EXECUTION COPY
EXHIBIT 10.3
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MASTER SEPARATION AND DISTRIBUTION AGREEMENT
DATED AS OF SEPTEMBER 30, 2002
BETWEEN
YELLOW CORPORATION
AND
SCS TRANSPORTATION, INC.
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TABLE OF CONTENTS
PAGE
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RECITALS..................................................................................1
ARTICLE I
PLAN OF DISTRIBUTION
1.1 The Distribution..................................................................2
1.2 Conditions to Distribution........................................................2
1.3 Sale of Fractional Shares.........................................................4
1.4 Sole Discretion of Yellow.........................................................4
1.5 Termination of Obligations........................................................5
ARTICLE II
DIVISION OF ASSETS AND LIABILITIES
2.1 Transfer of Assets and Liabilities................................................5
2.2 Allocated Employees...............................................................6
2.3 Stock Options and Restricted Stock................................................7
2.4 Third Party Debt..................................................................7
2.5 Certain Financial Support Arrangements............................................7
2.6 Miscellaneous Obligations and Claims.............................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Yellow.........................................15
3.2 Representations and Warranties of SCST...........................................16
ARTICLE IV
RELATED MATTERS
4.1 Access to Information............................................................17
4.2 Confidentiality..................................................................17
4.3 Indemnification..................................................................18
4.4 Manner of Payments...............................................................19
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4.5 Taxes............................................................................19
4.6 Expenses.........................................................................19
4.7 Non-solicitation.................................................................19
ARTICLE V
DISPUTE RESOLUTION
5.1 Use of Dispute Resolution; Presumptions..........................................20
5.2 Negotiation......................................................................20
5.3 Non-binding Mediation............................................................20
5.4 Proceedings......................................................................21
5.5 Continuity of Service and Performance............................................21
5.6 Further Assurances...............................................................21
ARTICLE VI
MISCELLANEOUS
6.1 Survival.........................................................................21
6.2 Entire Agreement.................................................................21
6.3 Waiver and Modification..........................................................21
6.4 Notices..........................................................................22
6.5 Counterparts.....................................................................22
6.6 Severability.....................................................................22
6.7 Assignment.......................................................................23
6.8 Choice of Law....................................................................23
6.9 No Third-Party Beneficiaries.....................................................23
ARTICLE VII
DEFINED TERMS
7.1 Defined Terms....................................................................23
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Table of Exhibits
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Exhibit A Form of By-laws
Exhibit B Form of Amended and Restated Certificate of Incorporation
Exhibit C Form of Tax Sharing Agreement
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MASTER SEPARATION AND DISTRIBUTION AGREEMENT
This Master Separation and Distribution Agreement (this "Agreement") is
made and entered into as of the 30th day of September, 2002 by and among Yellow
Corporation, a Delaware corporation ("Yellow"), and SCS Transportation, Inc., a
Delaware corporation and a wholly owned subsidiary of Yellow ("SCST").
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in Article VII hereof.
RECITALS
A. WHEREAS, Yellow is the sole stockholder of SCST, and SCST is the
sole stockholder of the operating subsidiaries Xxxx Motor Freight
Line, Inc. ("Saia") and Jevic Transportation, Inc. ("Jevic");
B. WHEREAS, Yellow's Board of Directors has determined pursuant to
an integrated plan to (i) separate SCST, which comprises Yellow's
non-union, regional operations, from Yellow's other businesses
and operations (the "Separation") and (ii) distribute to Yellow's
stockholders on a tax-free basis all of the outstanding shares of
SCST's common stock (the "Distribution");
C. WHEREAS, Yellow's Board of Directors has determined that it is in
the best interests of its stockholders to consummate the
Separation and the Distribution;
D. WHEREAS, it is appropriate and desirable to set forth the
principal corporate transactions required to effect the
Separation and the Distribution and certain other agreements that
will govern certain matters relating to such transactions
(collectively, the "Transactions") and the relationship of Yellow
and SCST following the consummation of the Transactions;
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
TERMS AND CONDITIONS
In consideration of the mutual covenants herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, it is hereby agreed as follows:
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ARTICLE I
PLAN OF DISTRIBUTION
1.1 The Distribution.
(i) Subject to Section 1.2 hereof, Yellow and SCST shall take all
reasonable steps necessary and appropriate to cause all conditions to the
Distribution to be satisfied and to effect the Distribution. Yellow's Board of
Directors will have the sole discretion to determine the Distribution Date, and
Yellow will consummate the Distribution subject to the satisfaction or waiver by
Yellow's Board of Directors, in its sole discretion, of the conditions set forth
in Section 1.2.
(ii) On or prior to the Distribution Date, Yellow will deliver to
the Distribution Agent for the benefit of the holders of record of Yellow Common
Stock on the Record Date, stock certificates, endorsed by Yellow in blank,
representing all of the outstanding shares of SCST Common Stock, and shall cause
the transfer agent for the Yellow Common Stock to instruct the Distribution
Agent to distribute on the Distribution Date the appropriate number of such
shares of SCST Common Stock to each such holder or designated transferee or
transferees of such holder.
(iii) Subject to Section 1.3 hereof, each holder of record of
Yellow Common Stock (or such holder's designated transferee or transferees) on
the Record Date will be entitled to receive in the Distribution that number of
shares of SCST Common Stock equal to that number of shares of Yellow Common
Stock owned by such holder on the Record Date divided by a number equal to the
Distribution Ratio established by Yellow's Board of Directors.
1.2 Conditions to Distribution.
1.2.1 The obligations of each party hereto to consummate the
Distribution are subject to the satisfaction or waiver by
Yellow in its sole discretion of each of the following
conditions:
(i) the simultaneous execution, delivery and
performance as required of each of the following:
(a) this Agreement;
(b) the Tax Sharing Agreement;
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(c) (1) the execution by SCST on or before the
Distribution Date of those certain Debt
Agreements listed in paragraph 1.2.1 of the
disclosure letter from Yellow to SCST dated
the date hereof (the "Disclosure Letter"),
each in form, substance and amount
satisfactory to Yellow, and (2) on or before
the Distribution Date, the payment by SCST
to Yellow of a cash dividend or a repayment
by SCST to Yellow of intercompany
indebtedness (or a combination of any of the
foregoing) from the proceeds of such Debt
Agreements, in the approximate amount of
$110.7 million, subject to adjustment on a
post-closing basis in the manner set forth
in paragraph 1.2.1(i)(c) of the Disclosure
Letter (the "Yellow Payment");
(ii) the Registration Statement shall have been filed
and declared effective by the Commission, and
there shall be no stop order in effect with
respect thereto, and no proceeding for that
purpose shall have been instituted or threatened
by the Commission;
(iii) the actions and filings with regard to state
securities and blue sky laws of the United States
(and any comparable laws under any foreign
jurisdictions) shall have been taken and, where
applicable, have become effective or been
accepted;
(iv) the SCST Common Stock to be distributed in the
Distribution shall have been admitted for trading
on The Nasdaq National Market, on official notice
of distribution;
(v) no order, injunction or decree issued by any
Government Authority or other legal restraint or
prohibition preventing the consummation of the
Distribution or any of the other transactions
contemplated by this Agreement or the Tax Sharing
Agreement shall be threatened, pending or in
effect;
(vi) the Letter Ruling shall have been issued and
shall not have been revoked;
(vii) any material Consents and Governmental Approvals
necessary to consummate the Distribution shall
have been obtained and be in full force and
effect;
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(viii) Yellow's Board of Directors shall be satisfied
that the Distribution will be made out of surplus
within the meaning of Section 170 of the Delaware
General Corporation Law;
(ix) Yellow's Board of Directors shall have approved
the Separation and the Distribution and shall not
have abandoned or deferred the Distribution at
any time prior to the Record Date;
(x) Yellow's Board of Directors shall be satisfied
that the Distribution does not constitute the
conveyance of all or substantially all of the
properties or assets of Yellow immediately prior
to the Distribution, as contemplated in Section
271 of the Delaware General Corporation Law;
(xi) the Certificate of Incorporation and By-laws
shall be in effect;
(xii) no other events or developments shall have
occurred that, in the sole judgment of Yellow,
would result in the Distribution having a
material adverse effect on Yellow or its
stockholders;
(xiii) Yellow's Board of Directors shall be satisfied
that each of Yellow and SCST will be solvent
following the Distribution; and
(xiv) SCST shall have made the Yellow Payment.
1.3 Sale of Fractional Shares. The Distribution Agent shall not
distribute any fractional shares of SCST Common Stock ("Fractional Shares") to
any record holder of Yellow Common Stock in connection with the Distribution.
The Distribution Agent shall be instructed to aggregate all such Fractional
Shares and sell them in an orderly manner promptly after the Distribution Date
in the open market at the then-prevailing prices and, after completion of all
such sales, distribute a pro rata portion of the gross proceeds from such sales,
less appropriate deductions of the amount required to be withheld for federal
income tax purposes, to each record holder of Yellow Common Stock who would
otherwise have received a Fractional Share. Yellow shall pay all brokerage
charges, commissions and transfer taxes attributed to such sale.
1.4 Sole Discretion of Yellow. The conditions set forth in Section 1.2
are for the sole benefit of Yellow and shall not give rise to or create any duty
on the part of Yellow or Yellow's Board of Directors to waive or not to waive
such conditions or limit in any way Yellow's right to terminate this Agreement
or alter the consequences of any such termination. Any determination made by
Yellow prior to the Distribution concerning the satisfaction or waiver of any or
all of the conditions set forth in Section 1.2 shall be conclusive. In addition,
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Yellow shall have the sole and absolute discretion to determine the date of
consummation of the Distribution (such date, the "Distribution Date"), all terms
of the Distribution, including without limitation the form, structure and terms
of any transaction(s) and/or offering(s) to effect the Distribution or related
to the Distribution and the timing of and conditions to the consummation of the
Distribution. In addition, Yellow may in its sole and absolute discretion at any
time and from time to time until the Distribution Date, modify or change the
terms of the Distribution, including without limitation accelerating or delaying
the timing of the consummation of all or part of the Distribution. SCST shall
cooperate with Yellow in all respects to accomplish the Distribution and shall,
at Yellow's direction, promptly take any and all actions necessary and desirable
to effect the Distribution, including without limitation the registration under
the Exchange Act of the SCST Common Stock on an appropriate registration form.
Yellow shall in its sole and absolute discretion select any investment bank and
managers in connection with the Distribution, as well as any financial printer,
solicitation and/or exchange agent and its own outside counsel.
1.5 Termination of Obligations. The obligations of Yellow and SCST under
this Agreement shall terminate on a determination by Yellow to terminate the
transactions that comprise the Distribution.
ARTICLE II
DIVISION OF ASSETS AND LIABILITIES
2.1 Transfer of Assets and Liabilities.
(a) On the terms and subject to the conditions set forth in
this Agreement and with effect as of the Contribution Date, Yellow hereby
contributes, assigns, transfers, conveys and delivers to SCST, and shall cause
its applicable Subsidiaries to contribute, assign, transfer, convey and deliver
to SCST or a member of the SCST Group, all of Yellow's and such applicable
Subsidiaries' respective rights, title and interest in and to the assets set
forth in paragraph 2.1 of the Disclosure Letter (the "Contributed Assets").
SCST, or the appropriate member of the SCST Group, hereby accepts from Yellow
and its Subsidiaries the Contributed Assets.
(b) On the terms and subject to the conditions set forth in this
Agreement and with effect as of the Contribution Date, SCST hereby accepts,
assumes and agrees faithfully to perform, discharge and fulfill all the
liabilities set forth in paragraph 2.1 of the Disclosure Letter (the
"Contributed Liabilities") in accordance with their respective terms, and agrees
to cause its applicable Subsidiaries to accept, assume, perform, discharge and
fulfill all the Contributed Liabilities to be held by its Subsidiaries in
accordance with their respective terms. SCST shall thereafter be responsible for
all Contributed Liabilities, regardless of
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(i) when or where such liabilities arose or arise, (ii) whether the facts on
which they are based occurred prior to or subsequent to the date hereof, (iii)
where or against whom such liabilities are asserted or determined (including
without limitation any liabilities arising out of claims made by Yellow's or
SCST's respective directors, officers, employees, agents, Subsidiaries or
Affiliates against any member of the Yellow Group or the SCST Group), (iv)
whether such liabilities were asserted or determined prior to the date hereof,
and (v) whether such liabilities arise from or are alleged to arise from
negligence, recklessness, violation of law, fraud or misrepresentation by any
member of the Yellow Group or the SCST Group or any of their respective
directors, officers, employees, agents, Subsidiaries or Affiliates.
(c) In the event that at any time or from time to time (whether
prior to or after the Contribution Date), any party hereto (or any member of
such party's respective Group) shall receive or otherwise possess any asset that
is allocated to any other Person pursuant to this Agreement, such party shall
promptly transfer, or cause to be transferred, such asset to the Person so
entitled thereto. Prior to any such transfer, the party possessing such asset
shall hold such asset in trust for any such other party, and upon such transfer
each party shall reimburse the other or make financial or other adjustments to
remedy any liabilities resulting from such transfer or possession.
2.2 Allocated Employees. As of the Distribution, the employees of Yellow
listed in paragraph 2.2 of the Disclosure Letter shall become employees of SCST
(the "Allocated Employees"). Yellow shall not be responsible for insurance,
employee benefits and other related benefits of the Allocated Employees that
accrue from and after the Distribution Date except as may be provided in an
individual agreement between Yellow and any Allocated Employee. SCST shall be
responsible for all costs associated with the Allocated Employees from and after
the Distribution Date. Yellow shall not be responsible for any Cobra benefit, or
unemployment or workers' compensation benefit of an employee whose employment
ends or whose injury or death occurs while an employee of SCST. SCST shall
reimburse Yellow in accordance with the procedures set forth in Section 4.4 if
Yellow determines that it has made any direct or indirect payment in respect
thereof, including without limitation as a result of adjustment to its insurance
rates or government fund payment obligations. SCST's health and life insurance
plans will not exclude pre-existing conditions for the Allocated Employees
(except to the extent such pre-existing conditions were excluded from the
corresponding Yellow plan immediately prior to the Distribution Date), will
waive any waiting period requirements for the Allocated Employees, and will
waive any evidence of insurability provisions for the Allocated Employees. In
addition, SCST's health plans will apply toward any deductible requirements and
out-of-pocket maximum limits for the plan year in which the Distribution takes
place any amounts paid by an Allocated Employee toward such requirements and
limits under the Yellow health plan in which he or she participated during such
plan year. SCST shall, and shall cause its Subsidiaries to, grant the Allocated
Employees credit for their service
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with Yellow and its Subsidiaries prior to the Distribution Date for purposes of
eligibility to participate in and vesting in the benefit plans sponsored by SCST
and its Subsidiaries.
2.3 Stock Options and Restricted Stock. The outstanding stock options
held by Yellow's directors, employees and other parties, including Allocated
Employees, to purchase stock of Yellow shall be adjusted in the manner set forth
in paragraph 2.3 of the Disclosure Letter. Certain senior officers of Yellow and
its Subsidiaries Yellow Transportation, Meridian IQ and Yellow Technologies have
received restricted stock grants. All such senior officers who are actively
employed by Yellow or any such Subsidiary on the Distribution Date will agree to
waive the shares of SCST Common Stock that they would otherwise have received in
exchange for additional restricted shares of Yellow Common Stock commensurate in
value to the impact of the Distribution on the value of their previous
restricted stock grants. The additional grants of restricted stock will be
subject to the same restrictions and vesting dates as the original grants.
2.4 Third Party Debt. SCST and/or its subsidiaries shall make all future
interest and principal payments on and after the Distribution Date on all Third
Party Debt in addition to the Debt Agreements listed in paragraph 1.2.1 of the
Disclosure Letter which resides on the books of SCST or its subsidiaries as of
the Distribution Date, and SCST shall indemnify and hold Yellow harmless for
payment of interest or principal after the Distribution Date in accordance with
Section 4.3. Third Party Debt is listed in paragraph 2.4 of the Disclosure
Letter.
2.5 Certain Financial Support Arrangements.
2.5.1 Guarantees by Yellow of SCST Obligations. As of the date
hereof, Yellow has provided guarantees of certain
obligations of SCST and its subsidiaries, the holders,
amount and duration of which are set forth in paragraph
2.5.1 of the Disclosure Letter (the "Guarantees"). As of
the Distribution Date, Yellow shall cancel all Guarantees
which it is permitted to cancel without the consent of any
other person in accordance with the documentation
governing such Guarantee. With respect to any Guarantees
the cancellation of which requires the consent of a third
party, SCST shall, subject to the following sentence, use
its reasonable best efforts following the Distribution
Date to remove such Guarantee by Yellow of obligations of
SCST and its Subsidiaries, and SCST shall indemnify and
hold Yellow harmless from any damages, claims, monies or
other demands incurred by or asserted against Yellow which
arise out of, in connection with or with reference to any
Guarantee in accordance with Section 4.3. SCST shall not
be required to offer monetary compensation to any holder
of a Guarantee to secure its release. Yel-
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low will not extend any Guarantee beyond the end of the
term of each obligation as in effect on the date hereof.
2.5.2 Insurance, Collateral and Claims Administration
Obligations.
2.5.2.1 Insurance. Responsibility as between SCST and
Yellow for any self-insurance, retention,
deductible, retrospective premium, or similar
items, including without limitation associated
administrative expenses and allocated loss
adjustment or similar expenses, arising after the
Distribution Date under any and all former or
current insurance policies maintained by Yellow
and related to liabilities or losses of SCST or
its Subsidiaries prior to the Distribution Date
shall be allocated by Yellow to SCST or Yellow
(each of the foregoing being a "party") on a
basis not inconsistent with past practices
between Yellow and SCST. To the extent that any
party pays any expenses that were determined by
Yellow to be properly allocable to the other
party, such other party shall reimburse the
paying party in accordance with the procedures
set forth in Section 4.4.
2.5.2.2 Self-Insurance Pool and AIT "Bank". As of the
Distribution Date, a calculation shall be made by
Yellow of the total of all premiums paid since
inception by SCST and its Subsidiaries for
coverage under the self-insurance retention pool
which has been maintained by Yellow to buy down
the self-insurance retentions of Jevic and Saia
(and Action Express, Inc. and WestEx, Inc.,
merged into Saia effective March 4, 2001) from
external retention levels of third-party
insurance providers. To this amount there shall
be added $1,014,783.00, representing SCST's and
its Subsidiaries' shares of the "bank" that has
been established with AI Transport, Inc. of
Atlanta, Georgia ("AIT") relating to certain
third-party liability claims incurred by Yellow
and SCST's Subsidiaries over the course of
Yellow's insurance arrangements with AIT. All
payments made by AIT to Yellow prior to or after
the Distribution Date shall be retained solely by
Yellow.
From the total derived in the preceding
paragraph, there shall be subtracted a sum equal
to a calculation made by Yellow of the actual
claim payments made by Yellow to resolve claims
involving SCST and its Subsidiaries within the
self-insurance
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retention pool from its inception to the
Distribution Date (the sum derived from this
calculation hereinafter being referred to as the
"Net Ultimate Liability of Yellow" and the
calculation being detailed in paragraph 2.5.2.2
of the Disclosure Letter).
After the Distribution Date, claims determined by
Yellow to fall within the self-insurance pool
that arise out of, in connection with or with
reference to activity of SCST and its
Subsidiaries prior to the Distribution Date
(together the "SCST Excess Liability") shall be
paid first by Yellow after the Distribution Date
up to the Net Ultimate Liability of Yellow. If
and when said Net Ultimate Liability of Yellow is
exhausted, all remaining liability for SCST
Excess Liability shall be paid by SCST and its
Subsidiaries, and SCST shall indemnify Yellow for
any claims asserted against Yellow for amounts of
SCST Excess Liability in excess of the Net
Ultimate Liability of Yellow in accordance with
Section 4.3. SCST shall reimburse Yellow in
accordance with the procedures set forth in
Section 4.4 if Yellow determines that Yellow or
any of its Subsidiaries has made any direct or
indirect payment in respect of SCST Excess
Liability in excess of the Net Ultimate Liability
of Yellow.
2.5.2.3 Collateral. In order to cover certain Collateral
Requirements (as defined below) of SCST and its
Subsidiaries, Yellow has provided letters of
credit, indemnity bonds or other collateral to
secure certain obligations of SCST and its
subsidiaries for self-insurance retention
deductibles, retrospective premiums and cash
payment for reserves as set forth in paragraph
2.5.2.3 of the Disclosure Letter. With respect to
discussion of this issue, the following
definitions apply:
(i) "Collateral" - Letters of credit,
indemnity bonds, or any other form of
collateral or guaranty which Yellow has or
will provide to cover certain collateral
requirements of SCST and its Subsidiaries
following the Distribution.
(ii) "Collateral Requirements" - The collateral
required by SCST's current or former
insurance carriers, sureties, and all
states where SCST is currently or has been
self-insured for workers' compensation
purposes for policy
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periods up to and including the March 1,
2002 - February 28, 2003 policy period.
(iii) "Collateral Cost" -
(1) Collateral Cost for any fiscal quarter
ending on or prior to the second
anniversary of the Distribution Date
shall equal the sum of the cost billed
by third parties to Yellow and its
Subsidiaries in connection with
providing Collateral as determined by
Yellow (such xxxxxxxx in any fiscal
quarter, the "Billed Cost").
(2) Collateral Cost for any fiscal quarter
ending after the second anniversary of
the Distribution Date and on or prior to
the fourth anniversary of the
Distribution Date shall equal the sum of
(a) the Billed Cost for such fiscal
quarter plus (b) 25 basis points
multiplied by the average daily face
amount of the Collateral for such fiscal
quarter as determined by Yellow.
(3) Collateral Cost for any fiscal quarter
ending after the fourth anniversary of
the Distribution Date and on or prior to
the fifth anniversary of the
Distribution Date shall equal the sum of
(a) the Billed Cost for such fiscal
quarter plus (b) 50 basis points
multiplied by the average daily face
amount of the Collateral for such fiscal
quarter as determined by Yellow.
(4) Collateral Cost for any fiscal quarter
ending after the fifth anniversary of
the Distribution Date and on or prior to
the sixth anniversary of the
Distribution Date shall equal the sum of
(a) the Billed Cost for such fiscal
quarter plus (b) 75 basis points
multiplied by the average daily face
amount of the Collateral for such fiscal
quarter as determined by Yellow.
(5) Collateral Cost for any fiscal quarter
ending after the sixth anniversary of
the Distribution Date and
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on or prior to the seventh anniversary
of the Distribution Date shall equal the
sum of (a) the Billed Cost for such
fiscal quarter plus (b) 100 basis points
multiplied by the average daily face
amount of the Collateral for such fiscal
quarter as determined by Yellow.
(6) Collateral Cost for any fiscal quarter
ending after the seventh anniversary of
the Distribution Date shall equal the
sum of (a) the Billed Cost for such
fiscal quarter plus (b) 125 basis points
multiplied by the average daily face
amount of the Collateral for such fiscal
quarter as determined by Yellow.
The Collateral Cost shall be billed on a
quarterly basis in arrears following the
Distribution Date. If Yellow receives a refund
from collateral providers for the Billed Cost of
Collateral that SCST has replaced following
Yellow's payment of the annual cost of such
Collateral, Yellow shall reimburse SCST the
amount of such Billed Cost and related premium
paid by SCST or any of its Subsidiaries to Yellow
or any of its Subsidiaries within 15 calendar
days of receipt by Yellow of such refund. Payment
of the Collateral Cost by SCST shall be due
within 15 calendar days after receipt by SCST of
the applicable Yellow xxxx or invoice.
After the Distribution, Yellow shall leave
existing Collateral in place until such
Collateral has been released by its holders,
except that SCST immediately after the
Distribution shall replace $15 million of the
existing Collateral detailed in paragraph 2.5.2.3
of the Disclosure Letter with Collateral obtained
by SCST. Notwithstanding the foregoing, in the
event that SCST experiences demands for increased
Collateral from any of the holders of such
Collateral detailed in paragraph 2.5.2.3 of the
Disclosure Letter between the Distribution Date
and February 28, 2003, Yellow shall either
provide such increased Collateral or instruct
SCST to provide such increased Collateral with a
credit against SCST's replacement Collateral
obligation described above, at Yellow's option.
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Yellow shall provide no additional Collateral to
SCST or any of SCST's Subsidiaries for any
insurance or self-insurance obligations arising
after February 28, 2003.
Notwithstanding the foregoing, in the event that
any holder of any Collateral provided by Yellow
redeems or calls such Collateral, SCST shall be
required to reimburse Yellow in accordance with
the procedures set forth in Section 4.4 and to
indemnify and hold Yellow harmless in accordance
with Section 4.3.
2.5.2.4 Claims Administration Obligations. Yellow and
SCST acknowledge that Yellow currently receives
invoices for claims administration expenses
provided by third-party administrators ("TPAs")
that pertain in whole or in part to the handling
and disposition of claims on behalf of Saia under
SCST's and Xxxx'x insurance programs for years
prior to the year ended March 1, 2000. Yellow
shall continue to pay such invoices by TPAs after
the Distribution Date and SCST and Saia shall be
jointly or severally obligated to reimburse
Yellow for the portion of such invoices which
relate to services performed by TPAs on behalf of
Saia. Yellow shall not pay the portion of any
such invoices as relate to services performed on
behalf of Saia until SCST and/or Saia has
verified in writing the correctness of the
billing, which SCST or Saia must do within
fifteen (15) calendar days of presentment of the
invoice by Yellow to SCST. If SCST or Saia does
not deliver such written verification on or prior
to the date that is fifteen (15) calendar days
after the presentment of such invoice, Yellow
shall regard SCST as having verified such
invoice. Yellow will use its reasonable efforts
to contest any such billing on Xxxx'x behalf, and
the parties will provide all reasonable
cooperation required to resolve any billing
disputes. If Yellow and SCST decide not to pay a
disputed invoice or to pay only a portion
thereof, SCST will indemnify Yellow from any
damages or costs incurred by Yellow stemming from
such non-payment or partial payment in accordance
with Section 4.3. SCST or Saia, as the case may
be, shall reimburse Yellow within fifteen (15)
calendar days of Yellow's payment of that portion
of each TPA invoice that relates to performance
by TPAs of services on their behalf.
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2.6 Miscellaneous Obligations and Claims. Certain miscellaneous
obligations of Yellow and potential claims against third parties exist which
shall be divided between Yellow and SCST as follows:
2.6.1 Preston Trucking Company, Inc. Claims. Yellow has incurred
certain expenses and has filed a claim in bankruptcy to
recover such expenses stemming from the bankruptcy of its
former subsidiary Preston Trucking Company, Inc.
("Preston"). Any and all expenses incurred stemming from
the bankruptcy of Preston, whether already incurred or to
be incurred in the future, shall be the sole
responsibility of Yellow, and Yellow shall be the sole
beneficiary of any payment of the claim in bankruptcy that
has been filed by Yellow against Preston, either for
amounts already claimed or to be claimed in the future,
specifically including any payment or valuation of the
Warrant dated July 15, 1998, to purchase shares of
Preston, that is presently held by Yellow. Following the
Distribution Date, Yellow shall indemnify and hold SCST
harmless in accordance with Section 4.3 for claims which
in any manner relate to or stem from the bankruptcy of
Preston and the former ownership of Preston by Yellow.
2.6.2 Luciano Transport Litigation. SCST's Subsidiary Saia is
presently engaged in litigation against Luciano Transport,
Inc. ("Luciano") and its owner Xxxx Xxxx, III relating to
unpaid interline receivables that are owed by Luciano to
Saia. SCST and/or Saia shall be solely responsible for the
future prosecution of any claim against Luciano and/or
Xxxx Xxxx, III for these unpaid interline receivables
after the Distribution and SCST and/or Saia shall be the
recipients of any and all judgment, settlement or other
recovery ultimately achieved as a result of or in
connection with such litigation against Luciano and Xxxx
Xxxx, III, after the payment to Yellow of all expenses,
including without limitation attorneys' fees up to a
maximum of $25,000, that Yellow determines that it or any
of its Subsidiaries (other than SCST or Saia) has incurred
in the prosecution of this claim prior to the Distribution
(together, the "Yellow Luciano Litigation Expenses").
Amounts received by SCST or Saia as a result of or in
connection with such litigation shall be paid first to
Yellow in full satisfaction of the Yellow Luciano
Litigation Expenses, promptly upon receipt thereof by any
member of the SCST Group, and then to SCST or another
member of the SCST Group.
2.6.3 Benesight Litigation. Saia is presently engaged in
litigation against Benesight, Inc. ("Benesight") for
services previously provided by Bene-
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sight as the TPA of Xxxx'x medical plan. SCST and Saia
shall solely be responsible for the future prosecution of
any claim against Benesight and SCST and Saia shall be the
recipients of any and all judgment, settlement or other
recovery ultimately achieved as a result of such
litigation against Benesight, after the payment to Yellow
of all expenses, including without limitation attorneys'
fees up to a maximum of $20,000, that Yellow determines
that it or any of its Subsidiaries (other than SCST or
Saia) has incurred in the prosecution of this claim prior
to the Distribution (together, the "Yellow Benesight
Litigation Expenses"). Amounts received by SCST or Saia as
a result of or in connection with such litigation shall be
paid first to Yellow in full satisfaction of the Yellow
Benesight Litigation Expenses, promptly upon receipt
thereof by any member of the SCST Group, and then to SCST
or another member of the SCST Group.
2.6.4 Remaining Action Express Purchase Obligations. Pursuant to
the Purchase Agreement entered into between Xxx and Xxxxx
Xxxxxxxxx and Yellow for the issued and outstanding shares
of Action Express, Inc. (merged into Saia effective March
4, 2001) on November 3, 1998, future sums are due both Xxx
and Xxxxx Xxxxxxxxx in the form of payments under the
terms of their non-compete agreements through January 31,
2006 and January 31, 2005, respectively. The
responsibility for all such payments after the
Distribution shall rest with SCST and/or Saia, and SCST
shall indemnify and hold Yellow harmless for all damages,
payments, costs and expenses incurred by Yellow after the
Distribution Date which relate in any manner to the Action
Express acquisition or claims for damages from the prior
owners of Action Express allegedly arising out of said
acquisition in accordance with Section 4.3.
2.6.5 Jevic Executive Employment and Severance Agreements. In
connection with the acquisition by Yellow of Jevic on July
9, 1999, Yellow and Jevic entered into employment
agreements (the "Jevic Employment Agreements") with
certain senior officers of Jevic, which employment
agreements incorporated by reference severance agreements
previously entered into between said senior officers and
Jevic. The responsibility for any payments under the Jevic
Employment Agreements after the Distribution Date shall
rest with SCST and Jevic, and SCST shall indemnify and
hold Yellow harmless for all damages, payments, costs and
expenses incurred by Yellow after the Distribution Date
which relate in any manner to claims for damages or
payments under the Jevic Employment Agreements in
accordance with Section 4.3.
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2.6.6 Assignment of Rights. Yellow hereby assigns to SCST any
rights or claims which Yellow has or may have against any
third parties which arise out of the acquisition by Yellow
of Jevic, Xxxxxxx Transportation Company, Xxxxxxx Freight
Lines, Inc., and Action Express, Inc., together with any
rights or claims arising at any time after any such
acquisition.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Yellow. Yellow represents and
warrants to SCST as follows:
(a) Organization and Standing. Yellow is a corporation duly
organized, validly existing and in good standing under the
laws of the state of Delaware.
(b) Authority and Status. Yellow has full power and authority
to execute and deliver this Agreement and the Tax Sharing
Agreement, to perform its obligations hereunder and under
the Tax Sharing Agreement, and to consummate the
transactions contemplated hereby and under the Tax Sharing
Agreement without the necessity of any act or consent of
any other person. Yellow has taken all necessary and
appropriate corporate action, including obtaining all
necessary board consents, with respect to the execution,
delivery and performance of this Agreement and the Tax
Sharing Agreement. This Agreement and the Tax Sharing
Agreement to be executed, delivered and performed by
Yellow in connection herewith constitute or will, when
executed and delivered, constitute the valid and legally
binding obligations of Yellow, enforceable against it in
accordance with their respective terms, except as
enforceability may be limited by applicable equitable
principles or by bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time affecting the
enforcement of creditors' rights generally.
(c) Litigation. To the knowledge of Yellow, there is no claim,
litigation, action, suit or proceeding, administrative or
judicial, pending or threatened against Yellow or related
to the business or the assets transferred pursuant to this
Agreement or the transactions contemplated hereunder, at
law or in equity, before any federal, state, local or
foreign court or regulatory agency, or other governmental
authority, which could result
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in the institution of legal proceedings to prohibit or
restrain the consummation or performance of this Agreement
or the transactions contemplated hereby, or claim damages
as a result of this Agreement or the transactions
contemplated hereby.
(d) No Conflict. Neither the execution and delivery of this
Agreement and the Tax Sharing Agreement nor compliance
with the terms and provisions hereof and thereof,
including, without limitation, the consummation of the
transactions contemplated hereby and thereby, will
conflict with or result in the breach of any term,
condition or provisions of Yellow's Certificate of
Incorporation or By-laws or applicable law, regulation or
court order.
3.2 Representations and Warranties of SCST. SCST represents and warrants
to Yellow as follows:
(a) Organization and Standing. SCST is a corporation duly
organized, validly existing and in good standing under the laws of the
state of Delaware.
(b) Authority and Status. SCST has full power and authority to
execute and deliver this Agreement and the Tax Sharing Agreement, to
perform its obligations hereunder and thereunder and consummate the
transactions contemplated hereby and thereby without the necessity of
any act or consent of any other person. SCST has taken all necessary and
appropriate corporate action, including obtaining all necessary board
and shareholder consents with respect to the execution, delivery and
performance by SCST of this Agreement and of the Tax Sharing Agreement.
This Agreement and the Tax Sharing Agreement constitute or will when
executed and delivered constitute the valid and legally binding
obligation of SCST enforceable against it in accordance with their
respective terms, except as enforceability may be limited by applicable
equitable principles or by bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time affecting the enforcement
of creditors' rights generally.
(c) No Conflict. Neither the execution and delivery of this
Agreement and the Tax Sharing Agreement nor the terms and provisions
hereof and thereof including, without limitation, the consummation of
the transactions contemplated hereby and thereby will conflict with or
result in the breach of any term, condition or provisions of the
Certificate of Incorporation or By-laws, as amended and restated, or
applicable law, regulation or court order.
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ARTICLE IV
RELATED MATTERS
4.1 Access to Information.
(a) From and after the Distribution Date, each of Yellow and
SCST, on behalf of its respective Group, agrees to provide or cause to be
provided to the other Group any Information in the possession or under the
control of such Group which the requesting party reasonably needs
(i) to comply with reporting, disclosure, filing or other
requirements imposed on the requesting party (including under applicable
securities laws) by a Governmental Authority having jurisdiction over
the requesting party;
(ii) for use in any other judicial, regulatory, administrative or
other proceeding or in order to satisfy audit, accounting, claims,
regulatory, litigation or other similar requirements, in each case other
than claims or allegations that one party to this Agreement has against
the other; or
(iii) subject to the foregoing clause (ii), to comply with its
obligations under this Agreement or the Tax Sharing Agreement;
provided, however, that in the event that any party hereto determines that any
such provision of Information could be commercially detrimental, violate any law
or agreement, or waive any attorney-client privilege, the parties shall take all
reasonable measures to permit the compliance with such obligations in a manner
that avoids any such harm or consequence.
(b) Except as otherwise specifically provided for herein, a
party providing Information or witnesses to the other hereunder shall be
entitled to receive from the recipient, upon the presentation of appropriate
invoices therefor, payments for such amounts relating to supplies, out-of-pocket
expenses, and such other costs, employee time and disbursements, which may be
reasonably incurred in providing such Information or witnesses. Invoices shall
be due and payable within fifteen (15) calendar days of receipt. Employee time
shall be billed at the involved employee's hourly rate for hourly employees with
a four-hour minimum, and salary calculated on a per diem basis for salaried
employees with a one calendar day minimum.
4.2 Confidentiality. Each of Yellow and its Subsidiaries (other than
SCST and its Subsidiaries) and SCST and its Subsidiaries shall hold and cause
each of their respective officers, directors, employees, agents, consultants and
advisors to hold, in strict confidence, all non-public information concerning
the other party, unless compelled to disclose such informa-
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tion by judicial or administrative process or, in the opinion of counsel, by the
requirements of law (in which case such party shall promptly notify the other
party so that the other party may seek a protective order or other appropriate
remedy). Each party shall not release or disclose such information to any other
person except its auditors, attorneys, financial advisors, bankers,
subcontractors and other consultants and advisors who have a need to know, who
shall be bound by the provisions of this Section 4.2. Each party shall be deemed
to have satisfied its obligations hereunder with respect to confidential
information supplied by the other party if it exercises the same care as it does
to preserving the confidentiality of its own similar information.
4.3 Indemnification.
(a) Except as otherwise provided in this Agreement, Yellow
shall indemnify SCST, its Subsidiaries and their officers, directors, managers,
members, employees, agents, affiliates and advisors (collectively, the "SCST
Indemnitees") from and against and shall reimburse such SCST Indemnitees in
respect of any and all Losses resulting from or arising out of (i) any Yellow
Liabilities (whether arising prior to or after the Distribution Date), (ii) the
failure of Yellow to perform any of its obligations under this Agreement in any
material respect, and (iii) all Liabilities arising out of the business,
operations and assets of Yellow and Yellow's Subsidiaries after the Distribution
Date.
(b) Except as otherwise provided in this Agreement, SCST shall
indemnify Yellow, its Subsidiaries and their officers, directors, managers,
members, employees, agents, affiliates and advisors (collectively, the "Yellow
Indemnitees") from and against and shall reimburse such Yellow Indemnitees in
respect of any and all Losses resulting from or arising out of (i) any of the
SCST Liabilities (whether arising prior to or after the Distribution Date), (ii)
the failure of SCST to perform any of its obligations under this Agreement in
any material respect, and (iii) all Liabilities arising out of the business,
operations and assets of SCST and SCST's Subsidiaries after the Distribution
Date.
(c) Any Liabilities not allocated to Yellow or its
Subsidiaries or to SCST or its Subsidiaries hereunder shall be allocated to
either Yellow or SCST by the Chief Executive Officer of Yellow in his sole
discretion.
(d) Neither party shall be liable for indemnification with
respect to any claim for which indemnification may result hereunder unless the
party seeking indemnification (the "Indemnitee") notifies the other party (the
"Indemnifying Party") in writing of the nature of the claim in as much detail as
is feasible within a reasonable time after the facts giving rise to such claim
are known to the Indemnitee. The Indemnifying Party shall be entitled to
participate at its own expense in the defense or, if it so elects by a writing
delivered to the Indemnitee within thirty (30) calendar days after receipt of
such notice, to assume at its own expense the defense of the matter giving rise
to the claim for indemnification or of any suit
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brought in connection with it. If the Indemnifying Party elects to assume a
defense and is reasonably creditworthy or carries insurance so as to make it
reasonable to expect it will be able to discharge an adverse judgment, the
defense shall be conducted by counsel chosen by it. Only one counsel will be
provided for the Indemnitee in any one proceeding regardless of the number of
entities or individuals to be indemnified and the Indemnifying Party shall be
able to settle if it obtains an unconditional release without limitations on
future conduct. If the Indemnitee elects to assume the defense of any such claim
or suit and retains such counsel, the Indemnitee shall bear the fees and
expenses of its own counsel arising out of any legal service thereafter
performed by that counsel. In the event the Indemnitee elects to defend against
any such claim it will, so long as the Indemnifying Party is actively engaged in
defense of the claim, refrain from paying or compromising the claim and will
extend its cooperation and assistance to the Indemnifying Party in its defense
against the claim. If the parties hereto or an Indemnitee is unable to agree
upon or settle any claim for indemnity, either party or an Indemnitee may submit
the Indemnitee claim to the dispute resolution procedure provided for herein.
Notwithstanding the foregoing, there shall be no obligation for one party to
indemnify the other for any dispute in which the amount in controversy is less
than $5,000.
4.4 Manner of Payments. Except as otherwise provided in this Agreement,
any reimbursements or other payments to be made on and after the Distribution
Date by any party to any other party hereunder shall be due within fifteen (15)
calendar days of the receipt by the owing party of an invoice or other billing
documentation accompanied by reasonably detailed supporting information.
4.5 Taxes. Yellow and SCST have entered into a Tax Sharing Agreement
regarding their respective rights and obligations with respect to taxes of
Yellow and SCST for all periods prior to (or including) the Distribution and
certain other tax related matters. In the event of any conflict between the
terms of the Tax Sharing Agreement and the terms of this Agreement, the terms of
the Tax Sharing Agreement shall prevail.
4.6 Expenses. Except as otherwise provided in this Agreement or the Tax
Sharing Agreement, all out-of-pocket expenses incurred in connection with the
Distribution up to and including the Distribution Date shall be paid by Yellow.
Thereafter, except as otherwise provided in this Agreement or in the Tax Sharing
Agreement, each party shall bear its own expenses in connection with the
Distribution.
4.7 Non-solicitation. For twenty-four (24) months after the date hereof,
Yellow and SCST shall not, directly or indirectly, offer, induce, recruit,
solicit, influence or attempt to influence any employee of the other or any of
its subsidiaries to terminate his or her employment for the purpose of working
for the other (without the prior written consent of the other party). This
Section 4.7 shall not prohibit one party from hiring an employee of the other
party if such employment is the result of an employee's soliciting employment by
the employ-
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ing party without any inducement or attempt by the employing party to encourage
said employee, or if the employment occurs as a result of a general solicitation
for employment by one party not specifically directed at the other party.
ARTICLE V
DISPUTE RESOLUTION
5.1 Use of Dispute Resolution; Presumptions. Except as otherwise set
forth in the Tax Sharing Agreement, resolution of any and all disputes arising
from or in connection with this Agreement or the Tax Sharing Agreement, whether
based on contract, tort or otherwise (collectively, "Disputes"), shall be
exclusively governed by and settled in accordance with the provisions of this
Article V, it being understood and agreed by SCST that any calculation or
determination made by Yellow with respect to or in connection with the
Distribution or this Agreement shall be deemed reasonable and binding on SCST
absent manifest error.
5.2 Negotiation. The parties shall make a good faith attempt to resolve
any Dispute through negotiation. Within fifteen (15) calendar days after notice
of a Dispute is given by either party to the other party, each party shall
select a negotiating team comprised of vice president-level employees of such
party and shall meet within fifteen (15) calendar days after the end of the
first fifteen (15) calendar day negotiating period to attempt to resolve the
matter. During the course of negotiations under this Section 5.2, all reasonable
requests made by one party to the other for Information, including requests for
copies of relevant documents, will be honored. The specific format for such
negotiations will be left to the discretion of the designated negotiating teams
and may include the preparation of agreed upon statements of fact or written
statements of position furnished to the other party.
5.3 Non-binding Mediation. In the event that any Dispute arising out of
or related to this Agreement is not settled by the parties within fifteen (15)
calendar days after the first meeting of the vice president-level negotiating
teams under Section 5.2, the parties will attempt in good faith to resolve such
Dispute by non-binding mediation in accordance with the American Arbitration
Association Commercial Mediation Rules as in effect at such time. Mediation
shall be held within thirty (30) calendar days of the end of such fifteen (15)
calendar day negotiation period of the negotiating teams. Except as provided in
Section 5.4, no litigation for the resolution of such Dispute may be commenced
until the parties attempt in good faith to settle the dispute by such mediation
in accordance with such rules and either party has concluded in good faith that
amicable resolution through continued mediation of the matter does not appear
likely. The costs of mediation shall be shared equally by the parties to the
mediation. Any settlement reached by mediation shall be recorded in writing,
signed by the parties, and shall be binding on them.
-21-
5.4 Proceedings. Nothing herein, however, shall prohibit either party
from initiating litigation or other judicial or administrative proceedings if
there is a substantial likelihood that such party would be substantially harmed
by a failure to act during the time that such good faith efforts are being made
to resolve the Dispute through negotiation or mediation. In the event that
litigation is commenced under this Section 5.4, the parties agree to continue to
attempt to resolve any Dispute according to the terms of Section 5.2 and Section
5.3 during the course of such litigation proceedings under this Section 5.4.
5.5 Continuity of Service and Performance. Unless otherwise agreed in
writing, the parties will continue to provide service on all of the commitments
in this Agreement and the Tax Sharing Agreement during the course of dispute
resolution pursuant to the provisions of this Article V with respect to all
matters not subject to the Dispute.
5.6 Further Assurances. In addition to the actions specifically provided
for elsewhere in this Agreement, each of the parties hereto shall use its
reasonable best efforts to (i) execute and deliver such further documents and
take such other actions as any other party may reasonably request in order to
effectuate the purposes of this Agreement and to carry out the terms hereof, and
(ii) take, or cause to be taken, all actions, and to do or cause to be done all
things reasonably necessary, proper or advisable under applicable law,
regulation and agreements or otherwise to consummate and make effective the
transactions contemplated by this Agreement, including without limitation using
its reasonable best efforts to obtain any consents and approvals and make any
filings and applications necessary or desirable in order to consummate the
transactions contemplated by this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Survival. The provisions of this Agreement shall survive the
Distribution Date.
6.2 Entire Agreement. This Agreement supersedes and cancels any and all
previous agreements, written or oral, between the parties relating to the
subject matter hereof. This Agreement and the Tax Sharing Agreement express the
complete and final understanding of the parties with respect to the subject
matter thereto and may not be changed in any way, except as provided in Section
6.3.
6.3 Waiver and Modification. An amendment or modification of this
Agreement will be valid and effective only if it is in writing and signed by
each party to this Agreement. In addition, a waiver of any duty, obligation or
responsibility of a party under this Agreement will be valid and effective only
if it is evidenced by writing, signed by or on behalf of the party against whom
the waiver or discharge is sought to be enforced. The waiver by either party of
-22-
a breach of a provision of this Agreement will not constitute a waiver of the
succeeding breach of the provision or a waiver of the provision itself.
6.4 Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy confirmed receipt,
nationally recognized overnight courier, or first class registered or certified
mail, return receipt requested, postage pre-paid, addressed to such party at the
address set forth below:
If to Yellow to:
00000 Xxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Senior Vice President-Legal and Corporate Secretary
e-mail: xxx.xxxxxx@xxxxxxxxxx.xxx
If to SCST to:
One Main Plaza
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn: Vice President and Chief Financial Officer
e-mail: xxxxxxxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
All notices, request, consents and other communications shall be deemed
to have been duly given: at the time delivered by hand, if personally delivered;
when receipt acknowledged, if telecopied; on the next business day after timely
delivery to the courier, if sent by overnight courier guaranteeing next day
delivery; and five business days after being deposited in the mail, postage
pre-paid, if mailed.
6.5 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
6.6 Severability. In the event any provision of the Agreement or portion
thereof is found to be wholly or partially invalid, illegal or unenforceable in
any judicial proceeding, then such provision shall be deemed to be modified or
restricted to the extent and in the manner necessary to render the same valid
and enforceable or shall be deemed excised from this Agreement, as the case may
require, and this Agreement shall be construed and enforced to the maximum
extent permitted by law as if such provision had been originally incorporated
-23-
herein as so modified or restricted, or as if such provision had not been
originally incorporated herein, as the case may be.
6.7 Assignment. Neither of the parties shall assign any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
6.8 Choice of Law. This Agreement shall be interpreted under the laws of
the State of Delaware, without giving effect to said state's conflict of laws
principles.
6.9 No Third-Party Beneficiaries. This Agreement is not intended to, and
does not, create any third-party contractual or other rights. No person or
entity shall be deemed to be a third-party beneficiary with respect to this
Agreement.
ARTICLE VII
DEFINED TERMS
7.1 Defined Terms.
Defined Term Location in Document
------------ --------------------
Agreement.................................. Preamble
AIT........................................ 2.5.2.2
Allocated Employees....................... 2.2
Benesight................................. 2.6.3
Billed Cost............................... 2.5.2.3
Collateral................................ 2.5.2.3
Collateral Cost........................... 2.5.2.3
Collateral Requirements................... 2.5.2.3
Contributed Assets........................ 2.1
Contributed Liabilities................... 2.1
Disclosure Letter......................... 1.2.1
Disputes.................................. 5.1
Distribution.............................. Recitals
Distribution Date......................... 1.4
Fractional Shares......................... 1.3
Guarantees................................ 2.5.1
Indemnifying Party........................ 4.3
Indemnitee................................ 4.3
Jevic..................................... Recitals
Luciano................................... 2.6.2
Net Ultimate Liability of Yellow.......... 2.5.2.2
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Defined Term Location in Document
------------ --------------------
Preston................................... 2.6.1
Saia...................................... Recitals
SCST...................................... Preamble
SCST Excess Liability..................... 2.5.2.2
SCST Indemnitees.......................... 4.3
Separation................................ Recitals
TPA....................................... 2.5.2.4
Transactions.............................. Recitals
Yellow.................................... Preamble
Yellow Benesight Litigation Expenses...... 2.6.3
Yellow Indemnitees........................ 4.3
Yellow Luciano Litigation Expenses........ 2.6.2
Yellow Payment............................ 1.2.1
"Action" means any action, claim, suit, arbitration, subpoena,
discovery request, proceeding or investigation by or before any court or grand
jury, any Governmental Authority or arbitration tribunal.
"By-laws" means the By-laws of SCST, substantially in the form of
Exhibit A.
"Certificate of Incorporation" means the Amended and Restated
Certificate of Incorporation of SCST, substantially in the form of Exhibit B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Consents" means any consents, waivers or approvals from, or
notification requirements to, any third parties.
"Contribution Date" means the Distribution Date or such other date as is
specified in the applicable section of the Disclosure Letter.
"Debt Agreements" means each of those agreements listed in paragraph
1.2.1 of the Disclosure Letter.
"Distribution Ratio" means the number of shares of Yellow Common Stock
that a stockholder must own at the Record Date that will entitle such
stockholder to receive one share of SCST Common Stock on the Distribution Date.
"Distribution Time" means 5:00 p.m., New York City time, on the
Distribution Date.
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"Effective Date" means the date on which the Registration Statement is
declared effective by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Governmental Approvals" means any notices, reports or other filings to
be made to, or any consents, registrations, approvals, permits or authorizations
to be obtained from, any Governmental Authority.
"Governmental Authority" means any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.
"Group" means the Yellow Group or the SCST Group, as the context
requires.
"Information" means all administrative records, books, contracts and
instruments, and all computer software (excluding any software not owned by
Yellow or SCST, as the case may be) and computer data and other owned data and
information.
"Information Statement" means the information statement included in the
Registration Statement.
"Letter Ruling" means a private letter ruling received from the Internal
Revenue Service to the effect that, among other things, the Distribution will
qualify as a tax-free distribution for federal income tax purposes under Section
355 of the Code.
"Liabilities" means any and all indebtedness, liabilities or
obligations, whether accrued, fixed or contingent, mature or inchoate, known or
unknown, reflected on a balance sheet or otherwise, including, but not limited
to, those arising under any law, rule, regulation, Action, order, injunction or
consent decree of any Governmental Authority or any judgment of any court of any
kind or any award of any arbitrator of any kind, and those arising under any
contract, commitment or undertaking.
"Losses" means any and all damages, losses, deficiencies, Liabilities,
obligations, penalties, judgments, settlements, claims, payments, fines,
interest, costs and expenses (including, without limitation, the costs and
expenses of any and all Actions and demands, assessments, judgments, settlements
and compromises relating thereto and the reasonable costs and expenses of
attorneys, accountants, consultants and other professionals' fees and expenses
incurred in the investigation or defense thereof or the enforcement of rights
hereunder), including direct and consequential damages, but excluding punitive
damages (other than punitive damages awarded to any third party against an
Indemnified Party).
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"Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.
"Record Date" means the close of business on the date to be determined
by Yellow's Board of Directors as the record date for determining stockholders
of Yellow entitled to receive shares of SCST Common Stock in the Distribution.
"Registration Statement" means the Registration Statement (No.
001-31401) on Form 10 filed by SCST with the Commission to effect the
registration of the SCST Common Stock pursuant to the Exchange Act in connection
with the Distribution, as such registration statement may be amended from time
to time.
"SCST Common Stock" means the common stock, par value $0.001 per share,
of SCST, entitled to one vote per share.
"SCST Group" means SCST, each Subsidiary of SCST and each other Person
that is either controlled directly or indirectly by SCST immediately after the
Distribution Date.
"SCST Liabilities" means any and all Liabilities of SCST or any of its
Subsidiaries of any kind or nature to the extent resulting from or arising out
of the present, past or future operation or conduct of the business, operations
or assets of SCST or of any Subsidiary of SCST, and shall include without
limitation:
(i) Liabilities resulting from or arising out of the Contributed
Assets;
(ii) Liabilities resulting from or arising out of the Contributed
Liabilities;
(iii) Liabilities resulting from or arising out of the Allocated
Employees;
(iv) Liabilities resulting from or arising out of the Guarantees;
(v) Liabilities allocated to SCST pursuant to Section 2.5.2.1;
(vi) Liabilities resulting from or arising out of the SCST Excess
Liability;
(vii) Liabilities resulting from or arising out of the Collateral
Costs;
(viii) Liabilities allocated to SCST pursuant to Section 2.5.2.4;
(ix) Liabilities resulting from or arising out of the litigation
described in Section 2.6.2;
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(x) Liabilities resulting from or arising out of the litigation
described in Section 2.6.3;
(xi) Liabilities resulting from or arising out of the litigation
described in Section 2.6.4;
(xii) Liabilities resulting from or arising out of the Jevic Employment
Agreements; and
(xiii) Liabilities resulting from or arising out of the rights and
claims described in Section 2.6.6.
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"Subsidiary" of any Person means any corporation, partnership, limited
liability entity, joint venture or other organization, whether incorporated or
unincorporated, of which such Person or a Subsidiary of such Person, or such
Person and one or more of its Subsidiaries, (i) directly or indirectly owns or
control at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or others performing similar functions with respect to such
corporation; (ii) have control, whether contractual or otherwise; (iii) are a
general partner, manager or managing member; or (iv) hold a majority of the
equity interests.
"Tax Sharing Agreement" means that certain Tax Indemnification and
Allocation Agreement by and between Yellow and SCST, substantially in the form
of Exhibit C.
"Third Party Debt" means all debt in addition to that evidenced by the
Debt Agreements listed in paragraph 1.2.1 of the Disclosure Letter residing on
the books of SCST or its subsidiaries as of the Distribution Date and
specifically excludes intercompany debt owed by SCST or its subsidiaries
directly to Yellow. Third Party Debt is listed in paragraph 2.4 of the
Disclosure Letter.
"Yellow Common Stock" means the common stock, par value $1.00 per share,
of Yellow.
"Yellow Group" means Yellow, each Subsidiary of Yellow and each Person
(other than any member of the SCST Group) that is either controlled directly or
indirectly by Yellow immediately after the Distribution Date.
"Yellow Liabilities" means any and all Liabilities of Yellow or any of
its Subsidiaries (other than SCST and its Subsidiaries) of any kind or nature to
the extent resulting from or
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arising out of the present, past or future operation or conduct of the business,
operations or assets of Yellow or of any Subsidiary of Yellow (other than SCST
and its Subsidiaries), and shall include Liabilities resulting from or arising
out of the claims described in Section 2.6.1.
[Signature Pages Follow]
S-1
IN WITNESS WHEREOF, the parties have executed this Master Separation and
Distribution Agreement as of the date first above written.
YELLOW CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
------------------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President
SCS TRANSPORTATION, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxxxx
Title: VP Finance and Chief
Financial Officer
