow Ratio for the four (4) most recently ended consecutive Fiscal Quarters will not exceed 4:1. 7.3 Senior Debt:Capital Ratio. The Senior Debt:Capital Ratio will not exceed 0.6:1. 8. Default 8.1 Events of Default. Jevic shall be in default if any one or more of the following events (each an "Event of Default") occurs: (a) Payments. Jevic fails to pay any principal of or interest on any Note when due and payable (whether at maturity, by notice of intention to prepay, or otherwise) or fails to pay when it is due and payable any other amount payable under any Loan Document and such failure shall continue for three Business Days. (b) Covenants. Jevic fails to observe or perform (1) any term, condition or covenant set forth in ss.5.2 (first sentence only), ss.ss.6.1 through 6.11 or ss.8.1(a) of this Agreement, as and when required, (2) any term, condition or covenant set forth in ss.ss.5.1(a), 5.1(b), 5.1(c), 5.1(g) or 5.1(h) of this Agreement, as and when required and such failure shall continue for a period of 3 days or more, or (3) any term, condition or covenant contained in this Agreement or any other Loan Document other than as set forth in (1) and (2) above, as and when required and such failure shall continue for a period of 15 days or more. (c) Representations, Warranties. Any representation or warranty made or deemed to be made by Jevic herein or in any Loan Document or in any exhibit, schedule, report or certificate delivered pursuant hereto or thereto shall prove to have been false, misleading or incorrect in any material respect when made or deemed to have been made. (d) Bankruptcy. Jevic is dissolved or liquidated, makes an assignment for the benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for any receiver or trustee, commences any proceeding relating to itself under any bankruptcy, reorganization, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, has commenced against it any such proceeding which remains undismissed for a period of thirty (30) days, or indicates its consent to, approval of or acquiescence in any such proceeding, or any receiver of or trustee for Jevic or any substantial part of the property of Jevic is appointed, or if any such receivership or trusteeship to continues undischarged for a period of thirty (30) days. (e) Certain Other Defaults. Jevic shall fail to pay when due any Indebtedness for Borrowed Money which singularly or in the aggregate exceeds $500,000, and such failure shall continue beyond any applicable cure period, or Jevic shall suffer to exist any default or event of default in the performance or observance, subject to any applicable grace period, of any agreement, term, condition or covenant with respect to any agreement or document relating to Indebtedness for Borrowed Money if the effect of such default is to permit, with the giving of notice or passage of time or both, the holders thereof, or any trustee or agent for said holders, to terminate or suspend any commitment (which is equal to or in excess of $500,000) to lend money or to cause or declare any portion of any borrowings thereunder to - 31 - become due and payable prior to the date on which it would otherwise be due and payable, provided that during any applicable cure period the Bank's obligations hereunder to make further Loans shall be suspended. (f) Judgments. Any judgments against Jevic or against its assets or property for amounts in excess of $500,000 in the aggregate remain unpaid, unstayed on appeal, undischarged, unbonded and undismissed for a period of thirty (30) days. (g) Attachments. Any assets of Jevic shall be subject to attachments, levies, or garnishments for amounts in excess of $500,000 in the aggregate which have not been dissolved or satisfied within twenty (20) days after service of notice thereof to Jevic. (h) Change in Control. Any event that would be deemed to be a "change in control" for purposes of Item 1 in the Securities and Exchange Commission's current report on Form 8K (i) Security Interests. Any security interest created pursuant to any Loan Document (i) shall cease to be in full force and effect, or (ii) shall cease in any material respect to give the Bank, the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a per fected security interest in, and Lien on, all of the Collateral), superior to and prior to the rights of all third Persons, and subject to no other Liens (except as permitted by ss.6.3). (j) Material Adverse Change. In the determination of the Bank, in its discretion reasonably exercised, (1) a Material Adverse Change shall have occurred or any event or circumstance shall have occurred which gives reasonable grounds to conclude that Jevic may not or will not be able to perform or observe in the normal course its obligations under this Agreement, the Revolving Credit Notes, the Term Notes, the Security Agreement or the other Loan Documents, (2) the Bank shall have given Jevic written notice thereof and (3) at least 15 Business Days shall have elapsed from the giving of notice as provided in ss.10.5 hereof. THEN and in every such event other than that specified in ss.8.1(d), the Bank may immediately terminate the Commitments by notice in writing to Jevic and immediately declare the Revolving Credit Notes, the Term Notes and all other Obligations, including without limitation accrued interest, to be, and they shall thereupon forthwith become due and payable without presentment, demand, or notice of any kind, all of which are hereby expressly waived by Jevic. Upon the occurrence of any event specified in ss.8.1(d), the Commitments shall automatically terminate and the Revolving Credit Notes, the Term Notes and all other Obligations, including without limitation accrued interest, shall immediately be due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Jevic. Any date on which the Loans and such other Obligations are declared due and payable pursuant to this ss.8.1, shall be the Equipment Revolver Termination Date and the Working Capital Revolver Termination Date for purposes of this Agreement. From and after the date an Event of Default shall have occurred and for so long as an Event of Default shall be continuing, the Loans shall bear interest at the Default Rate. - 32 - 9. Collateral 9.1 Collateral. Except as otherwise specifically set forth herein or in any other Loan Document, the Equipment Revolving Credit Loans and their repayment at all times shall be secured by a first priority, perfected, security interest in the Collateral (as defined in the Security Agreement, hereinafter referred to as the "Collateral"). 9.2 Security Agreement. As security for the punctual payment in full of all Equipment Revolving Credit Loans (including all payments of principal, and interest and other costs contemplated hereby), Jevic at or prior to the funding of the first Equipment Revolving Credit Loan hereunder shall execute and deliver to First Union a security agreement in the form and substance attached as Exhibit D hereto (herein referred to as the "Security Agreement"). 10. Miscellaneous 10.1 Waiver. No failure or delay on the part of the Bank or any holder of any Note in exercising any right, power or remedy under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under any Loan Document. The remedies provided under the Loan Documents are cumulative and not exclusive of any remedies provided by law. 10.2 Amendments. No amendment, modification, termination or waiver of any Loan Document or any provision thereof nor any consent to any departure by Jevic therefrom shall be effective unless the same shall have been approved in writing by the Bank, be in writing and be signed by the Bank and the Jevic and then any such waiver or consent shall be effective only in the instance and for the specific purpose for which given. No notice to or demand on the Jevic shall entitle the Jevic to any other or further notice or demand in similar or other circumstances. 10.3 Governing Law. The Loan Documents and all rights and obligations of the parties thereunder shall be governed by and be construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania without regard to Pennsylvania or federal principles of conflict of laws. 10.4 Participations and Assignments. Jevic hereby acknowledges and agrees that First Union may at any time: (a) grant participations in all or any portion of its Equipment Revolving Loan Commitment, Working Capital Revolving Loan Commitment, any Note or of its right, title and interest therein or in or to this Agreement (collectively, "Participations") to any other lending office of the First Union or to any other bank, lending institution or other entity which has the requisite sophistication to evaluate the merits and risks of investments in Participations ("Participants"); provided, however, that: (i) all amounts payable by the Jevic hereunder shall be determined as if First Union had not granted such Participation; and (ii) any agreement pursuant to which First Union may grant a Participation: (x) shall provide that First Union shall retain the sole right and responsibility to enforce the obligations of Jevic hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provisions of this Agreement; (y) such participation agreement may provide that First Union will not agree to any modification, amendment or waiver of this Agreement without the consent of the Participant if such modification, amendment or waiver would reduce the principal of or rate of interest on any Loan or postpone the date fixed for any payment of principal of or interest on any Loan; and (z) shall not relieve First Union from its obligations, which shall remain absolute, to make Loans hereunder; and (b) First Union may assign any of its Loans and -33- its Revolving Loan Commitment (but only with the consent of the Jevic, which consent shall not be unreasonably withheld), provided that, each such assignment shall be in an amount of at least $10,000,000 (unless, after giving effect to such assignment and all other such assignments by First Union occurring simultaneously or substantially simultaneously therewith, First Union shall hold no Equipment Revolving Loan Commitment, Working Capital Revolving Loan Commitment or Loan hereunder); and (ii) each such assignment by First Union of its Loans, or Equipment Revolving Loan Commitment or Working Capital Revolving Loan Commitment shall be made in such manner so that the same portion of its Loans, Notes, Equipment Revolving Loan Commitment, and Working Capital Loan Commitment is assigned to the respective assignee. Upon execution and delivery by the assignee to the Jevic of an instrument in writing pursuant to which such assignee agrees to become a "Bank" hereunder having the Commitment(s) and Loans specified in such instrument, and upon consent thereto by the Jevic, to the extent required above, the assignee shall have, to the extent of such assignment (unless otherwise provided in such assignment with the consent of the Jevic), the obligations, rights and benefits of a bank hereunder holding the Equipment Revolving Loan Commitment(s), Working Capital Loan Commitment(s) and Loans (or portions thereof) assigned to it, and First Union shall, to the extent of such assignment, be released from the Commitment(s) (or portion(s) thereof) so assigned. Jevic shall not be obligated to consent to any participation or assignment which would result in First Union retaining less than 51% of the Commitment(s), Loans and Notes. (a) Captions. Captions in the Loan Documents are included for convenience of reference only and shall not constitute a part of any Loan Document for any other purpose. 10.5 Notices. All notices, requests, demands, directions, declarations and other communications between the Bank and the Jevic provided for in any Loan Document shall, except as otherwise expressly provided, be mailed by registered or certified mail, return receipt requested, or telegraphed, or telefaxed, or delivered in hand to the applicable party at its address indicated opposite its name on the signature pages hereto. The foregoing shall be effective and deemed received three days after being deposited in the mails, postage prepaid, addressed as aforesaid and shall whenever sent by telegram, telegraph or telefax or delivered in hand be effective when received. Any party may change its address by a communication in accordance herewith. 10.6 Expenses; Indemnification. Jevic will from time to time reimburse the Bank promptly following demand for all out-of-pocket expenses (including the reasonable fees and expenses of legal counsel) in connection with (i) the preparation of the Loan Documents, (ii) the making of any Loans, (iii) the administration of the Loan Documents, and (iv) the enforcement of the Loan Documents; and reimburse the Bank for all out-of-pocket expenses (including reasonable fees and expenses of legal counsel) in connection with the enforcement of the Loan Documents. In addition to the payment of the foregoing expenses, Jevic hereby agrees to indemnify, protect and hold the Bank and any holder of the Notes and the officers, directors, employees, agents, affiliates and attorneys of the Bank and such holder (collectively, the "Indemnitees") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature, including reasonable fees and expenses of legal counsel, which may be imposed on, incurred by, or asserted against such Indemnitee by Jevic or other third parties and arise out of or relate to this Agreement or the other Loan Documents or any other matter whatsoever related to the transactions contemplated by or referred to in this Agreement or the other Loan Documents; provided, however, that Jevic shall have no obligation to an Indemnitee hereunder to the extent that the liability incurred by such Indemnitee has been determined by a court of competent jurisdiction to be the result of gross negligence or willful misconduct of such Indemnitee. - 34 - 10.7 Survival of Warranties and Certain Agreements. All agreements, representations and warranties made or deemed made herein shall survive the execution and delivery of this Agreement, the making of the Loans hereunder and the execution and delivery of the Notes. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of Jevic set forth in ss.ss.2.8(e), 2.9, 2.10, and 10.6 shall survive the payment of the Loans and the termination of this Agreement. This Agreement shall remain in full force and effect until the latest to occur of the termination of the Equipment Revolving Loan Commitment, the Working Capital Revolving Loan Commitment or the repayment in full of all amounts owed by Jevic under any Loan Document. 10.8 Severability. The invalidity, illegality or unenforceability in any jurisdiction of any provision in or obligation under this Agreement, the Notes or other Loan Documents shall not affect or impair the validity, legality or enforceability of the remaining provisions or obligations under this Agreement, the Notes or other Loan Documents or of such provision or obligation in any other jurisdiction. 10.9 No Fiduciary Relationship. No provision in this Agreement or in any of the other Loan Documents and no course of dealing between the parties shall be deemed to create any fiduciary duty by the Bank to Jevic. 10.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. JEVIC AND FIRST UNION EACH HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE EASTERN DISTRICT OF PENNSYLVANIA AND IRREVOCABLY AGREES THAT, ANY ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THE NOTES, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAYBE LITIGATED IN SUCH COURTS. EACH PARTY TO THIS AGREEMENT ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENT, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, ANY NOTE, OR SUCH OTHER LOAN DOCUMENT. 10.11 WAIVER OF JURY TRIAL. JEVIC AND First Union EACH HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE LENDER/BORROWER RELATIONSHIP ESTABLISHED HEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. JEVIC AND FIRST UNION EACH ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE TRANSACTION, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. JEVIC AND First Union EACH FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, MODIFICATIONS, REPLACEMENTS OR RESTATEMENTS TO THIS AGREEMENT, THE LOAN -35- DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 10.12 Counterparts; Effectiveness. This Agreement and any amendment hereto or waiver hereof may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement and any amendments hereto or waivers hereof shall become effective when the Bank shall have received signed counterparts or notice by telecopy of the signature page that the counterpart has been signed and is being delivered to it or facsimile that such counterparts have been signed by all the parties hereto or thereto. 10.13 Use of Defined Terms. All words used herein in the singular or plural shall be deemed to have been used in the plural or singular where the context or construction so requires. Any defined term used in the singular preceded by "any" shall be taken to indicate any number of the members of the relevant class. 10.14 Offsets. Nothing in this Agreement shall be deemed a waiver or prohibition of the Bank's right of banker's lien or offset. 10.15 Entire Agreement. This Agreement, the Notes issued hereunder and the other Loan Documents constitute the entire understanding of the parties hereto as of the date hereof with respect to the subject matter hereof and thereof and supersede any prior agreements, written or oral, with respect hereto or thereto. 10.16 Inconsistency with Existing First Union Loans. In the event any representation or covenant contained in the documentation pertaining to any Existing First Union Loan shall be inconsistent with any representation or covenant contained herein (excluding any payment dates, maturity dates, interest rates or comparable types of provisions), the representation or covenant contained in this Agreement shall govern. IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. JEVIC TRANSPORTATION, INC. By: /s/ Brian J. Fitzpatrick ------------------------ Name: Brian J. Fitzpatrick Title: Senior Vice President and Chief Financial Officer Notices To: Mr. Brian J. Fitzpatrick Senior Vice President and Chief Financial Officer Jevic Transportation, Inc. 600 Creek Road Delanco, NJ 08075 FAX No. (609) 764-7237 -36- FIRST UNION NATIONAL BANK By: /s/ Roy O. Young ----------------- Roy O. Young Vice President Notices To: Mr. Roy O. Young Vice President First Union National Bank Transportation, Leasing, and Equipment Finance Department FC 1-8-11-24 1339 Chestnut Street Philadelphia, PA 19107 FAX No. (215) 786-7704 - 37 - Reference Table of Definitions Definition Page Defined 1996 Credit Agreement........................................................1 Accounts Receivable Aging Report.............................................1 Additional Amount ...........................................................1 Affiliate ...................................................................1 Agreement ...................................................................1 Agreement Year .............................................................12 Applicable Margin ...........................................................2 Bank ........................................................................1 Base Rate ...................................................................2 Base Rate Loans .............................................................2 Borrowing Base ..............................................................2 Borrowing Base Certificate...................................................2 Business Day ................................................................2 Capitalized Lease ...........................................................2 Capitalized Lease Obligations................................................2 Closing Date ................................................................2 Closing Fee ................................................................16 Code ........................................................................2 Collateral .................................................................34 Commitment Fees ............................................................16 Debt ........................................................................3 Default Rate ................................................................3 Dollars .....................................................................3 EBITDA ......................................................................3 Eligible Equipment .........................................................3 Eligible Receivables.........................................................3 Environmental Control Statutes...............................................4 Equipment Revolver Termination Date..........................................4 Equipment Revolving Credit Loans.............................................4 Equipment Revolving Credit Note..............................................4 Equipment Revolving Loan Commitment..........................................4 Equipment Revolving Loan Commitment Fee......................................4 ERISA .......................................................................3 ERISA Affiliate .............................................................3 Event of Default ............................................................3 Existing First Union Loans..................................................12 Federal Funds Rate .........................................................4 First Union .................................................................1 Fiscal Quarter ..............................................................4 Fiscal Year .................................................................4 GAAP ........................................................................4 Generally Accepted Accounting Principles.....................................4 - 39 - Governmental Authority.......................................................4 Hazardous Substances.........................................................4 Indebtedness for Borrowed Money..............................................5 Indemnitees ................................................................35 Intangible Assets ...........................................................5 Interest Period .............................................................5 Investment ..................................................................5 Jevic .......................................................................1 Letter of Credit ............................................................9 LIBO Rate ...................................................................6 LIBO Rate Loans .............................................................6 LIBO Rate Reserve Percentage.................................................6 Lien ........................................................................6 Loan ........................................................................6 Loan Documents ..............................................................6 Loans .......................................................................6 London Business Day .........................................................2 Material Adverse Change......................................................6 Material Adverse Effect......................................................7 Multiemployer Plan .........................................................7 Net Worth ...................................................................7 Notes .......................................................................7 Obligations .................................................................7 Operating Lease .............................................................7 Participants ...............................................................34 Participations .............................................................34 PBGC ........................................................................7 Pension Plan ................................................................7 Permitted Liens .............................................................7 Person ......................................................................8 Plan ........................................................................8 Potential Default ...........................................................8 Prohibited Transaction.......................................................8 Regulation ..................................................................8 Regulation D ................................................................8 Regulatory Change ...........................................................8 Release .....................................................................9 Reportable Event ............................................................9 Revenue Equipment ...........................................................9 Revolving Credit Note.......................................................13 Revolving Loan Commitment Fee...............................................16 Security Agreement ........................................................34 Solvent .....................................................................9 Standby Letter of Credit.....................................................9 Subsidiary ..................................................................9 Tangible Net Worth .........................................................9 Taxes ......................................................................18 - 40 - Term Loan Commitment........................................................12 Term Loan Commitment Termination Date.......................................12 Term Loans .................................................................10 Term Note ..................................................................13 Termination Event ..........................................................10 Unfunded Pension Liabilities................................................10 Unrecognized Retiree Welfare Liability......................................10 Working Capital Revolver Termination Date...................................10 Working Capital Revolving Credit Loans......................................10 Working Capital Revolving Credit Note.......................................10 Working Capital Revolving Loan Commitment...................................10 Working Capital Revolving Loan Commitment Fee...............................10 - 41 - EXHIBIT A Equipment Revolving Credit Note $25,000,000 Philadelphia, PA June 22, 1998 For Value Received, JEVIC TRANSPORTATION, INC., a New Jersey corporation ("Jevic"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK (the "Bank"), in lawful currency of the United States of America in immediately available funds at the Bank's offices located at Broad and Chestnut Streets, Philadelphia, Pennsylvania, on the Equipment Revolver Termination Date, or on such earlier date or dates as provided in the Credit Agreement described below, the principal sum of TWENTY-FIVE MILLION DOLLARS ($25,000,000) or, if less, the then unpaid principal amount of all Equipment Revolving Credit Loans made by the Bank pursuant to the Credit Agreement. Jevic promises also to pay interest on the unpaid principal amount hereof in like money at such office from the date hereof until paid at the rates and at the times provided in the Credit Agreement. This Note is the Equipment Revolving Credit Note referred to in, is entitled to the benefits of and is secured by security interests referred to in the Credit Agreement, dated as of June 22, 1998 by and between Jevic and the Bank (as such may be amended, modified, supplemented, restated or replaced from time to time, the "Credit Agreement"). This Note is subject to voluntary prepayment and mandatory repayment prior to the Equipment Revolver Termination Date, in whole or in part, as provided in the Credit Agreement. In case an Event of Default shall occur and be continuing, the principal of and the accrued interest on this Note may be declared to be due and payable in the manner and with the effect provided in the Credit Agreement. Jevic hereby waives presentment, demand, protest or notice of any kind in connection with this Note. Notwithstanding the face amount of this Note, the undersigned's liability hereunder shall be limited at all times to the actual aggregate outstanding indebtedness to the Bank relating to such Bank's Equipment Revolving Credit Loans, including all principal and interest, together with all fees and expenses as provided in the Credit Agreement, as established by the Bank's books and records which shall be conclusive absent manifest error. Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Credit Agreement. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA OR FEDERAL PRINCIPLES OF CONFLICT OF LAWS. JEVIC TRANSPORTATION INC. By ______________________________ Name: Title: EXHIBIT B Working Capital Revolving Credit Note $10,000,000 Philadelphia, PA June 22, 1998 For Value Received, JEVIC TRANSPORTATION, INC., a New Jersey corporation ("Jevic"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK (the "Bank"), in lawful currency of the United States of America in immediately available funds at the Bank's offices located at Broad and Chestnut Streets, Philadelphia, Pennsylvania, on the Working Capital Revolver Termination Date, or on such earlier date or dates as provided in the Credit Agreement described below, the principal sum of TEN MILLION DOLLARS ($10,000,000) or, if less, the then unpaid principal amount of all Working Capital Revolving Credit Loans made by the Bank pursuant to the Credit Agreement. Jevic promises also to pay interest on the unpaid principal amount hereof in like money at such office from the date hereof until paid at the rates and at the times provided in the Credit Agreement. This Note is the Working Capital Revolving Credit Note referred to in, is entitled to the benefits of and is secured by security interests referred to in the Credit Agreement, dated as of June 22, 1998 by and between Jevic and the Bank (as such may be amended, modified, supplemented, restated or replaced from time to time, the "Credit Agreement"). This Note is subject to voluntary prepayment and mandatory repayment prior to the Working Capital Revolver Termination Date, in whole or in part, as provided in the Credit Agreement. In case an Event of Default shall occur and be continuing, the principal of and the accrued interest on this Note may be declared to be due and payable in the manner and with the effect provided in the Credit Agreement. Jevic hereby waives presentment, demand, protest or notice of any kind in connection with this Note. Notwithstanding the face amount of this Note, the undersigned's liability hereunder shall be limited at all times to the actual aggregate outstanding indebtedness to the Bank relating to such Bank's Working Capital Revolving Credit Loans, including all principal and interest, together with all fees and expenses as provided in the Credit Agreement, as established by the Bank's books and records which shall be conclusive absent manifest error. Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Credit Agreement. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA OR FEDERAL PRINCIPLES OF CONFLICT OF LAWS. JEVIC TRANSPORTATION INC. By ______________________________ Name: Title: EXHIBIT C Borrowing Base Certificate [insert date of certificate] To: First Union National Bank Gentlemen: This Borrowing Base Certificate is delivered to you pursuant to the terms of ss.5.1(g) of the Credit Agreement, dated as of June 22, 1998, as currently in effect. Capitalized terms used without definition below have the same meanings as they have in the Credit Agreement. We hereby certify that: 1. No Potential Default or Event of Default has occurred and is continuing as of the date of this Borrowing Base Certificate. 2. There has been no Material Adverse Change since March 31, 1998 or, if applicable, since the date of the most recent Borrowing Base Certificate, except as disclosed on the attached schedules. 3. The information set forth on the attached schedules is true, current and complete as of the date of this Borrowing Base Certificate. JEVIC TRANSPORTATION INC. By ______________________________ Name: Title: Jevic Transportation, Inc. Monthly Computation of Borrowing Base Availability for Working Capital Revolver for the Month of ____________ , ______ Collateral Value
1. Total Accounts Receivable $____________________ 2. less: Total Accounts Receivable Which Are Ineligible $(___________________) 3. Total Eligible Accounts Receivable $____________________ 4. Line 3 multiplied by 80% x .80 5. Borrowing Base for Working Capital Revolving Loans $____________________ Maximum Working Capital Revolving Credit Loans 6. Working Capital Revolving Credit Loans Maximum $ 10,000,000.00 7. less: Letters of Credit Outstanding (Face Amount) $____________________ 8. Adjusted Working Capital Revolving Credit Loans Maximum $____________________ Working Capital Revolving Credit Loan Usage 9. Working Capital Revolving Loan Balances (principal)1/ $____________________ 10. Availability Under Borrowing Base for Working $____________________ Capital Revolving Loans (line 5 minus line 9) 11. Availability As Working Capital Revolving Credit Loans $____________________ (line 8 minus line 9) 12. Lesser of Line 10 or Line 11 $____________________ 13. Amount of Working Capital Revolving Loan Requested This Date (if any) $____________________ (Not to exceed line 12)
Certification: Jevic Transportation, Inc. Date: ____________________________ By: _______________________________ - -------- 1/ Including any other working capital lines of credit with other institutions. Jevic Transportation, Inc. Monthly Computation of Borrowing Base Availability for Equipment Revolver for the Month of ____________ , ______ Collateral Value 1. Total Eligible Equipment $____________________ 2. less: Depreciation $(___________________) 3. Total Net Book Value of Eligible Equipment $____________________ Maximum Equipment Revolving Credit Loans 4. Equipment Revolving Credit Loans Maximum $ 25,000,000.00 Equipment Revolving Credit Loan Usage 5. Equipment Revolving Loan Balance (principal) $____________________ 6. Availability Under Borrowing Base for Equipment $____________________ Revolving Loans (line 3 minus line 5) 7. Lesser of Line 4 or Line 6 $____________________ 8. Amount of Equipment Revolving Loan Requested This Date (if any) $____________________ (Not to exceed line 7)
Certification: Jevic Transportation, Inc. Date: ____________________________ By: _______________________________ EXHIBIT D Amended and Restated Security Agreement This Security Agreement, dated June 22, 1998, by and between JEVIC TRANSPORTATION INC., a New Jersey corporation, with its main business office located at 600 Creek Road, Delanco, New Jersey 08075 (the "Debtor") and First Union, a national banking association (the "Secured Party"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned in the Credit Agreement. This Security Agreement amends and restates in its entirety and replaces and substitutes for that certain Security Agreement dated as of June 28, 1996 by and between the Debtor and the Secured Party (the "1996 Security Agreement"). Preliminary Statement This Security Agreement is entered into in accordance with and is a condition precedent to any Loan under the Credit Agreement. Agreement The Debtor and the Secured Party, intending to be legally bound, agree as follows: 1. Definitions. As used herein the following terms shall have the meanings indicated: (a) "Collateral" means the Revenue Equipment and other assets set forth in Schedule A1 hereto, and all supplemental Schedules A1 delivered by the Debtor to the Secured Party from time to time after the date hereof, Schedule A1 to the 1996 Security Agreement and all supplemental Schedules A1 delivered by the Debtor to the Secured Party from time to time after the date thereof, together with products and Proceeds (including insurance Proceeds) of any of the foregoing, less the Revenue Equipment and other assets set forth in Schedule A2 hereto, and all supplemental Schedules A2 delivered by the Debtor to the Secured Party from time to time after the date hereof. (b) "Credit Agreement" means that certain Credit Agreement, dated as of the date hereof (as such agreement may be amended, restated, modified, replaced or substituted hereafter) between the Debtor and First Union National Bank. (c) "Accounts", "Chattel Paper", "Documents of Title", "Equipment", "General Intangibles", "Instruments", and "Proceeds" shall have the meanings assigned to them under the Uniform Commercial Code as in effect in the Commonwealth of Pennsylvania and shall be applicable solely for purposes of the Collateral. (d) "Liabilities" means all existing and future indebtedness and other liabilities, absolute or contingent, direct or indirect, primary or secondary, of the Debtor to the Bank arising hereunder or in respect of the Equipment Revolving Credit Note or otherwise in connection with the Credit Agreement or any Loan Document, except for the Working Capital Revolving Credit Note. Security Agreement Dated Jevic Transportation, Inc. - 1 - June 22, 1998 (e) "Prevailing Interest Rate" as of any date means the highest rate of interest then payable by the Debtor under any Loan (as defined in the Credit Agreement). 2. Grant of Security. To secure the payment, promptly when due, and the punctual performance of all of the Liabilities, the Debtor hereby pledges and assigns to the Secured Party, and grants to the Secured Party and agrees that the Secured Party shall have, a general continuing lien upon and security interest in all the Collateral, which lien and security interest shall be a general continuing first priority lien upon and security interest in all the Collateral. 3. Substitution or Release of Collateral. The Debtor may, from time to time provided there shall not be any Event of Default or Potential Default (as defined in the Credit Agreement) in existence and no Event of Default or Potential Default would exist as a result thereof, withdraw assets from the Collateral, provided that the net book value of the remaining Collateral is greater than or equal to the Equipment Revolving Credit Loans outstanding and that the Debtor has submitted a Borrowing Base Certificate with Schedules A1 and A2 attached. 4. Books and Records. The Debtor shall faithfully keep complete and accurate books and records and make all necessary entries therein to reflect the quantities, costs, current values and locations of all Collateral, the events and transactions giving rise thereto and all payments, credits and adjustments applicable thereto, shall keep the Secured Party fully and accurately informed as to the locations of all such books and records and shall permit the Secured Party's agents to have such access to them and to any other records pertaining to the Debtor's business as the Secured Party may request from time to time. 5. Control of and Access to Collateral. (a) Upon the occurrence of an Event of Default, the Secured Party shall have the right at any time to take possession of the Collateral or any part thereof. Notwithstanding any such taking of possession, the Collateral shall remain at all times at the Debtor's sole risk, and to the full extent permitted by law the Secured Party shall not be responsible for any loss, damage or diminution in the value thereof. All costs of transportation, packaging, custody, processing, storage, and insurance of any unit or item of Collateral which may be incurred by the Secured Party shall be promptly repaid to the Secured Party by the Debtor together with interest thereon at the Prevailing Interest Rate, and the Debtor's liability to the Secured Party for such repayment with interest shall be included in the Liabilities. (b) If any item or unit of Collateral is now or hereafter the subject of a certificate of title or is required by law so to be, the Debtor will promptly procure the necessary certificate of title and take all steps necessary to cause the Secured Party's lien or security interest therein to be noted on the face of such certificate and undertake such other steps as may be necessary to assure that the Secured Party has a first priority, perfected security interest in each such item or unit of Collateral, and shall thereafter deposit the original of such certificate of title with the Secured Party. (c) The Debtor shall immediately notify the Secured Party of any event causing any deterioration, loss or depreciation in value of any substantial portion of the Collateral and the Debtor's best estimate of the amount of such deterioration, loss or depreciation. (d) The Debtor shall afford the Secured Party's agents access to the Collateral from time to time upon request for purposes of examination, inspection and appraisal thereof and to verify the Debtor's books Security Agreement Dated Jevic Transportation, Inc. - 2 - June 22, 1998 and records pertaining thereto. After an Event of Default and upon the Secured Party's demand therefor, the Debtor shall assemble the Collateral and make it available to the Secured Party at such place reasonably convenient to both parties as the Secured Party may designate, and the Secured Party's rights to such assemblage shall be enforceable by injunction. If an Event of Default shall not exist, the Secured Party shall furnish written prior notice to the Debtor reasonably in advance of any intended examination, inspection, appraisal and verification and such activity shall commence during the Debtor's normal business hours. (e) From and after the occurrence of an Event of Default hereunder, the Debtor shall pay to the Secured Party on demand any and all expenses of conducting any and all periodic examinations or reviews or causing any periodic examinations or reviews of Collateral determined to be appropriate by the Secured Party (including but not limited to reasonable attorneys' fees and legal expenses) which may be incurred by the Secured Party, with interest at the Prevailing Interest Rate. (f) Upon an Event of Default, the Secured Party is hereby granted a license or other right to use, without charge, Debtor's labels, intellectual property, or use of any name, trade secrets, tradenames, trademarks and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in advertising for sale, and selling any Collateral and Debtor's rights under all licenses and all franchise agreements shall inure to the Secured Party's benefit. 6. Maintenance of Collateral. Subject to the Debtor's business judgment and reasonable commercial practice, the Debtor shall take good care of the Collateral and shall afford it suitable preventative maintenance. The Debtor shall pay the cost of all repairs to or maintenance of the Collateral and shall not permit anything to be done that might in any way impair the value of any of the Collateral or any of the security intended to be afforded by this Agreement. The Debtor shall conscientiously adhere to a well designed internal control system with respect to the Collateral, and such system shall be capable of permitting the Debtor and the Secured Party to identify readily at any time the location and condition of each and every item of Collateral. The Debtor will not permit any of the Collateral to become or be a fixture. 7. Title to Collateral. (a) The Debtor has acquired or shall acquire absolute and exclusive title to each and every item or unit of the Collateral free and clear of all liens, claims, security interests and other encumbrances, except as permitted under the Credit Agreement, and the Debtor shall warrant and defend its title to the Collateral, subject to the rights of the Secured Party, against the claims and demands of all persons whomsoever. Without limiting the generality of the foregoing, the Debtor shall not pledge, assign or otherwise encumber, or permit any liens or security interests (other than those in favor of the Secured Party) to attach to, any of the Collateral, nor permit any of the Collateral to be levied upon under any legal process. Notwithstanding the foregoing, mechanics liens may be created or exist from time to time and such mechanics liens shall not be deemed to constitute a breach of this agreement provided the aggregate amount of such liens at any time does not exceed $50,000. (b) The Secured Party may, at its sole election but without obligation to do so, discharge any unpermitted encumbrance pertaining to the Collateral and all expenses incurred by the Secured Party in so doing, together with interest thereon at the Prevailing Interest Rate, shall be added to the Liabilities and shall be payable by the Debtor on demand. Security Agreement Dated Jevic Transportation, Inc. - 3 - June 22, 1998 8. Taxes and Liens. The Debtor shall promptly notify the Secured Party in the event there ever arises against any of the Collateral any lien, assessment or tax or other liability, whether or not entitled to priority over the Secured Party's security interest hereunder. In any such event, whether or not such notice is given, the Secured Party shall have the right (but shall be under no obligation) to pay any tax or other liability of the Debtor deemed by the Secured Party in good faith to affect the Secured Party's interests hereunder. The Debtor shall repay to the Secured Party on demand all sums which the Secured Party shall have paid under this section in respect of taxes or other liabilities of the Debtor, with interest thereon at the Prevailing Interest Rate, and the Debtor's liability to the Secured Party for such repayment with interest shall be included in the Liabilities. The Secured Party shall be subrogated to the extent of any such payment by it to all the rights and liens of the payee against the Debtor's assets. 9. Locations of the Collateral; Name. (a) If any of the Collateral or any of the Debtor's records concerning any of the Collateral are at any time to be located on premises leased by the Debtor, or any premises owned by the Debtor subject to a mortgage or other lien, the Debtor shall obtain and deliver to the Secured Party, prior to the delivery of any such Collateral or books or records to such premises, an agreement in form satisfactory to the Secured Party waiving the landlord's, mortgagee's or other lienholder's right to enforce against the Collateral or the Debtor's records concerning the same and assuring the Secured Party's access to such Collateral and books and records to facilitate the Secured Party's exercise of its rights to take possession thereof. The location of Debtor's chief executive office and all locations at which the Debtor maintains a place of business are set forth in Schedule B, and the Debtor agrees to provide the Secured Party annually with a list of each location of any such place of business or the establishment of any additional place of business of the Debtor. (b) The Debtor represents and warrants that at no time during the past five (5) years has it been known by or used any other name, including any trade or fictitious name, except as disclosed in Schedule B. 10. Further Assurances. The Debtor shall continue to conduct its business in substantially the manner heretofore conducted and will make no material changes therein which might impair the security of the Secured Party. The Debtor shall execute and deliver to the Secured Party from time to time all such other agreements, instruments and other documents (including without limitation all requested financing and continuation statements) and do all such other and further acts and things as the Secured Party may reasonably request in order further to evidence or carry out the intent of this Agreement or to perfect the liens and security interests created hereby or intended so to be. 11. Default and Remedies. (a) The Debtor shall be in default hereunder upon the occurrence of any one of the following events (each an "Event of Default"): (i) the Debtor shall fail to pay any amount payable in respect of any Liability when due (including the expiration of any applicable grace periods). (ii) any representation, warranty or information herein, heretofore or hereafter furnished to the Secured Party by the Debtor in connection with any of the Liabilities, including any warranty made by the Debtor through the submission of any schedule, statement, Security Agreement Dated Jevic Transportation, Inc. - 4 - June 22, 1998 certificate or other document pursuant to or in connection with this Agreement, shall be false in any material respect. (iii) there shall exist any Potential Default or Event of Default as defined under the Credit Agreement. (b) Upon the occurrence of any Event of Default which shall be continuing, (i) unless the Secured Party elects otherwise, the entire unpaid amount of such of the Liabilities as are not then otherwise due and payable shall become immediately due and payable without notice to or demand on the Debtor, (ii) the Secured Party or its agents may enter the Debtor's premises to exercise the Secured Party's right to take possession of any Collateral, and (iii) the Secured Party may at its option exercise from time to time any and all rights and remedies available to it under the Uniform Commercial Code or otherwise, including the right to assemble, receipt for, adjust, modify, repair, refurnish or refurbish (but without any obligation to do so) or foreclose or otherwise realize upon any of the Collateral and to dispose of any of the Collateral at one or more public or private sales or other proceedings. The Debtor agrees that the Secured Party or its nominee may become the purchaser at any such sale or sales. The Debtor further agrees that ten (10) days shall be reasonable prior notice of the date of any public sale or other disposition of all or any part of the Collateral, or of the date on or after which any private sale or other disposition of the same may be made. (c) The exercise by the Secured Party of any one right or remedy shall not be deemed a waiver or release of or any election against any other right or remedy, and the Secured Party may proceed against the Debtor and the Collateral and any other collateral granted by the Debtor to the Secured Party under any other agreement, all in any order and through any available remedies. A waiver on any one occasion shall not be construed as a waiver or bar on any future occasion. All property of any kind held at any time by the Secured Party as Collateral shall stand as one general continuing collateral security for all the Liabilities and may be retained by the Secured Party as security until all the Liabilities are fully satisfied. The Debtor shall pay to the Secured Party on demand any and all expenses (including reasonably attorneys' fees and legal expenses) which may have been incurred by the Secured Party with interest at the Prevailing Interest Rate (i) in the prosecution or defense of any action growing out of or connected with the subject matter of this Agreement, the Liabilities, the Collateral or any of the Secured Party's rights therein or thereto; or (ii) in connection with the custody, preservation, use, operation, preparation for sale or sale of any of the Collateral, the incurring of all of which are hereby authorized to the extent the Secured Party deems the same advisable. The Debtor's liability to the Secured Party for any such payment with interest shall be included in the Liabilities. The Proceeds of any Collateral received by the Secured Party at any time before or after default, whether from a sale or other disposition of Collateral or otherwise, or the Collateral itself, may be applied to the payment in full or in part of such of the Liabilities and in such order and manner as the Secured Party may elect. The Debtor to the extent of its rights in the Collateral waives and releases any right to require the Secured Party to collect any of the Liabilities from any other of the Collateral or any other collateral then held by the Secured Party under any theory of marshalling of assets or otherwise. 12. Power of Attorney. The Debtor hereby irrevocably appoints any officer, employee or agent of the Secured Party as the Debtor's true and lawful attorney-in-fact with power to (i) endorse the Debtor's name upon any notes, checks, drafts, money orders, or other instruments or payments or other Collateral that may come into the Secured Party's possession; (ii) sign and endorse the Debtor's name upon any Documents of Title, invoices, freight or express bills, assignments, verifications and notices in connection with any of the Collateral, and any instruments or documents relating thereto or to the Debtor's rights therein; and (iii) execute in the Debtor's name and file one or more financing, amendment and continuation statements Security Agreement Dated Jevic Transportation, Inc. - 5 - June 22, 1998 covering the Collateral. Any such attorney of the Debtor shall have full power to do any and all things necessary to be done with respect to the above transactions as fully and effectually as the Debtor might do, and the Debtor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. 13. Financing Statements. The Debtor shall execute all financing statements and amendments thereto as the Secured Party may request from time to time to evidence the security interest granted to the Secured Party hereunder and will pay all filing fees and taxes, if any, necessary to effect the filing thereof. Wherever permitted by law, the Debtor authorizes the Secured Party to file financing statements with respect to the Collateral without the signature of the Debtor. A copy of this Agreement or a copy of any financing statement prepared in connection with this Agreement may itself be filed as a financing statement. 14. Miscellaneous. (a) This Agreement shall commence on the date hereof and shall continue in full force and effect so long as any of the Liabilities shall exist from time to time. (b) No modification or waiver of any provision hereof shall be effective unless the same is in writing and signed by the party against whom its enforcement is sought. This Agreement and any amendment hereto or waiver of any provision hereof may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. (c) The representations, warranties, covenants and agreements contained herein are all material and continuing, and any breach of them shall constitute a material breach of this Agreement. (d) All the rights and remedies of the Secured Party hereunder shall be concurrent and cumulative with and not alternative to or in lieu of the Secured Party's rights and remedies under any other agreement or agreements. (e) This Agreement shall bind and inure to the benefit of the parties and their respective successors and assigns, except that the Debtor shall not assign any of the its rights hereunder without the Secured Party's prior written consent. (f) Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. (g) No persons other than the Debtor and the Secured Party, and the assignees of the Secured Party, are intended to be benefitted hereby or shall have any rights hereunder, as third-party beneficiaries or otherwise. (h) The Debtor acknowledges that this Agreement and the obligations of the Debtor hereunder and the security created or intended to be created hereby have constituted, and were intended by the Debtor to constitute, a material inducement to the Secured Party to enter into the Credit Agreement and other agreements referred to therein, knowing that the Secured Party will rely upon this Agreement. The Debtor intends to be legally bound hereby. Security Agreement Dated Jevic Transportation, Inc. - 6 - June 22, 1998 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Security Agreement Dated Jevic Transportation, Inc. - 7 - June 22, 1998 (i) This Agreement shall be deemed to be a contract made under and shall be construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to Pennsylvania or federal principles of the conflict of laws. IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. Debtor JEVIC TRANSPORTATION, INC. By ______________________________ Name Title Notices To: Mr. Brian J. Fitzpatrick Senior Vice President and Chief Financial Officer Jevic Transportation, Inc. 600 Creek Road Delanco, NJ 08075 FAX No. (609) 764-7237 Secured Party FIRST UNION NATIONAL BANK By ______________________________ Roy O. Young Vice President Notices To: Mr. Roy O. Young Vice President First Union National Bank Transportation, Leasing, and Equipment Finance Department FC 1-8-11-24, 1339 Chestnut Street Philadelphia, PA 19107 FAX No. (215) 786-7704 Security Agreement Dated Jevic Transportation, Inc. - 8 - June 22, 1998 SCHEDULE A1 TO SECURITY AGREEMENT [insert date] This Schedule "A1" is an integral part of the Security Agreement dated as of June 22, 1998 between Jevic Transportation, Inc. (the "Debtor") and First Union National Bank, Philadelphia, Pennsylvania 19101. The Debtor hereby grants to First Union a security interest in all property described below, subject to the terms and conditions of the Security Agreement referred to above, which property shall be included in the Collateral.
Acquisition Acquisition Accumulated Unit # Make Serial # Date Price Depreciation Net Book Value - ------ ---- -------- ------------- ------------- ------------ -------------- ------------- Total Net Book Value of Collateral: (Amount should equal line 1 of Equipment Borrowing Base Computation)
JEVIC TRANSPORTATION, INC. By ______________________________ Name: Title: SCHEDULE A2 TO SECURITY AGREEMENT [insert date] This Schedule "A2" is an integral part of the Security Agreement dated as of June 22, 1998 between Jevic Transportation, Inc. (the "Debtor") and First Union National Bank, Philadelphia, Pennsylvania 19101. The Debtor hereby requests that First Union release its security interest in all property described below, subject to the terms and conditions of the Security Agreement referred to above, which property shall be removed from the Collateral.
Acquisition Acquisition Accumulated Unit # Make Serial # Date Price Depreciation Net Book Value - ------ ---- -------- ------------- ------------- ------------ -------------- ------------- Total Net Book Value of Collateral Requested to be Released:
The Debtor hereby certifies that the aggregate amount of Loans outstanding under the Equipment Revolving Credit Note does not exceed the Borrowing Base (as defined in the Credit Agreement) after giving effect to this release. The Debtor also hereby certifies that: 1. No Potential Default or Event of Default has occurred and is continuing as of the date of this Schedule A2. 2. There has been no Material Adverse Change since March 31, 1998, or, if applicable, since the date of the most recent Schedule A2, except as disclosed on the attached schedules. 3. The information set forth herein is true, current, and complete as of the date hereof. JEVIC TRANSPORTATION, INC. By ______________________________ Name: Title: SCHEDULE B TO SECURITY AGREEMENT 1. The location of the Debtor's chief executive office and all locations at which the Debtor maintains a place of business are as follows: Chief executive office: 600 Creek Road, Delanco, New Jersey 08075 Other locations: 4200 West 35th Place, Chicago, IL 65032 655 Goodman Road, Concord, NC 28025 476 Hartford Turnpike, Shrewsbury, MA 01545 48 Ironside Court, Willingboro, NJ 08046 3934 Thurmond Road, Conley, GA 39026 2. During the past five years the Debtor has not used or been known by any other name, including any trade or fictitious name. EXHIBIT E Letter of Credit Application SCHEDULE 1 Equipment Depreciable Lives and Salvage Values
Type of Equipment Straight Line GAAP Depreciation Salvage Value - --------------------------- ------------------------------- ------------- Revenue Equipment: Tractors 5 Years 20% Trucks 5 Years 20% Trailers 10 Years 10% Commercial Equipment 5 Years None Automobiles 5 Years None Services Equipment: Trucks 5 Years None
SCHEDULE 2 Disclosure Schedule Section 3.3 Litigation Section 3.5 Additional Indebtedness Not Shown In Financial Statements. Section 3.7 Taxes Section 3.11 Subsidiaries Section 3.12 Liens EX-27 3 FINANCIAL DATA SCHEDULE
5 0001044066 Jevic Transportation, Inc. 1 U.S Dollars 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 1.000 4,354 0 23,757 1,426 0 32,619 121,612 34,858 120,634 22,130 0 0 0 72,031 (1,185) 120,634 109,480 109,480 0 100,699 (92) 0 541 8,332 3,237 5,095 0 0 0 5,095 0.48 0.47
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