<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 September 30, 1996
------------------
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 of (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 November 11, 1996
----- --------------------------------
Common Stock, $.01 Par Value 5,031,157
<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>
September 30, December 31,
1996 1995
---- ----
(Unaudited) (note)
(thousands)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 562 $ 7,629
Receivables:
Trade, net of allowance 17,944 12,517
Other 655 307
Equipment held for sale 1,223 1,223
Prepaid expenses 2,500 3,341
Investment in direct financing lease - 691
Income taxes refundable - 95
Deferred income taxes 161 -
Other 409 468
-------- --------
Total current assets 23,454 26,271
Property and equipment, at cost 95,507 78,829
Less: accumulated depreciation (30,420) (21,540)
-------- ---------
Net property and equipment 65,087 57,289
Other assets:
Investment in direct financing lease, less current portion - 548
Excess of cost over net assets acquired (Note C) 2,542 1,140
Non compete agreements (Note C) 1,288 1,059
Other 804 501
-------- --------
Total other assets 4,634 3,248
-------- --------
Total assets $ 93,175 $ 86,808
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 17,426 $ 15,120
Trade accounts payable 7,030 6,729
Deferred income taxes - 409
Other current liabilities 4,418 3,048
-------- --------
Total current liabilities 28,874 25,306
Long-term debt, less current portion 35,906 37,966
Non compete agreement 810 815
Deferred income taxes 6,343 4,489
Shareholders' equity:
Preferred stock
Common stock 50 50
Additional paid-in capital 13,376 13,307
Retained earnings 7,816 4,875
-------- --------
Total shareholders' equity 21,242 18,232
-------- --------
Total liabilities and shareholders' equity $ 93,175 $ 86,808
======== ========
</TABLE>
Note: The balance sheet at December 31, 1995 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 Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
(in 000s except per share data) (in 000s except per share data)
<S> <C> <C> <C> <C>
Operating revenues $ 29,618 $ 22,241 $ 83,319 $ 68,158
Operating expenses:
Salaries, wages and benefits 14,044 9,577 38,628 29,908
Operating supplies 5,510 4,023 15,574 12,267
Rent and purchased transportation 523 271 1,483 1,174
Depreciation and amortization 3,110 2,550 8,847 6,779
Operating taxes and licenses 1,702 1,342 4,965 4,131
Insurance and claims 1,296 1,032 3,661 3,170
Communications and utilities 222 244 780 649
(Gain) loss on sale of equipment 0 0 0 247
Other 485 326 1,432 1,174
-------- -------- -------- --------
26,892 19,365 75,370 59,499
-------- -------- -------- --------
Operating income 2,726 2,876 7,949 8,659
Other income (expense)
Interest expense (1,088) (922) (3,120) (2,582)
Other 0 40 31 131
-------- -------- -------- --------
(1,088) (882) (3,089) (2,451)
Income before income taxes 1,638 1,994 4,860 6,208
Income taxes--current 85 223 483 769
--deferred 570 535 1,436 1,590
-------- -------- -------- --------
655 758 1,919 2,359
Net income $ 983 $ 1,236 $ 2,941 $ 3,849
========= ========= ========= =========
Net income per share $ 0.13 $ 0.16 $ 0.38 $ 0.50
========= ========= ========= =========
Average common and common
equivalent shares outstanding 7,610,448 7,663,755 7,654,033 7,658,827
========= ========= ========= =========
</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>
Nine Months Ended
September 30,
1996 1995
---- ----
(000s) (000s)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,941 $ 3,849
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,847 6,779
Non compete agreement amortization 287 194
Loss on retirement of property and equipment - 247
Provision for deferred income taxes 1,436 1,590
Changes in operating assets and liabilities:
Accounts receivable (3,543) (1,871)
Prepaid expenses and other current assets 1,056 953
Accounts payable (1,487) (1,522)
Accrued expenses 362 850
-------- --------
Net cash provided by operating activities 9,899 11,069
INVESTING ACTIVITIES
Purchases of property and equipment (16,399) (2,793)
Proceeds from sale or disposal of property and
equipment - 1,422
Lease payments received on direct financing lease 1,240 461
-------- --------
Net cash used in investing activities (15,159) (910)
FINANCING ACTIVITIES
Borrowings under lines of credit 89,335 70,941
Repayments under lines of credit (90,750) (73,979)
Borrowings of long-term debt 13,993 -
Repayments of long-term debt (14,254) (9,915)
Choctaw acquisition less cash acquired - (1,324)
AFS acquisition less cash acquired (Note C) (200) -
Proceeds from exercise of stock options 69 114
-------- --------
Net cash provided by (used in) financing activities (1,807) (14,163)
-------- --------
Net decrease in cash and cash equivalents (7,067) (4,004)
Cash and cash equivalents at beginning of period $ 7,629 $ 4,078
-------- --------
Cash and cash equivalents at end of period $ 562 $ 74
======== ========
</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)
SEPTEMBER 30, 1996
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 nine-month period ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996. 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, 1995.
NOTE B: NOTES PAYABLE AND LONG-TERM DEBT
In the first nine months of 1996, the Company's subsidiary, P.A.M. Transport,
Inc., entered into installment obligations for the purchase of revenue equipment
in the approximate amount of $14.0 million payable in 48 and 60 monthly
installments at interest rates ranging from 6.95% to 7.85%.
NOTE C: ACQUISITION
On March 11, 1996, the Company closed the purchase of all of the outstanding
capital stock (the "Shares) of Allen Freight Services, Inc., a Missouri
corporation ("AFS"). The total purchase price for the Shares was $200,000, which
was negotiated by the parties at arms length. Assets of approximately $3.7
million were acquired and liabilities of approximately $3.5 million were
assumed. The Company paid the purchase price by utilizing its existing line of
credit.
The acquisition has been accounted for under the purchase method, effective
March 11, 1996, with the operations of AFS included in the Company's financial
statements since that date. If the acquisition had occurred at the beginning of
fiscal 1995, the effect on consolidated operating revenues, net income and net
income per share would not have been material. The purchase price has been
allocated to assets and liabilities based on their estimated fair values as of
the date of acquisition. Approximately $1.5 million in goodwill was recorded as
a result of the purchase allocation and it is being amortized over a 25-year
period. The Company also entered into three-year Non-competition Agreements with
four former shareholders and officers/employees of AFS.
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 SEPTEMBER 30, 1996 VS. THREE MONTHS ENDED SEPTEMBER 30, 1995
For the quarter ended September 30, 1996, revenues increased 33.2% to $29.6
million as compared to $22.2 million for the quarter ended September 30, 1995.
The main factor for the increase in revenues was a 28.1% increase in average
tractors from 683 in 1995 to 875 in 1996, of which 146 were added in connection
with the acquisition of Allen Freight Services, Inc. (AFS). AFS produced
revenues of $4.5 million for the third quarter of 1996.
The Company's operating ratio was 90.8% of revenues in the third quarter of 1996
compared to 87.1% in the third quarter of 1995.
Salaries, wages and benefits increased from 43.1% of revenues in the third
quarter of 1995 to 47.4% of revenues in the third quarter of 1996. The major
factor for the increase was a 3.5% increase attributable to amounts paid to AFS
fleet owners.
Operating supplies and expenses increased from 18.1% of revenues in the third
quarter of 1995 to 18.6% of revenues in the third quarter of 1996, reflecting
the approximate $.03 per share increase in fuel costs for the quarter.
Rent and purchased transportation increased 0.5% of revenues in the third
quarter of 1996 as compared to the same period in 1995. This increase relates
primarily to the acquisition of AFS which uses operating leases for its trailer
requirements.
The Company incurred a decrease in depreciation expense of 1.0% of revenues in
the third quarter of 1996 compared to the third quarter of 1995. This decrease
reflects AFS' utilization of 71 fleet owners rather than company owned trucks.
Interest expense increased approximately $166,000 in the third quarter of 1996
when compared to the third quarter of 1995, primarily as a result of borrowings
associated with new equipment purchases and an increased line of credit balance.
The Company's effective tax rate increased from 38% in the third quarter of 1995
to 40% in the third quarter of 1996. The increase is primarily due to state
income taxes.
NINE MONTHS ENDED SEPTEMBER 30, 1996 VS. NINE MONTHS ENDED SEPTEMBER 30, 1995
For the nine months ended September 30, 1996, revenues increased 22.2% to $83.3
million as compared to $68.1 million for the nine months ended September 30,
1995. The main factor for the increase in revenues was a 24.2% increase in
average tractors from 666 in 1995 to 829 in 1996, of which 145 were added in
connection with the acquisition of AFS which produced revenues of $10.1 million
for the first nine months of 1996.
The Company's operating ratio was 90.5% of revenues in the first nine months of
1996 compared to 87.3% in the first nine months of 1995.
Salaries, wages and benefits increased to 46.4% of revenues in the first nine
months of 1996 compared to 43.9% of revenues in the first nine months of 1995.
This increase results from a 2.5% increase attributable to amounts paid to AFS
fleet owners.
Operating supplies and expenses increased to 18.7% of revenues in the first nine
months of 1996 from 18.0% of revenues in the first nine months of 1995,
reflecting the increase in fuel costs for the nine month period which is
approximately $.11 per share.
8
<PAGE> 9
The Company incurred an increase in depreciation expense as a result of the new
equipment being placed into service. Depreciation expense increased from 9.9% of
revenues in the first nine months of 1995 to 10.6% of revenues in the first nine
months of 1996.
Interest expense increased approximately $539,000 in the first nine months of
1996 when compared to the same period in 1995. This increase relates to
borrowings for new equipment purchases and an increased line of credit balance.
The Company's effective tax rate increased to 39.5% in 1996 from 38% in 1995 as
a result of AFS' practice of paying per diem expenses to its drivers a portion
of which is a nondeductible permanent difference in the calculation of income
tax expense, and as a result of an increase in state income taxes. Subsequent to
July 1, 1996 per diems are no longer paid to AFS drivers.
The Company's results for the first quarter of 1996 were adversely affected by a
General Motors brake plant strike for 23 days. The strike not only idled the
G.M. system, but had repercussions felt by manufacturers and suppliers not
normally thought to be associated with the auto industry. Equipment utilization,
as measured in miles per truck per day, decreased 48 miles as a result of the
strike, while costs declined only marginally due to the proportion of costs
which are relatively fixed.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal subsidiary, P.A.M. Transport, Inc., has a $15 million
secured bank line of credit subject to borrowing limitations. Outstanding
advances on this line of credit were approximately $8.2 million, including $0.7
million in letters of credit, (at an interest rate of 7.9125%) at September 30,
1996. The Company's borrowing base limitation at September 30, 1996 was $12.4
million. The line of credit is guaranteed by the Company and matures May 31,
1998.
The Company entered into installment obligations in the first nine months of
1996 for the purchase of revenue equipment for approximately $14 million payable
in 48 and 60 monthly installments at interest rates ranging from 6.95% to 7.85%.
Operating results during the first nine months of 1996 provided net cash from
operations of approximately $9.9 million.
Management expects that the Company's existing working capital and its available
line of credit will be sufficient to meet the Company's commitments as of
September 30, 1996, and to fund its operating needs for the foreseeable future.
ACQUISITION
On March 11, 1996, the Company closed the purchase of all of the outstanding
capital stock (the "Shares") of Allen Freight Services, Inc. ("AFS"), a Missouri
corporation. The total purchase price for the Shares was $200,000, which was
negotiated by the parties at arms-length. The acquisition was financed through
borrowings under the Company's bank line of credit agreement and the acquisition
has been accounted for under the purchase method of accounting effective March
11, 1996 with operations included in the Company's financial statements
beginning on the acquisition date. The Company will also make payments under
three-year Non-competition Agreements which were entered into with four AFS
former stockholders and officers/employees. See Note C to the accompanying
condensed consolidated financial statements (unaudited).
9
<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed with this report:
4.1.1 - Second Amendment to Loan Agreement dated July 3,
1996 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
$5,000,000.
4.1.2 - Second Amendment to Security Agreement dated July
3, 1996 by and between P.A.M. Transport, Inc. and
First Tennessee National Bank Association.
4.1.3 - First Amendment to Security Agreement dated July 3,
1996 by and between Choctaw Express, Inc. and First
Tennessee Bank National Association.
4.1.4 - Security Agreement dated July 3, 1996 by and
between Allen Freight Services, Inc. and First
Tennessee Bank National Association.
11.1 - Statement Re: Computation of Per Share Earnings.
27.1 - Financial Data Schedule (for SEC use only).
Reports on Form 8-K
None.
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: November 13, 1996 By: /s/ Robert W. Weaver
---------------------------------------
Robert W. Weaver
President and Chief Executive Officer
(principal executive officer)
Dated: November 13, 1996 By: /s/ Larry J. Goddard
---------------------------------------
Larry J. Goddard
Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer
(principal accounting and financial
officer)
11
<PAGE> 1
EXHIBIT 4.1.1
SECOND AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT is made and entered into on this the 3rd day of July,
1996, 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," P.A.M. TRANSPORTATION
SERVICES, INC., a Delaware corporation, whose principal place of business and
chief executive office is located at Highway 412 West, P.O. Box 188, Tontitown,
Arkansas 72770, party of the third part, hereinafter called "Guarantor," 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, party of the fourth part, hereinafter called "Choctaw," and
ALLEN FREIGHT SERVICES, INC., a Missouri corporation, whose principal place of
business and chief executive office is located at Highway 412 West, P. O. Box
188, Tontitown, Arkansas 72770, party of the fifth part, hereinafter called
"Allen."
Recitals of Fact
Pursuant to the terms and provisions of that certain Loan Agreement,
bearing date of the 26th day of July, 1994, as amended by Amendment dated June
27, 1995 ("Loan Agreement"), among the Borrower, the Bank, the Guarantor and
Choctaw, 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 Ten Million Dollars ($10,000,000.00).
The Bank has now agreed to increase its Committed Amount (as defined in the Loan
Agreement), to the end that, except as otherwise hereinafter provided, 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 Fifteen Million Dollars
($15,000,000.00), 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, as heretofore
amended, 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, the
Guarantor, Choctaw and Allen do hereby absolute and unconditionally, jointly and
severally, certify, represent and warrant to the Bank, and covenant and agree
with the Bank, that:
<PAGE> 2
(a) All representations and warranties made by the Borrower, Choctaw,
Allen or the Guarantor in the Loan Agreement, as amended hereby, in the Security
Agreement, as amended, in the Choctaw Security Agreement, as amended, in the
Allen Security Agreement, 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.
(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, the Guarantor, Choctaw or Allen as set
forth in the Note, the Security Agreement, as amended, the Choctaw Security
Agreement, as amended, the Allen Security Agreement, the Loan Agreement, as
amended, or in any other Loan Document executed by the Borrower, the Guarantor,
Choctaw or Allen, respectively, in connection with the Loan.
(d) Neither the Borrower nor the Guarantor, Choctaw or Allen 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, the Guarantor,
Choctaw or Allen has or may have any such existing claim (whether known or
unknown), the Borrower, the Guarantor, Choctaw and Allen 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
respective Amendments (also of even date herewith) to the Security Agreement and
the Choctaw Security Agreement, are valid, genuine, enforceable in accordance
with their respective terms, and in full force and effect.
2. The amount of Ten Million Dollars ($10,000,000.00), as contained in
the Recitals of Fact of the Loan Agreement and in Section 2.1 thereof, is hereby
changed to the sum of Fifteen Million Dollars ($15,000,000.00). In addition, the
word "Borrower's" is deleted from clause (b) of Section 2.1.
3. The definitions of "Account Debtor," "Accounts Receivable," "Loan
Agreement," "Note," "Termination Date" and "Unbilled Revenues," as set forth in
Article One of the Loan Agreement, are hereby modified and amended to read as
follows:
"1.2 'Account Debtor' shall mean any Person which is now or
hereafter obligated or indebted to Borrower, Choctaw or Allen on any
Account Receivable.
"1.3 'Accounts Receivable' or 'Accounts' shall mean all
amounts owed to the Borrower, Choctaw or Allen on account of sales,
leases or rentals of goods or services rendered in the ordinary course
of the trade or business of any of said corporations.
"1.15 'Loan Agreement' means this Loan Agreement among the
Borrower, the Guarantor, the Bank, Choctaw and Allen.
- 2 -
<PAGE> 3
"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), one 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), and the third of said Notes being dated July 3, 1996,
and being in the principal sum of Five Million Dollars ($5,000,000.00),
as any 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, 1998,
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.
"1.26 'Unbilled Revenues' shall mean the payments owed or to
be owed by a customer of the Borrower, Choctaw or Allen with respect to
any load which has been properly dispatched, but which has not been
delivered or the charge for such delivery has not been invoiced."
4. Article One is further modified and amended by the addition thereto
of two (2) new sections, being Sections 1.30 and 1.31, reading as follows:
"1.30 'Allen' shall mean Allen Transportation Services, Inc.,
a Missouri corporation.
"1.31 'Allen Security Agreement' shall mean the security
agreement, bearing date of the 3rd day of July, 1996, executed by Allen
for the purpose of securing the Loan and the other Obligations (as that
term is defined in the Allen 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'; 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), but not
exceeding the principal sum of Ten Million Dollars ($10,000,000.00),
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 the same
as the Note attached hereto as EXHIBIT '2.3(A)'; and all advances with
respect to the Loan exceeding, at any one time outstanding, the
principal sum of Ten Million Dollars ($10,000,000.00), shall be
evidenced by the promissory note of the Borrower, payable to the order
of the Bank, in the principal amount of Five Million
- 3 -
<PAGE> 4
Dollars ($5,000,000.00), in form substantially the same as the Note
attached hereto as EXHIBIT '2.3(B).'"
6. Sections 3.1, 8.1 and 8.5 of the Loan Agreement are hereby modified
and amended to read as follows:
"3.1 Required Repayments. (a) In the event that the
outstanding principal balance of the Loan shall at any time exceed the
Borrowing Base, the Borrower will, immediately upon discovery of the
existence of such excess, make a principal payment which will reduce
the outstanding principal balance of the Loan to an amount which does
not exceed the Borrowing Base.
(b) Notwithstanding any provision to the contrary contained
herein or in any other Loan Document, on May 31, 1997, unless the Bank
sooner terminates its commitment by reason of a default of Borrower,
Choctaw, or Allen, the Committed Amount shall automatically be reduced
to the principal sum of Twelve Million Five Hundred Thousand Dollars
($12,500,000.00), and shall remain at that amount until the Termination
Date. In the event that, on May 31, 1997, the unpaid principal balance
of the Loan shall exceed the principal sum of Twelve Million Five
Hundred Thousand Dollars ($12,500,000.00), the Borrower shall, on such
date, make a principal payment which will reduce the outstanding
principal balance of the Loan to the principal sum of Twelve Million
Five Hundred Thousand Dollars ($12,500,000.00).
"8.1 Net Worth. Maintain at all times a Net Worth (as defined
in Article One) of not less than Twelve Million Five Hundred Thousand
Dollars ($12,500,000.00).
"8.5 Debt Service Coverage Ratio. Maintain at all times a Debt
Service Coverage Ratio of not less than 1.0 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 4.2(b) of the Loan Agreement is hereby modified and amended
to read as follows:
"(b) Neither the Borrower, Choctaw nor Allen shall be in
default of any of the terms and provisions hereof or of any instrument
or document now or at any time hereafter evidencing or securing all or
any part of the Loan indebtedness and extensions of credit. Each of the
warranties and representations of the Borrower, as set out in Article
Five hereof shall remain true and correct in all material respects as
of the date of such Loan advance."
8. Section 9.1(d) of the Loan Agreement is hereby modified and amended
to read as follows:
- 4 -
<PAGE> 5
"(d) Covenants. The Borrower, the Guarantor, Choctaw or Allen
shall default 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, as amended,
in the Choctaw Security Agreement, as amended, in the Allen 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"
9. (a) EXHIBIT "1.5" to the Loan Agreement is modified and amended to
read as provided in Exhibit "1.5" attached hereto.
(b) The Loan Agreement is further modified and amended by the addition
thereto of a new Exhibit, being EXHIBIT "2.3(B)," in form and substance
substantially the same as EXHIBIT "2.3(B)" attached to this Amendment.
10. (a) Except as the context may otherwise require, throughout the
Loan Agreement, the phrase "Borrower or Guarantor" (or words of similar import)
is changed to "Borrower, Guarantor, Choctaw or Allen"; and the phrase "Borrower
and Guarantor" (or words of similar import) is changed to "Borrower, Guarantor,
Choctaw and Allen."
(b) 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.
11. 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 heretofore amended and as further amended hereby.
12. The Guarantor does further (a) consent to and approve of all of the
terms and provisions of this Amendment, the Second Amendment to the Security
Agreement, the First Amendment to the Choctaw Security Agreement, and the Allen
Security Agreement, all of which are of even date herewith, insofar as its
rights are or may be affected hereby, and (b) acknowledge the continued
effectiveness of its Guaranty [in the amount of Fifteen Million Dollars
($15,000,000.00), plus interest and expenses] in accordance with the terms
thereof.
13. Choctaw and Allen join herein for the further purpose of consenting
to and approving of all of the terms and provisions of the Loan Agreement, as
amended hereby, insofar as their respective rights are or may be affected
hereby. Without limiting the generality of the foregoing, Choctaw and Allen
specifically agree to the terms and provisions set forth in Sections 10.21 and
- 5 -
<PAGE> 6
10.22 of the Loan Agreement in the same manner and to the same extent as if each
of them were specifically named in each such Section.
IN WITNESS WHEREOF, Borrower, Guarantor, Choctaw, Allen 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
ATTEST: ALLEN TRANSPORTATION SERVICES, INC.
/s/ Larry J. Goddard By: /s/ Robert Weaver
- ------------------------------------- ---------------------------------
Secretary Chief Executive Officer
ALLEN
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By:
---------------------------------
Senior Vice President
BANK
- 6 -
<PAGE> 7
EXHIBIT "1.5"
TO LOAN AGREEMENT
Borrowing Base
The Borrowing Base is an amount equal to eighty-five percent (85%) of
the amount due on the Acceptable Accounts of Borrower, Choctaw and Allen, plus
eighty-five percent (85%) of Unbilled Revenues, meeting the conditions set forth
in Section 1.1 of the Loan Agreement.
(Note: Although the Borrowing Base is limited as set forth above,
Bank's security interest covers and includes all of the Accounts
Receivable and Unbilled Revenue of Borrower, Choctaw and Allen and the
other collateral, both now owned and hereafter acquired, as more
particularly described in the respective Security Agreements, executed
by Borrower, Choctaw and Allen, as amended from time to time.)
1.5-1
<PAGE> 8
EXHIBIT "2.3(b)"
TO LOAN AGREEMENT
Promissory Note
<PAGE> 9
PROMISSORY NOTE
$5,000,000.00 Memphis, Tennessee
July 3, 1996
ON OR BEFORE MAY 31, 1998 (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 FIVE MILLION DOLLARS ($5,000,000.00), 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, 1996, 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
thirty-five-hundredths percent (2.35%) 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, 1996, (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; provided,
however, that if The Wall Street Journal should cease to publish the LIBOR Rate,
the Applicable Rate shall be the Contract Rate.
"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, eight and one-quarter percent (8 1/4%) per annum.]
2.3(b)-1
<PAGE> 10
"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 Friday, June 21, 1996, is five and fifteen-thirty-two-seconds percent (5
15/32%) 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 7.81875% 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.
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
2.3(b)-2
<PAGE> 11
hypothecation, including a Security Agreement ("Choctaw Security Agreement"),
dated June 27, 1995, as amended, executed by Choctaw Express, Inc., an Oklahoma
corporation, in favor of the Bank, and a Security Agreement ("Allen Security
Agreement"), of even date herewith, executed by Allen Freight Services, Inc., a
Missouri 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 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,
2.3(b)-3
<PAGE> 12
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(b)-4
<PAGE> 1
EXHIBIT 4.1.2
SECOND AMENDMENT TO SECURITY AGREEMENT
THIS AMENDMENT is made and entered into on this the 3rd day of July,
1996, 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, as amended by First Amendment to
Security Agreement dated June 27, 1995, 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 Five Million Dollars
($5,000,000.00); 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 three (3) certain promissory notes in the aggregate principal sum
of Fifteen Million Dollars ($15,000,000.00), 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), one of
said notes bearing date of the 27th day of June, 1995, and being in the
principal sum of Two Million Five Hundred Thousand Dollars
($2,500,000.00), and the third of said notes bearing date of the 3rd
day of July, 1996, and being in the principal sum of Five Million
Dollars ($5,000,000.00), all of said notes being executed by the
Grantor and being payable to the order of the Bank; and any and all
renewals, modifications, restatements, replacements or extensions of
any of said notes, in whole or in part;"
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 Amendments dated, respectively, June 27, 1995 and July 3, 1996.
<PAGE> 2
3. All terms and provisions of the Security Agreement, as heretofore
amended, 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:
------------------------
Senior Vice-President
BANK
- 2 -
<PAGE> 1
EXHIBIT 4.1.3
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS AMENDMENT is made and entered into on this the 3rd day of July,
1996, 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, 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 27th day of June, 1995, for the purpose of securing the
payment of certain Obligations, as mentioned and defined in the Security
Agreement.
P.A.M. Transport, Inc., an Arkansas corporation (the "Borrower"), has
this day made, executed and delivered to the Bank its additional promissory note
in the principal sum of Five Million Dollars ($5,000,000.00); 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 in the aggregate principal sum of Fifteen Million
Dollars ($15,000,000.00), evidenced and to be evidenced by those three
(3) 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), one bearing date of the 27th day of
June, 1995, and being in the principal sum of Two Million Five Hundred
Thousand Dollars ($2,500,000.00), and the third note bearing date of
the 3rd day of July, 1996, and being in the principal sum of Five
Million Dollars ($5,000,000.00), all of said notes being executed by
the Borrower and being payable to the order of the Bank; and any and
all renewals, modifications, substitutions, replacements and/or
extensions of any 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 Amendments dated, respectively, June 27, 1995 and July 3, 1996.
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: CHOCTAW EXPRESS, INC.
/s/ Larry J. Goddard By: /s/ Robert W. Weaver
- ------------------------------------- -------------------------------
Secretary Chief Executive Officer
GRANTOR
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By:
--------------------------------
Senior Vice-President
BANK
- 2 -
<PAGE> 1
EXHIBIT 4.1.4 ALLEN
SECURITY AGREEMENT
THIS SECURITY AGREEMENT entered into this 3rd day of July, 1996, by and
between ALLEN FREIGHT SERVICES, INC., a Missouri 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, bearing
date of the 26th day of July, 1994, as amended ("Loan Agreement"), 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;
(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).
<PAGE> 2
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 Fifteen Million Dollars
($15,000,000.00), evidenced and to be evidenced by those three (3) 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), one bearing date of the 27th day of June, 1995, and being in
the principal sum of Two Million Five Hundred Thousand Dollars ($2,500,000.00),
and the third note bearing date of the 3rd day of July, 1996, and being in the
principal sum of Five Million Dollars ($5,000,000.00), all of said notes being
executed by the Borrower, and all being payable to the order of Bank, and any
and all renewals, modifications, substitutions, replacements and/or extensions
of any 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.
(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.
- 2 -
<PAGE> 3
(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, the Florida Department of State, the Missouri
Secretary of State and the Recorder of Deeds of St. Charles County, Missouri,
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 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.
- 3 -
<PAGE> 4
(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 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.
- 4 -
<PAGE> 5
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 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,
- 5 -
<PAGE> 6
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 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
- 6 -
<PAGE> 7
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 (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 or Borrower 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.
- 7 -
<PAGE> 8
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.
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 or Borrower 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.
- 8 -
<PAGE> 9
(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.
(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
- 9 -
<PAGE> 10
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: ALLEN FREIGHT SERVICES, INC.
/s/ Larry J. Goddard By: /s/ Robert W. Weaver
- ---------------------------- ----------------------------------
Secretary Chief Executive Officer
GRANTOR
FIRST TENNESSEE BANK NATIONAL
ASSOCIATION
By:
----------------------------------
Senior Vice-President
BANK
- 10 -
<PAGE> 11
EXHIBIT "A"
TO SECURITY AGREEMENT
(Description of Other Security Interests in Collateral)
NONE
A-1
<PAGE> 1
EXHIBIT NO. 11.1
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
12
<PAGE> 2
EXHIBIT (11.1)----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 SEPTEMBER 30, 1996
Three Months Nine Months
<S> <C> <C>
Application of assumed proceeds ($6,767,531 and $6,790,243):
Toward repurchase of outstanding common shares at
September 30, 1996 market price of $6.375 and $6.958 per share $6,767,531 $6,790,243
Reduction of borrowings under line of credit 0 0
---------- ----------
$6,767,531 $6,790,243
========== ==========
Adjustments of net income: $ 982,988 $2,940,607
Actual net income 0 0
Interest expense reduction ---------- ----------
$ 982,988 $2,940,607
========== ==========
Adjusted net income (A)
Adjustment of shares outstanding: 5,023,044 5,013,480
Actual outstanding 2,587,404 2,640,553
---------- ----------
Net additional shares issuable 7,610,448 7,654,033
========== ==========
Adjusted shares outstanding (B)
$ 0.13 $ 0.38
========== ==========
Net income per common share (A) divided by (B)
EARNINGS PER SHARE FOR THE PERIOD ENDED SEPTEMBER 30, 1995
Three Months Nine Months
Application of assumed proceeds ($6,870,874 and $5,955,209):
Toward repurchase of outstanding common shares at
September 30, 1996 market price of $7.125 and $6.563 per share
Reduction of borrowings under line of credit $6,870,874 $5,955,209
0 0
---------- ----------
$6,870,874 $5,955,209
========== ==========
Adjustments of net income:
Actual net income $1,236,106 $3,849,445
Interest expense reduction 0 0
========== ==========
Adjusted net income (A) $1,236,106 $3,849,445
Adjustment of shares outstanding:
Actual outstanding 4,986,457 4,986,457
Net additional shares issuable 2,677,298 2,672,370
---------- ----------
Adjusted shares outstanding (B) 7,663,755 7,658,827
========== ==========
Net income per common share (A) divided by (B) $ 0.16 $ 0.50
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 562
<SECURITIES> 0
<RECEIVABLES> 19,038
<ALLOWANCES> 439
<INVENTORY> 0
<CURRENT-ASSETS> 23,454
<PP&E> 95,507
<DEPRECIATION> 30,420
<TOTAL-ASSETS> 93,175
<CURRENT-LIABILITIES> 28,874
<BONDS> 35,906
0
0
<COMMON> 50
<OTHER-SE> 21,192
<TOTAL-LIABILITY-AND-EQUITY> 93,175
<SALES> 0
<TOTAL-REVENUES> 83,319
<CGS> 0
<TOTAL-COSTS> 75,370
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,120
<INCOME-PRETAX> 4,860
<INCOME-TAX> 1,919
<INCOME-CONTINUING> 2,941
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,941
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
