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SECURITIES AND EXCHANGE COMMISSION
FORM 10-K
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ___________________ to ___________________
Commission File No. 34-0-17570
AMERICAN FREIGHTWAYS CORPORATION
(Exact name of registrant as specified in its charter)
Arkansas 74-2391754
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2200 Forward Drive 72601
Harrison, Arkansas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including Area Code: (501) 741-9000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of class)
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 Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [X] Yes [_] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of voting stock held by nonaffiliates of the
registrant at January 30, 1996: $320,961,840.30.
Number of shares of common stock outstanding at January 30, 1996:
30,936,081.
The Registrant's Annual Report to Shareholders for the fiscal year ended
December 31, 1995 is incorporated by reference into Parts II and IV.
The Proxy Statement for Registrant's March 14, 1996 Annual Meeting is
incorporated by reference into Parts III and IV.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
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<S> <C> <C>
PART I
1. and 2. Business and Properties 1
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security Holders 5
PART II
5. Market for Registrant's Common Equity
and Related Stockholder Matters 6
6. Selected Financial Data 7
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
8. Financial Statements and Supplementary Data 9
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 9
PART III
10. Directors and Executive Officers of the Registrant 10
11. Executive Compensation 10
12. Security Ownership of Certain Beneficial
Owners and Management 10
13. Certain Relationships and Related Transactions 10
PART IV
14. Exhibits, Financial Statement Schedules and
Current Reports on Form 8-K 11
Signatures 14
Financial Statements and Financial Statement Schedules 15
</TABLE>
<PAGE>
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
THE COMPANY
American Freightways is a scheduled common and contract carrier transporting
primarily less-than-truckload (LTL) shipments of general commodities. As of
January 1, 1996, the Company serves all points in Alabama, Arkansas, Colorado,
Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maryland, Mississippi, Missouri, Nebraska, North Carolina, Ohio,
Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, Wisconsin
and a portion of Minnesota and provides service to the ten provinces of Canada
through an exclusive alliance with Day & Ross, a Canadian less-than-truckload
carrier headquartered in Hartland, New Brunswick, Canada.
THE LTL INDUSTRY
LTL carriers generally handle shipments from multiple shippers to multiple
consignees on a scheduled basis. Carriers are classified as regional,
interregional or national depending on their average length of haul. Regional
carriers typically have an average length of haul of under 500 miles,
interregional have an average length of haul of between 500 and 1,000 miles and
national carriers, have coverage from coast to coast, with an average length of
haul over 1,000 miles. American Freightways, with an average length of haul of
588 miles for 1995, and all points coverage in 25 states effective January 1,
1996, is an interregional carrier targeting shipments within several regions to
increase density within its network. American Freightways competes against each
class of LTL carrier and to a lesser extent, truckload carriers, railroads and
overnight package carriers.
In general, the more business an LTL carrier has within a given geographical
area, the lower its incremental operating costs. This is particularly true with
respect to its pickup and delivery operation where there is less distance
between stops and more shipments per stop. Similarly, the more business a
carrier experiences in a given traffic lane (or route), resulting in greater
linehaul density, the lower its incremental costs. Other areas such as computer
operations, sales, collections, purchases of equipment, fuel, tires, parts,
insurance, supplies and corporate management also lend themselves to economies
of scale. More LTL freight moves short distances than long distances.
Typically, national carriers are less effective from an operational, service or
cost standpoint in short-haul markets. Thus, due to greater activity in a given
region, a regional or interregional carrier may achieve greater economies in
such regions or markets than a national carrier.
The industry experienced significant overcapacity in 1995 as a result of
carriers expanding fleets based on a very strong 1994 coupled with an economic
slowdown in the second half of 1995. This overcapacity resulted in aggressive,
discounted pricing in the LTL industry during 1995, particularly during the
second half of the year.
Congress passed legislation in 1994 deregulating intrastate traffic, freight
moving within the borders of a given state, effective January 1, 1995. Prior to
the deregulation, the Company had intrastate operating authority in Arkansas,
Louisiana and Kansas. The Company provides intrastate service to all the states
in which it operates.
The Interstate Commerce Commission (ICC), the agency exercising regulatory
authority over the transportation industry, was closed effective December 31,
1995, and its remaining responsibilities
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transferred to the Department of Transportation (DOT). The Company does not
anticipate any adverse impact as a result of this action.
EXPANSION
The history of American Freightways has been growth. Thirteen years ago, the
Company began serving all points in one state, Arkansas. Today the Company's
all-points service coverage extends to 25 states. Perhaps the most
distinguishing feature of the Company's operations is this all-points coverage.
Management knows of no other LTL carrier that duplicates this coverage.
The Company began operations by opening 20 terminals on October 25, 1982.
From 1983 through 1985, 11 terminals were added to the system, including
Chicago, Illinois; Oklahoma City and Tulsa, Oklahoma; and Houston, Texas.
Thirteen terminals were added in 1986, 20 terminals in 1987, 12 terminals in
1988, nine terminals in 1989, 15 terminals in 1990, 11 terminals in 1991 and ten
terminals in 1992. During 1993, the opening of seven new terminals in the state
of Georgia and nine new terminals in the state of Kentucky brought all-points
coverage to these two states as well as the southern portions of the states of
Indiana and Ohio. During 1994, the Company opened 14 new terminals in Indiana
and Ohio.
The Company's most aggressive expansion to date was in 1995. On January 1,
1995, the Company opened 13 terminals and extended its all-points coverage to
North Carolina and South Carolina. On April 17, 1995, terminals were opened at
Colorado Springs, Denver, Fort Collins and Pueblo, Colorado; Des Moines, Iowa;
Madison and Milwaukee, Wisconsin; Minneapolis/St. Paul, Minnesota; and Omaha,
Nebraska. On July 10, twelve additional terminals were opened extending the
Company's all-points coverage to Colorado, Iowa, Nebraska and Wisconsin. On
August 14, 1995, the Company opened seven terminals in Florida to provide all-
points coverage to the state. On January 1, 1996, the Company opened 12
terminals to provide all-points coverage to Delaware, Maryland, Virginia and
West Virginia. Also, on January 1, 1996, the Company extended its coverage to
all 10 Canadian provinces through an exclusive partnership with Day & Ross, one
of Canada's leading less-than-truckload carriers. Day & Ross, Inc. is part of
the Day & Ross transportation group, Canada's largest truck transportation
conglomerate and is a wholly-owned subsidiary of Canadian-based McCain Food
Company. The aggressive expansions of service territory initiated by the
Company during 1995 contributed to an increase in salaries, wages and benefits
as a percentage of operating revenue. Salaries, wages and benefits were
disproportionately high in relation to operating revenue as new associates were
added to establish an operating base within the expansion territories and to
maintain service standards. Plans for expansions of service territory during
1996 are less aggressive than those initiated during 1995.
SERVICE FEATURES
The principal service features of American Freightways are its all-points
coverage, scheduled LTL service, clean and efficient fleet, total information
services, its customer satisfaction and cargo care programs, and its total
quality and people development processes.
All-Points Coverage. To differentiate itself from its competitors, the
Company offers all-points coverage to entire states. This feature fulfills
shippers' needs by simplifying how freight is routed and assuring that the
Company's service standards will apply from pickup through delivery.
Scheduled LTL Service. The Company publishes very compressed service
standards between the points in its system. It maintains scheduled runs between
the terminals each night to ensure that these standards are met. The Company's
consistent achievement of these standards results in a high rate of customer
retention which, together with the Company's vigorous pursuit of new customers,
has resulted in sustained growth.
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Clean and Efficient Fleet. The Company's policy is to purchase equipment
having uniform specifications that are, to the greatest possible extent,
compatible with design improvements and resale values. This standardization
enables the Company to simplify mechanic and driver training, to control the
cost of spare parts and tire inventory, and in general to provide for a more
efficient vehicle maintenance program. American Freightways utilizes twin
trailers for movement of almost 100% of the freight among its terminals to gain
greater flexibility. The use of twin trailers (which can be operated singly or
in tandem) provides more options for the achievement of the Company's service
standards. At December 31, 1995, the Company utilized 11,173 van trailers,
9,787 of which were twin trailers, and 4,521 tractors. The average ages of the
tractors and trailers were 2.7 and 3.3 years, respectively, at December 31,
1995.
Total Information Services. An important aspect of customer service is the
instantaneous access by shippers to information concerning their shipments and
the Company's performance. The Company is committed to providing accurate and
timely information to the relevant person as needed. Accordingly, American
Freightways provides its customers the ability to customize information they
need and how and when they receive it.
Customer Satisfaction. The Company recognizes that it is in the customer
satisfaction business as well as the transportation business. In recognition of
its commitment to customer satisfaction, American Freightways maintains a
Customer Satisfaction Department and a Cargo Care Department. Access to each is
provided through the use of nationwide toll-free telephone lines. Management
believes American Freightways was the first LTL carrier to create a department
to deal exclusively with customer satisfaction. The Customer Satisfaction
Department is an integral part of an effort to make American Freightways
accessible and accountable to its customers, providing special attention to
customers' needs such as tracing freight, expediting shipments, and meeting
unusual delivery requirements. The Cargo Care Department educates Company
personnel on the correct care of shipments, such as proper loading to avoid loss
and damage. This department also assists customers with proper packaging of
shipments and settles cargo claims with customers.
Total Quality Process. The Company has for over six years utilized a "Total
Quality Process" to improve the quality and efficiency of its services. The
quality process involves management, education and training techniques, some of
which are developed by associates. These techniques are designed to, among
other things, identify and complete job responsibilities, including
identification of customer needs. The process measures improvement in associate
performance, enhances communication among management and associates and provides
a common Company language. Implementation of this process is accomplished with
customer satisfaction surveys, performance benchmarking and educating of
personnel. The total quality initiative is ongoing. The Company has committed
additional resources in 1996 to the process to further integrate the process
into operations and expand associate education.
People Development Process. The building blocks for American Freightways have
always been its people and its business principles. To continue its growth, the
Company must continue to attract, retain and educate quality people who can and
will grow with the Company. To facilitate this process, the Company initiated,
in 1993, a "People Development Process" in which Company personnel at all levels
and in all functions receive training on Company principles, job
responsibilities and skills critical to performance of their responsibilities.
The Company's people follow six business principles:
. Take care of our customers
. Take care of our people
. Honor our commitments
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. Work hard, work smart and safely and work together
. Make the most of resources
. Have fun!
At December 31, 1995, the Company employed 8,867 people, including 4,494
drivers, 2,293 dock workers and 227 mechanics and other maintenance personnel.
All drivers utilized by American Freightways are selected in accordance with
specific Company guidelines relating primarily to safety records and driving
experience. Drivers, as well as dockmen and mechanics, are required to pass
drug tests upon employment, randomly and for cause. State and federal
regulations require drug testing of drivers and require drivers to comply with
commercial driver's licensing requirements. Management believes that the
Company is substantially in compliance with these regulations.
The Company has not experienced a shortage of qualified drivers in the past,
and management does not expect a significant shortage in the near future.
None of the Company's personnel is currently represented by a collective
bargaining unit. From time to time, associates of a particular terminal or
facility may vote on representation by a collective bargaining unit. Management
of the Company cannot predict the outcome of future elections. However, it
believes any outcome will not have a material adverse affect on the Company's
competitive position, operations or financial condition. In the opinion of
management, the Company's relationship with its drivers, other associates and
independent contractors is excellent. The Company's policy is to share its
success with its associates through increased wages and benefits.
MARKETING
The Company's marketing strategy emphasizes to the customer the value of the
Company's reliable performance and innovative services. This has resulted in a
high level of repeat business from existing customers, which is used as a
springboard for business in the areas to which the Company expands. American
Freightways also aggressively seeks new customers as it expands its service
territory.
The Company established a national advertising program in 1984, utilizing
full-page, four-color ads in national transportation and distribution magazines.
American Freightways also utilizes direct mail advertising and surveys its
customers to solicit suggestions for improvements in its services.
The Company has designed and implemented its own 48-state class rate tariff
and rules tariff with simplified formats.
TECHNOLOGY
American Freightways is a leader in the use of advanced technology to increase
the value of service to its customers and to lower the cost of providing this
service. The Company uses computer and electronic technology to compress time
in the performance of operating and other processes and to compress the number
of levels within the organization necessary to complete tasks. From the
customer's call for a pickup through the capture of a signature verifying
delivery of the freight, the Company's information technology captures
information on the status of each shipment. In most cases the recovery of the
data is achieved automatically as the freight is moved. See also "Service
Features - Total Information Services."
TERMINALS
The Company owns its general office located in Harrison, Arkansas and 68
terminal facilities in 16 states. At December 31, 1995, 118 of the Company's
terminals were leased. The terms of the leases on the
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facilities range from month-to-month to ten years. The Company prefers to lease
when suitable facilities are available; however, it may be necessary to
construct or acquire additional facilities when facilities of sufficient size
are not available for lease.
One of the principal features distinguishing American Freightways from its
competitors is its extensive terminal network, placing terminals nearer to the
customer. During 1995, the Company added terminal capacity through the purchase
of existing facilities, the construction of new terminals or additions to
existing terminals in several strategic locations such as Anniston, Alabama; Des
Moines, Iowa; Indianapolis, Indiana; Wichita, Kansas; Louisville, Kentucky; Lake
Charles and Shreveport, Louisiana; Columbia, Joplin, Kansas City and
Springfield, Missouri; Columbus and Toledo, Ohio; Lewisburg, Tennessee; and
Bryan, San Antonio, Victoria and Waco, Texas. In addition, the Company added
twelve terminals to provide service to Delaware, Maryland, Virginia and West
Virginia on January 1, 1996. The Company presently has under construction a 230
door facility in Atlanta, Georgia, which will be completed during the second
half of 1996, and has plans to purchase or construct seven additional terminals
in 1996.
At December 31, 1995, the Company's terminal network consisted of 186
terminals. Of these terminals, 176 were managed by Company associates and 10
were operated and managed by 7 independent contractors. Company-operated
terminals involve relatively fixed costs (such as operating taxes, salaries and
wages and depreciation), whereas costs of independent contractor-operated
terminals generally are variable as a flat percentage of revenue. It is
American Freightways' intent to primarily utilize Company-operated terminals in
future expansions.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to routine litigation incidental to its business,
primarily involving claims for personal injuries and property damage incurred in
the transportation of freight. The Company believes adverse results in one or
more of these cases would not have a material adverse effect on its competitive
position, financial position or its results of operations. The Company
maintains insurance in an amount which Management believes is currently
sufficient to cover its risks.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
American Freightways Corporation's Common Stock is traded under the symbol
"AFWY" on the National Market System of the National Association of Securities
Dealers Automated Quotation System (NASDAQ). The following table sets forth,
for the periods indicated, the range of high and low prices for the Company's
Common Stock as reported by NASDAQ through January 30, 1996. The latest price
for the Company's Common Stock on January 30, 1996, as reported by the NASDAQ
was $10.38 per share. At January 30, 1996, there were approximately 2,784
holders of record of the Company's Common Stock.
<TABLE>
<CAPTION>
PERIOD HIGH LOW
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<S> <C> <C>
FISCAL YEAR 1994:
First Quarter 20-3/4 15-1/2
Second Quarter 21-3/4 18-1/4
Third Quarter 24-7/8 20-3/4
Fourth Quarter 24-3/8 17-3/4
FISCAL YEAR 1995:
First Quarter 24-1/8 18-5/8
Second Quarter 24-1/4 18-3/8
Third Quarter 24 13-3/4
Fourth Quarter 15-1/8 9-7/8
FISCAL YEAR 1996:
First Quarter (through January 30, 1996) 12-5/8 10-1/8
</TABLE>
The Company has not paid cash dividends in the past and does not intend to
pay cash dividends in the foreseeable future. Under certain of the Company's
loan agreements, the Company is subject to certain restrictions on its
ability to pay dividends. See Note 3 to the Consolidated Financial
Statements incorporated by reference herein.
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ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data is derived from consolidated financial
statements of the Company. The data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements, related notes and other
financial information included elsewhere herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
(Dollars in thousands, except per share data) 1991 1992 1993 1994 1995
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<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue.............................. $198,258 $262,011 $328,464 $465,588 $572,100
Operating expenses and costs:
Salaries, wages and benefits.................. 94,312 125,152 168,770 247,049 335,167
Operating supplies and
expenses..................................... 12,084 17,169 22,099 30,710 38,667
Operating taxes and licenses.................. 7,218 9,647 12,340 19,251 24,434
Insurance..................................... 7,011 8,705 7,891 15,360 21,595
Communications and utilities.................. 3,484 4,357 6,907 9,117 11,040
Depreciation and amortization................. 14,541 17,059 21,519 27,888 37,560
Rents and purchased
transportation............................... 31,877 39,683 42,250 45,633 46,405
Other......................................... 11,848 13,895 15,782 20,880 26,469
-----------------------------------------------------
Total operating expenses..................... 182,375 235,667 297,558 415,888 541,337
-----------------------------------------------------
Operating income............................... 15,883 26,344 30,906 49,700 30,763
Interest expense............................... (3,642) (4,844) (4,246) (6,832) (10,198)
Other income, net.............................. 312 453 329 442 415
Gain (loss) on disposal of
assets......................................... (3) 9 1 292 329
-----------------------------------------------------
Income before income taxes, extraordinary
charge and cumulative effect of
accounting change.............................. 12,550 21,962 26,990 43,602 21,309
Income taxes................................... 4,518 8,016 10,238 16,571 8,226
-----------------------------------------------------
Income before extraordinary charge and
cumulative effect of accounting change......... 8,032 13,946 16,752 27,031 13,083
Extraordinary charge for early retirement
of debt, net of tax benefit of $205............ - - - (335) -
Cumulative effect of accounting change......... - (383) - - -
-----------------------------------------------------
Net income..................................... $ 8,032 $ 13,563 $ 16,752 $ 26,696 $ 13,083
=====================================================
Per share:
Income before extraordinary charge and
cumulative effect of accounting change....... $ 0.30 $ 0.50 $ 0.59 $ 0.89 $ 0.42
Extraordinary charge.......................... - - - (0.01) -
Cumulative effect of
accounting change............................ - (0.02) - - -
-----------------------------------------------------
Net income.................................... $ 0.30 $ 0.48 $ 0.59 $ 0.88 $ 0.42
=====================================================
Average shares outstanding (000's)............. 26,644 28,132 28,581 30,357 31,334
Proforma Data (1):
Net income..................................... $ 7,807 $ 13,946 $ 16,752 $ 26,696 $ 13,083
Net income per share........................... $ 0.29 $ 0.50 $ 0.59 $ 0.88 $ 0.42
</TABLE>
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<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
(Dollars in thousands)
Current assets...................... $ 58,129 $ 34,729 $ 37,660 $ 54,247 $ 77,213
Current liabilities................. 18,218 19,348 35,083 44,378 52,514
Total assets........................ 168,131 175,531 251,130 355,348 477,762
Long-term debt (including
current portion).................... 70,896 55,304 97,537 111,181 197,631
Shareholders' equity................ 74,636 89,709 109,460 177,180 195,434
Working capital..................... $ 39,911 $ 15,381 $ 2,577 $ 9,869 $ 24,699
Debt to equity ratio................ 0.95 0.62 0.89 0.63 1.01
Return on shareholders' equity...... 14.5% 16.5% 16.8% 18.6% 7.0%
KEY OPERATING STATISTICS:
Operating ratio..................... 92.0% 89.9% 90.6% 89.3% 94.6%
Total tractors...................... 1,634 1,955 2,453 3,344 4,521
Terminals........................... 111 116 132 144 186
Number of employees................. 3,058 3,655 4,964 6,506 8,867
Gross tonnage hauled (000's)........ 1,238 1,615 2,051 2,759 3,380
Shipments (000's)................... 2,179 2,654 3,237 4,267 5,486
Average length of haul.............. 454 525 550 567 588
Linehaul load factor (tons)......... 9.96 10.79 10.90 10.96 10.91
Revenue per hundred weight.......... $ 8.01 $ 8.11 $ 8.01 $ 8.46 $ 8.48
</TABLE>
(1) Assumes the change in accounting method for recognition of revenue as
required by EITF 91-9 occurred January 1, 1991.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Item is incorporated by this reference to Registrant's Annual Report to
Shareholders for the fiscal year ended December 31, 1995, pages 20 through 26.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of independent auditors and consolidated financial statements
included on pages 27 through 35 of the Annual Report to Shareholders for the
year ended December 31, 1995, are incorporated herein by reference.
Quarterly Results of Operations on page 34 of the Annual Report to
Shareholders for the year ended December 31, 1995, is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The executive officers and directors of American Freightways as of January 30,
1996, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
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<S> <C> <C>
F. S. (Sheridan) Garrison 61 Chairman of the Board of Directors, President
and Chief Executive Officer
Tom Garrison 35 Vice President; Secretary/Treasurer;
Director
Frank Conner 46 Executive Vice President-Accounting & Finance;
Chief Financial Officer; Director
Tony R. Balisle 57 Executive Vice President-Operations; Director
Ben A. Garrison 64 Director
T. J. Jones 59 Director
Ken Reeves 48 Director
Will Garrison 32 Vice President; Director
Daniel Garrison 41 Account Executive
Joe Dobbs 49 Vice President-Properties
James Hearn 61 Vice President-Maintenance
</TABLE>
The remainder of this Item 10, Directors and Executive Officers of the
Registrant, is incorporated by this reference to Registrant's Notice and Proxy
Statement for its Annual Meeting of Shareholders to be held on Thursday,
March 14, 1996.
ITEM 11. EXECUTIVE COMPENSATION
This Item is incorporated by this reference to applicable portions of the
Registrant's Notice and Proxy Statement for its 1996 Annual Meeting of
Shareholders to be held on Thursday, March 14, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This Item is incorporated by this reference to applicable portions of the
Registrant's Notice and Proxy Statement for its 1996 Annual Meeting of
Shareholders to be held on Thursday, March 14, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS
This Item is incorporated by this reference to applicable portions of the
Registrant's Notice and Proxy Statement for its 1996 Annual Meeting of
Shareholders to be held on Thursday, March 14, 1996.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (l) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report.
(3) The exhibits as listed in the Exhibit Index, are submitted as a
separate section of this report.
(b) Current Reports on Form 8-K:
None.
(c) See Item 14(a)(3) above.
(d) The response to this portion of Item 14 is submitted as a separate section
of this report.
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INDEX TO EXHIBITS
3(a) Amended and Restated Articles of Incorporation incorporated by reference
to Registrant's Form 10-Q for the quarterly period ending March 31, 1995.
3(b) Amended and Restated Bylaws of American Freightways Corporation
incorporated by reference to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992.
10(a) Note Agreement among Prudential Capital Corporation, the Registrant and
certain subsidiaries dated December 5, 1991 incorporated by reference to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991.
10(b) Credit Agreement among NationsBank of Texas, N. A., as Agent, the
Registrant and certain subsidiaries dated April 14, 1992 incorporated by
reference to Registrant's Form 10-Q for the quarterly period ended
March 31, 1992.
10(c) Amendment Number 1 to Note Agreement among Prudential Capital
Corporation, the Registrant and certain subsidiaries dated December 5,
1991 incorporated by reference to Registrant's Form 10-Q for the
quarterly period ended June 30, 1992.
10(d) Promissory Note among NationsBank of Texas, N.A., the Registrant and
certain subsidiaries dated August 15, 1992, incorporated by reference to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992.
10(e) First Amendment to Credit Agreement among NationsBank of Texas, N.A., as
Agent, the Registrant and certain subsidiaries dated December 30, 1992,
incorporated by reference to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992.
10(f) Amended and Restated 1993 Chairman Stock Option Plan.
10(g) Amended and Restated 1993 Non-Employee Director Stock Option Plan as
amended January 23, 1996.
10(h) Amended and Restated 1993 Stock Option Plan for Key Employees as amended
January 23, 1996.
10(i) $50,000,000 Master Shelf Agreement ($10,000,000 note attached) with The
Prudential Insurance Company of America dated September 3, 1993,
incorporated by reference to Registrant's Form 10-Q for the quarterly
period ended September 30, 1993.
10(j) Second Amendment to Credit Agreement among NationsBank of Texas, N.A., as
Agent, the Registrant and certain subsidiaries dated February 1, 1994,
incorporated by reference to Registrant's Form 10-K for the fiscal year
ended December 31, 1993.
10(k) $10,000,000 Note dated February 2, 1994, issued under the $50,000,000
Master Shelf Agreement with The Prudential Insurance Company of America
dated September 3, 1993, incorporated by reference to Registrant's Form
10-K for the fiscal year ended December 31, 1993.
10(l) Amended and Restated American Freightways Corporation Excess Benefit Plan
as amended January 23, 1996.
12
<PAGE>
10(m) Amended and Restated Stock Purchase Plan for Certain employees of
Registrant and subsidiaries as amended January 23, 1996.
10(n) $10,000,000 Note dated April 13, 1994, issued under the $50,000,000
Master Shelf Agreement with The Prudential Insurance Company of America
dated September 3, 1993, incorporated by reference to Registrant's Form
10-Q for the quarterly period ended June 30, 1994.
10(o) Amended and Restated Credit Agreement among NationsBank of Texas, N.A.,
as Agent, the Registrant and certain subsidiaries dated October 20, 1994,
incorporated by reference to Registrant's Form 10-K for the fiscal year
ended December 31, 1994.
10(p) Letter Amendment No. 3 to Note Agreement with The Prudential Insurance
Company of America dated October 19, 1994 incorporated by reference to
Registrant's Form 10-K for the fiscal year ended December 31, 1994.
10(q) Letter Amendment No. 1 to Master Shelf Agreement with The Prudential
Insurance Company of America dated October 19, 1994, incorporated by
reference to Registrant's Form 10-K for the fiscal year ended December
31, 1994.
10(r) Letter Amendment No. 2 to Master Shelf Agreement with The Prudential
Insurance Company of America dated December 14, 1994, incorporated by
reference to Registrant's Form 10-K for the fiscal year ended December
31, 1994.
10(s) $15,000,000 note dated January 30, 1995, issued under the $90,000,000
Master Shelf Agreement with the Prudential Insurance Company of America
dated September 3, 1993, incorporated by reference to Registrant's Form
10-Q for the quarterly period ended March 31, 1995.
10(t) First Amendment to Amended and Restated Credit Agreement among
NationsBank of Texas, N.A., as agent, the Registrant and its Subsidiary
dated May 31, 1995, incorporated by reference to Registrant's Form 10-Q
for the quarterly period ended June 30, 1995.
10(u) $20,000,000 noted dated June 15, 1995, issued under the $90,000,000
Master Shelf Agreement with the Prudential Insurance Company of America
dated September 3, 1993, incorporated by reference to Registrant's Form
10-Q for the quarterly period ended June 30, 1995.
10(v) Lease Agreement among VT Finance, Inc., the Registrant and its Subsidiary
dated January 5, 1996.
13 Annual Report to Stockholders for the fiscal year ended December 31,
1995.
21 Subsidiary of Registrant
23 Consent of Ernst & Young LLP
24 Power of Attorney
27 Financial Data Schedule
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 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. Dated this 1st day of
February, 1996.
American Freightways Corporation
By: /s/Frank Conner
---------------
Frank Conner
Chief Financial Officer; Director
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/F. S. Garrison February 1, 1996
- ------------------------------------- ------------------
F. S. Garrison Date
Chairman of the Board of Directors,
Chief Executive Officer
(Principal Executive Officer)
/s/Frank Conner February 1, 1996
- ------------------------------------- ------------------
Frank Conner Date
Chief Financial Officer; Director
(Principal Accounting Officer)
/s/Tom Garrison February 1, 1996
- ------------------------------------- ------------------
Tom Garrison Date
Director
/s/T. J. Jones February 1, 1996
- ------------------------------------- ------------------
T. J. Jones Date
Director
/s/Ben A. Garrison February 1, 1996 *
- ------------------------------------- ------------------
Ben A. Garrison Date
Director
/s/Ken Reeves February 1, 1996
- ------------------------------------- ------------------
Ken Reeves Date
Director
/s/Tony Balisle February 1, 1996
- ------------------------------------- ------------------
Tony Balisle Date
Director
/s/Will Garrison February 1, 1996
- ------------------------------------- ------------------
Will Garrison Date
Director
</TABLE>
* Signed by Frank Conner under Power of Attorney dated January 18, 1996.
14
<PAGE>
ANNUAL REPORT ON FORM 10-K--ITEM 8, ITEM 14(A)(1) AND (2), (C) AND (D)
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARY
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of American Freightways
Corporation and subsidiary included in the Registrant's Annual Report to
Shareholders for the fiscal year ended December 31, 1995 are incorporated by
reference in Item 8:
Consolidated Balance Sheets as of December 31, 1995 and 1994.
Consolidated Statements of Income for the years ended December 31, 1995, 1994
and 1993.
Consolidated Statements of Stockholders' Equity for the years ended December 31,
1995, 1994 and 1993.
Consolidated Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993.
Notes to Consolidated Financial Statements--December 31, 1995.
The following consolidated financial statement schedule of American
Freightways Corporation and subsidiary is included in Item 14(d):
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARY
Consolidated Financial Statement Schedule:
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
15
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
AMERICAN FREIGHTWAYS CORPORATION
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------------------------------------------------------------------------------------------------------------
Additions
-------------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other Account Deductions at End
Description of Period Expenses -Describe -Describe of Period
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Allowance for Doubtful Accounts $800,000 $ 513,464 $430,379 (1) $1,250,804 (2) $493,039
======== ========== ======== === ========== === ========
Year ended December 31, 1994:
Allowance for Doubtful Accounts $493,039 $1,125,840 $423,029 (1) $1,403,102 (2) $638,806
======== ========== ======== === ========== === ========
Year ended December 31, 1995:
Allowance for Doubtful Accounts $638,806 $ 928,974 $264,867 (1) $ 988,116 (2) $844,531
======== ========== ======== === ========== === ========
</TABLE>
Note 1 - Recoveries of amounts previously written off.
Note 2 - Uncollectible accounts written off.
<PAGE>
EXHIBIT 10(f)
AMERICAN FREIGHTWAYS CORPORATION
CHAIRMAN STOCK OPTION PLAN
SECTION 1
---------
1. This Amended and Restated 1993 Chairman Stock Option Plan as
amended and restated as of July 20, 1994 (the "Plan") is intended to attract and
retain the services of an experienced and knowledgeable chairman ("Chairman") of
American Freightways Corporation (the "Company"), for the benefit of the Company
and its shareholders and to provide additional incentive for such persons to
continue to work for the best interests of the Company and its shareholders.
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board"). The Board shall have the power to
construe the Plan, to determine all questions arising thereunder and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable.
The interpretation and construction by the Board of any provisions of
the Plan or of any option granted under it shall be final. No member of the
Board shall be liable for any action or determination made in good faith with
respect to the Plan or any option granted under it.
3. ELIGIBILITY. The person who has been duly elected and is then
serving as Chairman of the Board of the Company on each February 1 hereafter
shall automatically be granted options to purchase such number of shares of the
Company's Common Stock (subject to further adjustment as provided in Section 3
hereof) as follows: The Chairman shall be granted options to acquire the number
of shares set forth in Column B which correspond to the percentage (set forth in
Column A) by which earnings per share ("EPS") for the Company's common stock for
the most recently completed fiscal year exceeded EPS for the preceding fiscal
year.
<TABLE>
<CAPTION>
A B
------ ------
<S> <C>
15 - 17.5% 10,000
17.6 - 20.0% 20,000
20.1 - 25.0% 30,000
25.1 - 29.0% 40,000
30.0 - and above 50,000
</TABLE>
The dates on which options are granted hereunder are referred to
herein as the "Grant Date."
All options granted to the Chairman under this Section 3 shall vest at
the rate of 20% per year beginning on the first anniversary of the Grant Date.
<PAGE>
4. SHARES OF STOCK SUBJECT TO THE PLAN. The shares that may be
issued under the Plan shall be authorized and unissued or reacquired shares of
the Company's common stock (the "Common Stock"). The aggregate number of shares
which may be issued under the Plan shall not exceed 950,000 shares of Common
Stock, unless an adjustment is required in accordance with Section 3.
5. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors may,
insofar as permitted by law, from time to time, suspend or terminate the Plan or
revise or amend it in any respect whatsoever, except that no such amendment
shall alter or impair or diminish any rights or obligations under any option
theretofore granted under the Plan without the consent of the person to whom
such option was granted. In addition no such amendment shall be effective
without shareholder approval is such approval is required in order to assure the
Plan's continued qualification under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended. The Plan's provisions regarding the formula
for determining the amount, exercise price, and timing of options to be granted
under the Plan shall in no event be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code of 1986, as
amended.
6. APPROVAL OF SHAREHOLDERS. The Plan is effective February 1, 1993,
subject to approval by the affirmative votes of the holders of a majority of the
securities of the Company present, or represented, and entitled to vote at the
next succeeding meeting of shareholders, or any adjournment thereof, duly held
in accordance with Arkansas law. Notwithstanding any contrary provision of the
Plan, no option granted hereunder may become exercisable unless and until such
approval is obtained.
Options may be granted under the Plan until February 1, 1998.
Notwithstanding the foregoing, each option granted under the Plan shall remain
in effect until such option has been satisfied by the issuance of shares or
terminated in accordance with its terms and the terms of the Plan.
7. NONASSIGNABILITY. No option shall be assignable or transferable
by the grantee except by will or by the laws of descent and distribution.
During the lifetime of the optionee, the option shall be exercisable only by him
or her, and no other person shall acquire any rights therein.
8. WITHHOLDING TAXES. Whenever shares of Common Stock are to be
issued under the Plan, the Company shall require the optionee to remit to the
Company an amount sufficient to satisfy federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares.
2
<PAGE>
9. DEFINITION OF "FAIR MARKET VALUE". For the purposes of this Plan,
the term "fair market value," when used in reference to the date of grant of an
option shall be the mean:
If the Shares of the Company are listed on a national securities
exchange (including the New York, American or NASDAQ National Market System) in
the United States on the date any Option is granted, the fair market value per
Share shall be deemed to be the average of the high and low sale prices per
share of such Shares of the Company on such national securities exchange in the
United States on such date, as published by the Wall Street Journal or other
reliable publication, but if the Shares of the Company are not traded on such
date or such national securities exchange is not open for business on such date,
the fair market value per Share shall be the average of such high and low sale
prices on the last preceding date on which such exchange shall have been open
for business and the Shares of the Company were traded. If the Shares of the
Company are listed on more than one national securities exchange in the United
States on the date any such Option is granted, the Committee shall determine, in
its discretion, which national securities exchange shall be used for the purpose
of determining the fair market value per Share.
If at any date any Option is granted a public market exists for the
Shares of the Company but such Shares are not listed on a national securities
exchange in the United States, the fair market value per Share shall be deemed
to be the mean between the closing bid and asked quotations in the over-the-
counter market for such Shares of the Company in the United States on the date
such Option is granted. If there are no bid and asked quotations for such
Shares on such date, the fair market value per Share shall be deemed to be the
mean between the closing bid and asked quotations in the over-the-counter market
in the United States for such Shares of the Company on the closest date
preceding the date such Option is granted, for which such quotations are
available.
SECTION 2
---------
STOCK OPTIONS
-------------
1. AWARD OF STOCK OPTIONS. Awards of stock options shall be made
under the Plan under all the terms and conditions contained herein. Each option
granted under the Plan shall be evidenced by an option agreement duly executed
on behalf of the Company and by the recipient, which option agreements shall
comply with and be subject to the terms and conditions of the Plan. Any option
agreement may contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Board.
2. TERM OF OPTIONS AND EFFECT OF TERMINATION. Notwith-standing any
other provision of the Plan, no option granted under the Plan shall be
exercisable after the expiration of ten years from the date of its grant.
3
<PAGE>
In the event that any outstanding option under the Plan expires by
reason of lapse of time or otherwise is terminated for any reason, the shares of
Common Stock subject to any such option which have not been issued pursuant to
the exercise of the option shall again become available in the pool of shares of
Common Stock for which options may be granted under the Plan.
3. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the
Plan shall be evidenced by agreements in such form as the Board shall from time
to time determine, which agreements shall comply with the following terms and
conditions.
A. Number of Shares. Each option agreement shall state the number of
shares to which the option pertains.
B. Option Price. Each option agreement shall state the option price per
share (or the method by which such price shall be computed), which shall be
equal to 100% of the Fair Market Value of a share of the Common Stock on the
date such option is granted.
C. Medium and Time of Payment. The option price shall be payable upon the
exercise of an option in the legal tender of the United States. Upon receipt of
payment, the Company shall deliver to the optionee (or person entitled to
exercise the option) a certificate or certificates for the shares of Common
Stock to which the option pertains.
D. Exercise of Options. Options granted under the Plan shall vest and
become exercisable in 20% increments per year, beginning on the first
anniversary of the Grant Date of the Option.
To the extent that an option has become exercisable and subject to the
restrictions and limitations set forth in this Plan and any option agreement, it
may be exercised in whole or such lesser amount as may be authorized by the
option agreement. If exercised in part, any vested, unexercised portion of an
option shall continue to be held by the optionee and may thereafter be exercised
as provided herein.
E. Termination of Chairman Employment. In the event that an optionee
shall cease to be Chairman of the Company for any reason other than his
termination for cause, his option shall cease to continue vesting, but vested
and exercisable portions shall continue to be exercisable to the extent it was
exercisable at the date he ceased to be Chairman, for the period specified in
the Option Agreement. In the event that an optionee ceases to be Chairman due
to his termination for cause, his option shall cease to continue vesting but
vested and exercisable portions shall continue to be exercisable portions shall
be exercisable for 90 days following the date of his termination, and thereafter
shall terminate.
SECTION 3
---------
RECAPITALIZATIONS AND REORGANIZATIONS
-------------------------------------
4
<PAGE>
The number of shares of Common Stock covered by the Plan, the number of
shares and price per share of each outstanding option, and the number of shares
subject to each grant provided for in Section 1 hereof shall be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend or any other increase or decrease in the
number of issued and outstanding shares of Common Stock effected without receipt
of consideration by the Company.
If the Company shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain to and apply to the
securities to which a holder of the same number of shares of Common Stock that
are subject to that option would have been entitled. A dissolution or
liquidation of the Company, or a merger or consolidation in which the Company is
not the surviving corporation, shall cause each outstanding option to terminate,
unless the agreement of merger or consolidation shall otherwise provide;
provided that, in the event such dissolution, liquidation, merger or
consolidation will cause outstanding options to terminate, optionee shall have
the right immediately prior to such dissolution, liquidation, merger or
consolidation to exercise his option in whole or in part without regard to any
limitations on the exercisability of such option other than the expiration date
of the option.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive.
SECTION 4
---------
MISCELLANEOUS PROVISIONS
------------------------
1. RIGHTS AS A SHAREHOLDER. An optionee or a transferee of an option as
such shall have no rights as a shareholder with respect to any shares covered by
an option until the date of the receipt of payment (including any amounts
required by the Company pursuant to Subsection 10 of Section 1) by the Company.
2. PURCHASE FOR INVESTMENT. Unless the shares of Common Stock to be
issued upon exercise of an option granted under the Plan have been effectively
registered under the Securities Act of 1933, as amended (the "Securities Act"),
the Company shall be under no obligation to issue any shares of Common Stock
covered by any option unless the person who exercises such option, in whole or
in part, shall give a written representation and undertaking to the Company
which is satisfactory in form and scope to counsel to the Company and upon
which, in the opinion of such counsel, the Company may reasonably rely, that he
is acquiring the shares of Common Stock issued to him pursuant to such exercise
of the option for his own account as an investment and not with a view to, or
for sale in connection with, the distribution of any such shares of Common
Stock, and that he will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act, or any other
5
<PAGE>
applicable law, and that if shares of Common Stock are issued without such
registration, a legend to this effect may be endorsed upon the securities so
issued.
3. OTHER PROVISIONS. The option agreements authorized under the Plan
shall contain such other provisions, including, without limitation, restrictions
upon the exercise of the option or restrictions required by any applicable
securities laws, as the Board shall deem advisable.
4. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of Common Stock pursuant to the exercise of options will be used for
general corporate purposes.
5. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall
impose no obligation upon the optionee to exercise such option.
IN WITNESS WHEREOF, AMERICAN FREIGHTWAYS CORPORATION, by its duly
authorized officer, has executed this Amended and Restated Plan on the date
indicated below.
Dated January 18, 1996 By:/s/Tom Garrison
---------------- ---------------
Officer
AMENDED AND RESTATED
Date January 18, 1996
----------------
By:/s/Tom Garrison
---------------
Officer
6
<PAGE>
EXHIBIT 10(g)
AMERICAN FREIGHTWAYS CORPORATION
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
SECTION 1
---------
1. This 1995 Non-Employee Director Stock Option Plan (the "Plan") as
amended and restated in 1995, is intended to attract and retain the services of
a non-employee director ("Director") of American Freightways Corporation (the
"Company"), for the benefit of the Company and its shareholders and to provide
additional incentive for such persons to continue to work for the best interests
of the Company and its shareholders.
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board"). The Board shall have the power to
construe the Plan, to determine all questions arising thereunder and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable.
The interpretation and construction by the Board of any provisions of
the Plan or of any option granted under it shall be final. No member of the
Board shall be liable for any action or determination made in good faith with
respect to the Plan or any option granted under it.
3. ELIGIBILITY. Each person who shall have been elected or appointed
a director of the Company at our or after its annual meeting of stockholders
shall automatically be granted options to purchase 2,000 shares of the Company's
common stock (subject to further adjustment as provided herein) on each
succeeding first day in February, commencing in 1995, provided, that such
automatic option grants shall be made only if the recipient director (i) is not
otherwise an employee of the Company or any subsidiary on the date of grant,
(ii) was not an employee of the Company or any subsidiary at any time during the
period commencing on the date of the immediately preceding annual meeting of
stockholders and ending on the date of grant (the "Eligibility Period") and
(iii) served on the Board of Directors for the entire Eligibility Period.
The dates on which options are granted hereunder are referred to
herein as the "Grant Date."
All options granted to any Directors under this Section 3 shall vest
at the rate of 20% per year beginning on the first anniversary of the Grant
Date.
4. SHARES OF STOCK SUBJECT TO THE PLAN. The shares that may be
issued under the Plan shall be authorized and unissued or reacquired shares of
the Company's common stock (the "Common Stock"). The aggregate number of shares
which may be issued under the Plan shall not exceed 50,000 shares of Common
Stock, unless an adjustment is required in accordance with Section 3.
<PAGE>
5. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors may,
insofar as permitted by law, from time to time, suspend or terminate the Plan or
revise or amend it in any respect whatsoever, except that no such amendment
shall alter or impair or diminish any rights or obligations under any option
theretofore granted under the Plan without the consent of the person to whom
such option was granted. In addition no such amendment shall be effective
without shareholder approval is such approval is required in order to assure the
Plan's continued qualification under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended. The Plan's provisions regarding the formula
for determining the amount, exercise price, and timing of options to be granted
under the Plan shall in no event be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code of 1986, as
amended.
6. EXPIRATION OF PLAN. Options may be granted under the Plan until
February 1, 1998. Notwithstanding the foregoing, each option granted under the
Plan shall remain in effect until such option has been satisfied by the issuance
of shares or terminated in accordance with its terms and the terms of the Plan.
7. NONASSIGNABILITY. No option shall be assignable or transferable
by the grantee except by will or by the laws of descent and distribution.
During the lifetime of the optionee, the option shall be exercisable only by him
or her, and no other person shall acquire any rights therein.
8. WITHHOLDING TAXES. Whenever shares of Common Stock are to be
issued under the Plan, the Company shall require the optionee to remit to the
Company an amount sufficient to satisfy federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares.
9. DEFINITION OF "FAIR MARKET VALUE". For the purposes of this Plan,
the term "fair market value," when used in reference to the date of grant of an
option shall be the mean:
If the Shares of the Company are listed on a national securities
exchange (including the New York, American or NASDAQ National Market System) in
the United States on the date any Option is granted, the fair market value per
Share shall be deemed to be the average of the high and low sale prices per
share of such Shares of the Company on such national securities exchange in the
United States on such date, as published by the Wall Street Journal or other
reliable publication, but if the Shares of the Company are not traded on such
date or such national securities exchange is not open for business on such date,
the fair market value per Share shall be the average of such high and low sale
prices on the last preceding date on which such exchange shall have been open
for business and the Shares of the Company were traded. If the Shares of the
Company are listed on more than one national securities exchange in the United
States on the date any such Option is
-2-
<PAGE>
granted, the Committee shall determine, in its discretion, which national
securities exchange shall be used for the purpose of determining the fair market
value per Share.
If at any date any Option is granted a public market exists for the
Shares of the Company but such Shares are not listed on a national securities
exchange in the United States, the fair market value per Share shall be deemed
to be the mean between the closing bid and asked quotations in the over-the-
counter market for such Shares of the Company in the United States on the date
such Option is granted. If there are no bid and asked quotations for such
Shares on such date, the fair market value per Share shall be deemed to be the
mean between the closing bid and asked quotations in the over-the-counter market
in the United States for such Shares of the Company on the closest date
preceding the date such Option is granted, for which such quotations are
available.
SECTION 2
---------
STOCK OPTIONS
-------------
1. AWARD OF STOCK OPTIONS. Awards of stock options shall be made
under the Plan under all the terms and conditions contained herein. Each option
granted under the Plan shall be evidenced by an option agreement duly executed
on behalf of the Company and by the recipient, which option agreements shall
comply with and be subject to the terms and conditions of the Plan. Any option
agreement may contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Board.
2. TERM OF OPTIONS AND EFFECT OF TERMINATION. Notwithstanding any
other provision of the Plan, no option granted under the Plan shall be
exercisable after the expiration of ten years from the date of its grant.
In the event that any outstanding option under the Plan expires by
reason of lapse of time or otherwise is terminated for any reason, the shares of
Common Stock subject to any such option which have not been issued pursuant to
the exercise of the option shall again become available in the pool of shares of
Common Stock for which options may be granted under the Plan.
3. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the
Plan shall be evidenced by agreements in such form as the Board shall from time
to time determine, which agreements shall comply with the following terms and
conditions.
A. Number of Shares. Each option agreement shall state the number of
shares to which the option pertains.
B. Option Price. Each option agreement shall state the option price
per share (or the method by which such price shall be computed), which shall be
equal to 100% of the Fair Market Value of a share of the Common Stock on the
date such option is granted.
-3-
<PAGE>
C. Medium and Time of Payment. The option price shall be payable
upon the exercise of an option in the legal tender of the United States. Upon
receipt of payment, the Company shall deliver to the optionee (or person
entitled to exercise the option) a certificate or certificates for the shares of
Common Stock to which the option pertains.
D. Exercise of Options. Options granted under the Plan shall vest
and become exercisable in 20% increments per year, beginning on the first
anniversary of the Grant Date of the Option.
To the extent that an option has become exercisable and subject to the
restrictions and limitations set forth in this Plan and any option agreement, it
may be exercised in whole or such lesser amount as may be authorized by the
option agreement. If exercised in part, any vested, unexercised portion of an
option shall continue to be held by the optionee and may thereafter be exercised
as provided herein.
E. Termination of Director. If an optionee ceases to be a director
for any reason, any option held by such person may be exercised at any time
within 90 days after the date on which such person ceased to be a director, but
only to the extent the option was vested and exercisable at such date.
Any such option granted hereunder may be exercised by the executors or
administrators of the optionee's estate or by any person or persons who shall
have acquired the option directly from the optionee by his will or the
applicable law of descent and distribution.
SECTION 3
---------
RECAPITALIZATIONS AND REORGANIZATIONS
-------------------------------------
The number of shares of Common Stock covered by the Plan, the number
of shares and price per share of each outstanding option, and the number of
shares subject to each grant provided for in Section 1 hereof shall be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any other increase
or decrease in the number of issued and outstanding shares of Common Stock
effected without receipt of consideration by the Company.
If the Company shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain to and apply to the
securities to which a holder of the same number of shares of Common Stock that
are subject to that option would have been entitled. A dissolution or
liquidation of the Company, or a merger or consolidation in which the Company is
not the surviving corporation, shall cause each outstanding option to terminate,
unless the agreement of
-4-
<PAGE>
merger or consolidation shall otherwise provide; provided that, in the event
such dissolution, liquidation, merger or consolidation will cause outstanding
options to terminate, optionee shall have the right immediately prior to such
dissolution, liquidation, merger or consolidation to exercise his option in
whole or in part without regard to any limitations on the exercisability of such
option other than the expiration date of the option.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
SECTION 4
---------
MISCELLANEOUS PROVISIONS
------------------------
1. RIGHTS AS A SHAREHOLDER. An optionee or a transferee of an option
as such shall have no rights as a shareholder with respect to any shares covered
by an option until the date of the receipt of payment (including any amounts
required by the Company pursuant to Subsection 10 of Section 1) by the Company.
2. PURCHASE FOR INVESTMENT. Unless the shares of Common Stock to be
issued upon exercise of an option granted under the Plan have been effectively
registered under the Securities Act of 1933, as amended (the "Securities Act"),
the Company shall be under no obligation to issue any shares of Common Stock
covered by any option unless the person who exercises such option, in whole or
in part, shall give a written representation and undertaking to the Company
which is satisfactory in form and scope to counsel to the Company and upon
which, in the opinion of such counsel, the Company may reasonably rely, that he
is acquiring the shares of Common Stock issued to him pursuant to such exercise
of the option for his own account as an investment and not with a view to, or
for sale in connection with, the distribution of any such shares of Common
Stock, and that he will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act, or any other applicable law, and that if shares of Common Stock
are issued without such registration, a legend to this effect may be endorsed
upon the securities so issued.
3. OTHER PROVISIONS. The option agreements authorized under the Plan
shall contain such other provisions, including, without limitation, restrictions
upon the exercise of the option or restrictions required by any applicable
securities laws, as the Board shall deem advisable.
4. APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of Common Stock pursuant to the exercise of options will be used for
general corporate purposes.
-5-
<PAGE>
5. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall
impose no obligation upon the optionee to exercise such option.
(The remainder of this page left blank intentionally)
-6-
<PAGE>
IN WITNESS WHEREOF, AMERICAN FREIGHTWAYS CORPORATION, by its duly
authorized officer, has executed this Plan on the date indicated below.
Dated January 23, 1996 By:/s/Tom Garrison
---------------- ---------------------------
Officer
-7-
<PAGE>
EXHIBIT 10(h)
AMERICAN FREIGHTWAYS CORPORATION
AMENDED AND RESTATED
1993 STOCK OPTION PLAN
Effective Date: January 23, 1996
<PAGE>
AMERICAN FREIGHTWAYS AMENDED AND RESTATED
1993 STOCK OPTION PLAN
<TABLE>
<CAPTION>
Article Page
- ------- ----
<S> <C> <C>
I. Purposes........................................ 1
II. Shares Subject to the Plan...................... 1
III. Administration.................................. 2
IV. Eligibility..................................... 4
V. Maximum Allotment of Incentive Options.......... 5
VI. Option Price and Payment........................ 5
VII. Use of Proceeds................................. 6
VIII. Term of Options and Limitations on
the Right of Exercise........................... 7
IX. Exercise of Options............................. 7
X. Stock Appreciation Rights....................... 8
XI. Nontransferability of Options and
Stock Appreciation Rights....................... 9
XII. Termination of Employment...................... 10
XIII. Adjustment of Shares; Effect of
Certain Transactions........................... 11
XIV. Right to Terminate Employment.................. 12
XV. Purchase for Investment........................ 12
XVI. Issuance of Certificates;
Legends; Payment of Expenses................... 13
XVII. Withholding Taxes.............................. 14
XVIII. Listing of Shares and Related Matters.......... 14
XIX. Amendment of the Plan.......................... 14
XX. Termination or Suspension of the Plan.......... 15
XXI. Governing Law.................................. 15
XXII. Effective Date................................. 15
</TABLE>
<PAGE>
AMERICAN FREIGHTWAYS AMENDED AND RESTATED
1993 STOCK OPTION PLAN
I. PURPOSES
--------
American Freightways Corporation (the "Company") desires to afford
certain of its key employees and key employees of any subsidiary corporation or
parent corporation now existing or hereafter formed or acquired who are
responsible for the continued growth of the Company an opportunity to acquire a
proprietary interest in the Company, and thus to create in such key employees an
increased interest in and a greater concern for the welfare of the Company.
The stock options ("Options") and stock appreciation rights ("Rights")
offered pursuant to this Freightways Stock Option Plan (the "Plan") are a matter
of separate inducement and are not in lieu of any salary or other compensation
for the services of any key employee.
The Company, by means of the Plan, seeks to retain the services of
persons now holding key positions and to secure the services of persons capable
of filling such positions.
The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as it may from time to time be amended (the
"Code"), or options that do not meet the requirements for Incentive Options
("Nonqualified Options"), but the Company makes no warranty as to the
qualification of any Option as an Incentive Option.
II. SHARES SUBJECT TO THE PLAN
--------------------------
The total number of common shares of the Company which either may be
purchased pursuant to the exercise of Options granted under the Plan or acquired
pursuant to the exercise of Rights granted under the Plan shall not exceed, in
the aggregate, 1,000,000 of the presently authorized common shares, $.01 par
value per share, of the Company (the "Shares"). Accordingly, the sum of (a) the
number of Shares subject at any one time to Options or Rights granted under the
Plan and (b) the number of Shares then outstanding pursuant to exercises of
Options or Rights granted under the Plan, shall not exceed 1,000,000 Shares. If
and to the extent that Options granted under the Plan expire or terminate
without having been exercised, new Options or Rights may be granted with respect
to the Shares covered by such expired or terminated
<PAGE>
Options or Rights, provided that the grant and the terms of such new Options or
Rights shall in all respects comply with the provisions of the Plan. The term
"Shares" shall include any securities, cash or other property into which Shares
may be changed through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, split-up, split-off, spin-off, combination of
Shares, exchange of Shares, issuance of rights to subscribe or change in capital
structure. Shares which are subject to Rights and related Options shall be
counted only once in determining whether the maximum number of Shares which may
be purchased or acquired under the Plan has been exceeded.
Shares which may be acquired under the Plan may be either authorized
but unissued Shares, Shares of issued stock held in the Company's treasury, or
both, at the discretion of the Company.
The Company may, from time to time during the period beginning
February 1, 1993 (the "Effective Date") and ending February 1, 2003 (the
"Termination Date"), grant to certain key employees of the Company, or of any
subsidiary corporation or parent corporation of the Company now existing or
hereafter formed or acquired, Options, Rights or both Options and Rights, under
the terms hereinafter set forth provided, however, that any such grants shall
not be effective until this Plan shall have been approved by stockholder vote at
the 1993 Annual Meeting of Stockholders.
Provisions of the Plan which pertain to Options or Rights granted to
an employee shall apply to Options, Rights or a combination thereof.
As used in the Plan, the terms "subsidiary corporation" and "parent
corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.
III. ADMINISTRATION
--------------
The Board of Directors of the Company (the "Board of Directors")
hereby designates the Compensation Committee (the "Committee") as the Committee
of the Board of Directors authorized to administer the Plan. The Committee
shall consist of no fewer than two members of the Board of Directors, each of
whom shall be a "disinterested person" within the meaning of Rule 16b-3 (or any
successor rule or regulation, hereafter "Rule 16b-3") promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). A majority of
the members
-2-
<PAGE>
of the Committee shall constitute a quorum, and the act of a majority of the
members of the Committee shall be the act of the Committee. Any member of the
Committee may be removed at any time either with or without cause by resolution
adopted by the Board of Directors, and any vacancy on the Committee may at any
time be filled by resolution adopted by the Board of Directors.
Subject to the express provisions of the Plan, the Committee shall
have authority, in its discretion, to determine the employees to whom Options or
Rights shall be granted, the time when such Options or Rights shall be granted
to employees, the number of Shares which shall be subject to each Option or
Right, the purchase price of each Share which shall be subject to each Option or
Right, the period(s) during which such Options or Rights shall be exercisable
(whether in whole or in part), and the other terms and provisions thereof. In
determining the employees to whom Options or Rights shall be granted, the
Committee shall consider the length of service, the amount of earnings, the
responsibilities and duties of such employees and such other factors as it
reasonably determines to be relevant to any such employees contribution to the
Company; provided, however, that no employee shall be granted Incentive Options
in any calendar year to purchase shares of stock in the Company or in any
subsidiary corporation or parent corporation of the Company which exceeds the
maximum allotment prescribed in Article V.
Subject to the express provisions of the Plan, the Committee also
shall have authority to construe the Plan and Options and Rights granted
thereunder, to amend the Plan and Options and Rights granted thereunder, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective Options and Rights (which
need not be identical) and to make all other determinations necessary or
advisable for administering the Plan. Any decision of the Committee reduced to
writing and signed by all members of the Committee shall be effective as a
meeting of the Committee. The Committee also shall have the authority to
require, in its discretion, that the employee agree, promptly after the grant of
an Option or Right, (i) not to sell or otherwise dispose of Shares acquired
pursuant to the exercise of an Option or Right granted under the Plan for a
period of six (6) months following the date of grant or exercise of the Option
or Right; and (ii) that in the event of termination of employment of such
employee, other than as a result of dismissal without cause, such employee will
not, for a period to be fixed at the time of the grant of the Option or Right,
enter into any other employment, or participate directly or
-3-
<PAGE>
indirectly in any other business or enterprise, which is competitive with the
business of the Company or any subsidiary corporation or parent corporation of
the Company, or enter into any employment in which such employee will be called
upon to utilize special knowledge and information obtained through employment
with the Company or any subsidiary corporation or parent corporation thereof.
The determination of the Committee on matters referred to in this Article III
shall be conclusive.
Whether or not a Committee is separately designated by the Board of
Directors, any or all powers and functions of the Committee may at any time and
from time to time be exercised by the Board of Directors; provided, however,
that, with respect to the participation in the Plan of employees who are members
of the Board of Directors, such powers and functions of the Committee may be
exercised by the Board of Directors only if, at the time of such exercise, each
of the members of the entire Board of Directors are "disinterested persons"
within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Exchange Act.
The Committee may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Board of
Directors or the Committee in the engagement of such counsel, consultant or
agent shall be paid by the Company. No member or former member of the Committee
or of the Board of Directors shall be liable for any action or determination
made in good faith with respect to the Plan or any Option or Right granted
hereunder.
IV. ELIGIBILITY
-----------
Options and Rights may be granted only to salaried key employees of
the Company or of any subsidiary corporation or parent corporation of the
Company, except members of the Committee and except as hereinafter provided, and
shall not be granted to any officer or director who is not also a salaried key
employee.
An Incentive Option shall not be granted to any person who, at the
time such Option is granted, owns shares of the Company or any subsidiary
corporation or parent corporation of the Company who possesses more than ten
percent (10%) of the total combined voting power of all classes of shares of the
Company or of any subsidiary corporation or parent corporation of the
-4-
<PAGE>
Company, unless (i) the exercise price per share is not less than one hundred
and ten percent (110%) of the fair market value per share on the date such
Option is granted and (ii) such Option by its terms is not exercisable after the
expiration of five (5) years from the date such Option is granted. In
determining share ownership of an employee, the rules of Section 424(d) of the
Code shall be applied, and the Committee may rely on representations of fact
made to it by the employee and believed by it to be true.
V. MAXIMUM ALLOTMENT OF INCENTIVE OPTIONS
--------------------------------------
To the extent that the aggregate fair market value of shares as to
which Incentive Options (determined without regard to this Article V) are
exercisable for the first time by an employee during any calendar year exceeds
$100,000, such options shall be treated as Nonqualified Options.
VI. OPTION PRICE AND PAYMENT
------------------------
The price for each Share purchasable under any Option granted
hereunder shall be such amount as the Committee shall, in its best judgment,
determine on the basis of facts and circumstances to be not less than (i) one
hundred percent (100%) of the fair market value per Share with respect to
Incentive Options, and (ii) one hundred percent (100%) of the fair market value
per Share with respect to Nonqualified Options, at the date any such Option is
granted; provided, however, that, in the case of an Incentive Option granted to
a person who, at the time such Option is granted, owns shares of the Company who
possesses more than ten percent (10%) of the total combined voting power of all
classes of shares of the Company, the purchase price for each share shall be
such amount as the Committee, in its best judgment, shall determine to be not
less than one hundred and ten percent (110%) of the fair market value per Share
at the date the Option is granted.
If the Shares of the Company are listed on a national securities
exchange (including the New York, American or NASDAQ National Market System) in
the United States on the date any Option is granted, the fair market value per
Share shall be deemed to be the average of the high and low sale prices per
share of such Shares of the Company on such national securities exchange in the
United States on such date, as published by the Wall Street Journal or other
reliable publication, but if the Shares of the Company are not traded on such
date or such national securities exchange is not
-5-
<PAGE>
open for business on such date, the fair market value per Share shall be the
average of such high and low sale prices on the last preceding date on which
such exchange shall have been open for business and the Shares of the Company
were traded. If the Shares of the Company are listed on more than one national
securities exchange in the United States on the date any such Option is granted,
the Committee shall determine, in its discretion, which national securities
exchange shall be used for the purpose of determining the fair market value per
Share.
If at the date any Option is granted a public market exists for the
Shares of the Company but such Shares are not listed on a national securities
exchange in the United States, the fair market value per Share shall be deemed
to be the mean between the closing bid and asked quotations in the over-the-
counter market for such Shares of the Company in the United States on the date
such Option is granted. If there are no bid and asked quotations for such
Shares on such date, the fair market value per Share shall be deemed to be the
mean between the closing bid and asked quotations in the over-the-counter market
in the United States for such Shares of the Company on the closest date
preceding the date such Option is granted, for which such quotations are
available.
The Company shall cause such Share certificates to be issued only when
it shall have received the full purchase price for the Shares in cash; provided,
however, that in lieu of cash, the holder of an Option may, if the terms of such
Option so provide in the discretion of the Committee and to the extent permitted
by applicable law, exercise his Option, in whole or in part, by delivering to
the Company common shares of the Company (in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu thereof)
owned by such holder having a fair market value equal to the cash exercise price
applicable to that portion of the Option being exercised by the delivery of such
shares. The fair market value of the shares so delivered to be determined on
the exercise date in the same manner as provided for the determination of the
fair market value on the date of grant, or as may be required in order to comply
with or to conform to the requirements of any applicable laws or regulations.
For this provision, the exercise date is the date on which shares are received
pursuant to the Option and payment is made therefor.
VII. USE OF PROCEEDS
---------------
Any cash proceeds of the sale of Shares subject to the Options granted
hereunder are to be added to the general funds of the Company and used for its
general corporate purposes as the Board
-6-
<PAGE>
of Directors shall determine. Shares received by the Company as payment, in
whole or in part, for the exercise of any Option may, in the discretion of the
Board of Directors, be retained as treasury shares or returned and cancelled.
VIII. TERM OF OPTIONS AND LIMITATIONS
ON THE RIGHT OF EXERCISE
------------------------
Unless the Committee shall determine otherwise (in which event, the
instrument evidencing the Option granted hereunder shall so specify), and
subject to the provisions of Article IV, any Option granted hereunder shall be
exercisable during a period of not more than ten (10) years from the date of
grant of such Option at such times and in such amounts as the Committee shall
determine at such date of grant.
Any Nonqualified Option granted hereunder shall be exercisable at such
times, in such amounts and during such period or periods as the Committee, with
the Board of Directors approval, shall determine at the date of the grant of
such Option.
The Committee shall have the right to accelerate, in whole or in part,
from time to time, conditionally or unconditionally, rights to exercise any
Option granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part. If any Option granted hereunder shall terminate prior to the Termination
Date, the Committee shall have the right to use the Shares as to which such
Option shall not have been exercised to grant one or more additional Options to
any eligible employee, but any such grant of an additional Option shall be made
prior to the close of business on the Termination Date.
In no event shall an Option granted hereunder be exercised for a
fraction of a share.
IX. EXERCISE OF OPTIONS
-------------------
Options granted under the Plan shall be exercised by the optionee as
to all or part of the Shares covered thereby by the giving of written notice of
the exercise thereof to the Corporate Secretary of the Company at the principal
business office of the Company, specifying the number of Shares to be purchased
and accompanied by payment of the purchase price.
-7-
<PAGE>
X. STOCK APPRECIATION RIGHTS
-------------------------
In the discretion of the Committee, a Right may be granted (i) alone,
(ii) simultaneously with the grant of an Option (either Incentive or
Nonqualified) and in conjunction therewith or in the alternative thereto or
(iii) subsequent to the grant of a Nonqualified Option and in conjunction
therewith or in the alternative thereto.
The exercise price of a Right granted alone shall be determined by the
Committee, but shall not be less than one hundred percent (100%) of the fair
market value of one Share on the date of grant of such Right. A Right granted
simultaneously with or subsequent to the grant of an Option and in conjunction
therewith or in the alternative thereto shall have the same exercise price as
the related Option, shall be transferable only upon the same terms and
conditions as the related Option, and shall be exercisable only to the same
extent as the related Option; provided, however, that a Right, by its terms,
shall be exercisable only when the fair market value of the Shares subject to
the Right exceeds the exercise price thereof.
Any Right shall be exercisable upon such additional terms and
conditions as may from time to time be prescribed by the Committee.
A Right shall entitle the holder to receive from the Company, upon a
written request filed with the Corporate Secretary of the Company at its
principal offices (the "Request"), a number of Shares as specified in the
Request (with or without restrictions as to substantial risk of forfeiture and
transferability, as determined by the Committee in its sole discretion), an
amount of cash, or any combination of Shares and cash, as set forth in the
Request (but subject to the approval of the Committee, in its sole discretion,
at any time up to and including the time of payment, as to the making of any
cash payment), having an aggregate value equal to the product of (i) the excess
of the fair market value on the day of such Request of one Share over the
exercise price per Share specified in such Right or its related Option,
multiplied by (ii) the number of Shares for which such Right shall be exercised;
provided, however, that the Committee, in its discretion, may impose a maximum
limitation on the amount of cash, the fair market value of Shares, or a
combination thereof, which may be received by a holder upon exercise of a Right.
Any election by a holder of a Right to receive cash in full or partial
settlement of such Right, and any exercise of such Right for cash, may be made
only by a Request filed with the Corporate Secretary of the Company either (i)
six months prior to the proposed settlement date for
-8-
<PAGE>
such Right, or (ii) during the period beginning on the third business day
following the date of release for publication by the Company of quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date. Within sixty (60) days of the receipt by the
Company of a Request to receive cash in full or partial settlement of a Right or
to exercise such Right for cash, the Committee shall, in its sole discretion,
either consent to or disapprove, in whole or in part, such Request.
If the Committee disapproves in whole or in part any election by a
holder to receive cash in full or partial settlement of a Right or to exercise
such Right for cash, such disapproval shall not affect such holder's right to
exercise such Right at a later date, to the extent that such Right shall be
otherwise exercisable, or to elect the form of payment at a later date, provided
that an election to receive cash upon such later exercise shall be subject to
the approval of the Committee. Additionally, such disapproval shall not affect
such holder's right to exercise any related Option or Options granted to such
holder under the Plan.
A holder of a Right shall not receive cash or Shares of the Company
stock in full or partial settlement of such Right, or upon the full or partial
exercise of such Right, if such Right or the related Option shall have been
exercised during the first six (6) months of its respective term; provided,
however, that such prohibition shall not apply if the holder of such Right dies
or becomes disabled (within the meaning of Section 105(d)(4) of the Code) prior
to the expiration of such six-month period, or if such holder is not a director,
officer or a beneficial owner of more than ten percent (10%) of any class of
equity security of the Company as described in Section 16(a) of the Exchange
Act.
A Right shall be deemed exercised on the last day of its term, if not
otherwise exercised by the holder thereof, provided that the fair market value
of the Shares subject to the Right exceeds the exercise price thereof on such
date.
XI. NONTRANSFERABILITY OF OPTIONS
AND STOCK APPRECIATION RIGHTS
-----------------------------
Neither an Option nor a Right granted hereunder shall be transferable
otherwise than by will or the laws of descent and distribution, and any Option
or Right granted hereunder shall be exercisable, during the lifetime of the
holder, only by such holder.
-9-
<PAGE>
XII. TERMINATION OF EMPLOYMENT
-------------------------
If an employee's employment with the Company shall be terminated by
reason of retirement, the Employee shall have the right to exercise the vested
portions of such Option in no event later than (i) in respect of Incentive Stock
Options, 90 days after the retirement date, and (ii) with respect to other
Options the date the Option would have expired had it not been for such
retirement.
If an employee's employment shall be terminated by reason of death or
disability, the employee shall have the right to exercise vested portions of
such Options for one year following the termination of the employee's
employment. During such one year period following death or disability, Options
held by employee shall continue to vest. Such vesting shall not continue after
such one year period and Options not vested shall expire and terminate.
If an employee's employment shall terminate for reasons other than
death, disability or retirement, any Option or Right previously granted to the
employee, unless otherwise specified by the committee in the Option or Right,
shall, to the extent not theretofore vested, terminate and become null and void.
Employee shall be entitled to exercise any vested portion of an Option or Right
for 90 days following termination.
If applicable to an Option or Right granted hereunder, whenever such
Option or Right shall be exercised by the legal representative of a deceased
employee or former employee, or by a person who acquired an Option or Right
granted hereunder by bequest or inheritance or by reason of the death of any
employee or former employee, written notice of such exercise shall be
accompanied by a certified copy of letters testamentary or equivalent proof of
the right of such legal representative or other person to exercise such Option
or Right.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
termination, the individual was an "employee" of such corporation for purposes
of Section 422(a) of the Code. If an individual is on leave of absence taken
with the consent of the corporation by which such individual was employed, or is
on active military service, and is determined to be an "employee" for purposes
of the exercise of an Option or Right, such individual shall not be entitled to
exercise such Option or Right during such period and while the employment
relationship is treated as continuing intact unless such individual shall have
obtained the prior written consent of such corporation, which consent shall be
signed by
-10-
<PAGE>
the Chairman of the Board, the President, a Vice-President or other duly
authorized officer of such corporation.
A termination of employment shall not be deemed to occur by reason of
(i) the transfer of an employee from employment by the Company to employment by
a subsidiary corporation or a parent corporation of the Company or (ii) the
transfer of an employee from employment by a subsidiary corporation or a parent
corporation of the Company to employment by the Company or by another subsidiary
corporation or parent corporation of the Company.
XIII. ADJUSTMENT OF SHARES; EFFECT
OF CERTAIN TRANSACTIONS
-----------------------
Notwithstanding any other provision contained herein, in the event of
any change in the Shares subject to the Plan or to any Option or Right granted
under the Plan (through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares, issuance of rights to subscribe, or change in
capital structure) appropriate adjustments shall be made by the Committee as to
the maximum number of Shares subject to the Plan, the maximum number of Shares
for which Options or Rights may be granted to any one employee and the number of
Shares and price per Share subject to outstanding Options or Rights which may be
granted to any one employee, and the number of Shares and price per Share
subject to outstanding Options or Rights as shall be equitable to prevent
dilution or enlargement of rights under Options or Rights, and the determination
of the Committee as to these matters shall be conclusive; provided, however,
that (i) any such adjustment with respect to an Incentive Option and any related
Right shall comply with the rules of Section 424(a) of the Code, and (ii) in no
event shall any adjustment be made which would render any Incentive Option
granted hereunder other than an Incentive Option for purposes of Section 422 of
the Code.
The Committee may determine, in its discretion, that Options and
Rights may become immediately exercisable upon the occurrence of a transaction
involving a "change in control" of the Company, which transactions shall be as
defined in the Option Agreement or other document pursuant to which Options or
Rights are granted. A "change in control" transaction may include a merger or
consolidation of the Company, a sale of all or substantially all of its assets,
or the
-11-
<PAGE>
acquisition of a significant percentage of the voting power of the Company, or
such other form of transaction as the Committee determines to constitute a
change in control.
The Committee, in its discretion, may also determine that, upon the
occurrence of such a "change in control" transaction, each Option or Right
outstanding hereunder shall terminate within a specified number of days after
notice to the holder, and such holder shall receive, with respect to each Share
subject to such Option or Right, an amount equal to the excess of the fair
market value of the Shares immediately prior to the occurrence of such
transaction over the exercise price of such Option or Right; such amount shall
be payable in cash, in one or more of the kinds of property payable in such
transaction, or in a combination thereof, as the Committee in its discretion
shall determine.
XIV. RIGHT TO TERMINATE EMPLOYMENT
-----------------------------
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation or parent corporation thereof to continue the employment
of any holder of an Option or Right; it shall not impose any obligation on the
part of any holder of an Option or Right to remain in the employ of the Company
or of any subsidiary corporation or parent corporation thereof.
XV. PURCHASE FOR INVESTMENT
-----------------------
Except as hereafter provided, the holder of an Option or Right granted
hereunder shall, upon any exercise hereof, execute and deliver to the Company a
written statement, in form satisfactory to the Company, in which such holder
represents and warrants that such holder is purchasing or acquiring the Shares
acquired thereunder for such holder's own account, for investment only and not
with a view to the resale or distribution of any of such Shares. Any resale or
distribution of such Shares shall be made only pursuant to either (a) a
Registration Statement on an appropriate form under the Securities Act of 1933,
as amended (the "Securities Act"), which Registration Statement shall have
become effective and is then current with regard to the Shares being sold, or
(b) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption the holder shall, prior to any offer of sale
or sale of such Shares, obtain a prior favorable written opinion, in form and
substance satisfactory to the Company, from counsel for or approved by the
Company, as to the application of such exemption thereto. The foregoing
-12-
<PAGE>
restriction shall not apply to (i) issuances by the Company so long as the
Shares being issued are registered under the Securities Act and a prospectus in
respect thereof is current or (ii) reofferings of Shares by affiliates of the
Company (as defined in Rule 405 or any successor rule or regulation promulgated
under the Securities Act) if the Shares being reoffered are registered under the
Securities Act and a prospectus in respect thereof is current.
XVI. ISSUANCE OF CERTIFICATES;
LEGENDS; PAYMENT OF EXPENSES
----------------------------
Upon any exercise of an Option or Right which may be granted hereunder
and, in the case of an Option, payment of the purchase price, a certificate or
certificates for the Shares as to which the Option or Right has been exercised
shall be issued by the Company in the name of the person exercising the Option
or Right and shall be delivered to or upon the order of such person or persons,
as permitted by state or federal securities law.
The Company may place such legend or legends upon the certificates for
Shares issued upon exercise of an Option or Right granted hereunder, and the
Committee may issue such "stop transfer" instructions to its transfer agent in
respect of such Shares, as the Committee, in its discretion, determines to be
necessary or appropriate to (i) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act, (ii)
implement the provisions of any agreement between the Company and the optionee
or grantee with respect to such Shares, or (iii) permit the Company to determine
the occurrence of a disqualifying disposition, as described in Section 421(b) of
the Code, of Shares transferred upon exercise of an Incentive Option granted
under the Plan.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer, except
fees and expenses which may be necessitated by the filing or amending of a
Registration Statement under the Securities Act, which fees and expenses shall
be borne by the recipient of the Shares unless such Registration Statement has
been filed by the Company for its own corporate purposes (and the Company so
states) in which event the recipient of the Shares shall bear only such fees and
expenses as are attributable solely to the inclusion of such Shares in the
Registration Statement.
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<PAGE>
All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.
XVII. WITHHOLDING TAXES
-----------------
Upon exercise of a Right or an Option and the issuance of Shares
hereunder, the Optionee shall remit to the Company an amount of cash (in the
form of a cashiers' check) sufficient to satisfy any taxes required by any
government to be withheld or otherwise deducted and paid by the Company in
respect of such issuance of Shares.
XVIII. LISTING OF SHARES AND RELATED MATTERS
-------------------------------------
If at any time the Board of Directors shall determine in its
discretion that the listing, registration or qualification of the Shares covered
by the Plan upon any national securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the sale or
purchase of Shares under the Plan, no Shares shall be delivered unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board of Directors.
XIX. AMENDMENT OF THE PLAN
---------------------
The Board of Directors may, from time to time, amend the Plan,
provided that no amendment shall be effective, without the approval of the
holders of a majority of the voting stock of the Company present in person or by
proxy at a meeting thereof (or pursuant to a written consent in lieu of such a
meeting), if such approval is necessary to maintain compliance with the
provisions of Rule 16b-3. The Committee shall be authorized to amend the Plan
and the Options granted thereunder to permit the Options granted thereunder to
qualify as incentive stock options under Section 422 of the Code and the
Treasury regulations promulgated thereunder and, to the extent permitted under
applicable laws, rules, and regulations, to include a cashless exercise
provision of Article VI. The rights and obligations under any Option or Right
granted before amendment of the
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<PAGE>
Plan or any unexercised portion of such Option or Right shall not be adversely
affected by amendment of the Plan or the Option or Right without the consent of
the holder of the Option or
Right.
XX. TERMINATION OR SUSPENSION OF THE PLAN
-------------------------------------
The Board of Directors may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated under Article XXII or by action of the Board
of Directors, shall terminate at the close of business on the Termination Date.
An Option or Right may not be granted while the Plan is suspended or after it is
terminated; provided, however, that options or rights previously issued and
unexpired shall continue to exist and may be validly exercised, pursuant to the
provisions of the Plan, until each option and/or right individually expires.
Rights and obligations under any Option or Right granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except upon the consent of the person to whom the Option or Right was
granted. The power of the Committee to construe and administer any Options or
Rights granted prior to the termination or suspension of the Plan under Article
III shall nevertheless continue after such termination or during such
suspension.
XXI. GOVERNING LAW
-------------
The Plan, such Options and Rights as may be granted thereunder and all
related matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Arkansas from time to time obtaining.
XXII. EFFECTIVE DATE
--------------
The Plan shall become effective at 3:00 P.M., Central Standard time,
on the Effective Date, the date on which the Plan was adopted by the Board or
Directors. Grants of Option or Rights made prior to shareholder approval as
required under Section II hereof shall be effective upon the date of such
shareholder approval.
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<PAGE>
CERTIFICATE
-----------
I, Tom Garrison, Secretary of American Freightways Corporation,
certify that the foregoing is a true and correct copy of the American
Freightways Corporation Amended and Substituted Stock Option Plan as adopted by
the board of directors of the corporation January 23, 1996, and authorized by
its shareholders April 22, 1993.
/s/Tom Garrison
---------------
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<PAGE>
EXHIBIT 10(l)
AMERICAN FREIGHTWAYS CORPORATION
AMENDED AND RESTATED
EXCESS BENEFITS PLAN
ARTICLE I
ESTABLISHMENT OF PLAN
---------------------
Section 1.01. Establishment. American Freightways Corporation Excess
Benefits Plan was established effective as of 1993. This amended and restated
Plan is effective March 1, 1994.
Section 1.02. Purpose. The purpose of this Plan is solely to provide
benefits in excess of the limitations of Section 415(c), 415(e), 401(k) and
Section 401(a)(17) of the Internal Revenue Code of 1986, or corresponding
provisions of subsequent federal tax laws ("Code") to a select group of
management or highly compensated employees upon whose efforts the continued
successful operation of the Company is largely dependent, and to ensure the
continued availability of their services to the Company.
Section 1.03. Funding. The Plan is unfunded and the rights, if any,
of any person to any benefits hereunder shall be the same as any unsecured
general creditor of the Company. The benefits payable under this Plan shall be
paid by the Company each year out of the Trust under the American Freightways
Corporation Amended and Restated Executive Saving Plan dated as of March, 1993
(the "Trust"), to the full extent of the assets contained in the Trust,
otherwise out of the Company's general assets.
ARTICLE II
DEFINITIONS AND INTERPRETATION
------------------------------
Section 2.01. Definitions. When the initial letter of a word or
phrase is capitalized herein, such word or phrase shall have the meaning
hereinafter set forth;
(a) "Board" means the Board of Directors of the Company which shall
interpret the Plan in its sole discretion.
(b) "Company" means American Freightways Corporation.
<PAGE>
(c) "Excess Benefit Plan Account" means the book reserve established for
each Participant to which shall be credited his benefit under this
Plan.
(d) "Participant" means a participant under the Profit-Sharing Plan (i)
who is designated by the Board as being eligible to participate in
this Plan, (ii) who agrees to be bound by the provisions of this Plan
on a form provided by the Company and (iii) who is, or whose
beneficiaries are entitled to benefits under the Plan.
(e) "Plan" means the "American Freightways Corporation Amended and
Restated Excess Benefits Plan" as set forth herein and as it may be
amended from time to time hereafter.
(f) "Profit-Sharing Plan" means the "American Freightways Corporation
401(k) Profit-Sharing Plan" as amended from time to time.
(g) "Trust" means the Trust under the American Freightways Corporation
Amended and Restated Excess Benefits Plan, as may be amended from time
to time.
Section 2.02. Construction and Governing Law.
(a) This Plan shall be construed, enforced, and administered and the
validity thereof determined in accordance with the laws of the State
of Arkansas.
(b) Words used herein in the masculine gender shall be construed to
include the feminine gender where appropriate and the words used
herein in the singular or plural shall be construed as being in the
plural or singular where appropriate
(c) When the initial letter of a word or phrase is Capitalized herein and
such word or phrase is not defined in Section 2.01, such word or
phrase shall have such meaning as provided in the Profit-Sharing Plan.
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<PAGE>
ARTICLE III
AMOUNT OF BENEFIT
-----------------
Section 3.01. Allocations. If, with respect to any Plan Year, the
allocation made to the Account of a Participant under the Profit-Sharing Plan is
less than the allocation that would have been for the benefit of such
Participant but for the application of the limitations on benefits under Code
Sections 415(c), 415(e), 401(k) or 401(a)(17), the Participant shall be entitled
to have his Plan Account credited with an amount equal to the difference between
the actual allocation made for the benefit of such Participant for the Plan Year
and the allocation that would have been made for such Participant but for the
application of such Code limitations. Such allocation shall be made at such
time as these benefits would have been contributed to the Profit Sharing Plan,
if determinable, otherwise as of the last day of the corresponding year.
Section 3.02. Credited Interest. The balance of a Participant's
Excess Benefit Plan Account as of any Valuation Date shall be credited with a
gain (or debited with a loss), equal to the gain (or loss) such balance would
have experienced had it been invested in the Trust for the period from the date
the funds were credited to such Excess Benefit Plan Account until such Valuation
Date.
Section 3.03. Vesting. A Participant under this Plan shall vest in
his Excess Benefit Plan Account in accordance with the vesting schedule set
forth in the Profit-Sharing Plan.
ARTICLE IV
PAYMENT OF BENEFITS
-------------------
Section 4.01. Retirement. Upon retirement, benefits under this Plan
shall be payable to a Participant on the same date in annual installments over a
five year period. The amount of each installment shall be determined by
multiplying the value of the amount of the Excess Benefit Plan Account to be
distributed by a fraction, the numerator of which is one and the denominator of
which is the total number of installments remaining to be paid. Such benefits
shall be payable commencing with payments under the Profit-Sharing Plan. Such
benefits shall be paid first out of the assets of the Trust, to the extent
thereof, and, otherwise out of the general assets of the Company.
Section 4.02. Termination. Upon the death, disability or other
termination of Participant's employment with the Company other than by
retirement, all vested amounts in such Participant's Excess Benefits Plan
Account shall be distributed in a single cash lump sum payment to Participant
(or his designated beneficiary) on a date that is the later of (i) ninety (90)
days after the date of death, disability or termination, or (ii) January 1 or
the year beginning after the date of such death, disability or termination.
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<PAGE>
ARTICLE V
ADMINISTRATION
--------------
Section 5.01. Plan Administrator. The person or persons designated
by the Plan Administrator of the Profit-Sharing Plan to perform the
administrative functions for the Profit-Sharing Plan shall perform the
administrative functions necessary for the operation of this Plan, except that
no person shall vote or take action with respect to his own Plan benefit.
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.01. Amendments. The Board from time to time may amend,
suspend, or terminate, in whole or In part, any or all of the provisions of this
Plan, effective as of the beginning of any calendar year commencing on or after
the date of adoption of such action by the Board; provided, however, that no
such action shall affect the rights of any Participant, or the operation of this
Plan with respect to any benefits of a Participant which have accrued prior to
such action.
Section 6.02. No Employment Rights. Neither the establishment of
this Plan nor the status of an employee as a Participant shall give any
Participant any right to be retained in the employ of an Employer; and no
Participant and no person claiming under or through such Participant shall have
any right or interest in any benefit under this Plan unless and until the terms,
conditions and provisions of this Plan affecting such Participant shall have
been satisfied,
Section 6.03. Nonalienation. The right of any Participant or any
person claiming under or through such Participant to any benefit or any payment
hereunder shall not be subject in any manner to attachment or other legal
process for the debts of such Participant or person; and the same shall not be
subject to anticipation, alienation, sale, transfer, assignment or encumbrance.
Section 6.04. Limitation of Liability. No member of the Board and no
officer or employee of an Employer shall be liable to any person for any action
taken or omitted in connection with the administration of this Plan, nor shall
an Employer be liable to any person for any such action or omission. No person
shall, because of the Plan, acquire any right to an accounting or to examine the
books or the affairs of an Employer. Nothing in this Plan shall be construed to
create any trust or fiduciary relatIonship between an Employer and any
Participant or any other person.
Suction 6.05. Acceleration of Payment. The Board in its sole
discretion may accelerate the time of payment of any benefit to any Participant
or Beneficiary to the extent that it deems It equitable or desirable under the
circumstances.
Section 6.06. Representative of Board. The Board may from time to
time designate an individual or committee to carry out any duties or
responsibilities of the Board hereunder.
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<PAGE>
Section 6.07. Designation of Beneficiary. Each Participant may
designate a beneficiary in writing to receive any and all payments to which he
may be entitled under this Plan upon his death. If a Participant fails to
designate a beneficiary in writing, benefits remaining unpaid at his death shall
be paid to his surviving spouse and if there is no surviving spouse to the
executor or other personal representative of the Participant to be distributed
in accordance with the Participant's will or applicable law.
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Amended and
Restated Plan to be executed as of this 7th day of February, 1996.
AMERICAN FREIGHTWAYS CORPORATION
By: /s/Tom Garrison
--------------------------
Its: Vice President
-------------------------
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<PAGE>
EXHIBIT 10(m)
AMERICAN FREIGHTWAYS CORPORATION
AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN
WHEREAS, American Freightways Corporation (the "Company"), desires to
adopt an Employee Stock Purchase Plan (the "Plan") providing for the grant of
options to purchase common stock of the Company to eligible employees who are
employed by the Company or its subsidiaries;
Now, therefore, the Company hereby establishes the Plan, the terms of
which shall be as follows:
1. Purpose
-------
The purpose of this Employee Stock Purchase Plan is to give only
eligible employees of American Freightways Corporation, an Arkansas corporation,
and its Subsidiaries, an opportunity to acquire shares of its Common Stock, $.01
par value, and to continue to promote its best interests and enhance the long-
term performance of such Employees.
2. Definitions
Wherever used herein, the following words and phrases shall have the
meanings stated below unless a different meaning is plainly required by the
context:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a committee appointed by the Board and composed of not
less than three members of the Board to which the Board may delegate its
powers with respect to administration of the Plan pursuant to Section 3
hereof.
(e) "Common Stock" means shares of the common stock of the Company, $.01 par
value.
(f) "Company" means American Freightways Corporation, an Arkansas corporation,
and, unless the context hereof requires otherwise, the Subsidiaries.
(g) "Eligible Employee" for the purposes of Section 5 hereof shall mean each
person who, on the applicable Grant Date, is employed by the Company or a
Subsidiary as follows:
1) An Employee who has been employed for more than one year;
<PAGE>
2) An Employee whose customary employment is for more than five months in
any calendar year; and
3) An Employee who is not a Highly Compensated Employee.
Determination of the Committee as to eligible employees shall be conclusive
and binding in all parties.
(h) "Grant Period" means a period of 12 months commencing on the first day of
grant of an Option hereunder.
(i) "Fair Market Value" of Common Stock as of the applicable Grant Date shall
mean:
(1) If the Common stock is listed on a national securities exchange or
market or is traded in the over-the-counter market and sales prices
are regularly reported for the Common Stock, the average of the mean
bid and mean ask prices of the Common Stock as of the Grant Date or,
if applicable, the closing sales price of the Common Stock as reported
by such national exchange or market, or if not quoted on such because
it is a Saturday, Sunday or holiday, or because no trades occurred on
the Grant Date, then on the business day for which such quotations are
available that immediately precedes such Grant Date, and
(2) If the Common Stock is neither listed on a national securities
exchange nor traded on the over-the-counter market, such value as the
Board, in good faith, shall determine.
Notwithstanding any provision of the Plan to the contrary, no determination
made with respect to the Fair Market Value of Common Stock subject to an
Option shall be inconsistent with Section 423 of the Code (or successor
provision) or regulations thereunder.
(j) "Fair Market Value of Common Stock" as of any Purchase Date shall mean:
(1) If the Common Stock is listed on a national securities exchange or
market system, or is traded in the over-the-counter market and sales
prices are regularly reported for the Common Stock, the average of the
mean bid and mean ask price of the Common Stock on the date
immediately preceding the Purchase Date, or if applicable, the closing
sales price of the Common Stock as reported by such national
securities exchange or market; or if not quoted on such because no
trades occurred on such date, then on the business day for which such
quotations are available immediately preceding such date; and
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<PAGE>
(2) If the Common Stock is neither listed on a national securities
exchange nor traded on the over-the-counter market, such value as the
Board, in good faith, shall determine.
Notwithstanding any provision of the Plan to the contrary, no determination
made with respect to the Fair Market Value of Common Stock subject to an
Option shall be inconsistent with Section 423 of the Code or regulations
thereunder.
(k) "Grant Date" means any date on which the Committee elects to grant options
hereunder, it being within the scope of this Plan that any number of Grant
Dates may occur within any one year.
(l) "Highly Compensated Employee" means an employee who meets Section 414(q) of
the Code.
(m) "Option" means an option granted hereunder that will entitle an Eligible
Employee to purchase shares of Common Stock on the applicable Purchase
Date.
(n) "Option Price" means the lower of:
(1) 85% of the Fair Market Value per share of Common Stock as set forth in
Section 2(i) hereof; or
(2) 85% of the Fair Market Value per share of Common Stock as set forth in
Section 2(j) hereof.
(o) "Plan" means the American Freightways Corporation Employee Stock Purchase
Plan as set forth herein.
(p) "Purchase Date" means the date which is one calendar year, less one day,
from the applicable Grant Date. If the Purchase Date falls upon a date
which the Company is not open for business, then the Purchase Date shall be
the next preceding date in which the Company is open for business.
(q) "Subsidiary" or "Subsidiaries" means a corporation or corporations of which
stock possessing at least 51% of the total combined voting power of all
classes of stock entitled to vote is owned by the Company or by any other
Subsidiary or Subsidiaries.
-3-
<PAGE>
3. Administration of the Plan
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board") consisting
of not less than three (3) members appointed by the Board and serving at the
Board's pleasure. Each member of the Committee shall be both a member of the
Board who is a "disinterested person" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (Exchange Act) or any successor rule or
regulation. Any vacancy occurring in the membership of the Committee shall be
filled by appointment by the Board. The Committee may appoint a Plan
Administrator who may or may not be an employee or affiliate of the Company to
assist in the day-to-day administration of the Plan.
-4-
<PAGE>
The Committee may interpret the Plan, prescribe, amend, and rescind any
rules and regulations necessary or appropriate for the administration of the
Plan, and take such other action as it deems necessary or advisable, except as
otherwise expressly reserved to the Board in the Plan. All decisions and
actions made by the Committee pursuant to the provisions of the Plan shall be
made by a majority of its members. Any decision reduced to writing and signed
by a majority of the members shall be fully effective as if it had been made by
a majority at a meeting duly held. Any interpretation, determination or other
action made or taken by the Committee shall be final, binding and conclusive.
4. Maximum Limitations
The total number of shares of Common Stock available for grant as Options
pursuant to Section 5 shall not exceed 600,000, subject to adjustment pursuant
to Section 9 hereof. Shares of Common Stock granted pursuant to the Plan may be
authorized but unissued shares of Common Stock or shares now or hereafter held
by or on behalf of the Company. In the event that any Option granted pursuant
hereto expires or is terminated, surrendered or cancelled without being
exercised, in whole or in part, for any reason, the number of shares of Common
Stock theretofore subject to such Option shall again be available for grant as
an Option hereunder and shall not reduce the total number of shares of Common
Stock available for grant.
5. Basis of Participation and Granting of Options
(a) Each person who is an Eligible Employee on a Grant Date, subject to earlier
termination of the Plan pursuant to Section 13(c) hereof, ending with the
last Grant Date on which shares of Common Stock are available for grant
within the limitation set forth in Section 4, will be granted an Option
hereunder which will entitle such Eligible Employee at the discretion of
such Eligible Employee to purchase on the Purchase Date, at the Option
Price per share, a whole number of shares of Common Stock having a Fair
Market Value at the Grant Date of no less than $100 and no more than the
greater of (i) the Fair Market Value at the Grant Date of 200 shares of
Common Stock, or (ii) $1,200. The Grant Date applicable to an Option
granted pursuant to this Section 5 shall be the date of the grant of such
Option.
(b) If the number of shares of Common Stock for which Options are granted
pursuant to this Section 5 exceeds the number of shares set forth and
calculated pursuant to Section 4 hereof, then outstanding, unexercised
Options shall, in a nondiscriminatory manner, be reduced.
-5-
<PAGE>
6. Terms of Options.
(a) Each Option granted under Section 5 and exercised by delivering written
notice and payment thereof as provided in Section 7 shall, unless sooner
expired pursuant to Section 6, become exercisable on the Purchase Date.
Each Option not exercised on the Purchase Date next succeeding the Grant
Date shall terminate and expire.
(b) Each Option granted under Section 5 and exercised by electing to authorize
a payroll deduction as provided in Section 7 shall, unless sooner expired
pursuant to Section 6, become exercisable on the Purchase Date. Each
Option not exercised on the Purchase Date next succeeding the Grant Date
shall terminate and expire.
(c) Notwithstanding the foregoing, an Option shall expire on the date that the
employment of the Eligible Employee with the Company and its Subsidiaries
terminates (as such date is determined by the Board or the Committee in its
discretion) for any reason other than death or disability of such Eligible
Employee.
(d) Notwithstanding the foregoing, if the employment of the Eligible Employee
with the Company and its Subsidiaries terminates by reason of the death of
such Eligible Employee, outstanding Option(s) held by such Employee shall
expire on the Purchase Date as set forth in the subject Option.
(e) Notwithstanding the foregoing, if the employment of the Eligible Employee
with the Company and its subsidiaries terminates by reason of the full or
permanent disability of such Eligible Employee (as defined in the Code),
outstanding Option(s) held by such Employee shall become exercisable on the
90th calendar day following the date on which such disability occurs (as
such dates are determined by the Board or the Committee); thereafter, such
Options shall terminate and expire.
7. Manner of Exercise of Options and Parents for Common StocK
(a) An Option may be exercised by an optionee by:
(i) delivering written notice to the Secretary of the Company stating the
number of shares of Common Stock with respect to which the Option is
being exercised (within the maximum and minimum number of such shares
set forth in the Option or in Section 5 hereto) and tendering payment
therefor in full in cash or by certified check on the Purchase Date.
Written notice hereunder will be effective if it is delivered pursuant
to Section 13(i) at or before 5:00 P.M. at the principal executive
offices of the Company either on the date immediately preceding the
Purchase Date or on the Purchase Date. A written notice hereunder
delivered prior to the date immediately preceding the Purchase Date
will not become effective until the date immediately preceding the
Purchase Date and, until effective, may be revoked by the optionee by
delivery of a written revocation to the Secretary of the Company; or
-6-
<PAGE>
(ii) electing to authorize a payroll deduction made by the Company of the
Option Price times the number of shares of Common Stock which the
Optionee anticipates purchasing upon the exercise of the Option by the
optionee. Such amount is to be equally divided by the number of
payroll periods in a twelve month period. Such payroll deductions will
be credited, without interest, to an account under the Plan. As of
the Purchase Date, the amount of each participating employee's account
is totaled. If a participating employee has sufficient funds in his
account to purchase any whole number of full shares of the Common
Stock at the Option Price, such employee shall be deemed to have
exercised his option to purchase shares (to the full extent of funds
in his account as of the Purchase Date) at the Option Price and his
account shall be charged for the amount of the purchase. Any unused
balance in a participating employee's account at the Purchase Date due
to insufficient funds for the purchase of any whole share or due any
limitation on the grant or exercise of options expressed herein will
be refunded without interest. If on or as of the Purchase Date the
optionee elects in writing to acquire a number of shares of Common
Stock having an aggregate Option Price in excess of amounts reserved
in his or her payroll deduction account, then, at the option of such
optionee, such optionee may, on the Purchase Date remit to the Company
the total amount of such excess in cash or cashier's check.
(b) An Eligible Employee may decrease his payroll deduction amount up to four
times (once per quarter) during the Grant Period. Such decrease will
become effective on the next pay period following the receipt by the
Company of written notice of the decrease from the employee. Decreases in
payroll deductions shall proportionally reduce the number of shares of
Common Stock into which the subject Option shall be exercisable. An
Eligible Employee may not increase his payroll deduction once an
authorization for payroll deduction becomes effective.
(c) Prior to an applicable Purchase Date, an Eligible Employee may make total
withdrawals of unused payroll deductions credited to his account under the
Plan by providing proper notice to the Company. Unused balances shall be
paid to such employee, without interest, after the timely receipt of the
notice, and no further payroll deductions may be made for the remainder of
the Grant Period. The number of shares of Common Stock into which the
Option is exercisable shall be reduced to the extent of an Eligible
Employee's withdrawal from his or her payroll deduction account.
As soon as possible following such exercise, a certificate representing the
shares of Common Stock purchased, in the name of the optionee, shall be issued
in the name of the optionee and delivered to the optionee or his designee.
8. Transferability.
No Option may be transferred, assigned, pledged, or hypothecated (whether
by operation of law or otherwise), except as provided by will or the applicable
laws of descent or distribution, and no Option shall be subject to execution,
attachment or similar process. Any attempted assignment,
-7-
<PAGE>
transfer, pledge, hypothecation or other disposition of any Option, or levy of
attachment or similar process upon the Option not specifically permitted herein
shall be null and void and without effect. An Option may be exercised only by
the Eligible Employee during his or her lifetime, or pursuant to Section 6, by
his or her estate or the person who acquires the right to exercise such Option
upon his or her death by bequest or inheritance.
Any shares issued upon exercise of an Option shall, unless subject to a
registration statement that is effective under the Act, bear a legend
restricting transfer thereof, containing substantially the following language:
The securities represented by this certificate have not been registered
under federal or state securities laws.
These securities may not be sold, transferred or assigned in the absence of
an effective registration statement for the securities under applicable
federal or state securities laws or an opinion of counsel satisfactory to
the issuer to the effect that such sale, transfer or assignment is exempt
from registration thereunder.
9. Adjustment Provisions
The aggregate number of shares of Common Stock with respect to which all
Options may be granted hereunder (as set forth in Section 4 hereof), the
aggregate number of shares of Common Stock subject to each outstanding Option,
and the Option Price per share of each Option may all be appropriately adjusted
as the Board may determine for any increase or decrease in the number of shares
of issued Common Stock resulting from a subdivision or consolidation of shares,
whether through reorganization, recapitalization, stock split-up, stock
distribution or combination of shares, or the payment of a share dividend or
other increase or decrease in the number of shares outstanding effected without
receipt of consideration by the Company. Adjustments under this Section 9 shall
be made according to the sole discretion of the Board, and its decision shall be
binding and conclusive.
10. Dissolution, Merger, Consolidation
Upon the dissolution or liquidation of the Company, or upon a merger or
consolidation of the Company pursuant to which the Company is not the surviving
corporation, each Option granted hereunder shall expire as of the effective date
of such transaction; provided, however, that the Board shall give at least 30
days' prior written notice of the intended date in which such event is to be
consummated to each optionee during which time he or she shall have a right to
exercise his or her wholly or partially unexercised Option and, subject to prior
expiration pursuant to Section 6, each Option shall be exercisable after receipt
of such written notice and prior to the effective date of such transaction.
-8-
<PAGE>
11. Effectiveness and Termination of the Plan
The effective date of the Plan is March 1, 1994. Unless terminated sooner
pursuant to the provisions contained herein, the Plan shall terminate on
March 1, 1999.
12. Limitation on Options
Notwithstanding any other provisions of the Plan:
(a) The Company intends that Options granted and Common Stock issued under the
Plan shall be treated for all purposes as granted and issued under an
employee stock purchase plan within the meaning of Section 423 of the Code
and regulations issued thereunder. Any provisions required to be included
in the Plan under said Section and regulations issued thereunder are hereby
included as fully as though set forth in the Plan at length.
(b) No Eligible Employee shall be granted an Option under the Plan if,
immediately after the Option was granted, the Eligible Employee would own
stock constituting 5% or more of the total combined voting power or total
value of all classes of stock of the Company or of any parent or Subsidiary
of the Company. For purposes of this Section 12(b), stock ownership of an
individual shall be as determined under the rules of Section 425(d) of the
Code and stock which the Eligible Employee may purchase under outstanding
Options shall be treated as stock owned by the Eligible Employee.
(c) No Eligible Employee shall be granted an Option under the Plan which
permits his or her rights to purchase stock under all employee stock
purchase plans (as defined in Section 423 of the Code) of the Company and
any parent or Subsidiary of the Company to accrue at a rate which exceeds
$25,000 of Fair Market Value of such stock (determined at the time of the
grant of such Option) for each calendar year in which such Option is
outstanding at any time. Any Option granted under the Plan shall be deemed
to be reduced or otherwise modified to the extent necessary to satisfy this
paragraph (c).
13. General
(a) Legal and Other Requirements. The obligations of the Company to sell and
deliver Common Stock under the Plan shall be subject to all applicable
laws, regulations, rules and approvals, including, but not by way of
limitation, the effectiveness of a registration statement under the
Securities Act of 1933 if deemed necessary or appropriate by the Company.
Certificates for shares of Common Stock issued hereunder may bear any
legend as the Board or the Committee shall in its discretion deem
appropriate.
(b) No Obligation To Exercise. The granting of an Option shall impose no
obligation upon an optionee to exercise such Option.
-9-
<PAGE>
(c) Termination and Amendment of Plan. The Board may from time to time alter,
amend or suspend the Plan or any Option granted hereunder or may at any
time terminate the Plan, except that it may not effect a change
inconsistent with Section 423 of the Code or regulations issued thereunder.
No action taken by the Board under this Section may materially and
adversely affect any outstanding Option without the consent of the holder
thereof.
(d) Withholding Taxes. Upon the exercise of any Option under the Plan, the
Company shall have the right to require the optionee to remit to the
Company an amount sufficient to satisfy all federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for shares of Common Stock.
(e) Right to Terminate Employment. Nothing in the Plan or any agreement
entered into pursuant to the Plan shall confer upon any Eligible Employee
or other optionee the right to continue in the employment of the Company or
any Subsidiary or affect any right which the Company or any Subsidiary may
have to terminate the employment of such Eligible Employee or other
optionee.
(f) Rights as a Shareholder. No holder of options shall, as such, have any
right as a shareholder unless and until certificates for shares of Common
Stock are issued to him.
(g) Leaves of Absence and Disability. The Board or the Committee shall be
entitled to make such rules, regulations and determinations as it deems
appropriate under the Plan in respect of any leave of absence taken by or
disability of any Eligible Employee. Without limiting the generality of
the foregoing, the Board or the Committee shall be entitled to determine
(i) whether or not any such leave of absence shall constitute a termination
of employment within the meaning of the Plan, and (ii) the impact, if any,
of any such leave of absence on Options under the Plan theretofore granted
to any Eligible Employee who takes such leave of absence.
(h) Notices. Every direction, revocation or notice authorized or required by
the Plan shall be deemed delivered to the Company (1) on the date it is
personally delivered to the Secretary of the Company at its principal
executive offices or (2) three business days after it is sent by registered
or certified mail, postage prepaid, addressed to the Secretary at such
offices; and shall be deemed delivered to an optionee (1) on the date it is
personally delivered to him or her or (2) three business days after it is
sent by registered or certified mail, postage prepaid, addressed to him or
her at the last address shown for him on the records of the Company or of
any Subsidiary.
(i) Waiver of Notice. Any person entitled to notice hereunder may waive such
notice.
(j) Company Records. Records of the Company regarding the participant's period
of employment, termination of employment and the reason therefor, leaves of
absence, reemployment and other matters shall be conclusive for all
purposes hereunder, unless determined by the Committee to be incorrect.
-10-
<PAGE>
(k) Information. The Company shall, upon request or as may be specifically
required hereunder, furnish or cause to be furnished, all of the
information or documentation which is necessary or required by the
Committee to perform its duties and functions under this Plan.
(l) No Liability of Company. The Company assumes no obligation or
responsibility to the participant (or such participant's successors and
assigns by operation of law) for any act of, or failure to act on the part
of, the Committee.
(m) Elimination of Fractional Shares. If under any provision of the Plan which
requires a computation of the number of shares of Common Stock subject to
an Option and the number so computed is not a whole number of shares of
Common Stock, such number of shares of Common Stock shall be rounded down
to the next whole number.
(n) Corporation Action. Any action required of the Company shall be by
resolution of the Board or the Committee or by any other person authorized
to so act by resolution of the Board.
(o) Successors. This Plan shall be binding upon the Eligible Employee, the
Company, the Committee and each of their permitted successors and assigns.
(p) Headings. The titles and headings of Sections are included for convenience
of reference only and are not to be considered in construction of the
provisions hereof.
(q) Governing Law. All questions arising with respect to the provisions of
this Plan shall be determined by application of the laws of the State of
Arkansas to the extent not inconsistent with Section 423 of the Code and
regulations hereunder and except to the extent Arkansas law is preempted by
federal law. The decision by the Company to deliver Stock hereunder is
subject to applicable laws and to the approval of any governmental
authority required in connection with the authorization, issuance, sale or
delivery of such Stock.
-11-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Amended and Restated
Plan to be executed as of this 23rd day of January, 1996.
AMERICAN FREIGHTWAYS CORPORATION
By: /s/Tom Garrison
-------------------------
Its: Vice President
-----------------------
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<PAGE>
EXHIBIT 10(v)
VOLVO TRUCK LEASE PLAN
TRUCK LEASE AGREEMENT (TRAC/Non-Maintenance)
THIS LEASE AGREEMENT is made as of December 20, 1995 by and between VT
Finance, Inc. (hereinafter called "Lessor"), a Delaware corporation with a place
of business located at P.O. Box 35129, Tulsa, OK 74153-0129 and American
Freightways, Inc. (hereinafter called "Lessee"), an Arkansas corporation with
its principal place of business located at 2200 Forward Drive, Harrison, AR
72602.
IN CONSIDERATION of the mutual covenants hereinafter contained, Lessor
hereby leases to Lessee, and Lessee hereby leases from Lessor, one or more
vehicles as shall from time to time be described in Schedules, Vehicle Purchase
Orders or Delivery Receipts executed by authorized employees and agents of
Lessee and accepted by Lessor, at its sole discretion, for the rental and lease
term and upon the terms and conditions set forth below:
1. THIS AGREEMENT is a contract of leasing only and shall consist of the
general terms and conditions stated herein which shall be applicable to
every Vehicle leased hereunder, any Schedule which may hereafter be
attached hereto describing certain Vehicles either individually or as a
class and the specific terms for each, and Delivery Receipts or other
evidences of ordering or delivery for each Vehicle delivered to Lessee
by Lessor. Without limiting the generality of the above, it is agreed
that the terms hereof may be changed for specific Vehicles by the
Schedules relating thereto. All of said Schedules, Delivery Receipts
and evidences of ordering or delivery are hereby incorporated by
reference and made a part hereof. Wherever used herein, the term
"Vehicle" or "Vehicles" shall mean such passenger automobiles, trucks
and other motor vehicles and trailers as are leased hereunder from time
to time, together with all additional equipment and accessories thereon.
Vehicles shall at all times remain the property of, and shall be
registered in the name of Lessor, but shall be under the full and
complete control of Lessee. During the term of this lease renewal of
registration in the name of Lessor shall be the responsibility and
expense of Lessee, and Lessor will, upon Lessee's request, furnish to
Lessee a power of attorney to this end. Lessee recognizes that it has
acquired no right, title, option or interest in or to any of the
Vehicles and agrees that it shall not assert any claim in or to an
interest in any Vehicle other than that of a lessee. Lessee agrees to
accept delivery of all vehicles ordered by Lessor pursuant to the
request of Lessee. Lessee shall at all times, and at its sole expense
and cost, keep the Vehicle(s) free from all levies, attachments, liens
and encumbrances and other judicial process other than those arising
solely from acts of Lessor. Lessee shall give Lessor immediate written
notice of any action taken by a third party which may jeopardize
Lessor's rights in any Vehicle and shall indemnify and hold Lessor
harmless from any loss or damages caused thereby.
2. LESSEE AGREES to pay Monthly Rental for each Vehicle in the amounts
stated in the Schedule "A" applicable to such Vehicle. Such amounts
shall be equal to the product of the Monthly Rental Factors stated in
such Schedule for such Vehicle multiplied by the Schedule "A" Value of
such Vehicle stated in such Schedule.
The Monthly Rentals are subject to final depreciation adjustment as
provided in Section 9 of this Lease, using a Final Adjustment Percentage
which is stated in the Schedule "B" applicable to such Vehicle.
"Schedule "A" Value" as used herein shall mean the amount designated as
such in the Schedule "A" for such Vehicle, representing the value of
such Vehicle as determined by Lessor.
<PAGE>
Lessee acknowledges that Schedule "A" Values set forth in the Schedules
are based upon the manufacturer's price and the amount of required
equipment in effect on the date the Schedule is executed. If the
manufacturer's price increases or decreases or if additional items of
equipment are required on the Vehicle prior to or at the time of
delivery of the Vehicle to Lessee, the Schedule "A" Value of such
Vehicle will be adjusted by the amount of such increase or decrease and
by the cost to Lessor of the additional equipment. The "Residual
Value" assigned to each Vehicle represents the product of (a) the
Schedule "A" Value multiplied by (b) the Final Adjustment Percentage
corresponding to expiration of the Maximum Term for such Vehicle, and
is provided for informational purposes only.
In addition to the Monthly Rental, Lessee shall pay to Lessor upon
demand and as Additional Rental all other charges payable by Lessee
which have been paid by Lessor. Lessee also agrees to pay to Lessor,
at the time each Vehicle is delivered, the amount of any Advance
Rentals noted in the Schedule applicable to such Vehicle. All Advance
Rentals shall be held by Lessor and, provided Lessee is not in default,
applied to the payment of the last Monthly Rentals which are due for
the Vehicle to which they relate. If Lessee is in default Lessor may
apply the Advance Rentals to any of Lessee's obligations hereunder as
Lessor in its sole discretion may determine. No interest shall accrue
to Advance Rentals.
3. THE TERM of this Lease in relation to each Vehicle shall extend for a
period not in excess of the Maximum Term noted in the Schedule "A"
relating to such Vehicle. The Lease Term shall commence on the earlier
of (i) the date when such Vehicle is delivered to Lessee or (ii) forty-
eight hours after Lessee has been notified, orally or in writing, that
the Vehicle is ready for delivery (hereinafter called the "Delivery
Date"). If the Delivery Date for such Vehicle is on or before the
fifteenth day of a month, the Monthly Rental for such Vehicle shall
commence as of the first day of such calendar month and if the Delivery
Date for such Vehicle is on or after the sixteenth day of a month, the
Monthly Rental for such Vehicle shall commence on the first day of the
next succeeding calendar month. Lessee may terminate this Lease as to
any Vehicle on any anniversary of the Delivery Date for such Vehicle by
(i) giving notice to Lessor; (ii) returning such Vehicle to Lessor on
such anniversary date in accordance with Section 8 hereof; and (iii)
paying to Lessor any amount owing pursuant to Section 9 hereof relating
to such Vehicle. For each Vehicle so terminated, the term of this Lease
shall end on the earlier of (i) the date such Vehicle is sold in
accordance with Section 8 hereof or (ii) forty-five days after the later
of (a) such anniversary date or (b) the date the Vehicle is actually
returned to Lessor and for each Vehicle as to which the Maximum term has
expired, the term of this Lease shall end on the earlier of (i) the date
such Vehicle is sold in accordance with Section 8 hereof or (ii) forty-
five days after the later of (a) the last day of the Maximum Term or (b)
the date the Vehicle is actually returned to Lessor. If such date is
before the fifteenth day of a month, no Monthly Rental for such Vehicle
shall be payable for such month; if such date is on or after the
fifteenth day of a month, a full Monthly Rental shall be payable for
such month without proration. Lessee may terminate this Lease as to any
Vehicle effective at any other time only upon terms hereafter agreed to
by Lessor.
Lessor's failure to deliver vehicles at the time and places specified,
by reason of labor disorders or other circumstances or events beyond the
control of Lessor, shall not impute liability of any kind to Lessor.
4. THIS LEASE MAY BE TERMINATED by either party regarding vehicles not then
ordered or under lease by giving written notice thereof to the other
party at least five days in advance of the proposed termination date.
After the giving of such notice no additional or replacement vehicles
will be delivered for lease hereunder. Notwithstanding expiration or
termination, all of the provisions of this Lease shall continue in full
force and effect with
<PAGE>
respect to each Vehicle then ordered pursuant to request of Lessee or
then under lease until the end of the lease term for such Vehicle as
provided in Section 3 hereof.
5. USE OF VEHICLES under this Lease is permitted only in the conduct of
Lessee's business in the United States and occasionally in Canada and
only for lawful purposes. No Vehicle shall be used off an improved road
or for transportation of passengers or of material designated as extra
hazardous, radioactive, flammable or explosive. Lessee will permit the
Vehicles to be operated only by safe and careful drivers who are
qualified and properly licensed in accordance with the laws of the
jurisdictions where such Vehicles are used. All operators of the
Vehicles will be conclusively presumed to be the agents, employees or
servants of Lessee and not of Lessor. Upon any complaint from Lessor
specifying illegal, negligent, reckless, careless or abusive handling of
the Vehicles, Lessee shall promptly take such steps as may be necessary
to stop and prevent the recurrence of any such practice. Lessee shall
in all respects comply, and cause all persons operating the Vehicles to
comply, with all applicable requirements of law (including but not
limited to rules, regulations, statutes and ordinances) relating to the
licensing, maintenance and operation of the Vehicles (including weight
limitations, tire requirements, load, axle and spring limits) and with
all terms and conditions of policies of insurance relating to the
Vehicle. Lessee shall immediately notify Lessor of any change of place
of permanent garaging of any Vehicle. Lessee agrees that it will not
load any Vehicle in excess of the lesser of (i) the payload capacity
noted in the manufacturer's specifications for such Vehicle or (ii) the
maximum amount permitted by applicable law.
6. MONTHLY RENTAL and all other amounts owing by Lessee shall be paid to
Lessor at its address stated on page one hereof or at such other place
as Lessor shall hereafter notify Lessee in writing.
Monthly Rentals shall be due and payable in advance on the first day of
each and every month during the term hereof; provided, however, that the
first Monthly Rental for a Vehicle with a Delivery Date on or before the
fifteenth day of a month shall be due and payable on the Delivery Date,
whether or not Lessee shall have received a statement for such amount.
Lessor will render to Lessee monthly statements of the amounts payable
on all Vehicles under this Lease and Lessee shall, within ten (10) days
after receipt of such statements, make payment by one check for each
such statement to the order of Lessor for the Monthly Rental,
Additional Rent and other sums, if any, covered by such statements
without abatement, off-set or counter-claim arising out of any
circumstance whatsoever. Lessee hereby waives any and all existing or
future claims of off-set against the Monthly Rentals, Additional Rents
and Adjusted Rents due hereunder, and agrees to make such payments
regardless of any off-set or claim which may be asserted by Lessee or
on its behalf. For each Monthly Rental or other sum due hereunder
which is not paid when due, Lessee agrees to pay Lessor a delinquency
charge calculated thereon at the rate of 1 1/2% per month for the
period of delinquency or, at Lessor's option, 5% of such Monthly Rental
or other sum due hereunder, provided that such a delinquency charge is
not prohibited by law, otherwise at the highest rate Lessee can legally
obligate itself to pay and/or Lessor can legally collect.
7. FEES, TAXES, GOVERNMENTAL ASSESSMENTS AND CHARGES (INCLUDING INTEREST
AND PENALTIES THEREON) of whatsoever nature, by whomsoever payable,
(other than federal, state or local taxes levied on the net income of
Lessor) levied, assessed or incurred during the entire term of this
Lease in connection with the Vehicles including, but not limited to, the
titling and registration of the Vehicles in all jurisdictions required
by the nature of Lessee's business and the purchase, sale, ownership,
rental, use, inspection and operation thereof, shall be paid by Lessee.
In the event any of said fees, taxes, governmental assessments and
charges shall have been paid by Lessor, of if Lessor is required to
collect or pay any thereof, Lessee shall reimburse Lessor therefor, upon
demand, as Additional Rent, to
<PAGE>
the end that Lessor shall receive the rental as provided in Sections 2
and 9 hereof as a net return on the Vehicles. If requested by Lessor,
Lessee agrees to file, or to refrain from filing, on behalf of Lessor
in form satisfactory to Lessor and before the due date thereof, all
required tax returns and reports concerning the Vehicles with all
appropriate governmental agencies and to mail a copy thereof to Lessor
concurrently with the filing thereof. Lessee further agrees to keep or
cause to be kept and made available to Lessor any and all necessary
records relative to the use of the Vehicles and/or pertaining to the
aforesaid fees, taxes, governmental assessments and charges. Lessee's
obligations under this Section shall survive the expiration or
termination of this Lease.
8. LESSEE SHALL RETURN each Vehicle to Lessor, at Lessee's expense, at the
expiration or termination of this Lease in relation to such Vehicle at
the location where delivery was made or at such other location as is
designated by Lessor in the same working order, condition and repair as
when received by Lessee, excepting only reasonable wear and tear caused
by normal usage of such Vehicle, together with all license plates,
registration certificates, or other documents relating to such Vehicle.
Upon request of Lessee, Lessor may at its sole discretion allow Lessee
to retain some or all of such license plates or other documents. Unless
otherwise agreed by Lessor, Lessee shall give Lessor at least sixty, and
not more than ninety, days notice of the return of any Vehicle. After
said return, Lessor shall cause such Vehicle to be sold at public or
private sale, at wholesale, for the highest cash offer received and
still open at the time of sale. The "net sale proceeds" for said
Vehicle shall be the net amount received by and paid to Lessor after
deducting the cost of sale, the cost of cleaning, repairing, equipping
or transporting said Vehicle and any other expenses of Lessor in
connection therewith.
9. FINAL ADJUSTMENT for each Vehicle will be made upon receipt of the net
sale proceeds therefor and, unless any default shall have occurred and
except as provided below; Lessor shall pay to Lessee the amount, if any,
by which the sum of (a) the net sale proceeds, and (b) surplus insurance
recoveries, if any, on such Vehicle, exceeds (c) a Final Adjustment
Amount, as defined herein, for such Vehicle calculated as of the rental
payment date next preceding the date such Vehicle was returned to Lessor
(referred to hereafter as the "Calculation Date"). The Final Adjustment
Amount for any Vehicle as of a Calculation Date shall be computed by
multiplying the Schedule "A" Value for such Vehicle by that percentage
("Final Adjustment Percentage") opposite the respective Calculation Date
as set forth in the Final Adjustment Table attached hereto as Schedule
B. If the sum of items (a) and (b) is less than item (c), Lessee shall,
within ten days after notice thereof, pay the deficiency to Lessor as
Adjusted Rental without abatement, off-set or counterclaim arising out
of any circumstance whatsoever. Lessor shall promptly determine the
aforesaid amounts and shall render statements therefor to Lessee.
Lessor may apply any sums received as proceeds from any Vehicle which
would otherwise be due to Lessee hereunder against any other obligation
of Lessee and Lessor may off-set the amount of any such rental
adjustment against any claim it may have against Lessee.
10. LOSS OF OR DAMAGE TO EACH VEHICLE and loss of use thereof, from
whatsoever cause, are risks hereby assumed by Lessee from the date
hereof until such Vehicle is returned to and sold by Lessor. If any
Vehicle is lost, stolen, damaged or destroyed, Lessee shall promptly
notify Lessor thereof. Lessor shall have no obligation to repair or
replace any such Vehicle. There shall be no abatement of rental
otherwise due hereunder during the period a Vehicle is stolen or missing
or during the time required for any repair, adjustment, servicing or
replacement of a Vehicle and Monthly Rentals will continue to accrue
until Final Adjustment is made. Final Adjustment in relation to lost,
stolen or destroyed Vehicles shall be made as provided in Section 9,
promptly after sale of the salvage and/or receipt of insurance proceeds,
as applicable or within forty-five days after such loss, theft or
destruction; whichever is earlier. For purposes of Final Adjustment,
lost or stolen Vehicles
<PAGE>
shall be deemed to have been sold as of the date of such loss or
theft, and the amount of net sale proceeds therefor shall be deemed
to be zero. In no event shall Lessor be liable to Lessee, its
employees or agents for business or other losses by reason of loss,
theft, destruction, repair, servicing or replacement of any Vehicle.
11. A. LIABILITY AND PHYSICAL DAMAGE INSURANCE, for bodily injury and
property damage to others, and damage to or loss of Vehicles by
collision, fire, theft, or otherwise, from the time each Vehicle is
delivered to Lessee until the Vehicle is sold after return to Lessor and
legal title passes to the purchaser thereof, shall be purchased and
maintained by Lessee. Lessor shall not be required to order vehicles
for Lessee's use until binders disclosing insurance coverage as herein
provided have been delivered to Lessor. All insurance policies shall
provide primary coverage, shall name Lessor as additional insured, shall
be in such amounts and with such insurers as shall be approved by
Lessor, shall provide for a minimum of 15 days prior written notice to
Lessor before cancellation or material change for any reason, and shall
provide that no act or default of any person other than Lessor shall
affect Lessor's right to recovery under such policies. Minimum
requirements shall be $250,000.00 for bodily injury or death to any one
person; $750,000.00 for any one accident; $100,000.00 for property
damage; or a combined single limit of $750,000.00; and actual cash value
for fire, theft, comprehensive and collision. Deductible amounts shall
not be in excess of $2,500.00. Lessor may from time to time by notice
to Lessee specify higher minimum requirements or additional risks to be
insured against. Lessee shall deliver the policies or other
satisfactory evidence of insurance required hereunder to Lessor, but
Lessor shall be under no duty to examine such evidence of insurance now
to advise Lessee in the event said insurance is not in compliance with
this Lease. Evidence of renewal of all expiring policies will be
delivered to Lessor at least 60 days prior to their respective
expiration dates.
Lessor does not assume any liability for loss of or damage to the
contents or personal property contained in any Vehicles, and Lessee
hereby releases and saves Lessor free from any and all liability for
loss of or damage to any contents or personal property contained in said
Vehicles regardless of the circumstances under which such loss or damage
may occur.
11. B. INDEMNITIES: The term "Liabilities" as used herein shall include
any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, expenses and disbursements of whatsoever
kind and nature, including legal fees and expenses, (whether or not any
of the transactions contemplated hereby are consummated), imposed on,
incurred by or asserted against Lessor (which term as used herein shall
include Lessor's successors, assigns, agents, employees and servants) or
the Vehicles (whether by way of strict or absolute liability or
otherwise), and in any way relating to or arising out of this lease or
the selection, manufacture, purchase, acceptance, ownership, delivery,
non-delivery, lease, possession, use, operation, condition, servicing,
maintenance, repair, improvement, alteration, replacement, storage,
return or other disposition of the Vehicles including, but not limited
to, (i) claims as a result of latent, patent or other defects, whether
or not discoverable by Lessor or Lessee; (ii) claims for patent,
trademark or copyright infringement; (iii) tort claims of any kind,
(whether based on strict liability, on Lessor's alleged negligence or
otherwise), including claims for injury or damage to property or injury
or death to any person, (including Lessee's employees); and (iv) claims
for any interruption of service or loss of business or anticipatory
profits, or consequential damages. Lessor shall have no responsibility
or liability or Lessee, its successors or assigns, or any other person
with respect to any and all Liabilities and, irrespective of any
insurance coverage and commencing on the date each Vehicle is ready for
delivery to Lessee, Lessee hereby assumes liability for, and hereby
agrees, at its sole cost and expense, to indemnify, defend, protect,
save and keep harmless Lessor from and against any and all Liabilities.
Where a Vehicle is operated by Lessee with a trailer or other equipment
not covered by this Lease, then in such event, Lessee warrants that such
trailer or other
<PAGE>
equipment will be in good operating condition, compatible in
all respects with the vehicles with which such trailer or
other equipment is to be used, and in all respects in full compliance
with all federal, state and local statutes, ordinances, rules or
regulations covering said trailer or other equipment, including but not
limited to all licensing and operating requirements. Lessee hereby
assumes liability for, and hereby agrees, at its sole cost and expense,
to indemnify, defend, protect, save and keep harmless Lessor from and
against any and all costs, expenses, damages, (including damages for
loss of any Vehicles leased hereunder) and Liabilities resulting from
Lessee's failure to properly connect, operate or maintain such trailer
or other equipment or to comply with any of the foregoing requirements
or from any other cause. Lessee agrees to give Lessor prompt written
notice of any claim or liability hereby indemnified against.
11. C. LESSEE'S TAX RELATED INDEMNITIES to Lessor are as follows:
(1) General Indemnity. Lessee agrees to pay and to indemnify and hold
Lessor harmless, on an after-tax basis, from and against all sales, use,
personal property, leasing, leasing use, stamp or other taxes, levies,
imposts, duties, charges, or withholdings of any nature (together with
any penalties, fines or interest thereon) now or hereafter imposed
against Lessor, Lessee or the Vehicles or any part thereof or upon the
purchase, ownership, delivery, leasing, possession, use, operation,
return or other disposition thereof, or upon the rentals, receipts or
earnings arising therefrom, or upon or with respect to this Lease
(excluding, however, Federal and State taxes on, or measured by, the net
income of Lessor). Lessee agrees to file, on behalf of Lessor, all
required tax returns concerning the Vehicles with all appropriate
governmental agencies and to furnish to Lessor a copy of each such
return, including evidence of payment, promptly after the due date of
each such filing; provided, that, in the event Lessee is not permitted to
file any such return on behalf of Lessor, then Lessee agrees to prepare
and forward each such return to Lessor in a timely manner with
instructions to Lessor with respect to the filing thereof.
(2) Income Tax Indemnity. Lessee and Lessor agree that Lessor shall be
entitled to accelerated cost recovery (or depreciation) deductions with
respect to the Vehicles, and should, under any circumstances whatsoever,
except as specifically below set forth, either the United States
government or any state tax authority disallow, eliminate, reduce,
recapture, or disqualify, in whole or in part, any benefits consisting of
accelerated cost recovery (or depreciation) deductions with respect to
any Vehicle, Lessee shall then indemnify Lessor by payment to Lessor,
upon demand, of a sum which shall be equal to the amount necessary to
permit Lessor to receive (on an after-tax basis over the full term of
this Lease) the same after-tax cash flow and after-tax yield assumed by
Lessor in evaluating the transactions contemplated by this Lease
(referred to hereafter as "Economic Return") that Lessor would have
realized had there not been a loss or disallowance of such benefits,
together with, on an after-tax basis, any interest or penalties which may
be assessed by the governmental authority with respect to such loss or
disallowance. In addition, if Lessee shall make any addition or
improvement to any Vehicle, and as a result thereof, Lessor is required
to include an additional amount in its taxable income, Lessee shall also
pay to Lessor, upon demand, an amount which shall be equal to the amount
necessary to permit Lessor to receive (on an after-tax basis over the
full term of this Lease) the same Economic Return that Lessor would have
realized had such addition or improvement not been made. Notwithstanding
the foregoing, Lessee's tax indemnification of Lessor shall not extend to
any change in Lessor's accelerated cost recovery (or depreciation) caused
by a change in tax law or policy.
Lessee shall not be obligated to pay any sums required in this subsection
11.C.(2) with respect to any Vehicle in the event the cause of the loss
of the deductions results solely from one or more of the following
events: (1) a failure of Lessor to timely claim accelerated cost
recovery (or depreciation) deductions for the Vehicle in Lessor's tax
return, other than a
<PAGE>
failure resulting from the Lessor's determination, based upon
opinion of counsel or otherwise, that no reasonable basis
exists for claiming accelerated cost recovery (or depreciation)
deductions, or (2) a failure of Lessor to have sufficient gross income to
benefit from accelerated cost recovery (or depreciation) deductions.
Lessor agrees to promptly notify Lessee of any claim made by any federal
or state tax authority against the Lessor with respect to the
disallowance of such accelerated cost recovery (or depreciation)
deductions.
(3) Payment and Enforceability. All amounts payable by Lessee pursuant
to subsection 11.C.(1) or 11.C.(2) shall be payable directly to Lessor
except to the extent paid to a governmental agency or taxing authority.
All the indemnities contained in subsection 11.C.(1) or 11.C.(2) shall
continue in full force and effect notwithstanding the expiration or other
termination of this Lease in whole or in part and are expressly made for
the benefit of, and shall be enforceable by, Lessor. Lessee's
obligations under subsection 11.C.(1) and 11.C.(2) shall be that of
primary obligor irrespective of whether Lessor shall also be indemnified
with respect to the same matter under some other agreement by another
party.
(4) Duration. The obligations of Lessee under subsection 11.C. are
expressly made for the benefit of, and shall be enforceable by, Lessor
without necessity of declaring this Lease in default and Lessor may
initially proceed directly against Lessee under this subsection 11.C.
without first resorting to any other rights of indemnification it may
have. In the event that, during the continuance of this Lease, an event
occurs which gives rise to a liability pursuant to this subsection 11.C.,
such liability shall continue, notwithstanding the expiration or
termination of this Lease, until all payments or reimbursements with
respect to such liability are made.
11. D. ALL OF LESSEE'S obligations, indemnities and liabilities under this
Section 11 shall survive the expiration or termination of this Lease.
Notwithstanding anything else herein to the contrary, in the event that
Lessee fails to procure or maintain insurance as above provided or fails
to perform any other of Lessee's duties or obligations as set forth in
this Lease, Lessor may, but shall have no obligation to, obtain such
insurance at Lessee's expense and perform such other duties and
obligations of Lessee and any amounts expended therefor shall be due and
payable immediately as Additional Rent. Lessee shall not use or permit
the use of any Vehicle at any time when the insurance described above is
not in effect.
12. A. EXPENSE OF OPERATION AND MAINTENANCE of Vehicles in accordance with
manufacturer's recommendations and in condition satisfactory to Lessor,
including but not limited to, cost of fuel, oil, grease, repairs,
maintenance, tires, tubes, storage, parking, tolls, fines and penalties
shall be the responsibility and obligation of Lessee. Lessee shall
reimburse Lessor if Lessor shall pay any of such operating or
maintenance expenses. If tires or parts are removed from a Vehicle,
Lessee shall provide comparable replacements therefor and such
replacements shall become part of the Vehicles by accession. Lessor may
inspect the Vehicles and Lessee's books and records relating thereto at
any time during Lessor's usual business hours. Lessee shall not alter
any Vehicle without the prior written consent of Lessor unless such
alteration is required by law. Lessee agrees to remove all markings
from the Vehicles, at Lessee's expense, prior to the return of the
Vehicles to Lessor.
12. B. ADDITIONAL EQUIPMENT REQUIRED BY LAW. In the event that subsequent
to the Delivery Date of a Vehicle any federal, state or local law,
ordinance, rule or regulation shall require the installation of any
additional equipment or accessories, including but not limited to anti-
pollution and/or safety devices, or in the event that any other
modifications of the Vehicles shall be required by virtue of such law,
ordinance, rule or regulation, then and in any of such events, Lessee
shall pay the full cost thereof, including installation expenses.
Lessor may, at its option, arrange for the installation of such
equipment or the performance
<PAGE>
of such modifications, and Lessee agrees to pay the full cost thereof
as Additional Rent, immediately upon receipt of an invoice for same.
13. NO WARRANTIES; LIMITATION ON LIABILITY: Lessee acknowledges and agrees
(i) that the Vehicles are of a size, design, capacity and manufacture
selected by Lessee, (ii) that the Lessor is not the manufacturer or
seller of the Vehicles or the manufacturer's or seller's agent and (iii)
that LESSEE LEASES THE VEHICLES "AS-IS" AND THAT LESSOR HAS NOT MADE,
AND DOES NOT HEREBY MAKE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE VALUE, CONDITION, QUALITY, MATERIAL, WORKMANSHIP,
DESIGN, CAPACITY, MERCHANTABILITY, DURABILITY, FITNESS OR SUITABILITY OF
THE VEHICLES FOR ANY USE OR PURPOSE OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED WITH RESPECT TO THE VEHICLES.
IN NO EVENT SHALL LESSOR BE LIABLE FOR LOSS OF OR DAMAGE TO CARGO, LOSS
OF PROFITS OR BUSINESS OR FOR INCIDENTAL, SPECIAL OR CONSEQUENTIAL
DAMAGES OF ANY NATURE, HOWSOEVER CAUSED. Provided Lessee is not in
default hereunder, during the term of this Lease as to any Vehicle,
Lessor hereby assigns to Lessee any rights Lessor may have under any
manufacturer's or seller's warranty, to the extent that such assignment
may be made without impairing Lessor's ability to assert such rights in
its own name under such warranty. No suit, claim or settlement shall be
brought or made by Lessee against or with the manufacturer or seller
without the prior written consent of Lessor.
14. A. DEFAULT under this Lease shall occur in the event (i) Lessee shall
fail to pay when due any part of the Monthly Rentals, Additional Rents
or Adjusted Rents payable hereunder or to provide or maintain the
insurance required hereby; (ii) any of Lessee's warranties or
representations shall be or become untrue or breached; (iii) Lessee
shall fail, after fifteen days notice thereof, to correct any failure in
the due performance and observance of any other of the covenants and
obligations of Lessee hereunder; (iv) Lessee shall default under any
other agreement with Lessor or its affiliates; (v) Lessee transfers a
substantial portion of its assets other than in the ordinary course of
business; (vi) a voluntary or involuntary petition under any statute
relating to bankruptcy, reorganization or receivership or under any
other statute relating to the relief of debtors shall be filed by or
against Lessee or any guarantor of Lessee's obligations hereunder; or
(vii) Lessee or any guarantor of Lessee's obligations hereunder shall
make an assignment for the benefit of creditors, admit in writing to
being insolvent or, if Lessee or such guarantor is a natural person, if
such person shall die.
14. B. LESSOR'S REMEDIES:
(1) In the event of such default described above, Lessor shall have no
further obligation to lease vehicles to Lessee and, at the option of
Lessor, all rights of Lessee hereunder and in and to the Vehicles shall
forthwith terminate. Upon such termination Lessee agrees that Lessor
may, without notice to Lessee, either take possession of any or all
Vehicles (with or without legal process) or require Lessee to return all
Vehicles forthwith to Lessor at such location as Lessor shall designate.
Lessee authorizes Lessor and Lessor's agents to enter any premises where
the Vehicles may be found for the purpose of repossessing the same. If
Lessor retakes possession of any of the Vehicles and at the time of such
retaking there shall be in, upon, or attached to the Vehicles any
property, goods, or things of value belonging to Lessee or in the custody
or control of Lessee, Lessor is hereby authorized to take possession of
such property, goods, and things of value and hold the same for Lessee or
to place such property, goods, or things of value in public storage for
the account of, and the expense of, Lessee. Lessor may at its option (i)
sell any or all of the Vehicles which are returned or repossessed
pursuant to this Section and hold Lessee liable for Adjusted Rental as
provided in Section 9, or (ii) lease any or all of the Vehicles to a
person other than Lessee for such term and such rental as Lessor may
elect in its sole discretion, and apply the proceeds of
<PAGE>
such lease, after first deducting all costs and expenses relating to the
termination of this Lease and the retaking of the Vehicles, to Lessee's
obligations hereunder; provided, however, that Lessee shall pay to
Lessor immediately upon demand, as liquidated damages for loss of
bargain and not as a penalty, a sum with respect to each such Vehicle
which represents the excess of the present value at the time of
termination of all Monthly Rentals which would otherwise have accrued
hereunder to the end of the Maximum Term for such Vehicle over the
present value of the aggregate of the rentals to be paid for such
Vehicle by such third party for such period (such present values to be
computed in each case on the basis of a discount factor equal to the
per annum lending rate publicly announced from time to time by
Continental Illinois National Bank and Trust Company of Chicago
as its prime rate, base rate or reference rate for unsecured
loans of the shortest maturity to corporate borrowers in effect on the
date this Lease is terminated by Lessor, from the respective dates upon
which such Monthly Rentals would have been payable hereunder had this
Lease not been terminated). In addition to the other remedies set forth
herein, if any Vehicle is not returned to Lessor, or if Lessor is
prevented from taking possession thereof, Lessee shall pay to Lessor
immediately upon demand Adjusted Rental as provided in Section 9, as if
such Vehicle had been sold on the date this Lease was terminated, and the
amount of net sale proceeds therefor were zero.
(2) Whether or not the Vehicles are returned to, sold or leased by
Lessor, Lessor shall also recover from Lessee all unpaid Monthly Rentals,
Additional Rents and Adjusted Rents then due or owing together with all
costs and expenses, including attorneys' fees, incurred by Lessor in the
enforcement of its rights and remedies under this Lease. In addition,
Lessor may retain as liquidated damages all Monthly Rentals and
Additional Rents and sale proceeds received, including any refunds and
other sums which otherwise would be payable to Lessee, and a sum equal to
the aggregate of all Monthly Rentals and other amounts, including but not
limited to any early termination fee customarily charged by Lessor, (the
due dates of which Rentals and other amounts Lessor may accelerate at its
option) which would have been due during the period ending, for each
Vehicle, on the earliest date on which Lessee could have effectively
terminated this Lease as to such Vehicle pursuant to Section 3 if Lessee
had not defaulted.
(3) The remedies in this Lease provided in favor of Lessor shall not be
deemed exclusive or alternative, but shall be cumulative and shall be in
addition to all other remedies in its favor existing at law or in equity.
Lessee hereby waives any right to trial by jury in any action relating to
this Lease, as well as any requirements of law, now or hereafter in
effect, which might limit or modify any of the remedies herein provided,
to the extent that such waiver is permitted by law. The failure of
Lessor to exercise any of the rights granted it hereunder shall not
constitute a waiver of any such right or establish a custom or course of
dealing.
15. NEITHER THIS LEASE, any rights or obligations hereunder, nor any rights
in or to the Vehicles may be assigned or subleased by Lessee without the
prior written consent of Lessor and no such assignment or sublease shall
be valid or binding on Lessor. Lessor may assign this Lease or an
interest hereunder or in the Vehicles for any purpose without consent of
or notice to Lessee.
16. LESSEE AGREES that at any time and from time to time, after the
execution and delivery of this Lease, it shall, upon request of Lessor,
execute and deliver such further documents and do such further acts and
things as Lessor may reasonably request in order fully to effect the
purposes of this Lease and to protect Lessor's interest in the Vehicles,
including, but not limited to, furnishing any and all information
necessary to enable Lessor or its insurer to defend itself in any
litigation arising in connection herewith. Lessee hereby authorizes
Lessor to insert serial numbers, delivery and Monthly Rental due dates,
and other data on the
<PAGE>
Schedules, Delivery Receipts and other documents relating hereto when
such numbers, dates and data become known to Lessor.
17. NOTICES required or permitted to be given hereunder shall be given in
writing either personally or by registered or certified mail addressed
to the respective party at its address listed on page one hereof or, if
such party has previously given notice of a change of address, to the
address specified in the last such notice of change of address. Notices
shall be deemed received when delivered if personally delivered or, if
mailed, two business days after deposit postage prepaid in the United
States mails.
18. THIS LEASE will become effective only upon acceptance by Lessor. This
form is intended for general use throughout the United States. Any
provision of this Lease which is prohibited or unenforceable in any
jurisdiction shall be ineffective in such jurisdiction to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. It is the intention of the parties hereto
that this contract constitute a lease for tax and other purposes;
however, if for purposes of perfection, this contract is interpreted by
any court as a lease intended as security, Lessee hereby grants to
Lessor a security interest in the vehicles. THIS AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
This Lease and any Schedules and other documents relating hereto may be
modified only in a writing signed by the party against whom enforcement
is sought. No vehicle dealer nor any employee or agent of any dealer or
of any other person has authority to make any representations to Lessee
on Lessor's behalf as to the performance of the Vehicles, or as to any
provision of this Lease or as to any other matter whatsoever. Lessee
has no authority to, and shall not, make any warranty or representation
concerning the Vehicles to any person on Lessor's behalf.
American Freightways, Inc. , Lessee
Witness (or Attest) By/s/Frank Conner
---------------------------------------------------
/s/David T. Shepherd Title Executive Vice President T.I.N. 71-0562003
- -------------------- ---------------------------------------------------
VT FINANCE, INC., LESSOR
Accepted on By/s/D. Collins Hicks
---------------------------------------------------
January 5, 1996 Title Authorizing Representative
- ---------------------- ---------------------------------------------------
(Date)
<PAGE>
SCHEDULE A
----------
This Schedule A is attached to and made part of that certain
Used Vehicle Acquisition Agreement
dated 12/20/95 between American Freightways, Inc. and VT Finance, Inc.
DESCRIPTION OF VEHICLES
-----------------------
Serial Number Make Model Year (body type) Price
------------- ---- ----- ---- --------- -----
4V4VBAPF 6TN723685 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723686 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723687 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723688 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723689 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723690 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723691 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723692 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723693 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723694 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723695 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723696 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723697 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723698 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723699 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723700 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723701 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723702 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723703 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723704 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723705 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723706 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723707 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723708 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723709 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723710 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723711 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723712 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723713 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723714 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723715 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723716 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723717 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723718 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723719 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723720 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723721 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723722 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723723 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723724 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723725 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723726 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723727 Volvo WCA42T 1996 Tractor 56,253.00
Page 1
<PAGE>
4V4VBAPF 9TN723728 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723729 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723730 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723731 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723732 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723733 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723734 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723735 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723736 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723737 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723738 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723739 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723740 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723741 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723742 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723743 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723744 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723745 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723746 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723747 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723748 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723749 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723750 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723751 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723752 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723753 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723754 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723755 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723756 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723757 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723758 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723759 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723760 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723761 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723762 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723763 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723764 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723765 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723766 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723767 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723768 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723769 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723770 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723771 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723772 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723773 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723774 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723775 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723776 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723777 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723778 Volvo WCA42T 1996 Tractor 56,253.00
Page 2
<PAGE>
4V4VBAPF 4TN723779 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723780 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723781 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723782 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723783 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723784 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723786 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723787 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723788 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723789 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723790 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723791 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723792 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723793 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723794 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723795 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723796 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723797 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723798 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723799 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723800 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723801 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723802 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723803 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723804 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723805 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723806 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723807 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723808 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723809 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723810 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723811 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723812 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723813 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723814 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723815 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723816 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723817 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723818 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723819 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723820 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723821 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723822 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723823 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723824 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723825 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723826 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723827 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723828 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723829 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723830 Volvo WCA42T 1996 Tractor 56,253.00
Page 3
<PAGE>
4V4VBAPF 2TN723831 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723832 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723833 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723834 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723835 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723836 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723837 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723838 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723839 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723840 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723841 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723842 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723843 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723844 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723845 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723846 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723847 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723848 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723849 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723850 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723851 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723852 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723853 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723854 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723855 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723856 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723857 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723858 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723859 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723860 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723861 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723862 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723863 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723864 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723865 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723866 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723867 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723868 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723869 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 1TN723870 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 3TN723871 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 5TN723872 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 7TN723873 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN723874 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 0TN723875 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 2TN723876 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723877 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723878 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 8TN723879 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 4TN723880 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 6TN723881 Volvo WCA42T 1996 Tractor 56,253.00
Page 4
<PAGE>
4V4VBAPF 8TN723882 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF XTN723883 Volvo WCA42T 1996 Tractor 56,253.00
4V4VBAPF 9TN724295 Volvo WCA42T 1996 Tractor 56,253.00
-------------
Grand Totals 199 Units 11,194,347.00
=============
American Freightways, Inc. VT Finance, Inc.
By:/s/Frank Conner By:/s/D. Collins Hicks
- -------------------------------- ----------------------------------
Title: Executive Vice President Title: Authorizing Representative
- -------------------------------- ----------------------------------
Page 5
<PAGE>
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table sets forth, for the years indicated, the percentages of
operating expenses and other items to operating revenue:
<TABLE>
<CAPTION>
1995 1994 1993
- -----------------------------------------------------------------
<S> <C> <C> <C>
Operating revenue 100.0% 100.0% 100.0%
Operating expenses and costs:
Salaries, wages and benefits 58.6 53.1 51.4
Operating supplies and expenses 6.8 6.6 6.7
Operating taxes and licenses 4.3 4.1 3.8
Insurance 3.8 3.3 2.4
Communications and utilities 1.9 1.9 2.1
Depreciation and amortization 6.5 6.0 6.5
Rents and purchased transportation 8.1 9.8 12.9
Other 4.6 4.5 4.8
- -----------------------------------------------------------------
Total operating expenses 94.6 89.3 90.6
- -----------------------------------------------------------------
Operating income 5.4 10.7 9.4
Interest expense 1.8 1.5 1.3
Other income, net 0.1 0.2 0.1
- -----------------------------------------------------------------
Income before taxes 3.7 9.4 8.2
Income taxes 1.4 3.6 3.1
- -----------------------------------------------------------------
Income before extraordinary item 2.3 5.8 5.1
- -----------------------------------------------------------------
</TABLE>
[graph appears here]
Average Shares Outstanding (in millions)
Year Amount
1984 10.60
1985 12.56
1986 14.79
1987 15.25
1988 16.63
1989 20.91
1990 22.40
1991 26.64
1992 28.13
1993 28.58
1994 30.36
1995 31.33
1
<PAGE>
RESULTS OF OPERATIONS
1995 COMPARED TO 1994
Revenue
- -------
Operating revenue for 1995 was $572,100,000, up 22.9%, compared to $465,588,000
for 1994. This increase in operating revenue was due almost entirely to a 22.5%
increase in tonnage handled by the Company. Revenue per hundred weight was
basically unchanged in 1995 from 1994 despite the Company effecting a rate
increase of approximately 3.5% on January 1, 1995. This was primarily due to
aggressive, discounted pricing as a result of excess capacity within the less-
than-truckload industry. This excess capacity existed largely as a result of
overall economic conditions during 1995. In order to utilize its excess
capacity and better position the Company for the long-term, the Company elected
to accelerate the pace of expansion of its service territory. The following
expansions of service territory were initiated by the Company during 1995:
. On January 1, 1995, the Company expanded its all-points coverage to the states
of North Carolina and South Carolina with the opening of thirteen new
terminals.
. On April 17, 1995, the Company expanded its service territory with the
addition of terminal locations in: Colorado Springs, Denver, Fort Collins and
Pueblo, CO; Des Moines, IA; Minneapolis/St. Paul, MN; Omaha, NE; Madison and
Milwaukee, WI.
. On July 10, 1995, the Company expanded its all-points coverage to the states
of Colorado, Iowa, Nebraska and Wisconsin with the opening of twelve new
terminal locations.
. On August 14, 1995, the Company provided all-points coverage to the state of
Florida with the opening of seven new terminal locations and opened one
additional terminal in the the state of Georgia.
These expansions of service territory from 14 to 21 states during 1995 were the
primary reasons for the increase in tonnage handled by the Company. In
addition, tonnage was increased by the deregulation of intrastate commerce,
effective January 1, 1995, by the Federal Aviation Administration Authorization
Act of 1994, and by continued market penetration into existing service
territories.
[graph appears here]
Book Value per Share (in dollars)
Year Amount
1984 $0.08
1985 $0.14
1986 $0.17
1987 $0.28
1988 $0.47
1989 $1.36
1990 $1.61
1991 $2.80
1992 $3.19
1993 $3.83
1994 $5.84
1995 $6.24
2
<PAGE>
Management expects that growth in operating revenue is sustainable in the near
term. However, the Company's planned expansions of service territory during 1996
are less aggressive than those initiated during 1995. Any near-term growth in
operating revenue will primarily be due to increased tonnage handled by the
Company.
OPERATING EXPENSES
Operating expenses as a percentage of operating revenue increased to 94.6% in
1995 from 89.3% in 1994. This overall increase was primarily attributable to:
. Salaries, wages and benefits as a percentage of operating revenue increased to
58.6% in 1995 from 53.1% in 1994. The increase in salaries, wages and
benefits as a percentage of operating revenue was primarily a result of three
factors. First, the utilization of Company-operated terminals, rather than
contractor-operated terminals, in expansions of service territory contributed
to this increase. Second, the continuation of the Company's philosophy of
sharing its success with its associates through increased wages and enhanced
benefit packages contributed to this increase. On March 6, 1995, the Company
increased the wages of its drivers, dockmen and clerical associates by
approximately 5.5%. The third factor was the accelerated expansion of service
territory during 1995. Within the expansion territories, wages and benefits
were disproportionately high in relation to operating revenues as new
associates were added to establish an operating base. Management does not
expect salaries, wages and benefits as a percentage of operating revenue to
continue in an upward trend, but expects these expenses as they relate to
operating revenue to stabilize or gradually improve.
. Insurance as a percentage of operating revenue increased to 3.8% in 1995 from
3.3% in 1994. This increase was primarily a result of the Company's increased
experience of accidents and cargo claims, particularly in the areas of cargo
care and liability insurance. Management does not expect a continuation of
the upward trend in insurance expenses as they relate to operating revenue but
expects a stabilization of these expenses near historical levels.
[graph appears here]
Operating Revenue (in millions)
Year Amount
1984 $17.83
1985 $25.04
1986 $34.45
1987 $47.07
1988 $73.08
1989 $97.59
1990 $142.78
1991 $198.26
1992 $262.01
1993 $328.46
1994 $465.59
1995 $572.10
3
<PAGE>
. Depreciation and amortization as a percentage of operating revenue increased
to 6.5% in 1995 from 6.0% in 1994. This increase was primarily due to two
factors. The first factor was the decreased usage of rented equipment in
favor of Company-owned equipment. The second factor was the rapid expansion
of service territory. During the initial stages of expansion of service
territory, depreciation expense is disproportionately high in comparison to
operating revenue. Management expects depreciation expense as a percentage of
operating revenue to stabilize or gradually improve.
[graph appears here]
Total Terminals
Year Amount
1984 31
1985 31
1986 44
1987 64
1988 76
1989 85
1990 100
1991 111
1992 116
1993 132
1994 144
1995 186
These increases in operating expenses as a percentage of operating revenue were
partially offset by improvements in the following area:
. Rents and purchased transportation as a percentage of operating revenue
improved to 8.1% in 1995 from 9.8% in 1994. This improvement was primarily
due to the Company's philosophy of utilizing Company-operated terminals rather
than contractor-operated terminals in expansions of service territory. In
addition, this improvement was partially due to the decreased usage of rented
equipment in favor of Company-owned equipment. Management expects rents and
purchased transportation as a percentage of operating revenue to stabilize
near current levels.
OTHER
Interest expense as a percentage of operating revenue increased to 1.8% in 1995
from 1.5% in 1994. This increase was primarily attributable to increased
borrowings incurred by the Company to finance the expansion of service territory
and support growth in operating revenue.
The effective tax rate of the Company was 38.6% for 1995, up from 38.0% in 1994.
This increase was primarily due to increased state income taxes. Net income for
1995 was $13,083,000, down 51.0%, from $26,696,000 for 1994.
4
<PAGE>
1994 COMPARED TO 1993
Operating revenue for 1994 was $465,588,000, up 41.7%, compared to $328,464,000
for 1993. The growth in operating revenue was primarily attributable to a 34.5%
increase in tonnage handled by the Company from new and existing customers. The
major causes of this increase in tonnage were:
. On April 5, 1993, the Company opened nine new terminals to extend all-points
coverage to the state of Kentucky and the southern regions of Indiana and
Ohio. The year 1994 included a full year of operation of these terminals.
. On January 1, 1994, the Company expanded its all-points coverage to the states
of Indiana and Ohio with the opening of fourteen new terminals.
. The Company continued to increase its market penetration into service
territory that existed on January 1, 1994.
. The one-time increase in tonnage as a result of a strike in April 1994, by the
International Brotherhood of Teamsters against several companies in the less-
than-truckload industry. This one-time, strike-related increase in tonnage
resulted in extra operating revenue of approximately $12,000,000.
In addition to the increase in tonnage, operating revenue was increased by a
5.5% increase in revenue per hundred weight. The major factors contributing to
this increase in revenue per hundred weight were:
. A general rate increase of 2.8% effective January 1, 1994. General rate
increases initially affect approximately 50% of the Company's customers. The
remaining customers' rates are determined by contracts and guarantees and are
negotiated throughout the year.
. The Company's average length of haul increased 3.1% in 1994 as a result of the
Company's expanded service territory.
. The percentage of the Company's total revenue that was truckload (shipments
greater than 10,000 pounds) declined to 8.1% in 1994 compared to 8.8% in 1993.
[graph appears here]
Shareholder's Equity (in millions)
Year Amount
1984 $0.80
1985 $1.71
1986 $2.50
1987 $4.28
1988 $7.75
1989 $28.30
1990 $35.94
1991 $74.64
1992 $89.71
1993 $109.46
1994 $177.18
1995 $195.43
5
<PAGE>
Operating expenses as a percentage of operating revenue improved to 89.3% in
1994 from 90.6% in 1993. This overall improvement was primarily attributable
to:
. Rents and purchased transportation as a percentage of operating revenue
decreased to 9.8% in 1994 from 12.9% in 1993. This decrease was due to the
Company's philosophy of utilizing Company-operated terminals in expansions of
service territory, along with the conversion of four contractor-operated
terminals to Company-operated terminals during 1994. At December 31, 1994, of
the Company's 144 terminals, 10 were contractor-operated. The increased
utilization of Company-operated terminals was one of two primary reasons
salaries, wages and benefits as a percentage of operating revenue increased to
53.1% in 1994 from 51.4% in 1993. The other reason for the increase in
salaries, wages and benefits as a percentage of operating revenue was the
Company's ongoing philosophy of sharing its success with associates through
increased wages and enhanced benefit packages. On March 6, 1994, the Company
increased the wages of its drivers, dockmen and clerical associates by
approximately 5.5%.
. Depreciation and amortization as a percentage of operating revenue decreased
to 6.0% in 1994 from 6.5% in 1993. This improvement was primarily due to
three factors. The first factor was the increased tonnage handled by the
existing fixed cost structure of the Company. The second factor was the one-
time surge in tonnage related to the Teamster strike in April 1994 (where
there was not a comparable surge in equipment in use). The third factor was
the extension of the useful lives of a portion of the Company's revenue
equipment by two years, effective July 1, 1994. Based on the historical
experience of the Company, management expects the extended lives to better
match the economic benefits received from the equipment.
[graph appears here]
Gross Tonnage Hauled (in thousands)
Year Amount
1984 218
1985 289
1986 334
1987 432
1988 586
1989 711
1990 937
1991 1,238
1992 1,615
1993 2,051
1994 2,759
1995 3,380
These improvements in operating expenses as a percentage of operating revenue
were partially offset by increases in the following areas:
. Insurance as a percentage of operating revenue increased to 3.3% in 1994 from
2.4% in 1993. This increase was primarily a result of the Company's increased
experience of accidents and cargo claims, particularly in the areas of cargo
care and liability
6
<PAGE>
insurance. Accidents and cargo claims returned to historical levels during
1994, after being somewhat lower in the prior two years.
. Operating taxes and licenses as a percentage of operating revenue increased to
4.1% in 1994 from 3.8% in 1993. The primary cause for this increase was an
increase in federal fuel taxes in October 1993.
[graph appears here]
Total Number of Tractors
Year Amount
1984 233
1985 270
1986 382
1987 516
1988 714
1989 968
1990 1,195
1991 1,634
1992 1,955
1993 2,453
1994 3,344
1995 4,521
LIQUIDITY AND CAPITAL RESOURCES
Significant capital resources were required by the Company during 1995,
primarily due to the expansion of service territory during 1995 and the startup
costs associated with the expansion of service territory initiated on January 1,
1996. Capital resources were also required to support the continued growth in
tonnage handled by the Company in service territory that existed prior to
January 1, 1995.
Capital requirements during 1995 consisted primarily of $136,923,000 of
investing activities. The Company invested $137,952,000 in capital expenditures
during 1995 comprised of $81,062,000 in additional revenue equipment,
$30,072,000 in new terminal facilities or the expansion of existing terminal
facilities and $26,818,000 in other equipment. Planned expansions of service
territory during 1996 are less aggressive than those expansions initiated during
1995. Therefore, management does not expect a similar amount of capital
expenditures will be required in 1996. However, the amount of capital
expenditures required in 1996 will be dependent on the growth rate of the
Company and the timing and size of any future geographical expansions. At
December 31, 1995, the Company had commitments for land, terminals, revenue and
other equipment of approximately $33,462,000. These commitments were for the
completion of projects in process at December 31, 1995, and for the purchase of
additional revenue equipment in anticipation of increased revenue levels during
1996.
The Company provided for its capital resource requirements in 1995 with cash
from operations and financing activities. Cash from operations totaled
$45,676,000 in 1995
7
<PAGE>
compared to $65,501,000 in 1994. This decrease was primarily attributable to the
increase in operating expenses, as they relate to operating revenue in 1995
compared to 1994. Financing activities augmented cash flow by $89,890,000 in
1995, utilizing two primary sources of financing: the revolving line of credit
and the Master Shelf facility.
. The Company experiences periodic cash flow fluctuations common to the
industry. Cash outflows are heaviest during the first part of any given year
while cash inflows are normally weighted towards the last two quarters of the
year. To smooth these fluctuations and to provide flexibility to fund future
growth, the Company utilizes a variable-rate, unsecured revolving line of
credit provided by NationsBank of Texas, N.A., Texas Commerce Bank, N.A. and
Wachovia Bank of Georgia, N.A. Effective May 31, 1995, the limit of this line
of credit facility was increased to $125,000,000 from $75,000,000. During
1995, the Company utilized this facility to provide $57,000,000 of net
financing, bringing outstanding borrowings under the facility to $94,000,000
and leaving $31,000,000 available for borrowing. The Company also maintains a
short-term, unsecured revolving line of credit with NationsBank of Texas, N.A.
Effective May 9, 1995, the limit of this short-term facility was increased to
$7,500,000 from $5,000,000. At December 31, 1995, $7,500,000 was available
for borrowing. In addition, the Company maintains a $10,000,000 line of
credit with NationsBank, N.A. to obtain letters of credit required for its
self-insurance program. At December 31, 1995, the Company had obtained
letters of credit totaling $5,870,000 for this purpose.
[graph appears here]
Total Assets (in millions)
Year Amount
1984 $ 7.47
1985 $ 11.66
1986 $ 15.37
1987 $ 23.20
1988 $ 43.47
1989 $ 68.90
1990 $ 97.95
1991 $168.13
1992 $175.53
1993 $251.13
1994 $355.35
1995 $477.76
. To assist in financing longer-lived assets, the Company has an uncommitted
Master Shelf Agreement with the Prudential Insurance Company of America which
provides for the issuance of up to $90,000,000 in medium to long-term
unsecured notes at an interest rate calculated at issuance. During 1995, the
Company utilized this agreement to issue a $15,000,000 note at 8.85% with a
ten year maturity and a $20,000,000 note at 6.92% with a ten year maturity.
The proceeds of these notes were used primarily to repay borrowings from the
revolving line of credit or to fund capital expenditures. At December 31,
1995, $25,000,000 was available under this facility for borrowing.
8
<PAGE>
Working capital at December 31, 1995, increased $14,830,000, compared to
December 31, 1994. This increase was primarily the result of a $14,301,000
increase in trade receivables, less allowance for doubtful accounts, at December
31, 1995, compared to December 31, 1994.
Management expects that the Company's existing working capital and its available
lines of credit are sufficient to meet the Company's commitments as of December
31, 1995, and to fund current operating and capital needs. However, if
additional financing is required, management believes it will be available.
The Company utilizes off-balance sheet financing in the form of operating
leases, when appropriate and suitable, to finance computer equipment, terminal
facilities and revenue equipment. At December 31, 1995, future rental
commitments on operating leases were $54,805,000.
ENVIRONMENTAL
At December 31, 1995, the Company had no outstanding inquiries with any state or
federal environmental agency.
INFLATION
During 1995, the effect of inflation on the operating results of the Company was
minimal. However, most of the Company's expenses are sensitive to inflation as
increases in inflation generally result in increased costs.
[graph appears here]
Average Length of Haul (miles)
Year Amount
1984 264
1985 290
1986 289
1987 274
1988 300
1989 360
1990 395
1991 454
1992 525
1993 550
1994 567
1995 588
SEASONALITY
In the trucking industry, results of operations generally show a seasonal
pattern because customers reduce shipments during winter months. In addition,
the Company's operating expenses as a percentage of operating revenues have
historically been higher during the winter.
9
<PAGE>
[graph appears here]
Total Number of Shipments (in thousands)
Year Amount
1984 227
1985 313
1986 437
1987 613
1988 949
1989 1,252
1990 1,693
1991 2,179
1992 2,654
1993 3,237
1994 4,267
1995 5,486
OTHER MATTERS
In October 1995, the Financial Accounting Standards Board issued Statement No.
123, Accounting for Stock-Based Compensation, which will be effective for 1996.
The Company has elected to continue following the existing accounting rules (the
intrinsic value method) and has disclosed such in the 1995 financial statements.
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of. Although this Statement will also be applicable for
1996, the Company does not expect it to have a significant impact on the
Company's financial position or results of operations.
RECENT EVENTS
On January 1, 1996, the Company opened twelve new terminals and extended its
all-points coverage to the states of Delaware, Maryland, Virginia and West
Virginia.
On January 1, 1996, the Company effected a general rate increase of
approximately 5.75%. This rate increase initially affected approximately 44% of
its customers. Rates for other customers are covered by contracts and
guarantees and are negotiated throughout the year.
Effective January 1, 1996, the Company expanded its coverage to include 92% of
Canada's population through an exclusive partnership with Day & Ross, Inc., one
of Canada's leading less-than-truckload carriers. Day & Ross, Inc. is part of
the Day & Ross Transportation Group, Canada's largest truck transportation
conglomerate and is a wholly-owned subsidiary of the Canadian-based McCain Food
Company. Day & Ross, Inc. corporate offices are located in Hartland, New
Brunswick, Canada.
10
<PAGE>
[graph appears here]
Total Number of People
Year Amount
1984 288
1985 340
1986 385
1987 745
1988 1,156
1989 1,516
1990 2,209
1991 3,058
1992 3,655
1993 4,964
1994 6,506
1995 8,867
11
<PAGE>
American Freightways Corporation and Subsidiary
Consolidated Balance Sheets
(thousands, except per share data)
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
--------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 9) $ 2,642 $ 3,999
Trade receivables, less allowance for doubtful accounts
(1995--$845; 1994--$639) 54,119 39,818
Operating supplies and inventories 2,136 1,519
Prepaid expenses 5,504 4,247
Deferred income taxes (Note 4) 8,444 4,664
Income taxes receivable 4,368 -
--------------------------
Total current assets 77,213 54,247
Property and equipment (Notes 3 and 6):
Land and structures 97,303 83,244
Revenue equipment 322,748 230,732
Service, office and other equipment 66,012 49,324
Leasehold improvements 1,650 1,439
Construction in progress 42,876 31,855
Allowances for depreciation and amortization
(deduction) (132,887) (98,701)
--------------------------
397,702 297,893
Other assets:
Bond funds (Notes 3 and 9) 901 888
Other 1,946 2,320
--------------------------
2,847 3,208
--------------------------
$ 477,762 $ 355,348
==========================
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
--------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 10,532 $ 13,358
Accrued expenses (Note 2) 33,590 24,449
Federal and state income taxes - 233
Current portion of long-term debt 8,392 6,338
--------------------------
Total current liabilities 52,514 44,378
Long-term debt, less current portion (Notes 3 and 9) 189,239 104,843
Deferred income taxes (Note 4) 40,575 28,947
Shareholders' equity (Notes 3, 5 and 7):
Common stock, par value $.01 per share; authorized
250,000 shares; issued and outstanding 30,931 shares
in 1995 and 30,496 in 1994 309 305
Additional paid-in capital 98,514 93,347
Retained earnings 96,611 83,528
--------------------------
195,434 177,180
Commitments (Note 6)
--------------------------
$ 477,762 $ 355,348
==========================
</TABLE>
See accompanying notes.
13
<PAGE>
American Freightways Corporation and Subsidiary
Consolidated Statements of Income
(thousands, except per share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
----------------------------------
<S> <C> <C> <C>
Operating revenue $572,100 $465,588 $328,464
Operating expenses and costs:
Salaries, wages and benefits 335,167 247,049 168,770
Operating supplies and expenses 38,667 30,710 22,099
Operating taxes and licenses 24,434 19,251 12,340
Insurance 21,595 15,360 7,891
Communications and utilities 11,040 9,117 6,907
Depreciation and amortization 37,560 27,888 21,519
Rents and purchased transportation 46,405 45,633 42,250
Other 26,469 20,880 15,782
----------------------------------
541,337 415,888 297,558
----------------------------------
Operating income 30,763 49,700 30,906
Other income (expense):
Interest expense (10,198) (6,832) (4,246)
Interest income 146 195 132
Gain on disposal of assets 329 292 1
Other, net 269 247 197
----------------------------------
(9,454) (6,098) (3,916)
----------------------------------
Income before income taxes and extraordinary
charge 21,309 43,602 26,990
Federal and state income taxes (Note 4):
Current (credit) (422) 7,071 4,189
Deferred 8,648 9,500 6,049
----------------------------------
8,226 16,571 10,238
----------------------------------
Income before extraordinary charge 13,083 27,031 16,752
Extraordinary charge for early retirement of debt,
net of tax benefit of $205 (Note 3) - (335) -
----------------------------------
Net income $ 13,083 $ 26,696 $ 16,752
==================================
Per share (Note 1):
Income before extraordinary charge $ 0.42 $ 0.89 $0.59
Extraordinary charge - (0.01) -
----------------------------------
Net income $ 0.42 $ 0.88 $0.59
==================================
Average shares outstanding (Note 1) 31,334 30,357 28,581
==================================
</TABLE>
See accompanying notes.
14
<PAGE>
American Freightways Corporation and Subsidiary
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
COMMON STOCK
----------------- ADDITIONAL
PAR PAID-IN RETAINED
SHARES VALUE CAPITAL EARNINGS TOTAL
---------------------------------------------------------
(thousands)
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1993 27,694 $ 277 $ 49,352 $ 40,080 $ 89,709
Stock option and purchase plans 329 3 2,996 - 2,999
Net income - - - 16,752 16,752
---------------------------------------------------------
Balances at December 31, 1993 28,023 280 52,348 56,832 109,460
Sale of stock (Note 7) 2,125 21 36,630 - 36,651
Stock option and purchase plans 348 4 4,369 - 4,373
Net income - - - 26,696 26,696
---------------------------------------------------------
Balances at December 31, 1994 30,496 305 93,347 83,528 177,180
Stock option and purchase plans 435 4 5,167 - 5,171
Net income - - - 13,083 13,083
---------------------------------------------------------
Balances at December 31, 1995 30,931 $ 309 $ 98,514 $ 96,611 $ 195,434
=========================================================
</TABLE>
See accompanying notes.
15
<PAGE>
American Freightways Corporation and Subsidiary
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
-------------------------------------
(thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Cash received from customers $ 557,139 $ 454,308 $ 323,298
Cash paid to suppliers and employees (498,454) (377,424) (266,724)
Interest received 146 195 132
Interest paid (9,907) (7,152) (4,157)
Income taxes paid (3,248) (4,426) (5,729)
-------------------------------------
Net cash provided by operating activities 45,676 65,501 46,820
INVESTING ACTIVITIES
Proceeds from sales of equipment 1,029 945 1,162
Capital expenditures (137,952) (116,272) (95,085)
-------------------------------------
Net cash used by investing activities (136,923) (115,327) (93,923)
FINANCING ACTIVITIES
Proceeds from notes payable and long-term
borrowings 117,640 74,500 44,000
Principal payments on long-term debt (31,190) (60,856) (1,767)
Proceeds from issuance of common stock 3,440 39,938 2,172
-------------------------------------
Net cash provided by financing activities 89,890 53,582 44,405
-------------------------------------
Net increase (decrease) in cash and cash
equivalents (1,357) 3,756 (2,698)
Cash and cash equivalents at beginning of year 3,999 243 2,941
-------------------------------------
Cash and cash equivalents at end of year $ 2,642 $ 3,999 $ 243
=====================================
</TABLE>
16
<PAGE>
American Freightways Corporation and Subsidiary
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1995 1994 1993
-----------------------------------
(thousands)
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 13,083 $ 26,696 $ 16,752
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 37,560 27,888 21,519
Provision for losses on accounts receivable 929 1,126 513
Current tax effect of exercise of stock
options 931 1,086 826
Gain on sale of equipment (329) (292) (1)
Deferred income taxes 8,648 9,500 6,049
Changes in operating assets and liabilities:
Trade accounts receivable (15,230) (11,521) (5,403)
Operating supplies and inventories (617) (664) (284)
Prepaid expenses (1,257) (986) (781)
Other assets 244 100 (262)
Trade accounts payable (2,826) 3,534 7,779
Accrued expenses 9,141 7,681 1,653
Federal and state income taxes (4,601) 1,353 (1,540)
-----------------------------------
Total adjustments 32,593 38,805 30,068
-----------------------------------
Net cash provided by operating activities $ 45,676 $ 65,501 $ 46,820
===================================
</TABLE>
See accompanying notes.
17
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of American
Freightways Corporation and its subsidiary (collectively, the "Company"). All
significant intercompany accounts and transactions have been eliminated.
BUSINESS
The Company primarily operates as an interregional, scheduled, for hire, less-
than-truckload motor carrier, serving all points in 21 contiguous states from a
network of 186 terminals. The Company performs ongoing credit evaluations of its
customers and generally does not require collateral. Historically, credit losses
have not been significant.
REVENUE RECOGNITION
The Company recognizes revenue and direct shipment costs upon the delivery of
the related freight.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. For financial reporting purposes,
the cost of such property is depreciated principally by the straight-line method
over the estimated useful lives of 3 to 12 years for revenue and service
equipment, 15 to 40 years for structures and improvements and 3 to 10 years for
furniture and office equipment. For tax reporting purposes, accelerated
depreciation or applicable cost recovery methods are used. Gains and losses are
recognized in the year of disposal.
Effective for periods beginning July 1, 1994, the Company changed the service
lives and salvage values for certain revenue equipment. These changes in
estimates were made to more accurately reflect the Company's experience as to
service lives of the equipment. These changes increased 1994 net income by
approximately $565,000, or $.02 per common share.
Effective for periods beginning October 1, 1995, the Company changed the service
lives for certain structures and improvements, ancillary and computer equipment
and furniture and fixtures. These changes in estimates were made to more
accurately reflect future service lives of the assets. These changes increased
1995 net income by approximately $453,000, or $.01 per common share.
18
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INSURANCE
As of December 31, 1995, the Company was self-insured up to specified limits for
the following types of claims:
Workers' compensation:
All states of operation (with the exception of Colorado,
Florida, Indiana, Iowa, Minnesota, Nebraska, Ohio, Texas
and Wisconsin) $ 500,000
State of Wisconsin FULLY INSURED
In the states of Colorado, Florida, Indiana, Iowa, Minnesota, Nebraska and
Texas, workers' compensation claims are insured under a $500,000 deductible
plan. In the state of Ohio, workers' compensation claims are insured under the
mandatory State Plan as private plans are not permitted. Wisconsin law does not
allow deductible plans and those claims are fully insured.
All other types of claims are self-insured with a retention limit of $500,000
per occurrence.
INCOME TAXES
Deferred income taxes are accounted for under the liability method. Deferred
income tax assets and liabilities reflect the effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and the amounts used for income tax purposes.
EARNINGS PER SHARE
Earnings per share is computed based on the weighted average number of shares
outstanding during each year, adjusted to include common stock equivalents
attributable to dilutive stock options and retroactively adjusted for the effect
of a 2-for-1 stock split declared April 22, 1993.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
19
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COMPENSATION TO EMPLOYEES
Stock based compensation to employees is accounted for based on the intrinsic
value method under Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees.
RECENT ACCOUNTING PRONOUNCEMENTS
In 1995, the Financial Accounting Standards Board issued Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of. This statement will be adopted in the first quarter of 1996. The
Company does not expect Statement No. 121 to have a significant impact on the
Company's financial position or results of operations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. ACCRUED EXPENSES
<TABLE>
<CAPTION>
1995 1994
---------------------------
(thousands)
<S> <C> <C>
Accrued salaries, wages and benefits $ 13,796 $ 10,518
Taxes other than income 2,363 2,575
Loss, injury, damage, health and
workers' compensation claims reserves 16,320 10,536
Other 1,111 820
---------------------------
$ 33,590 $ 24,449
===========================
</TABLE>
20
<PAGE>
American Freightways Corpration and Subsidiary
Notes to Consolidated Financial Statements (continued)
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
1995 1994
-------------------------
(thousands)
<S> <C> <C>
Bonds payable /(1)/ $ 7,310 $ 7,580
Revolving credit agreements /(2)/ 94,000 37,000
Mortgage notes /(3)/ 1,107 419
Capitalized lease obligations /(4)/ 214 1,182
Unsecured senior notes /(5)/ 95,000 65,000
-------------------------
197,631 111,181
Less current portion (8,392) (6,338)
-------------------------
$ 189,239 $ 104,843
=========================
</TABLE>
(1) Represents the Company's liability under a loan agreement with Arkansas
Development Finance Authority, issuer of economic development revenue bonds
to construct terminals and a general office facility. The loan agreement
provides that the Company will make payments sufficient to pay the principal
and interest on the bonds. The bonds include a $1,320,000 term bond due in
1999 and a $5,990,000 term bond due in 2009. The bonds bear interest at
fixed rates of 8.25% and 8.50%, respectively, and are collateralized by land
and structures with a net book value of $8,268,000 at December 31, 1995. The
loan agreement requires that certain bond service funds be maintained. As of
December 31, 1995, there was $901,000 in a debt service reserve fund.
Mandatory annual sinking fund redemption payments began in 1995.
(2) The revolving credit agreements at December 31, 1995, include an unsecured
revolving credit agreement which provides for available borrowings of
$125,000,000. Borrowings under this revolving credit agreement at December
31, 1995 totaled $94,000,000. The term of this agreement extends to April 1,
2000 (unless terminated or renewed). Interest is applied to outstanding
borrowings at variable interest rates based on the London Interbank rate or
the prime rate. The weighted average rate on outstanding borrowings at
December 31, 1995 was 6.5%. The agreement contains covenants which limit,
among other things, indebtedness, loans, investments and dividend payments,
as well as require the Company to meet certain financial tests. The Company
pays an annual commitment fee of .20% of the unused commitment. As of
December 31, 1995, the amount available for additional borrowing under this
line of credit was $31,000,000.
21
<PAGE>
American Freightways Corpration and Subsidiary
Notes to Consolidated Financial Statements (continued)
3. LONG-TERM DEBT (CONTINUED)
The Company also has $7,500,000 of available borrowings at December 31,
1995, under a separate unsecured revolving credit agreement. The terms of
this agreement provide for borrowings up to $7,500,000 at the prime rate of
interest or at a rate of interest agreed upon at the time of any borrowings.
No borrowings were outstanding at December 31, 1995 under this agreement.
This agreement matures May 31, 1996, unless terminated or renewed.
In addition, the Company maintains a $10,000,000 line of credit to fund
letters of credit. At December 31, 1995, the Company had utilized this line
of credit to obtain letters of credit totaling $5,870,000.
(3) Mortgage notes are due monthly or quarterly to November 2003 at an average
interest rate of 8.44%. The notes are collateralized by land and structures
with a net book value of $1,618,000 at December 31, 1995.
(4) Capitalized lease obligations consist primarily of installment obligations
for revenue equipment purchases; payable in various monthly installments
through April 1996, at a weighted average interest rate of 9.33% and
collateralized by revenue equipment with a net book value of approximately
$2,417,000 at December 31, 1995.
(5) Includes an unsecured senior note for $30,000,000 payable in equal annual
installments of $5,000,000 through November 2001. The note bears interest at
a fixed rate of 8.91% payable semi-annually.
Also includes five notes totaling $65,000,000; all issued under an unsecured
and uncommitted $90,000,000 Master Shelf Agreement with the following
characteristics:
<TABLE>
<CAPTION>
OUTSTANDING INTEREST
PRINCIPAL MATURITY DATE RATE
-------------------------------------------------------------
<S> <C> <C>
$ 10,000,000 August 2000 6.25%
10,000,000 October 2000 6.00
10,000,000 April 2001 7.55
15,000,000 January 2005 8.85
20,000,000 June 2005 6.92
</TABLE>
22
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consoliated Financial Statements (continued)
3. LONG-TERM DEBT (CONTINUED)
All notes have fixed interest rates, payable quarterly. These note agreements
contain covenants which limit, among other things, loans, indebtedness,
investments and dividend payments, and require the Company to meet certain
financial tests.
Annual maturities on long-term debt, excluding capitalized lease obligations,
are $8,178,000 in 1996, $11,463,000 in 1997, $11,495,000 in 1998, $11,539,000 in
1999, $106,835,000 in 2000 and $47,907,000 thereafter.
Interest costs of $1,478,000, $1,002,000 and $1,568,000 in 1995, 1994, and 1993,
respectively, were capitalized as part of the acquisition cost of certain
property and equipment.
In 1994, the Company paid a note prior to its maturity date and incurred a
prepayment charge of $540,000 which has been classified as an extraordinary
charge in the 1994 statement of income, net of the related income tax benefit of
$205,000.
4. FEDERAL AND STATE INCOME TAXES
Significant components of the Company's deferred tax liabilities and assets as
of December 31, 1995 and 1994, respectively, are as follows:
<TABLE>
<CAPTION>
1995 1994
---------------------
(thousands)
<S> <C> <C>
Noncurrent deferred tax liabilities:
Tax over book depreciation $49,490 $31,361
Alternative minimum tax credit carryover (8,915) (2,414)
---------------------
Net noncurrent deferred tax liabilities $40,575 $28,947
=====================
Current deferred tax assets:
Accrued expenses not deductible until paid $ 8,802 $ 5,346
Allowance for doubtful accounts 224 154
Revenue recognition differences 88 241
---------------------
Total current deferred tax assets 9,114 5,741
Current deferred tax liabilities:
Prepaid expenses (670) (1,077)
---------------------
Net current deferred tax assets $ 8,444 $ 4,664
=====================
</TABLE>
23
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consoliated Financial Statements (continued)
4. FEDERAL AND STATE INCOME TAXES (CONTINUED)
The reconciliation between the effective income tax rate and the statutory
federal income tax rate is presented in the following table:
<TABLE>
<CAPTION>
1995 1994 1993
---------------------------------
(thousands)
<S> <C> <C> <C>
Income tax at the statutory federal rate of 35% $ 7,458 $ 15,261 $ 9,446
Federal income tax effects of:
Retroactive tax rate change effect on deferred taxes - - 270
State income taxes (336) (613) (334)
Nondeductible expenses 295 214 90
Lower rates on taxable income below $15,000,000 (150) (100) (80)
Other - 58 (108)
---------------------------------
Federal income taxes 7,267 14,820 9,284
State income taxes 959 1,751 954
---------------------------------
$ 8,226 $ 16,571 $ 10,238
=================================
Effective income tax rate 38.6% 38.0% 37.9%
=================================
</TABLE>
The Company has alternative minimum tax credit carryovers of approximately
$8,915,000 which have reduced the deferred tax liability. These credits carry
over indefinitely.
Tax benefits of stock option and purchase plans recorded as paid-in capital and
which did not reduce income tax expense amounted to $1,731,000, $1,086,000 and
$826,000 in 1995, 1994 and 1993, respectively.
5. EMPLOYEE BENEFIT AND COMPENSATION PLANS
STOCK PURCHASE PLAN
The Company maintains a stock purchase plan covering substantially all employees
of the Company. A total of 320,699 shares of common stock remain reserved for
issuance under this plan at December 31, 1995. An eligible employee can purchase
shares having a fair market value on the date of grant of up to a maximum of the
greater of $1,200 or the fair market value of 200 shares. The price per share is
85% of the lower of the fair market value at the date of grant or the date of
exercise, which is one year from the date of grant.
24
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consoliated Financial Statements (continued)
5. EMPLOYEE BENEFIT AND COMPENSATION PLANS (CONTINUED)
Shares have been issued during 1993, 1994 and 1995 as follows:
<TABLE>
<CAPTION>
NUMBER OF PER SHARE
ISSUE DATE SHARES ISSUED EXERCISE PRICE
- ------------------------------------------------------------------------------
<S> <C> <C>
May 1, 1993 53,734 $ 9.56
November 1, 1993 63,328 9.46
April 30, 1994 91,199 12.75
October 31, 1994 55,795 16.58
April 30, 1995 59,093 16.15
October 31, 1995 74,014 10.84
</TABLE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
During 1993, the Company adopted the 1993 Stock Option Plan (the "Employee
Plan"), the Chairman Stock Option Plan, and the Nonemployee Director Stock
Option Plan. The Employee Plan is a successor to a nonstatutory stock option
plan adopted in February 1989. The Employee Plan provides for the issuance of
qualified or nonqualified options to purchase common stock of the Company, and
the awarding of stock appreciation rights payable in shares or cash. The stock
appreciation rights issued in 1993 are payable only in cash. No option or right
may be issued for less than the fair market value of the stock on the date of
grant. The options and rights vest over a five year period from the date of
grant and will expire if not exercised after ten years from the date of grant.
Collective activity within the plans is summarized as follows:
<TABLE>
<CAPTION>
STOCK SHARES
APPRECIATION UNDER
RIGHTS OPTION PRICE RANGE
----------------------------------------------
<S> <C> <C> <C>
Outstanding at January 1, 1993 - 1,273,350 $3.00 -$10.75
Granted 198,900 705,300 12.81 - 19.88
Exercised - (218,320) 3.00 - 10.75
Canceled (3,600) (50,470) 3.00 - 13.06
----------------------------------------------
Outstanding at December 31, 1993 195,300 1,709,860 3.00 - 19.88
Granted - 154,500 17.88 - 22.13
Exercised (10,690) (201,600) 3.00 - 13.06
Canceled (9,490) (29,020) 3.00 - 17.88
----------------------------------------------
Outstanding at December 31, 1994 175,120 1,633,740 3.00 - 22.13
Granted - 231,950 14.81 - 21.38
Exercised (21,800) (290,990) 3.00 - 17.88
Canceled (15,030) (76,920) 3.00 - 21.38
----------------------------------------------
Outstanding at December 31, 1995 138,290 1,497,780 $3.00 -$22.13
==============================================
</TABLE>
25
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consoliated Financial Statements (continued)
5. EMPLOYEE BENEFIT AND COMPENSATION PLANS (CONTINUED)
The number of shares of common stock reserved for granting future options under
these plans was 2,017,790, 2,172,820 and 2,644,090, at December 31, 1995, 1994,
and 1993, respectively. At December 31, 1995, options were exercisable to
purchase 551,590 shares.
The Company recorded a benefit related to the change in value of stock
appreciation rights of $243,000 in 1995 and expense of $256,000 in 1994 and
$244,000 in 1993.
RETIREMENT PLAN
The Company maintains a profit sharing plan for the benefit of all eligible
employees. The plan qualifies under Section 401(k) of the Internal Revenue Code
thereby allowing eligible employees to make tax deferred contributions to the
plan. The plan permits, at the discretion of the Board of Directors, annual
employer contributions to a maximum (generally) of 6% of the participants'
compensation.
The Company's contributions to the plan totaled $6,436,000, $4,254,000 and
$2,979,000 for 1995, 1994 and 1993, respectively.
6. LEASES AND COMMITMENTS
Rent expense, exclusive of amounts related to purchased transportation, totaled
approximately $22,119,000 for 1995, $18,576,000 for 1994 and $11,296,000 for
1993.
The future minimum rental commitments under noncancelable operating leases
having initial or remaining terms in excess of one year as of December 31, 1995
are as follows:
<TABLE>
<CAPTION>
REVENUE OTHER
TOTAL STRUCTURES EQUIPMENT EQUIPMENT
-------------------------------------------------
(thousands)
<S> <C> <C> <C> <C>
1996 $22,319 $3,890 $ 2,380 $16,049
1997 16,010 1,957 2,597 11,456
1998 5,723 1,159 2,597 1,967
1999 3,638 820 2,596 222
2000 3,005 409 2,596 -
Thereafter 4,110 1,075 3,035 -
-------------------------------------------------
$54,805 $9,310 $15,801 $29,694
=================================================
</TABLE>
26
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consoliated Financial Statements (continued)
6. LEASES AND COMMITMENTS (CONTINUED)
Certain leases have renewal options for periods from one to five years at the
fair rental value of the related property at renewal.
The future minimum lease payments under capitalized leases consist of the
following at December 31, 1995 (thousands):
<TABLE>
<S> <C>
1996 $ 217
Amount representing interest 3
---------
Present value of minimum lease payments included
in long-term debt (Note 3) $ 214
=========
</TABLE>
Capitalized leases are included in property and equipment as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------
(thousands)
<S> <C> <C>
Revenue equipment $ 4,136 $ 4,136
Service, office and other equipment 23 23
Less accumulated amortization (1,742) (1,456)
--------------------
$ 2,417 $ 2,703
====================
</TABLE>
Lease amortization is included in depreciation expense.
Certain of the lease agreements contain fixed price purchase options. The lease
agreements require the lessee to pay property taxes, maintenance and operating
expenses.
Commitments for land, terminals and revenue equipment (including the cost to
complete construction in progress) aggregated approximately $33,462,000 at
December 31, 1995.
7. COMMON STOCK
In 1994, the Company completed a public offering of 2,125,000 shares (including
over-allotment option) of common stock at $18.25 per share. The net proceeds to
the Company were $36,651,000.
27
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consoliated Financial Statements (continued)
8. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the years
ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
--------------------------------------------------
(thousands, except per share data)
<S> <C> <C> <C> <C>
1995
Operating revenue $ 132,533 $ 141,969 $ 149,392 $ 148,206
Operating expenses and costs 120,277 126,445 142,946 151,669
Net income (loss) 6,278 8,148 2,444 (3,787)
Net income (loss) per share $.20 $.26 $.08 $(.12)
Average shares outstanding 31,376 31,426 31,398 30,895
1994
Operating revenue $ 99,272 $ 123,656 $ 124,134 $ 118,525
Operating expenses and costs 91,677 106,576 110,256 107,378
Income before extraordinary
charge 3,933 9,486 7,774 5,838
Net income 3,933 9,486 7,439 5,838
Income per share before
extraordinary charge $.14 $.32 $.25 $.19
Net income per share $.14 $.32 $.24 $.19
Average shares outstanding 28,881 29,906 31,342 31,302
</TABLE>
9. FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
fair value disclosures for financial instruments:
Cash and cash equivalents - the carrying amount reported in the balance sheet
for cash and cash equivalents approximates fair value.
Bond funds - the Company's debt service reserve fund is invested in money market
funds and the carrying amount reported in the balance sheet for bond funds
approximates fair value.
28
<PAGE>
American Freightways Corporation and Subsidiary
Notes to Consoliated Financial Statements (continued)
9. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
Long-term debt - the fair values of the Company's long-term debt are estimated
using discounted cash flow analyses, based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements.
The carrying amounts and fair values of the Company's financial instruments at
December 31 are as follows (in thousands):
<TABLE>
<CAPTION>
CARRYING AMOUNT FAIR VALUE
-------------------------------
<S> <C> <C>
1995
Cash and cash equivalents $ 2,642 $ 2,642
Bond funds 901 901
Long-term debt 197,631 201,763
1994
Cash and cash equivalents $ 3,999 $ 3,999
Bond funds 888 888
Long-term debt 111,181 112,995
</TABLE>
29
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Shareholders
American Freightways Corporation
We have audited the accompanying consolidated balance sheets of American
Freightways Corporation and subsidiary as of December 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
American Freightways Corporation and subsidiary at December 31, 1995 and 1994,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
Ernst and Young LLP
Little Rock, Arkansas
January 18, 1996
30
<PAGE>
EXHIBIT 21
Subsidiary of Registrant
1. American Freightways, Inc., an Arkansas Corporation
<PAGE>
EXHIBIT 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of American Freightways Corporation and Subsidiary of our report dated January
18, 1996, included in the 1995 Annual Report to Shareholders of American
Freightways Corporation.
Our audits also included the financial statement schedule of American
Freightways Corporation and Subsidiary listed in Item 14(a). This schedule is
the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the financial statement
schedule referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-63674) pertaining to the American Freightways Corporation Stock
Option Plan and in the Registration Statement (Form S-8 No. 33-76788) pertaining
to the American Freightways Stock Purchase Plan of our report dated January 18,
1996, with respect to the consolidated financial statements incorporated herein
by reference, and our report included in the preceding paragraph with respect to
the financial statement schedule included in this Annual Report (Form 10-K) of
American Freightways Corporation and Subsidiary.
ERNST & YOUNG LLP
Little Rock, Arkansas
February 9, 1996
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Frank L. Conner, his true and lawful attorney in fact and agent with
full powers of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities to sign the Annual Report on Form 10-K, and
any or all amendments thereto (including post-effective amendments), to be filed
by American Freightways Corporation in accordance with the rules and regulations
governed by the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned hereby sets his hand this 18th day of
January, 1996.
/s/Ben A. Garrison
- ------------------------------------
Ben A. Garrison, Director
State of Arkansas )
)
County of Boone )
This 18th day of January, 1996, personally came before me Ben A. Garrison,
who, being by me duly sworn says that he is a Director for American Freightways
Corporation, an Arkansas corporation, and that said writing was signed and
sealed by him, on behalf of said corporation, by its authority given.
/s/Robbie Schriner
------------------------------------
Notary Public
My commission expires: February 1, 2002
--------------------
(SEAL)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
1995 consolidated financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,642
<SECURITIES> 0
<RECEIVABLES> 54,964
<ALLOWANCES> 845
<INVENTORY> 2,136
<CURRENT-ASSETS> 77,213
<PP&E> 530,589
<DEPRECIATION> 132,887
<TOTAL-ASSETS> 477,762
<CURRENT-LIABILITIES> 52,514
<BONDS> 189,239
<COMMON> 309
0
0
<OTHER-SE> 195,125
<TOTAL-LIABILITY-AND-EQUITY> 477,762
<SALES> 0
<TOTAL-REVENUES> 572,100
<CGS> 0
<TOTAL-COSTS> 541,337
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 10,198
<INCOME-PRETAX> 21,309
<INCOME-TAX> 8,226
<INCOME-CONTINUING> 13,083
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,083
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
<FN>
<F1> Provision for doubtful accounts included in costs and expenses applicable
to revenues.
</FN>
</TABLE>
