FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________.
COMMISSION FILE NUMBER: 0-19582
OLD DOMINION FREIGHT LINE, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 56-0751714
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1730 WESTCHESTER DRIVE
HIGH POINT, NC 27262
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER (336) 889-5000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK ($.10 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 Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate 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 the 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. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
registrant as of March 9, 1998, was $25,254,945.
As of March 9, 1998, the registrant had outstanding 8,310,596 shares of
Common Stock ($.10 par value).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
GENERAL
Old Dominion Freight Line, Inc. ("Old Dominion", the "Company" or the
"Registrant", as appropriate for this report), is an inter-regional and regional
motor carrier transporting primarily less-than-truckload ("LTL") shipments of
general commodities, including consumer goods, textiles and capital goods to a
diversified customer base. The Company serves regional markets in the Southeast,
Northeast, Midwest and West regions of the country. Old Dominion connects these
geographic regions with high quality inter-regional service.
Old Dominion's operating strategy is to provide high quality and timely
service, including time definite and expedited delivery services, at competitive
prices, while maintaining low operating costs. Along key inter-regional lanes,
Old Dominion maintains published service standards that generally provide for
delivery time schedules that are faster than those of its principal national
competitors, in part, because of its more efficient service center network. The
Company's service standards provide for delivery times of between two and three
days along key inter-regional lanes between 500 and 1,500 miles. The Company
generally provides for one or two-day delivery along regional lanes of less than
500 miles, which Old Dominion believes is highly competitive.
The Company seeks to reduce unit operating costs and improve service by
building freight volume, or density, in its markets. Increasing density reduces
unloading and reloading at breakbulk facilities, resulting in faster transit
times and reduced cargo claims, and also improves equipment utilization. Old
Dominion also lowers its cost structure and reduces cargo claims by using twin
28-foot trailers exclusively in its linehaul operations. Use of twin 28-foot
trailers permits the Company to transport freight directly from its point of
origin to destination with minimal unloading and reloading, and permits more
freight to be hauled behind a tractor than could be hauled if the Company used
one larger trailer. Approximately 60% of the Company's LTL tonnage moves
directly from the origination service center to its destination without being
reloaded to another trailer at a breakbulk facility, with a substantial majority
of the remaining tonnage experiencing no more than one breakbulk handling per
shipment. Further, management believes that it gains an operating advantage by
maintaining flexible work force rules among its nonunion labor force, which
permits service center employees to perform several functions that result in
reliable delivery and a higher level of customer satisfaction.
The Company also transports shipping containers between several port
cities and inland points in its core southeastern service area. For the year
ended December 31, 1997, container services accounted for 3.0% of the Company's
operating revenue. Old Dominion also provides assembly and distribution services
primarily to its retail customers.
THE LTL INDUSTRY
Old Dominion transports primarily LTL shipments, which are defined as
shipments weighing less than 10,000 pounds. Generally, LTL carriers transport
freight from multiple shippers to multiple consignees through a service center
network, based on standard transit times.
Deregulation of the trucking industry in 1980 created a new operating
environment for motor carriers, permitting them to choose, for the first time,
their operating routes and pricing policies. Since deregulation, most LTL
carriers have focused on providing service in either a single regional market or
the national market. Furthermore, the overall trucking industry currently is
undergoing changes that affect both shippers and carriers. Shippers are seeking
to reduce the number of carriers they use and to establish service-based,
long-term relationships with a small group of preferred or "core carriers." This
trend toward the use of "core carriers" offers significant growth opportunities
for carriers that possess financial stability and can provide both regional and
inter-regional, high quality service with low costs. The Company believes that
this trend has created an opportunity for it to increase lane and
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service center density along key inter-regional lanes in which a relatively
small number of carriers offer high quality service. Old Dominion's strategy is
to continue to capitalize on the opportunities provided by deregulation by
building its market share in key inter-regional and regional lanes. From time to
time, certain national carriers have sought to compete in selected
inter-regional markets and along selected inter-regional lanes and may seek to
do so in the future as national markets mature, but the Company believes that it
holds a key competitive advantage over its principal national competitors due to
its more efficient service center network.
LTL companies are generally categorized as regional, inter-regional or
national motor carriers, based upon length of haul. Carriers with average
lengths of haul less than 500 miles are referred to as regional carriers.
Carriers with average lengths of haul between 500 and 1,000 miles are referred
to as inter-regional carriers. National carriers generally have average lengths
of haul that exceed 1,000 miles. For the year ended December 31, 1997, Old
Dominion had an average length of haul of 869 miles.
In the motor carrier industry, revenue is primarily a function of
weight, length of haul and commodity class, and is frequently described in terms
of revenue per hundredweight. The Company tracks revenue per hundredweight as a
measure of pricing, commodity mix and rate trends.
LTL carriers can improve profitability by increasing lane and service
center density. Increased lane density lowers unit operating costs and improves
service. Increased service center density, by increasing the amount of freight
handled at a given service center location, improves utilization of assets and
other fixed costs.
REVENUE EQUIPMENT AND MAINTENANCE
At December 31, 1997, the Company operated 1,761 tractors. The Company
uses new tractors in linehaul operations for approximately three to four years
and then transfers those tractors to pickup and delivery operations for the
remainder of their useful lives. In a number of Company service centers,
tractors perform pickup and delivery functions during the day and linehaul
functions at night to maximize tractor utilization.
At December 31, 1997, the Company operated a fleet of 7,467 trailers.
As the Company has expanded and its needs for equipment have increased, the
Company has purchased new trailers as well as trailers meeting its
specifications from other trucking companies that have ceased operations. These
purchases of pre-owned equipment, though providing an excellent value, have the
effect of increasing the trailer fleet's average age; however, the Company
believes the age of its trailer fleet compares favorably with its competitors.
The Company develops certain specifications for revenue equipment, the
production and purchase of which are negotiated with several manufacturers.
These purchases are planned well in advance of anticipated delivery dates in
order to accommodate manufacturers' production schedules. The Company believes
that there is sufficient capacity among suppliers to ensure an uninterrupted
flow of equipment.
The table below reflects, as of December 31, 1997, the average age of
Old Dominion's revenue equipment:
Type of Equipment Number
(Categorized by Primary Use) of Units Average Age
- ---------------------------- -------- -----------
Linehaul tractors 1,402 2.8 years
Pickup and delivery tractors 359 6.4 years
Pickup and delivery trucks 21 6.4 years
Linehaul 28-foot trailers 6,223 6.4 years
Pickup and delivery trailers 1,244 11.6 years
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The Company currently has major maintenance operations at its service
centers in Atlanta, Georgia; Chicago, Illinois; Morristown and Memphis,
Tennessee; Los Angeles, California; Columbus, Ohio; and Greensboro, North
Carolina. In addition, six other service center locations are equipped to
perform routine and preventive maintenance checks and repairs on the Company's
equipment.
The Company has an established scheduled maintenance policy and
procedure that is administered by the Vice President - Equipment and
Maintenance. Linehaul tractors are routed to appropriate maintenance facilities
at designated mileage intervals ranging from 10,000 to 12,500 miles, depending
upon how the equipment was utilized. Pickup and delivery tractors and trailers
are scheduled for maintenance at designated time intervals ranging from 60 to 90
days.
The table below sets forth the Company's capital expenditures for
certain revenue equipment during 1995, 1996 and 1997:
Year Service Centers Tractors Trailers Total
- ---- --------------- -------- -------- -----
1995 $ 485,000 $ 9,727,000 $12,918,000 $23,130,000
1996 $12,513,000 $13,116,000 $10,120,000 $35,749,000
1997 $ 6,371,000 $17,529,000 $ 4,889,000 $28,789,000
SERVICE CENTER OPERATIONS
At December 31, 1997, Old Dominion conducted operations through 79
service center locations, of which it owns 28 and leases 51. The Company
operates major breakbulk facilities in Atlanta, Georgia; Columbus, Ohio;
Morristown, Tennessee; Jersey City, New Jersey; Los Angeles, California; and
Greensboro, North Carolina, while using some smaller service centers for limited
breakbulk activity. Old Dominion's service centers are strategically located to
permit the Company to provide the highest quality service and minimize freight
rehandling costs.
Each service center is responsible for the pickup and delivery of
freight for its own service area. All inbound freight received by the service
center in the evening or at night is scheduled for local delivery the next
business day, unless a customer requests a different delivery schedule. Each
service center loads the freight by destination the day it is picked up.
Management reviews the productivity and service performance of each service
center on a daily basis in order to ensure quality service.
The Company also has established primary responsibility for customer
service at the local level. Service center employees trace freight movements
using the Company's automated tracing systems which provides for immediate
response to customer requests for delivery information. While the Company
maintains primary accountability for customer service at the local service
center, the Company has established a customer service function at the corporate
offices to offer additional customer support.
The Company plans to expand capacity at existing service centers as
well as expand the number of service centers geographically as opportunities
arise that provide for profitable growth and fit the needs of its customers.
LINEHAUL TRANSPORTATION
The Company's Transportation Department is responsible for directing
the movement of freight among the Company's service centers. Linehaul
dispatchers monitor the movement of freight among service centers with an
on-line automated dispatch system that operates continuously. Each morning, the
Company's senior management reviews the prior day's freight movements, transit
times, load factors, empty miles and other key statistics to monitor the
Company's performance.
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The Company uses scheduled runs, and schedules additional runs as
necessary, to meet its published service standards. The Company uses twin
trailers exclusively in its linehaul operations to reduce breakbulk handling and
to increase linehaul productivity.
MARKETING AND CUSTOMERS
At December 31, 1997, the Company had a sales staff of 237 employees.
The Company compensates its sales force, in part, based upon revenue generated,
which the Company believes helps motivate its marketing employees.
The Company utilizes a computer modeling program to determine the price
level at which a particular shipment of freight will be profitable. Elements of
the pricing model may be modified, as necessary, to simulate the actual
conditions under which the freight will be moved. From time to time, the Company
also competes for business by participating in bid solicitations. Customers
generally solicit bids for relatively large numbers of shipments for a period of
from one to two years and typically choose to enter into a contractual
arrangement with a limited number of motor carriers based upon price and
service.
For the year ended December 31, 1997, Old Dominion's largest 20, 10,
and 5 customers accounted for approximately 21.8%, 16.4% and 11.8%,
respectively, of the Company's operating revenue. The Company's largest customer
for 1997 accounted for approximately 3.6% of operating revenue. While the
Company is not dependent upon one customer, a reduction or termination of
services provided by the Company to a large group of customers could have an
adverse effect on the Company's business and operating results.
COMPETITION
The transportation industry is highly competitive on the basis of both
price and service. Old Dominion competes with regional, inter-regional and
national LTL and truckload carriers and, to a lesser extent, with air freight
carriers and railroads, a number of which have greater financial resources,
operate more equipment and have larger freight capacity than the Company. The
Company believes that it is able to compete effectively in its markets by
providing high quality and timely service at competitive prices.
SAFETY AND INSURANCE
The Company's Vice President - Safety and Personnel, Director of Claims
and Director of Claims Prevention implement and monitor its safety and loss
prevention programs with the assistance of ten field supervisors. As a result of
the Company's emphasis on safety, the accident frequency, as defined by the
National Safety Council (including minor and unavoidable accidents), has
decreased from 12.5 accidents per million miles for the year ended December 31,
1989, to 7.3 accidents per million miles for the year ended December 31, 1997.
The Company is self-insured for bodily injury and property damage
claims up to $250,000 per occurrence and for cargo claims up to $50,000 per
occurrence. The Company also is self-insured for workers' compensation in
certain states and has first dollar or high deductible plans in the other
states. The Company believes that its policy of self-insuring up to set limits,
together with its safety and loss prevention programs, is an effective means of
managing insurance costs.
Old Dominion believes that its current insurance coverage is adequate
to cover its liability risks.
FUEL AVAILABILITY AND COST
The motor carrier industry is dependent upon the availability of diesel
fuel. Increases in fuel prices and fuel taxes, to the extent not offset by rate
increases or fuel surcharges to customers,
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shortages of fuel or rationing of petroleum products could have a material,
adverse effect on the operations and profitability of the Company. The Company
has not experienced difficulties in maintaining a consistent and ample supply of
fuel. In periods of extreme price increases, the Company has implemented a fuel
surcharge which is consistent with other competitors. Management believes that
the Company's operations and financial condition are susceptible to the same
fuel price increases or fuel shortages as those of its competitors. Fuel costs
normally fluctuate between three and five percent of operating revenue. Fuel
expense was 4.4% of revenue in 1997.
EMPLOYEES AND DRIVERS
At December 31, 1997, the Company employed 4,486 persons in the
following categories:
Number of
Category Employees
- -------- ---------
Salaried and clerical 1,160
Drivers 2,190
Platform 760
Mechanics 139
Sales (corporate and field) 237
At December 31, 1997, the Company employed 1,025 road drivers and 1,165
city drivers. All drivers hired by the Company are selected based upon driving
records and experience. Drivers are required to pass drug tests at employment
and are later required to take such tests periodically, by random selection.
Competition for drivers is intense within the trucking industry, and the Company
periodically experiences difficulties in attracting and retaining qualified
drivers. There can be no assurance that the Company's operations will not be
affected by a shortage of qualified drivers in the future which could result in
temporary under-utilization of revenue equipment, difficulty in meeting shipper
demands and increased compensation levels for drivers. Difficulty in attracting
or retaining qualified drivers could require the Company to limit growth and
have a materially adverse effect on the Company's operations.
To help fulfill driver needs, the Company offers employees the
opportunity to become drivers as the need arises. Since 1988, the Company has
operated its own driver training program. In management's opinion, driver
qualification programs, which are required to be taken by all drivers, have been
an important factor in improving the Company's safety record. Drivers with safe
driving records are rewarded with bonuses of up to $1,000 annually. Driver
safety bonuses paid for 1997 were approximately $375,000.
None of the Company's employees are currently represented by a
collective bargaining unit, and management believes that relations with its
employees are excellent. From time to time there have been efforts to organize
Company employees at various service centers, none of which have been
successful. However, there can be no assurance that the Company's employees will
not unionize in the future, which could increase the Company's operating costs
and force it to alter its operating methods, which could in turn have a
materially adverse effect on the Company's operating results.
REGULATION
The Motor Carrier Act of 1980 significantly deregulated the trucking
industry and increased competition among motor carriers. Following enactment of
the Motor Carrier Act, applicants have obtained operating authority more easily,
and interstate motor carriers such as Old Dominion have been able to change
their rates more freely with less regulatory scrutiny and delay. The law also
removed many route and commodity restrictions on transportation of freight.
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Effective January 1, 1995, the passage by the U.S. Congress of Section
601 of the Federal Aviation Administrative Authorization Act and the Trucking
Industry Regulatory Reform Act ("TIRRA") deregulated intrastate operating
authority. Prior to TIRRA, the Company maintained intrastate authority in the
states of North Carolina, Virginia, South Carolina, Georgia and California. The
states of Florida and New Jersey had already eliminated their restrictions on
operating authority. The passage of TIRRA provides additional intrastate growth
opportunities in the states in which the Company operates.
The Company was regulated by the Interstate Commerce Commission (the
"ICC") until passage of the ICC Termination Act of 1995, which abolished the ICC
on December 31, 1995. The Surface Transportation Board, an independent entity
within the United States Department of Transportation ("DOT"), assumed many of
the responsibilities of the ICC. The Company is also regulated by various state
agencies. These regulatory authorities have broad powers, generally governing
matters such as authority to engage in motor carrier operations, rates, certain
mergers, consolidations and acquisitions, and periodic financial reporting. The
motor carrier industry is subject to regulatory and legislative changes that can
affect the economics of the industry by requiring changes in operating practices
or influencing the demand for, and the costs of providing services to, shippers.
Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. Such matters as weight and dimensions of equipment are
also subject to federal and state regulation. The Company is subject to federal,
state and local environmental laws and regulations, particularly relating to
underground fuel storage tanks ("USTs"). The Company believes it is in
compliance with applicable environmental laws and regulations, including those
relating to USTs, and does not believe that the cost of future compliance should
have a material adverse effect on the Company's operations or financial
condition.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth information regarding the present
executive officers of the Company:
Name and Age Positions and Offices with the Company
- ------------ --------------------------------------
Earl E. Congdon (67) Chairman of the Board of Directors and Chief
Executive Officer
John R. Congdon (65) Vice Chairman of the Board of Directors
John A. Ebeling (60) Vice Chairman of the Board of Directors
David S. Congdon (41) President, Chief Operating Officer
John B. Yowell (46) Executive Vice President
J. Wes Frye (50) Sr. Vice President - Finance, Treasurer, Chief
Financial Officer and Assistant Secretary
Joel B. McCarty, Jr. (60) Sr. Vice President, General Counsel and Secretary
Earl E. Congdon has been with the Company since 1950 and has served as
Chairman of the Board and Chief Executive Officer since 1985 and as a director
since 1952. He is a son of E. E. Congdon, one of the founders of Old Dominion.
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John R. Congdon has been with the Company since 1953 and has served as
Vice Chairman of the Board since 1985 and as a director since 1955. He is also
the President of Old Dominion Truck Leasing, Inc., a North Carolina corporation
that is engaged in the full service leasing of tractors, trailers and other
equipment, to which he devotes more than half of his time. He is a son of E. E.
Congdon, one of the founders of Old Dominion, and the brother of Earl E.
Congdon.
John A. Ebeling has been a Vice Chairman of the Board of Directors
since May of 1997. He formerly served as President and Chief Operating Officer
from August of 1985 to May of 1997 and was first elected a director in August of
1985. Mr. Ebeling was previously employed by ANR Freight Systems from 1978 to
1985, holding the positions of Chairman and Chief Executive Officer.
David S. Congdon has been employed by the Company since 1978 and, since
May 1997, has served as President and Chief Operating Officer. He has held
various positions in the Company including Vice President - Quality and Field
Services, Vice President - Quality, Vice President - Transportation, President -
Dominion Furniture Xpress ( a division of Old Dominion that specialized in
furniture transportation) and held other positions in operations and
engineering. He is the son of Earl E. Congdon.
John B. Yowell has been employed by the Company since February 1983 and
was promoted to Executive Vice President in May of 1997. He has held the
position of Vice President - Corporate Services, Vice President - Central
Region, Vice President - South Central Area, Assistant to the President and Vice
President - Management Information Systems. He is a son-in-law of Earl E.
Congdon.
J. Wes Frye has been the Sr. Vice President - Finance since May of
1997. He has been Chief Financial Officer and Treasurer since joining the
Company in February of 1985 and has served as Assistant Secretary since December
of 1987. Mr. Frye served as the Vice President of Finance of Builders Transport,
Inc., from 1982 to 1985, and in various positions, including Vice President -
Controller of Johnson Motor Lines from 1975 to 1980. Mr. Frye is a Certified
Public Accountant.
Joel B. McCarty, Jr., has been a Sr. Vice President since May of 1997
and has served as General Counsel and Secretary since joining the Company in
June of 1987. Before joining Old Dominion, he was Assistant General Counsel of
McLean Trucking Company and was in private law practice prior to 1985.
Information concerning the Company's other significant employees is as
follows:
Name and Age Position
------------ --------
Ernest Brantley (61) Senior Vice President - Operations
J. Timothy Turner (42) Senior Vice President - Sales and Marketing
John P. Booker, III (41) Vice President - Controller
Robert M. Delgado (59) Vice President - Western Area
Kevin M. Freeman (38) Vice President - Field Sales
Gregory C. Gantt (42) Vice President - Southern Area
Terry L. Hutchins (39) Vice President - Quality and Field Services
Richard F. Keeler (48) Vice President - Corporate Services
Mark M. Madden (46) Vice President - Northern Area
Buddy S. McBride (52) Vice President - Transportation
Hugh N. Morris Jr. (34) Vice President - Midwest Area
J. Edward Richardson (53) Vice President - Equipment and Maintenance
Brian J. Stoddard (50) Vice President - Safety and Personnel
Michael A. Wood (44) Vice President - Central Area
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Ernest Brantley, Senior Vice President - Operations since January 1992,
joined the Company as Vice President - Operations in January of 1990. He was
previously with Thurston Motor Lines for 35 years where he served in various
capacities, including Executive Vice President from 1981 to 1987. Following its
acquisition by Brown Transport Co., Inc., Mr. Brantley served as Senior Vice
President of Brown Transport from 1987 to 1990.
J. Timothy Turner has been employed by the Company since July 1981 and
was promoted to Sr. Vice President - Sales and Marketing in May of 1997. He has
also served as Vice President - Sales and Marketing, Vice President - National
Accounts, Director of Sales, Central Area Director of Sales and District Sales
Representative prior to 1986. He was employed by McLean Trucking Company from
1977 to 1981.
John P. Booker, III, joined the Company in April 1987 and was promoted
to Vice President - Controller in May of 1997. He previously served as Assistant
Vice President and Controller. Between 1979 and 1987 he was employed by RJR
Nabisco, Inc. and Monsanto Company where he held various accounting positions.
Mr. Booker is a Certified Management Accountant.
Robert M. Delgado joined the Company in December 1985 and was promoted
to Vice President - Western Area in October 1996. He has also served as the
Director of the Western Area and as the Los Angeles Service Center Manager.
Prior to joining the Company, he held several management positions with Watkins
Motor Lines and American Freightways.
Kevin M. Freeman joined the Company in 1988 and was promoted to Vice
President - Field Sales in May of 1997. He previously served as Director of
Field Sales, Central Sales Director and as an area sales representative. Prior
to joining Old Dominion, he was employed in the air freight industry as a
National Sales Representative.
Gregory C. Gantt joined the Company in November 1994 as Vice President
- - South Central Area and assumed responsibility for the Southern Area in January
1996. From 1978 to 1994 he was employed by Carolina Freight Carriers where he
held various positions including Vice President - Southern Region, Regional
Manager and Operations Director.
Terry L. Hutchins joined the Company in December 1992 and was promoted
to Vice President - Quality and Field Services in December 1997. Previously he
served as Vice President - Southern Area and Vice President - Central Area.
Prior to joining the Company, he held several terminal manager and sales
positions with Carolina Freight Carriers and McLean Trucking Company between
1980 and 1992.
Richard F. Keeler joined the Company in 1993 and was promoted to Vice
President - Corporate Services in May of 1997. He has previously served as Vice
President - Midwest Area, Vice President - Northern Area, and as Director of
Pickup and Delivery Operations. Formerly, he was employed by Standard Trucking
Company where he served in various senior management positions.
Mark M. Madden joined Old Dominion in January 1986 and was promoted to
Vice President - Northern Area in April 1995. He has also served as the Area
Manager - Metro Area and as a Service Center Manager in the Northern Area.
Buddy S. McBride joined the Company in 1977 and held various positions
prior to becoming Vice President - Central Area in 1991. In December 1992, he
was promoted to Vice President - Transportation.
Hugh N. Morris joined the Company in 1986 and was promoted to Vice
President - Midwest Area in May of 1997. He previously served as Manager of
Sales and Service at the Charlotte, Atlanta and Tampa Service Centers, Southern
Area Sales Director and held various management positions at the Chattanooga
Service Center. Prior to joining Old Dominion he was employed by both
ARA/Smith's Transfer and Apex/Humboldt Express where he held several management
positions.
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J. Edward Richardson joined Old Dominion in December 1986 and has been
Vice President Equipment and Maintenance since March of 1990. From 1986 to 1990,
he was Director of Maintenance.
Brian J. Stoddard joined the Company in 1969 and was promoted to Vice
President - Safety and Personnel in May 1997. He previously served as Director -
Safety and Personnel, Corporate Safety Manager, Service Center Manager -
Dominion Furniture Xpress, Service Center Manager at both the Newport News and
Norfolk Service Centers and as a supervisor, dockworker and driver.
Michael A. Wood joined the Company in 1991 and was promoted to Vice
President - Central Area in December 1997. He previously served as Manager of
Sales and Service - Atlanta, and as both the Manager of Sales and Service and
Assistant Manager of Sales and Service - Charlotte. Prior to joining Old
Dominion he was employed by PIE Nationwide from 1979 to 1991.
ITEM 2. PROPERTIES
The Company owns its general offices located in High Point, North
Carolina, consisting of a four-story office building of approximately 56,500
square feet on 10.3 acres and an office building of approximately 15,000 square
feet located near the general office. The Company also owns operating service
center facilities in Baltimore, Maryland; Richmond, Manassas, Martinsville and
Norfolk, Virginia; Charlotte, Hickory, Wilson and Fayetteville, North Carolina;
Atlanta, Georgia; Columbia and Greenville, South Carolina; Orlando,
Jacksonville, and Tampa, Florida; Tupelo, Mississippi; Morristown, Memphis,
Nashville and Chattanooga, Tennessee; Cincinnati and Columbus, Ohio; Kansas
City, Missouri; Los Angeles, California; Minneapolis, Minnesota; Dallas and
Houston, Texas; and Milwaukee, Wisconsin.
The Company also owns non-operating properties in Memphis and
Nashville, Tennessee; Jacksonville, Florida; Los Angeles, California; St. Louis,
Missouri; Wilson, Hickory and Fayetteville, North Carolina; New Orleans,
Louisiana; Greenville, Mississippi; Baltimore, Maryland; and an office and
maintenance facility in Birmingham, Alabama, all of which are held for lease.
Currently the Los Angeles and Fayetteville properties are not under lease; the
Birmingham, Wilson, New Orleans, Greenville and Baltimore properties are leased
until September 2001; the Nashville property is leased until June 1998; the
Jacksonville property is leased until February 1999; the Memphis property is
leased until December 1998; and the St. Louis and Hickory properties are on
month-to-month leases.
Old Dominion leases 51 of its 79 service centers. The length of the
leases range from month-to-month to a lease that expires on July 31, 2004. The
Company believes that its leased facilities are adequate for its existing needs
and that, as current leases expire, it will be able either to renew them or find
comparable facilities without incurring any material negative impact on service
to customers or its operating results.
The Company believes that all of its properties are in good repair and
are capable of providing the level of service required by current business
levels and customer demands.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Company is a party or of
which any of its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
COMMON STOCK AND DIVIDEND INFORMATION
The common stock of Old Dominion Freight Line, Inc. is traded on the Nasdaq
Stock Market (National Market) under the symbol ODFL. At March 9, 1998, there
were approximately 798 holders of the common stock, including 115 stockholders
of record. No dividends have been paid on the common stock. The information
concerning restrictions on dividend payments required by Item 5 of Form 10-K
appears in Note 2 of the Notes to Consolidated Financial Statements appearing in
Item 8 of this report.
MARKET PRICES OF COMMON STOCK:
1997
-------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------------------------------------------
HIGH $ 12.375 $ 14.25 $ 19.75 $ 19.25
LOW $ 9.50 $ 11.75 $ 13.50 $ 14.00
1996
-------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
- ----------------------------------------------------------------------------
High $ 12.50 $ 12.25 $ 10.50 $ 11.25
Low $ 7.50 $ 9.25 $ 7.50 $ 8.50
MARKET MAKERS:
BT Alex Brown & Sons, Inc.; Herzog, Heine, Geduld, Inc.; Wheat, First
Securities, Inc.; William Blair & Co.; Furman Selz Inc.; and Mayer & Schweitzer
Inc.
11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
AND OPERATING STATISTICS) 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Revenue from operations $ 328,844 $ 293,006 $ 248,079 $ 243,547 $ 205,399
Operating expenses:
Salaries, wages and benefits 193,523 163,490 141,163 131,138 109,135
Purchased transportation 15,494 21,435 18,933 21,897 20,878
Operating supplies and expenses 30,311 30,288 22,945 21,716 18,206
Depreciation and amortization 17,173 16,091 13,630 11,781 10,119
Building and office equipment rents 6,921 6,874 5,991 5,292 4,162
Operating taxes and licenses 13,968 12,867 10,393 9,628 7,939
Insurance and claims 10,033 10,118 8,503 8,758 6,709
Communications and utilities 6,152 5,687 5,014 4,509 3,655
General supplies and expenses 11,976 10,444 10,195 9,406 8,658
Miscellaneous expenses 3,282 2,762 1,671 1,798 1,399
-----------------------------------------------------------
Total operating expenses 308,833 280,056 238,438 225,923 190,860
-----------------------------------------------------------
Operating income 20,011 12,950 9,641 17,624 14,539
Interest expense, net 3,547 2,903 1,510 1,107 1,099
Other expense, net 273 137 329 110 226
-----------------------------------------------------------
Income before income taxes and
cumulative effect of changes in
accounting principles 16,191 9,910 7,802 16,407 13,214
Provision for income taxes 6,153 3,766 2,995 6,399 4,947
-----------------------------------------------------------
Income before cumulative effect of
changes in accounting principles $ 10,038 $ 6,144 $ 4,807 $ 10,008 $ 8,267
-----------------------------------------------------------
EARNINGS PER SHARE:
Basic $1.21 $0.74 $0.58 $1.20 $0.99
Diluted $1.21 $0.74 $0.58 $1.19 $0.99
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 8,312 8,346 8,354 8,362 8,370
Diluted 8,322 8,347 8,357 8,378 8,388
OPERATING STATISTICS:
Operating ratio 93.9% 95.6% 96.1% 92.8% 92.9%
LTL revenue per hundredweight $11.37 $11.00 $10.87 $10.80 $10.43
Revenue per intercity mile $3.00 $2.92 $2.93 $3.04 $2.96
Intercity miles (in thousands) 109,681 100,447 84,715 79,985 69,326
LTL tonnage (in thousands) 1,334 1,221 1,037 1,024 883
Shipments (in thousands) 2,607 2,388 2,084 2,034 1,740
Average length of haul (miles) 869 - - - -
As of December 31,
-----------------------------------------------------------
BALANCE SHEET DATA: 1997 1996 1995 1994 1993
-----------------------------------------------------------
Current assets $59,860 $56,264 $50,465 $45,643 $46,613
Current liabilities 39,084 35,865 31,861 34,538 35,056
Total assets 191,061 170,726 143,346 124,035 110,696
Long-term debt 47,301 43,141 30,216 18,625 18,989
Stockholders' equity 85,501 74,928 68,784 63,726 53,676
</TABLE>
12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth, for the years indicated, expenses and other
items as a percentage of revenue from operations:
1997 1996 1995
- -----------------------------------------------------------------------------
Revenue from operations 100.0% 100.0% 100.0%
----------- ----------- -----------
Salaries, wages and benefits 58.9 55.8 56.9
Purchased transportation 4.7 7.3 7.6
Operating supplies and expenses 9.2 10.3 9.3
Depreciation and amortization 5.2 5.5 5.5
Building and office equipment rents 2.1 2.4 2.4
Operating taxes and licenses 4.2 4.4 4.2
Insurance and claims 3.1 3.5 3.4
Communication and utilities 1.9 1.9 2.0
General supplies and expenses 3.6 3.6 4.1
Miscellaneous expenses 1.0 0.9 0.7
----------- ----------- -----------
Total operating expenses 93.9 95.6 96.1
----------- ----------- -----------
Operating income 6.1 4.4 3.9
Interest expense, net 1.1 1.0 0.6
Other expense, net 0.1 0.0 0.2
----------- ----------- -----------
Income before income taxes 4.9 3.4 3.1
Provision for income taxes 1.8 1.3 1.2
----------- ----------- -----------
Net income 3.1% 2.1% 1.9%
=========== =========== ===========
1997 COMPARED TO 1996
Revenue from operations for 1997 was $328,844,000, an increase of 12.2%,
compared to $293,006,000 for 1996. This revenue growth was a direct result of
the Company's focus on improving both revenue per hundredweight, or revenue
yield, and market share in existing areas of operations, or market density. Less
than truckload ("LTL") tonnage increased 9.3% during the year and total tonnage
increased 7.2%. These tonnage increases reflect increased market share in
existing areas of operation, as well as the impact of opening five new service
centers in 1997 and six new service centers in 1996, which primarily expanded
and enhanced direct service in existing regions of operations.
Average LTL revenue per shipment increased 3.4% to $119.73 in the current year
compared to $115.83 for 1996. This increase was a result of a 3.4% increase in
LTL revenue per hundredweight to $11.37 in 1997 from $11.00 for the previous
year. The improvement in LTL revenue per hundredweight reflects a general rate
increase on public tariffs implemented on January 1, 1997, as well as increases
on private tariffs which were negotiated throughout the year. The average weight
per LTL shipment was 1,053 lbs. for both 1997 and 1996 and thus had no impact on
the increase in average LTL revenue per shipment from 1996 to 1997.
Operating expense as a percentage of net revenue, or the operating ratio, was
93.9% for 1997 compared to 95.6% for the prior year. This improvement resulted
primarily from decreases in purchased transportation and operating supplies and
expenses, which combined were 3.7 operating points lower in 1997 than in 1996.
Purchased transportation decreased to 4.7% of revenue from 7.3% in the prior
year as a result of the Company's continuing effort to replace cartage agents
with Company
13
<PAGE>
personnel and equipment. Operating supplies and expenses decreased to 9.2% of
revenue from 10.3% in 1996 due to (1) a reduction in vehicle repair and
maintenance costs to 2.0% of revenue from 2.2% for the previous year, (2) a $.05
reduction in the average price per gallon of fuel in 1997 and (3) improved fleet
fuel efficiency to 6.5 miles per gallon in 1997 from 6.3 for the previous year.
The reduced repair and maintenance costs resulted, in part, from a reduction in
the average age of the linehaul tractor fleet to 2.8 years in 1997 from 3.0
years for the previous year and a comparatively milder winter season in 1997.
Building and office equipment rents decreased to 2.1% of revenue in 1997
compared to 2.4% in 1996 as a result of the Company's purchase of seven service
center facilities. Insurance and claims decreased to 3.1% from 3.5% in the
previous year. This decrease is primarily attributed to a reduction in cargo
claims expense to 1.6% of revenue from 2.1% for 1996. This reduction reflects an
ongoing Company-wide focus on continuous improvement in freight handling
processes and equipment.
Depreciation and amortization decreased to 5.2% of revenue from 5.5% in 1996 and
operating taxes and licenses decreased to 4.2% from 4.4% in 1996 as a result of
the Company leveraging higher revenue against these relatively fixed operating
costs in 1997.
These reductions in expenses were somewhat offset by an increase in salaries,
wages and benefits to 58.9% of revenue from 55.8% for 1996. In 1997, the Company
continued to replace cartage agents used for pickup and delivery services in
remote areas with Company personnel and equipment, which primarily led to the
increase in salaries, wages and benefits. As part of the overall strategy to
increase density and market share in existing markets, the Company added 45 new
field sales personnel in 1997, an increase of 23.4% over the prior year. In
addition, the Company added five new service centers in 1997 which expanded
direct coverage in regions already served. Linehaul and pickup and delivery
wages tend to be higher in the expanded areas as the Company is committed to
providing superior service while building service center and lane density.
The Company's net interest expense increased slightly as a percent of revenue to
1.1% in 1997 from 1.0% in 1996, due to an increase in average outstanding debt.
Net income was $10,038,000 for the year ended December 31, 1997, an increase of
63.4%, compared to $6,144,000 for 1996. The effective tax rate was approximately
38% in both 1997 and 1996.
1996 COMPARED TO 1995
Revenue from operations for 1996 was $293,006,000, an increase of 18.1%,
compared to $248,079,000 for 1995. Less than truckload tonnage increased 17.7%
during the year, and total tonnage increased 12.9%. During 1995, the Company
opened 15 new service centers in ten additional states, and the increased
tonnage reflects improved market share in 1996 in both the expanded areas as
well as the service center network existing prior to the expansion. To a lesser
degree, the tonnage increase was also a result of six new service centers that
were opened by the Company in 1996, which enhanced service in existing major
metropolitan markets rather than expand geographical coverage.
Average LTL revenue per shipment increased 3.8% to $115.83 in the current year
compared to $111.62 for 1995. This increase was caused by two factors. First,
the average LTL revenue per hundredweight was $11.00 in 1996 compared to $10.87
for the previous year, an increase of 1.2%. This improvement reflects a general
rate increases on public tariffs implemented on January 1, 1996. In addition,
the increase in LTL revenue per shipment was also due to an increase in LTL
weight per shipment, which increased 2.5% to 1,053 lbs. for the current year
from 1,027 lbs. for the previous year. Generally, revenue per hundredweight
tends to decrease as shipment size increases; however, the Company's focus on
improving revenue yield caused an opposite effect during the year, resulting in
a higher revenue per hundredweight and a higher weight per shipment.
Operating expense as a percentage of net revenue, or the operating ratio, was
95.6% for 1996 compared to 96.1% for the prior year. This decrease was primarily
a result of decreases in salaries,
14
<PAGE>
wages and benefits, purchased transportation and general supplies and expenses
to 66.7% of revenue in 1996 from 68.6% in 1995. Salaries, wages and benefits
decreased to 55.8% of revenue in the current year from 56.9% for the previous
year. This improvement was primarily a result of lower fringe benefit costs as a
percent of revenue, which decreased to 10.2% in 1996 from 11.8% in 1995. This
decrease was due to a reduction in workers' compensation and group health
expenses, which decreased as a percent of payroll to 7.8% in 1996 from 9.7% for
the previous year. In addition, salaries decreased to 9.5% of revenue for the
current year from 10.0% for 1995. Purchased transportation was reduced to 7.3%
of revenue from 7.6% in 1995 as the Company continued to replace cartage agents
with Company personnel and equipment. The Company reduced general and
administrative expenses to 3.6% of revenue for 1996 compared to 4.1% for the
previous year.
These reductions in expenses were somewhat offset by increases in both operating
supplies and expenses and operating taxes and licenses to 14.7% of revenue in
1996 from 13.5% for 1995. The increase in operating supplies and expenses was
primarily due to increased fuel costs experienced in 1996 to 4.9% of revenue up
from 4.0% in 1995. The increased fuel cost was partially offset by a fuel
surcharge implemented in mid-May of 1996 that is reflected in net revenue. The
slight increase in operating taxes and licenses was due to increased state fuel
tax liabilities.
The Company's net interest expense increased as a percent of revenue to 1.0% in
1996 from .6% in 1995, due to an increase in average outstanding debt.
Net income was $6,144,000 for the year ended December 31, 1996, an increase of
27.8%, compared to $4,807,000 for 1995. The effective tax rate was approximately
38% in both 1996 and 1995.
LIQUIDITY AND CAPITAL RESOURCES
Expansion in both the size and number of service center facilities, as well as
the routine tractor and trailer turnover cycle, has required continued
investment in property and equipment. In order to accommodate this growth, the
Company incurred capital expenditures of $34,223,000 during the year ended
December 31, 1997, which includes $6,371,000 of outlays for service centers that
replaced smaller or previously leased facilities at various locations. Cash
flows generated internally were sufficient to fund 88.0% of the required capital
expenditures during the year. The remaining capital needs were achieved through
borrowings on the Company's line of credit, of which $6,730,000 was outstanding
at year-end December 31, 1997, compared to $5,890,000 in the prior year. In
addition, $9,000,000 of term financing payable over four years was obtained at
interest rates ranging from fixed rates of 6.65% to LIBOR plus .60%. At December
31, 1997, long-term debt including current maturities increased to $47,301,000
from $43,141,000 at December 31, 1996.
The Company estimates capital expenditures to be approximately $60,000,000 to
$65,000,000 for the year ending December 31, 1998. Of that, approximately
$28,000,000 will be used to purchase additional revenue equipment, $30,000,000
is for purchases of larger replacement service centers or expansion of existing
service centers and the remaining balance is to be used for investments in other
assets and technology.
The Company generally meets its working capital needs with cash generated from
operations. On April 22, 1997, the Company amended the $32,500,000
uncollateralized committed agreement to consist of a $17,500,000 line of credit
facility and a $15,000,000 letter of credit facility. The Company previously had
a $15,000,000 line of credit facility and a $17,500,000 letter of credit
facility. Interest on the line of credit is charged at rates that vary based
upon a certain financial performance ratio and the stated period of time the
borrowings are outstanding. The applicable interest rate for 1997 was based upon
LIBOR plus .75% for periods of 30-180 days and prime minus 1% for periods less
than 30 days. The Company has also entered into a separate agreement with First
Union National Bank that fixes the interest rate on a portion of the outstanding
amount on the credit line over a specified term. Pursuant to this agreement, as
of December 31, 1997, the Company has fixed $3,500,000 of the outstanding credit
line at a rate of 6.54% through June 19, 1998. A fee of .25% is charged on the
unused portion of the $32,500,000 line of credit and letter of credit facility,
and a fee of .75% is charged on outstanding
15
<PAGE>
letters of credit. At December 31, 1997, there were $6,730,000 outstanding
borrowings on the line of credit and $7,891,000 outstanding on the letter of
credit facility, which is required for self-insured retention reserves for
bodily injury, property damage and workers' compensation insurance. The Company
believes that it has sufficient credit lines and capacity to meet seasonal and
long-term financial needs.
On February 27, 1998, the Company entered into a $20,000,000 private placement
of debt through a Note Purchase Agreement with two insurance companies. The Note
Purchase Agreement consists of $10,000,000 of Senior Notes maturing in seven
years bearing an interest rate of 6.35% and $10,000,000 of Senior Notes maturing
in ten years bearing an interest rate of 6.59%. The proceeds from this private
debt agreement will be used to replace the outstanding borrowings on the line of
credit facility with long term, fixed rate obligations and will also be used to
finance 1998 planned capital expenditures for service center facilities and
revenue equipment.
IMPACT OF THE YEAR 2000
Some of the Company's older software applications were written using two digits
rather than four to define the applicable year. As a result, that software may
interpret a date using "00" as the year 1900 rather than the year 2000. This
could possibly cause a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in normal business activities.
The Company has completed an assessment and will have to modify or replace
portions of its software to ensure that its computer systems will function
properly with respect to dates in the year 2000 and thereafter. The total cost
of this year 2000 project is expected to be immaterial to the Company. The
project is currently underway, with several of the affected systems having
already been modified or replaced. The project is expected to be completed in
its entirety by the first quarter of 1999. The Company believes that with the
necessary modifications to existing software and any necessary conversions to
new software, the year 2000 issue does not pose significant operational problems
for its computer systems.
The cost of the project and the date on which the Company believes it will
complete the year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes and similar uncertainties.
The Company has not completed an evaluation of its major customers and suppliers
to determine if they have taken adequate measures to ensure that necessary
modifications are made to their software prior to the year 2000. While the
Company is not dependent on any one customer or supplier, failure to make
necessary year 2000 modifications by any large groups of customers or suppliers
could result in a material adverse impact on the Company.
INFLATION
Most of the Company's expenses are affected by inflation, which generally result
in increased costs. During 1997, the effect of inflation on the Company's
results of operations was minimal.
SEASONALITY
The Company's operations are subject to seasonal trends common in the motor
carrier industry. Operating results in the first and fourth quarters are
normally lower due to reduced shipments during the winter months. Harsh winter
weather can also adversely impact the Company's performance by reducing demand
and increasing operating expenses. The second and third quarters are stronger
due to increased demand for services during the spring and summer months.
16
<PAGE>
ENVIRONMENTAL
The Company is subject to federal, state and local environmental laws and
regulations, particularly relating to underground storage tanks ("USTs"). The
Company believes it is in compliance with all current applicable environmental
laws and regulations including those relating to USTs, and does not believe that
the cost of future compliance would have a material adverse effect on the
Company's operations or financial condition.
FORWARD-LOOKING INFORMATION
Forward-looking statements relating to future events or the future financial
performance of the Company appear in the preceding Management's Discussion and
Analysis of Financial Condition and Results of Operations and in other written
and oral statements made by or on behalf of the Company, including without
limitation, statements relating to the Company's goals, strategies,
expectations, competitive environment, regulation and availability of resources.
Such forward-looking statements are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that such forward-looking statements involve risks and uncertainties that could
cause actual events and results to be materially different from those expressed
or implied herein, including, but not limited to, the following: (1) changes in
the Company's goals, strategies and expectations, which are subject to change at
any time at the discretion of the Company; (2) the Company's ability to maintain
a nonunion, qualified work force; (3) the competitive environment with respect
to industry capacity and pricing; (4) the availability and cost of fuel,
additional revenue equipment, service centers and other significant resources;
(5) the impact of various regulatory bodies; (6) various economic factors such
as insurance costs, liability claims, interest rate fluctuations, the
availability of qualified drivers or owner-operators, fluctuations in the resale
value of revenue equipment, increases in fuel or energy taxes, economic
recessions and downturns in customers' business cycles and shipping
requirements; (7) the Company's inability to raise capital or borrow funds on
satisfactory terms, which could limit growth and require the Company to operate
its revenue equipment for longer periods of time; and (8) other risks and
uncertainties indicated from time to time in the Company's filings with the
Securities and Exchange Commission.
17
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------------------
(IN THOUSANDS, EXCEPT SHARE DATA) 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 674 $ 1,353
Customer receivables, less allowances of $4,963 and
$5,699, respectively 43,399 39,983
Other receivables 1,492 890
Tires on equipment 5,052 4,514
Prepaid expenses 7,273 6,899
Deferred income taxes 1,970 2,625
------------- --------------
Total current assets 59,860 56,264
Property and equipment:
Revenue equipment 144,926 127,443
Land and structures 42,572 36,459
Other equipment 19,675 15,718
Leasehold improvements 721 479
------------- --------------
Total property and equipment 207,894 180,099
Less accumulated depreciation and amortization (83,064) (70,924)
------------- --------------
Net property and equipment 124,830 109,175
Other assets, less insurance policy loans of $1,851
and $1,815, respectively 6,371 5,287
------------- --------------
Total assets $ 191,061 $ 170,726
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,161 $ 14,860
Compensation and benefits 8,915 6,919
Claims and insurance accruals 9,275 8,918
Other accrued liabilities 1,587 1,509
Current maturities of long-term debt 5,146 3,659
------------- --------------
Total current liabilities 39,084 35,865
Long-term debt 42,155 39,482
Other non-current liabilities 7,704 7,074
Deferred income taxes 16,617 13,377
------------- --------------
Total long-term liabilities 66,476 59,933
Stockholders' equity:
Common stock - $.10 par value, 25,000,000 shares
authorized, 8,310,596 and 8,345,608 shares outstanding,
respectively 831 835
Capital in excess of par value 23,891 23,352
Retained earnings 60,779 50,741
------------- --------------
Total stockholders' equity 85,501 74,928
Commitments and contingencies - -
------------- --------------
Total liabilities and stockholders' equity $ 191,061 $ 170,726
============= ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue from operations $ 328,844 $ 293,006 $ 248,079
Operating expenses:
Salaries, wages and benefits 193,523 163,490 141,163
Purchased transportation 15,494 21,435 18,933
Operating supplies and expenses 30,311 30,288 22,945
Depreciation and amortization 17,173 16,091 13,630
Building and office equipment rents 6,921 6,874 5,991
Operating taxes and licenses 13,968 12,867 10,393
Insurance and claims 10,033 10,118 8,503
Communications and utilities 6,152 5,687 5,014
General supplies and expenses 11,976 10,444 10,195
Miscellaneous expenses 3,282 2,762 1,671
-------------- -------------- ---------------
Total operating expenses 308,833 280,056 238,438
-------------- -------------- ---------------
Operating income 20,011 12,950 9,641
Other deductions:
Interest expense, net 3,547 2,903 1,510
Other expense, net 273 137 329
-------------- -------------- ---------------
Total other deductions 3,820 3,040 1,839
-------------- -------------- ---------------
Income before income taxes 16,191 9,910 7,802
Provision for income taxes 6,153 3,766 2,995
-------------- -------------- ---------------
Net income $ 10,038 $ 6,144 $ 4,807
============== ============== ===============
Basic and diluted earnings per share $ 1.21 $ 0.74 $ 0.58
============== ============== ===============
Weighted average shares outstanding:
Basic 8,312 8,346 8,354
Diluted 8,322 8,347 8,357
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital in
Common excess of Retained
(IN THOUSANDS) stock par value earnings Total
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance as of December 31, 1994 $836 $23,100 $39,790 $63,726
Net income - - 4,807 4,807
Release of common stock under Restricted Stock Agreement,
net of tax charge of $22 (1) 252 - 251
--------------------------------------------
Balance as of December 31, 1995 835 23,352 44,597 68,784
Net income - - 6,144 6,144
--------------------------------------------
Balance as of December 31, 1996 835 23,352 50,741 74,928
NET INCOME - - 10,038 10,038
EXERCISE OF STOCK OPTIONS - 24 - 24
RELEASE OF COMMON STOCK UNDER RESTRICTED STOCK AGREEMENT,
NET OF TAX CHARGE OF $74 (4) 515 - 511
--------------------------------------------
BALANCE AS OF DECEMBER 31, 1997 $831 $23,891 $60,779 $85,501
============================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
(IN THOUSANDS) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 10,038 $ 6,144 $ 4,807
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 17,173 16,091 13,630
Deferred income taxes 3,895 3,355 2,536
Net effect of restricted stock distribution 511 - 251
(Gain) Loss on sale of property and equipment (178) 91 (635)
Changes in assets and liabilities:
Customer and other receivables, net (4,018) (3,453) (6,808)
Tires on equipment (538) (575) (180)
Prepaid expenses and other assets (1,458) (2,148) (1,432)
Accounts payable (699) 4,356 1,730
Compensation, benefits and other accrued liabilities 2,074 1,910 117
Claims and insurance accruals 357 273 (2,290)
Income taxes payable - - (1,722)
Other liabilities 630 (1,309) 3,489
------------ ------------- -------------
Net cash provided by operating activities 27,787 24,735 13,493
------------ ------------- -------------
Cash flows from investing activities:
Purchase of property and equipment (34,223) (38,324) (27,757)
Proceeds from sale of property and equipment 1,573 1,031 1,266
------------ ------------- -------------
Net cash used by investing activities (32,650) (37,293) (26,491)
------------ ------------- -------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 9,000 38,112 6,000
Principal payments under debt and capital lease agreements (5,680) (13,577) (7,209)
Net proceeds (payments) on short-term revolving line of credit 840 (11,610) 12,800
Proceeds from conversion of stock options 24 - -
------------ ------------- -------------
Net cash provided by financing activities 4,184 12,925 11,591
------------ ------------- -------------
(Decrease) Increase in cash and cash equivalents (679) 367 (1,407)
Cash and cash equivalents at beginning of period 1,353 986 2,393
------------ ------------- -------------
Cash and cash equivalents at end of period $ 674 $ 1,353 $ 986
============ ============= =============
</TABLE>
Supplemental disclosure of non-cash activities:
The Company released 76,668 and 38,334 shares of common stock for the years
ended December 31, 1997 and December 31, 1995, respectively, under a
Restricted Stock Agreement.
Cash paid for interest was approximately $4,565,000, $1,990,000 and $1,570,000
for the years ended December 31, 1997, 1996 and 1995, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The Company is an inter-regional and regional motor carrier transporting
primarily less-than-truckload shipments of general commodities, such as consumer
goods, textiles and capital goods, to a diversified customer base. The Company
serves regional markets in the Southeast, Northeast, Midwest and West regions of
the country. Old Dominion connects these geographic regions with high quality
inter-regional service
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiary. All significant intercompany balances and transactions are
eliminated in consolidation.
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.
Estimates made by the Company relate primarily to self insurance accruals and
allowances for uncollectible accounts. Actual results could differ from these
estimates.
REVENUE AND EXPENSE RECOGNITION
Operating revenue is recognized on a percentage of completion method based on
average transit time. Expenses associated with the operating revenue are
recognized when incurred.
CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of customer receivables. Credit risk is
generally diversified due to the large number of entities comprising the
Company's customer base and their dispersion across many different industries
and geographic regions. As noted on the consolidated balance sheets, the Company
maintains an allowance for doubtful accounts to cover estimated credit losses.
CASH AND CASH EQUIVALENTS
The Company considers cash on hand and deposits in banks along with certificates
of deposit and short-term marketable securities with original maturities of
three months or less as cash and cash equivalents for the purpose of the
statements of cash flows.
TIRES ON EQUIPMENT
The cost of tires on equipment is amortized over the estimated tire life of 18
to 24 months.
FUEL AND SUPPLIES
Fuel and operating supplies are valued at the lower of cost or market using the
first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major additions and improvements are
capitalized, while maintenance and repairs that do not improve or extend the
lives of the respective assets are charged to expense as incurred. Gain or loss
on retirement or disposal of assets is recorded in income or expense. The
Company periodically assesses the net realizable value of its long-lived assets
and evaluates such assets for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
22
<PAGE>
Depreciation and amortization are provided by the straight-line method over the
following estimated useful lives:
Structures 5 to 25 years
Revenue equipment 3 to 12 years
Other equipment 3 to 10 years
Leasehold improvements Lesser of 10 years or life of lease
CLAIMS AND INSURANCE ACCRUALS
Claims and insurance accruals reflect the estimated ultimate cost of claims for
cargo loss and damage, bodily injury and property damage, workers' compensation,
long-term disability and group health not covered by insurance. These costs are
charged to insurance and claims expense except for workers' compensation,
long-term disability and group health, which are charged to employee benefits
expense.
EARNINGS PER SHARE
Net income per common share is computed using the weighted average number of
common shares outstanding during the period. The weighted average number of
common shares outstanding was 8,311,521, 8,345,608 and 8,353,830 for the years
ended December 31, 1997, 1996 and 1995, respectively.
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, EARNINGS PER
SHARE, which requires companies to present basic earnings per share ("EPS") and
diluted earnings per share, instead of the primary and fully diluted EPS that
was previously required. The new standard requires additional informational
disclosures and also makes certain modifications to the formerly applicable EPS
calculations defined in Accounting Principles Board No. 15. The new standard was
required to be adopted by all public companies for reporting periods ending
after December 15, 1997, and required restatement of EPS for all prior periods
reported. The Company's restated earnings per share under SFAS No. 128 for both
basic and diluted earnings per share was $1.21, $.74 and $.58 for 1997, 1996 and
1995, respectively. The effect of dilutive employee stock options in Note 7 is
immaterial to the calculation of diluted earnings per share for the years ended
December 31, 1997, 1996 and 1995.
FAIR VALUES OF FINANCIAL INSTRUMENTS
At December 31, 1997, and 1996, the carrying value of financial instruments such
as cash and cash equivalents, customer and other receivables, trade payables and
long-term debt approximated their fair values. Fair value is determined based on
expected future cash flows, discounted at market interest rates, and other
appropriate valuation methodologies.
STOCK BASED COMPENSATION
Stock based compensation expense for the Company's employee stock option plan is
recognized under the provisions of Accounting Principles Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25"), and related
interpretations. Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized. Pro forma information
regarding net income and earnings per share required by Financial Accounting
Standards Board Statement No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, is
not significant.
RECLASSIFICATIONS
Certain amounts in prior periods have been reclassified to conform with the
current period presentation.
23
<PAGE>
PENDING ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE INCOME,
which establishes standards for the reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
The Company expects to adopt SFAS No. 130 in the first quarter of 1998.
In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, which requires that a publicly-held company
report financial and descriptive information about its operating segments in
financial statements issued to shareholders for interim and annual periods. The
SFAS also requires additional disclosures with respect to products and services,
geographic areas of operations and major customers. The Company will adopt SFAS
No. 131 in 1998.
The impact of the adoption of these statements is not expected to be material.
NOTE 2 - LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------
(In thousands) 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Borrowings under bank revolving credit agreement $ 6,730 $ 5,890
Equipment obligations, principal payable in monthly installments
plus interest ranging from 5.2% to 7.0% 9,994 6,283
Senior notes payable 30,000 30,000
Capitalized lease obligations 577 968
----------------------------
47,301 43,141
Less current maturities 5,146 3,659
----------------------------
$42,155 $39,482
============================
</TABLE>
Equipment and capitalized lease obligations are collateralized by property and
equipment with a net book value of $14,644,000 at December 31, 1997.
As of December 31, 1997, aggregate maturities of long-term debt are as follows:
(In thousands)
- ---------------------------------------------------------------------------
1998 $ 5,146
1999 4,968
2000 7,211
2001 5,960
2002 5,857
Thereafter 11,429
--------------
40,571
Borrowings outstanding under the revolving credit agreement 6,730
--------------
$47,301
==============
The Company generally meets its working capital needs with cash generated from
operations. On April 22, 1997, the Company amended its $32,500,000
uncollateralized committed agreement to consist of a $17,500,000 line of credit
facility and a $15,000,000 letter of credit facility. The Company previously had
a $15,000,000 line of credit facility and a $17,500,000 letter of credit
facility. Interest on the line of credit is charged at rates that vary based
upon a certain financial performance ratio and the
24
<PAGE>
stated period of time the borrowings are outstanding. The applicable interest
rate for 1997 was based upon LIBOR plus .75% for periods of 30-180 days and
prime minus 1% for periods less than 30 days. The Company has also entered into
a separate agreement with First Union National Bank that fixes the interest rate
on a portion of the outstanding amount on the credit line over a specified term.
Pursuant to this agreement, as of December 31, 1997, the Company has fixed
$3,500,000 of the outstanding credit line at a rate of 6.54% through June 19,
1998. A fee of .25% is charged on the unused portion of the $32,500,000 line of
credit and letter of credit facility, and a fee of .75% is charged on
outstanding letters of credit. At December 31, 1997, there were $6,730,000
outstanding borrowings on the line of credit and $7,891,000 outstanding on the
letter of credit facility, which is required for self-insured retention reserves
for bodily injury, property damage and workers' compensation insurance.
On June 15, 1996, the Company entered into a $30,000,000 private placement of
debt through a Note Purchase Agreement. The Note Purchase Agreement consists of
a $10,000,000, 7.3% Senior Note due December 15, 2002, and a $20,000,000, 7.59%
Senior Note due June 15, 2006. The Company believes that it has sufficient
credit lines and capacity to meet seasonal and long-term financial needs.
The Company's Credit Agreement and Senior Notes limit the amount of dividends
that may be paid to stockholders pursuant to or limited by certain financial
ratios, necessary corporate action and all applicable laws.
NOTE 3 - LEASES
The Company leases revenue equipment under a capital lease that expires in 1999.
These assets are included in property and equipment as follows:
December 31,
-----------------------------------
(IN THOUSANDS) 1997 1996
- ---------------------------------------------------------------------
Revenue equipment $ 1,112 $ 1,112
Less accumulated amortization 525 154
-------------- -------------
$ 587 $ 958
============== =============
Future minimum annual lease payments as of December 31, 1997, are as follows:
<TABLE>
<CAPTION>
Capital Operating
(IN THOUSANDS) Lease Leases Total
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 $ 407 $ 7,005 $ 7,412
1999 202 3,345 3,547
2000 - 1,855 1,855
2001 - 926 926
2002 - 691 691
Thereafter - 1,128 1,128
-------------- -------------- -------------
Total minimum lease payments 609 $ 14,950 $ 15,559
============== =============
Less amount representing interest 32
--------------
Present value of capitalized lease obligations $ 577
==============
</TABLE>
Aggregate expense under operating leases approximated $9,093,000, $8,841,000 and
$7,580,000 for 1997, 1996 and 1995, respectively.
25
<PAGE>
NOTE 4 - INCOME TAXES
The components of the provision for income taxes are as follows:
Year ended December 31,
-----------------------------------------
(IN THOUSANDS) 1997 1996 1995
- ---------------------------------------------------------------------------
Current:
Federal $ 2,116 $ 395 $ 839
State 142 16 (380)
-----------------------------------------
2,258 411 459
-----------------------------------------
Deferred:
Federal 3,307 2,857 2,118
State 588 498 418
-----------------------------------------
3,895 3,355 2,536
-----------------------------------------
Total provision for income taxes $ 6,153 $ 3,766 $ 2,995
=========================================
Net cash paid (refunds received) for income taxes during 1997, 1996 and 1995
aggregated $2,972,000, ($987,000) and $4,036,000, respectively.
A reconciliation of the statutory federal income tax rates with the Company's
effective income tax rates for 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
(IN THOUSANDS) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax provision at statutory rate on income before income taxes $ 5,505 $ 3,369 $ 2,653
State income taxes, net of federal benefit 476 122 8
Meals and entertainment disallowance 257 229 219
Other, net (85) 46 115
-----------------------------------------
Total provision for income taxes $ 6,153 $ 3,766 $ 2,995
=========================================
</TABLE>
Deferred tax assets and liabilities consist of the following:
December 31,
----------------------------
(IN THOUSANDS) 1997 1996
- ------------------------------------------------ ----------------------------
Deferred tax assets:
Claims and insurance reserves $ 6,200 $ 5,957
Allowance for doubtful accounts 1,936 2,223
Property and equipment 694 694
Accrued vacation 931 684
Other 559 714
----------------------------
$ 10,320 $ 10,272
============================
Deferred tax liabilities:
Depreciation and amortization $ 20,297 $ 16,983
Tires on equipment 1,971 1,761
Employee benefits 1,293 1,243
Other 1,406 1,037
----------------------------
$ 24,967 $ 21,024
============================
26
<PAGE>
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company leases revenue equipment and service center facilities from certain
stockholders, employees and affiliates under both capital and operating leases.
Future minimum lease commitments to affiliates at December 31, 1997, are as
follows:
<TABLE>
<CAPTION>
(In thousands) Operating lease Capital lease Total
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 $ 366 $ 407 $ 773
1999 373 202 575
2000 188 - 188
2001 - - -
2002 - - -
--------------------------------------------
Total minimum lease payments $ 927 609 $1,536
========= =========
Less amount representing interest 32
--------
Present value of capitalized lease obligations $ 577
========
</TABLE>
Lease payments to affiliates of the Company were $775,000, $826,000 and $891,000
in 1997, 1996 and 1995, respectively.
The Company purchased fuel, equipment repairs and other services from an
affiliate for which it paid $365,000, $401,000 and $333,000 in 1997, 1996 and
1995, respectively. Charges to the affiliate for rent, equipment repairs, fuel
and other services provided by the Company aggregated $480,000, $1,009,000 and
$865,000 during 1997, 1996 and 1995, respectively.
NOTE 6 - EMPLOYEE RETIREMENT PLAN CONTRIBUTION EXPENSE
Substantially all employees meeting certain service requirements are eligible to
participate in the Company's 401(k) employee retirement plan. Employee
contributions are limited to a percentage of their compensation, as defined in
the plan. The Company makes contributions based upon the greater of a percentage
of employee contributions or ten percent of net income. Company contributions
for 1997, 1996 and 1995 were $1,004,000, $753,000, and $576,000, respectively.
27
<PAGE>
NOTE 7 - STOCK OPTIONS
In 1991, the Board of Directors and stockholders adopted the 1991 Employee Stock
Option Plan ("Plan") under which 250,000 shares of common stock are reserved for
stock option grants to certain officers and employees. Options granted under the
Plan may be incentive stock options or nonqualified stock options. The Plan
provides that options may be granted at prices not less than the fair market
value on the date the option is granted, which means the closing price of a
share of common stock as reported on the Nasdaq Stock Market (National Market)
on such day or the preceding day if the shares are not traded in the Nasdaq
system on the grant day. The Stock Option Plan Committee of the Board of
Directors will determine the period during which an option may be exercised on
the date the option is granted; however, under the terms of the Plan, the option
period cannot extend more than ten years from the date on which the option is
granted. Options may not be granted under the Plan after August 31, 2001. A
summary of the changes in the number of common shares under option during the
years ended December 31, 1997, 1996 and 1995 follows:
<TABLE>
<CAPTION>
Number of Per share Options reserved
options option price for future grant
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance as of December 31, 1994 169,000 $13.875 - $19.25 68,000
Granted 27,500 $10.00 (27,500)
Exercised - - -
Canceled - - -
----------------------------------------------------------
Balance as of December 31, 1995 196,500 $10.00 - $19.25 40,500
Granted - - -
Exercised - - -
Canceled (15,000) $10.00 - $19.25 15,000
----------------------------------------------------------
Balance as of December 31, 1996 181,500 $10.00 - $19.25 55,500
GRANTED - - -
EXERCISED (2,400) $10.00 -
CANCELED - - -
----------------------------------------------------------
BALANCE AS OF DECEMBER 31, 1997 179,100 $10.00 - $19.25 55,500
============== ===================
</TABLE>
Shares exercisable at December 31, 1997, were 144,940.
NOTE 8 - RESTRICTED STOCK
In 1991, the Board of Directors and stockholders approved a Restricted Stock
Agreement with an officer of the Company. Pursuant to that agreement, 153,336
shares of the Company's common stock were issued and reserved for release to the
officer in four equal, biannual installments originally scheduled for January 1,
1994, 1996, 1998 and 2000. On January 28, 1997, the Board of Directors
authorized the release of 76,668 shares, the total remaining unreleased shares
under the agreement. Compensation expense was recognized ratably over the
vesting period, unless that vesting period was modified by the Board of
Directors, based on the stock price as of October 24, 1991, the date of the
initial public offering. Compensation expense recognized pursuant to this
agreement was $697,000, $232,000 and $232,000 for the years 1997, 1996 and 1995,
respectively.
28
<PAGE>
NOTE 9 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Quarter
-----------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) First Second Third Fourth Total
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997
- ----
REVENUE $73,591 $84,490 $88,275 $82,488 $328,844
OPERATING INCOME 3,214 6,061 6,502 $4,234 20,011
NET INCOME 1,399 3,153 3,353 $2,133 10,038
NET INCOME PER SHARE - BASIC AND DILUTED 0.17 0.38 0.40 0.26 1.21
1996
- ----
Revenue $68,262 $74,862 $77,279 $72,603 $293,006
Operating income 1,696 3,393 4,509 3,352 12,950
Net income 657 1,643 2,180 1,664 6,144
Net income per share - Basic and Diluted 0.08 0.20 0.26 0.20 0.74
</TABLE>
NOTE 10 - COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal proceedings and claims that have arisen
in the ordinary course of its business that have not been fully adjudicated.
Many of these are covered in whole or in part by insurance. These actions, when
finally concluded and determined, will not, in the opinion of management, have a
material adverse effect upon the financial position or results of operations of
the Company. As of the date of this report, the Company had purchase commitments
of $8,059,000 for the acquisition of additional revenue equipment and service
center facilities.
29
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Old Dominion Freight Line, Inc.
We have audited the accompanying consolidated balance sheets of Old Dominion
Freight Line, Inc. and its subsidiary as of December 31, 1997 and 1996, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1997. Our audits also included the financial statement schedule listed in Item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Old Dominion
Freight Line, Inc. and its subsidiary at December 31, 1997, and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Ernst & Young LLP
Winston-Salem, North Carolina
January 21, 1998
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the Company's directors required by Item 10
of Form 10-K is incorporated by reference to the Company's proxy statement for
the 1998 Annual Meeting of its Stockholders under the caption's "Election of
Directors" and "Principal Stockholders - Compliance with Beneficial Ownership
Reporting Rules", reference to which is hereby made, and the information there
is incorporated herein by reference.
The information concerning the Company's executive officers required by
Item 10 of Form 10-K appears in Item 1 of this report under the heading
"Executive Officers of the Company".
30
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 of Form 10-K appears in the
Company's proxy statement for the 1998 Annual Meeting of its Stockholders under
the caption "Executive Compensation", reference to which is hereby made, and the
information there is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 of Form 10-K appears in the
Company's proxy statement for the 1998 Annual Meeting of its Stockholders under
the captions "Election of Directors" and "Principal Stockholders", reference to
which is hereby made, and the information there is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 of Form 10-K appears in the
Company's proxy statement for the 1998 Annual Meeting of its Stockholders under
the caption "Executive Compensation - Compensation Committee Interlocks and
Insider Participation", reference to which is hereby made, and the information
there is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements.
The following consolidated financial statements of Old Dominion Freight
Line, Inc., are included in Item 8:
Consolidated Balance Sheets - December 31, 1997, and December 31, 1996
Consolidated Statements of Operations - Years ended December 31, 1997,
December 31, 1996, and December 31, 1995
Consolidated Statements of Changes in Stockholders' Equity - Years
ended December 31, 1997, December 31, 1996, and December 31, 1995
Consolidated Statements of Cash Flows - Years ended December 31, 1997,
December 31, 1996, and December 31, 1995
Notes to the Consolidated Financial Statements
(a)(2) Financial Statement Schedules.
The following financial statement schedule of Old Dominion Freight
Line, Inc., is included in response to Item 14(d):
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the instructions or are inapplicable and, therefore, have been omitted.
31
<PAGE>
The documents listed below are filed under subsection (d) of Item 14:
(a)(3) Exhibits Filed. The exhibits listed in the accompanying Exhibit Index are
filed as a part of this report.
(b) Reports on Form 8-K. None filed during the last quarter of the period
covered by this report.
(c) Exhibits. See Exhibit Index.
(d) Financial Statement Schedules.
SCHEDULE II
OLD DOMINION FREIGHT LINE, INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
--------------------------------------------------------------------
ADDITIONS AMOUNTS
BEGINNING CHARGED WRITTEN ENDING
DESCRIPTION BALANCE TO EXPENSE OFF BALANCE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED
DECEMBER 31, 1995 $ 4,286,000 $ 1,954,000 $ 1,157,000 $ 5,083,000
YEAR ENDED
DECEMBER 31, 1996 $ 5,083,000 $ 2,345,000 $ 1,729,000 $ 5,699,000
YEAR ENDED
DECEMBER 31, 1997 $ 5,699,000 $ 2,852,000 $ 3,588,000 $ 4,963,000
</TABLE>
32
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
OLD DOMINION FREIGHT LINE, INC.
Dated: March 9, 1998 By: EARL E. CONGDON
---------------
Earl E. Congdon
Chief Executive 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:
Name and Signature Position Date
- ------------------- ----------- ------
EARL E. CONGDON Chairman of the Board and March 9, 1998
- ------------------
Earl E. Congdon Chief Executive Officer
JOHN R. CONGDON Vice Chairman of the Board March 9, 1998
- ------------------
John R. Congdon and Director
JOHN A. EBELING Vice Chairman of the Board March 9, 1998
- ------------------
John A. Ebeling and Director
HAROLD G. HOAK Director March 9, 1998
- ---------------
Harold G. Hoak
FRANZ F. HOLSCHER Director March 9, 1998
- ------------------
Franz F. Holscher
DAVID S. CONGDON President and Chief Operating March 9, 1998
- ------------------
David S. Congdon Officer
J. WES FRYE Senior Vice President - Finance March 9, 1998
- ------------------
J. Wes Frye (Principal Financial Officer)
JOHN P. BOOKER III Vice President - Controller March 9, 1998
- -------------------
John P. Booker III (Principal Accounting Officer)
33
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
TO ANNUAL REPORT ON FORM 10-K
OLD DOMINION FREIGHT LINE, INC.
FOR YEAR ENDED DECEMBER 31, 1997
Exhibit No. Description
- ------------- -------------
<S> <C> <C>
3.1.1(a) Articles of Incorporation (as amended and restated September 18, 1991)
3.2(a) Bylaws of Old Dominion Freight Line, Inc.
4.1(a) Specimen certificate of Common Stock
4.3(b) ISDA Master Agreement and Schedule between First Union National Bank of North Carolina and
Old Dominion Freight Line, Inc., dated June 15, 1995
4.4(b) Credit Agreement between First Union National Bank of North Carolina and Old Dominion
Freight Line, Inc., dated June 14, 1995
4.4.1(b) Form of note issued by Company pursuant to the Credit Agreement between First Union National
Bank of North Carolina and Old Dominion Freight Line, Inc., dated June 14, 1995
4.4.2(c) First Amendment to Credit Agreement between First Union National Bank of North Carolina and
Old Dominion Freight Line, Inc., dated February 2, 1996
4.4.3(d) Second Amendment to the Credit Agreement between Old Dominion Freight Line, Inc. and
First Union National Bank of North Carolina, dated April 29, 1996
4.4.4(d) Third Amendment to the Credit Agreement between Old Dominion Freight Line, Inc.
and First Union National Bank of North Carolina, dated June 15, 1996
4.4.5(f) Fourth Amendment to the Credit Agreement between Old Dominion Freight Line, Inc. and First
Union National Bank of North Carolina, dated April 22, 1997
4.5(d) Note Purchase Agreement between Nationwide Life Insurance Company, New York
Life Insurance Company and Old Dominion Freight Line, Inc., dated June 15, 1996
4.5.1(d) Forms of notes issued by Company pursuant to Note Purchase Agreement between
Nationwide Life Insurance Company, New York Life Insurance Company and Old Dominion
Freight Line, Inc., dated June 15, 1996
4.6 Note Purchase Agreement between Nationwide Life Insurance Company, New York
Life Insurance Company and Old Dominion Freight Line, Inc., dated February 27, 1998
4.6.1 Forms of notes issued by Company pursuant to Note Purchase Agreement between
Nationwide Life Insurance Company, New York Life Insurance Company and Old Dominion
Freight Line, Inc., dated February 27, 1998
10.1(a) Employment Agreement Between Old Dominion Freight Line, Inc., and John A.
Ebeling (as amended April 7, 1988)
10.3(a) Restricted Stock Agreement between Old Dominion Freight Line, Inc., and John A.
Ebeling, dated August 19, 1991
10.4(a) 1991 Employee Stock Option Plan of Old Dominion Freight Line, Inc.
10.5(a) Stock Option Agreement pursuant to the 1991 Employee Stock Option Plan of Old Dominion
Freight Line, Inc. (included in Exhibit 10.4)
10.9(a) E & J Enterprises Trailer Lease Agreement, effective August 1, 1991
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.9.1(e) Extension of E & J Trailer Lease Agreement, effective August 1, 1996
10.15(c) Lease Agreement between Robert A. Cox, Jr., Trustee, and Old Dominion Freight
Line, Inc., dated as of October 31, 1995
23.1 Consent of Ernst & Young LLP
27 Financial Data Schedule
- --------------------------------------------------
</TABLE>
(a) Incorporated by reference to the exhibit of the same number contained in
the Company's registration statement on Form S-1 filed under the
Securities Act of 1933 (SEC File: 33- 42631)
(b) Incorporated by reference to the exhibit contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995
(c) Incorporated by reference to the exhibit of the same number contained in
the Company's Annual Report on Form 10-K for the year ended December 31,
1995
(d) Incorporated by reference to the exhibit of the same number contained in
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1996
(e) Incorporated by reference to the exhibit of the same number contained in
the Company's Annual Report on Form 10-K for the year ended December 31,
1996
(f) Incorporated by reference to the exhibit of the same number contained in
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997
EXHIBIT 4.6
================================================================================
OLD DOMINION FREIGHT LINE, INC.
$10,000,000 6.35% Senior Notes due February 25, 2005
and
$10,000,000 6.59% Senior Notes due February 25, 2008
--------------
NOTE PURCHASE AGREEMENT
-------------
Dated as of February 25, 1998
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(Not a part of the Agreement)
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SECTION HEADING PAGE
SECTION 1. AUTHORIZATION OF NOTES.........................................................................................1
SECTION 2. SALE AND PURCHASE OF NOTES.....................................................................................1
SECTION 3. CLOSING .......................................................................................................2
SECTION 4. CONDITIONS TO CLOSING .........................................................................................2
Section 4.1. Representations and Warranties.............................................................................2
Section 4.2. Performance; No Default....................................................................................2
Section 4.3. Compliance Certificates....................................................................................2
Section 4.4. Opinions of Counsel........................................................................................3
Section 4.5. Purchase Permitted By Applicable Law, etc..................................................................3
Section 4.6. Sale of Other Notes........................................................................................3
Section 4.7. Payment of Special Counsel Fees............................................................................3
Section 4.8. Private Placement Number...................................................................................3
Section 4.9. Changes in Corporate Structure.............................................................................3
Section 4.10. Proceedings and Documents..................................................................................3
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................................4
Section 5.1. Organization; Power and Authority..........................................................................4
Section 5.2. Authorization, etc.........................................................................................4
Section 5.3. Disclosure ................................................................................................4
Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates...........................................4
Section 5.5. Financial Statements.......................................................................................5
Section 5.6. Compliance with Laws, Other Instruments, etc...............................................................5
Section 5.7. Governmental Authorizations, etc...........................................................................6
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders..................................................6
Section 5.9. Taxes .....................................................................................................6
Section 5.10. Title to Property; Leases..................................................................................6
Section 5.11. Licenses, Permits, etc.....................................................................................7
Section 5.12. Compliance with ERISA......................................................................................7
Section 5.13. Private Offering by the Company............................................................................8
Section 5.14. Use of Proceeds; Margin Regulations........................................................................8
Section 5.15. Existing Debt; Future Liens................................................................................8
Section 5.16. Foreign Assets Control Regulations, etc....................................................................9
Section 5.17. Status under Certain Statutes..............................................................................9
Section 5.18. Environmental Matters......................................................................................9
SECTION 6. REPRESENTATIONS OF THE PURCHASER...............................................................................9
Section 6.1. Purchase for Investment....................................................................................9
Section 6.2. Source of Funds ..........................................................................................10
SECTION 7. INFORMATION AS TO COMPANY.....................................................................................11
Section 7.1. Financial and Business Information........................................................................11
Section 7.2. Officer's Certificate.....................................................................................13
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Section 7.3. Inspection ...............................................................................................14
SECTION 8. PREPAYMENT OF THE NOTES.......................................................................................14
Section 8.1. Required Prepayments......................................................................................14
Section 8.2. Optional Prepayments with Make-Whole Amount...............................................................15
Section 8.3. Prepayment of Notes upon Change in Control................................................................16
Section 8.4. Allocation of Partial Prepayments.........................................................................17
Section 8.5. Maturity; Surrender, etc..................................................................................17
Section 8.6. Purchase of Notes ........................................................................................18
Section 8.7. Make-Whole Amount ........................................................................................18
SECTION 9. AFFIRMATIVE COVENANTS ........................................................................................19
Section 9.1. Compliance with Law.......................................................................................19
Section 9.2. Insurance ................................................................................................19
Section 9.3. Maintenance of Properties.................................................................................20
Section 9.4. Payment of Taxes and Claims...............................................................................20
Section 9.5. Corporate Existence, etc..................................................................................20
SECTION 10. NEGATIVE COVENANTS ...........................................................................................20
Section 10.1. Consolidated Tangible Net Worth...........................................................................20
Section 10.2. Fixed Charges Coverage Ratio..............................................................................20
Section 10.3. Limitations on Debt.......................................................................................21
Section 10.4. Liens ....................................................................................................21
Section 10.5. Restricted Payments and Restricted Investments............................................................23
Section 10.6. Merger, Consolidation, etc................................................................................23
Section 10.7. Sale of Assets, etc.......................................................................................24
Section 10.8. Sale-and-Leasebacks.......................................................................................25
Section 10.9. Transactions with Affiliates..............................................................................25
Section 10.10. Line of Business .........................................................................................25
SECTION 11. EVENTS OF DEFAULT ............................................................................................25
SECTION 12. REMEDIES ON DEFAULT, ETC......................................................................................27
Section 12.1. Acceleration .............................................................................................27
Section 12.2. Other Remedies ...........................................................................................28
Section 12.3. Rescission ...............................................................................................28
Section 12.4. No Waivers or Election of Remedies, Expenses, etc.........................................................28
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.................................................................29
Section 13.1. Registration of Notes.....................................................................................29
Section 13.2. Transfer and Exchange of Notes............................................................................29
Section 13.3. Replacement of Notes......................................................................................29
SECTION 14. PAYMENTS ON NOTES ............................................................................................30
Section 14.1. Place of Payment .........................................................................................30
Section 14.2. Home Office Payment.......................................................................................30
SECTION 15. EXPENSES, ETC ................................................................................................30
Section 15.1. Transaction Expenses......................................................................................30
Section 15.2. Survival .................................................................................................31
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..................................................31
SECTION 17. AMENDMENT AND WAIVER .........................................................................................31
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Section 17.1. Requirements .............................................................................................31
Section 17.2. Solicitation of Holders of Notes..........................................................................32
Section 17.3. Binding Effect, etc.......................................................................................32
Section 17.4. Notes Held by Company, etc................................................................................32
SECTION 18. NOTICES ......................................................................................................32
SECTION 19. REPRODUCTION OF DOCUMENTS.....................................................................................33
SECTION 20. CONFIDENTIAL INFORMATION......................................................................................33
SECTION 21. SUBSTITUTION OF PURCHASER.....................................................................................34
SECTION 22. MISCELLANEOUS ................................................................................................35
Section 22.1. Successors and Assigns....................................................................................35
Section 22.2. Payments Due on Non-Business Days.........................................................................35
Section 22.3. Severability .............................................................................................35
Section 22.4. Construction .............................................................................................35
Section 22.5. Counterparts .............................................................................................35
Section 22.6. Governing Law ............................................................................................35
Section 22.7. Additional Debt ..........................................................................................35
Signature ......................................................................................................................36
ATTACHMENTS TO NOTE PURCHASE AGREEMENT:
SCHEDULE A -- Information Relating To Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE C -- Existing Debt
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.12 -- ERISA Affiliates and Plans
SCHEDULE 5.15 -- Existing Debt
SCHEDULE 10.4 -- Existing Liens
EXHIBIT 1-A -- Form of 2005 Notes
EXHIBIT 1-B -- Form of 2008 Notes
EXHIBIT 4.4(a) -- Form of Opinion of General Counsel and Special Counsel for the
Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the Purchasers
EXHIBIT 4.5 -- Legality Certificate
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OLD DOMINION FREIGHT LINE, INC.
1730 WESTCHESTER DRIVE
HIGH POINT, NORTH CAROLINA 27261
$10,000,000 6.35% Senior Notes due February 25, 2005
and
$10,000,000 6.59% Senior Notes due February 25, 2008
Dated as of
February 25, 1998
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
OLD DOMINION FREIGHT LINE, INC., a Virginia corporation (the
"COMPANY"), agrees with you as follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $10,000,000 aggregate
principal amount of its 6.35% Senior Notes due February 25, 2005 and $10,000,000
aggregate principal amount of its 6.59% Senior Notes due February 25, 2008
(respectively, the "2005 NOTES" and the "2008 NOTES", each being a "SERIES" of
Notes and collectively the "NOTES", such term to include any such notes issued
in substitution therefor pursuant to Section 13 of this Agreement or the Other
Agreement (as hereinafter defined)). The Notes shall be substantially in the
respective forms set out in Exhibits 1-A and 1-B, with such changes therefrom,
if any, as may be approved by you and the Company. Certain capitalized terms
used in this Agreement are defined in Schedule B; references to a "Schedule" or
an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount and of the Series
specified opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this Agreement,
the Company is entering into a separate Note Purchase Agreement (the "OTHER
AGREEMENT") identical with this Agreement with the other purchaser named in
Schedule A (the "OTHER PURCHASER"), providing for the sale at such Closing to
the Other Purchaser of Notes in the principal amount and of the Series specified
opposite its name in Schedule A. Your obligation hereunder, and the obligation
of the Other Purchaser under the Other Agreement, are several and not joint
obligations, and you shall have no obligation under the Other Agreement and no
liability to any Person for the performance or nonperformance by the Other
Purchaser thereunder.
SECTION 3. CLOSING.
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Old Dominion Freight Line, Inc. Note Purchase Agreement
The sale and purchase of the Notes to be purchased by you and the Other
Purchaser shall occur at the offices of Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603, at 10:00 a.m. Chicago time, at a closing (the
"CLOSING") on February 25, 1998 or on such other Business Day thereafter on or
prior to February 27, 1998 as may be agreed upon by the Company and you and the
Other Purchaser. At the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $1,000,000 as you may request) dated the date of
the Closing and registered in your name (or in the name of your nominee),
against delivery by you to the Company or its order of immediately available
funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
2073 7811 32196 at First Union National Bank, High Point, North Carolina (ABA
#053000219). If at the Closing the Company shall fail to tender such Notes to
you as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
SECTION 4.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of the Closing.
SECTION 4.2. PERFORMANCE; NO DEFAULT. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at the Closing, and after
giving effect to the issue and sale of the Notes (and the application of the
proceeds thereof as contemplated by Section 5.14), no Default or Event of
Default shall have occurred and be continuing.
SECTION 4.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to you an
Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) SECRETARY'S CERTIFICATE. The Company shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery
of the Notes and the Agreements.
SECTION 4.4. OPINIONS OF COUNSEL. You shall have received opinions in form
and substance satisfactory to you, dated the date of the Closing (a) from Joel
B. McCarty, Jr., General Counsel of the Company and from Womble Carlyle
Sandridge & Rice, PLLC, special counsel for the Company, covering the matters
set forth in Exhibit 4.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such opinion to you)
and (b) from Chapman and Cutler, your special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as you may reasonably request.
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Old Dominion Freight Line, Inc. Note Purchase Agreement
SECTION 4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the date of the
Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as to the
character of the particular investment, (ii) not violate any applicable law or
regulation (including, without limitation, Regulation G, T or X of the Board of
Governors of the Federal Reserve System) and (iii) not subject you to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate (or legality certificate
in the form of Exhibit 4.5 hereto) certifying as to such matters of fact as you
may reasonably specify to enable you to determine whether such purchase is so
permitted.
SECTION 4.6. SALE OF OTHER NOTES. Contemporaneously with the Closing, the
Company shall sell to the Other Purchaser, and the Other Purchaser shall
purchase, the Notes to be purchased by it at the Closing as specified in
Schedule A.
SECTION 4.7. PAYMENT OF SPECIAL COUNSEL FEES. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the fees, charges and disbursements of your special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel rendered to
the Company at least one Business Day prior to the Closing.
SECTION 4.8. PRIVATE PLACEMENT NUMBER. A Private Placement Number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for each Series of the Notes.
SECTION 4.9. CHANGES IN CORPORATE STRUCTURE. The Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
SECTION 4.10.PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory to
you and your special counsel, and you and your special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as you or they may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
SECTION 5.1. ORGANIZATION; POWER AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Other
Agreement and the Notes and to perform the provisions hereof and thereof.
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Old Dominion Freight Line, Inc. Note Purchase Agreement
SECTION 5.2. AUTHORIZATION, ETC. This Agreement, the Other Agreement and
the Notes have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement constitutes, and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
SECTION 5.3. DISCLOSURE. This Agreement, the documents, certificates or
other writings delivered to you by or on behalf of the Company in connection
with the transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made. Since December 31, 1996, there has been no change in the financial
condition, operations, business, properties or prospects of the Company or any
Subsidiary except changes that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. There is no fact known
to the Company that could reasonably be expected to have a Material Adverse
Effect.
SECTION 5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES;
AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization,
and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other
Subsidiary, (ii) of the Company's Affiliates, other than Subsidiaries, and
(iii) of the Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and
clear of any Lien.
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly qualified
as a foreign corporation or other legal entity and is in good standing in
each jurisdiction in which such qualification is required by law, other
than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement and restrictions
imposed by the corporate law of the jurisdiction under which such
Subsidiary exists) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits
to the Company or any of its Subsidiaries that owns outstanding shares of
capital stock or similar equity interests of such Subsidiary.
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Old Dominion Freight Line, Inc. Note Purchase Agreement
SECTION 5.5. FINANCIAL STATEMENTS. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
SECTION 5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The execution,
delivery and performance by the Company of this Agreement and the Notes will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
SECTION 5.7. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority or pursuant to the Interstate Commerce Act, as amended, is required in
connection with the execution, delivery or performance by the Company of this
Agreement or the Notes.
SECTION 5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any Subsidiary or any property of the Company or any Subsidiary in any
court or before any arbitrator of any kind or before or by any Governmental
Authority that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term
of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
SECTION 5.9. TAXES. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established
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Old Dominion Freight Line, Inc. Note Purchase Agreement
adequate reserves in accordance with GAAP. The Company knows of no basis for any
other tax or assessment that could reasonably be expected to have a Material
Adverse Effect. The charges, accruals and reserves on the books of the Company
and its Subsidiaries in respect of Federal, state or other taxes for all fiscal
periods are adequate. The Federal income tax liabilities of the Company and its
Subsidiaries have been determined by the Internal Revenue Service and paid for
all fiscal years up to and including the fiscal year ended December 31, 1991.
SECTION 5.10.TITLE TO PROPERTY; LEASES. The Company and its Subsidiaries
have good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.
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Old Dominion Freight Line, Inc. Note Purchase Agreement
SECTION 5.11.LICENSES, PERMITS, ETC.
(a) The Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others.
(b) To the best knowledge of the Company, no product of the Company
infringes in any Material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other right owned by
any other Person.
(c) To the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by the Company or any of its Subsidiaries.
SECTION 5.12.COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I of ERISA or to such penalty or
excise tax provisions of the Code, other than such liabilities or Liens as would
not be individually or in the aggregate Material.
(b) Neither the Company nor any ERISA Affiliate participates in,
contributes to or has any liability with respect to any pension plan subject to
Title IV of ERISA.
(c) The expected post-retirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(d) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(d) is made in reliance
upon and subject to (i) the accuracy of your representation in Section 6.2 as to
the sources of the funds used to pay the purchase price of the Notes to be
purchased by you and (ii) the assumption, made solely for the purpose of making
such representation, that Department of Labor Interpretive Bulletin 75-2 with
respect to prohibited transactions remains valid in the circumstances of the
transactions contemplated herein.
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Old Dominion Freight Line, Inc. Note Purchase Agreement
(e) Schedule 5.12 contains a complete and correct list of all ERISA
Affiliates and all Plans established or maintained by the Company and its ERISA
Affiliates.
SECTION 5.13.PRIVATE OFFERING BY THE COMPANY. Neither the Company nor
anyone acting on its behalf has offered the Notes or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other than you and
the Other Purchaser, each of which has been offered the Notes at a private sale
for investment. Neither the Company nor anyone acting on its behalf has taken,
or will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act.
SECTION 5.14.USE OF PROCEEDS; MARGIN REGULATIONS. The Company will use the
proceeds of the sale of the Notes to prepay certain existing Funded Debt, to
fund capital expenditures and for general corporate purposes. No part of the
proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR 207), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). The Company does not
presently own any margin stock and does not have any present intention to
acquire any margin stock in the future. As used in this Section, the terms
"margin stock" and "purpose of buying or carrying" shall have the meanings
assigned to them in said Regulation G.
SECTION 5.15.EXISTING DEBT; FUTURE LIENS.
(a) Schedule 5.15 sets forth a complete and correct list of all
outstanding Debt of the Company and its Subsidiaries as of the date of this
Agreement, since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities
of the Debt of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect,
in the payment of any principal or interest on any Debt of the Company or
such Subsidiary and no event or condition exists with respect to any Debt
of the Company or any Subsidiary that would permit (or that with notice or
the lapse of time, or both, would permit) one or more Persons to cause such
Debt to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) Neither the Company nor any Subsidiary has agreed or consented to
cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by Section 10.4.
SECTION 5.16.FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the sale of
the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.
SECTION 5.17.STATUS UNDER CERTAIN STATUTES. Neither the Company nor any
Subsidiary is subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as amended, or the
Federal Power Act, as amended.
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Old Dominion Freight Line, Inc. Note Purchase Agreement
SECTION 5.18.ENVIRONMENTAL MATTERS. Neither the Company nor any Subsidiary
has knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage to
the environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing:
(a) neither the Company nor any Subsidiary has knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring
on or in any way related to real properties now or formerly owned, leased
or operated by any of them or to other assets or their use, except, in each
case, such as could not reasonably be expected to result in a Material
Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and or has disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner that
could reasonably be expected to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or operated
by the Company or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 6. REPRESENTATIONS OF THE PURCHASER.
SECTION 6.1. PURCHASE FOR INVESTMENT. You represent that you are purchasing
the Notes for your own account or for one or more separate accounts maintained
by you or for the account of one or more pension or trust funds and not with a
view to the distribution thereof, PROVIDED that the disposition of your or their
property shall at all times be within your or their control. You understand that
the Notes have not been registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
SECTION 6.2. SOURCE OF FUNDS. You represent that at least one of the
following statements is an accurate representation as to each source of funds (a
"SOURCE") to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:
(a) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995), and there is no employee benefit plan
(treating as a single plan all plans maintained by the same employer or
employee organization) with respect to which the amount of the general
account reserves and liabilities for all contracts held by or on behalf of
such plan exceed 10% of the total reserves and liabilities of such general
account (exclusive of separate account liabilities) plus surplus, as set
forth in your most recent annual statement in the form required by the
National Association of Insurance Commissioners as filed with your state of
domicile; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of Prohibited Transaction Exemption 90-1
(issued January 29, 1990), or (ii) a bank collective investment fund,
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Old Dominion Freight Line, Inc. Note Purchase Agreement
within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as
you have disclosed to the Company in writing pursuant to this paragraph
(b), no employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective investment
fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part l(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each
of which has been identified to the Company in writing pursuant to this
paragraph (e); or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
SECTION 7. INFORMATION AS TO COMPANY.
SECTION 7.1. FINANCIAL AND BUSINESS INFORMATION. The Company shall deliver
to each holder of Notes that is an Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its Subsidiaries
for such quarter and (in the case of the second and third quarters) for
the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being
10
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Old Dominion Freight Line, Inc. Note Purchase Agreement
reported on and their results of operations and cash flows, subject to changes
resulting from year-end adjustments, PROVIDED that delivery within the time
period specified above of copies of the Company's Quarterly Report on Form 10-Q
prepared in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of this Section 7.1 (a);
(b) ANNUAL STATEMENTS-- within 120 days after the end of each fiscal
year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied
(A) by an opinion thereon of independent certified
public accountants of recognized national standing, which
opinion shall state that such financial statements present
fairly, in all material respects, the financial position of
the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity
with GAAP, and that the examination of such accountants in
connection with such financial statements has been made in
accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion
in the circumstances, and
(B) a certificate of such accountants stating that
they have reviewed this Agreement and stating further whether,
in making their audit, they have become aware of any condition
or event that then constitutes a Default or an Event of
Default, and, if they are aware that any such condition or
event then exists, specifying the nature and period of the
existence thereof (it being understood that such accountants
shall not be liable, directly or indirectly, for any failure
to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in
making an audit in accordance with generally accepted auditing
standards or did not make such an audit),
provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements therefor
and filed with the Securities and Exchange Commission, together with the
accountant's certificate described in clause (B) above, shall be deemed to
satisfy the requirements of this Section 7.1(b);
(c) SEC AND OTHER REPORTS -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such holder),
and each prospectus and all amendments thereto filed by the Company or any
Subsidiary with the Securities and Exchange Commission and of all press
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Old Dominion Freight Line, Inc. Note Purchase Agreement
releases and other statements made available generally by the Company or
any Subsidiary to the public concerning developments that are Material;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any event
within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given
any notice or taken any action with respect to a claimed default hereunder
or that any Person has given any notice or taken any action with respect to
a claimed default of the type referred to in Section 11(f), a written
notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within five days after
a Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the
Company or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse Effect;
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or
any Subsidiary from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably
be expected to have a Material Adverse Effect; and
(g) REQUESTED INFORMATION -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
SECTION 7.2. OFFICER'S CERTIFICATE. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 through Section 10.8
hereof, inclusive, during the quarterly or annual period covered by the
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Old Dominion Freight Line, Inc. Note Purchase Agreement
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and
its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or
an Event of Default or, if any such condition or event existed or exists
(including, without limitation, any such event or condition resulting from
the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof
and what action the Company shall have taken or proposes to take with
respect thereto.
SECTION 7.3. INSPECTION. The Company shall permit the representatives of
each holder of Notes that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists, at the
expense of such holder (and if a Default or Event of Default exists, at the
expense of the Company) and upon reasonable prior notice to the Company, to
visit the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its Subsidiaries with the
Company's officers, and (with the consent of the Company, which consent
will not be unreasonably withheld) its independent public accountants, and
(with the consent of the Company, which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing; and
(b) DEFAULT -- if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent public
accountants (and by this provision the Company authorizes said accountants
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested.
SECTION 8. PREPAYMENT OF THE NOTES.
SECTION 8.1. REQUIRED PREPAYMENTS.
(a) 2005 NOTES. On each date listed below, the Company will prepay the
principal amount listed below opposite such date (or such lesser principal
amount as shall then be outstanding) of the 2005 Notes at par and without
payment of the Make-Whole Amount or any premium:
Date Prepayment Amount
February 25, 2000 $1,500,000
February 25, 2001 $1,000,000
February 25, 2002 $1,000,000
February 25, 2003 $1,500,000
February 25, 2004 $2,500,000
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Old Dominion Freight Line, Inc. Note Purchase Agreement
provided that (i) upon any partial prepayment of the 2005 Notes pursuant to
Section 8.2, such partial prepayment shall be deemed to be applied first, to the
amount of principal scheduled to remain unpaid on the 2005 Notes on February 25,
2005, and then to the remaining scheduled principal payments in inverse
chronological order and (ii) upon any partial prepayment of the 2005 Notes
pursuant to Section 8.3 or purchase of the 2005 Notes permitted by Section 8.6,
the principal amount of each required prepayment of the 2005 Notes becoming due
under this Section 8.1 on and after the date of such prepayment or purchase
shall be reduced in the same proportion as the aggregate unpaid principal amount
of the 2005 Notes is reduced as a result of such prepayment or purchase.
(b) 2008 NOTES. On each date listed below, the Company will prepay the
principal amount listed below opposite such date (or such lesser principal
amount as shall then be outstanding) of the 2008 Notes at par and without
payment of the Make-Whole Amount or any premium:
Date Prepayment Amount
February 25, 2001 $ 500,000
February 25, 2002 $ 500,000
February 25, 2003 $1,750,000
February 25, 2004 $1,750,000
February 25, 2005 $1,250,000
February 25, 2006 $1,250,000
February 25, 2007 $1,500,000
provided that (i) upon any partial prepayment of the 2008 Notes pursuant to
Section 8.2, such partial prepayment shall be deemed to be applied first, to the
amount of principal scheduled to remain unpaid on the 2008 Notes on February 25,
2008, and then to the remaining scheduled principal payments in inverse
chronological order and (ii) upon any partial prepayment of the 2008 Notes
pursuant to Section 8.3 or purchase of the 2008 Notes permitted by Section 8.6,
the principal amount of each required prepayment of the 2008 Notes becoming due
under this Section 8.1 on and after the date of such prepayment or purchase
shall be reduced in the same proportion as the aggregate unpaid principal amount
of the 2008 Notes is reduced as a result of such prepayment or purchase.
SECTION 8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT. The Company may,
at its option, upon notice as provided below, prepay at any time all, or from
time to time any part of, the Notes, in an amount not less than 10% of the
aggregate principal amount of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, plus the
Make-Whole Amount determined for the prepayment date with respect to such
principal amount so prepaid. The Company will give each holder of Notes written
notice of each optional prepayment under this Section 8.2 not less than 30 days
and not more than 60 days prior to the date fixed for such prepayment. Each such
notice shall specify such date, the aggregate principal amount of the Notes to
be prepaid on such date, the principal amount of each Note held by such holder
to be prepaid (determined in accordance with Section 8.4), and the interest to
be paid on the prepayment date with respect to such principal amount being
prepaid, and shall be accompanied by a certificate of a Senior Financial Officer
as to the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
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Old Dominion Freight Line, Inc. Note Purchase Agreement
SECTION 8.3. PREPAYMENT OF NOTES UPON CHANGE IN CONTROL.
(a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company will,
within five Business Days after any Responsible Officer has knowledge of
the occurrence of any Change in Control or Control Event, give written
notice of such Change in Control or Control Event to each holder of Notes.
In the case that a Change in Control has occurred, such notice shall
contain and constitute an offer to prepay Notes as described in
subparagraph (b) of this Section 8.3 and shall be accompanied by the
certificate described in subparagraph (e) of this Section 8.3.
(b) OFFER TO PREPAY NOTES. The offer to prepay Notes contemplated by
subparagraph (a) of this Section 8.3 shall be an offer to prepay, in
accordance with and subject to this Section 8.3, all, but not less than
all, of the Notes held by each holder (in this case only, "HOLDER" in
respect of any Note registered in the name of a nominee for a disclosed
beneficial owner shall mean such beneficial owner) on a date specified in
such offer (the "PROPOSED PREPAYMENT DATE") that is not less than 45 days
and not more than 60 days after the date of such offer (if the Proposed
Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the 45th day after the date of such offer).
(c) ACCEPTANCE. A holder of Notes may accept the offer to prepay made
pursuant to this Section 8.3 by causing a notice of such acceptance to be
delivered to the Company at least 20 days prior to the Proposed Prepayment
Date. If the Company shall not have received a written response to the
offer to prepay pursuant to this Section 8.3 from each holder of Notes
within ten Business Days after the date of making such offer to such holder
of Notes, then the Company shall immediately send a second written notice
with offer to prepay via an overnight air courier of national reputation to
each such holder of Notes who shall have not previously responded to the
Company. If the offer is so accepted by any holder of Notes, the Company at
least 15 days prior to the Proposed Prepayment Date shall give written
notice to each holder of Notes that has not so accepted the offer, in which
notice the Company shall (i) state the aggregate outstanding principal
amount of Notes in respect of which the offer has been accepted and (ii)
renew the offer and extend the time for acceptance by stating that any
holder of Notes may yet accept the offer, whether theretofore rejected or
not, by causing a notice of such acceptance to be delivered to the Company
at least five days prior to the Proposed Prepayment Date. A failure by a
holder of Notes to respond to an offer to prepay made pursuant to this
Section 8.3 shall be deemed to constitute an acceptance of such offer by
such holder.
(d) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant to this
Section 8.3 shall be at 100% of the principal amount of such Notes, plus
the Make-Whole Amount determined for the date of prepayment with respect to
such principal amount, together with interest on such Notes accrued to the
date of prepayment. Two Business Days prior to the date of prepayment, the
Company shall deliver to each holder of Notes being prepaid a certificate
of a Senior Financial Officer showing the Make-Whole Amount due in
connection with such prepayment and setting forth the details of the
computation of such amount. The prepayment shall be made on the Proposed
Prepayment Date.
(e) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant to
this Section 8.3 shall be accompanied by a certificate, executed by a
Senior Financial Officer of the Company and dated the date of such offer,
specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made
pursuant to this Section 8.3; (iii) the principal amount of each Note
offered to be prepaid; (iv) the estimated Make-Whole Amount, if any, due in
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Old Dominion Freight Line, Inc. Note Purchase Agreement
connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such
computation; (v) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions
of this Section 8.3 have been fulfilled; and (vii) in reasonable detail,
the nature and date of the Change in Control.
(f) "CHANGE IN CONTROL" AND "CURRENT MANAGEMENT" DEFINED. "CHANGE IN
CONTROL" shall mean any event or circumstance resulting in any Person or
group of Persons acting in concert, other than a group of Persons
including, and under the general direction of, Current Management, legally
or beneficially owning or controlling, directly or indirectly, more than
50% (by number of votes) of the voting stock of the Company. "CURRENT
MANAGEMENT" shall mean and include Earl E. Congdon, John R. Congdon, David
S. Congdon and John A. Ebeling.
(g) "CONTROL EVENT" DEFINED. "CONTROL EVENT" means:
(i) the execution by the Company or any of its Subsidiaries or
Affiliates of any agreement or letter of intent with respect to any
proposed transaction or event or series of transactions or events
which, individually or in the aggregate, may reasonably be expected to
result in a Change in Control, or
(ii)the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Change in Control.
SECTION 8.4. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of each partial
prepayment of the Notes made pursuant to Section 8.1 or Section 8.2, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes of all Series at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment. All partial prepayments made pursuant to Section 8.3
shall be applied only to the Notes of the holders who have elected to
participate in such prepayment.
SECTION 8.5. MATURITY; SURRENDER, ETC. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.
SECTION 8.6. PURCHASE OF NOTES. The Company will not and will not permit
any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
SECTION 8.7. MAKE-WHOLE AMOUNT. The term "MAKE-WHOLE AMOUNT" means, with
respect to any Note, an amount equal to the excess, if any, of the Discounted
Value of the Remaining Scheduled Payments with respect to the Called Principal
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of such Note over the amount of such Called Principal, provided that the
Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or Section 8.3
or has become or is declared to be immediately due and payable pursuant
to Section 12. 1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of any
Note, 0.5% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page 500" on the Telerate
Access Service (or such other display as may replace Page 500 on
Telerate Access Service) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement Date with respect to
such Called Principal, in Federal Reserve Statistical Release H. 15
(519) (or any comparable successor publication) for actively traded
U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date. Such implied yield will be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating
linearly between (1) the actively traded U.S. Treasury security with
the duration closest to and greater than the Remaining Average Life and
(2) the actively traded U.S. Treasury security with the duration
closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by
(b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, PROVIDED that if such
Settlement Date is not a date on which interest payments are due to be
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Old Dominion Freight Line, Inc. Note Purchase Agreement
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2, Section 8.3 or Section
12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant
to Section 8.2 or Section 8.3 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context
requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
SECTION 9.1. COMPLIANCE WITH LAW. The Company will and will cause each of
its Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
ERISA and Environmental Laws, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 9.2. INSURANCE. The Company will and will cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.
SECTION 9.3. MAINTENANCE OF PROPERTIES. The Company will and will cause
each of its Subsidiaries to maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, PROVIDED that this
Section shall not prevent the Company or any Subsidiary from discontinuing the
operation and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 9.4. PAYMENT OF TAXES AND CLAIMS. The Company will and will cause
each of its Subsidiaries to file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, PROVIDED that neither the Company nor any Subsidiary need pay any
such tax or assessment or claims if (i) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or a Subsidiary has
established adequate reserves therefor in
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accordance with GAAP on the books of the Company or such Subsidiary or (ii) the
nonpayment of all such taxes and assessments in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
SECTION 9.5. CORPORATE EXISTENCE, ETC. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject to
Sections 10.6 and 10.7, the Company will at all times preserve and keep in full
force and effect the corporate existence of each of its Subsidiaries (unless
merged into the Company or a Subsidiary) and all rights and franchises of the
Company and its Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
SECTION 10.1.CONSOLIDATED TANGIBLE NET WORTH. The Company will not, at any
time, permit Consolidated Tangible Net Worth to be less than the sum of (a)
$62,762,500 plus (b) an aggregate amount equal to 50% of its Consolidated Net
Income (but, in each case, only if a positive number) for each completed fiscal
quarter beginning with the fiscal quarter ended March 31, 1998.
SECTION 10.2.FIXED CHARGES COVERAGE RATIO. The Company will not, at any
time, permit the Fixed Charges Coverage Ratio to be less than 1.75 to 1.
SECTION 10.3.LIMITATIONS ON DEBT.
(a) The Company will not at any time permit Consolidated Funded Debt to
exceed 55% of Consolidated Total Capitalization as of the then most
recently ended fiscal quarter of the Company.
(b) The Company will not at any time permit Funded Debt of Subsidiaries
to exceed the remainder of (i) 15% of Consolidated Tangible Net Worth minus
(ii) the aggregate amount of Debt of the Company and its Subsidiaries then
outstanding secured by Liens permitted by Section 10.4(k).
SECTION 10.4. LIENS. The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or permit to exist
(upon the happening of a contingency or otherwise) any Lien on or with respect
to any property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of the Company or any
such Subsidiary, whether now owned or held or hereafter acquired, or any income
or profits therefrom or assign or otherwise convey any right to receive income
or profits (unless it (i) makes, or causes to be made, effective provision
whereby the Notes will be equally and ratably secured with any and all other
obligations thereby secured, such security to be pursuant to an agreement
reasonably satisfactory to the Required Holders and, in any such case, the Notes
shall have the benefit, to the fullest extent that, and with such priority as,
the holders of the Notes may be entitled under applicable law, of an equitable
Lien on such property and (ii) delivers to each holder of the Notes an opinion
of counsel in form and substance satisfactory to the Required Holders to the
effect that such agreement constitutes a valid and perfected lien on and
security interest in such security and that the Notes are equally and ratably
secured with any and all other obligations thereby secured), except:
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Old Dominion Freight Line, Inc. Note Purchase Agreement
(a) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or the payment of which is not at the time
required by Section 9.4;
(b) Liens created by or resulting from any judgment or award which are
being actively contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance with
GAAP;
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case, incurred in
the ordinary course of business for sums not yet due and payable or the
payment of which is not at the time required by Section 9.4;
(d) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case
incidental to, and not interfering with, the ordinary conduct of the
business of the Company or any of its Subsidiaries, PROVIDED that such
Liens do not, in the aggregate, materially detract from the value of such
property;
(e) other Liens incidental to the normal conduct of the business of the
Company or any Subsidiary or the ownership of its property and assets which
are not incurred in connection with the borrowing of money and which do not
in the aggregate materially impair the use of such property and assets in
the operation of the business of the Company or any Subsidiary or
materially impair the value of such property and assets for the purposes of
such business;
(f) Liens on property or assets of the Company or any of its
Subsidiaries securing Debt owing to the Company or to any of its
Wholly-Owned Subsidiaries;
(g) Liens existing on the date of this Agreement and reflected on
Schedule 10.4;
(h) any Lien renewing, extending or refunding any Lien permitted by
paragraph (g) or paragraph (i) of this Section 10.4, PROVIDED that (i) the
principal amount of Debt secured by such Lien immediately prior to such
extension, renewal or refunding is not increased or the maturity thereof
reduced, (ii) such Lien is not extended to any other property, and (iii)
immediately after such extension, renewal or refunding no Default or Event
of Default would exist;
(i) any Lien created to secure all or any part of the purchase price,
or to secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of construction, of real or tangible personal
property (or any improvement thereon or thereto) acquired or constructed by
the Company or a Subsidiary after the date of the Closing, PROVIDED that
(i) any such Lien shall extend solely to the item or items of
such property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument
originally creating such Lien, other property (or improvement
thereon) which is an improvement to or is acquired for
specific use in connection with such acquired or constructed
property (or improvement thereon) or which is real property
being improved by such acquired or constructed property (or
improvement thereon),
(ii) the principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to the Fair Market
Value (as
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determined in good faith by the board of directors of the
Company) of such property (or improvement thereon) at the time
of such acquisition or construction, and
(iii) any such Lien shall be created contemporaneously with,
or within 120 days after, the acquisition or completion of
construction of such property;
(j) any Lien existing on property of a Person immediately prior to its
being consolidated with or merged into the Company or a Subsidiary or its
becoming a Subsidiary, or any Lien existing on any property acquired by the
Company or any Subsidiary at the time such property is so acquired (whether
or not the Debt secured thereby shall have been assumed), PROVIDED that (i)
no such Lien shall have been created or assumed in contemplation of such
consolidation or merger or such Person's becoming a Subsidiary or such
acquisition of property, (ii) each such Lien shall extend solely to the
item or items of property so acquired and, if required by the terms of the
instrument originally creating such Lien, other property which is an
improvement to or is acquired for specific use in connection with such
acquired property and (iii) the principal amount of the Debt secured by any
such Lien shall at no time exceed an amount equal to the Fair Market Value
(as determined in good faith by the board of directors of the Company) of
such property (or such improvement thereon) at the time of such
acquisition; and
(k) other Liens not otherwise permitted by paragraphs (a) through (j)
securing Debt of the Company or any Subsidiary, provided that all Debt
secured by such Liens does not at any time exceed the remainder of (i) 15%
of Consolidated Tangible Net Worth minus (ii) the aggregate amount of
Funded Debt of Subsidiaries then outstanding.
SECTION 10.5.RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.
(a) LIMITATION. The Company will not, and will not permit any of its
Subsidiaries to, declare, make or incur any liability to make any
Restricted Payment or make or authorize any Restricted Investment UNLESS
immediately after giving effect to such action:
(i) the sum of (x) the aggregate value of all Restricted
Investments of the Company and its Subsidiaries (valued immediately
after such action), plus (y) the aggregate amount of Restricted
Payments of the Company and its Subsidiaries declared or made during
the period commencing on March 31, 1996 and ending on the date such
Restricted Payment or Restricted Investment is declared or made,
inclusive, would not exceed the sum of
(A) $5,000,000, plus
(B) 50% of Consolidated Net Income for such period (or
minus 100% of Consolidated Net Income for such period if
Consolidated Net Income for such period is a loss), plus
(C) the aggregate amount of Net Proceeds of Capital Stock
for such period; and
(ii)no Default or Event of Default would exist.
(b) TIME OF PAYMENT. The Company will not, nor will it permit any of
its Subsidiaries to, authorize a Restricted Payment that is not payable
within 60 days of authorization.
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SECTION 10.6.MERGER, CONSOLIDATION, ETC. The Company will not, and will not
permit any of its Subsidiaries to, consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person (except that (x) a
Subsidiary of the Company may consolidate with or merge with, or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to, the Company or another Wholly-Owned Subsidiary of the
Company and (y) each of the Company and its Subsidiaries may convey, transfer or
lease all of its assets in compliance with the provisions of Section 10.7),
provided that the foregoing restriction does not apply to the consolidation or
merger of the Company with, or the conveyance, transfer or lease of
substantially all of the assets of the Company in a single transaction or series
of transactions to, any Person so long as:
(a) the successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the case
may be (the "SUCCESSOR CORPORATION"), shall be a solvent corporation
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia;
(b) if the Company is not the Successor Corporation, such corporation
shall have executed and delivered to each holder of Notes its assumption of
the due and punctual performance and observance of each covenant and
condition of this Agreement and the Notes (pursuant to such agreements and
instruments as shall be reasonably satisfactory to the Required Holders),
and the Company shall have caused to be delivered to each holder of Notes
an opinion of nationally recognized independent counsel, or other
independent counsel reasonably satisfactory to the Required Holders, to the
effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms
hereof; and
(c) immediately after giving effect to such transaction, (i) no Default
or Event of Default would exist and (ii) Consolidated Funded Debt does not
exceed 55% of Consolidated Total Capitalization.
No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any Successor
Corporation from its liability under this Agreement or the Notes.
SECTION 10.7.SALE OF ASSETS, ETC. Except as permitted under Section 10.6,
the Company will not, and will not permit any of its Subsidiaries to, make any
Asset Disposition unless:
(a) in the good faith opinion of the Company, the Asset Disposition is
in exchange for consideration having a Fair Market Value at least equal to
that of the property exchanged and is in the best interest of the Company
or such Subsidiary; and
(b) immediately after giving effect to the Asset Disposition, (i) no
Default or Event of Default would exist and (ii) Consolidated Funded Debt
does not exceed 55% of Consolidated Total Capitalization; and
(c) immediately after giving effect to the Asset Disposition, (i) the
Disposition Value of all property that was the subject of any Asset
Disposition occurring in the period of four fiscal quarters of the Company
then next ending would not exceed 15% of Consolidated Assets as of the end
of the then most recently ended fiscal quarter of the Company and (ii) all
of the property of the Company and its Subsidiaries that was the subject of
any Asset Disposition occurring in the period of four fiscal quarters of
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the Company then next ending did not account for more than 15% of
Consolidated Net Income for the then most recently ended four quarter
fiscal period.
If the Net Proceeds Amount for any Transfer is applied to a Reinvestment
Application within 270 days after such Transfer, then such Transfer, only for
the purpose of determining compliance with subsection (c) of this Section 10.7
as of a date on or after the Net Proceeds Amount is so applied, shall be deemed
not to be an Asset Disposition.
SECTION 10.8.SALE-AND-LEASEBACKS. The Company will not, and will not permit
any Subsidiary to, enter into any Sale-and-Leaseback Transaction unless the Net
Proceeds Amount received by the Company or such Subsidiary in respect of such
Sale-and-Leaseback Transaction is applied within 270 days of the consummation
thereof to a Reinvestment Application.
SECTION 10.9.TRANSACTIONS WITH AFFILIATES. The Company will not and will
not permit any Subsidiary to enter into directly or indirectly any transaction
or Material group of related transactions (including without limitation the
purchase, lease, sale or exchange of properties of any kind or the rendering of
any service) with any Affiliate (other than the Company or another Subsidiary),
except in the ordinary course and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
SECTION 10.10. LINE OF BUSINESS. The Company will not, and will not permit
any of its Subsidiaries to, engage in any business if, as a result, the general
nature of the business in which the Company and its Subsidiaries, taken as a
whole, would then be engaged would be substantially changed from the general
nature of the business in which the Company and its Subsidiaries, taken as a
whole, are engaged on the date of this Agreement.
SECTION 11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any Note for
more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any
term contained in Sections 10.1 through 10.3 or Sections 10.5 through 10.8;
or
(d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b)
and (c) of this Section 11) and such default is not remedied within 30 days
after the earlier of (i) a Responsible Officer obtaining actual knowledge
of such default and (ii) the Company receiving written notice of such
default from any holder of a Note (any such written notice to be identified
as a "notice of default" and to refer specifically to this paragraph (d) of
Section 11); or
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Old Dominion Freight Line, Inc. Note Purchase Agreement
(e) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date
as of which made; or
(f) (i) the Company or any Subsidiary is in default (as principal or as
guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Debt that is outstanding in an
aggregate principal amount of at least $5,000,000 beyond any period of
grace provided with respect thereto, or (ii) the Company or any Subsidiary
is in default in the performance of or compliance with any term of any
evidence of any Debt in an aggregate outstanding principal amount of at
least $5,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such default
or condition such Debt has become, or has been declared, due and payable
before its stated maturity or before its regularly scheduled dates of
payment, or (iii) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the
holder of Debt to convert such Debt into equity interests), (x) the Company
or any Subsidiary has become obligated to purchase or repay Debt before its
regular maturity or before its regularly scheduled dates of payment in an
aggregate outstanding principal amount of at least $5,000,000, or (y) one
or more Persons have the right to require the Company or any Subsidiary so
to purchase or repay such Debt and shall have exercised such right; or
(g) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition
in bankruptcy, for liquidation or to take advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of the
foregoing; or
(h) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for
relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Company or any of its Subsidiaries, or any such petition shall be filed
against the Company or any of its Subsidiaries and such petition shall not
be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating
in excess of $5,000,000 (excluding any judgment, or portion thereof, as to
which a solvent insurer shall have accepted responsibility) are rendered
against one or more of the Company and its Subsidiaries and which judgments
are not, within 45 days after entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within 45 days after the expiration
of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding standards
of ERISA or the Code for any plan year or part thereof or a
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Old Dominion Freight Line, Inc. Note Purchase Agreement
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a Plan
may become a subject of any such proceedings, (iii) the aggregate "amount
of unfunded benefit liabilities" (within the meaning of section 4001(a)(18)
of ERISA) under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $5,000,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or any
Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase
the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
SECTION 12. REMEDIES ON DEFAULT, ETC.
SECTION 12.1.ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i)
of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 25% in principal amount of the Notes of any
Series at the time outstanding may at any time at its or their option, by
notice or notices to the Company, declare all the Notes of such Series then
outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes
at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all
the Notes held by it or them to be immediately due and payable.
Upon any Note becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the entire
unpaid principal amount of such Note, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended (a) to provide
compensation for the deprivation of such right
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Old Dominion Freight Line, Inc. Note Purchase Agreement
under such circumstances and (b) to be liquidated damages for loss of bargain
and not a penalty.
SECTION 12.2.OTHER REMEDIES. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
SECTION 12.3.RESCISSION. At any time after any Notes of any Series have
been declared due and payable pursuant to clause (b) of Section 12.1, the
holders of not less than 66-2/3% in principal amount of the Notes of such Series
then outstanding, by written notice to the Company, may rescind and annul any
such declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes of such Series, all principal of and Make-Whole Amount, if
any, on any Notes of such Series that are due and payable and are unpaid other
than by reason of such declaration, and all interest on such overdue principal
and Make-Whole Amount, if any, and (to the extent permitted by applicable law)
any overdue interest in respect of the Notes of such Series, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes of
such Series. No rescission and annulment under this Section 12.3 will extend to
or affect any subsequent Event of Default or Default or impair any right
consequent thereon.
SECTION 12.4.NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No course
of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys'
fees, expenses and disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
SECTION 13.1.REGISTRATION OF NOTES. The Company shall keep at its principal
executive office a register for the registration and registration of transfers
of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
SECTION 13.2.TRANSFER AND EXCHANGE OF NOTES. Upon surrender of any Note at
the principal executive office of the Company for registration of transfer
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Old Dominion Freight Line, Inc. Note Purchase Agreement
or exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or its attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver, at the Company's expense
(except as provided below), one or more new Notes (as requested by the holder
thereof) of the same Series in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new Note shall be dated and
bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$1,000,000, PROVIDED that if necessary to enable the registration of transfer by
a holder of its entire holding of Notes, one Note may be in a denomination of
less than $1,000,000. Any transferee, by its acceptance of a Note registered in
its name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.2.
SECTION 13.3.REPLACEMENT OF NOTES. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (PROVIDED that if the holder of such Note is, or is a
nominee for, an original Purchaser or another holder of a Note with a
minimum net worth of at least $100,000,000, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof,
a new Note of the same Series, dated and bearing interest from the date to
which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.
SECTION 14. PAYMENTS ON NOTES.
SECTION 14.1.PLACE OF PAYMENT. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in High Point, North Carolina at the principal office of
the Company in such jurisdiction. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
SECTION 14.2.HOME OFFICE PAYMENT. So long as you or your nominee shall be
the holder of any Note, and notwithstanding anything contained in Section 14.1
or in such Note to the contrary, the Company will pay all sums becoming due on
such Note for principal, Make-Whole Amount, if any, and interest by the method
and at the address specified for such purpose below your name in Schedule A, or
by such other method or at such other address as you shall have from time to
time specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of
27
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Old Dominion Freight Line, Inc. Note Purchase Agreement
any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, you shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to Section
14.1. Prior to any sale or other disposition of any Note held by you or your
nominee you will, at your election, either endorse thereon the amount of
principal paid thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Company will afford the benefits of this Section
14.2 to any Institutional Investor that is the direct or indirect transferee of
any Note purchased by you under this Agreement and that has made the same
agreement relating to such Note as you have made in this Section 14.2.
SECTION 15. EXPENSES, ETC.
SECTION 15.1.TRANSACTION EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel) incurred by you and the Other Purchaser or
each other holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the Notes, or by reason of being a holder of any Note, and (b)
the costs and expenses, including financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary or
in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company will pay, and will save you
and each other holder of a Note harmless from, all claims in respect of any
fees, costs or expenses, if any, of brokers and finders (other than those
retained by you).
SECTION 15.2.SURVIVAL. The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the termination of
this Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.
SECTION 17. AMENDMENT AND WAIVER.
SECTION 17.1.REQUIREMENTS. This Agreement and the Notes may be amended, and
the observance of any term hereof or of the Notes may be waived (either
28
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Old Dominion Freight Line, Inc. Note Purchase Agreement
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (i) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.
SECTION 17.2.SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision
with respect to any proposed amendment, waiver or consent in respect of any
of the provisions hereof or of the Notes. The Company will deliver executed
or true and correct copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 17 to each holder of outstanding
Notes promptly following the date on which it is executed and delivered by,
or receives the consent or approval of, the requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes
as consideration for or as an inducement to the entering into by any holder
of Notes or any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes
then outstanding even if such holder did not consent to such waiver or
amendment.
SECTION 17.3.BINDING EFFECT, ETC. Any amendment or waiver consented to as
provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term "this Agreement" and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.
SECTION 17.4.NOTES HELD BY COMPANY, ETC. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
29
<PAGE>
Old Dominion Freight Line, Inc. Note Purchase Agreement
SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii)if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of J. Wes Frye, or at
such other address as the Company shall have specified to the holder of
each Note in writing. Notices under this Section 18 will be deemed
given only when actually received.
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, PROVIDED that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, PROVIDED that you may deliver or disclose Confidential
Information to (i) your directors,
30
<PAGE>
Old Dominion Freight Line, Inc. Note Purchase Agreement
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (v) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.
SECTION 21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
31
<PAGE>
Old Dominion Freight Line, Inc. Note Purchase Agreement
SECTION 22. MISCELLANEOUS.
SECTION 22.1.SUCCESSORS AND ASSIGNS. All covenants and other agreement
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.
SECTION 22.2.PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of or
Make-Whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day.
SECTION 22.3.SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 22.4.CONSTRUCTION. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
SECTION 22.5.COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
SECTION 22.6.GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.
SECTION 22.7.ADDITIONAL DEBT. Subject to the terms and provisions hereof,
the Company may, from time to time, issue and sell additional senior promissory
notes and may, in connection with the documentation thereof, incorporate by
reference various provisions of this agreement. Such incorporation by reference
shall not modify, dilute or otherwise affect the terms and provisions hereof and
in no event shall any holder of Notes have any obligation to purchase any such
additional promissory notes referred to above.
32
<PAGE>
Old Dominion Freight Line, Inc. Note Purchase Agreement
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
OLD DOMINION FREIGHT LINE, INC.
DAVID S. CONDGON
By /s/David S. Congdon
Its President
The foregoing is hereby agreed to as of the date thereof.
NATIONWIDE LIFE INSURANCE COMPANY
By S. Thomas Knoff
Its Investment Manager
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE
ACCOUNT
By James W. Pruden
Its Vice President
Municipal Securities
33
<PAGE>
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF NOTES TO BE
PURCHASED
NAME AND ADDRESS OF PURCHASER SERIES
NATIONWIDE LIFE INSURANCE COMPANY $10,000,000 2005 Notes
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Old
Dominion Freight Line, Inc., 6.35% Senior Notes due 2005, PPN 679580 A# 7,
principal or interest") to:
The Bank of New York (ABA #021-000-018)
BNF: IOC566
For the account of: Nationwide Life Insurance Company
Attention: P&I Department
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
Nationwide Life Insurance Company
c/o The Bank of New York
P. O. Box 19266
Newark, New Jersey 07195
Attention: P&I Department
with a copy to:
Nationwide Life Insurance Company
One Nationwide Plaza (1-32-05)
SCHEDULE A
(to Note Purchase Agreement)
<PAGE>
Columbus, Ohio 43215-2220
Attention: Investment Accounting
All notices and communications other than those in respect to payments to be
addressed:
Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 31-4156830
PRINCIPAL AMOUNT OF NOTES TO BE
PURCHASED
NAME AND ADDRESS OF PURCHASER SERIES
NEW YORK LIFE INSURANCE AND ANNUITY $10,000,000 2008 Notes
CORPORATION
INSTITUTIONALLY OWNED LIFE INSURANCE
SEPARATE ACCOUNT
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Investment Department, Private Finance Group, Room 206
Telefacsimile Number: (212) 447-4122
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Old
Dominion Freight Line, Inc., 6.59% Senior Notes due 2008, PPN 679580 B* 0,
principal or interest") to:
Chase Manhattan Bank
New York, New York
ABA #021-000-021
A-2
<PAGE>
For the account of NYLIAC SEPARATE BOLI 3 BROAD FIXED
Account Number 323-8-39002
Notices
All notices with respect to payments and written confirmation of each such
payment, to be addressed:
New York Life Insurance and Annuity Corporation
Institutionally Owned Life Insurance Separate Account
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Treasury Department, Securities Income Section, Room 209
Telefacsimile Number: (212) 447-4160
All other notices and communications to be addressed as first provided above,
with a copy of any notices regarding any Default or Event of Default to: Office
of the General Counsel, Investment Section, Room 1104, Telefacsimile Number
(212) 576-8340
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-3044743
A-3
<PAGE>
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "AFFILIATE"
is a reference to an Affiliate of the Company.
"ASSET DISPOSITION" means any Transfer except:
(a) any Transfer from the Company to a Subsidiary or from a
Subsidiary to another Subsidiary, which in either case is for Fair
Market Value, and so long as immediately before and immediately after
the consummation of any such Transfer and after giving effect thereto,
no Default or Event of Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or
(ii) equipment, fixtures, supplies or materials no longer required in
the operation of the business of the Company or any of its Subsidiaries
or that is obsolete.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York, New York or High Point, North Carolina
are required or authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"CHANGE IN CONTROL" has the meaning set forth in Section 8.3(f).
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"COMPANY" means Old Dominion Freight Line, Inc., a Virginia
corporation, and any successor corporation permitted under Section 10.6.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED FUNDED DEBT" means, as of any date of determination, the
total of all Funded Debt of the Company and its Subsidiaries outstanding on
SCHEDULE B
(to Note Purchase Agreement)
<PAGE>
such date, after eliminating all offsetting debits and credits between the
Company and its Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Company and its Subsidiaries in accordance with GAAP.
"CONSOLIDATED INCOME AVAILABLE FOR FIXED CHARGES" means, with respect
to any period, Consolidated Net Income for such period plus all amounts deducted
in the computation thereof on account of (a) Fixed Charges, (b) taxes imposed on
or measured by income or excess profits, (c) depreciation and (d) amortization.
"CONSOLIDATED NET INCOME" means, with reference to any period, the net
income (or loss) of the Company and its Subsidiaries for such period (taken as a
cumulative whole), as determined in accordance with GAAP, after eliminating all
offsetting debits and credits between the Company and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any time, the stockholders
equity of the Company and its Subsidiaries determined on a consolidated basis as
of such time in accordance with GAAP MINUS the net book amount of all assets of
the Company and its Subsidiaries (after deducting any reserves applicable
thereto) which would be shown as intangible assets on a consolidated balance
sheet of the Company and its Subsidiaries as of such time prepared in accordance
with GAAP.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any time, the sum of
Consolidated Tangible Net Worth and Consolidated Funded Debt.
"CONTROL EVENT" has the meaning set forth in Section 8.3(g).
"CURRENT MATURITIES OF FUNDED DEBT" means, at any time and with respect
to any item of Funded Debt, the portion of such Funded Debt outstanding at such
time which by the terms of such Funded Debt or the terms of any instrument or
agreement relating thereto is due on demand or within one year from such time
(whether by sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible or refundable
at the option of the obligor under an agreement or firm commitment in effect at
such time to a date one year or more from such time.
"DEBT" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);
(c) its Capital Lease Obligations;
(d) letters of credit issued for the account of such Person
including, but without duplication, amounts required to be reimbursed
by such Person to the issuer of the letter of credit;
(e) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities); and
B-2
<PAGE>
(f) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (e) hereof.
Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (f) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP. Debt shall exclude (i) any such liabilities,
obligations or Guaranties referred to in clauses (a) through (f) above if owed
by the Company to a Wholly-Owned Subsidiary or by a Subsidiary to the Company or
a Wholly-Owned Subsidiary and (ii) any unfunded obligations which may exist now
or hereafter in any pension plan maintained by the Company or any Subsidiary.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater of (i)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of any Note or (ii) 2% over the rate of interest publicly announced by
Citibank, N.A., in New York, New York as its "base" or "prime" rate.
"DISPOSITION VALUE" means, at any time, with respect to any property
(a) in the case of property that does not constitute
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by the Company, and
(b) in the case of property that constitutes Subsidiary Stock,
an amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that
the book value of such Subsidiary Stock represents of the book value of
all of the outstanding capital stock of such Subsidiary (assuming, in
making such calculations, that all Securities convertible into such
capital stock are so converted and giving full effect to all
transactions that would occur or be required in connection with such
conversion) determined at the time of the disposition thereof, in good
faith by the Company.
"DISTRIBUTION" means, in respect of any corporation, association or
other business entity:
(a) dividends or other distributions or payments on capital
stock or other equity interest of such corporation, association or
other business entity (except distributions in such stock or other
equity interest); and
(b) the redemption or acquisition of such stock or other
equity interests or of warrants, rights or other options to purchase
such stock or other equity interests.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
B-3
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"FIXED CHARGES" means, with respect to any period, the sum of (a)
Interest Charges for such period and (b) Lease Rentals for such period.
"FIXED CHARGES COVERAGE RATIO" means, at any time, the ratio of (a)
Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters ending on, or most recently ended prior to, such
time to (b) Fixed Charges for such period.
"FUNDED DEBT" means, with respect to any Person, but without
duplication (i) all Debt of such Person which by its terms or by the terms of
any instrument or agreement relating thereto matures, or which is otherwise
payable or unpaid, one year or more from, or is directly or indirectly renewable
or extendible at the option of the obligor in respect thereof to a date one year
or more (including, without limitation, an option of such obligor under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of one year or more) from, the date of the creation
thereof, (ii) Capitalized Lease Obligations, (iii) Current Maturities of Funded
Debt (iv) all other Debt of such Person outstanding under a working capital line
or revolving credit agreement or similar agreement unless there shall have been
during the 12 calendar month period immediately preceding any date of
determination a period of at least 30 consecutive days on each of which there
shall have been no Debt outstanding thereunder and (v) all Guaranties of any of
the foregoing.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii)any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the
Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
B-4
<PAGE>
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof. In any computation of the
indebtedness or other liabilities of the obligor under any Guaranty,
the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INTEREST CHARGES" means, with respect to any period, all amounts (in
each case, eliminating all offsetting debits and credits between the Company and
its Subsidiaries and all other items required to be eliminated in the course of
the preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP) deducted in computing Consolidated Net
Income on account of interest on Debt and shall include, in any event: (a) all
interest in respect of Debt of the Company and its Subsidiaries (including
imputed interest on Capital Lease Obligations) deducted in determining
Consolidated Net Income for such period, (b) all Debt discount and expense
amortized or required to be amortized in the determination of Consolidated Net
Income for such period, (c) fees and commissions for letters of credit and
bankers acceptances, and (d) the net
B-5
<PAGE>
interest cost in respect of interest rate swaps, interest rate caps and other
hedging arrangements.
"INVESTMENT" means any investment, made in cash or by delivery of
property, by the Company or any of its Subsidiaries (i) in any Person, whether
by acquisition of stock, Debt or other obligation or Security, or by loan,
Guaranty, advance, capital contribution or otherwise, or (ii) in any property.
"LEASE RENTALS" means, with respect to any period, the sum of the
minimum amount of rental and other obligations required to be paid during such
period by the Company or any Subsidiary as lessee under all leases of real or
personal property (other than Capital Leases), excluding any amounts required to
be paid by the lessee (whether or not therein designated as rental or additional
rental) (a) which are on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges, or (b) which are based on profits,
revenues or sales realized by the lessee from the leased property or otherwise
based on the performance of the lessee.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.7.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NET PROCEEDS AMOUNT" means, with respect to any Transfer of any
property by any Person, an amount equal to the DIFFERENCE of
(a) the aggregate amount of the consideration (valued at the
Fair Market Value of such consideration at the time of the consummation
of such Transfer) received by such Person in respect of such Transfer,
MINUS
(b) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by such Person in connection with such
Transfer.
"NET PROCEEDS OF CAPITAL STOCK" means, with respect to any period, cash
proceeds (net of all costs and out-of-pocket expenses in connection therewith,
including, without limitation, placement, underwriting and brokerage fees and
expenses), received by the Company and its Subsidiaries during such period, from
the sale of all capital stock (other than Redeemable capital stock) of the
Company, including in such net proceeds:
B-6
<PAGE>
(a) the net amount paid upon issuance and exercise during such
period of any right to acquire any capital stock, or paid during such
period to convert a convertible debt Security to capital stock (but
excluding any amount paid to the Company upon issuance of such
convertible debt Security); and
(b) any amount paid to the Company upon issuance of any
convertible debt Security issued after March 31, 1996 and thereafter
converted to capital stock during such period.
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"OTHER AGREEMENT" is defined in Section 2.
"OTHER PURCHASER" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"REDEEMABLE" means, with respect to the capital stock of any Person,
each share of such Person's capital stock that is:
(a) redeemable, payable or required to be purchased or
otherwise retired or extinguished, or convertible into Debt of such
Person (i) at a fixed or determinable date, whether by operation of
sinking fund or otherwise, (ii) at the option of any Person other than
such Person, or (iii) upon the occurrence of a condition not solely
within the control of such Person; or
(b) convertible into other Redeemable capital stock.
"REINVESTMENT APPLICATION" means, with respect to any Transfer of
property, the application of an amount equal to the Net Proceeds Amount with
respect to such Transfer (i) to the acquisition by the Company or any Subsidiary
of operating assets of the Company or such Subsidiary to be used in the ordinary
course of business of such Person or (ii) for reinvestment in the business of
the Company or such Subsidiary as such business is conducted as of the date of
this Agreement.
B-7
<PAGE>
"REQUIRED HOLDERS" means, at any time, the holders of at least 66-2/3%
in principal amount of the Notes of each Series at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"RESTRICTED INVESTMENTS" means all Investments except the following:
(a) property to be used in the ordinary course of business of
the Company and its Subsidiaries;
(b) current assets arising from the sale of goods and services
in the ordinary course of business of the Company and its Subsidiaries;
(c) Investments in one or more Subsidiaries or any Person that
concurrently with such Investment becomes a Subsidiary;
(d) Investments existing on the date of the Closing and
disclosed in Schedule C;
(e) Investments in United States Governmental Securities,
PROVIDED that such obligations mature within 365 days from the date of
acquisition thereof;
(f) Investments in certificates of deposit or banker's
acceptances issued by an Acceptable Bank, PROVIDED that such
obligations mature within 365 days from the date of acquisition
thereof;
(g) Investments in commercial paper given the highest rating
by a credit rating agency of recognized national standing and maturing
not more than 270 days from the date of creation thereof;
(h) Investments in Repurchase Agreements; and
(i) Investments in tax-exempt obligations of any state of the
United States of America, or any municipality of any such state, in
each case rated "AA" or better by S&P, "Aa2" or better by Moody's or an
equivalent rating by any other credit rating agency of recognized
national standing, PROVIDED that such obligations mature within 365
days from the date of acquisition thereof.
As of any date of determination, each Restricted Investment shall be valued at
the lesser of:
(x) the amount at which such Restricted Investment is shown on
the books of the Company or any of its Subsidiaries in accordance with
GAAP; and
(y) the excess of (A) the cost thereof to the Company or its
Subsidiary over (B) any return of capital (after income taxes
applicable thereto) upon such Restricted Investment through the sale or
other liquidation thereof or part thereof or otherwise.
Notwithstanding anything contained in the foregoing to the contrary, if any
Restricted Investment is not shown on the books of the Company or any of its
Subsidiaries, such Restricted Investment shall be valued in accordance with
clause (y) above.
B-8
<PAGE>
As used in this definition of "Restricted Investments":
"ACCEPTABLE BANK" means any bank or trust company (i) which is
organized under the laws of the United States of America or any State thereof,
(ii) which has capital, surplus and undivided profits aggregating at least
$100,000,000, and (iii) whose long-term unsecured debt obligations (or the
long-term unsecured debt obligations of the bank holding company owning all of
the capital stock of such bank or trust company) shall have been given a rating
of "A-" or better by S&P, "A3" or better by Moody's or an equivalent rating by
any other credit rating agency of recognized national standing.
"ACCEPTABLE BROKER-DEALER" means any Person other than a natural person
(i) which is registered as a broker or dealer pursuant to the Exchange Act and
(ii) whose long-term unsecured debt obligations shall have been given a rating
of "A" or better by S&P, "A2" or better by Moody's or an equivalent rating by
any other credit rating agency of recognized national standing.
"MOODY'S" means Moody's Investors Service, Inc.
"REPURCHASE AGREEMENT" means any written agreement
(a) that provides for (i) the transfer of one or more United
States Governmental Securities in an aggregate principal amount at
least equal to the amount of the Transfer Price (defined below) to the
Company or any of its Subsidiaries from an Acceptable Bank or an
Acceptable Broker-Dealer against a transfer of funds (the "TRANSFER
PRICE") by the Company or such Subsidiary to such Acceptable Bank or
Acceptable Broker-Dealer, and (ii) a simultaneous agreement by the
Company or such Subsidiary, in connection with such transfer of funds,
to transfer to such Acceptable Bank or Acceptable Broker-Dealer the
same or substantially similar United States Governmental Securities for
a price not less than the Transfer Price plus a reasonable return
thereon at a date certain not later than 365 days after such transfer
of funds,
(b) in respect of which the Company or such Subsidiary shall
have the right, whether by contract or pursuant to applicable law, to
liquidate such agreement upon the occurrence of any default thereunder,
and
(c) in connection with which the Company or such Subsidiary,
or an agent thereof, shall have taken all action required by applicable
law or regulations to perfect a Lien in such United States Governmental
Securities.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"UNITED STATES GOVERNMENTAL SECURITY" means any direct obligation of,
or obligation guaranteed by, the United States of America, or any agency
controlled or supervised by or acting as an instrumentality of the United States
of America pursuant to authority granted by the Congress of the United States of
America, so long as such obligation or guarantee shall have the benefit of the
full faith and credit of the United States of America which shall have been
pledged pursuant to authority granted by the Congress of the United States of
America.
"RESTRICTED PAYMENT" means any Distribution in respect of the Company
or any Subsidiary of the Company (other than on account of capital stock or
other equity interests of a Subsidiary owned legally and beneficially by the
Company
B-9
<PAGE>
or another Subsidiary), including, without limitation, any Distribution
resulting in the acquisition by the Company of Securities which would constitute
treasury stock. For purposes of this Agreement, the amount of any Restricted
Payment made in property shall be the greater of (x) the Fair Market Value of
such property (as determined in good faith by the board of directors (or
equivalent governing body) of the Person making such Restricted Payment) and (y)
the net book value thereof on the books of such Person, in each case determined
as of the date on which such Restricted Payment is made.
"SALE-AND-LEASEBACK TRANSACTION" means a transaction or series of
transactions pursuant to which the Company or any Subsidiary shall sell or
transfer to any Person (other than the Company or a Subsidiary) any property,
whether now owned or hereafter acquired, and, as part of the same transaction or
series of transactions, the Company or any Subsidiary shall rent or lease as
lessee (other than pursuant to a Capital Lease), or similarly acquire the right
to possession or use of, such property or one or more properties which it
intends to use for the same purpose or purposes as such property.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"SERIES" is defined in Section 1.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"SUBSIDIARY STOCK" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.
"SUCCESSOR CORPORATION" has the meaning set forth in Section 10.6.
"TRANSFER" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Stock. For purposes of determining the
application of the Net Proceeds Amount in respect of any Transfer, the Company
may designate any Transfer as one or more separate Transfers each yielding a
separate Net Proceeds Amount. In any such case, (a) the Disposition Value of any
property subject to each such separate Transfer and (b) the amount of
Consolidated Net Income attributable to any property subject to each such
separate Transfer shall be determined by ratably allocating the aggregate
Disposition Value of, and the aggregate Consolidated Net Income attributable to,
all property subject to all such separate Transfers to each such separate
Transfer on a proportionate basis.
"2005 NOTES" is defined in Section 1.
B-10
<PAGE>
"2008 NOTES" is defined in Section 1.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.
B-11
<PAGE>
EXISTING INVESTMENTS
DESCRIPTION AMOUNT
[1. The Company: Certificate of Deposit $200,000.00
First Union National Bank
(Deposit for self-insured workers' compensation status)
Maturity: 12/18/98
4.83% yield 4.90%
2. The Company: Certificate of Deposit $300,000.00
First Union National Bank
(Deposit for self-insured workers' compensation status)
Maturity: 9/22/98
5.47% yield 5.680%
3. ODIS, INC.: CoreStates - Core Fund $57,775.78
Tax Free Mutual Fund
Various maturities and yields
------------
TOTAL $557,775.78
SCHEDULE C
(to Note Purchase Agreement)
<PAGE>
SCHEDULE 5.4
(i) SUBSIDIARIES OF THE COMPANY
JURISDICTION PERCENTAGE OF
CORPORATE NAME OF INCORPORATION SHARES HELD
ODIS, INC. Delaware 100%
(ii) AFFILIATES OF THE COMPANY
Old Dominion Truck Leasing, Inc.
E&J Enterprises
Robert A. Cox, Jr., Trustee U/A dated as of 7/15/75
with Earl E. Congdon and John R. Congdon
(iii) DIRECTORS AND SENIOR OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
<S><C>
Earl E. Congdon Chairman of the Board of Directors and Chief Executive Officer
John R. Congdon Vice Chairman of the Board of Directors
John A. Ebeling Vice Chairman of the Board of Directors
Harold G. Hoak Director
Franz F. Holscher Director
David S. Congdon President and Chief Operating Officer
John B. Yowell Executive Vice President
J. Wes Frye Senior Vice President - Finance and Chief Financial Officer
Joel B. McCarty, Jr. Senior Vice President - Secretary and General Counsel
Ernest Brantley Senior Vice President - Operations
J. Timothy Turner Senior Vice President - Sales and Marketing
</TABLE>
SCHEDULE 5.4
(to Note Purchase Agreement)
<PAGE>
SCHEDULE 5.5
LIST OF FINANCIAL STATEMENTS
1993 Annual Report to Shareholders
1994 Annual Report to Shareholders
1995 Annual Report to Shareholders
1996 Annual Report to Shareholders
SCHEDULE 5.5
(to Note Purchase Agreement)
<PAGE>
SCHEDULE 5.12
ERISA AFFILIATES AND PLANS
401K -- Old Dominion 401K Retirement Plan
125 -- Old Dominion Section 125 Plan
Health and Long-Term Disability --
Old Dominion Benefit Plan:
o Group Health
o Group Dental
o Group Life Insurance
o Long-Term Disability
o Voluntary Employee's Benefit Trust
SCHEDULE 5.12
(to Note Purchase Agreement)
<PAGE>
SCHEDULE 5.15
EXISTING DEBT
<TABLE>
<CAPTION>
<S> <C> <C>
BORROWER LENDER OUSTANDING AMOUNT AS OF 1/31/98 DESCRIPTION
1. Company Philadelphia National Bank $2,375,000 6.64% Unsecured Promissory Note
due August, 1999
2. Company CoreStates $4,064,788 6.65% Promissory Note due
February, 2001 secured by 101
1997 and 1998 tractors.
3. Company First Union $17,500,000 (approximately Revolving Credit Agreement
$11,110,000 to be paid down at
closing
4. Company Nationwide Life Insurance $10,000,000 7.30% Senior Notes due December
Company Nationwide Life 15, 2002
and Annuity Insurance
Company
New York Life Insurance
Company New York Life $20,000,000 7.59% Senior Notes due June 15,
Insurance and Annuity 2006
Corporation
5. Company First Union $3,249,994 6.26% Promissory Note due April,
2001 secured by 79 1997 and 1998
tractors.
</TABLE>
SCHEDULE 5.15
(to Note Purchase Agreement)
<PAGE>
SCHEDULE 10.4
EXISTING LIENS
Liens described in and securing Debt of the Company referred to in Items 1,
2, 3 and 4 of Schedule 5.15.
SCHEDULE 10.4
(to Note Purchase Agreement)
<PAGE>
[FORM OF 2005 NOTES]
OLD DOMINION FREIGHT LINE, INC.
6.35% SENIOR NOTE DUE FEBRUARY 25, 2005
No. [_________] [Date]
$[____________] PPN 679580 A# 7
FOR VALUE RECEIVED, the undersigned, OLD DOMINION FREIGHT LINE, INC.
(herein called the "COMPANY"), a corporation organized and existing under the
laws of the Commonwealth of Virginia, hereby promises to pay to
[________________], or registered assigns, the principal sum of
[________________] DOLLARS on February 25, 2005, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 6.35% per annum from the date hereof, payable
semiannually, on the twentyfifth day of August and February in each year,
commencing with the August 25 or February 25 next succeeding the date hereof,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 8.35% or (ii) 2% over the rate of interest publicly
announced by Citibank, N.A. from time to time in New York, New York as its
"base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of the Company in High Point, North Carolina or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements referred to
below.
This Note is one of a series of Senior Notes (herein called the
"NOTES") issued pursuant to separate Note Purchase Agreements, dated as of
February 25, 1998 (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective Purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
EXHIBIT 1-A
(to Note Purchase Agreement)
<PAGE>
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreements. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreements, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
OLD DOMINION FREIGHT LINE, INC.
By
--------------------------------------
Its
1-A-2
<PAGE>
[FORM OF 2008 NOTES]
OLD DOMINION FREIGHT LINE, INC.
6.59% SENIOR NOTE DUE FEBRUARY 25, 2008
No. [_________] [Date]
$[____________] 679580 B* 0
FOR VALUE RECEIVED, the undersigned, OLD DOMINION FREIGHT LINE, INC.
(herein called the "COMPANY"), a corporation organized and existing under the
laws of the Commonwealth of Virginia, hereby promises to pay to
[________________], or registered assigns, the principal sum of
[________________] DOLLARS on February 25, 2008, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 6.59% per annum from the date hereof, payable
semiannually, on the twentyfifth day of August and February in each year,
commencing with the August 25 or February 25 next succeeding the date hereof,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreements
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 8.59% or (ii) 2% over the rate of interest publicly
announced by Citibank, N.A. from time to time in New York, New York as its
"base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of the Company in High Point, North Carolina or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements referred to
below.
This Note is one of a series of Senior Notes (herein called the
"NOTES") issued pursuant to separate Note Purchase Agreements, dated as of
February 25, 1998 (as from time to time amended, the "NOTE PURCHASE
AGREEMENTS"), between the Company and the respective Purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to
have made the representation set forth in Section 6.2 of the Note Purchase
Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
EXHIBIT 1-B
(to Note Purchase Agreement)
<PAGE>
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreements. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreements, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
OLD DOMINION FREIGHT LINE, INC.
By
-------------------------------------
Its
1-B-2
<PAGE>
DESCRIPTION OF CLOSING OPINION OF
COUNSEL TO THE COMPANY
The closing opinion of Joel B. McCarty, Jr., General Counsel of the
Company and Womble Carlyle Sandridge & Rice, PLLC, special counsel for the
Company, which are called for by Section 4.4(a) of the Note Purchase Agreements,
shall be dated the date of the Closing and addressed to the Purchasers, shall be
satisfactory in scope and form to the Purchasers and shall be to the effect
that:
1. The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Virginia, has the corporate power and the corporate authority to
execute and perform the Note Purchase Agreements and to issue the Notes
and has the full corporate power and the corporate authority to conduct
the activities in which it is now engaged and is duly licensed or
qualified and is in good standing as a foreign corporation in each
jurisdiction in which the character of the properties owned or leased
by it or the nature of the business transacted by it makes such
licensing or qualification necessary.
2. Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly licensed or qualified and is in good standing
in each jurisdiction in which the character of the properties owned or
leased by it or the nature of the business transacted by it makes such
licensing or qualification necessary and all of the issued and
outstanding shares of capital stock of each such Subsidiary have been
duly issued, are fully paid and nonassessable and are owned by the
Company, by one or more Subsidiaries, or by the Company and one or more
Subsidiaries.
3. Each Note Purchase Agreement has been duly authorized by
all necessary corporate action on the part of the Company, has been
duly executed and delivered by the Company and constitutes the legal,
valid and binding contract of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether the application of
such principles is considered in a proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed
and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
5. No approval, consent or withholding of objection on the
part of, or filing, registration or qualification with, any
governmental body, Federal, state or local, is necessary in connection
with the execution, delivery and performance of the Note Purchase
Agreements or the Notes.
6. The issuance and sale of the Notes and the execution,
delivery and performance by the Company of the Note Purchase Agreements
do not conflict with or result in any breach of any of the provisions
of or constitute a default under or result in the creation or
imposition of
EXHIBIT 4.4(a)
(to Note Purchase Agreement)
<PAGE>
any Lien upon any of the property of the Company pursuant
to the provisions of the Articles of Incorporation or By-laws of the
Company or any agreement or other instrument known to such counsel to
which the Company is a party or by which the Company may be bound.
7. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreements do not,
under existing law, require the registration of the Notes under the
Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.
8. The issuance of the Notes and the use of the proceeds of
the sale of the Notes in accordance with the provisions of and
contemplated by the Note Purchase Agreements do not violate or conflict
with Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
9. There is no litigation pending or, to the best knowledge of
such counsel, threatened which in such counsel's opinion could
reasonably be expected to have a materially adverse effect on the
Company's business or assets or which would impair the ability of the
Company to issue and deliver the Notes or to comply with the provisions
of the Note Purchase Agreements.
The opinions of Joel B. McCarty, Jr. and Womble Carlyle Sandridge &
Rice, PLLC shall cover such other matters relating to the sale of the Notes as
the Purchasers may reasonably request. With respect to matters of fact on which
such opinions are based, such counsel shall be entitled to rely on appropriate
certificates of public officials and officers of the Company.
4.4(a)-2
<PAGE>
DESCRIPTION OF CLOSING OPINION OF
SPECIAL COUNSEL TO THE PURCHASERS
The closing opinion of Chapman and Cutler, special counsel to the
Purchasers called for by Section 4.4(b) of the Note Purchase Agreements, shall
be dated the date of the Closing and addressed to the Purchasers, shall be
satisfactory in form and substance to the Purchasers and shall be to the effect
that:
1. The Company is a corporation, validly existing and in good
standing under the laws of the Commonwealth of Virginia and has the
corporate power and the corporate authority to execute and deliver the
Note Purchase Agreements and to issue the Notes.
2. Each Note Purchase Agreement has been duly authorized by
all necessary corporate action on the part of the Company, have been
duly executed and delivered by the Company and constitute the legal,
valid and binding contracts of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether the application of
such principles is considered in a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed
and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreements does not,
under existing law, require the registration of the Notes under the
Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.
The opinion of Chapman and Cutler shall also state that the opinion of
Womble Carlyle Sandridge & Rice, PLLC is satisfactory in scope and form to
Chapman and Cutler and that, in their opinion, you are justified in relying
thereon.
In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely solely upon an examination of the Articles of Incorporation
certified by and a certificate of good standing of the Company from, the
Secretary of State of the Commonwealth of Virginia and the By-laws of the
Company. The opinion of Chapman and Cutler is limited to the laws of the State
of New York and the Federal laws of the United States.
With respect to matters of fact upon which such opinion is based,
Chapman and Cutler may rely on appropriate certificates of public officials and
officers of the Company.
EXHIBIT 4.4(b)
(to Note Purchase Agreement)
<PAGE>
[TO: New York Life Insurance and Annuity Corporation
FROM: Old Dominion Freight Line, Inc.
DATE: February __, 1998
RE: $10,000,000 Senior Notes Due 2008 of Old Dominion Freight Line, Inc.
LEGALITY CERTIFICATE
Section 1308(2) Delaware Insurance Code
(000's omitted)
Indicate basis used:
<TABLE>
<CAPTION>
Consolidated
<S><C>
FOR FISCAL YEAR ENDED DECEMBER 31,
1993 1994 1995 1996 1997 TOTAL
1. Net Income Available for Dividends
2. Add: Federal and State and Other Income
Taxes of Parent (and of ___% or more owned subsidiaries if computed on
consolidated basis) Extraordinary Non-Recurring Items of Expenses1
3. Sub-Total (1 plus 2) [See Exhibit A Attached Hereto]
4. Deduct: Extraordinary Non-Recurring
Items of Income(a) 5. Adjust Net Income (3 minus 4)
6. Add Fixed Charges:
Interest on Funded and Unfunded Debt
Amortization of Debt Discount
Rental for Leased Properties2
Preferred Dividends of Subsidiaries
Payable to Others3
7. Net Earnings Available for Fixed
Charged (5 plus 6)
8. Fixed Charges Times Earned
(7 divided by 6)
</TABLE>
<PAGE>
OLD DOMINION FREIGHT LINE, INC.
By
----------------------------
Its
- --------
(1) Include only those appearing in regular statements; state nature of
items and amounts.
(2) Include all payments (whether or not stated to be "rentals") required to
be made by lessee, such as taxes, insurance premiums, etc.
(3) Not applicable to company only basis.
EXHIBIT 4.5
(to Note Purchase Agreement)
<PAGE>
EXHIBIT 4.6.1
[FORM OF 2005 NOTES]
OLD DOMINION FREIGHT LINE, INC.
6.35% SENIOR NOTE DUE FEBRUARY 25, 2005
No. [_________]
$[------------]
FOR VALUE RECEIVED, the undersigned, OLD DOMINION FREIGHT LINE, INC. (herein
called the "COMPANY"), a corporation organized and existing under the laws of
the Commonwealth of Virginia, hereby promises to pay to [________________], or
registered assigns, the principal sum of [________________] DOLLARS on February
25, 2005, with interest (computed on the basis of a 360-day year of twelve
30-day months) (a) on the unpaid balance thereof at the rate of 6.35% per annum
from the date hereof, payable semiannually, on the twentyfifth day of August and
February in each year, commencing with the August 25 or February 25 next
succeeding the date hereof, until the principal hereof shall have become due and
payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate per annum
from time to time equal to the greater of (i) 8.35% or (ii) 2% over the rate of
interest publicly announced by Citibank, N.A. from time to time in New York, New
York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of the Company in High Point, North Carolina or at such other
place as the Company shall have designated by written notice to the holder of
this Note as provided in the Note Purchase Agreements referred to below.
This Note is one of a series of Senior Notes (herein called the "NOTES") issued
pursuant to separate Note Purchase Agreements, dated as of February 25, 1998 (as
from time to time amended, the "NOTE PURCHASE Agreements"), between the Company
and the respective Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreements and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase Agreements,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.
The Company will make required prepayments of principal on the dates and in the
amounts specified in the Note Purchase Agreements. This Note is also subject to
optional prepayment, in whole or from time to time in part, at the times and on
the terms specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, occurs and
is continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner, at the price (including any applicable Make-Whole
Amount) and with the effect provided in the Note Purchase Agreements.
EXHIBIT 1-A
(to Note Purchase Agreement)
<PAGE>
This Note shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the State of New York excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.
OLD DOMINION FREIGHT LINE, INC.
By
--------------------------------
Its
1-2A-
<PAGE>
[FORM OF 2008 NOTES]
OLD DOMINION FREIGHT LINE, INC.
6.59% SENIOR NOTE DUE FEBRUARY 25, 2008
No. [_________]
$[------------]
FOR VALUE RECEIVED, the undersigned, OLD DOMINION FREIGHT LINE, INC. (herein
called the "COMPANY"), a corporation organized and existing under the laws of
the Commonwealth of Virginia, hereby promises to pay to [________________], or
registered assigns, the principal sum of [________________] DOLLARS on February
25, 2008, with interest (computed on the basis of a 360-day year of twelve
30-day months) (a) on the unpaid balance thereof at the rate of 6.59% per annum
from the date hereof, payable semiannually, on the twentyfifth day of August and
February in each year, commencing with the August 25 or February 25 next
succeeding the date hereof, until the principal hereof shall have become due and
payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate per annum
from time to time equal to the greater of (i) 8.59% or (ii) 2% over the rate of
interest publicly announced by Citibank, N.A. from time to time in New York, New
York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of the Company in High Point, North Carolina or at such other
place as the Company shall have designated by written notice to the holder of
this Note as provided in the Note Purchase Agreements referred to below.
This Note is one of a series of Senior Notes (herein called the "NOTES") issued
pursuant to separate Note Purchase Agreements, dated as of February 25, 1998 (as
from time to time amended, the "NOTE PURCHASE AGREEMENTS"), between the Company
and the respective Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreements and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase Agreements,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.
The Company will make required prepayments of principal on the dates and in the
amounts specified in the Note Purchase Agreements. This Note is also subject to
optional prepayment, in whole or from time to time in part, at the times and on
the terms specified in the Note Purchase Agreements, but not otherwise.
1-3A-
<PAGE>
If an Event of Default, as defined in the Note Purchase Agreements, occurs and
is continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner, at the price (including any applicable Make-Whole
Amount) and with the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by the law of the State of New York excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.
OLD DOMINION FREIGHT LINE, INC.
By
-----------------------------------
Its
1-4A-
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-44137 and 33-44139) pertaining to the Old Dominion Freight
Line, Inc. Restricted Stock Agreement and 1991 Employee Stock Option Plan of Old
Dominion Freight Line, Inc. and in the related Prospectus of our report dated
January 21, 1998, with respect to the consolidated financial statements and
schedule of Old Dominion Freight Line, Inc. and its subsidiary included in the
Annual Report (Form 10-K) for the year ended December 31, 1997.
Ernst & Young LLP
Winston-Salem, North Carolina
March 9, 1998
35
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000878927
<NAME> OLD DOMINION FREIGHT LINE INC.
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 APR-01-1997 JUL-01-1997 OCT-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997 DEC-31-1997 DEC-31-1997
<CASH> 851 648 798 674 674
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 48,138 51,864 54,265 48,362 48,362
<ALLOWANCES> (5,657) (5,849) (6,133) (4,963) (4,963)
<INVENTORY> 0 0 0 0 0
<CURRENT-ASSETS> 56,698 59,084 60,975 59,860 59,860
<PP&E> 183,472 196,228 205,004 207,894 207,894
<DEPRECIATION> (73,220) (76,436) (78,528) (83,064) (83,064)
<TOTAL-ASSETS> 172,779 184,652 193,409 191,061 191,061
<CURRENT-LIABILITIES> 33,556 36,982 39,987 39,084 39,084
<BONDS> 0 0 0 0 0
<COMMON> 831 831 831 831 831
0 0 0 0 0
0 0 0 0 0
<OTHER-SE> 76,006 79,160 82,517 85,501 85,501
<TOTAL-LIABILITY-AND-EQUITY> 172,779 184,652 193,409 191,061 191,061
<SALES> 73,591 84,490 88,275 82,488 328,844
<TOTAL-REVENUES> 73,591 84,490 88,275 82,488 328,844
<CGS> 0 0 0 0 0
<TOTAL-COSTS> 70,377 78,429 81,773 78,254 308,833
<OTHER-EXPENSES> 72 79 118 4 273
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 868 854 932 893 3,547
<INCOME-PRETAX> 2,274 5,128 5,452 3,337 16,191
<INCOME-TAX> 875 1,975 2,099 1,204 6,153
<INCOME-CONTINUING> 1,399 3,153 3,353 2,133 10,038
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 1,399 3,153 3,353 2,133 10,038
<EPS-PRIMARY> 0.17 0.38 0.40 0.26 1.21
<EPS-DILUTED> 0.17 0.38 0.40 0.26 1.21
</TABLE>
