<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 34-0-17570
American Freightways Corporation
(Exact name of registrant as specified in its charter)
Arkansas 74-2391754
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2200 Forward Drive, Harrison, Arkansas 72601
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (870) 741-9000
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Number of shares of common stock outstanding at September 30,
1997: 31,466,232.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
<TABLE>
SEPTEMBER 30, December 31,
1997 1996
(UNAUDITED) (Note)
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 7,858 $ 4,394
Trade receivables, less allowance for
doubtful accounts (1997-$1,837;
1996-$1,378) 86,599 66,673
Operating supplies and inventories 2,518 2,493
Prepaid expenses 9,706 4,648
Deferred income taxes 13,938 10,649
Income taxes receivable 0 3,097
----------- -----------
Total current assets 120,619 91,954
Property and equipment 679,690 634,791
Accumulated depreciation
and amortization (217,574) (179,193)
----------- -----------
462,116 455,598
Other assets 1,846 2,323
----------- -----------
$ 584,581 $ 549,875
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 16,309 $ 9,425
Accrued expenses 61,415 45,278
Federal and state income taxes 413 0
Current portion of long-term debt 11,495 11,463
----------- -----------
Total current liabilities 89,632 66,166
Long-term debt, less current
portion (Note B) 212,431 226,776
Deferred income taxes 57,755 50,635
Shareholders' equity
Common stock, par value $.01 per
share--authorized 250,000 shares;
issued and outstanding 31,440 in
1997 and 31,242 in 1996 314 312
Additional paid-in capital 103,643 101,519
Retained earnings 120,806 104,467
----------- -----------
224,763 206,298
----------- -----------
$ 584,581 $ 549,875
=========== ===========
</TABLE>
Note: The condensed consolidated balance sheet at December 31,
1996, has been derived from the audited consolidated financial
statements at that date.
See notes to condensed consolidated financial statements.
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(000's omitted, except per share data)
<TABLE>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
----------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUE $233,760 $192,497 $645,899 $539,742
OPERATING EXPENSES AND COSTS
Salaries, wages and benefits 140,582 117,224 389,159 327,564
Operating supplies and expenses 17,845 15,108 55,021 42,577
Operating taxes and licenses 8,828 8,250 26,306 23,813
Insurance 6,462 6,784 19,876 19,744
Communications and utilities 3,673 3,310 10,748 9,593
Depreciation and amortization 13,237 12,081 39,107 34,438
Rents and purchased
transportation 16,275 11,746 39,772 35,660
Other 9,873 8,834 26,951 25,308
------------------ ------------------
216,775 183,337 606,940 518,697
------------------ ------------------
OPERATING INCOME 16,985 9,160 38,959 21,045
OTHER INCOME (EXPENSE)
Interest expense (4,005) (4,128) (12,265) (10,826)
Interest income 79 25 201 85
Gain (loss) on disposal
of assets (105) 2 (72) 13
Other, net 31 27 50 149
------------------ ------------------
(4,000) (4,074) (12,086) (10,579)
INCOME BEFORE INCOME TAXES 12,985 5,086 26,873 10,466
FEDERAL AND STATE INCOME TAXES
Current 3,170 388 6,550 682
Deferred 1,920 1,575 3,984 3,358
------------------ ------------------
5,090 1,963 10,534 4,040
------------------ ------------------
NET INCOME $ 7,895 $ 3,123 $ 16,339 $ 6,426
================== ==================
NET INCOME PER SHARE (NOTE D) $ 0.25 $ 0.10 $ 0.52 $ 0.21
================== ==================
AVERAGE SHARES OUTSTANDING 31,811 31,285 31,633 31,265
================== ==================
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Nine Months Ended
September 30
1997 1996
(000's omitted)
-----------------------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 61,788 $ 44,100
INVESTING ACTIVITIES
Proceeds from sales of equipment 2,452 71
Capital expenditures (48,188) (91,206)
----------- -----------
Net cash used by investing activities (45,736) (91,135)
FINANCING ACTIVITIES
Principal payments on long-term debt (62,712) (25,858)
Proceeds from notes payable
and long-term borrowings 48,400 76,500
Proceeds from issuance of common stock 1,724 1,745
----------- -----------
Net cash provided (used)
by financing activities (12,588) 52,387
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 3,464 $ 5,352
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results of the nine month period ended September 30, 1997, are not
necessarily indicative of the results that may be expected for the
year ending December 31, 1997. For further information, refer to
the Company's consolidated financial statements and footnotes
thereto included in Form 10-K for the year ended December 31, 1996.
NOTE B - LONG-TERM DEBT
As of September 30, 1997, the Company has outstanding borrowings of
$58,000,000 under its existing $175,000,000 unsecured revolving
line of credit. The proceeds of these borrowings were used for the
purchase of revenue equipment and for the purchase and construction
of Customer Center facilities. At September 30, 1997, the amount
available for borrowing under the line of credit was $117,000,000.
In addition to this credit facility, the Company has obtained
letters of credit totaling $5,076,000 to provide collateral on its
self-insurance plan.
As of September 30, 1997, the Company has outstanding borrowings of
$133,250,000 under an uncommitted Master Shelf Agreement which
provides for the issuance of up to $140,000,000 of senior
promissory notes with an average life not to exceed twelve years.
In addition, the Company has outstanding an unsecured senior note
for $25,000,000 payable in equal annual installments of $5,000,000
through November 2001.
NOTE C - COMMITMENTS
Commitments for the purchase of revenue equipment and the purchase
or construction of Customer Centers aggregated approximately
$36,284,000 at September 30, 1997.
NOTE D - EARNINGS PER SHARE
<TABLE>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
----------------------------------------
(000's omitted except per share amounts)
<S> <C> <C> <C> <C>
Weighted average shares
outstanding 31,414 31,128 31,325 31,037
Net effect of dilutive stock
options based on treasury
stock method 397 157 308 228
-------- -------- -------- --------
Total weighted average
shares outstanding 31,811 31,285 31,633 31,265
======== ======== ======== ========
Net income $ 7,895 $ 3,123 $ 16,339 $ 6,426
======== ======== ======== ========
Earnings per common share and
common share equivalents $ 0.25 $ 0.10 $ 0.52 $ 0.21
======== ======== ======== ========
</TABLE>
Earnings per common share and common share equivalents are computed
by dividing net income by the weighted average number of shares of
common stock and common stock equivalents outstanding during the
period.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share, which is required to be
adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new
requirements for computing primary earnings per share, the dilutive
effect of stock options will be excluded. The impact of Statement
128 on the calculation of primary earnings per share and fully
diluted earnings per share for these quarters is not expected to be
material.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following table sets forth, for the periods indicated, the
percentages of operating expenses and other items to operating
revenue:
<TABLE>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Operating revenue 100.0% 100.0% 100.0% 100.0%
Operating expenses and costs
Salaries, wages and benefits 60.1% 60.9% 60.3% 60.7%
Operating supplies and expenses 7.6% 7.8% 8.5% 7.9%
Operating taxes and licenses 3.8% 4.3% 4.1% 4.4%
Insurance 2.8% 3.5% 3.1% 3.6%
Communications and utilities 1.6% 1.7% 1.6% 1.8%
Depreciation and amortization 5.6% 6.3% 6.0% 6.4%
Rents and purchased transportation 7.0% 6.1% 6.2% 6.6%
Other 4.2% 4.6% 4.2% 4.7%
----------------------------------
Total operating expenses
and costs 92.7% 95.2% 94.0% 96.1%
----------------------------------
Operating income 7.3% 4.8% 6.0% 3.9%
Interest expense (1.7%) (2.2%) (1.9%) (2.0%)
Other income, net 0.0% 0.0% 0.0% 0.0%
----------------------------------
Income before income taxes 5.6% 2.6% 4.1% 1.9%
Income taxes 2.2% 1.0% 1.6% 0.7%
----------------------------------
Net income 3.4% 1.6% 2.5% 1.2%
==================================
</TABLE>
RESULTS OF OPERATIONS
Operating Revenue
Operating revenue for the nine months ended September 30, 1997 was
$645,899,000, up 19.7%, compared to $539,742,000 for the nine
months ended September 30, 1996. Operating revenue for the three
months ended September 30, 1997 was $233,760,000, up 21.4%,
compared to $192,497,000 for the three months ended September 30,
1996. The growth in operating revenue was primarily the result of
increased revenue per hundred weight and increased tonnage from new
and existing customers.
Revenue per hundred weight for the first nine months of 1997 was up
8.5% from levels experienced in the first nine months of 1996.
Factors contributing to the increase in revenue per hundred weight
were:
- - A general rate increase of approximately 5.9% effective
January 1, 1997. General rate increases initially affect
approximately 45% of the Company's customers. The remaining
customers' rates are determined by contracts and guarantees and are
negotiated throughout the year.
- - The Company initiated a fuel surcharge beginning September 16,
1996 to help recover the increased costs of fuel. This surcharge
is tied to the Department of Energy's National Diesel Fuel Index
and was 0.7% for LTL shipments as of September 30, 1997. The
surcharge is designed to suspend at the time this national index
moves below $1.15 per gallon.
<PAGE>
- - The percentage of the Company's total revenue that was derived from
truckload shipments (greater than 10,000 pounds) declined to
5.7% during the first nine months of 1997 as compared to 6.7%
during the first nine months of 1996.
Tonnage handled by the Company during the nine and three months
ended September 30, 1997, increased 10.3% and 13.8%, respectively,
over the same time periods of 1996. This increase in tonnage was
mainly a result of the following:
- - The Company continued to increase its market penetration into
existing service territories, particularly those geographic areas
added during 1995 and 1996. During 1995, the Company expanded its
all-points coverage to the states of Colorado, Florida, Iowa,
Nebraska, North Carolina, South Carolina and Wisconsin. 1996
expansions included the states of Delaware, Maryland, Minnesota,
Virginia and West Virginia.
- - The continued increase in intrastate tonnage following the
deregulation of intrastate commerce effective January 1, 1995.
- - Effective August 4, 1997, the Company increased its all-points
coverage to 27 states with the addition of the state of New Mexico.
Management expects that growth in operating revenue is sustainable
in the near term. However, the Company's planned expansions of
service territory during 1997 are less aggressive than those
initiated in recent years. The primary focus for growth in
operating revenue in the near term will be further penetration of
existing markets. As a result, any near-term percentage growth in
operating revenue will likely be less than that experienced in
recent years. The foregoing statement concerning the
sustainability of revenue growth is subject to a number of factors,
including LTL industry capacity, increased tonnage and general
economic conditions.
Operating Expenses
Operating expenses as a percentage of operating revenue improved to
94.0% in the nine months ended September 30, 1997 from 96.1% in the
nine months ended September 30, 1996. Operating expenses as a
percentage of operating revenue improved to 92.7% in the three
months ended September 30, 1997 from 95.2% in the three months
ended September 30, 1996. This overall improvement was primarily
attributable to:
- - Insurance as a percentage of operating revenue decreased to
3.1% in the nine months ended September 30, 1997 from 3.6% in the
nine months ended September 30, 1996. This improvement was largely
due to improved experience involving vehicle accidents and cargo
claims.
- - Rents and purchased transportation as a percentage of
operating revenue decreased to 6.2% in the nine months ended
September 30, 1997 from 6.6% in the nine months ended September 30,
1996. This improvement was primarily a result of the utilization
of Company-operated Customer Centers, rather than contractor-
operated Customer Centers, in expansions of service territory. In
addition, five contractor-operated Customer Centers were converted
to Company-operated Customer Centers during 1996 and one Customer
Center was converted in the third quarter of 1997. Management
expects rents and purchased transportation as a percentage of
operating revenue to remain flat or gradually increase due to three
principal reasons: 1) most functions that were previously being
provided by contractors have already been absorbed by the Company,
2) the Company has started to increase the strategic use of
purchased transportation in selected line-haul lanes, and 3) the
increased utilization of off-balance sheet financing of revenue
equipment (see Liquidity and Capital Resources).
<PAGE>
- - Depreciation as a percentage of operating revenue improved to
6.0% in the nine months ended September 30, 1997 from 6.4% in the
nine months ended September 30, 1996. This improvement was largely
due to the increased usage of purchased transportation and off-
balance sheet financing of revenue equipment.
- - Other expenses as a percentage of operating revenue improved to
4.2% in the first nine months of 1997 from 4.7% in the first
nine months of 1996. This improvement was mostly due to
decreased hotel costs for line-haul drivers. The Company
reconfigured its line-haul network, with an emphasis on
improving service in regional and intrastate markets, during the
last half of 1996. One of the benefits of this reconfiguration
was that line-haul drivers were required to spend less time in
hotels.
These improvements in operating expenses as a percentage of
operating revenue were partially offset by increases in the
following areas:
- - Operating supplies and expenses as a percentage of operating
revenue increased to 8.5% in the nine months ended September 30,
1997 from 7.9% in the nine months ended September 30, 1996. This
increase primarily relates to increased maintenance costs of
equipment and facilities. Management expects these maintenance
costs will continue to gradually increase as the Company's fleet
ages. Fuel prices declined during the second and third quarters
of 1997 from levels experienced during the last half of 1996 and
early 1997.
Other
Interest expense as a percentage of operating revenue decreased to
1.9% in the nine months ended September 30, 1997, compared to 2.0%
in the nine months ended September 30, 1996.
The effective tax rate of the Company was 39.2% for the first nine
months of 1997, up from 38.6% for the same time period of 1996.
This increase was mostly due to increased state taxes.
Net income for the nine months ended September 30, 1997, was
$16,339,000, up 154.3%, from $6,426,000 for the nine months ended
September 30, 1996. Net income for the three months ended
September 30, 1997, was $7,895,000, up 152.8%, from $3,123,000 for
the three months ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The focus on further penetration of existing markets coupled with
improved asset utilization reduced the capital requirements of the
Company during the first nine months of 1997.
Capital requirements during the nine months ended September 30,
1997 consisted primarily of $45,736,000 in investing activities.
The Company invested $48,188,000 in capital expenditures during the
nine months ended September 30, 1997 comprised of $1,835,000 in
additional revenue equipment, $32,524,000 in new Customer Center
facilities or the expansion of existing facilities and $13,829,000
in other equipment. Management expects capital expenditures for
the full year of 1997 will be approximately $70,000,000. However,
the amount of capital expenditures required in 1997 will be
dependent on the growth rate of the Company and the timing and size
of any future expansions of service territory. At September 30,
1997, the Company had commitments for land, Customer Centers,
revenue and other equipment of approximately $36,284,000.
The Company provided for its capital resource requirements in the
nine months ended September 30, 1997 predominantly with cash from
operations. Cash from operations totaled $61,788,000 in the nine
months ended September 30, 1997 compared to $44,100,000 provided by
operations in the nine months ended September 30, 1996. Cash from
operations exceeded capital requirements by $16,052,000 during the
nine months ended September 30, 1997. This excess was used
primarily to repay debt. Two primary sources of credit financing
were available to the Company: the revolving line of credit and
the Master Shelf facility.
<PAGE>
- - 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 of $175,000,000 provided by NationsBank of Texas, N.A.
(agent), Chase Bank of Texas, N.A., Wachovia Bank of Georgia,
N.A., ABN-AMRO Bank N.V., The First National Bank of Chicago and
Credit Lyonnais. Due to reduced capital expenditures, improved
cash from operations and proceeds from the issuance of fixed
rate debt, the Company reduced the amount outstanding under this
facility during the nine months ended September 30, 1997. At
September 30, 1997, $58,000,000 was outstanding on the revolving
line of credit, leaving $117,000,000 available for borrowing.
The Company also had $10,000,000 available under its short-term,
unsecured revolving $10,000,000 line of credit with NationsBank
of Texas, N.A. 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 September
30, 1997, the Company had obtained letters of credit totaling
$5,076,000 for this purpose.
- - 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
$140,000,000 in medium to long-term unsecured notes at an interest
rate calculated at issuance. On April 18, 1997, the Company
utilized this facility to issue a $50,000,000 note at 8.11% with a
15-year maturity. At September 30, 1997, the Company had
$133,250,000 outstanding under this facility.
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 September 30, 1997, and to fund current operating
and capital needs. However, if additional financing is required,
management believes it will be available.
The Company uses off-balance sheet financing in the form of
operating leases primarily in the following areas; land and
structures, revenue equipment and other equipment. At September
30, 1997, future rental commitments on operating leases were:
<TABLE>
Land and Revenue Other
Total Structures Equipment Equipment
-------------------------------------
<S> <C> <C> <C> <C>
1997 5,650 1,234 926 3,490
1998 15,087 3,627 3,700 7,760
1999 11,632 2,473 3,700 5,459
2000 9,204 1,705 3,700 3,799
2001 4,233 1,309 2,924 --
Thereafter 3,609 1,652 1,957 --
-------------------------------------
Total 49,415 12,000 16,907 20,508
=====================================
</TABLE>
The Company prefers to utilize operating leases for these areas and
plans to use them in the future when such financing is available
and suitable.
ENVIRONMENTAL
At September 30, 1997, the Company had no outstanding inquiries
with any state or federal environmental agency.
<PAGE>
INDEX
AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets--September 30, 1997 and
December 31, 1996
Condensed consolidated statements of income--Three months
ended September 30, 1997 and 1996; Nine months ended September
30, 1997 and 1996
Condensed consolidated statements of cash flows--Nine months
ended September 30, 1997 and 1996
Notes to condensed consolidated financial statements--
September 30, 1997
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(10) Amended and Restated Stock Purchase Plan for
Certain Employees of Registrant and subsidiaries as
amended January 9, 1997.
Master Lease Agreement with Volvo Truck Finance
North America, Inc. dated August 18, 1997.
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during
the three month period ended September 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMERICAN FREIGHTWAYS CORPORATION
(Registrant)
Date: October 31, 1997 /s/Frank Conner
Frank Conner
Executive Vice President-Accounting &
Finance and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
September 30, 1997 quarterly consolidated financial statements and is
qualified in its entirely by reference to such finanical statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,858
<SECURITIES> 0
<RECEIVABLES> 88,436
<ALLOWANCES> 1,837
<INVENTORY> 2,518
<CURRENT-ASSETS> 120,619
<PP&E> 679,690
<DEPRECIATION> 217,574
<TOTAL-ASSETS> 584,581
<CURRENT-LIABILITIES> 89,632
<BONDS> 212,431
0
0
<COMMON> 314
<OTHER-SE> 224,449
<TOTAL-LIABILITY-AND-EQUITY> 584,581
<SALES> 0
<TOTAL-REVENUES> 645,899
<CGS> 0
<TOTAL-COSTS> 606,940
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 12,265
<INCOME-PRETAX> 26,873
<INCOME-TAX> 10,534
<INCOME-CONTINUING> 16,339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,339
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
<FN>
<F1>Provision for Doubtful accounts included in costs and expenses applicable
to revenues.
</FN>
</TABLE>
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;
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
(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. 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.
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 1,100,000,
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.
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
(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, 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.
11. Effectiveness and Termination of the Plan
The effective date of the Plan is March 1, 1994, as amended
January 23, 1996 and January 9, 1997. 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.
(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.
(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.
IN WITNESS WHEREOF, the undersigned has caused this Amended
and Restated Plan to be executed as of this 9th day of January,
1997.
AMERICAN FREIGHTWAYS CORPORATION
By: /s/Tom Garrison
Its: Tom Garrison, Secretary/Treasurer
VOLVO
VOLVO TRUCK FINANCE NORTH AMERICA INC.
MASTER LEASE AGREEMENT
LESSEE NAME AND ADDRESS
LEGAL NAME: AMERICAN FREIGHTWAYS, INC.
CHECK ONE: CORPORATION [X] PARTNERSHIP [ ] JOINT VENTURE [ ]
LLC [ ]
STREET ADDRESS: 2200 FORWARD DRIVE
MAILING ADDRESS: P.O. BOX 840
CITY: HARRISON STATE: AR ZIP: 72602-0840
COUNTY: BOONE TELEPHONE: 501-741-9000 FACSIMILE: 501-741-5240
FEDERAL ID/SN: 76-0562003 ICC NO:
CUSTOMER NO: 0305296
1. LEASE: Subject to the terms and conditions of this Master
Lease Agreement (this "AGREEMENT") Volvo Truck Finance North
America, Inc., a Delaware corporation with its principal place of
business in North Carolina ("LESSOR"), agrees to lease to Lessee
and Lessee agrees to lease from Lessor the motor vehicles,
trailers, and such other equipment (collectively the "VEHICLES")
described in the Schedules to be attached to this Agreement from
time to time (each a "SCHEDULE") as may be agreed upon by Lessor
and Lessee. All of the terms and conditions of each Schedule and
all other documents executed by Lessor and Lessee shall be
incorporated by this reference in this Agreement. Lessee's
obligations with respect to the Vehicles as described in the
respective Schedule shall become irrevocable upon the execution of
the Certificate of Acceptance for such Vehicles.
(a) ACCEPTANCE OF VEHICLES BY LESSEE. Upon completion of
delivery of all of the Vehicles described on a Schedule, Lessee
shall inspect such Vehicles and, if in good order and in
conformance with any applicable purchase order or supply contract,
Lessee will accept delivery of the Vehicles on behalf of the
Lessor, and execute and deliver the applicable Certificate of
Acceptance.
(b) LESSOR'S OBLIGATIONS TO FUND ANY SCHEDULE.
Notwithstanding any other provision of this Agreement, Lessor shall
have no obligation to lease the Vehicles on any Schedule or pay the
manufacturer or supplier until all of the following conditions
precedent are fulfilled to the reasonable satisfaction of Lessor
with respect to such Schedule (each a "CLOSING DATE"): (i) All of
the representations and warranties made by Lessee in this Lease or
the Schedule are true and accurate as of the Closing Date; (ii)
Lessor has received evidence of Lessee's compliance with the
insurance requirements of this Agreement; (iii) Lessor has received
UCC financing statements as required by Lessor; (iv) Lessee has
provided a certificate of its secretary or other authorized officer
certifying (1) the accuracy of its charter documents; (2)
resolutions of its governing board duly authorizing the execution,
delivery, and performance of this Agreement, the Schedules, and all
other related documents (the foregoing together with any guaranty
being collectively the "LEASE DOCUMENTS"); and (3) the incumbency
and signatures of the officers authorized to execute the Lease
Documents; (v) receipt of the Schedule and all exhibits or
attachments duly executed by Lessee; (vi) confirmation of the
absence of an Event of Default or an event which, but for the
passage of time or the giving of notice or both would constitute an
Event of Default, on the Closing Date; and (vii) no enactment of
any statute or adoption of any regulation which has or will have an
adverse effect on the anticipated federal or state income tax
consequences to Lessor, in which case Lessee shall not be obligated
to lease from Lessor any Vehicles not already subject to a
Certificate of Acceptance. If any of the conditions precedent
specified in the preceding (i )-(vii) are not satisfied or waived
by Lessor in its sole and absolute discretion, Lessee shall
promptly pay Lessor and indemnify, defend, and hold Lessor harmless
against all amounts which Lessor has expended or may become
obligated to pay and any claims, including the claims of any
supplier or manufacturer, with respect to any Vehicle and the
transactions contemplated under the applicable Schedule.
2. FINANCE LEASE: This Agreement is a "FINANCE LEASE" as defined
in Section 2A - 103 of the Uniform Commercial Code (the "UCC") as
adopted in the State of North Carolina (25-2A-101 et seq., General
Statutes of North Carolina). Lessee acknowledges that Lessor has
neither selected, manufactured, nor supplied the Vehicles. Lessee
selected the Vehicles and the suppliers of the Vehicles. Lessor is
acquiring the Vehicles at the request of Lessee in connection with
this Agreement. Lessee received and approved copies of the purchase
order(s) or supply contract(s) for the Vehicles prior to entering
into this Agreement.
3. PRECAUTIONARY SECURITY AGREEMENT. Should it be determined,
notwithstanding the express intent of the parties, that this
Agreement is not a "finance lease" or a lease under the UCC but
rather an agreement intended for security, then solely in that
event and for the expressly limited purposes thereof, Lessee grants
Lessor a security interest in the Vehicles to secure the prompt
payment and performance, when and as due, of the obligations and
indebtedness of Lessee to Lessor under this Agreement. Lessee
hereby also grants Lessor a security interest in all accessions and
additions to, substitutions and replacements for, and proceeds
(including insurance proceeds), accounts, and income arising from
or generated by the Vehicles. Lessee hereby appoints the Lessor as
agent for the benefit of the Lessee and grants Lessor an
irrevocable power of attorney, to take any and all actions and to
execute and file all documents necessary to establish, maintain,
and continue the perfected security interest of Lessor in the
Vehicles, in the name of and on behalf of Lessee, at Lessee's sole
cost and expense. This power of attorney is coupled with an
interest and is irrevocable during the term of this Agreement.
Lessee shall take all actions and execute and file all documents
reasonably requested by Lessor to establish, maintain, and continue
the perfected security interest of Lessor. Lessee shall, within ten
(10) days after receipt of notice from Lessor, pay all costs and
expenses of filing and recording (including the costs of all
searches deemed necessary by Lessor) to establish, maintain, and
determine the validity and priority of Lessor's security interest.
4. TERM: Unless terminated earlier by Lessor, with respect to
each Schedule, this Agreement shall be effective from the date such
Schedule is executed by Lessor for a term expiring on the Lease
Termination Date. Lessee's right to use and possess the Vehicles
described on any Schedule will begin when all of the following have
occurred: (a) Lessee has executed the applicable Certificate of
Acceptance and all other documents required thereby; (b) Lessee has
supplied Lessor with evidence of insurance coverage on the Vehicles
acceptable to Lessor in its reasonable discretion; and (c) Lessee
has paid to Lessor both the Advance Rent and the Interim Rent, if
any, designated on the applicable Schedule. Notwithstanding any
other provision of this Agreement, the term of this Agreement for
each Schedule shall continue until all of the Vehicles are returned
to Lessor in the condition required by the Schedule. As of any
applicable date, the Stipulated Loss Value for a Vehicle is the
Lessor's Cost as shown on the applicable Schedule multiplied by the
Stipulated Loss Factor as of the applicable date and as designated
on Exhibit B to such Schedule. THIS AGREEMENT IS A "NET LEASE" AND
MAY NOT BE TERMINATED BY LESSEE FOR ANY REASON WHATSOEVER.
5. RENTAL PAYMENTS: Lessee shall make all of the following
payments to Lessor (collectively "Rent"): (a) the Advance Rent set
forth on any Schedule will be due on the Date of Acceptance; (b)
Interim Rent set forth on any Schedule will be due on the Date of
Acceptance and will be calculated by multiplying the Daily Lease
Rate Factor times the number of days between the Date of Acceptance
to and including the Base Lease Commencement Date; (c) Regular
Monthly Rental Payments (plus any Additional Monthly Rent) will be
due on the date of each month during the Base Lease Term and in the
amounts stated in the applicable Schedule; and (d) All sales and
use taxes and the like will accompany each payment in an amount
sufficient to pay such taxes and other charges in full.
Notwithstanding any other provision of this Agreement, the term of
this Agreement and Lessee's obligations to pay Rent on a Vehicle
shall continue if Lessee has not returned the Vehicle to Lessor in
the condition required by this Agreement on the Lease Termination
Date (unless Lessee had previously paid Lessor the Stipulated Loss
Value for such Vehicle or is exercising any option to purchase the
Vehicle) until the Vehicle is returned to Lessor in the required
condition. Lessee agrees to make all payments of Rent in the
manner required by Lessor, including but not limited to by wire
transfer, check, or electronic funds transfer.
6. ABSOLUTE NON-TERMINABLE OBLIGATION: LESSEE'S OBLIGATION TO
MAKE PAYMENT OF ALL RENT AND ALL OTHER AMOUNTS WHEN DUE AND TO
OTHERWISE PERFORM AS REQUIRED UNDER THIS AGREEMENT SHALL BE
ABSOLUTE AND UNCONDITIONAL AND SHALL NOT BE SUBJECT TO ANY
ABATEMENT, REDUCTION, SET-OFF, DEFENSE, COUNTERCLAIM, INTERRUPTION,
DEFERMENT OR RECOUPMENT OR TERMINATION, UNDER ANY CIRCUMSTANCE OR
FOR ANY REASON WHATSOEVER, AND SHALL NOT REQUIRE PRIOR NOTICE OR
DEMAND. Any default under a warranty, service contract, or
insurance policy, even when obtained through or from Lessor, does
not constitute a defense to Lessee's obligation to make each and
every payment in full when due under this Agreement. Lessee will
make all Rent and other payments directly to Lessor at such places
as Lessor may from time to time designate in writing. Payments
will be applied when actually received on good funds by Lessor. To
compensate Lessor for the additional costs of processing late
payments, a one-time late charge of 5% will be charged on any
payment not actually received within ten days of its due date. All
other monetary obligations due and not paid when due will bear
interest at the lesser of 18% per annum or the maximum rate allowed
by law. Lessor may, at its option, apply all payments to any past
due charges and then to charges not yet due.
7. NO WARRANTY: LESSOR, NOT BEING THE MANUFACTURER, SUPPLIER, OR
VENDOR OF THE VEHICLES MAKES NO WARRANTY OR REPRESENTATION, EXPRESS
OR IMPLIED, AS TO THE VALUE, CONDITION, QUALITY, MATERIAL, DESIGN,
MERCHANTABILITY, OR FITNESS OR SUITABILITY OF ANY VEHICLES FOR ANY
PURPOSE. LESSEE ACKNOWLEDGES THAT LESSEE HAS SELECTED THE VEHICLES
BASED ON LESSEE'S OWN JUDGMENT AND HAS NOT RELIED ON ANY STATEMENTS
OR REPRESENTATIONS OF LESSOR. In no event will Lessor be liable
for loss or damage to cargo, contents, attachments, lost profits or
to the Vehicles, or incidental, special, or consequential damages
of any nature, regardless of cause. So long as no Event of Default
has occurred Lessor hereby assigns to Lessee the right to enforce
all warranties made by the manufacturer, supplier, or vendor of the
Vehicles.
8. LESSEE'S REPRESENTATIONS: Lessee warrants and represents to
Lessor, expressly acknowledging that Lessor is relying on these
warranties and representations, as of the date of this Agreement
and/or each Closing Date, as applicable, and until all of Lessee's
obligations under this Agreement have been satisfied in full, that:
(i) all information supplied by Lessee to Lessor in any financial,
credit or accounting statement is and will be true, correct, valid
and genuine; (ii) the Vehicles are to be used only for business
purposes; (iii) Lessee is duly organized, validly existing, and in
good standing under the laws of the state of its formation; (iv)
Lessee has the full authority to enter into each of the Lease
Documents and to perform all of its obligations under each of the
Lease Documents; (v) Lessee has duly authorized, executed, and
delivered each of the Lease Documents to which it is a party, and
each such Lease Document constitutes the legal, valid, and binding
obligation of Lessee, enforceable against Lessee in accordance with
its terms; (vi) that each of the Lease Documents does not require
the approval of any stockholder, trustee, or holder of any
obligation of Lessee and does not and will not violate any law,
rule, or order now binding upon Lessee, or the charter, by-laws, or
other governing documents of Lessee, or violate the provisions of,
constitute a default under, or result in the creation of any lien
or encumbrance upon the property of Lessee under, any contract or
agreement to which Lessee is a party or by which it or its assets
are bound or require the consent or approval or the giving of
notice to the Federal, or any state, or local government (other
than customary titling, registration, and security interest
filings); (vii) there are no pending or overtly threatened actions
or proceedings, which either, individually, or in the aggregate,
would materially adversely affect the financial condition of Lessee
or Lessee's ability to fully perform all of its obligations under
all of the Lease Documents; (viii) Lessee maintains its principal
place of business at the address set forth on page 1 of this
Agreement; and (ix) Lessor's ownership of and interest in the
Vehicles shall at all times be prior to any other interests in the
Vehicles.
9. LESSEE'S OBLIGATIONS AND COVENANTS: In addition to and not in
limitation of any other agreements of Lessee under the Lease
Documents, Lessee agrees at its sole expense: (a) to use each
Vehicle only in the United States (or in Canada for not more than
60 days per rolling 12 calendar month period to be determined
individually for each Vehicle) in accord with all applicable laws,
regulations, and insurance policies; (b) to keep each Vehicle free
from all claims, liens, encumbrances and attachments of any kind
whatsoever; (c) to file, report, and pay on its and Lessor's
behalf by the applicable due date all taxes, fees, and assessments
on the Vehicles and the Lease, sending a copy of such filing and
payment contemporaneously to Lessor; (d) to defend any action,
proceeding or claim affecting the Vehicles or Lessor's interest
therein; (e) to obtain a certificate of title on each of the
Vehicles showing Lessor's title to the Vehicles, and to preserve
and perfect Lessor's title to all of the Vehicles; (f) that Lessee
will not (or permit any party to) misuse, secrete, sell, rent,
lend, encumber, transfer, or illegally use any of the Vehicles nor
permit any Vehicle to be operated by or be in the possession of any
party other than Lessee; (g) Lessee will not use or permit the use
of any Vehicle off an improved road or for transportation of
passengers or of material designated as HAZARDOUS, RADIOACTIVE,
TOXIC, FLAMMABLE, OR EXPLOSIVE, OR ENVIRONMENTALLY HAZARDOUS,
UNSAFE, OR DANGEROUS under any state, federal, or local law, rule,
or requirement; (h) that Lessor may enter any premises to inspect
the Vehicles, Vehicles or Lessee's books and records regarding the
Vehicles at any time during usual business hours; (i) to provide
Lessor with its complete financial information, including Income
Statements and Balance Sheets, compiled according to generally
accepted accounting principles -- unaudited on a quarterly basis
within 60 days after the end of each quarter and audited on an
annual basis within 90 days after year end; (j) to give Lessor
prompt written notice of any lien or claim for which it is
obligated to indemnify Lessor; and (k) that Lessee will not alter
or permit the alteration of any Vehicles without the prior written
consent of Lessor, and that Lessee will remove or cause the removal
of all markings prior to the return of the Vehicles to Lessor.
10. VEHICLE CONDITION: In addition to any other requirements of
this Agreement, Lessee will, at its sole expense, maintain each of
the Vehicles so as to meet all of the following requirements: (a)
each Vehicle will be preserved in first class operating condition,
repair, and appearance in accordance with all manufacturer service
requirements and warranties; (b) all replacement and substitute
parts and accessories will be original Vehicle manufacture, or from
commercially reputable providers with similar or superior value,
serviceability, and warranty; (c) each Vehicle will be kept in
roadworthy condition so as to continuously and fully comply with
all government requirements, including the United States Department
of Transportation. If Lessor notifies Lessee that any Vehicle is
not being maintained within the above standards, Lessee will have
20 days from the date of receipt of the written notification to
make the necessary corrections.
11. INSURANCE AND RISK OF LOSS: All risk of loss, damage or
destruction of the Vehicles will at all times be on Lessee. Lessee
will keep the Vehicles insured at Lessee's expense against
liability in an amount not less that $1,000,000 per occurrence, and
loss or damage by fire, theft and other customary risks for the
greater of the full insurable values or the then applicable
Stipulated Loss Value for the Vehicles. Coverage and insurer will
be subject to Lessor's approval, provided however that such insurer
shall have a Best Class rating of at least B+VIII. Lessor and any
third party designated by Lessor shall be named as an additional
insured and/or loss payee, as applicable, on each policy. Each
policy will further provide that Lessor's interest can not be
invalidated by any act, omissions, or neglect of anyone other than
Lessor and that the insurer will give Lessor thirty days advance
written notice of any policy cancellation or non-renewal, whether
such cancellation is at the direction of Lessee or insurer. Lessee
will promptly deliver a copy of each policy or insurance
certificate to Lessor and proof of renewal at least 30 days prior
to expiration or cancellation. If Lessee fails to provide the
required insurance, Lessor may purchase such insurance at Lessee's
expense, purchase of which need not include liability coverage or
protection of Lessee's interest. Lessee irrevocably appoints
Lessor as Lessee's attorney-in-fact to execute and endorse all
documents, checks or drafts received in payment of loss or damage
under any insurance policy. Lessee will immediately notify Lessor
in writing of any substantial damage, theft or loss which makes any
Vehicle unfit for continued or repairable use at which time Lessee
will pay to Lessor the Stipulated Loss Value for the Vehicle
calculated as of the day upon which the next Regular Monthly Rental
Payment is due, together with all other sums then owed in
connection with the Vehicle. Upon receipt of the Stipulated Loss
Value and all other amounts then due, Lessor shall transfer title
to the Vehicle "Where-Is," "As-Is" to Lessee or as Lessee directs,
with Lessee being responsible for all costs of such transfer.
Lessor has no obligation to replace any Vehicle and may apply
insurance proceeds to any of Lessee's obligations as Lessor deems
appropriate.
12. RETURN OF VEHICLES: In addition to the other requirements of
this Agreement, whenever Lessee's right to possess any of the
Vehicles terminates, for any reason whatsoever, including after the
occurrence of an Event of Default, Lessee will promptly, at its
sole expense, assemble and return the Vehicles to locations
selected by Lessor. Lessee will also return to Lessor all license
plates, registration certificates, manufacturer warranty
agreements, maintenance records and other documents relating to the
Vehicles. Upon return of a Vehicle, should the average annual
miles exceed the maximum mileage provision as specified in the
applicable Schedule, Lessee will pay to Lessor an additional return
charge equal to the Mileage Rate set forth on the Schedule, times
the number of excess miles. If Lessor takes possession of any
property not subject to its interests, it shall notify Lessee and
may dispose of the property if Lessee fails to take possession
within thirty (30) days. If a Vehicle is not returned in the
condition set forth below, Lessee shall pay to Lessor within five
(5) days of receipt of written notice from Lessor an amount to
repair and recondition the Vehicle, in order to offset its decline
in value, and to obtain the appropriate licenses and registration.
(a) ROADWORTHY. Each Vehicle will be in roadworthy
condition, and all original equipment or replacement equipment of
similar value made by the same manufacturer will be intact and in
first class working condition, free of mechanical problems to any
of its parts and accessories. Permanently installed attachments
must remain with the Vehicle unless a written exception is executed
by each of Lessor and Lessee. If attachments are removed, the
Vehicle must be returned to its original condition.
(b) CAB AND BODY. The cost of necessary repairs to sheet
metal (cab, body, fuel tanks) will not exceed four hours labor,
flat rated against Mitchell or other industry accepted guide, and
$200 replacement parts at truck manufacturers published "fleet"
price. All decals, permits, numbers, and other customer
identification will be removed from each Vehicle by Lessee in such
a manner as not to damage the surface. Interior trim will be free
of tears, and no glass will be broken, chipped or cracked. The
windshield seal must be free of visible gasket/adhesive material.
All mechanical and electrical equipment including radios, heaters
and air conditioners must be in proper operating condition.
(c) MECHANICAL POWER TRAIN. The Vehicle must be capable of
performing at 85% of its rated capacity, at the wheels, under full
load without excess oil leakage or blow-by. The condition of the
engine and power train will be determined by diagnostic testing
conducted by National Truck Protection Co., Inc. or conducted at a
service center authorized by Lessor which uses National Truck
Protection Co., Inc. standards. Passwords for the engine
electronic program, if applicable, must be supplied.
(d) SYSTEMS. Cooling and lubrication systems will not be
contaminated or leaking between fluid systems nor will any system
be damaged by the failure to properly maintain fluids. Batteries
must be of original CCA rating and capable of holding a charge
starting the Vehicle.
(e) TIRES, WHEELS, AND BRAKES. Tires and wheels will be made
of matched generic type, quality, and design as originally supplied
and have at least 9/32" tread on front tires and 12/32" tread on
rear tires. Front tires will be original casings. Rear tires may
have first time recapped casings. Brake linings will have at least
50% remaining wear. There must be no irregular, or unusual wear or
damage to the tread or sidewalls. All rear wheel positions must be
of matched tread design.
(f) DOCUMENTS AND RECORDS. Each Vehicle will have a title
free and clear of all liens and encumbrances, meet any ICC
requirements, have a state inspection certificate valid for at
least 120 days after the date of return; proof of payment of ad
valorem, highway and all other taxes, a copy of a vehicle
maintenance packet, license plates and registration compliance, and
a valid, current DOT inspection certification.
(g) INSPECTIONS. Not more than 90 days and not less than 45
days prior to return of a Vehicle on the applicable Lease
Termination Date, Lessee will make the Vehicle available so that
Lessor may conduct a "walk-around" appraisal. Inspections may be
made by National Truck Protection at the request and expense of
Lessor if the Vehicles meet the National Truck Protection standard.
Lessee is responsible for the cost of inspection of Vehicles not
meeting the established National Truck Protection standard.
13. ASSIGNMENT:
(a) TRANSFER BY LESSOR: LESSOR MAY ASSIGN OR TRANSFER THIS
AGREEMENT ANY SCHEDULE OR LESSOR'S INTEREST IN ANY OF THE VEHICLES
WITHOUT NOTICE TO LESSEE. Any assignee or transferee of Lessor
shall have all of the rights, but none of the obligations, of
Lessor under this Agreement and Lessee agrees that it will not
assert against any assignee or transferee of Lessor any defense,
counterclaim, or offset which Lessee may have against Lessor.
Lessee acknowledges that any assignment or transfer by Lessor shall
not materially change Lessee's duties or obligations under this
Lease nor materially increase the burden or risks imposed on
Lessee.
(b) TRANSFER BY LESSEE: LESSEE SHALL NOT ASSIGN, SUBLEASE,
TRANSFER, OR DISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR
OBLIGATIONS UNDER THIS AGREEMENT OR IN THE VEHICLES, OR ENTER INTO
ANY SUBLEASE OF ALL OR ANY OF THE VEHICLES, WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR, (REGARDLESS OF WHETHER SUCH ACTION
OCCURS VOLUNTARILY OR BY OPERATION OF LAW).
(c) SECURITY INTEREST AND ASSIGNMENT. Notwithstanding the
prohibition against assignments or subleases without Lessor's prior
written consent, Lessee hereby transfers, conveys, and assigns to
Lessor and grants to Lessor a security interest in all of Lessee's
right, title, and interest in, but none of its obligations under
any sublease of the Vehicles, and all proceeds and income arising
therefrom. Any sublease permitted under this Agreement shall be in
form and contain terms and conditions acceptable to Lessor and
assigned to Lessor by form approved by Lessor, all such approvals
by Lessor to be granted or withheld in Lessor's sole and absolute
discretion.
14. LESSEE'S INDEMNITIES: Lessee agrees that: (a) Lessee will
indemnify and hold harmless Lessor and its agents for, from, and
against all losses, penalties, claims, and causes of action
including legal fees and expenses of every kind and nature related
to this Agreement or the selection, manufacture, purchase,
delivery, lease, possession, use, misuse, contents, repair,
collision, personal injury, death, condition or return of any of
the Vehicles; (b) Lessor may, at its sole option, take any action
Lessor deems necessary to cure any Event of Default, and Lessee
will immediately and fully compensate Lessor for such action; and
(c) Lessor is entitled to the accelerated cost recovery (or
depreciation) deductions with respect to each Vehicle. Should any
taxing authority disallow, eliminate, reduce, recapture, or
disqualify, in whole or in part, any tax benefits with respect to
any Vehicle (whether because of a change in tax law or policy or
because of a change in the status or condition of the Vehicle),
then Lessee will immediately pay a sum that permits Lessor to
receive (on an after-tax basis over the full term of the Lease) the
same after-tax cash flow and after-tax yield that Lessor may have
reasonably assumed upon entering into the Lease. Any written
request from Lessor for such a payment will be binding, unless
objected to within 14 days of notification, and due upon request.
15. EVENTS OF DEFAULT: Each of the following shall constitute an
Event of Default which will allow Lessor to exercise all of its
rights under this Agreement and applicable law: (a) Lessee fails to
make any payment in full when due under this Agreement; (b) Lessee
breaches any provision, covenant, or warranty in this Agreement and
such breach continues after ten (10) days written notice to Lessee;
(c) any of the Vehicles is lost, severely damaged, destroyed or
attached and Lessor does not receive the Stipulated Loss Value for
such Vehicle, plus all other amounts then due under this Agreement
for such Vehicle, within ten (10) days after the date on which such
damage, destruction, or attachment occurs; (d) an odometer on any
Vehicle fails or appears to have been tampered with and is not
repaired within two weeks; (e) Lessee or any guarantor dies,
becomes insolvent or ceases to do business in the ordinary course,
or suffers a material adverse change in its management or
ownership; (f) a petition in bankruptcy is filed by or against
Lessee or any guarantor, or Lessee or guarantor admits its
inability or is unable to pay its debts as they come due, or a
receiver or trustee is appointed for Lessee or any guarantor; (g)
any guarantor, surety or endorser for Lessee defaults on any
obligation or liability to Lessor; (h) Lessee or any guarantor
shall default with respect to any agreement with, or obligation to,
any other party for the payment of borrowed money, contractual
obligation, or rent, and such default exceeds an aggregate amount
of One Million Dollars ($1,000,000); (i) any representation or
warranty made by Lessee or any guarantor in any of the Lease
Documents or any information delivered by Lessee or any guarantor
in obtaining or hereafter in connection with the credit evidenced
by this Agreement is materially incomplete, incorrect or misleading
as of the date made or delivered; (j) the consolidation or merger
of Lessee or guarantor with any other person or entity, or the
taking of any action by Lessee or any guarantor towards a
dissolution, liquidation, consolidation, or merger; and (k) the
sale or transfer (voluntarily or by operation of law) by Lessee or
any guarantor of all or substantially all of Lessee's or any
guarantor's assets to any person or entity.
16. WAIVER OF DEFAULTS: Lessor may, in its sole discretion, waive
an Event of Default or permit a cure of an Event of Default, at
Lessee's sole expense. Any such waiver will not constitute a
waiver of any other Events of Defaults or a waiver of the same type
of an Event of Default at another time.
17. REMEDIES: Whenever an Event of Default has occurred under
this Agreement, Lessor will have all the rights and remedies
provided by this Agreement, the UCC, and other applicable law.
Lessor's rights and remedies are cumulative. At the option of
Lessor, with or without notice, Lessee's rights to the Vehicles may
be canceled and all rental payments and other amounts owed under
this Agreement will be immediately due and payable in full,
together with all costs and expenses, including attorneys' fees,
incurred by Lessor in the enforcement of its rights and remedies
under this Lease. Lessor may take possession of any Vehicles (with
or without legal process) and, to the extent permitted by law, may
enter any locked or unlocked premises for that purpose. Lessor
may, at its option, sell, lease, or otherwise dispose of any or all
of the Vehicles after it obtains possession. Upon such sale,
Lessee will pay to Lessor immediately, as liquidated damages for
loss of bargain and not as a penalty, the amount by which the
Stipulated Loss Value exceeds the net sales proceeds of such
Vehicles in addition to all other amounts due. If any Vehicle is
not immediately returned to Lessor, or if Lessor is prevented from
retaking possession, Lessee will pay Lessor immediately the
Stipulated Loss Value for such Vehicle as of the date rental
payments are next due, in addition to all other owed charges.
Lessor may at its sole discretion seek remedies with respect to
Lessee's obligations on some or all of the Schedules without
diminishing Lessor's rights to separately or later pursue remedies
on any of Lessee's other obligations. To the extent permitted by
law, Lessee waives all other remedies, including specific
performance, the right to deduct damages from current amounts due,
and all indirect, consequential, punitive, and incidental damages.
18. STATUTE OF LIMITATIONS.: Any action by Lessee against Lessor
under this Agreement shall be commenced within one (1) year after
any such cause of action accrues.
19. SURVIVAL. The representations, warranties, and covenants of
the Lessee in this Agreement shall survive the execution and
delivery of this Agreement.
20. INTEGRATION, ENTIRE AGREEMENT. This Agreement and the
Schedules attached hereto constitute the entire agreement and
understanding of Lessor and Lessee and supersede all prior
representations, warranties, agreements, understandings, and
negotiations. Acceptance of late payments shall not waive the TIME
IS OF THE ESSENCE PROVISION, the right of Lessor to require that
subsequent payments be made when due, or the right of Lessor to
declare an Event of Default if subsequent payments are not made
when due.
21. COSTS, EXPENSES, AND FEES. In the event of any dispute
between the parties, the prevailing party in such dispute shall
recover from the other all fees and expenses (including reasonable
attorney's fees and expenses) incurred in connection with such
dispute, regardless of whether litigation is instigated.
22. SEVERABILITY. If any provision of any of this Agreement is
unenforceable, such provision shall be modified to the minimum
extent possible to make such provision enforceable and the
enforceability of the other provisions of this Agreement shall not
be affected.
23. CHOICE OF LAW. This Agreement shall not be effective until
accepted by Lessor at its North Carolina headquarters and shall be
governed by the substantive (and not choice of law or conflicts)
laws of the State of North Carolina.
24. TIME IS OF THE ESSENCE. Time is off the essence with regard
to each provision of this Agreement as to which time is a factor.
25. NOTICES AND DEMANDS. All demands or notices under this
Agreement shall be in writing (including without limitation,
telecopy or facsimile, receipt confirmed) and mailed, telecopied,
or delivered to the address previously specified in writing by the
party to whom such notice is being given. Any demand or notice
mailed shall be mailed first-class mail, post-prepaid, return-
receipt requested. Demands or notices shall be effective upon the
earlier of (i) actual receipt by the addressee or (ii) the date
shown on the return receipt, fax confirmation, or delivery receipt.
26. RESCISSION OR RETURN OF PAYMENTS. If at any time, all or any
part of any amount received by the Lessor under this Agreement,
must or is claimed to be subject to avoidance, rescission, or
return to Lessee or any other party for any reason whatsoever, such
obligation and any liens, security interests and other encumbrances
that secured such obligations at the time such avoidance,
rescission, or returned payment was received by Lessor shall be
deemed to have continued in existence or shall be reinstated, as
the case may be, all as though such payment had not been received.
27. HEADINGS. The headings at the beginning of sections of this
Agreement are solely for convenience and do not modify any
sections.
28. NUMBER AND GENDER. The singular shall include the plural and
vice versa and each gender shall include the other genders.
29. MULTIPLE FINANCE ACCOMMODATIONS. If Lessee has more than one
lease or other finance accommodation with Lessor, Lessee agrees
that: (i) this Agreement and the documents relating to such other
finance accommodation shall all remain in effect and neither shall
supersede the other, regardless of whether this Agreement and such
other financing documents have differing terms, conditions, and
requirements; and (ii) regardless of any such differences, Lessee
shall comply with all of the terms, condition, and requirements of
this Agreement and of such other financing documents.
30. WAIVERS. Lessee waives, to the fullest extent permitted by
law, presentment, notice of dishonor, and all other notices of
demands of any kind (except as otherwise expressly provided in this
Agreement).
31. AMENDMENT OR MODIFICATION. No term or provision of this
Agreement maybe amended, waived, modified, discharged, or
terminated orally but only in writing, executed by the parties. By
executing this Agreement, Lessee agrees to be bound by the terms of
this Lease and, to the extent applicable, the provision concerning
a separately signed document pursuant to UCC Section 2A-208 has
been satisfied.
Dated: As of the 18th day of August, 1997.
LESEE: VOLVO TRUCK FINANCE NORTH
AMERICA, INC.
American Freightways, Inc. 7823 National Service Road
PO Box 26131
Greensboro, North Carolina
27402-6131
By /s/Frank Conner By /s/Christopher Patterson
Executive Vice President Customer Accounts Manager
Title Title
