<PAGE> 1
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, 1995
-------------
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 0-15057
-------
P.A.M. TRANSPORTATION SERVICES, INC.
------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 71-0633135
-------- ----------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
Highway 412 West, Tontitown, Arkansas 72770
--------------------------------------------
(Address of principal executive offices)
(Zip Code)
(501) 361-9111
--------------
(Registrants 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.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding at August 7, 1995
----- -----------------------------
Common Stock, $.01 Par Value 4,977,957
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
2
<PAGE> 3
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
ASSETS (unaudited) (note)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 84,091 $ 4,077,854
Receivables:
Trade, net of allowance 11,572,769 8,498,364
Other 262,172 481,986
Equipment held for sale 974,012 1,164,262
Prepaid expenses 2,320,103 2,870,033
Investment in direct financing lease 656,245 622,790
Income taxes refundable 10,495 154,313
Other 696,492 578,679
------------ ------------
Total current assets 16,576,379 18,448,281
Property and equipment, at cost 71,916,983 64,299,609
Less: accumulated depreciation (20,860,883) (19,316,030)
------------ ------------
Net property and equipment 51,056,100 44,983,579
Other assets:
Investment in direct financing lease, less current portion 903,117 1,239,824
Excess of cost over net assets acquired (Note C) 1,074,511 602,214
Non compete agreement (Note C) 1,238,362 0
Other 50,000 50,000
------------ ------------
Total other assets 3,265,990 1,892,038
------------ ------------
$ 70,898,469 $ 65,323,898
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 12,731,930 $ 10,358,442
Trade accounts payable 3,805,202 4,983,179
Deferred income taxes 116,093 368,866
Other current liabilities 2,600,405 2,456,504
------------ ------------
Total current liabilities 19,253,630 18,166,991
Long-term debt, less current portion 31,257,115 32,206,125
Non compete agreement (Note C) 1,373,779 0
Deferred income taxes 3,291,972 1,917,198
Common Stockholders' equity:
Common stock 49,695 49,379
Additional paid-in capital 13,197,975 13,123,241
Retained earnings (deficit) 2,474,303 (139,036)
------------ ------------
Total common stockholders' equity 15,721,973 13,033,584
------------ ------------
$ 70,898,469 $ 65,323,898
============ ============
</TABLE>
Note: The balance sheet at December 31, 1994 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See notes to condensed consolidated financial
statements.
3
<PAGE> 4
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues $ 23,833,493 $ 19,833,308 $ 45,916,996 $ 38,679,862
Operating expenses:
Salaries, wages and benefits 10,243,678 8,901,576 20,330,731 17,010,588
Operating supplies 4,222,097 3,662,174 8,244,277 7,662,862
Rent and purchased transportation 299,505 259,112 903,042 616,270
Depreciation and amortization 2,213,867 1,808,559 4,228,400 3,481,339
Operating taxes and licenses 1,414,705 1,220,030 2,789,087 2,552,667
Insurance and claims 1,115,103 984,425 2,137,990 1,971,130
Communications and utilities 243,922 206,307 405,466 430,215
(Gain) loss on sale of equipment 247,000 (208,732) 247,000 (208,732)
Other 421,222 314,418 847,750 613,689
------------ ------------ ------------ ------------
20,421,099 17,147,869 40,133,743 34,130,028
------------ ------------ ------------ ------------
Operating income 3,412,394 2,685,439 5,783,253 4,549,834
Other income (expense)
Interest expense (871,891) (745,017) (1,659,506) (1,472,698)
Other 43,674 59,368 91,314 116,309
------------ ------------ ------------ ------------
(828,217) (688,649) (1,568,192) (1,356,389)
Income before income taxes and
dividends on redeemable preferred
stock 2,584,177 1,996,790 4,215,061 3,193,445
Income taxes--current 431,526 363,775 546,106 380,305
--deferred 550,461 434,941 1,055,617 826,884
------------ ------------ ------------ ------------
981,987 798,716 1,601,723 1,207,189
------------ ------------ ------------ ------------
Income before dividends on
redeemable preferred stock 1,602,190 1,198,074 2,613,338 1,986,256
Accrued dividends on redeemable
preferred stock 0 0 0 29,589
------------ ------------ ------------ ------------
Net income $ 1,602,190 $ 1,198,074 $ 2,613,338 $ 1,956,667
============ ============ ============ ============
$ 0.21 $ 0.16 $ 0.34 $ 0.26
============ ============ ============ ============
Net income per share
Average common and common
equivalent shares outstanding 7,604,724 7,492,741 7,626,268 7,557,222
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,613,338 $ 1,956,667
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,228,400 3,481,339
Non compete agreement amortization 135,417 0
(Gain) loss on retirement of property and equipment 247,000 (208,732)
Provision for doubtful accounts 0 36,857
Provision for deferred income taxes 1,271,862 1,004,030
Accrued dividends on redeemable preferred stock 0 29,589
Changes in operating assets and liabilities:
Accounts receivable (1,940,492) 483,653
Prepaid expenses and other current assets 766,173 27,171
Accounts payable (1,685,046) (543,806)
Accrued expenses (289,226) 1,026,107
------------ ------------
Net cash provided by operating activities 5,347,426 7,292,875
INVESTING ACTIVITIES
Purchases of property and equipment (1,868,946) (134,718)
Proceeds from sale or disposal of property and
equipment 1,421,550 1,290,269
Lease payments received on direct financing lease 303,252 273,120
------------ ------------
Net cash provided by (used in) investing activities (144,144) 1,428,671
FINANCING ACTIVITIES
Borrowings under lines of credit 48,263,159 17,066,807
Repayments under lines of credit (48,417,492) (20,030,989)
Repayments of long-term debt (7,818,072) (4,357,909)
Choctaw acquisition less cash acquired of $1,219,079 (Note C) (1,299,690) 0
Redemption of preferred stock 0 (4,425,205)
Proceeds from exercise of stock options 75,050 70,303
------------ ------------
Net cash used in financing activities (9,197,045) (11,676,993)
------------ ------------
Net decrease in cash and cash equivalents (3,993,763) (2,955,447)
Cash and cash equivalents at beginning of period 4,077,854 3,621,642
------------ ------------
Cash and cash equivalents at end of period $ 84,091 $ 666,195
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
P.A.M. TRANSPORTATION SERVICES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1995
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with 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 management's opinion, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation
have been included. Operating results for the six-month period ended June 30,
1995 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1995. For further information, refer to the
consolidated financial statements and the footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1994.
NOTE B: NOTES PAYABLE AND LONG-TERM DEBT
In the first six months of 1995, the Company's subsidiary, P.A.M. Transport,
Inc., entered into installment obligations for the purchase of revenue
equipment in the aggregate amount of $9.5 million payable in 48 and 60 monthly
installments at an interest rate ranging from 7.3% to 8.5%.
NOTE C: ACQUISITION
On January 31, 1995, the Company acquired 100% of the outstanding capital stock
of Choctaw Express, Inc. and Choctaw Brokerage, Inc. based in Oklahoma City,
(collectively "Choctaw"). Assets of approximately $2.7 million were acquired
and liabilities of approximately $.8 million were assumed. The total purchase
price for Choctaw was $2,518,769 in cash, subject to closing audit adjustments.
The Company paid an initial payment of $2,404,369 which was financed through
borrowings under the Company's bank line of credit agreement and available
cash. The remaining balance due is included in other current liabilities in
the accompanying consolidated financial statements. The final payment will be
funded through borrowings under the Company's bank line of credit agreement and
available cash.
The acquisition has been accounted for under the purchase method, effective
January 31, 1995, with operations of Choctaw included in the Company's
financial statements for the five months ended June 30, 1995. The purchase
price has been allocated to assets and liabilities based on their estimated
fair values as of the date of acquisition. Approximately $500,320 of goodwill
was recorded as a result of the purchase allocation and is being amortized over
a 30-year period. A final allocation of the purchase price will be completed
in 1995 based on determination of the final purchase price. The final
allocation is not expected to vary materially from amounts previously recorded.
The Company will also pay $325,000 per year for a five year noncompete
agreement with the former sole shareholder of Choctaw.
Pro forma unaudited financial information (as if the Choctaw acquisition was
completed at the beginning of the respective periods) for the first six months
of 1995 and 1994 is provided below:
<TABLE>
<CAPTION>
Six Months Ended,
June 30,
1995 1994
---- ----
<S> <C> <C>
Operating revenues $ 46,784,056 $ 44,992,978
Operating expenses 40,900,041 40,173,871
------------ ------------
Operating income 5,884,015 4,819,107
Interest expense 1,589,196 1,476,542
Income taxes 1,632,031 1,337,026
------------ ------------
Net income $ 2,662,788 $ 2,005,539
============ ============
Net income per common share (primary) $ 0.35 $ 0.27
============ ============
Average common and common equivalent shares outstanding 7,626,268 7,557,222
============ ============
</TABLE>
The above pro forma unaudited financial information does not purport to be
indicative of the results which actually would have occurred had the
acquisition been made at the beginning of the respective periods.
6
<PAGE> 7
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 VS. THREE MONTHS ENDED JUNE 30, 1994
For the quarter ended June 30, 1995 revenues increased 20.2% to $23.8 million
as compared to $19.8 million for the quarter ended June 30, 1994. The main
factor for the increase in revenues was a 19.3% increase in average tractors
from 575 in 1994 to 686 in 1995, of which 55 were added in connection with the
acquisition of Choctaw which produced revenues of $2 million for the second
quarter of 1995.
The Company's operating ratio improved from 86.5% of revenues in the second
quarter of 1994 to 85.7% in the second quarter of 1995.
Salaries, wages and benefits decreased from 44.9% of revenues in the second
quarter of 1994 to 43% of revenues in the second quarter of 1995. The major
factors were a 1.1% decrease in workmen's compensation expense and a .6%
decrease in maintenance wages.
Operating supplies and expenses decreased from 18.5% of revenues in the second
quarter of 1994 to 17.7% of revenues in the second quarter of 1995, as the
Company continues to modernize its fleet. The largest areas of savings were
realized in repairs and maintenance where a 1.9% reduction was recorded.
The Company incurred an increase in depreciation expense as a result of the new
equipment being placed into service. Depreciation expense increased from 9.1%
of revenues in the second quarter of 1994 to 9.3% of revenues in the second
quarter of 1995.
Insurance and claims expense decreased from 5% of revenues in the second
quarter of 1994 to 4.7% of revenues in the second quarter of 1995. This
decrease was due to premium reductions as a result of continued favorable loss
experience.
SIX MONTHS ENDED JUNE 30, 1995 VS. SIX MONTHS ENDED JUNE 30, 1994
For the six months ended June 30, 1995 revenues increased 18.6% to $45.9
million as compared to $38.7 million for the six months ended June 30, 1994.
The main factors for the increase in revenues was a 15% increase in average
tractors from 572 in 1994 to 658 in 1995, of which 55 were added in connection
with the acquisition of Choctaw which produced revenues of $3.8 million for
the first six months of 1995.
The Company's operating ratio improved from 88.2% of revenues in the first six
months of 1994 to 87.4% in the first six months of 1995.
Operating supplies and expenses decreased from 19.8% of revenues in the first
six months of 1994 to 18% of revenues in the first six months of 1995, as the
Company continues to modernize its fleet. The largest areas of savings were
realized in repairs and maintenance where a 1.5% reduction was recorded.
Rent and purchased transportation increased from 1.6% of revenues in the first
six months of 1994 to 2% of revenues in the first six months of 1995. This was
primarily due to the use of rental equipment by Choctaw, which was acquired by
the Company on January 31, 1995. The majority of the rental equipment has been
replaced by Company owned equipment during the period since January 31.
The Company incurred an increase in depreciation expense as a result of the new
equipment being placed into service. Depreciation expense increased from 9% of
revenues in the first six months of 1994 to 9.2% of revenues in the first six
months of 1995.
Operating taxes and licenses as a percent of revenues decreased from 6.6% in
the first six months of 1994 to 6.1% in the first six months of 1995 due
largely to lower accruals of state fuel tax expenses.
8
<PAGE> 9
Insurance and claims expense decreased from 5.1% of revenues in the first six
months of 1994 to 4.7% of revenues in the first six months of 1995. This
decrease was due to premium reductions as a result of continued favorable loss
experience.
The Company's income tax rate differs from the expected rate primarily due to
state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal subsidiary, P.A.M. Transport, Inc., has a $10 million
secured bank line of credit subject to borrowing limitations. Outstanding
advances on this line of credit were approximately $2.8 million (at an interest
rate of 8.63%) at June 30, 1995. The Company's borrowing base limitation at
June 30, 1995 was $8 million. The line of credit is guaranteed by the Company
and matures May 31, 1997.
The Company entered into installment obligations in the first six months of
1995 for the purchase of revenue equipment for approximately $9.5 million
payable in 48 and 60 monthly installments at an interest rate ranging from 7.3%
to 8.5%.
During the remainder of 1995 the Company plans to replace 50 trailers and 151
tractors and expects to incur additional debt of approximately $11.4 million.
Operating results during the first six months of 1995 provided net cash from
operations of approximately $5.3 million.
Management of the Company believes that its cash requirements for 1995 will be
adequately met from operating cash flows and the Company's available credit
line.
ACQUISITION
On January 31, 1995, the Company acquired 100% of the outstanding capital stock
of Choctaw Express, Inc. and Choctaw Brokerage, Inc. based in Oklahoma City,
(collectively "Choctaw"). The total purchase price for Choctaw was
approximately $2.5 million in cash, subject to closing audit adjustments. The
acquisition was financed through borrowings under the Company's bank line of
credit agreement and available cash, and the acquisition will be accounted for
under the purchase method, effective January 31, 1995, with operations included
in the Company's financial statements beginning on the acquisition date. The
Company will also pay $325,000 per year for a five year noncompete agreement
with the former sole shareholder of Choctaw. See Note C to the accompanying
condensed consolidated financial statements (unaudited).
9
<PAGE> 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The 1995 Annual Meeting of Stockholders of the Company was held on May
25, 1995. At the meeting the following persons were elected as directors to
serve for a term of one year and until their successors are elected and
qualified: Robert W. Weaver, Daniel C. Sullivan, William E. Morrissey, Beryl L.
Shroyer, Ronald W. Lech and Matthew T. Moroun.
The results of voting with respect to the election of directors were
as follows:
<TABLE>
<CAPTION>
Votes Votes
FOR WITHHELD
--- --------
<S> <C> <C>
Robert W. Weaver 4,792,620 2,100
Daniel C. Sullivan 4,792,747 2,000
William E. Morrissey 4,771,760 2,225
Beryl L. Shroyer 4,792,522 2,225
Ronald W. Lech 4,792,522 2,225
Matthew T. Moroun 4,792,247 2,500
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed with this report:
4.1.1 - First Amendment to Loan Agreement dated June 27,
1995 by and among P.A.M. Transport, Inc., First Tennessee
Bank National Association and P.A.M. Transportation Services,
Inc., together with Promissory Note in the principal amount of
$2,500,000.
4.1.3 - Security Agreement dated June 27, 1995 by and
between Choctaw Express, Inc. and First Tennessee Bank
National Association.
4.1.4 - Guaranty Agreement of P.A.M. Transportation
Services, Inc. dated June 27, 1995 in favor of First
Tennessee Bank National Association respecting $10,000,000
line of credit.
4.2.2 - First Amendment to Security Agreement dated June
27, 1995 by and between P.A.M. Transport, Inc. and First
Tennessee Bank National Association.
11 - Statement Re: Computation of Per Share Earnings.
27 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
The Company filed the following report on Form 8-K during the
three months ended June 30, 1995:
(1) Amendment No. 1 to Current Report on Form 8-K (Event:
January 31, 1995) filed on April 14, 1995 regarding the
acquisition of Choctaw Express, Inc. and Choctaw Brokerage,
Inc.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
P.A.M. TRANSPORTATION SERVICES, INC.
Dated: August 10, 1995 By: /s/ Robert W. Weaver
--------------------------------------------
Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: August 10, 1995 By: /s/ Larry J. Goddard
--------------------------------------------
Larry J. Goddard
Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer
(principal accounting and financial officer)
11
<PAGE> 12
EXHIBIT INDEX
Exhibit
No. Description
------- ------------------------------------------------------
4.1.1 - First Amendment to Loan Agreement dated June 27, 1995
by and among P.A.M. Transport, Inc., First Tennessee
Bank National Association and P.A.M. Transportation
Services, Inc., together with Promissory Note in the
principal amount of $2,500,000.
4.1.3 - Security Agreement dated June 27, 1995 by and between
Choctaw Express, Inc. and First Tennessee Bank
National Association.
4.1.4 - Guaranty Agreement of P.A.M. Transportation Services,
Inc. dated June 27, 1995 in favor of First Tennessee
Bank National Association respecting $10,000,000 line
of credit.
4.2.2 - First Amendment to Security Agreement dated June 28,
1995 by and between P.A.M. Transport, Inc. and First
Tennessee Bank National Association.
11 - Statement Re: Computation of Per Share Earnings.
27 - Financial Data Schedule (for SEC use only).
<PAGE> 1
EXHIBIT 4.1.1
FIRST AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT is made and entered into on this the 27 day of June,
1995, by and among P.A.M. TRANSPORT, INC., an Arkansas corporation, whose chief
executive office and principal place of business is located at Highway 412
West, P.O. Box 188, Tontitown, Arkansas 72770, party of the first part,
hereinafter called "Borrower," FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a
national banking association organized and existing under the laws of the
United States, with its principal place of business at 165 Madison Avenue,
Memphis, Tennessee 38103, party of the second part, hereinafter called "Bank,"
and P.A.M. TRANSPORTATION SERVICES, INC., a Delaware corporation, party of the
third part, hereinafter called "Guarantor."
Recitals of Fact
Pursuant to the terms and provisions of that certain Loan Agreement
("Loan Agreement"), bearing date of the 26th day of July, 1994, among the
parties hereto, the Bank committed to make loans and advances and extensions of
credit to the Borrower on a revolving credit basis, in an amount not to exceed,
at any one time outstanding, the principal sum of Seven Million Five Hundred
Thousand Dollars ($7,500,000.00). The Bank has now agreed to increase its
Committed Amount (as defined in the Loan Agreement), to the end that the Bank
will, subject to all of the terms and conditions of the Loan Agreement, as
amended hereby, make loans and advances and extensions of credit to the
Borrower, on a revolving credit basis, in an amount not to exceed, at any one
time outstanding, the lesser of (a) the principal sum of Ten Million Dollars
($10,000,000.00), or (b) the Borrower's Borrowing Base (as defined in the Loan
Agreement).
By reason of such increased commitment, it is necessary to modify and
amend the Loan Agreement as hereinafter provided. In addition, the parties
have agreed to make certain other changes in the Loan Agreement, all as are set
forth herein.
NOW, THEREFORE, for and in consideration of the premises, as set forth
in the Recitals of Fact, and other good and valuable considerations, the
receipt and sufficiency of which are hereby acknowledged, it is agreed by the
parties as follows:
Agreements
1. To induce the Bank to enter into this Amendment, the Borrower and
the Guarantor do hereby absolute and unconditionally, jointly and severally,
certify, represent and warrant to the Bank, and covenant and agree with the
Bank, that:
(a) All representations and warranties made by the Borrower or the
Guarantor in the Loan Agreement, as amended hereby, in the Security Agreement,
as amended, and in all other loan documents (all of which are herein sometimes
called the "Loan Documents"), are true, correct and complete in all material
respects as of the date of this Amendment.
<PAGE> 2
(b) As of the date hereof and with the execution of this Amendment,
there are no existing events, circumstances or conditions which constitute, or
would, with the giving of notice, lapse of time, or both, constitute Events of
Default.
(c) There are no existing offsets, defenses or counterclaims to the
respective obligations of the Borrower or the Guarantor, as set forth in the
Note, the Security Agreement, as amended, the Loan Agreement, as amended, or in
any other Loan Document executed by the Borrower or the Guarantor,
respectively, in connection with the Loan.
(d) Neither the Borrower nor the Guarantor has any existing claim for
damages against the Bank arising out of or related to the Loan; and, if and to
the extent (if any) that the Borrower or the Guarantor has or may have any such
existing claim (whether known or unknown), the Borrower and the Guarantor do
hereby forever release and discharge, in all respects, the Bank with respect to
such claim.
(e) The Loan Documents, as amended by this Amendment and by the
Amendment (also of even date herewith) to the Security Agreement, are valid,
genuine, enforceable in accordance with their respective terms, and in full
force and effect.
2. The amount of Seven Million Five Hundred Thousand Dollars
($7,500,000.00), as contained in the Recitals of Fact of the Loan Agreement and
in Section 2.1 thereof, is hereby changed to the sum of Ten Million Dollars
($10,000,000.00).
3. The definitions of "Note" and "Termination Date," as set forth in
Article One of the Loan Agreement are hereby modified and amended to read as
follows:
"1.18 'Note' means, collectively, the Notes given to evidence
the Loan, one of said Notes being dated July 26, 1994 and being in the
principal sum of Seven Million Five Hundred Thousand Dollars
($7,500,000.00), and the other of said Notes being dated June 27,
1995, and being in the principal sum of Two Million Five Hundred
Thousand Dollars ($2,500,000.00), as either or both of said Notes may
be modified, renewed, amended, restated or extended, in whole or in
part, from time to time; and any other note or notes executed at any
time hereafter to evidence the Loan.
"1.25 'Termination Date' shall mean the 31st day of May, 1997,
unless such date is extended pursuant to the provisions of Section
10.12 hereof, in which event such extended date shall be the
Termination Date."
4. Article One is further modified and amended by the addition
thereto of two (2) new sections, being Sections 1.28 and 1.29, reading as
follows:
"1.28 'Choctaw' shall mean Choctaw Express, Inc., an Oklahoma
corporation.
"1.29 'Choctaw Security Agreement' shall mean the security
agreement, bearing date of the 27 day of June, 1995, executed by
Choctaw for the
- 2 -
<PAGE> 3
purpose of securing the Loan and the other Obligations (as that term
is defined in the Security Agreement)."
5. The first sentence of Section 2.3(a) is hereby modified and
amended to read as follows:
"All advances with respect to the Loan up to but not exceeding at any
one time outstanding the principal sum of Seven Million Five Hundred
Thousand Dollars ($7,500,000.00) shall be evidenced by the promissory
note of the Borrower, payable to the order of the Bank, in the
principal amount of Seven Million Five Hundred Thousand Dollars
($7,500,000.00), in form substantially the same as the Note attached
hereto as EXHIBIT '2.3'; and all advances with respect to the Loan
exceeding, at any one time outstanding, the principal sum of Seven
Million Five Hundred Thousand Dollars ($7,500,000.00) shall be
evidenced by the promissory note of the Borrower, payable to the order
of the Bank, in the principal amount of Two Million Five Hundred
Thousand Dollars ($2,500,000.00) in form substantially as the Note
attached hereto as EXHIBIT '2.3(A)'."
6. Sections 8.1 and 8.5 of the Loan Agreement are hereby modified and
amended to read as follows:
"8.1 Net Worth. Maintain at all times a Net Worth (as defined
in Article One) of not less than Ten Million Five Hundred Thousand
Dollars ($10,500,000.00).
"8.5 Debt Service Coverage Ratio. Maintain at all times a
Debt Service Coverage Ratio of not less than 1.1 to 1.0. For the
purposes hereof, the term "Debt Service Coverage Ratio" shall mean net
after-tax income, plus current year's deferred taxes, plus
depreciation, divided by current maturities of long-term debt, all
determined in accordance with generally accepted accounting
principles, consistently applied."
7. Section 9.1(d) of the Loan Agreement is hereby modified and
amended to read as follows:
"(d) Covenants. The Borrower, the Guarantor, or Choctaw
defaults in the performance or observance of any covenant, condition,
agreement or undertaking on its part to be performed or observed, as
contained herein, in the Security Agreement, in the Choctaw Security
Agreement, or in any other instrument or document which now or
hereafter evidences, secures, or relates to all or any part of the
Loan or any extensions of credit made pursuant hereto; and, with
respect to the covenants of the Guarantor set forth in Sections 8.1
and 8.2 hereof, such default is not cured within sixty (60) days
following the Guarantor's or the Borrower's first knowledge or notice
thereof; or"
8. The Loan Agreement is further modified and amended by the addition
thereto of a new exhibit, being EXHIBIT "2.3(A)," in form and substance
substantially the same as EXHIBIT "2.3(A)" attached to this Amendment.
- 3 -
<PAGE> 4
9. All terms and provisions of the Loan Agreement which are
inconsistent with the provisions of this Amendment are hereby modified and
amended to conform hereto; and, as so modified and amended, the Loan Agreement
is hereby ratified, approved and confirmed. Except as otherwise may be
expressly provided herein, this Amendment shall become effective as of the date
set forth in the initial paragraph hereof.
10. All references in all Loan Documents to the Loan Agreement shall,
except as the context may otherwise require, be deemed to constitute references
to the Loan Agreement as amended hereby.
11. The Guarantor does further (a) consent to and approve of all of
the terms and provisions of this Amendment, and the Amendment to the Security
Agreement, which Amendment is also of even date herewith, insofar as its rights
are or may be affected hereby, and (b) acknowledge the continued effectiveness
of its Guaranty in accordance with the terms thereof.
12. Choctaw joins herein for the purpose of consenting to and
approving of all of the terms and provisions of the Loan Agreement, as amended
hereby, insofar as its rights are or may be affected hereby. Without limiting
the generality of the foregoing, Choctaw specifically agrees to the terms and
provisions set forth in Sections 10.21 and 10.22 of the Loan Agreement.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, Borrower, Guarantor, Choctaw and Bank have caused
this Amendment to be executed by their respective officers, duly authorized so
to do, on this the day and year first above written.
ATTEST: P.A.M. TRANSPORT, INC.
/s/ Larry J. Goddard By: /s/ Robert W. Weaver
---------------------------- ----------------------------------------
Secretary President
BORROWER
ATTEST: P.A.M. TRANSPORTATION SERVICES, INC.
/s/ Larry J. Goddard By: /s/ Robert W. Weaver
---------------------------- ----------------------------------------
Secretary President
GUARANTOR
ATTEST: CHOCTAW EXPRESS, INC.
/s/ Larry J. Goddard By: /s/ Robert W. Weaver
---------------------------- ----------------------------------------
Secretary Chief Executive Officer
CHOCTAW
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By: /s/ Steve Hawkins
----------------------------------------
Senior Vice President
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<PAGE> 6
EXHIBIT "2.3(a)"
PROMISSORY NOTE
$2,500,000.00 Memphis, Tennessee
June 27, 1995
ON OR BEFORE MAY 31, 1997 (the "Termination Date"), the undersigned,
P.A.M. TRANSPORT, INC., an Arkansas corporation (the "Maker"), promises to pay
to the order of FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national banking
association having its principal place of business in Memphis, Tennessee (the
"Bank"), the principal sum of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS
($2,500,000.00), value received, together with interest from date until
maturity, upon disbursed and unpaid principal balances, at the Applicable Rate,
determined quarterly as hereinafter provided, said interest being payable
monthly on the first day of each and every month hereafter, commencing on the
1st day of August, 1994, with the final installment of interest being due and
payable concurrently on the same date that the principal balance is due
hereunder.
The "Termination Date" may be extended one or more times pursuant to
the provisions of that certain Loan Agreement ("Loan Agreement"), bearing date
of the 26th day of July, 1994, as amended, among the Maker, the Bank and
certain other parties therein mentioned; and if so extended, such extended date
shall thereupon constitute the Termination Date.
For the purposes hereof, the following terms shall have the following
meanings (such meanings to be applicable equally to the both the singular and
plural forms of such terms) unless the context otherwise requires:
"Adjustment Date" shall mean the first day of each February, May,
August and November of each year, with the next Adjustment Date being the 1st
day of August, 1995.
"Alternate Contract Rate" shall mean a rate per annum equal to the
lesser of (a) the Maximum Rate, or (b) a rate equal to (i) two and one-half
percent (2 1/2%) per annum, plus (ii) the LIBOR Rate, adjusted and determined
as of the opening of business on Wednesday of each week.
"Applicable Rate" shall mean (a) from the date hereof to the 1st day
of August, 1995, the Alternate Contract Rate, and (b) thereafter, the Contract
Rate, if the Maker's Net Income After Taxes for the Maker's fiscal quarter last
ending prior to the applicable Adjustment Date is less than Five Hundred
Thousand Dollars ($500,000.00), and the Alternate Contract Rate if the Maker's
Net Income After Taxes for such fiscal quarter is Five Hundred Thousand Dollars
($500,000.00) or more.
2.3(a)-1
<PAGE> 7
"Base Rate" shall mean the base commercial rate of interest
established from time to time by the Bank, it being understood and agreed,
however, that the Bank has made, and may hereafter make, loans at rates of
interest which are higher or lower than the Base Rate. [The Bank's Base Rate
is, as of the date hereof, nine percent (9%) per annum.]
"Contract Rate" shall mean a rate per annum equal to the lesser of (a)
the Base Rate, as adjusted and determined on a daily basis, or (b) the Maximum
Rate.
"Default Rate" shall mean a rate of interest per annum which shall be
equal to the Applicable Rate, plus two percent (2%) per annum, but never to
exceed the Maximum Rate.
"LIBOR Rate" shall mean the London Interbank Offered Rate of Interest
for an interest period of one (1) month, as reported on each Wednesday of each
week in The Wall Street Journal; provided, however, that if The Wall Street
Journal is not published on a Wednesday, the "LIBOR Rate" shall be determined
by reference to The Wall Street Journal last published immediately preceding
such Wednesday. [The one-month LIBOR Rate quoted in The Wall Street Journal
published on Monday, June 12, 1995, is six and one-sixteenth percent (6-1/16%)
per annum. Therefore, if Monday, June 12, 1995 were a Wednesday, the Alternate
Contract Rate, based upon the LIBOR Rate quoted in The Wall Street Journal on
such date, would be 8.5625% per annum.]
"Maximum Rate" shall mean the maximum effective variable contract rate
of interest which the Bank may, from time to time, lawfully charge.
"Net Income After Taxes" shall mean, with respect to any fiscal period
of the Maker, the Maker's consolidated net income after provision for income
taxes for such fiscal period, as determined in accordance with generally
accepted accounting principles, consistently applied.
The Applicable Rate prior to maturity upon the unpaid principal
balances of this Note shall be determined quarterly as of each Adjustment Date,
based upon the Net Profit After Taxes of the Maker for the calendar quarter of
its fiscal year ending most recently prior to such Adjustment Date. In the
event that the financial report for the immediately preceding calendar quarter
of the Maker has not been received by the Bank on or before an Adjustment Date,
then and in such event the rate of interest prior to maturity for the fiscal
quarter commencing as of such Adjustment Date shall be the Contract Rate.
Any payments of principal or interest not made when due shall bear
interest after maturity (whether by reason of default, acceleration or
otherwise) at the Applicable Rate for a period of sixty (60) days following
such maturity, and, if payment is not made within such sixty (60) day period,
upon the expiration of such sixty (60) day period, at the Default Rate.
However, in the event the Maker is obligated to pay the Default Rate under this
paragraph, such obligation to pay the Default Rate shall terminate when the
Maker cures the default and the interest rate thereafter shall revert back to
the Applicable Rate.
2.3(a)-2
<PAGE> 8
In the event that the foregoing provisions should be construed by a
court of competent jurisdiction not to constitute a valid, enforceable
designation of a rate of interest or method of determining same, the
indebtedness hereby evidenced shall bear interest at the Maximum Rate.
This Note is secured by one or more Security Agreements ("Security
Agreements") dated July 26, 1994, as amended, covering Maker's Accounts
Receivable, and other collateral, as is more particularly described in said
Security Agreement(s), and may now or hereafter be secured by other mortgages,
trust deeds, assignments, security agreements, or other instruments of pledge
or hypothecation, including a Security Agreement ("Choctaw Security
Agreement"), of even date herewith, executed by Choctaw Express, Inc., an
Oklahoma corporation, in favor of the Bank.
This Note is payable at the offices of Bank, at 165 Madison Avenue,
Memphis, Tennessee, 38103, or at such other place as the holder may designate
in writing, in lawful money of the United States of America, which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment.
On the Termination Date, or, at the option of the Bank (a) if the
undersigned shall fail to make payment of any installment of interest, as above
provided, and such default remains uncured for a period of five (5) days, or
(b) upon any default in the terms and provisions of any of the Security
Agreements or the Choctaw Security Agreement, or any trust deed, mortgage, or
other instrument of pledge or hypothecation which now or hereafter secures the
payment of the indebtedness evidenced hereby, or (c) upon the occurrence of any
Event of Default as that term is defined in the Loan Agreement, or (d) upon the
dissolution of the Maker, or (e) upon default in the payment when due of any
other indebtednesses, liabilities, or obligations of the Maker to the Bank,
whether now existing or hereafter created or arising, and such default remains
uncured for a period of five (5) days, the entire unpaid balance of the
indebtedness hereby evidenced, together with all interest then accrued, shall
at once become due and payable for all purposes.
If this Note is placed in the hands of an attorney for collection, by
suit or otherwise, or to protect the security for its payment, or to enforce
its collection, or to represent the rights of the Bank in connection with any
loan documentation executed in connection herewith, or to defend successfully
against any claim, cause of action or suit brought by the Maker against the
Bank, the Maker shall pay on demand all costs of collection and litigation
(including court costs), together with a reasonable attorney's fee.
The Maker and any endorsers or guarantors hereof waive protest,
demand, presentment and notice of dishonor. The Maker and any endorsers or
guarantors that this Note may be extended, in whole or in part, without limit
as to the number of such extensions, or the period or periods thereof, and
without notice to them and without affecting their liability thereon.
It is the intention of the Bank and the Maker to comply strictly with
all applicable usury laws; and, accordingly, in no event and upon no
contingency shall the holder hereof ever be entitled to receive, collect, or
apply as interest any interest, fees, charges, or other payments equivalent to
interest, in excess of the Maximum Rate; and, in the event that the holder
hereof ever receives, collects, or applies as interest, any such excess, such
amount which, but for this
2.3(a)-3
<PAGE> 9
provision, would be excessive interest, shall be applied to the reduction of
the principal amount of the indebtedness evidenced hereby; and, if the
principal amount of the indebtedness evidenced hereby, and all lawful interest
thereon, is paid in full, any remaining excess shall forthwith be paid to the
Maker, or other party lawfully entitled thereto. All interest paid or agreed
to be paid by the Maker shall, to the maximum extent permitted under applicable
law, be amortized, pro rated, allocated and spread throughout the full period
until payment in full of the principal so that the interest hereon for such
full period shall not exceed the maximum amount permitted by applicable law.
Any provision hereof, or of any other agreement between the Bank and the Maker,
that operates to bind, obligate, or compel the Maker to pay interest in excess
of such Maximum Rate shall be construed to require the payment of the maximum
rate only. The provisions of this paragraph shall be given precedence over any
other provision contained herein or in any other agreement between the Bank and
the Maker that is in conflict with the provisions of this paragraph.
This Note shall be governed and construed according to the statutes
and laws of the State of Tennessee from time to time in effect, except to the
extent that Section 85 of Title 12 of the United States Code (or other
applicable federal statute) may permit the charging of a higher rate of
interest than applicable state law, in which event such applicable federal
statute, as amended and supplemented from time to time, shall govern and
control the maximum rate of interest permitted to be charged hereunder; it
being intended that, as to the maximum rate of interest which may be charged,
received, and collected hereunder, those applicable statutes and laws, whether
state or federal, from time to time in effect, which permit the charging of a
higher rate of interest, shall govern and control; provided, always, however,
that in no event and under no circumstances shall the Maker be liable for the
payment of interest in excess of the maximum effective rate permitted by such
applicable law, from time to time in effect.
ATTEST: P.A.M. TRANSPORT, INC.
/s/ Larry J. Goddard By: /s/ Robert W. Weaver
---------------------------------- ---------------------------------
Secretary President
2.3(a)-4
<PAGE> 1
EXHIBIT 4.1.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT entered into this 27 day of June, 1995, by and
between CHOCTAW EXPRESS, INC., an Oklahoma corporation, whose principal place
of business and chief executive office is located at Highway 412 West, P.O.
Box 188, Tontitown, Arkansas 72770 (the "Grantor"), and FIRST TENNESSEE BANK
NATIONAL ASSOCIATION, a national banking association whose address is 165
Madison Avenue, Memphis, Tennessee 38103, Attn: Commercial Finance Division
(the "Bank").
W I T N E S S E T H:
That for good and valuable considerations, the receipt and sufficiency
of which are hereby acknowledged, the Grantor hereby agrees with Bank as
follows:
1. Definitions. (a) Reference is made to the Loan Agreement ("Loan
Agreement"), bearing date of the 26th day of July, 1994, as amended, among
P.A.M. Transport, Inc., an Arkansas corporation (the "Borrower"), P.A.M.
Transportation Services, Inc., a Delaware corporation, as Guarantor, and the
Bank, said Loan Agreement being incorporated herein by reference. All terms
used in this Security Agreement which are defined in the Loan Agreement or in
Article 9 of the Uniform Commercial Code (the "Code") of Tennessee and which
are not otherwise defined herein shall have the same meanings herein as set
forth therein, unless the context shall otherwise require.
(b) "Default" shall mean any event, circumstance or condition which
constitutes, or would, with the giving of notice, lapse of time, or both,
constitute an Event of Default (as that term is defined in the Loan Agreement).
2. Grant of Security Interest. As collateral security for all of the
Obligations (as defined in Section 3 hereof), the Grantor hereby pledges and
assigns to Bank, and grants to Bank a continuing security interest in, the
following (the "Collateral"):
(a) All of the Grantor's accounts, accounts receivable, and
unbilled revenue, whether or not earned by performance (collectively
hereinafter "Accounts Receivable" or "Receivables") whether now or
hereafter existing, arising out of or in connection with the rendering
of transportation services, and all rights now or hereafter existing
in and to all security agreements, leases and other contracts securing
or otherwise relating to any such Accounts Receivable;
(b) All of Grantor's customer lists, original books and
records, ledger and account cards, computer tapes, discs and
printouts, whether now in existence or hereafter created, relating to
such Accounts Receivable;
<PAGE> 2
(c) All proceeds ("Proceeds") of any and all of the foregoing
Collateral. (Although proceeds are covered, Bank does not authorize
the sale or other transfer of any of the Collateral or the transfer of
any interest in the Collateral, except for the sale of goods in the
ordinary course of Grantor's business);
in each case, whether now owned or hereafter acquired by the Grantor and
howsoever its interest therein may arise or appear (whether by ownership,
lease, security interest, claim, or otherwise).
3. Security for Obligations. The security interest created hereby in
the Collateral constitutes continuing collateral security for all of the
following obligations, whether now existing or hereafter incurred (the
"Obligations"):
(a) The full and prompt payment, when due, of the indebtednesses (and
interest thereon), in the aggregate principal sum of Ten Million Dollars
($10,000,000.00), evidenced and to be evidenced by those two (2) certain
promissory notes, one bearing date of the 26th day of July, 1994, and being in
the principal sum of Seven Million Five Hundred Thousand Dollars
($7,500,000.00), and the other bearing date of the 27 day of June, 1995, and
being in the principal sum of Two Million Five Hundred Thousand Dollars
($2,500,000.00), both being executed by the Borrower, and both being payable to
the order of Bank, and any and all renewals, modifications, substitutions,
replacements and/or extensions of either of said notes, in whole or in part;
(b) The due performance and observance by the Grantor and Borrower of
all of their respective covenants, agreements, representations, liabilities,
obligations, and undertakings as set forth herein, or in the Loan Agreement (as
the same may be modified, renewed or extended from time to time) or in any
other instrument or document which now or at any time hereafter evidences or
secures, in whole or in part, all or any part of the Obligations hereby
secured; and
(c) The prompt payment and performance of any and all other present
and future indebtednesses, liabilities and obligations of Grantor or Borrower
to Bank of every kind, character, and description, whether now existing or
hereafter created or arising, whether absolute or contingent, due or to become
due, joint or several, matured or unmatured, direct or indirect, primary or
secondary, and including without limitation, all future advances to the Grantor
or Borrower and all obligations of the Grantor or Borrower with respect to any
letters of credit issued at any time by Bank for the benefit of Grantor or
Borrower.
4. Representations and Warranties. The Grantor represents and
warrants as follows:
(a) The Grantor's chief place of business and chief executive office,
the place where the Grantor keeps its records concerning Accounts Receivable
and all originals of all chattel paper which constitute Accounts Receivable are
located at the address specified for the Grantor in the initial paragraph
hereof. None of the Accounts Receivable is evidenced by a promissory note or
other instrument.
- 2 -
<PAGE> 3
(b) (i) Except as otherwise specifically mentioned in EXHIBIT "A,"
hereto attached, the Grantor owns the Collateral free and clear of any
lien, security interest or other charge or encumbrance except for the
security interest created by this Agreement.
(ii) Except for the financing statements filed in favor of
Bank relating to this Agreement, and except for any financing
statements filed with respect to the security interests mentioned in
EXHIBIT "A," hereto attached, no other financing statement or other
instrument similar in effect covering all or any part of the
Collateral is on file in any recording office.
(c) The exercise by Bank of its rights and remedies hereunder will
not contravene any law or governmental regulation or any contractual
restriction binding on or affecting the Grantor or any of its properties and
will not result in or require the creation of any lien, security interest or
other charge or encumbrance upon or with respect to any of its properties.
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or other regulatory body is required
either for the grant by the Grantor of the security interest created hereby in
the Collateral or for the exercise by Bank of its rights and remedies
hereunder.
(e) This Agreement creates a valid security interest in favor of the
Bank in the Collateral. The filing of financing statements with the Arkansas
Secretary of State, the Circuit Court Clerk and Ex-Officio Recorder of
Washington County, Arkansas, and the County Court Clerk of Oklahoma County,
Oklahoma, will perfect and establish the priority of the Bank's security
interest hereunder in the Collateral, subject to no other existing liens and
encumbrances, except as otherwise specifically disclosed in EXHIBIT "A."
Except as set forth in this Section 4(e), no action is necessary or desirable
to perfect or otherwise protect such security interest.
5. Covenants as to the Collateral. So long as any of the Obligations
shall remain outstanding, unless Bank shall otherwise consent in writing:
(a) Further Assurances. The Grantor will at its expense, at any time
and from time to time, promptly execute and deliver all further instruments and
documents and take all further action that Bank deems necessary or desirable or
that Bank may request in order (i) to perfect and protect the security interest
created or purported to be created hereby; (ii) to enable Bank to exercise and
enforce its rights and remedies hereunder in respect of the Collateral; or
(iii) to otherwise effect the purposes of this Agreement, including, without
limitation: (A) executing and filing such financing or continuation
statements, or amendments thereto, as Bank deems necessary or desirable or that
Bank may request in order to perfect and preserve the security interest created
or purported to be created hereby; (B) furnishing to Bank from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Bank may reasonably
request, all in reasonable detail; (C) marking conspicuously each chattel paper
included in the Accounts Receivable and, at the request of the Bank, each of
its records pertaining to the Account Receivable with a legend, in
- 3 -
<PAGE> 4
form and substance satisfactory to the Bank, indicating that such chattel paper
is subject to the security interest created hereby; and (D) if any Account
Receivable shall be evidenced by a promissory note or other instrument or
chattel paper, delivering and pledging to the Bank hereunder such note,
instrument or chattel paper duly endorsed and accompanied by executed
instruments of transfer or assignment, all in form and substance satisfactory
to the Bank.
(b) Taxes. The Grantor will pay promptly and before the same become
delinquent all property and other taxes, assessments, and governmental charges
or levies imposed upon, and all claims (including claims for labor, materials,
and supplies) against, the Collateral, except to the extent the validity
thereof is being contested diligently and in good faith by proper proceedings
satisfactory to the Bank.
(c) Insurance. This Section is intentionally omitted.
(d) As to Receivables.
(i) The Grantor will (A) keep its chief place of business and
chief executive office and all originals of all chattel paper which
constitute Accounts Receivable, at the location(s) specified in
paragraph 4(a) hereof, and (B) maintain and preserve complete and
accurate records concerning the Receivables and the proceeds thereof.
(ii) As of the time any Receivable becomes subject to the
security interest granted by this Security Agreement, including,
without limitation, as of each time any specific assignment or
transfer or identification is made to Bank of any Receivable, Grantor
shall be deemed to have warranted as to each and all of such
Receivables that each Receivable and all papers and documents relating
thereto are genuine and in all respects what they purport to be; that
each Receivable is valid and subsisting and arises out of a bona fide
sale of goods sold and delivered, or in the process of being
delivered, or out of and for services theretofore actually rendered,
to the account debtor named in the Receivable; that the amount of the
Receivable represented as owing is the correct amount actually and
unconditionally owing except for normal cash discounts and is not
disputed, and except for such normal cash discount is not subject to
any setoffs, credits, deductions or counter-charges; that the Grantor
is the owner thereof free and clear of all prior liens, except for the
security interest in favor of Bank and any security interest
specifically mentioned in EXHIBIT "A" hereto attached; and that no
surety bond was required or given in connection with said Receivable
or the contracts or purchase orders out of which the same arose; and
that Grantor has no notice of or reason to believe that the account
debtor is subject to any pending bankruptcy proceeding, insolvency
proceeding or operations of any creditors committee.
(iii) Bank shall have the privilege at any time upon its
request, of inspection during reasonable business hours of any of the
business properties or premises of the Grantor and the books and
records of the Grantor relating to said Receivables and inventory or
the processing or collection thereof as well as those relating to its
general
- 4 -
<PAGE> 5
business affairs and financial condition. Bank shall have the right
at any time after the occurrence of a Default, to notify any and all
account debtors to make payment thereof directly to Bank; but, prior
to a Default, and after a Default to the extent Bank does not so
elect, Grantor shall continue to collect the Receivables. Except as
the Bank and the Grantor shall otherwise expressly agree in writing,
all proceeds of collection of Receivables received by the Grantor
shall be forthwith accounted for and transmitted to Bank in the form
as received by the Grantor and shall not be commingled with any funds
of the Grantor. In the event the account debtor of any Receivable
included in this Security Agreement shall also be indebted to the
Grantor in any other respect and such account debtor shall make
payment without designating the particular indebtedness against which
it is to apply, such payment shall be conclusively presumed to be
payment on the Receivable of such account debtor included in this
Security Agreement. Any proceeds of Receivables so transmitted to
Bank shall be handled and administered by Bank in and through a
remittance or similar account, but the Grantor acknowledges that the
maintenance of such an account by Bank is solely for its convenience
in facilitating its own operations pursuant hereto and that Grantor
has not and shall not have any right, title or interest in said
account or in the amounts at any time to the credit thereof. Except
to the extent Bank may from time to time in its discretion release
proceeds to the Grantor for use in its business, all proceeds received
by Bank shall be applied on the Obligations secured hereby, whether or
not such Obligations shall have by their terms matured, such
application to be made at such intervals as Bank may determine, except
that Bank need not apply or give credit for any item included in such
proceeds until two (2) business days after receipt by Bank of such
item at its Main Office in Memphis, Tennessee. Items received after
2:00 o'clock p.m. on any business day shall be deemed to have been
received the following business day. In administering the collection
of proceeds as herein provided for, Bank may accept checks or drafts
in any amount and bearing any notation without incurring liability to
Grantor for so doing.
(iv) After the occurrence of a Default, Bank shall have the
right, but shall incur no liability for failing to do so, in its own
name, or in the name of the Grantor to demand, collect, receive,
receipt for, sue for, compound and give acquittance for, any and all
amounts due or to become due on the Receivables, to adjust, settle or
compromise the amount or payment thereof, in the same manner and to
the same extent as Grantor might have done, and to endorse the name of
the Grantor on all commercial paper given in payment or part payment
thereof, and in its discretion to file any claim or take any action or
proceedings which Bank may deem necessary or appropriate to protect
and preserve and realize upon the security interest of Bank in the
Receivables and the proceeds thereof.
(v) Grantor will from time to time execute such further
instruments and do such further acts and things as Bank may reasonably
require by way of further assurance to Bank of the matters and things
herein provided for or intended so to be. Without limiting the
foregoing, Grantor agrees to execute and deliver to Bank an assignment
or other form of identification in the form required by Bank of all
Receivables at any time included
- 5 -
<PAGE> 6
under this Security Agreement, together with such other evidence of
the existence and identity of such Receivables as Bank may reasonably
require; and Grantor will mark its books and records to reflect this
Security Agreement. Grantor will accompany each transmission of
proceeds of Receivables to Bank with a report in such form as Bank may
require in order to identify the Receivables to which such proceeds
apply.
(e) Transfers and Other Liens. Without the prior consent of Bank or
as permitted by the Loan Agreement, the Grantor will not (i) sell, assign (by
operation of law or otherwise), exchange, or otherwise dispose of any of the
Collateral; or (ii) create or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to any of the Collateral
except for the security interest created by this Agreement, and except for any
security interest specifically disclosed in EXHIBIT "A," attached hereto.
6. Additional Provisions Concerning the Collateral.
(a) The Grantor hereby authorizes Bank to file, without the signature
of the Grantor where permitted by law, one or more financing or continuation
statements, and amendments thereto, relating to the Collateral.
(b) The Grantor hereby irrevocably appoints Bank the Grantor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Grantor and in the name of the Grantor or otherwise, from time to time in the
Bank's discretion, (following the occurrence of a Default not waived by the
Bank) to take any action and to execute any instrument which Bank may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, the following: (i) to obtain and adjust insurance required
to be paid to Bank pursuant to Section 5(c) hereof; (ii) to ask, demand,
collect, sue for, recover, compound, receive, and give acquittance and receipts
for moneys due and to become due under or in respect of any of the Collateral;
(iii) to receive, endorse, and collect any checks, drafts or other instruments,
documents, and chattel paper in connection with clause (i) or (ii) above; (iv)
to sign its name on any invoice or bill of lading relating to any Receivable,
on drafts against customers, on schedules and assignments of Receivables, on
notices of assignment, financing statements and other public records, on
verification of accounts and on notices to customers (including notices
directing customers to make payment direct to Bank); (v) to notify the post
office authorities to change the address for delivery of its mail to an address
designated by Bank, to receive, open and process all mail addressed to Grantor,
to send requests for verification of Receivables to customers; and (vi) to file
any claims or take any action or institute any proceedings which Bank may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of Bank with respect to any of the Collateral. Grantor
hereby ratifies and approves all acts of said attorney; and so long as the
attorney acts in good faith it shall have no liability to Grantor for any act
or omission as such attorney.
(c) If the Grantor fails to perform any agreement contained herein,
Bank may itself perform, or cause performance of, such agreement or obligation,
and the costs and expenses of
- 6 -
<PAGE> 7
Bank incurred in connection therewith shall be payable by the Grantor under
Section 9 hereof, and shall be fully secured hereby.
(d) The powers conferred on Bank hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Bank shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
(e) Anything herein to the contrary notwithstanding, (i) the Grantor
shall remain liable under any contracts and agreements relating to the
Collateral to the extent set forth therein to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed; (ii)
the exercise by Bank of any of its rights hereunder shall not release the
Grantor from any of its obligations under the contracts and agreements relating
to the Collateral; and (iii) Bank shall not have any obligation or liability by
reason of this Agreement under any contracts and agreements relating to the
Collateral, nor shall Bank be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.
7. Remedies Upon Default. If an Event of Default shall have occurred:
(a) Bank may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Code (whether
or not the Code applies to the affected Collateral), and also may (i) require
the Grantor to, and the Grantor hereby agrees that it will at its expense and
upon request of Bank forthwith, assemble all or part of the Collateral as
directed by Bank and make it available to Bank at a place to be designated by
Bank which is reasonably convenient to Bank; and (ii) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of Bank's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as Bank may deem commercially reasonable. The Grantor agrees that, to
the extent notice of sale shall be required by law, at least five (5) days'
notice to the Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. Bank shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Bank may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(b) Any cash held by Bank as Collateral and all cash proceeds
received by Bank in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral shall be applied as
follows:
(i) First, to the repayment of the reasonable costs and
expenses, including reasonable attorneys' fees and legal expenses,
incurred by Bank in connection with
- 7 -
<PAGE> 8
(A) the administration of this Agreement, (B) the retaking, custody,
preservation, use, or operation of, or the sale of, collection from,
or other realization upon, any Collateral, (C) the exercise or
enforcement of any of the rights of Bank hereunder, or (D) the failure
of the Grantor to perform or observe any of the provisions hereof or
of the Loan Agreement;
(ii) Second, to the reimbursement of Bank for the amount of
any obligations of the Grantor paid or discharged by Bank pursuant to
the provisions of this Agreement, and of any expenses of Bank payable
by the Grantor hereunder;
(iii) Third, to the satisfaction of the Obligations, in such
order as Bank shall elect;
(iv) Fourth, to the payment of any other amounts required by
applicable law [including, without limitation, Section 47-9-504(1)(c)
the Code or any successor or similar, applicable statutory provision];
and
(v) Fifth, the surplus proceeds, if any, to the Grantor or to
whomsoever shall be lawfully entitled to receive the same or as a
court of competent jurisdiction shall direct.
(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which Bank is legally
entitled, the Grantor shall be liable for the deficiency, together with
interest thereon at such rate(s) as shall be fixed by instrument(s) evidencing
the Obligation(s) with respect to which such deficiency exists, together with
the costs of collection and the reasonable fees of any attorneys employed by
Bank to collect such deficiency.
8. Rights and Duties of Bank, Etc. Bank undertakes, as to this
Agreement, to exercise only such duties as are specifically set forth in this
Agreement and to exercise such of the rights, powers and remedies as are vested
in it by this Agreement or by law.
9. Indemnity and Expenses. (a) The Grantor agrees to indemnify Bank
from and against any and all claims, losses, and liabilities growing out of or
resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses, or liabilities resulting solely and
directly from Bank's gross negligence or willful misconduct.
(b) The Grantor will upon demand pay to Bank the amount of any and
all costs and expenses, including the fees and disbursements of the Bank's
counsel and of any experts and agents, which Bank may incur in connection with
(i) the administration of this Agreement (excluding the salary of Bank's
employees and Bank's normal and usual overhead expenses); (ii) the custody,
preservation, use, or operation of, or the sale of, collection from, or other
realization upon, any Collateral; (iii) the exercise or enforcement of any of
the rights of Bank hereunder; or (iv) the failure by the Grantor to perform or
observe any of the provisions hereof, except expenses resulting solely and
directly from Bank's gross negligence or willful misconduct.
- 8 -
<PAGE> 9
10. Notices, Etc. All notices and other communications provided for
hereunder (except for routine informational communications) shall be in writing
and shall be mailed by registered or certified mail, return receipt requested,
sent by recognized national overnight courier service, telecopied by facsimile
machine, or delivered, if to the Grantor, to it at its address specified in the
first paragraph of this Agreement (Telecopy No. 501/361-5335); and if to the
Bank, to it Attention: Commercial Finance Division at its address specified in
the first paragraph of this Agreement (Telecopy No.: 901/523-4633); with a copy
(if other than a routine informational communication) to Baker, Donelson,
Bearman & Caldwell, 2000 First Tennessee Building, Memphis, Tennessee 38103,
Attention: David G. Williams (Telecopy No.: 901/577-2303). All such notices
and other communications shall be effective (a) if mailed, when received or
three (3) business days after mailing, whichever is earlier, (b) if sent by
recognized national overnight courier service, on the first business day
following the sending thereof, (c) if telecopied, upon confirmation of sending,
and (d) if delivered, upon delivery.
11. Security Interest Absolute. All rights of Bank, all security
interests and all obligations of the Grantor hereunder shall be absolute and
unconditional irrespective of: (i) any lack of validity or enforceability of
the Loan Agreement, any guaranty, or any other agreement or instrument relating
thereto; (ii) any change in the time, manner, or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from this Agreement, any guaranty, or
any other agreement or instrument relating thereto; (iii) any increase in,
addition to, or exchange, release, or non-perfection of, any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Obligations; (iv) any other circumstance which
might otherwise constitute a defense available to, or a discharge of, the
Grantor in respect of the Obligations or this Agreement; or (v) the absence of
any action on the part of Bank to obtain payment or performance of the
Obligations from the Grantor or any other party.
12. Miscellaneous. (a) No amendment of any provision of this
Security Agreement shall be effective unless it is in writing and signed by the
Grantor and Bank, and no waiver of any provision of this Agreement, and no
consent to any departure by the Grantor therefrom, shall be effective unless it
is in writing and signed by Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) No failure on the part of Bank to exercise, and no delay in
exercising, any right hereunder or under any other instrument or document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of
any other right. The rights and remedies of Bank provided herein and in the
other instruments and documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of Bank under
any Loan Agreement between the parties, any guaranty, any other instrument
which now or hereafter evidences or secures all or part of the Obligations, or
any related document against any party thereto are not conditional or
contingent on any attempt by Bank to exercise any of its rights under any other
such instrument or document against such party or against any other party.
- 9 -
<PAGE> 10
(c) Any provision of this Security Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full of all of the Obligations, (ii) be binding on the Grantor and its
successors and permitted assigns and shall inure, together with all rights and
remedies of Bank hereunder, to the benefit of Bank and its successors,
transferees, and assigns. None of the rights or obligations of the Grantor
hereunder may be assigned or otherwise transferred without the prior written
consent of Bank.
(e) Upon the satisfaction in full of all of the Obligations, Bank
will, upon the Grantor's request and at the Grantor's expense, (i) return to
the Grantor such of the Collateral as shall not have been sold or otherwise
disposed of or applied pursuant to the terms hereof; and (ii) execute and
deliver to the Grantor such documents as the Grantor shall reasonably request
to evidence termination of the security interest herein granted.
(f) This Agreement shall be governed by and construed in accordance
with the statutes and laws of the State of Tennessee, except as required by
mandatory provisions of law and except to the extent that the validity or
perfection of the security interest created hereby, or remedies hereunder, in
respect of any particular Collateral are governed by the laws of a jurisdiction
other than the State of Tennessee. If any provision hereof is in conflict with
the provisions of the Loan Agreement, the provisions of the Loan Agreement
shall control.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed and delivered by its duly authorized officers on this the day and year
first above written.
ATTEST: CHOCTAW EXPRESS, INC.
/s/ Larry J. Goddard By: /s/ Robert W. Weaver
---------------------------------- ---------------------------------
Secretary Chief Executive Officer
GRANTOR
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By: /s/ Steve Hawkins
---------------------------------
Senior Vice-President
BANK
- 10 -
<PAGE> 11
EXHIBIT "A"
TO SECURITY AGREEMENT
(Description of Other Security Interests in Collateral)
A-1
<PAGE> 1
EXHIBIT 4.1.4
[LOGO] FIRST
1ST TENNESSEE
BANK
GUARANTY AGREEMENT
For Value Received, And in consideration of credit given or to be given,
advances made or to be made, or other financial accommodation from time to time
afforded or to be afforded to P.A.M TRANSPORT, INC., an Arkansas corporation
(hereinafter called the "Borrower") and/or his, her, their or its successors or
assigns, by First Tennessee Bank National Association, or its successors,
endorsees, transferees and assigns (all of which are hereinafter called the
"Bank"), the undersigned hereby jointly and severally, for themselves, their
heirs, executors, administrators and successors, guarantee the full and prompt
payment to the Bank, at maturity and at all times thereafter, of any and all
indebtedness, obligations and liabilities of every kind and nature (all of
which are hereinafter collectively referred to as "indebtedness"), however
created, arising or evidenced, of the Borrower to the Bank (including all
liabilities of any partnership created or arising while the Borrower may have
been or may be a member thereof), whether now existing or hereafter created or
arising, whether direct or indirect, absolute or contingent, joint or several,
and howsoever owned, held or acquired, whether through discount, overdraft,
purchase, direct loan or as collateral, or otherwise: together with all
expenses, legal and/or otherwise (including court costs and attorney's fees)
incurred by the Bank in collecting or endeavoring to collect such indebtedness
or any part thereof, in protecting any collateral, and in enforcing this
guaranty. The right of recovery, however, against each of the undersigned is
limited to
TEN MILLION AND NO/100 ------------------------ Dollars ($10,000,000.00),
------------------------------------------------ -------------
plus interest on all loans and/or advances hereunder and all expenses
hereinbefore mentioned.
THIS GUARANTY SHALL BE A CONTINUING, ABSOLUTE, AND UNCONDITIONAL GUARANTY and
shall apply to and cover all loans, discounts or renewals thereof, made by the
Bank to the Borrower at any time, and any and all indebtedness, of any nature
and howsoever arising or created or evidenced, now owing or hereafter created
to the Bank by the Borrower, and shall remain in full force and effect until
written notice of its discontinuance, addressed to the President of the Bank,
shall be actually received by the Bank (the burden of proof of receipt by the
Bank of such notice being in all cases upon the undersigned), and also until
any and all said indebtedness, or any extensions or renewals thereof, existing
before receipt of such notice, and expenses in connection therewith, shall be
fully paid. Regardless of when a renewal or extension of pre-termination debt
occurs (with or without adjustment of interest rate or other terms), the debt
is deemed to have been incurred prior to termination to the extent of the
renewal or extension, and to be fully covered by this guaranty. The death,
dissolution or withdrawal of any one or more of the undersigned shall not
terminate this guaranty until notice of any such death, dissolution or
withdrawal, given as above provided, shall have actually been received by the
Bank, and until all of said indebtedness, or any extensions or renewals thereof,
existing before receipt of such notice shall be fully paid. And in the event
of any such death, dissolution or withdrawal and notice thereof to the Bank,
this guaranty shall, notwithstanding, continue and remain in force against the
survivor or survivors, or the remainder, of the undersigned until discontinued
as hereinabove provided.
The Bank is hereby authorized to make from time to time, without notice to
anyone: any renewals or extensions, (whether such renewals or extensions be in
whole or in part and without limit as to the number of such extensions or of
the renewal periods thereof, and without notice to or further assent from the
undersigned), sales, pledges, surrenders, compromises, settlements, releases,
indulgences, alterations, substitutions, exchanges, changes in, modifications,
or other dispositions including, without limitation, cancellations, of all or
any part of the collateral pledged to secure the indebtedness and all or any
part of said indebtedness, either express or implied, or of any contracts or
instruments evidencing any thereof, or of any security or collateral therefor,
and/or take any security for or other guaranties upon any of said indebtedness,
and the liability of the undersigned hereunder shall not be in any manner
affected, diminished or impaired thereby, or by any lack of diligence, failure,
neglect or omission on the part of the Bank to make any demand or protest, or
give any notice of dishonor or default, or to realize upon or protect any of
said indebtedness, or any collateral or security therefor, or to exercise any
lien upon or right of appropriation or set-off of any monies, accounts,
credits, or property of the Borrower, possessed by the Bank, towards the
liquidation of said indebtedness, or by any application of payments or credits
thereon. The Bank shall have the exclusive right to determine how, when and
what application of payments and credits, if any, shall be made on said
indebtedness, or any part thereof, and shall be under no obligation, at any
time, to first resort to, make demand on, file a claim against, or exhaust its
remedies against the Borrower, any one or more of the undersigned, or other
persons or corporations, their properties or estates, or to resort to or
exhaust its remedies against any collateral, security, property, liens or other
rights whatsoever. It is expressly agreed that the Bank may at any time make
demand for payment on, or bring suit against, the undersigned guarantors,
jointly or severally, or any one or more of the undersigned, less than all, and
may compound with any one or more of the undersigned for such sums or on such
terms as it may see fit, without notice or consent, the same being hereby
expressly waived, and release such of the undersigned from all further
liability to the Bank hereunder, without thereby impairing the rights of the
Bank in any respect to demand, sue for and collect the balance of the
indebtedness from any of the undersigned guarantors not so released: and that
any claims against the Borrower accruing to the undersigned by reason of
payments made hereunder shall be subordinate to any indebtedness then or
subsequently owned by the Borrower to the Bank. In addition, the liability of
the undersigned guarantors shall not be affected by any lack of validity or
enforceability of the guaranteed debt. As security for the undertakings and
obligations of the undersigned hereunder, the undersigned and each of them
expressly grant and give to the Bank a right of immediate set-off, without
demand or notice, of the balance of every deposit account, now or at any time
hereafter existing, of the undersigned with the Bank, and a general lien upon,
and security interest in, all money, negotiable instruments, commercial paper,
notes, bonds, stocks, credits and/or choses in action, or any interest therein,
and any other property, rights, and interests of the undersigned or any
evidence thereof, which have or any time shall come into the possession,
custody, or control of the Bank, and, in the event of default hereunder, the
Bank may sell or cause to be sold at public or private sale in any manner which
may be lawful, for cash or credit and upon such terms as the Bank may see fit,
and (except as may be otherwise expressly provided by the Uniform Commercial
Code, or other applicable law) without demand or notice to the undersigned, all
or any of such security, and the Bank (unless prohibited by the Uniform
Commercial Code from so doing) or any other person may purchase such property,
rights or interests so sold and thereafter hold the same free of any claim or
right or whatsoever kind, including any right or equity of redemption, of the
undersigned, such demand, notice, right or equity of redemption being hereby
expressly waived and released.
In the event of the death, incompetency, dissolution, liquidation, insolvency
(however evidenced) of, or institution of bankruptcy or receivership
proceedings by or against the Borrower, all of the indebtedness of the Borrower
then existing shall, for the purposes of this guaranty, and at the option of
the Bank, immediately become due and payable from the undersigned; and, in such
event, any and all sums or payments of any nature which may be or become due
and payable by the Borrower to any of the undersigned are hereby assigned to
the Bank, and shall be collectible by the Bank, without necessity for other
authority than this instrument, until all such indebtedness of the Borrower to
the Bank shall be fully paid and discharged, but such collection by the Bank
shall not in any respect affect, impair or diminish any other rights of the
Bank hereunder.
The granting of credit from time to time by the Bank to the Borrower, in excess
of the amount to which right of recovery under this guaranty is limited and
without notice to the undersigned, is hereby expressly authorized and shall in
no way affect or impair this guaranty; and, in event that the indebtedness of
the Borrower to the Bank shall so exceed the amount to which the guaranty is
limited, any payments by the Borrower to the Bank, or any collections or
recovery by the Bank from any sources other than this guaranty may first be
applied by the Bank to any portion of the indebtedness which exceeds the limits
of this guaranty.
The Bank may, without any notice whatsoever to anyone, sell, assign or transfer
all or any part of said indebtedness, and in that event each and every
immediate and successive assignee, transferee or holder of all or any part of
said indebtedness shall have the right to enforce this guaranty, by suit or
otherwise, for the benefit of such assignee, transferee or holder, as fully as
though such assignee, transferee or holder were herein by name given such
rights, powers and benefits; but the Bank shall have an unimpaired right, prior
and superior to that of any said assignee, transferee or holder, to enforce
this guaranty for the benefit of the Bank, as to so much of said indebtedness
that it has not sold, assigned or transferred.
No act of commission or omission of any kind, or at any time, on the part of
the Bank in respect of any matter whatsoever shall in any way affect or impair
this guaranty. This guaranty is in addition to and not in substitution for or
discharge of any other guaranty held by the Bank. The undersigned jointly and
severally waive any right of action they might have against the Bank because of
the exercise by the Bank in any manner howsoever of any rights granted to the
Bank herein.
This guaranty contains the entire agreement between the parties and every part
thereof shall be binding upon the undersigned, jointly and severally, and upon
their respective heirs, legal representatives, successors and assigns, as fully
as though everywhere specifically mentioned, and shall be construed according
to the laws of the State of Tennessee, in which State it shall be performed by
the undersigned.
EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER ON ANY MATTER
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR UNDER
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED (OR WHICH MAY BE
DELIVERED IN THE FUTURE) IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP BETWEEN THE PARTIES TO THIS AGREEMENT.
WITNESS Our respective signatures, and the acceptance hereof by the Bank, this
27 day of June, 1995
P.A.M. TRANSPORTATION SERVICES, INC.
By: /s/ Robert W. Weaver
--------------------------------
Title: President
-------------------------------
(Witness)
ATTEST:
By: /s/ Larry J. Goddard
------------------------------- --------------------------------
(Witness) Title: Vice President - Finance
SEE REVERSE SIDE FOR IMPORTANT INFORMATION
1. Notary Acknowledgement 2. Notice to Cosigner
First Tennessee Bank National Association. Member FDIC. Registered Service Mark
owned and licensed by First Tennessee National Association.
<PAGE> 2
NOTICE TO COSIGNER
You are being asked to guarantee any and all indebtedness of
the Borrower to the Bank up to the total amount set forth on the
reverse side hereof. Think carefully before you do. If the
borrower doesn't pay the debt, you will have to. Be sure you can
afford to pay if you have to, and that you want to accept this
responsibility.
You may have to pay up to the full amount of the debt if the
borrower does not pay. You may also have to pay late fees or
collection costs, which increase this amount.
The creditor can collect this debt from you without first
trying to collect from the borrower. The creditor can use the
same collection methods against you that can be used against the
borrower, such as suing you, garnishing your wages, etc. If this
debt is ever in default, that fact may become a part of YOUR
credit record.
This notice is not the contract that makes you liable for
the debt.
INDIVIDUAL ACKNOWLEDGEMENT
STATE OF TENNESSEE
COUNTY OF _________________
Personally appeared before me, ______________________________________,
with whom I am personally acquainted, and who acknowledged that __he__ executed
the within instrument for the purposes therein contained.
Witness my hand, at office, this _________ day of ______________, 19__.
My commission expires: ______________________________________
Notary Public
________________________________
CORPORATE ACKNOWLEDGEMENT
STATE OF ARKANSAS
COUNTY OF WASHINGTON
Personally appeared before me, ROBERT W. WEAVER, President of P.A.M.
TRANSPORTATION SERVICES, INC., with whom I am personally acquainted, or proved
to me on the basis of satisfactory evidence and who acknowledged that he/she
executed the within instrument for the purposes therein contained, and who
further acknowledged that he is the President of the maker and is
------------------
(Official Capacity)
authorized by the maker to execute this instrument of behalf of the maker.
Witness my hand, at office, this 27th day of June, 1995
My commission expires: /s/ Mona A. Foster
7-18-2000 ---------------------------------------
--------- Notary Public
[SEAL]
MONA A. FOSTER
NOTARY PUBLIC
WASHINGTON COUNTY ARKANSAS
<PAGE> 1
EXHIBIT 4.2.2
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS AMENDMENT is made and entered into on this the 27 day of June,
1995, by and between P.A.M. TRANSPORT, INC., an Arkansas corporation, whose
address is Highway 412 West, P.O. Box 188, Tontitown, Arkansas 72770, party of
the first part, hereinafter called "Grantor," and FIRST TENNESSEE BANK NATIONAL
ASSOCIATION, a national banking association, whose address is 165 Madison
Avenue, Memphis, Tennessee 38103, Attention: Commercial Finance Division, party
of the second part, hereinafter called the "Bank."
Recitals of Fact
Grantor as Debtor, has heretofore made, executed and delivered to the
Bank, as Secured Party, that certain Security Agreement ("Security Agreement")
bearing date of the 26th day of July, 1994, for the purpose of securing the
payment of certain Obligations, as mentioned and defined in the Security
Agreement.
Grantor has this day made, executed and delivered to the Bank its
additional promissory note in the principal sum of Two Million Five Hundred
Thousand Dollars ($2,500,000.00); and as a result thereof, the parties desire
to modify and amend the Security Agreement as hereinafter provided.
NOW, THEREFORE, for and in consideration of the premises, as set forth
in the Recitals of Fact, and other good and valuable considerations, the
receipt and sufficiency of which are hereby acknowledged, it is agreed by the
parties as follows:
Agreements
1. Paragraph 3(a) of the Security Agreement is hereby modified and
amended to read as follows:
"(a) The full and prompt payment, when due, of the
indebtednesses (and interest thereon) evidenced and to be evidenced by
those two (2) certain promissory notes in the aggregate principal sum
of Ten Million Dollars ($10,000,000.00), one of said notes bearing
date of the 26th day of July, 1994, and being in the principal sum of
Seven Million Five Hundred Thousand Dollars ($7,500,000.00), the other
of said notes bearing date of the 27 day of June, 1995, and being in
the principal sum of Two Million Five Hundred Thousand Dollars
($2,500,000.00), both of said notes being executed by the Grantor and
being payable to the order of the Bank; and any and all renewals,
modifications, or extensions of either of said notes, in whole or in
part;"
<PAGE> 2
2. All references in the Security Agreement to the Loan Agreement
shall be deemed to be references to the Loan Agreement dated July 26, 1994, as
amended by Amendment dated June 27, 1995.
3. All terms and provisions of the Security Agreement, which are
inconsistent with the terms and provisions of this Amendment are hereby
modified and amended to conform herewith; and, as modified and amended hereby,
the Security Agreement is hereby ratified, approved and confirmed by the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed in Memphis, Tennessee, by their respective officers, duly
authorized so to do, on this the day and year first above written.
ATTEST: P.A.M. TRANSPORT, INC.
/s/ Larry J. Goddard By: /s/ Robert W. Weaver
-------------------------------- ------------------------------------
Secretary President
GRANTOR
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By: /s/ Steve Hawkins
------------------------------------
Senior Vice-President
BANK
- 2 -
<PAGE> 1
EXHIBIT 11 -- STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Earnings per share computations assumes the exercise of stock warrants and
options to purchase shares of common stock. The shares assumed exercised are
based on the weighted average number of warrants and options outstanding during
the period. Under the treasury stock method of computing earnings per share,
the number of shares of treasury stock assumed repurchased is limited to 20% of
common stock outstanding, with the remaining shares assumed to be newly issued
and with the excess proceeds assumed to have reduced long-term borrowings
outstanding for the periods.
<TABLE>
<CAPTION>
EARNINGS PER SHARE FOR THE PERIOD ENDED JUNE 30, 1995
-----------------------------------------------------
Three Months Six Months
<S> <C> <C>
Application of assumed proceeds ($4,716,633 and $4,738,633):
Toward repurchase of outstanding common shares at
June 30, 1995 market price of $6.06 and $6.28 per share $ 4,716,633 $ 4,738,633
Reduction of borrowings under line of credit 0 0
----------- -----------
$ 4,716,633 $ 4,738,633
=========== ===========
Adjustments of net income:
Actual net income $ 1,602,189 $ 2,613,338
Interest expense reduction 0 0
----------- -----------
Adjusted net income (A) $ 1,602,189 $ 2,613,338
=========== ===========
Adjustment of shares outstanding:
Actual outstanding 4,968,200 4,956,362
Net additional shares issuable (3,414,461-777,937 and
3,427,683-757,777) 2,636,524 2,669,906
----------- -----------
Adjusted shares outstanding (B) 7,604,724 7,626,268
=========== ===========
Net income per common share (A) divided by (B) $ 0.21 $ 0.34
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
EARNINGS PER SHARE FOR THE PERIOD ENDED JUNE 30, 1994
-----------------------------------------------------
Three Months Six Months
<S> <C> <C>
Application of assumed proceeds ($4,771,314 and $4,793,285):
Toward repurchase of outstanding common shares at
June 30, 1994 market price of $5.42 and $5.87 per share $ 4,771,314 $ 4,793,285
Reduction of borrowings under line of credit 0 0
----------- -----------
$ 4,771,314 $ 4,793,285
=========== ===========
Adjustments of net income:
Actual net income $ 1,198,074 $ 1,956,667
Interest expense reduction 0 0
----------- -----------
Adjusted net income (A) $ 1,198,074 $ 1,956,667
=========== ===========
Adjustment of shares outstanding:
Actual outstanding 4,919,188 4,910,675
Net additional shares issuable (3,453,869-880,316 and
3,463,120-816,573) 2,573,553 2,646,547
----------- -----------
Adjusted shares outstanding (B) 7,492,741 7,557,222
=========== ===========
Net income per common share (A) divided by (B) $ 0.16 $ 0.26
=========== ===========
</TABLE>
2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 84
<SECURITIES> 0
<RECEIVABLES> 11,573
<ALLOWANCES> 239
<INVENTORY> 0
<CURRENT-ASSETS> 16,576
<PP&E> 71,917
<DEPRECIATION> 20,861
<TOTAL-ASSETS> 70,898
<CURRENT-LIABILITIES> 19,254
<BONDS> 31,257
<COMMON> 50
0
0
<OTHER-SE> 15,672
<TOTAL-LIABILITY-AND-EQUITY> 70,898
<SALES> 45,917
<TOTAL-REVENUES> 45,917
<CGS> 40,134
<TOTAL-COSTS> 40,134
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,660
<INCOME-PRETAX> 4,215
<INCOME-TAX> 1,602
<INCOME-CONTINUING> 2,613
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,613
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
