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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(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, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Act
of 1934
For the transition period from _______ to _______
COMMISSION FILE NO. 0-23948
BOYD BROS. TRANSPORTATION INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-6006515
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3275 HIGHWAY 30 36016
CLAYTON, ALABAMA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (334) 775-1400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.001 PER SHARE
(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
---- ----
AGGREGATE MARKET VALUE OF THE VOTING AND NON-VOTING COMMON EQUITY HELD
BY NON-AFFILIATES OF THE REGISTRANT:
$9,997,184 AS OF MARCH 19, 1999
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
3,552,887 SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE,
OUTSTANDING AS OF MARCH 19, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENTS INCORPORATED BY REFERENCE IN THIS ANNUAL REPORT ON FORM 10-K
ARE AS FOLLOWS:
PORTIONS OF THE DEFINITIVE PROXY STATEMENT RELATING TO THE 1999 ANNUAL
MEETING OF STOCKHOLDERS IN PART III, ITEMS 10 (AS RELATED TO DIRECTORS), 11, 12
AND 13. PORTIONS OF THE ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED
DECEMBER 31, 1998 IN PARTS II AND IV.
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [ ]
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TABLE OF CONTENTS
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PAGE
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PART I.............................................................................................................1
ITEM 1. BUSINESS........................................................................................1
ITEM 2. PROPERTIES......................................................................................6
ITEM 3. LEGAL PROCEEDINGS...............................................................................7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................7
PART II............................................................................................................7
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........................7
ITEM 6. SELECTED FINANCIAL DATA.........................................................................8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...........................................................................8
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......................................8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................................................8
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE........................................................................8
PART III...........................................................................................................8
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT..................................................8
ITEM 11. EXECUTIVE COMPENSATION..........................................................................9
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..................................9
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................................................9
PART IV............................................................................................................9
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K.....................................................................................9
</TABLE>
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PART I
ITEM 1. BUSINESS
THE COMPANY
Boyd Bros. Transportation Inc. ("Boyd" or the "Company") is a truckload
carrier that operates exclusively in the flatbed segment of the industry and
hauls primarily steel products and building materials. Since its founding in
1956, Boyd has grown into what management believes is one of the largest
exclusively flatbed carriers in the United States. The Company owns and operates
a total of over 1,032 tractors and 1,337 flatbed trailers.
On December 8, 1997, Boyd acquired Welborn Transport, Inc. ("Welborn")
located in Tuscaloosa, Alabama (the "Welborn Acquisition"). The acquisition was
accounted for using the purchase method of accounting and, accordingly, the
purchase price was allocated to the assets acquired, and liabilities assumed,
based upon their estimated fair market values at the acquisition date. Welborn
is operated by Boyd as a stand-alone subsidiary. References to the "Company"
contained herein refer to the combined operations of Boyd and Welborn.
References hereinafter to "Boyd" or "Welborn" describe the distinct operations
of the parent and subsidiary, respectively.
The Company's strategy is to offer high-quality flatbed transportation
services to high-volume, time-sensitive shippers. Because much of the freight
hauled by the Company consists of steel products and building materials,
time-definite delivery is required. A late delivery can result in a shutdown of
a production line at a plant or a delay in a construction project. Management
focuses its marketing efforts on those shippers who require time-definite
delivery because it believes that service, rather than price, generally will be
the primary factor that will dictate their choice of carrier.
Management believes that its ability to recruit and retain drivers has
been critical to its success, and Boyd has sought to attract and retain drivers
by using only high-quality, late-model tractors equipped with its two-way
satellite communication equipment, and offering financial and other incentives
to drivers. Management recognizes that getting drivers home frequently is
critical to driver retention. Accordingly, Boyd makes load assignments to
drivers that enable each driver to attain his or her goals with respect to both
miles driven as well as time at home.
Additionally, in June 1997, Boyd began contracting with independent
owner-operators to provide service to its customers. Boyd has also implemented a
lease-purchase program, providing Boyd's drivers with both career opportunities
at Boyd and the opportunity to own their own tractor. Under the program, the
driver leases the tractor from Boyd, along with an option to purchase the
tractor. In turn, the driver leases the use of the tractor and the driver's
services back to Boyd.
In 1998, Boyd added another option under the owner-operator program.
Owner-operators are able to lease a new tractor for three and one-half years.
Boyd will retain ownership of the tractor at the end of the lease, but this will
enable the owner-operator to operate a new tractor and maintain its status as
independent contractor. Management believes that Boyd's owner-operator program,
along with the owner-operator program already in place at Welborn, will aid in
reducing driver turnover and better enable the Company to meet its growth
projections.
Welborn provides transportation services over shorter routes than
traditionally provided by Boyd. Welborn operates primarily in the southeastern
United States, with an average length of haul of less than 400 miles. Management
believes this enhances Welborn's ability to retain quality drivers, as drivers'
time away from home is thereby minimized. Welborn operates approximately 342
tractors and 355 flatbed trailers. Owner-operators own 310 of the 342 tractors
utilized by Welborn, while Welborn owns the rest. The owner-operators of these
units are compensated by Welborn based upon a percentage of revenue. Over 50% of
Welborn's loads are booked through commissioned agents, whereas Boyd has
traditionally developed direct relationships with its customers.
STRATEGY
As discussed above, the Company's business strategy is to offer
high-quality flatbed transportation services in the truckload carrier market
primarily to high-volume, time-sensitive customers. The key components of the
Company's strategy are as follows:
Time-Sensitive Shippers. The Company focuses its marketing efforts on
high-volume, time-sensitive shippers that are involved primarily in the steel
and building materials businesses and require time-definite delivery. Management
believes that many large volume shippers in this segment of the industry have
reduced the number of carriers they use so as to use only those "core carriers"
that offer consistently superior service. The Company
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intends to continue its focus on developing relationships as a core-carrier for
high-volume, time-sensitive shippers.
Technology. Boyd's strategy has been to utilize technology to provide
better service to its customers and to improve operating efficiency. Boyd became
the first major flatbed carrier in the country to install a satellite tracking
system, manufactured by QUALCOMM, in its tractors. The tracking system enables
Boyd to monitor equipment locations and schedules more effectively and to
communicate with both drivers and customers. Currently, Welborn does not utilize
satellite tracking technology. Boyd has also installed computers on board each
of its tractors to monitor fuel efficiency and other operational data. Boyd will
continue to monitor and implement technological developments that will enable
Boyd to improve customer service and operating efficiency.
Premium Quality Tractors. Boyd continuously upgrades its fleet of
tractors. Maintaining a young, high-quality fleet of tractors facilitates Boyd's
ability to recruit and retain drivers, achieve maximum on-time reliability,
maximize fuel economy and convey an image of quality to existing and potential
customers. While Welborn maintains a fleet of high-quality tractors, the shorter
routes over which its vehicles are dispatched enables these units to be serviced
more frequently. Accordingly, it has not been necessary for Welborn to replace
its fleet as frequently as Boyd.
CUSTOMERS AND MARKETING
The Company markets itself on the basis of quality service and
employees, its satellite communication system, the capabilities of its
information system to interface with the information systems of its customers,
its record of on-time deliveries, and its efficient and well-maintained tractors
and trailers. The Company's marketing efforts concentrate on attracting
customers that require time-definite delivery and ship multiple loads to and
from locations that complement the Company's existing traffic flows.
Boyd has written contracts with most of its customers. The contracts
generally require the customer to use Boyd for a specified minimum amount of
shipments each year and may be terminated by either party upon 30 to 60 days'
written notice.
The Company's largest 20, 10 and 5 customers accounted for
approximately 57.7%, 43.4% and 31.1%, respectively, of the Company's revenues
during 1998. Many of the Company's largest 20 customers are publicly-held
companies. No single customer accounted for more than 10% of the Company's
revenues during 1998.
OPERATIONS
The Company's operations are designed to maximize efficiency and
provide quality service to customers. All of Boyd's fleet operations, routing
and scheduling are centrally coordinated through a satellite tracking system
from its corporate headquarters in Clayton, Alabama. Through the use of Boyd's
satellite-based communication system, which is complemented by its
fully-integrated mainframe computer system, dispatchers monitor the location and
delivery schedules of all shipments and equipment to coordinate routes and
maximize utilization of Boyd's drivers and equipment. See "Transportation
Technology."
Boyd conducts its operations through a network of 10 regional and
satellite service centers in strategic locations in the eastern two-thirds of
the United States. See "Item 2 - Properties." Boyd operates regional service
centers in Clayton and Birmingham, Alabama; Springfield, Ohio; and Greenville,
Mississippi. These regional service centers are supported by smaller satellite
service centers, each having between one to three employees, located in Calvert
City, Kentucky; Danville, Virginia; Lisbon Falls, Maine; Blytheville, Arkansas;
Baltimore, Maryland; and Walworth, Wisconsin. These service centers allow Boyd
to re-dispatch equipment terminating in a given area, enhance driver recruiting
and return drivers to their homes more regularly. Boyd also has arrangements to
deposit trailers near various major customers or shipping locations to
facilitate pre-loading of shipments and thereby increase efficiency.
Welborn's corporate offices are located in Tuscaloosa, Alabama.
Welborn's terminal locations include Memphis, TN; Decatur, AL; and Columbia, SC.
Welborn utilizes independent agents located in Atlanta, GA and Jackson, MS. All
of Welborn's terminal locations are utilized for dispatching purposes, including
the home office in Tuscaloosa. Welborn currently does not use satellite tracking
systems in its operations.
DRIVERS AND EMPLOYEES
Recruiting and retaining professional, well-trained drivers is critical
to the Company's success, and all of the Company's drivers must meet specific
guidelines relating primarily to safety record, driving experience and
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personal evaluation, including drug testing.
To maintain high-equipment utilization, particularly during periods of
growth, the Company strongly emphasizes continuous driver and owner-operator
recruiting and training. Drivers are recruited at all regional terminal
locations and at the Company's corporate headquarters.
Drivers are trained in Company policies and operations, safety
techniques and fuel efficient operation of equipment, and must pass a rigorous
road test prior to assignment to a vehicle. The Company's training programs
range from two to eight weeks of concentrated schooling, depending on a driver's
level of experience. In addition, all drivers are required to participate in
annual safety training and defensive driving courses for recertification by the
Company. Recognizing the importance of driver contact while drivers are on the
road for extended periods, the Company maintains toll-free telephone lines and
publishes a newsletter containing Company information, in addition to
maintaining daily contact between dispatchers and drivers.
Competition for qualified drivers is intense. The short- to medium-haul
truckload segment of the trucking industry, including the Company, experiences
significant driver and owner-operator turnover, and the Company anticipates that
the intense competition for qualified drivers in the trucking industry will
continue. In order to attract quality drivers, management is actively pursuing
the services of independent owner-operators to complement the fleet.
At December 31, 1998, the Company had 1,015 employees, of whom
approximately 793 were drivers and driver-trainees, and the balance of whom were
mechanics, other equipment maintenance personnel and support personnel,
including management and administration. In addition, owner-operators accounted
for the operation of approximately 460 tractors. None of the Company's employees
is subject to a collective bargaining agreement, and the Company has never
experienced a work stoppage. Management believes that its relationship with its
employees is good.
REVENUE EQUIPMENT
The Company's philosophy is to purchase premium quality tractors to
help attract and retain drivers and to promote safe operations, and management
believes the higher initial cost of such equipment is recovered through better
resale marketability. Each of the Company's tractors are equipped with a sleeper
cab to permit all drivers to comply conveniently and cost-effectively with the
United States Department of Transportation ("DOT") hours of service guidelines
and to facilitate team operations when necessary.
At December 31, 1998, the Company owned and operated 1,032 tractors and
1,337 flatbed trailers. The tractors are manufactured by Freightliner, Kenworth
and International, and the trailers are manufactured by Utility, Dorsey,
Fruehauf, Fontaines, Wabash and Great Dane.
TRANSPORTATION TECHNOLOGY
Management believes that the application of technology is an ongoing
part of providing high-quality service at competitive prices, and further
believes that Boyd has enhanced its strong reputation for customer satisfaction
through the early, fleet-wide implementation of two computer systems.
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Boyd was the first major flatbed carrier to be fully equipped with the
two-way satellite communication system produced by QUALCOMM. The satellite-based
OMNITRACS(C) system ("Omnitracs") was installed and operational in the entire
Boyd fleet by the end of 1990. Omnitracs has improved the quality and efficiency
of Boyd's operations by allowing drivers and dispatchers to have instant,
on-the-road communication ability and by enabling Boyd to provide its customers
with accurate information on the status and estimated delivery time of cargo
shipments.
Omnitracs permits more efficient transmission of load assignments to
drivers, as well as an enhanced capability to monitor loads in transit and
rapidly bill customers for completed deliveries. Once a load is assigned by a
load planner, the assignment is transmitted to Boyd's operations department
where it is reviewed by a dispatcher who then relays the assignment to the
appropriate driver through the Omnitracs display unit in each of Boyd's
vehicles. The driver can respond to the dispatcher through Omnitracs in a matter
of seconds, thereby eliminating waiting time and inefficient dependence on truck
stop telephones or other methods of communication between drivers and
dispatchers. Through Omnitracs, Boyd can electronically record a load
assignment, report the load to the billing department and generate customer
invoices.
In addition, Boyd uses Omnitracs to automatically transmit location and
equipment information and other data to the dispatcher, thereby reducing the
need for drivers to stop to communicate with dispatchers in the event of a
problem. The system continually tracks every cargo load with accuracy within
one-tenth of a mile. This information, along with information concerning
available loads, is constantly updated on Boyd's on-line computer. Load planners
use this information to match available equipment with available loads, meet
delivery schedules and respond more quickly to customer inquiries.
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Boyd has also equipped its entire fleet of tractors with the
SENSORTRACS(C) on-board computer system ("Sensortracs"), which is also produced
by QUALCOMM and which monitors fuel efficiency and other operational data.
Information from Sensortracs is periodically processed by one of Boyd's
computers, which generates reports on vehicle efficiency and driver performance.
Reports generated by this system enhance Boyd's ability to counsel its drivers
on strengths and deficiencies in their driving habits and fuel efficiency and to
monitor the effectiveness of driver training programs. Based on information
provided by QUALCOMM, Boyd believes the on-board computer systems are year 2000
compliant.
During 1998, Boyd developed load tendering and tracking capabilities.
Customers are able to track the progress of their loads during transport using
their own personal computer. Additionally, customers are able to book loads over
the internet. Customers submit potential loads to the appropriate regional load
planner, and the load planner will then contact the customer via the internet
e-mail system to acknowledge acceptance of the load. This technological
advancement enables customers to book loads routinely without having to complete
the same paperwork again. Additionally, in 1998, Boyd implemented a new software
program by The SABRE Group that enables Boyd to review each shipping lane to
determine overall profitability and also to determine which customers are the
most profitable within the lane. The end result will be that Boyd will be in a
position to direct the movement of the fleet in a way that will yield the most
results to the bottom line and not affecting the quality of the service.
SAFETY AND INSURANCE
The Company's safety department is responsible for training and
supervising personnel to keep safety awareness at its highest level. The Company
has implemented an active safety and loss prevention program. The emphasis on
safety begins in the hiring and training process, where prospective employees
and owner-operators are given physical examinations and drug tests, and newly
hired drivers and owner-operators, regardless of experience level, must
participate in an intensive training program. See "Drivers and Employees."
The directors of safety for the Company continuously monitor driver
performance and have final authority regarding employment and retention of
drivers. The Company is committed to securing appropriate insurance coverage at
cost-effective rates. The primary claims that arise in the trucking industry
consist of cargo loss and damage, personal injury, property damage and workers'
compensation. The Company currently retains liability up to $100,000 for each
claim for personal injury and property damage, $100,000 for each claim for
employee medical and hospitalization, and $10,000 for each claim for cargo
damage. The Company also maintains full coverage for workers' compensation
claims. The Company currently purchases excess primary and umbrella insurance
coverage in amounts that management believes are adequate to supplement its
retained liabilities.
FUEL
Motor carrier service is dependent upon the availability of diesel
fuel. The Company's fuel expense comprised 9.0% and 15.0% of revenues in 1998
and 1997, respectively. Through on-board computers, the Company continually
monitors fuel usage, miles per gallon, cost per mile and cost per gallon. The
Company has not experienced any difficulty in maintaining fuel supplies
sufficient to support its operations. Shortages of fuel, increases in fuel
prices or fuel tax rates or rationing of petroleum products could have a
material adverse effect on the operations and profitability of the Company.
COMPETITION
The trucking industry is highly competitive and fragmented. The Company
competes primarily with other short- to medium-haul, flatbed truckload carriers,
internal shipping conducted by existing and potential customers and, to a lesser
extent, railroads. Deregulation of the trucking industry during the 1980s
created an influx of new truckload carriers which, along with certain other
factors, continues to create substantial downward pressure on the industry's
rate structure. Competition for the freight transported by the Company is based
primarily on service and efficiency and, to a lesser degree, on freight rates.
There are other trucking companies, including truckload carriers that have
flatbed divisions, that have substantially greater financial resources, operate
more equipment or carry a larger volume of freight than the Company. The
existence of these other motor carriers has also resulted in increased
competition for qualified drivers.
REGULATION
The trucking industry is subject to regulatory oversight and
legislative changes that can affect the economics of the industry by requiring
certain operating practices or influencing the demand for, and the costs of
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providing, services to shippers. The Intermodal Surface Transportation Board
(the "ISTB"), as well as various state agencies that have jurisdiction over the
Company, have broad powers, generally governing such matters as authority to
engage in motor carrier operations, rates and charges, accounting systems,
certain mergers, consolidations and acquisitions, and periodic financial
reporting.
The Federal Motor Carrier Act of 1980 commenced a program to increase
competition among motor carriers and to diminish the level of regulation in the
industry. Following this deregulation, applicants have more easily been able to
obtain operating authority, and interstate motor carriers such as the Company
have been able to implement certain rate changes without federal approval. The
Motor Carrier Act also removed many route and commodity restrictions on
transportation of freight. In 1995, the Interstate Commerce Commission (the
"ICC") was eliminated, and the ISTB was established within the Department of
Transportation (the "DOT"). The ISTB performs all functions previously performed
by the ICC. Since 1981, the Company has held authority to carry general
commodities throughout the 48 contiguous states, as both a common and contract
carrier.
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. All of the Company's drivers were
required to obtain national commercial driver's licenses by April 1, 1992
pursuant to the regulations promulgated by the DOT. Also, effective in 1989, DOT
regulations imposed mandatory drug testing of drivers. In addition, the Company
has completed the implementation of its own ongoing drug-testing program. The
DOT's national commercial driver's license and drug testing requirements have
not to date adversely affected the availability of qualified drivers to the
Company. DOT alcohol testing rules require certain tests, random and otherwise,
for alcohol levels in drivers and other safety personnel. See "Safety and
Insurance."
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state and local laws
and regulations concerning the environment. Certain of the Company's facilities
are located in historically industrial areas and, therefore, there is the
possibility of environmental liability as a result of operations by prior owners
as well as the Company's use of fuels and underground storage tanks at its
regional service centers.
The Company's consolidated balance sheets as of December 31, 1998 and
1997 include reserves for environmental remediation of $46,000 and $75,000,
respectively, to cover final costs related to contamination caused by
underground storage tanks. The tanks were replaced and clean-up was
substantially complete in 1995. Currently, management knows of no other
environmental remediation issues or liabilities. There can be no assurance that
material liabilities or expenditures will not arise from these or additional
environmental matters that may be discovered, or from future requirements of
law. Management does not believe these expenditures will have a material adverse
effect on the Company's financial condition.
FORWARD LOOKING STATEMENTS
Certain statements incorporated by reference from the information under
the caption "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" in the Company's Annual Report to Stockholders for the
year ended December 31, 1998 contained herein constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance,
or achievements of the Company to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, business
conditions and growth in the economy, including the transportation and
construction sectors in particular, competitive factors, including price
pressures and the ability to recruit and retain qualified drivers, the ability
to control internal costs as well as fuel costs, that are not passed on to the
Company's customers, and other factors referenced elsewhere herein.
ITEM 2. PROPERTIES
The Company's corporate headquarters and principal service center are
located on a 17.9 acre tract in Clayton, Alabama. Such facilities consist of
approximately 22,000 square feet of office space, 12,000 square feet of
equipment repair facilities and approximately 3 acres of parking space. The
Company is in the process of constructing a new "super terminal", containing
several maintenance and safety bays in Birmingham. The super terminal is
estimated to be completed in late 1999 or early 2000.
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The following table sets forth information regarding the location and
ownership of each of Boyd's service centers and shuttle facilities:
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Clayton, AL........................................................ Owned
Springfield, OH.................................................... Owned
Birmingham, AL..................................................... Owned
Greenville, MS..................................................... Owned
Calvert City, KY................................................... Leased
Danville, VA....................................................... Leased
Lisbon Falls, ME................................................... Leased
Baltimore, MD...................................................... Leased
Walworth, WI....................................................... Leased
Blytheville, AR.................................................... Leased
</TABLE>
Additionally, Welborn owns its corporate offices in Tuscaloosa, Alabama and
leases service centers located as follows:
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Birmingham, Al..................................................... Leased
Memphis, TN........................................................ Leased
Decatur, AL........................................................ Leased
Columbia, SC....................................................... Leased
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Company is routinely a party to litigation incidental to its
business, primarily involving claims for personal injury and property damage
incurred in the transportation of freight. The Company maintains insurance that
it believes is adequate to cover its liability risks. See "Item 1 - Business --
Safety and Insurance."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1998, either through the
solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company is listed on the Nasdaq National Market
under the symbol "BOYD." As of March 12, 1999, the Common Stock was held by
approximately 100 holders of record. The table below sets forth the reported
high and low sales price per share for the Common Stock as reported by the
Nasdaq National Market for each fiscal quarter during 1998 and 1997.
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Price Range
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1998 High Low
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First Quarter.................................................... $10-3/8 $ 8-4/7
Second Quarter................................................... 12 8-1/2
Third Quarter.................................................... 10-1/8 5-7/8
Fourth Quarter................................................... 8 5-5/8
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Price Range
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1997 High Low
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First Quarter.................................................... $ 8 $ 4-1/4
Second Quarter................................................... 7-3/4 4-3/8
Third Quarter.................................................... 10-3/8 6-3/4
Fourth Quarter................................................... 10-3/4 6
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Management currently anticipates that all of its earnings will be
retained for development of the Company's business and does not anticipate
paying any cash dividends in the foreseeable future. Any future cash dividends,
if any, will be at the discretion of the Company's Board of Directors and will
depend upon, among other things, the
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Company's future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions, and other factors as the
Board of Directors may deem relevant.
In January 1999, the Company repurchased 500,000 shares of the
Company's Common Stock from the Company's former Chief Executive Officer, Donald
G. Johnston for an aggregate purchase price of $3,660,000. The repurchase of the
shares, representing about 12% of the Company's outstanding Common Stock, was
funded by available cash and the Company's bank line of credit. Additionally,
the Board of Directors has authorized a program under which the Company may
purchase up to 500,000 shares of its Common Stock in open market or negotiated
transactions at such times and at such prices as management may from time to
time decide.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference from
the information under the caption "Selected Financial Data" in the Company's
Annual Report to Stockholders for the year ended December 31, 1998.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is incorporated by reference from
the information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's Annual Report to
Stockholders for the year ended December 31, 1998.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
The Company is exposed to interest rate risk due to its long-term debt,
which at December 31, 1998, bore interest at rates ranging from 1.00% to 1.75%
above the bank's LIBOR rate. Under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial
Instruments, the Company has estimated the fair value of its long-term debt
approximates its carrying value, using a discounted cash flow analysis based on
borrowing rates available to the Company. The effect of a hypothetical ten
percent increase in interest rates would increase the estimated fair value of
the Company's long-term debt by approximately $300,000. Management believes that
current working capital funds are sufficient to offset any adverse effects
caused by changes in the interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference from
the Consolidated Financial Statements contained in the Company's Annual Report
to Stockholders for the year ended December 31, 1998.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information concerning the Directors and Executive
Officers of the Company as of March 12, 1999.
Dempsey Boyd, age 71, founded Boyd in 1956, and has been Chairman of
the Board since April 1980. Mr. Boyd served as President of Boyd from December
1962 until April 1980. Mr. Boyd is the father of Gail B. Cooper and Ginger B.
Tibbs.
Miller Welborn, age 40, has served as President and Chief Executive
Officer of the Company since July 17, 1998. Mr Welborn co-founded Welborn in
1989.
Richard C. Bailey, age 48, has served as Executive Vice President and
Chief Financial Officer since joining Boyd in August 1992, and has served as a
Director since February 1995. He served as President and Director of Eastern
Inter-Trans Services, Inc., a dry van truckload carrier based in Columbus,
Georgia, from December 1989 to August 1992. Mr. Bailey is a certified public
accountant with a B.S. in accounting from Georgia
8
<PAGE> 11
State University. He was previously employed in various financial positions by
Ernst & Young, Intermet Corporation and Snapper Products (a division of The
Actava Group Inc.). Mr. Bailey has served on the Advisory Board of the
University of Georgia Trucking Profitability Strategies Conference.
Gail B. Cooper, age 48, has been the Secretary of Boyd since December
1969, and served as a Director of Boyd from December 1969 until March 1994. Ms.
Cooper received a B.S. in business administration from Troy State University.
She has served Boyd in numerous administrative and accounting positions since
joining Boyd full-time in June 1972. Ms. Cooper is the daughter of Mr. Boyd and
the sister of Ms. Tibbs.
Ginger B. Tibbs, age 45, has been the Treasurer of Boyd since December
1979, and served as a Director from December 1978 until March 1994. Ms. Tibbs is
primarily responsible for collection of Boyd's accounts receivable and has
served as Credit Manager since September 1980. Ms. Tibbs received a degree in
elementary education from Auburn University. She is the daughter of Mr. Boyd and
the sister of Ms. Cooper.
Gary Robinson, age 50, has been the Vice President of Operations of
Boyd since May 1997. From February of 1989 to April 1997, Mr. Robinson served as
Director of Sales and Marketing for the flatbed division of Prime, Inc., a
truckload carrier based in Springfield, Missouri.
Steven Rumsey, age 35, co-founded Welborn in 1989 and has served as its
President since such date. He holds a B.A. in communications from the University
of Alabama.
With the exception of information relating to the executive officers of
the Company, which is provided in Item 10 hereof, all information required by
Part III (Items 11, 12 and 13) is incorporated by reference to the Company's
definitive Proxy Statement relating to the 1999 Annual Meeting of Stockholders,
which is scheduled to be filed on or before April 9, 1999.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULES AND CURRENT REPORTS ON FORM 8-K
(a) Exhibits, Financial Statements and Schedules.
1. Financial Statements. The following financial statements for the
Company and Independent Auditors' Report are incorporated by reference
from the Company's Annual Report to Stockholders for the year ended
December 31, 1998:
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 1998 and 1997
Consolidated Statements of Income for the years ended December 31,
1998, 1997 and 1996
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996
Notes to Consolidated Financial Statements
2. Financial Statement Schedules.
The schedule listed below is included herein immediately after the
signature pages hereto. Schedules not listed below have been omitted
because of the absence of conditions under which they are required or
because the information is included in the financial statements or notes
thereto.
SCHEDULE
NUMBER DESCRIPTION
------ -----------
II Valuation and Qualifying Accounts and Reserves for the Three
Fiscal Years Ended December 31, 1998
9
<PAGE> 12
3. Exhibits required by Item 601 of Regulation S-K.
The following exhibits are included in this Form 10-K:
<TABLE>
<CAPTION>
Exhibit
No. Description
-------- -----------
<S> <C>
10.1 Credit and Security Agreement dated February 28, 1996 between the Company and Compass Bank in the
amount of $5,000,000 for truck equipment
10.2 Credit and Security Agreement dated May 29, 1998 between the Company and Compass Bank in the amount
of $4,500,000 for truck equipment
10.3* Agreement and General Release between the Company and Donald Johnston dated July 16, 1998
10.4 Consulting Agreement between the Company and Donald Johnston dated July 16, 1998
10.5 Stock Repurchase Agreement between the Company and Donald Johnston dated January 7, 1999
13 Those portions of the Company's Annual Report to Stockholders for the year ended December 31, 1997
that are specifically incorporated herein by reference
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule (for SEC use only)
</TABLE>
The following exhibits are incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 (File no.
000-23948):
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
10.1* First Amendment to Boyd Bros. Transportation Inc. 1994 Stock Option Plan
10.2* Employment Agreement between the Company and Miller Welborn dated December 8, 1997
10.3* Employment Agreement between the Company and Steven Rumsey dated December 8, 1997
</TABLE>
The following exhibits are incorporated by reference to the Company's
Registration Statement on Form S-1 (File No. 33-76756), declared effective on
May 9, 1994:
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
3.1 Certificate of Incorporation of the Company
3.2 By-laws of the Company
</TABLE>
- --------
* Identifies each exhibit that is a "management contract or compensatory
plan or arrangement" required to be filed as an exhibit to this Annual
Report on Form 10-K pursuant to Item 14(c) of Form 10-K.
10
<PAGE> 13
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
10.1* Boyd Bros. Transportation Inc. 1994 Stock Option Plan
10.2* Form of the Company's Nonstatutory Stock Option Agreement
10.3* Form of the Company's Nonstatutory Stock Option Agreement for Nonemployee Directors
10.11 Master Note for Business and Commercial Loans dated July 22, 1992 providing for a $1,500,000 line of
credit from AmSouth Bank N.A. to the Company
10.13 Note for Business and Commercial Loans dated August 2, 1993 by the Company in favor of AmSouth Bank
N.A. in the principal amount of $5,122,702.70
10.14 Security Agreement for Tangible Personal Property dated February 15, 1994 by the Company in favor of
AmSouth Bank N.A.
10.15 Note for Business and Commercial Loans dated February 15, 1994 for a $5,000,000 non-revolving draw
note by the Company in favor of AmSouth Bank N.A.
10.22 Modification of the Continuation of Credit and Security Agreement and Loan Modification Agreement dated
March 4, 1994 by and between the Company and Compass Bank
10.26 Credit and Security Agreement dated February 1, 1994 by and between the Company and Compass Bank
10.27 Security Agreement dated February 1, 1994 by the Company in favor of Compass Bank
10.37 Credit Agreement dated April 1, 1994 by and between the Company and AmSouth Bank N.A.
</TABLE>
The following exhibit is incorporated by reference to the Company's
Amendment to Report on Form 10-Q filed on August 5, 1997:
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
10.33 OMNITRACS contract dated February 5, 1997, between the Company and QUALCOMM, Inc.
</TABLE>
The following exhibit is incorporated by reference to the Company's
Report on Form 8-K filed on December 19, 1997:
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
2.1 Acquisition Agreement dated December 8, 1997, by and among the Company, W-T Acquisition Company,
Welborn Transport, Inc., Miller Welborn and Steven Rumsey
</TABLE>
(b) Reports on Form 8-K
1. None.
11
<PAGE> 14
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.
BOYD BROS. TRANSPORTATION INC.
By: /s/ W. MILLER WELBORN
-------------------------------------
W. Miller Welborn
President and Chief Executive Officer
Date: March 30, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ W. MILLER WELBORN President, Chief Executive March 30, 1999
- ------------------------------------------- Officer and Director (Principal
W. Miller Welborn Executive Officer)
/s/ RICHARD C. BAILEY Executive Vice President,
- ------------------------------------------- Chief Financial Officer and
Richard C. Bailey Director (Principal Financial March 30, 1999
and Accounting Officer)
/s/ DEMPSEY BOYD Chairman and Director March 30, 1999
- -------------------------------------------
Dempsey Boyd
/s/ W. WYATT SHORTER Director March 30, 1999
- -------------------------------------------
W. Wyatt Shorter
/s/ BOYD WHIGHAM Director March 30, 1999
- -------------------------------------------
Boyd Whigham
/s/ STEPHEN J. SILVERMAN Director March 30, 1999
- -------------------------------------------
Stephen J. Silverman
</TABLE>
<PAGE> 15
SCHEDULE II
BOYD BROS. TRANSPORTATION INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Three Years Ended December 31, 1998
<TABLE>
<CAPTION>
ADDITIONS ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER BALANCE AT
DESCRIPTION YEAR EXPENSES ACCOUNTS(b) DEDUCTIONS(a) END OF YEAR
- ----------- ------------ ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts--deducted from trade
receivables in the balance sheet
Year ended December 31, 1996 $ 125,108 $ -- $ -- $ 108 $ 125,000
========== ========== =========== ========== ==========
Year ended December 31, 1997 $ 125,000 $ -- $ 112,000 $ -- $ 237,000
========== ========== =========== ========== ==========
Year ended December 31, 1998 $ 237,000 $ 150,400 $ -- $ 115,400 $ 272,000
========== ========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND BALANCE AT
DESCRIPTION YEAR EXPENSES DEDUCTIONS(a) END OF YEAR
- ----------- ------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Allowance for uncollectible receivables related
to sales-type leases--deducted from investment
in sales-type leases in the balance sheet
Year ended December 31, 1996 $ -- $ -- $ -- $ --
========== =========== ========== ==========
Year ended December 31, 1997 $ -- $ 380,000 $ -- $ 380,000
========== =========== ========== ==========
Year ended December 31, 1998 $ 380,000 $ 1,627,506 $ 806,261 $1,201,245
========== =========== ========== ==========
</TABLE>
Page 1
(a) Uncollectible accounts written off
(b) Addition of Welborn Transport, Inc., acquired on December 8, 1997
<PAGE> 1
EXHIBIT 10.1
CREDIT AND SECURITY AGREEMENT
THIS CREDIT AND SECURITY AGREEMENT is being executed and entered into
as of the 28th day of February, 1996, by and among BOYD BROTHERS TRANSPORTATION
COMPANY, INC., an Alabama corporation, which conducts its business at Route 1,
Box 40, Clayton, Alabama 36016 ("BORROWER", whether one or more) and COMPASS
BANK, an Alabama state banking corporation, 223 E. Broad Street, Eufaula,
Alabama 36027 ("BANK").
PREAMBLE
BORROWER has applied to BANK for, and BANK has agreed, upon the terms
and subject to the conditions herein set forth, to extend to BORROWER, a loan in
the amount of up to FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) (the "LOAN")
the proceeds of which are to be made available to Borrower for use between the
date hereof and February 28, 1997 (the "ADVANCE PERIOD") for BORROWER to finance
the purchase of tractors and flatbed trailers to be used in BORROWER'S trucking
business (collectively, the "TRUCK EQUIPMENT"), including sixty-eight
(68) tractors and _______________________ (_____) new 1996 Utility 45 foot
flatbed trailers to be purchased with the initial advance hereunder.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the mutual
obligations of the parties as contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound hereby, agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
Section 1.01 "BORROWER'S LOAN ACCOUNT" means the account on the books
of BANK in which will be recorded loans and advances made by BANK to BORROWER
pursuant to this Agreement, payments made on such loans and other appropriate
debits and credits as provided by this Agreement.
Section 1.02 "COLLATERAL" means any and all property of BORROWER in
which BANK now has, by this Agreement, or by any other Loan Document acquires,
or hereafter acquires, a security interest.
Section 1.03 "EQUIPMENT" means all tangible personal property
including, without limitation, machinery, furniture and furnishings now owned or
hereafter acquired for use primarily in the business of BORROWER.
Section 1.04 "INDEBTEDNESS" means all indebtedness, liabilities and
obligations, matured or unmatured, liquidated or unliquidated, direct or
indirect, primary, secondary, absolute or contingent, and whether arising by
contract, operation of law or otherwise, including without limitation,
obligations to creditors (including without limitation BANK), for borrowed money
or the deferred purchase price of property or services, and all obligations
under real property leases and under leases of personal property.
Section 1.05 "INSOLVENCY" of BORROWER or any other person means that
there shall have occurred with respect to that person one or more of the
following events: dissolution, termination of existence, insolvency, business
failure, appointment of a
2
<PAGE> 3
receiver of any part of the property of, assignment for the benefit of creditors
by, or the filing of a petition in bankruptcy or the commencement of any
proceedings under any bankruptcy or insolvency laws, or any laws relating to the
relief of debtors, readjustment of indebtedness, reorganization, composition or
extension, by or against such person, or if any action shall be taken for the
purpose of effecting any of the foregoing.
Section 1.06 "LIABILITIES" means any and all liabilities of BORROWER to
BANK of every kind and description, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, regardless of how they
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument. "Liabilities" includes obligations to
perform acts and refrain from taking action as well as obligations to pay money.
Section 1.07 "LOAN DOCUMENTS" means this Agreement, the Note (as
defined in Section 2.04 hereof), the Security Agreement from BORROWER to BANK
dated as of the date hereof, and all other documents and instruments evidencing,
securing, guaranteeing, relating to, or executed or delivered in connection with
the Loan.
Section 1.08 UNDEFINED TERMS. Except as otherwise defined in this
Agreement, whether in this Article I, or in a parenthetical or other reference
in this Agreement, accounting terms used herein shall have the meanings given to
them under generally accepted accounting principles, and terms defined in the
Alabama Uniform Commercial Code, as the same may be amended from time to time,
shall have the meanings given them in the Code.
3
<PAGE> 4
ARTICLE II
THE LOAN
Section 2.01 LOAN. Subject to the terms and conditions hereof, from and
after the date hereof and until February 28, 1997, and so long as BANK has not
demanded payment in full under the Note and BORROWER shall not be in default
hereunder or with respect to any other Liability to BANK, the BANK will make
advances under the Loan to BORROWER, or directly to BORROWER'S suppliers, up to
a maximum aggregate principal amount of $5,000,000 to pay for BORROWER'S
purchase of the Truck Equipment to be used as Equipment in BORROWER'S business
("ADVANCES"). BANK may, but shall not have any obligation to, make any Advances
hereunder at any time after or during which an Event of Default (as defined
herein) shall have occurred or exists.
Section 2.02 BORROWER'S LOAN ACCOUNT. All such Advances shall be
entered as debits in the BORROWER'S Loan Account. BANK may, if it so elects,
require each request for any Advance pursuant to this Agreement to be
accompanied by certification of the number, identity and continued use of Truck
Equipment purchased with the proceeds of the Loan, in form and substance
satisfactory to BANK. BANK shall also record in the BORROWER'S Loan Account, in
accordance with customary accounting practice, all other charges, expenses and
other items properly chargeable to BORROWER; all payments made by BORROWER on
account of indebtedness evidenced by BORROWER'S Loan Account; and other
appropriate debits and credits.
4
<PAGE> 5
The debit balance of BORROWER'S Loan Account shall reflect the amount of
BORROWER'S Indebtedness to BANK from time to time by reason of Advances and
other appropriate charges hereunder.
Section 2.03 USE OF LOAN PROCEEDS. The Loan proceeds shall be used by
BORROWER to finance its purchase of the Truck Equipment.
Section 2.04 NOTE. Each Advance under the loan shall be evidenced by a
separate promissory note (collectively, the "NOTE"), in form and substance
acceptable to BANK. Each Note shall bear interest from the date of the Advance
thereunder at the rate and calculated in the manner provided therein, and shall
be otherwise payable as set forth therein; provided, however, that in the event
that Borrower's demand deposit balances at Bank shall be less than $200,000.00
at any time, the applicable rate under each Note shall be increased by
one-fourth of one percentage point (1/4%) over the applicable rate stated
therein. Dates and amounts of Advances, and payments received by BANK, shall be
evidenced by entries upon the books and records of BANK, and shall be reflected
in monthly statements, which shall be conclusive evidence of such dates and
amounts of Advances, and payments.
Section 2.05 DURATION; EXTENSION. Availability of funds under the Loan
shall terminate on February 28, 1997; provided, however, that the parties
recognize that they may wish to extend the expiration date by mutual agreement
to be negotiated prior to such expiration date. It is understood that any
extension may require a revision of certain provisions of this Agreement.
5
<PAGE> 6
ARTICLE III
SECURITY FOR LOAN
Section 3.01 SECURITY INTEREST OF BANK IN COLLATERAL. As security for
the payment and performance of all Liabilities, BANK shall have, and is hereby
granted a continuing security interest in the following Collateral, whether now
owned or existing or hereafter created, acquired or arising and wheresoever
located:
(a) (i) The Truck Equipment described on Exhibit "A" hereto and
(ii) all Truck Equipment or other Equipment and other personal property of
BORROWER purchased with the proceeds of the Loan;
(b) All goods, instruments, certificates or other documents of
title, policies and certificates of insurance, securities, chattel paper,
deposits, cash or other property owned by BORROWER or in which BORROWER has an
interest which are now or may hereafter be in the possession of BANK or as to
which BANK may now or hereafter control possession by documents of title or
otherwise;
(c) Proceeds and products (including tort and insurance claims) of
all of the foregoing.
Section 3.02 AFTER-ACQUIRED PROPERTY. No submission by BORROWER is
necessary to vest in BANK a security interest in hereafter created or acquired
Collateral, but, rather such title and security interest shall vest in BANK
immediately upon the creation or acquisition of any item of Collateral, without
the necessity for any other or further action by BORROWER or BANK.
6
<PAGE> 7
Section 3.03 OTHER APPLICABLE LAW. If, by reason of location of
Collateral or otherwise, the creation, validity or perfection of security
interests provided for herein are governed by the law of a jurisdiction other
than Alabama, BORROWER shall take such steps and execute and deliver such papers
as BANK may from time to time request to comply with the Uniform Commercial
Code, the Uniform Trust Receipts Act, the Factors Lien Act or other laws of
another state or states.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce BANK to enter into this Agreement, BORROWER represents and
warrants as follows:
Section 4.01 ORGANIZATION AND AUTHORITY. Each BORROWER (a) is an
Alabama corporation which is duly organized, validly existing and in good
standing under the laws of the State of Alabama; (b) has all necessary corporate
power and authority, and possesses all licenses and permits as are required for
BORROWER to own its assets and conduct its business as now conducted or
presently proposed to be conducted; (c) has no subsidiaries other than Boyd
Brothers Truck and Tractor; and (d) is duly qualified and in good standing in
the State of Alabama and in every other jurisdiction wherein its ownership or
leasing of assets or conduct of its business makes such qualification necessary.
Section 4.02 BORROWER'S AUTHORIZATION. The execution, delivery and
performance of this Agreement, the Note, the Security Agreement, and the other
Loan
7
<PAGE> 8
Documents, the granting of the power of attorney under Section 8.03 hereof, and
the borrowing hereunder and under the Note, are within BORROWER'S corporate
powers and authority, have been duly and validly authorized by all necessary
corporate and other action including, without limitation, any necessary
shareholder action, are not in contravention of law or the terms of BORROWER'S
Articles of Incorporation, By-Laws or other incorporation documents, or of any
indenture, agreement or undertaking or any law, regulation, or order to which
BORROWER is a party or by which it is bound.
Section 4.03 ENFORCEABILITY. Upon execution and delivery hereof and
thereof, this Agreement, the Note, the Security Agreement, and the other Loan
Documents will constitute valid and binding obligations of the respective
parties thereto, enforceable in accordance with their respective terms.
Section 4.04 OWNERSHIP OF COLLATERAL. Except for the security interests
granted in connection herewith, or heretofore granted to BANK, BORROWER is, and
as to assets to be acquired after the date hereof, shall be, the owner of all
Collateral with respect to which it grants a security interest hereunder, free
from any lien, security interest or encumbrance, and BORROWER shall defend its
assets against all claims and demands of all persons at any time claiming the
same or any interest therein.
Section 4.05 OTHER COLLATERAL. At the time BORROWER pledges, sells,
assigns, or transfers to BANK any instrument, document of title, security,
chattel paper or other property or any interest therein, BORROWER shall be the
lawful owner thereof and shall have good right to pledge, sell, assign or
transfer the same; none of such
8
<PAGE> 9
property shall have been pledged, sold, assigned or transferred to any person
other than BANK or in any way encumbered; and BORROWER shall defend the same
against the lawful claims and demands of all persons.
Section 4.06 FINANCIAL INFORMATION. Subject to any limitations stated
therein or in connection therewith, all financial statements which have been or
may hereafter be furnished to BANK to induce it to enter into this Agreement, to
extend credit from time to time hereunder, or otherwise in connection herewith,
do or shall fairly represent the financial condition of BORROWER or other person
or entity reported on therein, as of the dates and, in the case of BORROWER, the
results of its operations for the periods for which the same are furnished, in
accordance with generally accepted accounting principles consistently applied,
and all other information, reports and other papers and dates furnished to BANK
are or shall be, at the time the same are so furnished, accurate and correct in
all material respects and complete insofar as completeness may be necessary to
give BANK a true and accurate knowledge of the subject matter. There has been no
material adverse change in the business, properties, prospects, or condition
(financial or otherwise) of the BORROWER since the dates of the most recent
financial statements provided to the BANK. BORROWER has good and marketable
title to all the properties and assets reflected on its balance sheet furnished
to BANK, free and clear of mortgages, pledges, liens, charges and other
encumbrances, other than encumbrances in favor of BANK and encumbrances securing
indebtedness reflected on such balance sheet.
9
<PAGE> 10
Section 4.07 NO VIOLATIONS. BORROWER is not now in default under any
agreement evidencing an obligation for the payment of money, performance of a
service or delivery of goods, the demand for performance under which, or
acceleration of the maturity of which, would render BORROWER insolvent or unable
to meet its other debts as they become due or conduct its business as usual.
Section 4.08 LITIGATION. There is no action, suit, or proceeding at law
or in equity or by or before any governmental instrumentality or other agency
now pending, or, to the knowledge of the BORROWER, threatened or in prospect
against or affecting the BORROWER or any properties or rights of the BORROWER,
which, if adversely determined, would (i) materially impair the right of the
BORROWER to carry on business substantially as now conducted or (ii) materially
and adversely affect the financial condition of the BORROWER. BORROWER is not
currently affected by any strike or other labor disturbance nor is BORROWER in
default in any material respect under any judgment, order, injunction, rule,
ruling, of any court or governmental commission, agency, or instrumentality.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01 FINANCIAL STATEMENTS. BORROWER shall furnish or cause to
be furnished to BANK, (a) on a quarterly basis, within sixty (60) days after the
end of each quarter, internally prepared profit and loss statements for
BORROWER; and (b) on an annual basis, audited year-end financial statements
prepared by a certified public
10
<PAGE> 11
accountant acceptable to BANK. Statements required under Section 5.01(b)
immediately preceding shall be provided as soon as available after the end of
the fiscal period reported on therein, but no later than ninety (90) days after
the end of such period. In addition, BORROWER shall furnish BANK, on an annual
basis, year-end financial statements on any guarantor of the Loan in a form
acceptable to BANK, as soon as available, but no later than 60 days after the
end of each year.
Section 5.02 CERTIFICATIONS. All statements and reports required by
this Article V shall be certified as true and correct by the President or a
Vice-President of BORROWER, or in the case of Guarantor, by or on behalf of the
Guarantor.
Section 5.03 EXPENSES. BORROWER shall pay any and all taxes, charges
and expenses of every kind or description paid or incurred by BANK under or with
respect to the Loan or any Collateral therefor or the collection of or
realization upon the same. BORROWER hereby authorizes BANK to charge interest,
charges, taxes and expenses provided for herein to BORROWER'S Loan Account.
Section 5.04 INSURANCE. BORROWER shall have and maintain at all times
liability insurance and, with respect to the Collateral and other assets of
BORROWER, insurance against risks of fire, so-called extended coverage, and
other risks customarily insured against by companies engaged in similar business
to that of BORROWER, in amounts, containing such terms, in such form, for such
periods and written by such companies as may be satisfactory to BANK. Where
insurance covers Collateral for loans to BORROWER from BANK, such insurance
shall be payable to BANK and to BORROWER as their interests may appear, pursuant
to a long-form New
11
<PAGE> 12
York standard non-contributory mortgagee clause or endorsement. All policies of
insurance shall provide for ten (10) days' written minimum cancellation notice
to BANK. In the event of BORROWER'S failure to provide and maintain insurance as
herein provided, BANK may, at its option, provide such insurance and charge the
amount thereof to the BORROWER'S Loan Account or add the same to the principal
balance of the Loan. BORROWER shall furnish to BANK certificates or other
evidence satisfactory to BANK of compliance with the foregoing insurance
provisions. Notwithstanding anything to the contrary contained or implied
herein, BORROWER may self-insure its fleet of vehicles (including the
Collateral) as to physical damage, but shall obtain insurance against
catastrophic loss (in excess of an aggregate of $500,000) of Collateral and
other assets. BORROWER shall provide BANK evidence satisfactory to BANK the
existence of such catastrophic insurance, which policy of insurance shall name
BANK as loss payee pursuant to a New York standard non-contributory endorsement
or clause. In the event of any loss with respect to any item of Collateral,
BORROWER will make an additional payment under the Loan in an amount equal to
the portion of the outstanding Loan balance representing the purchase money
advanced against the Collateral with respect to which such loss has occurred.
Section 5.05 INFORMATION REGARDING COLLATERAL. BORROWER shall furnish
to BANK information adequate to identify and evaluate the Collateral at times
and in form and substance as may be requested by BANK.
12
<PAGE> 13
Section 5.06 REGISTRATION AND TITLING. BORROWER shall cause all
Collateral that is required to be registered, to be properly registered in
BORROWER'S name, and will cause the title certificates for all Collateral to
reflect BORROWER'S ownership and BANK'S lien.
Section 5.07 RECORDS REGARDING COLLATERAL. BORROWER shall give BANK
written notice of each location at which Collateral and records regarding
Collateral are or will be kept other than for temporary processing, storage or
like purposes. Except as such notice is given, and except as Collateral is moved
from place to place in the ordinary course of BORROWER'S trucking business, all
Collateral and records are and shall be kept at BORROWER'S address as it appears
in Section 10.04 of this Agreement.
Section 5.08 INSPECTION. BORROWER shall at all reasonable times and
from time to time allow BANK, by or through any of its officers, agents,
attorneys, or accountants, to examine, inspect or make extracts from BORROWER'S
books and records and to arrange for verification of Collateral, under
reasonable procedures and by reasonable methods, and shall do, make, execute and
deliver all such additional and further acts, things, deeds, assurances and
instruments as the BANK may require more completely to vest in and assure to the
BANK its rights hereunder or in any Collateral.
Section 5.09 TAXES. BORROWER will promptly pay or cause to be paid all
taxes, customs fees, and freight charges on the Collateral and will at all times
keep the Collateral free and clear of all liens and claims whatsoever, other
than the security
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interests granted hereby. BORROWER agrees to do and cause to be done all things
that the BANK may request to establish and maintain a valid title and security
interest in the Collateral, free of all other liens and claims whatsoever, to
secure the payment of the Liabilities. If such taxes or other assessments remain
unpaid after the date fixed for the payment of the same, or if any lien shall be
claimed which, in the opinion of the BANK, could create a valid obligation
having priority over the rights of the BANK in the Collateral, the BANK may,
without notice to the BORROWER, pay such taxes, assessments, charges or claims,
and the BORROWER unconditionally promises to reimburse BANK for any amounts so
paid upon demand.
Section 5.10 CONTINUED EXISTENCE, PROTECTION OF PROPERTY, INSURANCE.
BORROWER shall do or cause to be done all that is necessary (a) to preserve its
existence and in keep in full force and effect all of its governmental permits,
licenses, charters, consents and franchises, and to comply with all applicable
laws; (b) to conduct and operate its business in a prudent and careful manner;
(c) to preserve its properties; and (d) subject to the limitation regarding
self-insurance in Section 6.04 hereof, to maintain adequate insurance with
insurance companies of recognized responsibility, including without limitation,
(i) insurance coverage to such extent and against such risks, including fire,
casualty, and theft, as is customary in BORROWER'S business, (ii) necessary
workmen's compensation insurance; (iii) such other insurance or bonds as may be
required by law or reasonably requested in writing by BANK; and (iv) pay all
taxes applicable to it or levied against any of its properties as and when the
same shall become due and payable.
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Section 5.11 RECORDS. BORROWER shall keep or cause to be kept accurate
records concerning its business and shall maintain or cause to be maintained a
system of accounting and proper books of record and account in accordance with
general accepted accounting principles applicable to the particular entity, and
will set aside on its books all proper and adequate reserves for taxes,
depreciation, depletion, obsolescence, loan losses, amortization, contract
cancellations, defaults, or other breaches of contract, and otherwise as may be
appropriate in accordance with said principles.
Section 5.12 CERTIFICATES. On a quarterly basis, and at such other
times as BANK shall request, BORROWER shall supply to BANK a written certificate
as to the following:
(i) that there does not exist any default or Event of Default,
or any condition or event which, with the giving of notice or the
passage of time, or both, would constitute such an Event of Default,
under the Agreement, the Note, or any other Loan Documents;
(ii) that all representations, warranties and covenants
contained in this Agreement and the other Loan Documents remain true
and accurate through the date of such certificate, except as may be
noted and acceptable to BANK;
(iii) that all conditions precedent to BANK'S obligation to
make advances under the Loan have been and remain fully satisfied; and
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(iv) that all of the Collateral is in good repair and useful
in BORROWER'S business.
Section 5.13 NOTICE OF ADVERSE EVENTS. BORROWER shall promptly notify
BANK of the filing of any notice, suit, claim, action, proceeding, or
investigation in or by any court or by any governmental authority in which an
adverse decision reasonably could be expected to have a material adverse effect
upon the BORROWER, and shall promptly notify BANK of the occurrence of any
material adverse order, judgment, settlement, determination, or other adverse
event, or of any default or Event of Default or any condition or event which,
with the giving of notice or the passage of time, or both, would constitute such
an Event of Default, under this Agreement or under any of the other Loan
Documents. BORROWER also shall promptly notify BANK of the occurrence of any
other condition or event which could have a material adverse effect upon it.
ARTICLE VI
NEGATIVE COVENANTS
BORROWER covenants and agrees that from the date hereof until payment
in full of the Loan, and any other indebtedness and Liabilities, and the
termination of this Agreement, unless BANK shall otherwise consent in writing,
BORROWER will not either directly or indirectly:
Section 6.01 CASH FLOWS-TO-CURRENT MATURITIES OF LONG-TERM DEBT. Cause
or allow the ratio of BORROWER'S cash flows-to-current maturities of long-term
debt to
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be less than 1.3:1 at any time after December 31, 1996. As used in this Section,
"CASH FLOWS" means net profits less dividends, plus lease expense and
depreciation and any other expenses which would be classified as non-cash
expenses in accordance with generally accepted accounting principles and
"CURRENT MATURITIES OF LONG TERM DEBT" means the outstanding principal balance
of indebtedness and lease expense due within twelve (12) months.
Section 6.02 CONSOLIDATED NET WORTH. Cause or allow BORROWER'S
Consolidated Tangible Net Worth to be less than $14,800,000. As used herein,
"CONSOLIDATED TANGIBLE NET WORTH" means an amount equal to the Shareholders'
equity of the BORROWER (including capital stock, capital surplus and retained
earnings, but excluding any unpaid amounts due for sale of stock) less (i) the
book value of any shares of common stock of the BORROWER held by the BORROWER
and treated as an asset in computing such stockholder's equity, (ii) all
unamortized debt costs, patents, tradenames, licenses, franchises, good will and
other intangible assets, (iii) the aggregate balance of loans, notes receivable,
accounts receivable and other advances to and or owing from BORROWER'S
affiliates, subsidiaries, shareholders, employees officers, directors or any
other related entity, and (iv) taxes, the payment of which has been deferred.
All financial ratios in this Agreement shall be determined on a combined basis
in accordance with generally accepted accounting principles applied on a
consistent basis.
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Section 6.03 NO ENCUMBRANCES ON COLLATERAL. BORROWER shall not pledge,
mortgage, sell, assign or create, or suffer to exist a security interest in
Collateral in favor of any person other than BANK.
Section 6.04 MANAGEMENT; OWNERSHIP. Cause or allow any material change
in the ownership or senior management of BORROWER, including without limitation
any change in the officers of the BORROWER at or above the level of its vice
president.
Section 6.05 DEBT-TO-TANGIBLE NET WORTH. Cause or allow the BORROWER'S
ratio of total debt (defined as all of BORROWER'S Indebtedness and Liabilities
to whomsoever the same may be owing, whether now or hereafter existing, created
or arising, absolute or contingent, direct or indirect, joint or several,
including without limitation, all indebtedness under the Loan)-to- Consolidated
Tangible Net Worth (as defined in Section 6.02 hereof) to be greater than 2:1.
Section 6.06 LOANS TO RELATED PARTIES. Cause or allow BORROWER'S loans
or other advances to BORROWER'S shareholders, officers, partnerships,
subsidiaries, affiliates, directors or other related entities to exceed
$2,000,000 at any time outstanding.
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ARTICLE VII
CONDITIONS
BANK'S obligation to make the Loan available to BORROWER, and to make
any advance thereunder, is subject to the full satisfaction of the following
conditions precedent:
Section 7.01 NO DEFAULT. There shall not exist any default or Event of
Default, or any condition or event which, after notice or lapse of time or both,
would constitute such an Event of Default hereunder or under any other Loan
Documents.
Section 7.02 OPINION OF COUNSEL. BANK shall have received from counsel
to BORROWER a favorable opinion in satisfactory scope and form as to all matters
reasonably requested by BANK.
Section 7.03 DELIVERY OF DOCUMENTS. Delivery to BANK of the purchase
orders and Certificates of Title for the Collateral to be purchased with the
proceeds of the requested advance, the duly-executed Note and Guaranty, and all
other documents or instruments which BANK shall require in connection with
making the Loan.
Section 7.04 TERMS AND CONDITIONS. Continued fulfillment and
satisfaction through the date hereof and as of the date of any requested advance
of all the terms, representations, warranties, conditions and covenants hereof.
Section 7.05 OFFICER'S CERTIFICATE. BANK shall have received a
certificate of the President or other officer authorized by resolution of
BORROWER stating that all representations and warranties contained in this
Agreement and all other Loan Documents are and remain true and accurate as of
the date of such advance and that
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there exists no default or Event of Default hereunder or under any other Loan
Document, or any condition or event which, with the giving of notice or the
passage of time, or both, would become an Event of Default hereunder or under
any other Loan Document.
ARTICLE VIII
DEFAULT AND REMEDIES ON DEFAULT
Section 8.01 EVENTS OF DEFAULT; ACCELERATION. At the option of BANK and
notwithstanding any time or credit allowed by any instrument evidencing any of
the Liabilities, any or all of the Liabilities of BORROWER or any other person
to BANK hereunder shall immediately become due and payable upon the occurrence
of any of the following events of default ("EVENTS OF DEFAULT"), without notice
or demand to BORROWER, Guarantor, or any other person: (a) default in the
payment or performance, when due or payable, of any of the Liabilities of
BORROWER or any other person or entity, or of any endorser or Guarantor for any
of the Liabilities of BORROWER or any other person or entity to BANK or the
occurrence of any Event of Default under any Loan Document; (b) failure of
BORROWER to pay any tax; (c) if any representation or warranty contained herein
is or becomes inaccurate or if BORROWER or Guarantor have made, or hereafter
make any misrepresentation to BANK for the purpose of obtaining credit or an
extension of credit, (d) failure of BORROWER to furnish or cause to be furnished
financial information or to permit or cause to be permitted the inspection of
books or records; (e) issuance of an injunction or
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attachment against property of BORROWER or any Guarantor; (f) calling of a
meeting of creditors, appointment of a committee of creditors or liquidating
agents, or offering of a composition or extension to creditors by, for or of
BORROWER or any endorser or Guarantor of any of the Liabilities of BORROWER to
BANK; (g) insolvency of BORROWER or any endorser or Guarantor of any of the
Liabilities of BORROWER to BANK; (h) such a material change in the condition or
affairs (financial or otherwise) of BORROWER or of any endorser or Guarantor of
any of the Liabilities of BORROWER to BANK as in the opinion of BANK impairs
BANK'S security or increases its risk; (i) failure by BORROWER or any Guarantor
to comply with any of the provisions of this Agreement; (j) failure to make any
payments required by this Agreement; (k) default shall be made with respect to
any Indebtedness (other than the Note) of the BORROWER or the Guarantor, when
due, or the performance of the other obligation incurred in connection with any
Indebtedness for borrowed money of the BORROWER, or the Guarantor, if the effect
of such default is to accelerate the maturity of such Indebtedness or to permit
the holder thereof to cause such Indebtedness to become due prior to its stated
maturity, or any such Indebtedness shall not be paid when due; or (l) if there
shall occur any default or Event of Default, or any condition or event which
with the giving of notice or the passage of time, or both, would become an Event
of Default, under, pursuant to or with respect to any Indebtedness or loan
transaction or any document or instrument evidencing, securing, guaranteeing, or
relating to any Indebtedness or loan transaction of BORROWER.
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Section 8.02 RIGHTS UPON DEFAULT. Upon the occurrence of any one or
more of the above Events of Default and at any time thereafter, such default not
having previously been cured, BANK shall have, in addition to all other rights
and remedies, the remedies of a secured party under the Alabama Uniform
Commercial Code, regardless whether the Code has been enacted in the
jurisdiction where rights or remedies are asserted, including without
limitation, the right to take possession of the Collateral, and for that purpose
BANK may, so far as BORROWER or Guarantor can give authority therefor, enter
upon any premises on which the Collateral may be situated and remove the same
therefrom or store the same on the premises pending disposition. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, BANK shall give to BORROWER at
least five (5) days' prior written notice of the time and place of any public
sale of Collateral or of the time after which any private sale or any other
intended disposition is to be made. Upon fifteen (15) days' prior written notice
to BORROWER, BANK may at any time in its discretion transfer any securities or
other property constituting Collateral into its own name or that of its nominee
and receive the income thereon and hold the same as security for Liabilities or
apply it on principal or interest due on Liabilities. Insofar as Collateral
shall consist of insurance policies, instruments, chattel paper, choses in
action or the like, BANK may demand, collect, receipt for, settle, compromise,
adjust, sue for, foreclose or realize upon Collateral, as BANK may determine,
whether or not Liabilities or Collateral are then due, and for the purpose of
realizing BANK'S rights therein, BANK may receive, open and dispose of
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mail addressed to BORROWER and endorse notes, checks, drafts, money orders,
documents of title or other evidences of payment, shipment or storage or any
form of Collateral on behalf of and in the name of BORROWER. The enumeration of
the foregoing rights is not intended to be exhaustive, and the exercise of any
right shall not preclude the exercise of any other rights, all of which shall be
cumulative. As against the obligations secured hereby, BORROWER hereby expressly
waives all claims and all rights to claim any exemptions, both as to personal
and real property, allowed or allowable under the Constitution or laws of the
United States, the State of Alabama or any other jurisdiction. Any notice to
BORROWER of sale, disposition or other intended action by BANK, required by law
to be given to BORROWER, sent to BORROWER at the address of BORROWER shown
hereinabove or at such other address of BORROWER as may from time to time be
shown on BANK'S records, at least five days prior to such action, shall
constitute reasonable notice to BORROWER.
Section 8.03 POWER OF ATTORNEY. BORROWER hereby requests, authorizes
and empowers Billy V. Houston, or any other officer or employee of BANK who may
be designated by BANK for that purpose to make, execute and file, any financing
statements, documents or certificates of title, or other documents, and to take
any and all such other steps as BANK deems necessary or desirable to perfect and
continue the perfection of BANK'S security interest in the Collateral. No
failure by BANK to exercise for any period the powers herein granted shall
operate or be construed as a waiver of BANK'S rights thereafter to exercise such
authorizations and powers. The foregoing power of attorney is coupled with an
interest and shall be irrevocable so
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long as any Liabilities or Indebtedness hereunder, under the Note, or under the
other Loan Documents remain outstanding.
Section 8.04 SET OFF. BANK hereby is given a continuing lien as
security for BORROWER'S obligations hereunder upon any and all moneys,
securities and other property of BORROWER, and the proceeds thereof, now or
hereafter held or received by or in transit to BANK from or for BORROWER,
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
and also upon any and all deposit balances, general or special, and credits of
BORROWER with, and any and all claims of BORROWER against BANK at any time
existing, and upon an Event of Default hereunder, BANK may apply or set off the
same against the Liabilities hereby secured.
ARTICLE IX
MISCELLANEOUS
Section 9.01 WAIVERS. BORROWER hereby waives demand, notice, protest,
notice of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect both to
Liabilities and Collateral, BORROWER assents to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of any Collateral which may now or hereafter secure Liabilities, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payments hereon and to the settlement, compromise or
adjustment of any thereof, all
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in such manner and at such time or times as BANK may in its sole discretion deem
advisable. BANK shall have no duty as to the collection or protection of any
Collateral or any income thereon, nor as to the preservation of rights against
prior parties, nor as to the preservation of any rights pertaining thereto
beyond the safe custody thereof. BANK may exercise its rights with respect to
any Collateral without resorting or regard to other Collateral or sources of
reimbursement for Liabilities. BANK shall not be deemed to have waived any of
its rights upon or under Liabilities or Collateral unless such waiver is in
writing and signed by BANK. No delay or omission on the part of BANK in
exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion. All rights and remedies of BANK with respect to
Liabilities or Collateral, whether evidenced hereby or by any other instrument,
shall be cumulative and may be exercised separately or concurrently.
Section 9.02 EXPENSES; PROCEEDS OF COLLATERAL. BORROWER shall pay to
BANK on demand any and all expenses, including reasonable attorneys' fees,
incurred or paid by BANK in collecting or otherwise protecting or enforcing or
attempting to collect, protect or enforce its rights upon or under Liabilities
or Collateral. After deducting all of said expenses, the residue of any proceeds
of collection or sale of Liabilities or Collateral shall be applied to the
payment of principal or interest on Liabilities, in such order of preference as
BANK may determine with proper allowance for interest on Liabilities not then
due being made, and any excess shall be returned to BORROWER and BORROWER shall
remain liable for any deficiency.
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Section 9.03 AMENDMENT. No modification or amendment of this Agreement
shall be effective unless placed in writing and duly executed by the BORROWER
and the BANK. By guaranteeing the Liabilities described herein, Guarantor
expressly agrees that BORROWER and BANK may, without notice to or consent by
Guarantor, modify or amend this Agreement. Neither party shall be obligated in
any respect to extend the termination date hereof.
Section 9.04 GENERAL. Any demand upon or notice that BANK may elect to
give to BORROWER and any notice required to be given to BANK shall be effective
three (3) days after the same has been deposited in the United States mail,
first class with postage prepaid and addressed to such party at the following
addresses, as applicable, if such party has notified BANK in writing of a change
of address, to the last address so notified:
IF TO BORROWER: Boyd Brothers Transportation
Company, Inc.
Route 1, Box 40
Clayton, Alabama 36016
IF TO BANK: Compass Bank
223 E. Broad Street
Eufaula, Alabama 36027
Attention: City Executive
with a copy to: Don Owens
Vice President - Loan Administration
Compass Bank
P. O. Box 10566
Birmingham, Alabama 35296
Demands or notices addressed to BORROWER'S address at which BANK customarily
communicates with BORROWER, shall also be effective. If at any time or times by
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assignment or otherwise BANK transfers any of the Liabilities or Collateral
therefor, such transfer shall include BANK'S power and rights under this
Agreement with respect to the Liabilities or Collateral transferred, and the
transferee shall become vested with said powers and rights whether or not they
are specifically referred to in the transfer. If and to the extent BANK retains
any of the Liabilities or Collateral, BANK will continue to have the rights and
powers herein set forth with respect thereto. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs, personal representatives, and estates; provided, however, that
BORROWER shall not assign or delegate any of its rights or obligations hereunder
without the express written consent of BANK. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but when
taken together shall constitute one agreement. This Agreement is being executed
under the seal of the parties hereto and is intended to constitute and have
effect as a sealed instrument according to law.
Section 9.05 GOVERNING LAW; JURISDICTION. This Agreement, the Note, the
Security Agreement and the other Loan Documents, and the rights and the
obligations of the parties hereunder and thereunder, shall be governed by and be
construed in accordance with the laws of the State of Alabama. BORROWER
acknowledges that the negotiation of the provisions of the Note, this Agreement,
the Security Agreement, and all other Loan Documents took place in the State of
Alabama; that all of such documents were executed in Jefferson County, Alabama,
or if executed elsewhere, will be or were delivered to BANK in said county and
state subject to BANK'S
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acceptance thereof in Birmingham, Jefferson County, Alabama, and that all of
such documents were or will be executed and delivered to BANK to induce BANK to
extend the Loan to BORROWER. BANK shall be under no obligation to give BORROWER
notice of acceptance of any Loan Documents for said documents and instruments to
become effective. BORROWER acknowledges further that the negotiation, execution
and delivery of this Agreement, the Note, the Security Agreement and the other
Loan Documents constitutes the transaction of business within the State of
Alabama and that any cause of action arising under any of said documents will be
a cause of action arising from such transaction of business. BORROWER hereby
submits itself to jurisdiction in the State of Alabama for any cause of action
or action arising out of or in connection with this Agreement, the Note, or any
of the other Loan Documents, and agrees that venue for any such action shall be
in Jefferson County, Alabama, and waives any and all rights under the laws of
any state to object to jurisdiction or venue within Jefferson County, Alabama.
Notwithstanding the foregoing, nothing contained in this Section 9.05 shall
prevent BANK from bringing any action or exercising any rights against BORROWER,
any security for the Loan or against any of BORROWER'S properties in any other
state or jurisdiction. Initiating any such action or proceeding or taking any
such action in any other state shall in no event constitute a waiver by BANK of
any of the foregoing.
Section 9.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
covenants, agreements, representations, and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by the BANK of
the Loan herein
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contemplated and the execution and delivery to the BANK of the Note evidencing
such Loan and shall continue in full force and effect so long as the Note is
outstanding and unpaid. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises, and agreements by or on
behalf of the BORROWER which are contained in this Agreement shall bind the
successors and assigns of BORROWER and inure to the benefit of the successors
and assigns of the BANK; provided, however, that BORROWER shall not assign or
delegate this Agreement, the Loan, or its rights, duties, or obligations
hereunder without the written consent of BANK.
Section 9.07 NO CONFLICT, ETC. No provision of this Agreement or of the
Note or the other Loan Documents shall be deemed in conflict with any other
provision thereof, and the BORROWER acknowledges that no such provisions or any
interpretation thereof shall be deemed to diminish the rights of the BANK, any
assignee, or the holder or holders of the Note under the terms and conditions or
any other provisions thereof. BANK may at its option exhaust its remedies
hereunder, under the Note, and under the other Loan Documents, either
concurrently or independently, and in such order as it may determine.
Section 9.08 HEADINGS; UNDER SEAL; ENTIRE AGREEMENT; NO THIRD PARTY,
BENEFICIARY. Article and section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement or be used to construe any provision hereof or for any other purpose.
This Agreement is intended to be under the seal of all parties hereto and to
have the effect of a sealed
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instrument in accordance with the law. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding between the
parties, supersedes all prior agreements and understandings related to the Loan,
and may not be amended except by written agreement between BORROWER and BANK.
This Agreement shall not benefit, and may not be relied upon by, any person
other than the persons who sign this Agreement. There are no third party
beneficiaries to this Agreement or any negotiations, statements, or
representations related to this Agreement.
Section 9.09 NO PARTNERSHIP OR JOINT VENTURE. Notwithstanding anything
to the contrary herein contained or implied, BANK, by this Agreement, or by any
action pursuant thereto or hereto, shall not be deemed a partner, joint
venturer, or participant in the venture with BORROWER, and BORROWER hereby
indemnifies and agrees to defend and hold BANK harmless (including the payment
of reasonable attorneys' fees) from any and all damages resulting from such a
construction of the parties' relationship. The requirements herein, and the
restrictions imposed in this Agreement, are for the sole protection and benefit
of BANK.
Section 9.10 INDEMNIFICATION. BORROWER shall indemnify and hold
harmless BANK from and against any and all claims, charges, losses, expenses and
costs, including reasonable attorneys' fees, resulting from any claims, actions
or proceedings in connection with the execution, delivery and performance of
this Agreement, the Note, and other Loan Documents. The indemnification provided
in this section shall survive the payment in full of the Loan.
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed by their duly authorized officers as of the date
first set forth above.
BORROWER:
WITNESS: BOYD BROTHERS TRANSPORTATION
COMPANY, INC.
/s/ Jeanette Wilson By: /s/ Richard Bailey
- -------------------------------- -----------------------------------
Its: CFO
-------------------------------
WITNESS: BANK:
COMPASS BANK
/s/ Jeanette Wilson By: /s/ Billy V. Houston
- -------------------------------- -----------------------------------
Its: Billy V. Houston - CEO
-------------------------------
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COMPASS BANK
SECURITY AGREEMENT
KNOW ALL MEN BY THESE PRESENTS: That
WHEREAS, BOYD BROTHERS TRANSPORTATION COMPANY, INC., an Alabama
corporation ("DEBTOR") is, contemporaneously with the execution hereof, becoming
indebted to COMPASS BANK (the "BANK"), on loan in the principal amount of FIVE
MILLION AND NO/100 DOLLARS ($5,000,000.00), or so much thereof as may be
advanced under the Note as hereafter defined (the "LOAN"), as evidenced by a
Promissory Note of even date herewith and by additional Promissory Notes
executed subsequent to the date hereof, payable to Bank with interest thereon
and as provided therein (each a "NOTE" and collectively, the "NOTES"), and as
secured by a Credit and Security Agreement from Debtor to Bank (the "LOAN
AGREEMENT") and the other Loan Documents defined therein (the "LOAN DOCUMENTS");
and
WHEREAS, Debtor may hereafter become indebted to Bank or a subsequent
holder of this Security Agreement on loans or otherwise (said Bank and any
subsequent holder of this Security Agreement being referred to herein as
"SECURED PARTY"); and
WHEREAS, Debtor agrees to make this Security Agreement (the
"AGREEMENT") to further secure said Notes and any and all other future or
additional Liabilities of Debtor to Secured Party (said Liabilities, as defined
in paragraph 5, being referred to herein as "LIABILITIES").
NOW, THEREFORE, the undersigned Debtor, in consideration of making the
Loan, and to secure the prompt payment of same, with the interest thereon, and
any extensions, modifications, or renewals of same, and any and all Liabilities
of Debtor to Secured Party, and further to secure the performance of the
covenants, conditions, and agreements hereinafter set forth and set forth in the
Note, and as may be set forth in the Loan Agreement and other Loan Documents or
other instruments evidencing or securing other Liabilities of Debtor to Secured
Party, and further to secure any and all charges incurred by Secured Party on
account of Debtor, including but not limited to attorney's fees, does hereby
agree as follows:
1. DEFINITIONS. All terms used herein which are defined in the Alabama
Uniform Commercial Code (the "CODE") shall have the same meaning herein as in
the Code unless otherwise indicated herein.
2. INCORPORATION BY REFERENCE. All of the terms and provisions of the
Note are hereby incorporated by reference as though set forth in full herein.
<PAGE> 33
3. SECURITY INTERESTS. Debtor hereby grants to Secured Party title to
and a security interest in the Collateral described in paragraph 4 hereof to
secure the performance and payment of the Liabilities described in paragraph 5
hereof.
4. COLLATERAL. As security for the payment and performance of all
Liabilities of the Debtor, Debtor grants Secured Party title to and a security
interest in the following described property of the Debtor (herein collectively
referred to as the "COLLATERAL"):
4.01 EQUIPMENT. The items of personal property described on
Exhibit "A" hereto and all equipment and other personal property of
every nature whatsoever now or hereafter owned by the Debtor and
purchased with the proceeds of the Loan, wheresoever the same may be
located.
4.02 PROCEEDS. Proceeds (including insurance, contract and tort
claims) and products of all of the foregoing Collateral.
5. LIABILITIES: "LIABILITIES" of Debtor, as used herein, shall mean:
5.01 NOTES. The Notes, with interest as therein provided, and
all extensions, modifications, or renewals thereof.
5.02 OTHER INDEBTEDNESS. Any and all other obligations,
indebtedness, and liabilities of the Debtor to the Secured Party,
whether joint or several, due or to become due, liquidated or
unliquidated, now existing or hereafter arising, absolute or
contingent, direct or indirect, and all extensions, modifications, and
renewals thereof, and whether incurred or given as maker, endorser,
guarantor, surety, or otherwise.
6. REPRESENTATIONS, WARRANTIES, AND COVENANTS. The Debtor hereby
represents, warrants, and covenants as follows:
6.01 NO ADVERSE LIENS. Except for any security interest
specifically set forth on an addendum attached hereto, and except for the
security interest granted hereby, the Debtor is or (with respect to Collateral
not presently owned by Debtor will be) the lawful owner of all Collateral free
from any adverse lien, security interest, or encumbrance, and shall have full
right to pledge, sell, assign, or transfer the same to Secured Party. Debtor
will defend the Collateral against all claims and demands of all persons at any
time claiming the same or any interest therein.
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6.02 FINANCING STATEMENTS. No financing statement covering any
Collateral or any proceeds thereof is on file in any public office, except
for financing statements specifically set forth on an addendum attached
hereto, if any, and except for the financing statements executed by Debtor
and Secured Party. At the Secured Party's request, the Debtor will join
with Secured Party in executing one or more financing statements pursuant
to the Code in form satisfactory to the Secured Party, and will pay the
cost of filing the same in all public offices wherever filing is deemed by
the Secured Party to be necessary or desirable. The Debtor authorizes the
Secured Party to prepare and to file financing statements covering the
Collateral signed only by the Secured Party and to sign the Debtor's
signature to such financing statements in jurisdictions where Debtor's
signature is required. The Debtor promises to pay the Secured Party the
fees incurred in filing the financing statements, which fees shall become
part of the Liabilities secured by this Agreement.
6.03 INSPECTION OF COLLATERAL AND RECORDS. The Secured Party may
examine and inspect the Collateral and records and documents related to
the Collateral at any time, wherever located.
6.04 ASSIGNMENT OR SALE. Debtor, its agents, servants, or
employees will not sell, assign, or offer to sell or assign or otherwise
transfer the Collateral, either in whole or in part, or any interest
therein without the written consent of the Secured Party.
6.05 PAYMENT OF TAXES AND INSURANCE. Debtor will pay promptly all
taxes and assessments upon or with respect to the Collateral. Debtor
hereby authorizes Secured Party to discharge taxes, assessments, liens,
security interests, or other encumbrances at any time levied or placed on
the Collateral, to pay for any insurance on the Collateral required to be
maintained by Debtor hereunder, and to pay for, make, or provide for any
maintenance, repair, or preservation of the Collateral as the Secured
Party shall deem reasonably necessary to preserve its interests; provided,
however, that Secured Party shall be under no obligation to do so. Debtor
agrees to reimburse Secured Party on demand with interest at the rate set
forth in the Note for any payment made or any expense incurred by Secured
Party pursuant to the foregoing authorization. Payments made or expenses
incurred by Secured Party pursuant to the foregoing authorization shall be
included in the Liabilities secured hereunder.
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<PAGE> 35
6.06 ADDITIONAL REPRESENTATIONS OF DEBTOR (COLLATERAL). With
respect to all of the Collateral:
6.06(a) Such Collateral is used or bought primarily for
business purposes.
6.06(b) Such Collateral is being acquired with the proceeds
of the Note.
6.06(c) All such Collateral will be kept at the address of
Debtor shown below Debtor's signature. Debtor will promptly
notify Secured Party of any change in the location of the
Collateral. Except for transactions in the ordinary course of
Debtor's trucking business, Debtor, its agents or employees will
not remove such Collateral from said location without the prior
written consent of the Secured Party.
6.06(d) If certificates of title are issued or outstanding
with respect to such Collateral, the Debtor will cause the Secured
Party's interest to be properly noted thereon.
6.06(e) Debtor has and will maintain insurance on such
Collateral to the extent and against such hazards and liabilities
as is commonly done by companies of like nature, similarly
situated, including but not limited to public liability, theft,
fire (with extended coverage) insurance, and in the case of motor
vehicles, collision insurance, all containing such terms and for
such periods as may be reasonably satisfactory to the Secured
Party; provided, however, that Debtor may self-insure the
Collateral against physical damage up to an aggregate of $500,000
and provide insurance against catastrophic loss thereof in excess
of such self-insurance amount. All such insurance will be
maintained with insurance companies reasonably acceptable to the
Secured Party and will be payable to the Secured Party and to the
Debtor as their interests may appear. All insurance policies shall
provide for a minimum of ten (10) days' written cancellation
notice to the Secured Party and, at the Secured Party's request,
all policies shall be delivered to and held by the Secured Party.
If at any time the Secured Party is of the opinion that the
Debtor's insurance coverage is inadequate, the Debtor will, within
ten (10)
4
<PAGE> 36
days after written request by the Second Party, obtain such
insurance as the Secured Party shall reasonably request. Secured
Party is hereby made attorney-in-fact for Debtor to obtain,
adjust, and settle, in its sole discretion, such insurance and to
endorse any drafts or checks issued in connection with such
insurance.
6.06(f) Debtor agrees to prevent and protect against any
waste, damage, or destruction of such Collateral, and Debtor will
maintain the same in as good condition as it now is in, ordinary
and reasonable wear and tear excepted.
6.07 NAME OF DEBTOR. Debtor's name has always been as set forth on
the first page of this Agreement, except as otherwise disclosed in writing
to the Secured Party. Debtor will promptly advise the Secured Party in
writing of any change in Debtor's name.
7. SET OFF. The Secured Party is hereby given a continuing lien as
additional security for the Liabilities hereunder upon any and all monies,
securities, and other property of Debtor, and the proceeds thereof, now or
hereafter held or received by or in transit to the Secured Party from or for
Debtor, whether for safekeeping, custody, pledge, transmission, collection, or
otherwise, and also upon any and all deposit balances (general or special) and
credits of Debtor with, and any and all claims of Debtor against, the Secured
Party at any time existing, and upon an event of default hereunder, the Secured
Party may apply or set off the same against the Liabilities hereby secured.
8. EVENTS OF DEFAULT. Debtor shall be in default under this Agreement upon
the happening of any of the following events or conditions which is not
completely cured within any specific time period provided in any Loan Document:
8.01 Any Event of Default or failure to perform any obligation,
covenant, or liability contained or referred to herein, in the Notes, the
Loan Agreement, or any other Loan Document.
8.02 Assignment, transfer, or encumbrance or any unreimbursed loss,
theft, damage or destruction to or of any part of the Collateral (except
for sales or encumbrances of Collateral expressly authorized by the terms
of this Agreement), or any levy, seizure, injunction, or attachment
thereon.
9. RIGHTS AND REMEDIES UPON DEFAULT. Upon occurrence of any of the above
events of default, the Secured Party shall have the following rights which shall
be cumulative with all other rights and remedies of Secured Party:
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9.01 ACCELERATION AND OTHER RIGHTS. The right to declare all
Liabilities secured hereby to be immediately due and payable without
notice to or demand upon the Debtor or any other person. The Secured
Party, in addition to any remedies it may exercise under this Security
Agreement, the Note, under other documents executed in connection with the
Liabilities secured hereby, or under applicable law, may immediately and
without demand, exercise any and all of the rights of a secured party upon
default under the Alabama Uniform Commercial Code, all of which shall be
cumulative. Such rights shall include, without limitation:
9.01(a) The right to take possession of the Collateral
without judicial process and to enter upon any premises where the
Collateral may be located for the purposes of taking possession
of, securing, removing, and/or disposing of the Collateral without
interference from the Debtor and without any liability for rent,
storage, utilities or other sums.
9.01(b) The right to sell, lease, or otherwise dispose of
any or all of the Collateral, whether in its then condition or
after further processing or preparation, at public or private
sale. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized
market, the Secured Party shall give the Debtor at least five (5)
days' prior notice of the time and place of any public sale of the
Collateral or of the time after which any private sale or other
intended disposition of the Collateral is to be made, all of which
the Debtor agrees shall be reasonable notice of any sale or
disposition of the Collateral.
9.01(c) Upon request of Secured Party, Debtor shall
assemble and make the Collateral available to Secured Party at a
place reasonably convenient to Debtor and Secured Party.
9.02 ATTORNEY-IN-FACT . To effectuate the rights and remedies
of the Secured Party upon default, Debtor does hereby irrevocably appoint
Secured Party attorney-in-fact for the Debtor, with full power of
substitution to, after default of Debtor, sign, execute, and deliver any
and all instruments and documents and do all acts and things to the same
extent as Debtor could do, and to sell, assign, and transfer any
Collateral to Secured Party or any other party.
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9.03 RECEIVER. Secured Party shall have the right to apply for and
have a receiver appointed by a court of competent jurisdiction, in
connection with any action taken by the Secured Party to enforce its
rights and remedies hereunder, to manage, protect, and preserve the
Collateral and continue the business of the Debtor, to collect all
revenues and profits thereof, and to apply the same to the payment of all
expenses and other charges of such receivership, including but not limited
to the compensation of the receiver, and to the payment of Liabilities
secured hereby, until a sale or other disposition of such Collateral shall
be finally made and consummated, or until all Liabilities secured hereby
shall have been paid.
9.04 PROCEEDS OF SALE; DEFICIENCY. The proceeds of any sale or
other disposition of Collateral by the Secured Party shall be applied
first to the expenses (including, but not limited to legal expenses and
reasonable attorneys' fees) of retaking, holding, storing, and processing
the Collateral and preparing the Collateral for sale, selling and the like
and collecting or attempting to collect the Liabilities secured by this
Agreement; then to the satisfaction of the Liabilities secured hereby with
the application of such proceeds to particular Liabilities or to interest
or principal as the Secured Party, in its sole discretion, shall
determine; and the balance, if any, to be paid to Debtor or to be paid as
otherwise provided by Law. The enumeration of the foregoing rights is not
intended to be exhaustive, and the exercise of any right shall not
preclude the exercise of any other rights, all of which shall be
cumulative. Debtor agrees that any delay by the Secured Party in
exercising any right or remedy hereby granted shall not be construed as a
waiver by the Secured Party of any of its rights or remedies hereunder.
Secured Party may permit the Debtor to remedy any default, but such shall
not be a waiver of the default so remedied, and Secured Party's waiver of
any default shall not be a waiver of any subsequent or prior defaults.
10. WAIVERS. In addition to any other waivers, as set forth herein or in
the Note, against the Liabilities secured hereby, Debtor expressly waives, to
the extent allowed by law, all claims and rights to claim any exemptions allowed
or allowable under the Constitution or laws of the United States, the State of
Alabama, or any other jurisdiction. All rights and remedies of Secured Party
hereunder or with respect to Liabilities or Collateral shall be cumulative, and
in addition to any other right available to Secured Party by statute or at law
or in equity, and may be exercised singularly or concurrently. In the event that
any one or more of the terms or provisions of this Agreement or of the Note
shall be invalid, illegal, or unenforceable in any respect, the validity of the
remaining terms or provisions shall in no way be affected, prejudiced or
disturbed thereby.
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11. ASSIGNMENT OF LIABILITIES. If at any time or times by sale,
assignment, negotiation, pledge, or otherwise, Secured Party transfers any or
all of the Liabilities, such transfer shall, unless otherwise specified in
writing, carry with it Secured Party's rights and remedies under this Agreement
with respect to such Liabilities transferred, and the transferee shall become
vested with such rights and remedies whether or not they are specifically
referred to in the transfer. If and to the extent Secured Party retains any of
the Liabilities, Secured Party shall continue to have the rights and remedies
herein set forth with respect thereto.
12. NOTICES. Any demand upon or notice to Debtor that the Secured Party
may elect to give shall be effective if hand delivered to Debtor, deposited in
the United States mail, postage prepaid, return receipt requested, or delivered
to a telegraph company addressed to Debtor at the address shown below Debtor's
signature, or if Debtor has notified the Secured Party in writing of a change of
address, to Debtor's last address so notified. Demands or notices addressed to
Debtor's address at which the Secured Party customarily communicates with Debtor
shall also be effective.
13. AGREEMENT UNDER SEAL. This Agreement is given under the seal of all
persons signing as and for the Debtor. It is intended by Debtor and all persons
signing for Debtor that this instrument is and shall constitute a sealed
instrument according to law.
14. HEADINGS. The headings of the sections, paragraphs, and subdivisions
of this Agreement are for convenience of reference only, are not to be
considered a part hereof, and shall not limit or otherwise affect any of the
terms hereof.
15. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure
to and bind not only the parties hereto, but also their respective heirs,
executors, administrators, successors, and assigns.
16. APPLICABLE LAW. This Agreement, the Note, and the Loan Documents,
except as may otherwise be provided therein, shall be construed and governed,
and their validity determined, according to the laws of the State of Alabama.
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<PAGE> 40
IN WITNESS WHEREOF, the undersigned Debtor and Secured Party have caused
this Agreement to be duly executed and delivered effective on the 28 day of
February ___, 1996.
DEBTOR:
ATTEST: BOYD BROTHERS TRANSPORTATION
COMPANY, INC.
By: /s/ Gail Cooper By: /s/ Richard Bailey
- -------------------------------- -----------------------------------
Its: Secretary Its: CFO
------------------------- -------------------------------
Debtor's address: Route 1, Box 40
Clayton, Alabama 36016
WITNESS: SECURED PARTY:
COMPASS BANK
/s/ Jeanette Wilson By: /s/ Billy V. Houston
- -------------------------------- -----------------------------------
Mary Williams Its: Billy V. Houston - CEO
-------------------------------
Secured Party's address: 223 E. Broad Street
Eufaula, Alabama 36027
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<PAGE> 41
STATE OF ALABAMA )
COUNTY OF Barbour )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that Richard Bailey, whose name as CFO of BOYD BROTHERS
TRANSPORTATION COMPANY, INC., an Alabama corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me on this day that,
being informed of the contents of the above and foregoing instrument, he, as
such officer and with full authority, executed the same voluntarily for and as
the act of said corporation.
Given under my hand and official seal of office this 28 day of
February, 1996.
/s/ Elaine Gray
----------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 4-27-98
-----------
STATE OF ALABAMA )
COUNTY OF Barbour )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that Billy V. Houston, whose name as CEO of COMPASS BANK,
an Alabama banking corporation, is signed to the foregoing instrument, and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the above and foregoing instrument, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and official seal of office this 28 day of
February, 1996.
/s/ Jeanette Wilson
----------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 7-23-96
-------
10
<PAGE> 1
EXHIBIT 10.2
CREDIT AND SECURITY AGREEMENT
THIS CREDIT AND SECURITY AGREEMENT is being executed and entered into
as of the 29th day of May, 1998, by and among BOYD BROTHERS TRANSPORTATION
COMPANY, INC., an Alabama corporation, which conducts its business at Route 1,
Box 40, Clayton, Alabama 36016 ("BORROWER", whether one or more) and COMPASS
BANK, an Alabama state banking corporation, 223 E. Broad Street, Eufaula,
Alabama 36027 ("BANK").
PREAMBLE
BORROWER has applied to BANK for, and BANK has agreed, upon the terms
and subject to the conditions herein set forth, to extend to BORROWER, a loan in
the amount of up to FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($4,500,000.00) (the "LOAN") the proceeds of which are to be made available to
Borrower for use between the date hereof and May 29th, 1999 (the "ADVANCE
PERIOD") for BORROWER to finance the purchase of tractors and flatbed trailers
to be used in BORROWER'S trucking business (collectively, the "TRUCK
EQUIPMENT"), including Forty Five (45) tractors and Fifty Five (55 ) new 1998
Utility 45-foot flatbed trailers.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the mutual
obligations of the parties as contained herein, and for other good and valuable
consideration, the
<PAGE> 2
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 "BORROWER'S LOAN ACCOUNT" means the account on the books
of BANK in which will be recorded loans and advances made by BANK to BORROWER
pursuant to this Agreement, payments made on such loans and other appropriate
debits and credits as provided by this Agreement.
Section 1.02 "COLLATERAL" means any and all property of BORROWER in
which BANK now has, by this Agreement, or by any other Loan Document acquires,
or hereafter acquires, a security interest.
Section 1.03 "EQUIPMENT" means all tangible personal property
including, without limitation, machinery, furniture and furnishings now owned or
hereafter acquired for use primarily in the business of BORROWER.
Section 1.04 "INDEBTEDNESS" means all indebtedness, liabilities and
obligations, matured or unmatured, liquidated or unliquidated, direct or
indirect, primary, secondary, absolute or contingent, and whether arising by
contract, operation of law or otherwise, including without limitation,
obligations to creditors (including without limitation BANK), for borrowed money
or the deferred purchase price of property or services, and all obligations
under real property leases and under leases of personal property.
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<PAGE> 3
Section 1.05 "INSOLVENCY" of BORROWER or any other person means that
there shall have occurred with respect to that person one or more of the
following events: dissolution, termination of existence, insolvency, business
failure, appointment of a receiver of any part of the property of, assignment
for the benefit of creditors by, or the filing of a petition in bankruptcy or
the commencement of any proceedings under any bankruptcy or insolvency laws, or
any laws relating to the relief of debtors, readjustment of indebtedness,
reorganization, composition or extension, by or against such person, or if any
action shall be taken for the purpose of effecting any of the foregoing.
Section 1.06 "LIABILITIES" means any and all liabilities of BORROWER to
BANK of every kind and description, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, regardless of how they
arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument. "Liabilities" includes obligations to
perform acts and refrain from taking action as well as obligations to pay money.
Section 1.07 "LOAN DOCUMENTS" means this Agreement, the Note (as
defined in Section 2.04 hereof), the Security Agreement from BORROWER to BANK
dated as of the date hereof, and all other documents and instruments evidencing,
securing, guaranteeing, relating to, or executed or delivered in connection with
the Loan.
Section 1.08 UNDEFINED TERMS. Except as otherwise defined in this
Agreement, whether in this Article I, or in a parenthetical or other reference
in this
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<PAGE> 4
Agreement, accounting terms used herein shall have the meanings given to them
under generally accepted accounting principles, and terms defined in the Alabama
Uniform Commercial Code, as the same may be amended from time to time, shall
have the meanings given them in the Code.
ARTICLE II
THE LOAN
Section 2.01 LOAN. Subject to the terms and conditions hereof, from and
after the date hereof and until May 29th, 1999, and so long as BANK has not
demanded payment in full under the Note and BORROWER shall not be in default
hereunder or with respect to any other Liability to BANK, the BANK will make
advances under the Loan to BORROWER, or directly to BORROWER'S suppliers, up to
a maximum aggregate principal amount of $4,500,000 to pay for BORROWER'S
purchase of the Truck Equipment to be used as Equipment in BORROWER'S business
("ADVANCES"). BANK may, but shall not have any obligation to, make any Advances
hereunder at any time after or during which an Event of Default (as defined
herein) shall have occurred or exists.
Section 2.02 BORROWER'S LOAN ACCOUNT. All such Advances shall be
entered as debits in the BORROWER'S Loan Account. BANK may, if it so elects,
require each request for any Advance pursuant to this Agreement to be
accompanied by certification of the number, identity and continued use of Truck
Equipment purchased with the proceeds of the Loan, in form and substance
satisfactory to BANK.
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<PAGE> 5
BANK shall also record in the BORROWER'S Loan Account, in accordance with
customary accounting practice, all other charges, expenses and other items
properly chargeable to BORROWER; all payments made by BORROWER on account of
Indebtedness evidenced by BORROWER'S Loan Account; and other appropriate debits
and credits. The debit balance of BORROWER'S Loan Account shall reflect the
amount of BORROWER'S Indebtedness to BANK from time to time by reason of
Advances and other appropriate charges hereunder.
Section 2.03 USE OF LOAN PROCEEDS. The Loan proceeds shall be used by
BORROWER to finance its purchase of the Truck Equipment.
Section 2.04 NOTE. Each Advance under the Loan shall be evidenced by a
separate promissory note (collectively, the "NOTE"), in form and substance
acceptable to BANK. Each Note shall bear interest from the date of the Advance
thereunder at the rate and calculated in the manner provided therein, and shall
be otherwise payable as set forth therein; provided, however, that in the event
that Borrower's demand deposit balances at Bank shall be less than $200,000.00
at any time, the applicable rate under each Note shall be increased by
one-fourth of one percentage point (1/4%) over the applicable rate stated
therein. Dates and amounts of Advances, and payments received by BANK, shall be
evidenced by entries upon the books and records of BANK, and shall be reflected
in monthly statements, which shall be conclusive evidence of such dates and
amounts of Advances, and payments.
Section 2.05 DURATION; EXTENSION. Availability of funds under the Loan
shall terminate on May 29, 1999; provided, however, that the parties recognize
that
5
<PAGE> 6
they may wish to extend the expiration date by mutual agreement to be negotiated
prior to such expiration date. It is understood that any extension may require a
revision of certain provisions of this Agreement.
ARTICLE III
SECURITY FOR LOAN
Section 3.01 SECURITY INTEREST OF BANK IN COLLATERAL. As security for
the payment and performance of all Liabilities, BANK shall have, and is hereby
granted a continuing security interest in the following Collateral, whether now
owned or existing or hereafter created, acquired or arising and wheresoever
located:
(a) (i) The Truck Equipment described on Exhibit "A" hereto and
(ii) all Truck Equipment or other Equipment and other personal property of
BORROWER purchased with the proceeds of the Loan;
(b) All goods, instruments, certificates or other documents of
title, policies and certificates of insurance, securities, chattel paper,
deposits, cash or other property owned by BORROWER or in which BORROWER has an
interest which are now or may hereafter be in the possession of BANK or as to
which BANK may now or hereafter control possession by documents of title or
otherwise;
(c) Proceeds and products (including tort and insurance claims) of
all of the foregoing.
Section 3.02 AFTER-ACQUIRED PROPERTY. No submission by BORROWER is
necessary to vest in BANK a security interest in hereafter created or acquired
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<PAGE> 7
Collateral, but, rather such title and security interest shall vest in BANK
immediately upon the creation or acquisition of any item of Collateral, without
the necessity for any other or further action by BORROWER or BANK.
Section 3.03 OTHER APPLICABLE LAW. If, by reason of location of
Collateral or otherwise, the creation, validity or perfection of security
interests provided for herein are governed by the law of a jurisdiction other
than Alabama, BORROWER shall take such steps and execute and deliver such papers
as BANK may from time to time request to comply with the Uniform Commercial
Code, the Uniform Trust Receipts Act, the Factors Lien Act or other laws of
another state or states.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce BANK to enter into this Agreement, BORROWER represents and
warrants as follows:
Section 4.01 ORGANIZATION AND AUTHORITY. Each BORROWER (a) is an
Alabama corporation which is duly organized, validly existing and in good
standing under the laws of the State of Alabama; (b) has all necessary corporate
power and authority, and possesses all licenses and permits as are required for
BORROWER to own its assets and conduct its business as now conducted or
presently proposed to be conducted; (c) has no subsidiaries other than Boyd
Brothers Truck and Tractor; and (d) is duly qualified and in good standing in
the State of Alabama and in every other
7
<PAGE> 8
jurisdiction wherein its ownership or leasing of assets or conduct of its
business makes such qualification necessary.
Section 4.02 BORROWER'S AUTHORIZATION. The execution, delivery and
performance of this Agreement, the Note, the Security Agreement, and the other
Loan Documents, the granting of the power of attorney under Section 8.03 hereof,
and the borrowing hereunder and under the Note, are within BORROWER'S corporate
powers and authority, have been duly and validly authorized by all necessary
corporate and other action including, without limitation, any necessary
shareholder action, are not in contravention of law or the terms of BORROWER'S
Articles of Incorporation, ByLaws or other incorporation documents, or of any
indenture, agreement or undertaking or any law, regulation, or order to which
BORROWER is a party or by which it is bound.
Section 4.03 ENFORCEABILITY. Upon execution and delivery hereof and
thereof, this Agreement, the Note, the Security Agreement, and the other Loan
Documents will constitute valid and binding obligations of the respective
parties thereto, enforceable in accordance with their respective terms.
Section 4.04 OWNERSHIP OF COLLATERAL. Except for the security interests
granted in connection herewith, or heretofore granted to BANK, BORROWER is, and
as to assets to be acquired after the date hereof, shall be, the owner of all
Collateral with respect to which it grants a security interest hereunder, free
from any lien, security interest or encumbrance, and BORROWER shall defend its
assets against all
8
<PAGE> 9
claims and demands of all persons at any time claiming the same or any interest
therein.
Section 4.05 OTHER COLLATERAL. At the time BORROWER pledges, sells,
assigns, or transfers to BANK any instrument, document of title, security,
chattel paper or other property or any interest therein, BORROWER shall be the
lawful owner thereof and shall have good right to pledge, sell, assign or
transfer the same; none of such property shall have been pledged, sold, assigned
or transferred to any person other than BANK or in any way encumbered; and
BORROWER shall defend the same against the lawful claims and demands of all
persons.
Section 4.06 FINANCIAL INFORMATION. Subject to any limitations stated
therein or in connection therewith, all financial statements which have been or
may hereafter be furnished to BANK to induce it to enter into this Agreement, to
extend credit from time to time hereunder, or otherwise in connection herewith,
do or shall fairly represent the financial condition of BORROWER or other person
or entity reported on therein, as of the dates and, in the case of BORROWER, the
results of its operations for the periods for which the same are furnished, in
accordance with generally accepted accounting principles consistently applied,
and all other information, reports and other papers and dates furnished to BANK
are or shall be, at the time the same are so furnished, accurate and correct in
all material respects and complete insofar as completeness may be necessary to
give BANK a true and accurate knowledge of the subject matter. There has been no
material adverse change in the business, properties, prospects, or condition
(financial or otherwise) of the
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BORROWER since the dates of the most recent financial statements provided to the
BANK. BORROWER has good and marketable title to all the properties and assets
reflected on its balance sheet furnished to BANK, free and clear of mortgages,
pledges, liens, charges and other encumbrances, other than encumbrances in favor
of BANK and encumbrances securing indebtedness reflected on such balance sheet.
Section 4.07 NO VIOLATIONS. BORROWER is not now in default under any
agreement evidencing an obligation for the payment of money, performance of a
service or delivery of goods, the demand for performance under which, or
acceleration of the maturity of which, would render BORROWER insolvent or unable
to meet its other debts as they become due or conduct its business as usual.
Section 4.08 LITIGATION. There is no action, suit, or proceeding at law
or in equity or by or before any governmental instrumentality or other agency
now pending, or, to the knowledge of the BORROWER, threatened or in prospect
against or affecting the BORROWER or any properties or rights of the BORROWER,
which, if adversely determined, would (i) materially impair the right of the
BORROWER to carry on business substantially as now conducted or (ii) materially
and adversely affect the financial condition of the BORROWER. BORROWER is not
currently affected by any strike or other labor disturbance nor is BORROWER in
default in any material respect under any judgment, order, injunction, rule,
ruling, of any court or governmental commission, agency, or instrumentality.
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ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01 FINANCIAL STATEMENTS. BORROWER shall furnish or cause to
be furnished to BANK, (a) on a quarterly basis, within sixty (60) days after the
end of each quarter, internally prepared profit and loss statements for
BORROWER; and (b) on an annual basis, audited year-end financial statements
prepared by a certified public accountant acceptable to BANK. Statements
required under Section 5.01(b) immediately preceding shall be provided as soon
as available after the end of the fiscal period reported on therein, but no
later than ninety (90) days after the end of such period. In addition, BORROWER
shall furnish BANK, on an annual basis, year-end financial statements on any
guarantor of the Loan in a form acceptable to BANK, as soon as available, but no
later than 60 days after the end of each year.
Section 5.02 CERTIFICATIONS. All statements and reports required by
this Article V shall be certified as true and correct by the President or a
Vice-President of BORROWER, or in the case of Guarantor, by or on behalf of the
Guarantor.
Section 5.03 EXPENSES. BORROWER shall pay any and all taxes, charges
and expenses of every kind or description paid or incurred by BANK under or with
respect to the Loan or any Collateral therefor or the collection of or
realization upon the same. BORROWER hereby authorizes BANK to charge interest,
charges, taxes and expenses provided for herein to BORROWER'S Loan Account.
Section 5.04 INSURANCE. BORROWER shall have and maintain at all times
liability insurance and, with respect to the Collateral and other assets of
BORROWER,
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insurance against risks of fire, so-called extended coverage, and other risks
customarily insured against by companies engaged in similar business to that of
BORROWER, in amounts, containing such terms, in such form, for such periods and
written by such companies as may be satisfactory to BANK. Where insurance covers
Collateral for loans to BORROWER from BANK, such insurance shall be payable to
BANK and to BORROWER as their interests may appear, pursuant to a long-form New
York standard non-contributory mortgagee clause or endorsement. All policies of
insurance shall provide for ten (10) days' written minimum cancellation notice
to BANK. In the event of BORROWER'S failure to provide and maintain insurance as
herein provided, BANK may, at its option, provide such insurance and charge the
amount thereof to the BORROWER'S Loan Account or add the same to the principal
balance of the Loan. BORROWER shall furnish to BANK certificates or other
evidence satisfactory to BANK of compliance with the foregoing insurance
provisions. Notwithstanding anything to the contrary contained or implied
herein, BORROWER may self-insure its fleet of vehicles (including the
Collateral) as to physical damage, but shall obtain insurance against
catastrophic loss (in excess of an aggregate of $500,000) of Collateral and
other assets. BORROWER shall provide BANK evidence satisfactory to BANK the
existence of such catastrophic insurance, which policy of insurance shall name
BANK as loss payee pursuant to a New York standard non-contributory endorsement
or clause. In the event of any loss with respect to any item of Collateral,
BORROWER will make an additional payment under the Loan in an amount equal to
the portion of the outstanding Loan balance representing the
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purchase money advanced against the Collateral with respect to which such loss
has occurred.
Section 5.05 INFORMATION REGARDING COLLATERAL. BORROWER shall furnish
to BANK information adequate to identify and evaluate the Collateral at times
and in form and substance as may be requested by BANK.
Section 5.06 REGISTRATION AND TITLING. BORROWER shall cause all
Collateral that is required to be registered, to be properly registered in
BORROWER'S name, and will cause the title certificates for all Collateral to
reflect BORROWER'S ownership and BANK'S lien.
Section 5.07 RECORDS REGARDING COLLATERAL. BORROWER shall give BANK
written notice of each location at which Collateral and records regarding
Collateral are or will be kept other than for temporary processing, storage or
like purposes. Except as such notice is given, and except as Collateral is moved
from place to place in the ordinary course of BORROWER'S trucking business, all
Collateral and records are and shall be kept at BORROWER'S address as it appears
in Section 10.04 of this Agreement.
Section 5.08 INSPECTION. BORROWER shall at all reasonable times and
from time to time allow BANK, by or through any of its officers, agents,
attorneys, or accountants, to examine, inspect or make extracts from BORROWER'S
books and records and to arrange for verification of Collateral, under
reasonable procedures and by reasonable methods, and shall do, make, execute and
deliver all such additional and further acts, things, deeds, assurances and
instruments as the BANK may require
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more completely to vest in and assure to the BANK its rights hereunder or in any
Collateral.
Section 5.09 TAXES. BORROWER will promptly pay or cause to be paid all
taxes, customs fees, and freight charges on the Collateral and will at all times
keep the Collateral free and clear of all liens and claims whatsoever, other
than the security interests granted hereby. BORROWER agrees to do and cause to
be done all things that the BANK may request to establish and maintain a valid
title and security interest in the Collateral, free of all other liens and
claims whatsoever, to secure the payment of the Liabilities. If such taxes or
other assessments remain unpaid after the date fixed for the payment of the
same, or if any lien shall be claimed which, in the opinion of the BANK, could
create a valid obligation having priority over the rights of the BANK in the
Collateral, the BANK may, without notice to the BORROWER, pay such taxes,
assessments, charges or claims, and the BORROWER unconditionally promises to
reimburse BANK for any amounts so paid upon demand.
Section 5.10 CONTINUED EXISTENCE. Protection of Property. Insurance.
BORROWER shall do or cause to be done all that is necessary (a) to preserve its
existence and in keep in full force and effect all of its governmental permits,
licenses, charters, consents and franchises, and to comply with all applicable
laws; (b) to conduct and operate its business in a prudent and careful manner;
(c) to preserve its properties; and (d) subject to the limitation regarding
self-insurance in Section 6.04 hereof, to maintain adequate insurance with
insurance companies of recognized responsibility, including without limitation,
(i) insurance coverage to such extent and
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against such risks, including fire, casualty, and theft, as is customary in
BORROWER'S business, (ii) necessary workmen's compensation insurance; (iii) such
other insurance or bonds as may be required by law or reasonably requested in
writing by BANK; and (iv) pay all taxes applicable to it or levied against any
of its properties as and when the same shall become due and payable.
Section 5.11 RECORDS. BORROWER shall keep or cause to be kept accurate
records concerning its business and shall maintain or cause to be maintained a
system of accounting and proper books of record and account in accordance with
general accepted accounting principles applicable to the particular entity, and
will set aside on its books all proper and adequate reserves for taxes,
depreciation, depletion, obsolescence, loan losses, amortization, contract
cancellations, defaults, or other breaches of contract, and otherwise as may be
appropriate in accordance with said principles.
Section 5.12 CERTIFICATES. On a quarterly basis, and at such other
times as BANK shall request, BORROWER shall supply to BANK a written certificate
as to the following:
(i) that there does not exist any default or Event of Default, or
any condition or event which, with the giving of notice or the passage
of time, or both, would constitute such an Event of Default, under the
Agreement, the Note, or any other Loan Documents;
(ii) that all representations, warranties and covenants contained
in this Agreement and the other Loan Documents remain true and
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accurate through the date of such certificate, except as may be noted
and acceptable to BANK;
(iii) that all conditions precedent to BANK'S obligation to make
advances under the Loan have been and remain fully satisfied; and
(iv) that all of the Collateral is in good repair and useful in
BORROWER'S business.
Section 5.13 NOTICE OF ADVERSE EVENTS. BORROWER shall promptly notify
BANK of the filing of any notice, suit, claim, action, proceeding, or
investigation in or by any court or by any governmental authority in which an
adverse decision reasonably could be expected to have a material adverse effect
upon the BORROWER, and shall promptly notify BANK of the occurrence of any
material adverse order, judgment, settlement, determination, or other adverse
event, or of any default or Event of Default or any condition or event which,
with the giving of notice or the passage of time, or both, would constitute such
an Event of Default, under this Agreement or under any of the other Loan
Documents. BORROWER also shall promptly notify BANK of the occurrence of any
other condition or event which could have a material adverse effect upon it.
ARTICLE VI
NEGATIVE COVENANTS
BORROWER covenants and agrees that from the date hereof until payment
in full of the Loan, and any other indebtedness and Liabilities, and the
termination of this
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Agreement, unless BANK shall otherwise consent in writing, BORROWER will not
either directly or indirectly:
Section 6.01 CASH FLOWS-TO-CURRENT MATURITIES OF LONG-TERM DEBT. Cause
or allow the ratio of BORROWER'S cash flows-to-current maturities of long-term
debt to be less than 1,3:1. As used in this Section, "CASH FLOWS" means net
profits less dividends, plus lease expense and depreciation and any other
expenses which would be classified as non-cash expenses in accordance with
generally accepted accounting principles and "CURRENT MATURITIES OF LONG TERM
DEBT" means the outstanding principal balance of indebtedness and lease expense
due within twelve (12) months.
Section 6.02 CONSOLIDATED NET WORTH. Cause or allow BORROWER'S
Consolidated Tangible Net Worth to be less than $14,800,000. As used herein,
"CONSOLIDATED TANGIBLE NET WORTH" means an amount equal to the Shareholders'
equity of the BORROWER (including capital stock, capital surplus and retained
earnings, but excluding any unpaid amounts due for sale of stock) less (i) the
book value of any shares of common stock of the BORROWER held by the BORROWER
and treated as an asset in computing such stockholder's equity, (ii) all
unamortized debt costs, patents, trade names, licenses, franchises, good will
and other intangible assets, (iii) the aggregate balance of loans, notes
receivable, accounts receivable and other advances to and or owing from
BORROWER'S affiliates, subsidiaries, shareholders, employees officers, directors
or any other related entity, and (iv) taxes, the payment of which has been
deferred. All financial ratios in this Agreement shall be determined
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on a combined basis in accordance with generally accepted accounting principles
applied on a consistent basis.
Section 6.03 NO ENCUMBRANCES ON COLLATERAL. BORROWER shall not pledge,
mortgage, sell, assign or create, or suffer to exist a security interest in
Collateral in favor of any person other than BANK.
Section 6.04 MANAGEMENT: OWNERSHIP. Cause or allow any material change
in the ownership or senior management of BORROWER, including without limitation
any change in the officers of the BORROWER at or above the level of its vice
president.
Section 6.05 DEBT-TO-TANGIBLE NET WORTH. Cause or allow the BORROWER'S
ratio of total debt (defined as all of BORROWER'S Indebtedness and Liabilities
to whomsoever the same may be owing, whether now or hereafter existing, created
or arising, absolute or contingent, direct or indirect, joint or several,
including without limitation, all indebtedness under the Loan)-to-Consolidated
Tangible Net Worth (as defined in Section 6.02 hereof) to be greater than 2:1.
Section 6.06 LOANS TO RELATED PARTIES. Cause or allow BORROWER'S loans
or other advances to BORROWER'S shareholders, officers, partnerships,
subsidiaries, affiliates, directors or other related entities to exceed
$2,000,000 at any time outstanding.
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ARTICLE VII
CONDITIONS
BANK'S obligation to make the Loan available to BORROWER, and to make
any advance thereunder, is subject to the full satisfaction of the following
conditions precedent:
Section 7.01 NO DEFAULT. There shall not exist any default or Event of
Default, or any condition or event which, after notice or lapse of time or both,
would constitute such an Event of Default hereunder or under any other Loan
Documents.
Section 7.02 OPINION OF COUNSEL. BANK shall have received from counsel
to BORROWER a favorable opinion in satisfactory scope and form as to all matters
reasonably requested by BANK.
Section 7.03 DELIVERY OF DOCUMENTS. Delivery to BANK of the purchase
orders and Certificates of Title for the Collateral to be purchased with the
proceeds of the requested advance, the duly-executed Note and Guaranty, and all
other documents or instruments which BANK shall require in connection with
making the Loan.
Section 7.04 TERMS AND CONDITIONS. Continued fulfillment and
satisfaction through the date hereof and as of the date of any requested advance
of all the terms, representations, warranties, conditions and covenants hereof.
Section 7.05 OFFICER'S CERTIFICATE. BANK shall have received a
certificate of the President or other officer authorized by resolution of
BORROWER stating that all representations and warranties contained in this
Agreement and all other Loan Documents are and remain true and accurate as of
the date of such advance and that there exists no default or Event of Default
hereunder or under any other Loan Document, or any condition or event which,
with the giving of notice or the passage
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of time, or both, would become an Event of Default hereunder or under any other
Loan Document.
ARTICLE VIII
DEFAULT AND REMEDIES ON DEFAULT
Section 8.01 EVENTS OF DEFAULT: ACCELERATION. At the option of BANK and
notwithstanding any time or credit allowed by any instrument evidencing any of
the Liabilities, any or all of the Liabilities of BORROWER or any other person
to BANK hereunder shall immediately become due and payable upon the occurrence
of any of the following events of default ("EVENTS OF DEFAULT"), without notice
or demand to BORROWER, Guarantor, or any other person: (a) default in the
payment or performance, when due or payable, of any of the Liabilities of
BORROWER or any other person or entity, or of any endorser or Guarantor for any
of the Liabilities of BORROWER or any other person or entity to BANK or the
occurrence of any Event of Default under any Loan Document; (b) failure of
BORROWER to pay any tax; (c) if any representation or warranty contained herein
is or becomes inaccurate or if BORROWER or Guarantor have made, or hereafter
make any misrepresentation to BANK for the purpose of obtaining credit or an
extension of credit; (d) failure of BORROWER to furnish or cause to be furnished
financial information or to permit or cause to be permitted the inspection of
books or records; (e) issuance of an injunction or attachment against property
of BORROWER or any Guarantor; (f) calling of a meeting of creditors, appointment
of a committee of creditors or liquidating agents, or offering
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of a composition or extension to creditors by, for or of BORROWER or any
endorser or Guarantor of any of the Liabilities of BORROWER to BANK; (g)
insolvency of BORROWER or any endorser or Guarantor of any of the Liabilities of
BORROWER to BANK; (h) such a material change in the condition or affairs
(financial or otherwise) of BORROWER or of any endorser or Guarantor of any of
the Liabilities of BORROWER to BANK as in the opinion of BANK impairs BANK'S
security or increases its risk; (i) failure by BORROWER or any Guarantor to
comply with any of the provisions of this Agreement; (j) failure to make any
payments required by this Agreement; (k) default shall be made with respect to
any Indebtedness (other than the Note) of the BORROWER or the Guarantor, when
due, or the performance of the other obligation incurred in connection with any
Indebtedness for borrowed money of the BORROWER, or the Guarantor, if the effect
of such default is to accelerate the maturity of such Indebtedness or to permit
the holder thereof to cause such Indebtedness to become due prior to its stated
maturity, or any such Indebtedness shall not be paid when due; or (i) if there
shall occur any default or Event of Default, or any condition or event which
with the giving of notice or the passage of time, or both, would become an Event
of Default, under, pursuant to or with respect to any Indebtedness or loan
transaction or any document or instrument evidencing, securing, guaranteeing, or
relating to any Indebtedness or loan transaction of BORROWER.
Section 8.02 RIGHTS UPON DEFAULT. Upon the occurrence of any one or
more of the above Events of Default and at any time thereafter, such default not
having previously been cured, BANK shall have, in addition to all other rights
and
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remedies, the remedies of a secured party under the Alabama Uniform Commercial
Code, regardless whether the Code has been enacted in the jurisdiction where
rights or remedies are asserted, including without limitation, the right to take
possession of the Collateral, and for that purpose BANK may, so far as BORROWER
or Guarantor can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom or store the same on
the premises pending disposition. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, BANK shall give to BORROWER at least five (5) days' prior
written notice of the time and place of any public sale of Collateral or of the
time after which any private sale or any other intended disposition is to be
made. Upon fifteen (15) days' prior written notice to BORROWER, BANK may at any
time in its discretion transfer any securities or other property constituting
Collateral into its own name or that of its nominee and receive the income
thereon and hold the same as security for Liabilities or apply it on principal
or interest due on Liabilities. Insofar as Collateral shall consist of insurance
policies, instruments, chattel paper, choses in action or the like, BANK may
demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose or
realize upon Collateral, as BANK may determine, whether or not Liabilities or
Collateral are then due, and for the purpose of realizing BANK'S rights therein,
BANK may receive, open and dispose of mail addressed to BORROWER and endorse
notes, checks, drafts, money orders, documents of title or other evidences of
payment, shipment or storage or any form of Collateral on behalf of and in the
name of BORROWER. The enumeration of the
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foregoing rights is not intended to be exhaustive, and the exercise of any right
shall not preclude the exercise of any other rights, all of which shall be
cumulative. As against the obligations secured hereby, BORROWER hereby expressly
waives all claims and all rights to claim any exemptions, both as to personal
and real property, allowed or allowable under the Constitution or laws of the
United States, the State of Alabama or any other jurisdiction. Any notice to
BORROWER of sale, disposition or other intended action by BANK, required by law
to be given to BORROWER, sent to BORROWER at the address of BORROWER shown
hereinabove or at such other address of BORROWER as may from time to time be
shown on BANK'S records, at least five days prior to such action, shall
constitute reasonable notice to BORROWER.
Section 8.03 POWER OF ATTORNEY. BORROWER hereby requests, authorizes
and empowers Billy V. Houston, or any other officer or employee of BANK who may
be designated by BANK for that purpose to make, execute and file, any financing
statements, documents or certificates of title, or other documents, and to take
any and all such other steps as BANK deems necessary or desirable to perfect and
continue the perfection of BANK'S security interest in the Collateral. No
failure by BANK to exercise for any period the powers herein granted shall
operate or be construed as a waiver of BANK'S rights thereafter to exercise such
authorizations and powers. The foregoing power of attorney is coupled with an
interest and shall be irrevocable so long as any Liabilities or Indebtedness
hereunder, under the Note, or under the other Loan Documents remain outstanding.
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Section 8.04 SET OFF. BANK hereby is given a continuing lien as
security for BORROWER'S obligations hereunder upon any and all moneys,
securities and other property of BORROWER, and the proceeds thereof, now or
hereafter held or received by or in transit to BANK from or for BORROWER,
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
and also upon any and all deposit balances, general or special, and credits of
BORROWER with, and any and all claims of BORROWER against BANK at any time
existing, and upon an Event of Default hereunder, BANK may apply or set off the
same against the Liabilities hereby secured.
ARTICLE IX
MISCELLANEOUS
Section 9.01 WAIVERS. BORROWER hereby waives demand, notice, protest,
notice of acceptance of this Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect both to
Liabilities and Collateral, BORROWER assents to any extension or postponement of
the time of payment or any other indulgence, to any substitution, exchange or
release of any Collateral which may now or hereafter secure Liabilities, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payments hereon and to the settlement, compromise or
adjustment of any thereof, all in such manner and at such time or times as BANK
may in its sole discretion deem advisable. BANK shall have no duty as to the
collection or protection of any Collateral
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or any income thereon, nor as to the preservation of rights against prior
parties, nor as to the preservation of any rights pertaining thereto beyond the
safe custody thereof. BANK may exercise its rights with respect to any
Collateral without resorting or regard to other Collateral or sources of
reimbursement for Liabilities. BANK shall not be deemed to have waived any of
its rights upon or under Liabilities or Collateral unless such waiver is in
writing and signed by BANK. No delay or omission on the part of BANK in
exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion. All rights and remedies of BANK with respect to
Liabilities or Collateral, whether evidenced hereby or by any other instrument,
shall be cumulative and may be exercised separately or concurrently.
Section 9.02 EXPENSES; PROCEEDS OF COLLATERAL. BORROWER shall pay to
BANK on demand any and all expenses, including reasonable attorneys' fees,
incurred or paid by BANK in collecting or otherwise protecting or enforcing or
attempting to collect, protect or enforce its rights upon or under Liabilities
or Collateral. After deducting all of said expenses, the residue of any proceeds
of collection or sale of Liabilities or Collateral shall be applied to the
payment of principal or interest on Liabilities, in such order of preference as
BANK may determine with proper allowance for interest on Liabilities not then
due being made, and any excess shall be returned to BORROWER and BORROWER shall
remain liable for any deficiency.
Section 9.03 AMENDMENT. No modification or amendment of this Agreement
shall be effective unless placed in writing and duly executed by the
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BORROWER and the BANK. By guaranteeing the Liabilities described herein,
Guarantor expressly agrees that BORROWER and BANK may, without notice to or
consent by Guarantor, modify or amend this Agreement. Neither party shall be
obligated in any respect to extend the termination date hereof.
Section 9.04 GENERAL. Any demand upon or notice that BANK may elect to
give to BORROWER and any notice required to be given to BANK shall be effective
three (3) days after the same has been deposited in the United States mail,
first class with postage prepaid and addressed to such party at the following
addresses, as applicable, if such party has notified BANK in writing of a change
of address, to the last address so notified:
IF TO BORROWER: Boyd Brothers Transportation Company, Inc.
Route 1, Box 40
Clayton, Alabama 36016
IF TO BANK: Compass Bank
223 E. Broad Street
Eufaula, Alabama 36027
Attention: City Executive
with a copy to: Don Owens
Vice President - Loan Administration
Compass Bank
P. O. Box 10566
Birmingham, Alabama 35296
Demands or notices addressed to BORROWER'S address at which BANK customarily
communicates with BORROWER, shall also be effective. If at any time or times by
assignment or otherwise BANK transfers any of the Liabilities or Collateral
therefor, such transfer shall include BANK'S power and rights under this
Agreement with
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respect to the Liabilities or Collateral transferred, and the transferee shall
become vested with said powers and rights whether or not they are specifically
referred to in the transfer. If and to the extent BANK retains any of the
Liabilities or Collateral, BANK will continue to have the rights and powers
herein set forth with respect thereto. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors, assigns,
heirs, personal representatives, and estates; provided, however, that BORROWER
shall not assign or delegate any of its rights or obligations hereunder without
the express written consent of BANK. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but when taken
together shall constitute one agreement. This Agreement is being executed under
the seal of the parties hereto and is intended to constitute and have effect as
a sealed instrument according to law.
Section 9.05 GOVERNING LAW; JURISDICTION. This Agreement, the Note, the
Security Agreement and the other Loan Documents, and the rights and the
obligations of the parties hereunder and thereunder, shall be governed by and be
construed in accordance with the laws of the State of Alabama. BORROWER
acknowledges that the negotiation of the provisions of the Note, this Agreement,
the Security Agreement, and all other Loan Documents took place in the State of
Alabama; that all of such documents were executed in Jefferson County, Alabama,
or if executed elsewhere, will be or were delivered to BANK in said county and
state subject to BANK'S acceptance thereof in Birmingham, Jefferson County,
Alabama, and that all of such documents were or will be executed and delivered
to BANK to induce BANK to extend
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the Loan to BORROWER. BANK shall be under no obligation to give BORROWER notice
of acceptance of any Loan Documents for said documents and instruments to become
effective. BORROWER acknowledges further that the negotiation, execution and
delivery of this Agreement, the Note, the Security Agreement and the other Loan
Documents constitutes the transaction of business within the State of Alabama
and that any cause of action arising under any of said documents will be a cause
of action arising from such transaction of business. BORROWER hereby submits
itself to jurisdiction in the State of Alabama for any cause of action or action
arising out of or in connection with this Agreement, the Note, or any of the
other Loan Documents, and agrees that venue for any such action shall be in
Jefferson County, Alabama, and waives any and all rights under the laws of any
state to object to jurisdiction or venue within Jefferson County, Alabama.
Notwithstanding the foregoing, nothing contained in this Section 9.05 shall
prevent BANK from bringing any action or exercising any rights against BORROWER,
any security for the Loan or against any of BORROWER'S properties in any other
State or jurisdiction. Initiating any such action or proceeding or taking any
such action in any other state shall in no event constitute a waiver by BANK of
any of the foregoing.
Section 9.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
covenants, agreements, representations, and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by the BANK of
the Loan herein contemplated and the execution and delivery to the BANK of the
Note evidencing such Loan and shall continue in full force and effect so long as
the Note
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is outstanding and unpaid. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises, and agreements by or on
behalf of the BORROWER which are contained in this Agreement shall bind the
successors and assigns of BORROWER and inure to the benefit of the successors
and assigns of the BANK; provided, however, that BORROWER shall not assign or
delegate this Agreement, the Loan, or its rights, duties, or obligations
hereunder without the written consent of BANK.
Section 9.07 NO CONFLICT, ETC. No provision of this Agreement or of the
Note or the other Loan Documents shall be deemed in conflict with any other
provision thereof, and the BORROWER acknowledges that no such provisions or any
interpretation thereof shall be deemed to diminish the rights of the BANK, any
assignee, or the holder or holders of the Note under the terms and conditions or
any other provisions thereof. BANK may at its option exhaust its remedies
hereunder, under the Note, and under the other Loan Documents, either
concurrently or independently, and in such order as it may determine.
Section 9.08 HEADINGS; UNDER SEAL; ENTIRE AGREEMENT; NO THIRD PARTY
BENEFICIARY. Article and section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement or be used to construe any provision hereof or for any other purpose.
This Agreement is intended to be under the seal of all parties hereto and to
have the effect of a sealed instrument in accordance with the law. This
Agreement, together with the other Loan
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<PAGE> 30
Documents, embodies the entire agreement and understanding between the parties,
supersedes all prior agreements and understandings related to the Loan, and may
not be amended except by written agreement between BORROWER and BANK. This
Agreement shall not benefit, and may not be relied upon by, any person other
than the persons who sign this Agreement. There are no third party beneficiaries
to this Agreement or any negotiations, statements, or representations related to
this Agreement.
Section 9.09 NO PARTNERSHIP OR JOINT VENTURE. Notwithstanding anything
to the contrary herein contained or implied, BANK, by this Agreement, or by any
action pursuant thereto or hereto, shall not be deemed a partner, joint
venturer, or participant in the venture with BORROWER, and BORROWER hereby
indemnifies and agrees to defend and hold BANK harmless (including the payment
of reasonable attorneys' fees) from any and all damages resulting from such a
construction of the parties' relationship. The requirements herein, and the
restrictions imposed in this Agreement, are for the sole protection and benefit
of BANK.
Section 9.10 INDEMNIFICATION. BORROWER shall indemnify and hold
harmless BANK from and against any and all claims, charges, losses, expenses and
costs, including reasonable attorneys' fees, resulting from any claims, actions
or proceedings in connection with the execution, delivery and performance of
this Agreement, the Note, and other Loan Documents. The indemnification provided
in this section shall survive the payment in full of the Loan.
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<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have executed or caused
this Agreement to be duly executed by their duly authorized officers as of the
date first set forth above.
BORROWER:
WITNESS BOYD BROTHERS TRANSPORTATION
COMPANY, INC.
/s/ Elaine Gray By: /s/ Richard Bailey
- -------------------------------- ------------------------------------
Its: CFO
--------------------------------
BANK:
WITNESS: COMPASS BANK
/s/ Tonya W. Henderson By: /s/ Billy V. Houston
- -------------------------------- ------------------------------------
Its: City President
--------------------------------
31
<PAGE> 32
COMPASS BANK
SECURITY AGREEMENT
KNOW ALL MEN BY THESE PRESENTS: That
WHEREAS, BOYD BROTHERS TRANSPORTATION COMPANY, INC., an Alabama
corporation ("DEBTOR") is, contemporaneously with the execution hereof, becoming
indebted to COMPASS BANK (the "BANK"), on loan in the principal amount of FOUR
MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($4,500,000.00), or so much
thereof as may be advanced under the Note as hereafter defined (the "LOAN"), as
evidenced by one or more Promissory Notes of various dates, payable to Bank with
interest thereon and as provided therein (each a "NOTE" and collectively, the
"NOTES"), and as secured by a Credit and Security Agreement from Debtor to Bank
(the "LOAN AGREEMENT") and the other Loan Documents defined therein (the "LOAN
DOCUMENTS"); and
WHEREAS, Debtor may hereafter become indebted to Bank or a subsequent
holder of this Security Agreement on loans or otherwise (said Bank and any
subsequent holder of this Security Agreement being referred to herein as
"SECURED PARTY"); and
WHEREAS, Debtor agrees to make this Security Agreement (the
"AGREEMENT") to further secure said Notes and any and all other future or
additional Liabilities of Debtor to Secured Party (said Liabilities, as defined
in paragraph 5, being referred to herein as "LIABILITIES").
NOW, THEREFORE, the undersigned Debtor, in consideration of making the
Loan, and to secure the prompt payment of same, with the interest thereon, and
any extensions, modifications, or renewals of same, and any and all Liabilities
of Debtor to Secured Party, and further to secure the performance of the
covenants, conditions, and agreements hereinafter set forth and set forth in the
Note, and as may be set forth in the Loan Agreement and other Loan Documents or
other instruments evidencing or securing other Liabilities of Debtor to Secured
Party, and further to secure any and all charges incurred by Secured Party on
account of Debtor, including but not limited to attorney's fees, does hereby
agree as follows:
1. DEFINITIONS. All terms used herein which are defined in the Alabama
Uniform Commercial Code (the "CODE") shall have the same meaning herein as in
the Code unless otherwise indicated herein.
2. INCORPORATION BY REFERENCE. All of the terms and provisions of the
Note are hereby incorporated by reference as though set forth in full herein.
<PAGE> 33
3. SECURITY INTERESTS. Debtor hereby grants to Secured Party title to
and a security interest in the Collateral described in paragraph 4 hereof to
secure the performance and payment of the Liabilities described in paragraph 5
hereof.
4. COLLATERAL. As security for the payment and performance of all
Liabilities of the Debtor, Debtor grants Secured Party title to and a security
interest in the following described property of the Debtor (herein collectively
referred to as the "COLLATERAL"):
4.01 EQUIPMENT. The items of personal property described on
Exhibit "A" hereto and all equipment and other personal property of
every nature whatsoever now or hereafter owned by the Debtor and
purchased with the proceeds of the Loan, wheresoever the same may be
located.
4.02 PROCEEDS. Proceeds (including insurance, contract and tort
claims) and products of all of the foregoing Collateral.
5. LIABILITIES: "LIABILITIES" of Debtor, as used herein, shall mean:
5.01 NOTES. The Notes, with interest as therein provided, and
all extensions, modifications, or renewals thereof.
5.02 OTHER INDEBTEDNESS. Any and all other obligations,
indebtedness, and liabilities of the Debtor to the Secured Party,
whether joint or several, due or to become due, liquidated or
unliquidated, now existing or hereafter arising, absolute or
contingent, direct or indirect, and all extensions, modifications, and
renewals thereof, and whether incurred or given as maker, endorser,
guarantor, surety, or otherwise.
6. REPRESENTATIONS, WARRANTIES, AND COVENANTS. The Debtor hereby
represents, warrants, and covenants as follows:
6.01 NO ADVERSE LIENS. Except for any security interest
specifically set forth on an addendum attached hereto, and except for
the security interest granted hereby, the Debtor is or (with respect to
Collateral not presently owned by Debtor will be) the lawful owner of
all Collateral free from any adverse lien, security interest, or
encumbrance, and shall have full right to pledge, sell, assign, or
transfer the same to Secured Party. Debtor will defend the Collateral
against all claims and demands of all persons at any time claiming the
same or any interest therein.
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<PAGE> 34
6.02 FINANCING STATEMENTS. No financing statement covering any
Collateral or any proceeds thereof is on file in any public office,
except for financing statements specifically set forth on an addendum
attached hereto, if any, and except for the financing statements
executed by Debtor and Secured Party. At the Secured Party's request,
the Debtor will join with Secured Party in executing one or more
financing statements pursuant to the Code in form satisfactory to the
Secured Party, and will pay the cost of filing the same in all public
offices wherever filing is deemed by the Secured Party to be necessary
or desirable. The Debtor authorizes the Secured Party to prepare and to
file financing statements covering the Collateral signed only by the
Secured Party and to sign the Debtor's signature to such financing
statements in jurisdictions where Debtor's signature is required. The
Debtor promises to pay the Secured Party the fees incurred in filing
the financing statements, which fees shall become part of the
Liabilities secured by this Agreement.
6.03 INSPECTION OF COLLATERAL AND RECORDS. The Secured Party
may examine and inspect the Collateral and records and documents
related to the Collateral at any time, wherever located.
6.04 ASSIGNMENT OR SALE. Debtor, its agents, servants, or
employees will not sell, assign, or offer to sell or assign or
otherwise transfer the Collateral, either in whole or in part, or any
interest therein without the written consent of the Secured Party.
6.05 PAYMENT OF TAXES AND INSURANCE. Debtor will pay promptly
all taxes and assessments upon or with respect to the Collateral.
Debtor hereby authorizes Secured Party to discharge taxes, assessments,
liens, security interests, or other encumbrances at any time levied or
placed on the Collateral, to pay for any insurance on the Collateral
required to be maintained by Debtor hereunder, and to pay for, make, or
provide for any maintenance, repair, or preservation of the Collateral
as the Secured Party shall deem reasonably necessary to preserve its
interests; provided, however, that Secured Party shall be under no
obligation to do so. Debtor agrees to reimburse Secured Party on demand
with interest at the rate set forth in the Note for any payment made or
any expense incurred by Secured Party pursuant to the foregoing
authorization. Payments made or expenses incurred by Secured Party
pursuant to the foregoing authorization shall be included in the
Liabilities secured hereunder.
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<PAGE> 35
6.06 ADDITIONAL REPRESENTATIONS OF DEBTOR (COLLATERAL). With
respect to all of the Collateral:
6.06(a) Such Collateral is used or bought primarily for
business purposes.
6.06(b) Such Collateral is being acquired with the
proceeds of the Note.
6.06(c) All such Collateral will be kept at the address
of Debtor shown below Debtor's signature. Debtor will
promptly notify Secured Party of any change in the location
of the Collateral. Except for transactions in the ordinary
course of Debtor's trucking business, Debtor, its agents or
employees will not remove such Collateral from said location
without the prior written consent of the Secured Party.
6.06(d) If certificates of title are issued or
outstanding with respect to such Collateral, the Debtor will
cause the Secured Party's interest to be properly noted
thereon.
6.06(e) Debtor has and will maintain insurance on such
Collateral to the extent and against such hazards and
liabilities as is commonly done by companies of like nature,
similarly situated, including but not limited to public
liability, theft, fire (with extended coverage) insurance,
and in the case of motor vehicles, collision insurance, all
containing such terms and for such periods as may be
reasonably satisfactory to the Secured Party; provided,
however, that Debtor may self-insure the Collateral against
physical damage up to an aggregate of $500,000 and provide
insurance against catastrophic loss thereof in excess of
such self-insurance amount. All such insurance will be
maintained with insurance companies reasonably acceptable to
the Secured Party and will be payable to the Secured Party
and to the Debtor as their interests may appear. All
insurance policies shall provide for a minimum of ten (10)
days' written cancellation notice to the Secured Party and,
at the Secured Party's request, all policies shall be
delivered to and held by the Secured Party. If at any time
the Secured Party is of the opinion that the Debtor's
insurance coverage is inadequate, the Debtor will, within
ten (10)
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<PAGE> 36
days after written request by the Secured Party, obtain such
insurance as the Secured Party shall reasonably request.
Secured Party is hereby made attorney-in-fact for Debtor to
obtain, adjust, and settle, in its sole discretion, such
insurance and to endorse any drafts or checks issued in
connection with such insurance.
6.06(f) Debtor agrees to prevent and protect against
any waste, damage, or destruction of such Collateral, and
Debtor will maintain the same in as good condition as it now
is in, ordinary and reasonable wear and tear excepted.
6.07 NAME OF DEBTOR. Debtor's name has always been as set
forth on the first page of this Agreement, except as otherwise
disclosed in writing to the Secured Party. Debtor will promptly advise
the Secured Party in writing of any change in Debtor's name.
7. SET OFF. The Secured Party is hereby given a continuing lien
as additional security for the Liabilities hereunder upon any and all monies,
securities, and other property of Debtor, and the proceeds thereof, now or
hereafter held or received by or in transit to the Secured Party from or for
Debtor, whether for safekeeping, custody, pledge, transmission, collection, or
otherwise, and also upon any and all deposit balances (general or special) and
credits of Debtor with, and any and all claims of Debtor against, the Secured
Party at any time existing, and upon an event of default hereunder, the Secured
Party may apply or set off the same against the Liabilities hereby secured.
8. EVENTS OF DEFAULT. Debtor shall be in default under this
Agreement upon the happening of any of the following events or conditions which
is not completely cured within any specific time period provided in any Loan
Document:
8.01 Any Event of Default or failure to perform any
obligation, covenant, or liability contained or referred to herein, in
the Notes, the Loan Agreement, or any other Loan Document.
8.02 Assignment, transfer, or encumbrance or any unreimbursed
loss, theft, damage or destruction to or of any part of the Collateral
(except for sales or encumbrances of Collateral expressly authorized by
the terms of this Agreement), or any levy, seizure, injunction, or
attachment thereon.
9. RIGHTS AND REMEDIES UPON DEFAULT. Upon occurrence of any of
the above events of default, the Secured Party shall have the following rights
which shall be cumulative with all other rights and remedies of Secured Party:
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<PAGE> 37
9.01 ACCELERATION AND OTHER RIGHTS. The right to declare
all Liabilities secured hereby to be immediately due and payable
without notice to or demand upon the Debtor or any other person. The
Secured Party, in addition to any remedies it may exercise under this
Security Agreement, the Note, under other documents executed in
connection with the Liabilities secured hereby, or under applicable
law, may immediately and without demand, exercise any and all of the
rights of a secured party upon default under the Alabama Uniform
Commercial Code, all of which shall be cumulative. Such rights shall
include, without limitation:
9.01(a) The right to take possession of the
Collateral without judicial process and to enter upon any
premises where the Collateral may be located for the purposes
of taking possession of, securing, removing, and/or disposing
of the Collateral without interference from the Debtor and
without any liability for rent, storage, utilities or other
sums.
9.01(b) The right to sell, lease, or otherwise
dispose of any or all of the Collateral, whether in its then
condition or after further processing or preparation, at
public or private sale. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Secured Party
shall give the Debtor at least five (5) days' prior notice of
the time and place of any public sale of the Collateral or of
the time after which any private sale or other intended
disposition of the Collateral is to be made, all of which the
Debtor agrees shall be reasonable notice of any sale or
disposition of the Collateral.
9.01(c) Upon request of Secured Party, Debtor shall
assemble and make the Collateral available to Secured Party at
a place reasonably convenient to Debtor and Secured Party.
9.02 ATTORNEY-IN-FACT. To effectuate the rights and
remedies of the Secured Party upon default, Debtor does hereby
irrevocably appoint Secured Party attorney-in-fact for the
Debtor, with full power of substitution to, after default of
Debtor, sign, execute, and deliver any and all instruments and
documents and do all acts and things to the same extent as Debtor
could do, and to sell, assign, and transfer any Collateral to
Secured Party or any other party.
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<PAGE> 38
9.03 RECEIVER. Secured Party shall have the right to apply for
and have a receiver appointed by a court of competent jurisdiction, in
connection with any action taken by the Secured Party to enforce its
rights and remedies hereunder, to manage, protect, and preserve the
Collateral and continue the business of the Debtor, to collect all
revenues and profits thereof, and to apply the same to the payment of
all expenses and other charges of such receivership, including but not
limited to the compensation of the receiver, and to the payment of
Liabilities secured hereby, until a sale or other disposition of such
Collateral shall be finally made and consummated, or until all
Liabilities secured hereby shall have been paid.
9.04 PROCEEDS OF SALE; DEFICIENCY. The proceeds of any sale or
other disposition of Collateral by the Secured Party shall be applied
first to the expenses (including, but not limited to legal expenses and
reasonable attorneys' fees) of retaking, holding, storing, and
processing the Collateral and preparing the Collateral for sale,
selling and the like and collecting or attempting to collect the
Liabilities secured by this Agreement; then to the satisfaction of the
Liabilities secured hereby with the application of such proceeds to
particular Liabilities or to interest or principal as the Secured
Party, in its sole discretion, shall determine; and the balance, if
any, to be paid to Debtor or to be paid as otherwise provided by Law.
The enumeration of the foregoing rights is not intended to be
exhaustive, and the exercise of any right shall not preclude the
exercise of any other rights, all of which shall be cumulative. Debtor
agrees that any delay by the Secured Party in exercising any right or
remedy hereby granted shall not be construed as a waiver by the Secured
Party of any of its rights or remedies hereunder. Secured Party may
permit the Debtor to remedy any default, but such shall not be a waiver
of the default so remedied, and Secured Party's waiver of any default
shall not be a waiver of any subsequent or prior defaults.
10. WAIVERS. In addition to any other waivers, as set forth herein or
in the Note, against the Liabilities secured hereby, Debtor expressly waives, to
the extent allowed by law, all claims and rights to claim any exemptions allowed
or allowable under the Constitution or laws of the United States, the State of
Alabama, or any other jurisdiction. All rights and remedies of Secured Party
hereunder or with respect to Liabilities or Collateral shall be cumulative, and
in addition to any other right available to Secured Party by statute or at law
or in equity, and may be exercised singularly or concurrently. In the event that
any one or more of the terms or provisions of this Agreement or of the Note
shall be invalid, illegal, or unenforceable in any respect, the validity of the
remaining terms or provisions shall in no way be affected, prejudiced or
disturbed thereby.
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11. ASSIGNMENT OF LIABILITIES. If at any time or times by sale,
assignment, negotiation, pledge, or otherwise, Secured Party transfers any or
all of the Liabilities, such transfer shall, unless otherwise specified in
writing, carry with it Secured Party's rights and remedies under this Agreement
with respect to such Liabilities transferred, and the transferee shall become
vested with such rights and remedies whether or not they are specifically
referred to in the transfer. If and to the extent Secured Party retains any of
the Liabilities, Secured Party shall continue to have the rights and remedies
herein set forth with respect thereto.
12. NOTICES. Any demand upon or notice to Debtor that the Secured Party
may elect to give shall be effective if hand delivered to Debtor, deposited in
the United States mail, postage prepaid, return receipt requested, or delivered
to a telegraph company addressed to Debtor at the address shown below Debtor's
signature, or if Debtor has notified the Secured Party in writing of a change of
address, to Debtor's last address so notified. Demands or notices addressed to
Debtor's address at which the Secured Party customarily communicates with Debtor
shall also be effective.
13. AGREEMENT UNDER SEAL. This Agreement is given under the seal of all
persons signing as and for the Debtor. It is intended by Debtor and all persons
signing for Debtor that this instrument is and shall constitute a sealed
instrument according to law.
14. HEADINGS. The headings of the sections, paragraphs, and
subdivisions of this Agreement are for convenience of reference only, are not to
be considered a part hereof, and shall not limit or otherwise affect any of the
terms hereof.
15. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to and bind not only the parties hereto, but also their respective heirs,
executors, administrators, successors, and assigns.
16. APPLICABLE LAW. This Agreement, the Note, and the Loan Documents,
except as may otherwise be provided therein, shall be construed and governed,
and their validity determined, according to the laws of the State of Alabama.
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<PAGE> 40
STATE OF ALABAMA )
COUNTY OF )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that Richard Bailey, whose name as CFO of BOYD BROTHERS
TRANSPORTATION COMPANY, INC., an Alabama corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me on this day that,
being informed of the contents of the above and foregoing instrument, he, as
such officer and with full authority, executed the same voluntarily for and as
the act of said corporation.
Given under my hand and official seal of office this 2nd day of June, 1998.
/s/ Elaine Gray
--------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 4-27-2002
---------------
STATE OF ALABAMA )
COUNTY OF )
I, the undersigned, a Notary Public in and for said County in said State,
hereby certify that Billy V. Houston, whose name as City President of COMPASS
BANK, an Alabama banking corporation, is signed to the foregoing instrument, and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the above and foregoing instrument, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and official seal of office this 29th day of May, 1998.
/s/ Renee S. Gibson
--------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 03-02-2000
---------------
<PAGE> 41
EXHIBIT A
DESCRIPTION OF COLLATERAL
DEBTOR: Boyd Brothers Transportation Company, Inc.
All of Debtor's trucks, tractors, trailers and other equipment and other
personal property financed with the proceeds of any loan from Secured Party,
whether now owned or existing or hereafter created or acquired; all goods,
instruments, documents of title, policies and certificates of insurance,
securities, chattel paper, deposits, cash or other property owned by Debtor or
in which Debtor has an interest which are now or may hereafter be in the
possession of Secured Party or as to which Secured Party may now or hereafter
control by possession, by documents of tile or otherwise; and proceeds and
products (including tort and insurance claims) of the foregoing:
Without limiting the generality of the foregoing, the collateral shall include:
Fifteen New 1999 International 9300 Tractors
2HSFBASR5X0080041 2HSFBASR7X0080042
2HSFBASR9X0080043 2HSFBASR0X0080044
2HSFBASR2X0080045 2HSFBASR4X0080046
2HSFBASR6X0080047 2HSFBASR8X0080048
2HSFBASRXX0080049 2HSFBASR6X0080050
2HSFBASR8X0080051 2HSFBASRXX0080052
2HSFBASR1X0080053 2HSFBASR3X0080054
2HSFBASR5X0080055
FOR VALUE RECEIVED, Debtor hereby grants to Secured Party a security
interest in all of the foregoing property.
<PAGE> 1
EXHIBIT 10.3
AGREEMENT AND GENERAL RELEASE
THIS AGREEMENT AND GENERAL RELEASE ("Agreement") is made and entered
into by and between DONALD G. JOHNSTON ("Johnston") and BOYD BROS.
TRANSPORTATION INC. ("Boyd").
W I T N E S S E T H:
WHEREAS, Johnston agrees that he will voluntarily retire all of his
positions with Boyd, whether as officer, director or employee, on July 16, 1998;
and
WHEREAS, Johnston and Boyd desire to settle fully and finally all
differences between them, including, but in no way limited to, any differences
that might arise out of Johnston's employment with Boyd, and his resignation
thereof;
NOW, THEREFORE, in consideration of the premises and mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Johnston and Boyd agree as follows:
1. BENEFITS. On or after the Effective Date of this Agreement, Boyd
shall provide Johnston with the following benefits:
a. Johnston shall be paid, as and when they become due, all of
Johnston's retirement benefits, if any, which were vested as to Johnston on July
31, 1998 in accordance with the terms of any such underlying plan(s);
b. Johnston shall be paid on or before August 31, 1998 all accrued
and earned vacation pay to which Johnston is entitled;
c. Johnston shall be paid his current salary through July 31, 1998
in accordance with normal payroll practices and $91,875 in lieu of any annual
performance bonus that would otherwise have been due him, which amount will be
paid on or before August 31, 1998;
d. Boyd shall continue to fund (through the month in which Johnston
reaches age 65) Johnston's life insurance policies at the current rate as of the
date hereof and to the extent such policies so permit;
e. Johnston and his spouse shall be permitted to participate in
Boyd's general health care and other welfare benefit programs at Boyd's expense
through the month in which Johnston attains the age of 65, after which Johnston
may continue to participate in Boyd's general health care and other welfare
benefit programs at his own expense, in both circumstances solely to the extent
such programs permit continued participation by former employees at no
additional expense of the Company;
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<PAGE> 2
f. Johnston shall have continued use of his current office until
July 17, 1998;
g. Johnston shall be transferred title to the automobile currently
provided to him by the Company; and
h. Johnston and Boyd shall have entered into that certain Consulting
Agreement of even date herewith, which shall include consulting payments under
such agreement.
These payments and benefits shall be in lieu of and discharge any
obligations of Boyd to Johnston for any rights or claims, including, but not
limited to, any and all rights that Johnston may have under any plans, programs
or agreements with Boyd, any and all rights that Johnston may have for lost
compensation, lost wages, lost benefits, pain and suffering, or any other
expectation of remuneration or benefit on the part of Johnston. Other than the
obligations specifically set forth in this paragraph, Boyd shall have no other
obligations to Johnston under this Agreement. Johnston understands and agrees
that the payments and benefits described herein are greater than those to which
Johnston is otherwise entitled under Boyd's policies and procedures.
2. NON-ADMISSION OF LIABILITY. This Agreement shall not in any way be
construed as an admission by Boyd that it has acted wrongfully with respect to
Johnston or any other person, or that Johnston has any rights whatsoever against
Boyd, and Boyd specifically disclaims any liability to or wrongful acts against
Johnston or any other person, on the part of itself, its employees, or its
agents.
3. RETIREMENT; NO REEMPLOYMENT. Johnston and Boyd agree that active
employment with Boyd has been terminated by Johnston's voluntary retirement,
effective July 16, 1998. Johnston and Boyd further agree that he will not be
reemployed by Boyd, and that he will not apply for or otherwise seek employment
with Boyd at any time. A breach of this paragraph by Johnston will constitute a
basis for refusal to employ Johnston or to terminate him if already employed,
and he shall have no cause of action against Boyd for such refusal or
termination.
4. NON-DISPARAGEMENT. Johnston agrees that he will not act in any
manner that might damage the business or reputation of Boyd and/or any of its
subsidiaries, successors, assigns, officers, or directors. Johnston further
agrees that he will not counsel or assist any attorneys or their clients in the
presentation or prosecution of any disputes, differences, grievances, claims,
charges, or complaints by any third-party against Boyd and/or any officer,
director, employee, agent, representative, shareholder, or attorney of Boyd,
unless under a subpoena or other court order to do so.
5. FUTURE COOPERATION. Johnston agrees that he will, upon request by
Boyd, assist and cooperate with Boyd in any lawsuits, disputes, differences,
grievances, claims, charges, or complaints brought or threatened by any party
against Boyd or brought by Boyd against any party, subject to reimbursement by
Boyd of all reasonable expenses actually incurred by him.
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<PAGE> 3
Johnston further agrees that he will, upon Boyd's reasonable request, assist and
cooperate with Boyd in the preparation and dissemination of any press releases
or other disclosures that Boyd deems necessary.
6. CESSATION OF AUTHORITY; RESIGNATION FROM BOARD(S). Johnston
understands and agrees that as of the Effective Date, he was and is no longer
authorized to incur any expenses, obligations, or liabilities on behalf of Boyd.
Johnston further agrees that as of the Effective Date, he has hereby irrevocably
resigned any all directorships and/or other positions with Boyd or any Boyd
subsidiary or affiliate.
7. RETURN OF COMPANY MATERIALS AND PROPERTY. Johnston understands and
agrees that he will immediately turn over to Boyd all files, memoranda, records,
credit cards, and other documents, physical or personal property that Johnston
received from Boyd and that are the property of Boyd.
8. NON-DISCLOSURE AND TRADE SECRETS. Johnston understands and agrees
that in the course of employment with Boyd, he has acquired confidential and
proprietary information and trade secrets concerning Boyd's operations, its
future plans for sales and expansion, its methods of doing business, it
financial situation, which information Johnston understands and agrees would be
extremely damaging to Boyd if disclosed to a competitor or made available to any
other person or corporation. Johnston understands and agrees that such
information has been divulged to Johnston in confidence and Johnston understands
and agrees that he will keep such information secret and confidential. Johnston
further agrees that he will not solicit or participate in or assist in any way
in the solicitation of any other employees or customers of Boyd or of any of its
affiliated companies. In view of the nature of Johnston's employment and the
information and trade secrets which Johnston has received during the course of
his employment, Johnston likewise agrees that Boyd would be irreparably harmed
by any violation, or threatened violation of this Agreement and that, therefore,
Boyd shall be entitled to an injunction prohibiting Johnston from any violation
or threatened violation of this Agreement. The undertakings set forth in this
paragraph shall survive the termination of other arrangements contained in this
Agreement.
9. COMPLETE RELEASE. a. As a material inducement to Boyd to enter into
this Agreement, Johnston hereby irrevocably and unconditionally releases,
acquits, and forever discharges Boyd and each of Boyd's owners, predecessors,
successors, assigns, agents, directors, officers, employees, representatives,
attorneys, and all persons acting by, through, under or in concert with any of
them (collectively "Releases"), or any of them, from any and all charges,
complaints, claims, promises, and agreements, damages, (including attorneys'
fees and costs actually incurred) of any nature whatsoever, known or unknown,
suspected or unsuspected, including, but not limited to, rights arising out of
alleged violations of any contracts, express or implied, any covenant of good
faith and fair dealing, express or implied, or any tort, including, but not
limited to, fraudulent inducement, promissory estoppel, or detrimental reliance,
or any legal restrictions on Boyd's right to terminate employees, or any
federal, state or other governmental statute, regulation, or ordinance,
including, without limitation: the Age Discrimination in Employment Act, U.S.C.
ss.ss. 621-634 ("Claim" or "Claims"), which Johnston
3
<PAGE> 4
now has, owns or holds, or claims to have, own or hold, or which Johnston at any
time heretofore had, owned or held, or claimed to have, own or hold, against
each or any of the Releases.
b. Boyd hereby irrevocably and unconditionally releases, acquits,
and forever discharges Johnston from any and all charges, complaints, claims,
promises, and agreements, damages, (including attorneys' fees and costs actually
incurred) of any nature whatsoever, known or unknown, suspected or unsuspected,
including, but not limited to, rights arising out of alleged violations of any
contracts, express or implied, any covenant of good faith and fair dealing,
express or implied, or any tort, including, but not limited to, fraudulent
inducement, promissory estoppel, or detrimental reliance, or any federal, state
or other governmental statute, regulation, or ordinance ("Claim" or "Claims"),
which Boyd now has, owns or holds, or claims to have, own or hold, or which Boyd
at any time heretofore had, owned or held, or claimed to have, own or hold,
against Johnston, except for acts of intentional misconduct, intentional
violation of law or for fraudulent acts knowingly taken to the detriment of
Boyd.
10. NO CLAIMS. Johnston and Boyd each represent that they have not
filed any complaints, charges, or lawsuits against one another or any of Boyd's
employees with any governmental agency or any court, or that any such
complaints, charges, or lawsuits filed prior to execution of this Agreement will
be withdrawn by them immediately after this Agreement becomes effective;
provided, however, this shall not limit either party from filing a lawsuit for
the sole purpose of enforcing its rights under this Agreement.
11. CONFIDENTIALITY. Johnston represents and agrees that he will keep
the terms, amount, and fact of this Agreement completely confidential, and that
he will not hereafter disclose any information concerning this Agreement to
anyone other than Johnston's immediate family and professional representatives
who will be informed of and bound by this confidentiality clause.
12. CONSULTATION WITH COUNSEL. Johnston represents and agrees that he
fully understands his right to discuss all aspects of this Agreement with his
private attorney, that to the extent, if any, that Johnston desired, Johnston
has availed himself of this right, that Johnston has carefully read and fully
understands all of the provisions of this Agreement, and that Johnston is
voluntarily entering into this Agreement.
13. KNOWING AND VOLUNTARY WAIVER. For the purpose of implementing a
full and complete release and discharge of Boyd, Johnston expressly acknowledges
that this Agreement is intended to include in its effect, without limitation,
all Claims which Johnston does not know or suspect to exist in his favor at the
time of execution hereof, and that this Agreement contemplates the
extinguishment of any such Claim or Claims. Johnston further expressly
acknowledges he is freely and voluntarily executing this Agreement, and that he
has had sufficient and reasonable time to consider this Agreement and its terms
before executing it.
14. NO REPRESENTATIONS. Johnston represents and acknowledges that in
executing this Agreement Johnston does not rely and has not relied upon any
representation or statement
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<PAGE> 5
not set forth herein made by any of the Releases or by any of the Releases'
agents, representatives, or attorneys with regard to the subject matter, basis,
or effect of this Agreement or otherwise.
15. EFFECTIVE DATE. This Agreement shall become effective upon
Johnston's execution of this Agreement and such date shall be the "Effective
Date" of this Agreement.
16. SOLE AND ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. The Agreement
sets forth the entire agreement between the parties hereto, and fully supersedes
any and all prior agreements or understandings between the parties hereto
pertaining to the subject matter hereof. The Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, and, in the case of Johnston, shall be binding upon and inure to the
benefit of, his heirs, legatees, executors, administrators and guardians.
17. SEVERABILITY. The provisions of this Agreement are severable, and
if any part of it is found to be unenforceable, the other paragraphs shall
remain fully valid and enforceable. This Agreement shall survive the termination
of any arrangements contained herein.
18. ATTORNEYS' FEES. In the event either party finds it necessary to
institute litigation to enforce the terms of this Agreement, the prevailing
party in such litigation shall be entitled to recover its reasonable attorneys'
fees, costs and expenses in connection with such litigation.
19. BREACH OF AGREEMENT. Consultant agrees that in the event Consultant
materially breaches any provisions of this Agreement, Boyd shall be entitled, in
addition to any other remedies it may have under this Agreement, to offset to
the extent of any liability, loss, damage or injury from such breach any
payments due to Consultant pursuant to this or any other agreement to which
Consultant and Boyd are parties, which notice of offset shall include an
indication of the reasons therefor.
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<PAGE> 6
PLEASE READ AND CONSIDER THIS AGREEMENT CAREFULLY BEFORE
EXECUTING. THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
Executed at _________________, Alabama, this 16th day of July, 1998.
/s/ Donald G. Johnston
-----------------------------------------
DONALD G. JOHNSTON
Executed at __________________, Alabama, this 16th day of July, 1998.
BOYD BROS. TRANSPORTATION INC. [SEAL]
By: /s/ Miller Welborn
-------------------------------------
Name: Miller Welborn
----------------------------------
Title: Chief Executive Officer
6
<PAGE> 1
EXHIBIT 10.4
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is made and entered into this
16th day of July, 1998 by and between DONALD G. JOHNSTON, an individual resident
of Alabama (hereinafter referred to as "Consultant") and BOYD BROS.
TRANSPORTATION INC., a Delaware corporation (hereinafter referred to as the
"Company").
W I T N E S S E T H:
WHEREAS, Consultant has heretofore been employed by the Company as
President and Chief Executive Officer;
WHEREAS, Consultant has retired from his employment with the Company;
WHEREAS, Company desires for Consultant to provide certain consulting
services for the Company and to agree to certain restrictions concerning
confidential information and noncompetition as set forth herein and to make
certain payments to Consultant in consideration therefor;
NOW, THEREFORE, in consideration of the premises and mutual promises
herein contained, it is agreed as follows:
1. CONSULTING.
1.1 The Company hereby engages the Consultant to perform and the
Consultant hereby agrees to perform the consulting services in Section 1.2 below
to commence August 1, 1998 and terminate on July 31, 2001 (the "Term").
Consultant shall make himself available to perform consulting services for the
Company for up to eight (8) working days per month, on such days, at such times,
and in such locations as the Chief Executive Officer of the Company shall
reasonably request.
1.2 The consulting services to be performed by Consultant shall include
advice on marketing, sales, driver recruitment and retention and such other
consulting services as may be agreed upon from time to time by Consultant and
the Company ("Consulting Services"). Consultant shall report to the Chief
Executive Officer of the Company only, or to the Chief Executive Officer's
designee.
2. COMPENSATION.
2.1 In consideration for the Consulting Services to be performed by
Consultant described in Section 1.2 hereof, Consultant's undertakings concerning
Confidential Information set forth in Section 3 hereof, and Consultant's
undertakings concerning noncompetition set forth in Section 5 hereof, the
Company shall pay Consultant a consultant
<PAGE> 2
fee of $12,500 per month (less applicable taxes and withholdings as required by
law) in accordance with Boyd's normal payroll procedures (the "Consulting Fee")
through and including January 31, 2001. The Consulting Fee shall not exceed
$375,000 in the aggregate through the end of the Term of this Agreement.
2.2 Consultant shall be entitled to reimbursement of all reasonable
expenses incurred in performance of his duties hereunder, including without
limitation, reimbursement of mileage expenses when on business of the Company.
2.3 Except as explicitly set forth in this Section 2, Consultant shall
not be entitled to any compensation or benefits from the Company or any of its
affiliates for services under this Agreement.
2.4 In the event of Consultant's death or disability, the payments
contemplated in Section 2.1 shall be paid to his estate or to Consultant, as the
case may be, in accordance with the terms thereof regardless of the provisions
of Section 1 hereof.
3. CONFIDENTIAL INFORMATION.
3.1 Subject to the provisions of Subsection 3.3 hereof, Consultant
shall keep confidential and not directly or indirectly disclose or divulge to
any person nor use or otherwise appropriate for Consultant's own benefit,
pricing information, marketing information, sales techniques of the Company or
any other of the following confidential information or documents of or relating
to the Company: confidential records, client and customer lists, information
about client requirements, terms of contracts with clients and customers, and
planning and financial information of the Company (hereinafter referred to as
the "Confidential Information"). Consultant hereby acknowledges and agrees that
the prohibitions against disclosure of Confidential Information recited herein
are in addition to, and not in lieu of, any rights or remedies which the Company
may have available pursuant to the laws of any jurisdiction or at common law to
prevent the disclosure of trade secrets or proprietary information, and the
enforcement by the Company of its rights and remedies pursuant to this Agreement
shall not be construed as a waiver of any other rights or available remedies
which it may possess in law or equity absent this Agreement.
3.2 Consultant shall not utilize the Confidential Information for any
purpose except the purpose for which the Confidential Information is being
disclosed to the Consultant.
3.3 The obligation of nondisclosure and nonuse set forth in this
Section 3 shall expire two (2) years after the last date on which the Consultant
performs consulting services hereunder and shall not apply to any Confidential
Information that was: (a) in the public domain at the time it was disclosed to
the Consultant or subsequently came into the public domain through no fault of
the Consultant; (b) rightfully known by the Consultant prior to its disclosure
to him or independently developed by the Consultant outside of his employment or
consulting engagement with the Company; or (c) received by the Consultant as a
matter of
2
<PAGE> 3
right from a source other than the Company or another person subject to a
confidentiality obligation to Company.
4. DISCLOSURE UNDER LEGAL COMPULSION.
In the event that Consultant or any of Consultant's representatives
become legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand, any similar process or otherwise) to
disclose any of the Confidential Information, Consultant shall provide the
Company with prompt prior written notice of such requirement so that the Company
may seek a protective order or other appropriate remedy and/or waive compliance
with the terms of this Agreement. In the event that such protective order or
other remedy is not obtained, or that the Company waives compliance with the
provisions hereof, Consultant agrees to furnish only that portion of the
Confidential Information which is required to be disclosed in the written
opinion of Consultant's counsel, and to use reasonable efforts to obtain
confidential treatment of such of the disclosed information which the Company so
designates.
5. NONCOMPETITION.
5.1 The Consultant recognizes that he has acquired and will continue to
acquire and develop unique contacts, skills and talents during his relationship
with the Company. The Consultant will have many opportunities to develop on the
Company's behalf the loyalty and goodwill of the Company's customers,
prospective customers and suppliers in the commercial trucking industry. The
Consultant realizes and agrees that the Company has a protectible interest in
such relationships the Consultant establishes or nurtures with the Company's
customers, prospective customers and suppliers while engaged by the Company.
Accordingly, the Consultant agrees that the Company should be allowed to prevent
Consultant, before and after termination of his consulting relationship with the
Company hereunder, from unfairly competing with the Company or benefiting from
the expenditures made by the Company in establishing or nurturing its
relationships with customers and prospective customers. The Consultant
acknowledges that such conduct on his part would harm and damage the legitimate
business interests of the Company.
5.2 During the term of the Consultant's consulting relationship with
the Company hereunder, the Consultant covenants that he will not, within the
territories listed on Exhibit A hereto ("Territories"), directly or indirectly
compete with the Company by carrying on Business (as defined in Section 5.5
below) which is substantially similar to the Business of the Company. The
Consultant acknowledges that he has, and will continue to have, substantial
direct or indirect contact with customers, prospective customers, and suppliers
in the Territories.
5.3 For the purposes of this Agreement, the term "compete" shall mean
with respect to the Business: (i) managing, supervising, or otherwise
participating in a management or supervisory capacity in flatbed and related
non-enclosed truckload carrier for hire operations; (ii) calling on, soliciting,
taking away, accepting as a customer or attempting to call on,
3
<PAGE> 4
solicit, take away or accept as a customer any individual, partnership,
corporation, limited liability company or association that is or was a customer
of the Company during the twelve calendar month period immediately preceding
such act with whom the Consultant had contact; (iii) soliciting, taking away or
attempting to solicit or take away any employee of the Business, either on the
Consultant's behalf or on behalf of any other person or entity, who was an
employee of the Company during the twelve calendar month period immediately
preceding such act, or (iv) entering into or attempting to enter into any
business substantially similar to the Business, either alone or with any
individual, partnership, corporation, limited liability company or association.
It is expressly acknowledged that Johnston may hire Becky Ryland, David
Johnston, Scott Schell and Rosie Clark.
5.4 For the purposes of this Agreement, the words "directly or
indirectly" as used herein shall mean (i) acting as an agent, representative,
consultant, officer, director, member, independent contractor, or employee of
any entity or enterprise which is competing with the Business, (ii)
participating in any such competing entity or enterprise as an owner, partner,
limited partner, joint venturer, member, creditor or stockholder (except as a
stockholder holding less than one percent (1%) interest in a corporation whose
shares are actively traded on a regional or national securities exchange or in
the over-the-counter market), and (iii) communicating to any such competing
entity or enterprise the names or addresses or any other information concerning
any past, present, or identified prospective customer of the Company.
5.5 For purposes of this Agreement, the term "Business" shall mean the
flatbed or related non-enclosed truckload carrier for hire operations, in which
the Company now or hereafter engages, or has an immediate intention to engage.
5.6 During the term of the Consultant's consulting relationship with
the Company hereunder, the Consultant also covenants and agrees not to hire or
attempt to hire for himself or another employer any employee of the Company or
directly or indirectly cause any such employee to leave his employment in order
to work for another.
5.7 In the event the Company shall have failed to make any payments
called for under this Agreement which shall remain uncured for more than ninety
(90) days, Consultant shall not be obligated under this Section 5, but only for
such time as the Company's payment defaults shall remain uncured.
6. INJUNCTION.
6.1 It is the understanding of the parties that the obligations of the
Consultant set forth in Sections 3 and 5 of this Agreement relating to
Confidential Information and noncompetition will be enforced to the fullest
extent permissible under the laws and public policies in any jurisdiction in
which enforcement is sought, and shall survive the termination of this Agreement
and/or Consultant's engagement with the Company.
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<PAGE> 5
6.2 If there is a breach or threatened breach of any provision of this
Agreement, the Company shall be entitled to seek and obtain an injunction
restraining the Consultant from such breach. Nothing contained in this Agreement
shall be construed as prohibiting the Company from pursuing any other remedies
for such breach or threatened breach.
6.3 If any court shall determine that the duration, geographical limit
or any other aspect of any restriction contained in this Agreement is
unenforceable, it is the intention of the parties that any restrictive covenants
set forth herein shall not thereby be terminated, but shall be deemed amended to
the extent required to render them valid and enforceable.
6.4 The Consultant acknowledges and agrees that the prohibition against
disclosure of Confidential Information recited in Section 3 hereof is in
addition to, and not in lieu of, any rights or remedies which the Company may
have available pursuant to the laws of any jurisdiction or at common law to
prevent the disclosure of trade secrets and that the enforcement by the Company
of its rights and remedies pursuant to this Agreement shall not be construed as
a waiver of any other rights or remedies which it may possess in law or at
equity absent this Agreement.
7. SEVERABILITY.
If any particular provision of this Agreement shall be adjudicated to
be invalid or unenforceable (subject to Subsection 6.3 above), such provision
shall be deemed amended to delete therefrom the portion adjudicated to be
invalid or unenforceable, such deletion to apply only with respect to the
operation of this Section in the particular jurisdiction in which such
adjudication is made.
8. NOTICES.
Any notice required or permitted to be given under this Agreement shall
be given in writing and sent by certified mail, postage prepaid, return receipt
requested, to the last known residence in the case of the Consultant or to the
Company's principal office in the case of the Company.
9. AMENDMENT; SUCCESSORS AND ASSIGNS.
This Agreement may not be changed orally, but only by an agreement in
writing, duly signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors or assigns, and, in the case of Consultant, shall inure to the
benefit of his heirs, legatees, executors, administrators and guardians.
10. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Alabama.
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<PAGE> 6
11. BREACH OF AGREEMENT.
Consultant agrees that in the event Consultant breaches any material
provisions of this Agreement, the Company shall be entitled, in addition to any
other remedies the Company may have under this Agreement, to offset to the
extent of any liability, loss, damage or injury from such breach any payments
due to Consultant pursuant to this or any other agreement to which Consultant
and the Company are parties, which notice of offset shall include an indication
of the reasons therefor.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement
and set their hands and seals thereto as of the date first above written.
BOYD BROS. TRANSPORTATION INC.
[SEAL]
By: /s/ Miller Welborn
-------------------------------------
Name: Miller Welborn
-----------------------------------
Title: Chief Executive Officer
/s/ Donald G. Johnston
-----------------------------------------
DONALD G. JOHNSTON
7
<PAGE> 8
EXHIBIT A
LIST STATES IN WHICH BOYD
IS PRESENTLY CONDUCTING BUSINESS
Louisiana Michigan
Mississippi Virginia
Alabama West Virginia
Georgia Pennsylvania
Florida New York
South Carolina Maryland
North Carolina District of Columbia
Tennessee Vermont
Kentucky New Hampshire
Illinois Maine
Indiana Massachusetts
Ohio Connecticut
Wisconsin Rhode Island
Texas Oklahoma
Arkansas Missouri
Kansas Nebraska
Iowa Minnesota
Delaware New Jersey
<PAGE> 1
EXHIBIT 10.5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), made and
entered into this 7th day of January, 1999, by and between DONALD G. JOHNSTON,
an individual resident of the State of Alabama ("Seller") and BOYD BROS.
TRANSPORTATION, INC., a Delaware corporation ("Purchaser" or the "Company");
W I T N E S S E T H:
WHEREAS, Seller owns an aggregate of 531,114 shares of the
outstanding common stock, $.001 par value per share ("Common Stock") of
Purchaser; and
WHEREAS, Purchaser desires to purchase from Seller and Seller
desires to sell to Purchaser Five Hundred (500,000) shares of Common Stock owned
by Seller (the "Shares");
NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements contained herein, the parties hereto, intending
to be legally bound, hereby agree as follows:
SECTION 1. PURCHASE OF SHARES.
1.1. TRANSFER OF SHARES. On the terms and subject to the
conditions set forth in this Agreement, Seller hereby agrees to sell, assign,
transfer and deliver to Purchaser all of his right, title and interest in and to
the Shares owned by Seller.
1.2. PURCHASE PRICE. On the terms and subject to the
conditions set forth in this Agreement, Purchaser shall pay a total purchase
price (the "Purchase Price") of Three Million Six Hundred Sixty Thousand Dollars
($3,660,000), or $7.32 per share, to Seller in the manner described below.
Purchaser shall pay the Purchase Price to Seller contemporaneously with the
execution and delivery of this Agreement and the Shares.
SECTION 2. PAYMENT OF PURCHASE PRICE.
Upon delivery of the Shares, Purchaser shall pay to Seller the
Purchase Price by delivering to an account or accounts designated by Seller by
wire transfer in immediately available funds. Wire transferred funds shall be
deemed delivered when dispatched by Buyer or its agents over the Federal Funds
Transfer Wire Service and a Federal Funds wire number is obtained in respect
thereof from the Federal Reserve System or its agent.
<PAGE> 2
SECTION 3. INSTRUMENTS OF CONVEYANCE.
3.1. TRANSFER OF SHARES. Seller shall deliver stock
certificates representing all of his right, title and interest in and to the
Shares, duly endorsed in blank or accompanied by duly executed assignment
documents.
3.2. FURTHER ASSURANCES. Seller shall from time to time at
Purchaser's request and without further consideration execute and deliver to
Purchaser such instruments of transfer, conveyance and assignment in addition to
those delivered pursuant to Section 3.1 hereof as Purchaser shall reasonably
request to transfer, convey and assign more effectively all of his right, title
and interest in and to the Shares to Purchaser.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
4.1. AUTHORIZATION. This Agreement has been duly executed and
delivered by Seller and constitutes the legal, valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms. Seller is not
required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
4.2. OWNERSHIP OF SHARES. Seller is the lawful owner of the
Shares, free and clear of any liens, charges, claims, security interests or
other encumbrances of any nature whatsoever. Seller has the full legal right,
power and authority to sell, assign, transfer and deliver his Shares to
Purchaser, free and clear of all liens, charges, claims, security interests or
other encumbrances of any nature whatsoever, and the sale and delivery of the
Shares to Purchaser pursuant to this Agreement will transfer to Purchaser full
and legal title to all of the Shares, free and clear of any lien, encumbrance,
charge, claim, security interest, equity or restriction whatsoever. Seller is
not a party to any option, warrant, purchase right or other contract or
commitment that could require Seller to sell, transfer or otherwise dispose of
any capital stock of Purchaser (other than this Agreement). Seller is not a
party to any voting trust, proxy or other agreement or understanding with
respect to the voting of any capital stock of Purchaser.
4.3. NO VIOLATION. Neither the execution or delivery of this
Agreement nor the consummation by Seller of the transactions contemplated hereby
will (a) constitute a violation of any judgment, decree, order, regulation or
rule of any court or governmental authority or any statute or law or (b)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, or create in any party the right to accelerate, terminate,
modify or cancel any agreement, contract, lease, license, instrument or other
arrangement to which Seller is a party or by which he is bound or to which any
of his assets are subject. No consent, approval or authorization of any third
party is required in connection with the execution, delivery and performance of
this Agreement by Seller.
4.4. BROKERS AND FINDERS' FEES. Neither the Seller nor anyone
acting on his behalf has done anything to cause or incur any liability to any
party for any brokers' or finders' fees or the like in connection with this
Agreement or any transaction contemplated hereby.
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<PAGE> 3
4.5. INVESTMENT. Seller (a) is a sophisticated investor with
knowledge and experience in business and financial matters; and (b) has had
access to such information, including financial information, of Purchaser as he
has desired in order to evaluate the transactions contemplated hereby and has
been given the opportunity to ask questions of and receive answers from
Purchaser and its representatives concerning Purchaser and to obtain any
additional information that Purchaser possesses or can reasonably obtain that is
necessary to verify the accuracy of the information furnished by Purchaser in
connection herewith.
4.6. DISCLOSURE. No representations or warranties by Seller
contained in this Agreement, and no statement, certificate, instrument or other
writing furnished or to be furnished by Seller to Purchaser pursuant to the
provisions hereof or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
SECTION 5. REPRESENTATIONS AND WARRANTIES BY PURCHASER.
Purchaser represents and warrants to Seller as follows:
5.1. PURCHASER'S EXISTENCE, POWER AND GOOD STANDING. Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Purchaser is duly qualified to do business as a
foreign corporation and is in good standing in Alabama.
5.2. AUTHORIZATION. This Agreement and its execution, delivery
and performance have been duly authorized by all necessary corporate action on
the part of Purchaser and are within its corporate power. This Agreement has
been duly executed and delivered by Purchaser and constitutes the legal, valid
and binding agreement of Purchaser, enforceable against Purchaser in accordance
with its terms.
5.3. SEC REPORTS. Since January 1, 1998, Purchaser has filed
with the Securities and Exchange Commission (the "Commission") all forms,
reports and documents required to be filed by it pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") (the "SEC Filings"), each of which, as
of its respective filing date, complied in all material respects with all
applicable requirements of the Exchange Act. None of the SEC Filings as of the
respective dates on which they were filed with the Commission contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Since
September 30,1998, the most recent period for which the Purchaser has filed a
Quarterly Report under the Exchange Act, Purchaser has conducted its business in
the ordinary course and there has not been any change or changes that,
individually or in the aggregate, would have a material adverse effect on the
financial condition of the Purchaser.
5.4. BROKERS' AND FINDERS' FEES. Neither Purchaser nor anyone
acting on its behalf has done anything to cause or incur any liability to any
party for any brokers' or finders' fees or the like in connection with this
Agreement or any transaction contemplated hereby.
-3-
<PAGE> 4
5.5. NO VIOLATION. Neither the execution or delivery of this
Agreement nor the consummation by Purchaser of the transactions contemplated
hereby will (a) constitute a violation of any judgment, decree, order,
regulation or rule of any court or governmental authority or any statute or law
or (b) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, or create in any party the right to accelerate,
terminate, modify or cancel any agreement, contract, lease, license, instrument
or other arrangement to which Purchaser is a party or by which it is bound or to
which any of its assets are subject. No consent, approval or authorization of
any third party is required in connection with the execution, delivery and
performance of this Agreement by Purchaser.
SECTION 6. COVENANTS OF SELLER.
For a period of two years from the date of this Agreement,
except in accordance with the terms of a specific written request from the
Company, Seller covenants that neither it nor any of its representatives, will
(A) propose or publicly announce or otherwise disclose an intent to propose, or
enter into or agree to enter into, singly or with any other person or directly
or indirectly, (i) any form of business combination, acquisition, or other
transaction relating to the Company or any majority-owned affiliate thereof,
(ii) any form of restructuring, recapitalization or similar transaction with
respect to the Company or any such affiliate, or (iii) any demand, request or
proposal to amend, waive or terminate any provision of this Agreement, or (B)
(i) acquire, or offer, propose or agree to acquire, by purchase or otherwise,
any securities whether debt or equity (the "Securities") of the Company,
including any indirect or direct options or other rights to acquire any such
Securities, (ii) make, or in any way participate in, any solicitation of proxies
with respect to any Securities (including by the execution of action by written
consent), become a participant in any election contest with respect to the
Company, seek to influence any person with respect to any Securities or demand a
copy of the Company's list of its stockholders or other books and records, (iii)
participate in or encourage the formation of any partnership, syndicate, or
other group which owns or seeks or offers to acquire beneficial ownership of any
Securities or which seeks to effect control of the Company or for the purpose of
circumventing any provision of this Agreement, or (iv) otherwise act, alone or
in concert with others (including by providing financing for another person), to
seek or to offer to control or influence, in any manner, the management, Board
of Directors, or policies of the Company.
SECTION 7. CERTAIN ADDITIONAL COVENANTS.
7.1. TAXES. Seller shall pay any stamp, transfer, real
property or other similar taxes attributable to the consummation of the
transactions contemplated by this Agreement.
7.2. EXPENSES. Except as provided in Section 7.1 hereof, each
party hereto shall bear the legal, accounting and other expenses incurred by
such party in connection with this Agreement.
7.3. FURTHER ASSURANCES. From time to time, upon request of
any party to this Agreement to any other party or parties and without further
consideration, the party or parties to whom the request was made shall execute,
acknowledge and deliver all such other instruments and
-4-
<PAGE> 5
shall take all such other action as may be requested to confirm or perfect or
otherwise carry out the intent and purposes of this Agreement.
7.4. DISCLOSURES. Except as may be required by law or the
rules of any stock exchange, no party hereto shall publicly disclose any aspect
of the Agreement.
SECTION 8. INDEMNIFICATION.
Each party hereto shall indemnify, defend and hold the other
harmless from and against any and all claims and losses, costs, damages and
expenses (including reasonable attorneys' fees and expenses) incurred by such
party, directly or indirectly, caused by, resulting from or arising out of any
misrepresentation by, or breach of any covenant or warranty of, the other
contained in this Agreement.
SECTION 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made or undertaken by or on
behalf of any party hereto shall survive the execution of this Agreement and
continue in perpetuity; provided, however, that no party shall be liable to
another party hereto with respect to any claims, suits or proceedings arising
from a breach of a representation or warranty set forth in this Agreement
brought by a third party against such party after ninety (90) days after the
expiration of the applicable statute of limitations.
SECTION 10. MISCELLANEOUS.
10.1. BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
successors and assigns.
10.2. GOVERNING LAW. This Agreement shall be deemed to be made
in, and in any and all respects shall be interpreted, construed and governed by
and in accordance with, the domestic laws of the State of Alabama, without
giving effect to any choice or conflict of law provision or rules that would
cause the application of the laws of any other jurisdiction.
10.3. AMENDMENT AND MODIFICATION. The parties hereto, by
mutual agreement in writing approved on behalf of Purchaser by its Board of
Directors or its officers authorized by its Board of Directors, and approved by
Seller, may amend, modify and supplement this Agreement in any respect.
10.4. NOTICES. All notices, requests, demands or other
communications required or permitted hereunder shall be sufficiently given if
delivered in person or sent by registered or certified mail, postage prepaid,
addressed:
-5-
<PAGE> 6
(a) If to Seller, to:
Donald G. Johnston
443 Anderson Drive
Eufaula, AL 36027
with a copy to:
Johnston, Hinesley, Flowers & Clenney, P.C.
P. O. Box 2246
Dothan, AL 36302
Attention: G. David Johnston, Esq.
(b) If to Purchaser, to:
Boyd Bros. Transportation, Inc.
3275 Highway 30
Clayton, Alabama 36016
Attention: Richard C. Bailey
With a copy to:
Jones, Day, Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attention: Lizanne Thomas, Esq.
or to such other person or address as shall be furnished in writing by any party
to the other prior to the giving of applicable notice or communication, and such
notice or communication shall be deemed to have been given when delivered in
person or five (5) business days after being so mailed.
10.5. HEADINGS. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
10.6. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
10.7. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
-6-
<PAGE> 7
10.8. ASSIGNMENT. No party hereto may assign either this
Agreement or any of his or its rights, interests, or obligations hereunder
without the prior written consent of the other party hereto.
10.9. CONSTRUCTION. Seller, on the one hand, and Purchaser, on
the other hand, have participated jointly in the negotiation and drafting of
this Agreement. In the event any ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by such parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
BOYD BROS. TRANSPORTATION, INC.
By: /s/ Miller Welborn
--------------------------------------
Title: Chief Executive Officer
SELLER:
/s/ Donald G. Johnston
------------------------------------------
DONALD G. JOHNSTON
-8-
<PAGE> 1
Exhibit 13
Boyd Bros. Transportation Inc. and Subsidiary
Selected Financial Data
The following tables set forth selected financial data and selected pro forma
financial data of the Company. The selected financial data presented below for
the five-year period ended December 31, 1998, are derived from the Company's
audited financial statements. The data presented below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Consolidated Financial Statements and Notes
thereto.
<TABLE>
<CAPTION>
Year Ended December 31,
- ---------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
(in thousands, except per share data)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Operating revenues $ 118,123 $ 77,215 $ 65,523 $ 61,866 $ 59,132
Operating expenses:
Salaries, wages and employee benefits 36,608 32,427 28,420 27,573 24,800
Cost of independent contractors 31,818 2,441 -- -- --
Operating supplies 21,429 20,832 19,550 17,156 15,042
Taxes and licenses 2,566 2,306 2,222 1,823 1,922
Insurance and claims 5,393 3,439 3,379 3,210 3,669
Communications and utilities 1,554 1,305 1,186 1,022 927
Depreciation and amortization 10,320 9,181 8,261 7,296 6,451
Rent 348 163 202 154 136
Gain on disposition of property and equipment, net (433) (577) (805) (648) (410)
Environmental remediation (1) 24 (23) 19 (294) 800
Other 1,169 558 439 474 523
Total operating expenses 110,796 72,124 62,873 57,765 53,860
- ---------------------------------------------------------------------------------------------------------------------------
Operating income 7,327 5,091 2,650 4,101 5,272
Interest income 97 136 164 82 54
Interest expense (1,608) (1,391) (1,408) (781) (806)
Other 82 -- -- -- 70
- ---------------------------------------------------------------------------------------------------------------------------
Income before income taxes 5,898 3,836 1,406 3,402 4,590
Income taxes 2,326 1,519 579 1,227 6,544
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 3,572 $ 2,317 $ 828 $ 2,125 $ (1,954)
Basic and diluted net income (loss) per share $ .87 $ .62 $ .22 $ .56 $ (.55)
Dividends paid (2) $ -- $ -- $ -- $ -- $ 2,525
Dividends per share $ -- $ -- $ -- $ -- $ .66
===========================================================================================================================
Pro Forma Income Data (Unaudited) (3):
Income before income taxes $ 4,590
Pro forma income taxes 1,762
Pro forma net income 2,828
Pro forma basic and diluted net income per share .80
===========================================================================================================================
</TABLE>
(1) Reflects an operating expense (credit) accrued for environmental remediation
during 1995.
(2) Distributions primarily to fund tax liabilities resulting from the Company's
S Corporation status were made to the Company's stockholders in each year
between 1990 and 1994, prior to the termination of the Company's S Corporation
status on March 30, 1994.
(3) Between January 1, 1987 and March 30, 1994, the Company was treated as an S
Corporation for federal and certain state income tax purposes. As a result, the
Company's taxable earnings for 1989 through 1993, and the first quarter of 1994,
were taxed for federal and certain state income tax purposes directly to the
Company's then-existing stockholders. On March 30, 1994, the Company terminated
its S Corporation status and became subject to federal and certain additional
state income taxes. For informational purposes, unaudited pro forma net income
data is provided for 1994 to reflect an adjustment for a provision for federal
and state income taxes as if the Company had not been treated as an S
Corporation during that period. The pro forma net income data does not give
effect to the non-cash charge of approximately $5.5 million in recognition of
deferred income taxes that resulted from the termination of the Company's S
Corporation status.
4
<PAGE> 2
Boyd Bros. Transportation Inc. and Subsidiary
Selected Financial Data
<TABLE>
<CAPTION>
December 31,
1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital $ 4,360 $ 3,785 $ 2,495 $ 2,676 $ 768
Net property and equipment 48,691 48,859 44,593 37,188 33,184
Total assets 77,047 71,526 57,262 48,892 41,480
Long-term debt, less current maturities 18,049 19,252 15,198 9,228 6,143
Total liabilities 44,186 42,071 33,374 24,903 19,616
Stockholders' equity 32,862 29,455 23,888 23,989 21,864
</TABLE>
Selected Operating Data:
The following table sets forth certain operating data regarding the Company.
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating ratio 93.80% 93.41% 95.95% 93.37% 91.08%
Average length of haul in miles 576 663 677 694 687
Average number of truckloads per week 3,330 1,908 1,607 1,470 1,457
Average revenues per total mile $1.17 $1.17 $1.14 $1.14 $1.15
Equipment at period end:
Tractors 1,032 950 575 522 480
Trailers 1,337 1,227 916 875 830
</TABLE>
5
<PAGE> 3
Boyd Bros. Transportation Inc. and Subsidiary
Management's Discussion and Analysis
The following is a discussion of the financial condition and results of
operations of the Company for each of the years in the three-year period ended
December 31, 1998. This discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere herein.
General
The Company was founded in 1956 by Dempsey Boyd and his brothers as a small
regional flatbed trucking operation with three tractors. Since that time, the
Company has grown to one with 1,032 tractors and 1,337 trailers operating in the
eastern two-thirds of the United States. Historically, the Company has owned its
revenue equipment and operated through employee drivers. The Company's expansion
in the past, therefore, has required significant capital expenditures which have
been funded through secured borrowings. During 1997, as a strategy to expand the
Company's potential for growth without the increase in capital expenditures
typically related to owned equipment, the Company began adding owner/operators
to its fleet. The Company then accelerated the implementation of this strategy
in December 1997 with the acquisition of Welborn Transport, Inc., which
specializes in short-haul routes using largely an owner/operated fleet. The
Company continued to expand its owner-operator program in 1998. At December 31,
1998, owner-operators made up 44.5% of the Company's total fleet.
Results of Operations
The following table sets forth the percentage relationship of the expense items
to operating revenues for the periods indicated.
<TABLE>
<CAPTION>
Percentage of Operating Revenues
Year Ended December 31,
1998 1997 1996
Operating revenues 100.00% 100.00% 100.00%
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating expenses
Salaries, wages, and employee benefits 31.00 42.00 43.37
Cost of independent contractors 26.94 3.16 --
Operating supplies 18.14 26.98 29.84
Taxes and licenses 2.17 2.99 3.39
Insurance and claims 4.57 4.45 5.16
Communication and utilities 1.31 1.69 1.81
Depreciation and amortization 8.74 11.89 12.61
Gain on disposition of property and equipment, net (.37) (.47) (1.23)
Other 1.30 .72 .66
Total operating expenses 93.80 93.41 95.95
----------------------------------------------------------------------------------------------------
Operating income 6.20 6.59 4.04
Interest expense, net (1.28) (1.62) (1.90)
Other income .07 -- --
----------------------------------------------------------------------------------------------------
Income before income taxes 4.99 4.97 2.14
Income taxes 1.97 1.97 .88
----------------------------------------------------------------------------------------------------
Net income 3.02% 3.00% 1.26%
====================================================================================================
</TABLE>
6
<PAGE> 4
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
Operating revenues for 1998 increased $40.9 million, or 52.9%, to $118.1 million
compared with $77.2 million for 1997. The inclusion of Welborn revenues for the
entire year accounted for 78.5% of the increase. Revenues also increased due to
better equipment utilization and the addition of 70 tractors.
Salaries, wages and employee benefits increased $4.2 million, or 12.9%, to $36.6
million compared with $32.4 million in 1997. Salaries increased at a slower rate
than revenues, making up 31.0% of operating revenue in 1998 compared to 42.0% in
1997, due to the expansion of the owner/operator program.
Cost of independent contractors for 1998 increased $29.4 million to $31.8
million from $2.4 million in 1997, due to a full year of the owner/operator
program and the inclusion of Welborn. As of December 31, 1998 Boyd Bros. had an
owner/operator fleet of 150 operators compared with 50 operators in 1997.
Additionally, Welborn, had 310 owner/operators as of December 31, 1998, which is
substantially all of its fleet.
Operating supplies expense for 1998 increased $.6 million, or 2.9%, to $21.4
million compared with $20.8 million for 1997. Operating supplies expense
increased at a slower rate than revenue because of lower fuel prices and also
the increase in the owner/operator fleet. Maintenance costs on a per mile basis
decreased $.06, or 16.7%, due to lowering the average age of the fleet.
Taxes and licenses expense for 1998 increased $.3 million, or 11.3%, to $2.6
million compared with $2.3 million in 1997. Taxes and licenses increased at a
slower rate than revenue due to the greater percentage of owner/operators.
Insurance and claims expense increased $2.0 million, or 56.8%, to $5.4 million
compared with $3.4 million in 1997. The increase was primarily due to an
increase in the accident frequency and the inclusion of Welborn for the entire
year.
Communications and utilities expense increased $.3 million, or 19.1%, to $1.6
million from $1.3 million in 1997. Improved cost management contributed to the
slower rate of increase compared with revenue growth.
Depreciation and amortization expense increased $1.1 million, or 12.4%, to $10.3
million from $9.2 million in 1997. The slower rate of growth compared with
revenue was due to higher utilization of equipment, a full year of Boyd's owner/
operator program, and Welborn's high percentage of owner/operators.
Rent expense increased $.2 million, or 113%, to $.3 million from $.1 million in
1997 due largely to the inclusion of Welborn. Rent expense includes operating
leases for both trailers and terminals.
Other expenses increased approximately $1.0 million, or 176.7%, to $1.5 million
in 1998 from $.6 million in 1997 due largely to Welborn being included for the
entire year. Other expenses include, but are not limited to, consulting fees,
advertising costs and bank charges.
Interest expense (net of interest income) increased $.2 million, or 20.4%, to
$1.5 million from $1.3 million in 1997. During 1998, the Company incurred
additional indebtedness for the purpose of financing an increase in its fleet of
70 tractors.
Net income for 1998 was $3.57 million compared with $2.32 million for 1997.
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
Operating revenues for 1997 increased $11.7 million, or 17.8%, to $77.2 million
compared with $65.5 million for 1996. The increase resulted because of better
equipment utilization, the addition of 27 tractors, and the inclusion of Welborn
revenues for one month. The Company's operating ratio improved from 95.95% in
1996 to 93.41% in 1997. The lower operating ratio was due primarily to better
utilization of equipment and moderating fuel costs.
Operating supplies expense for 1997 increased $1.3 million, or 6.6%, to $20.8
million compared with $19.5 million for 1996. Operating supplies expense
increased at a slower rate than revenue because of lower fuel prices.
Maintenance costs on a per mile basis decreased $.01, or 9.6%, due to lowering
the average age of the fleet.
Taxes and licenses expense for 1997 increased $.1 million, or 3.8%, to $2.3
million from $2.2 million in 1996. Taxes and licenses increased at a slower rate
than revenue because of the addition during 1997 of owner/operators, who pay
their own taxes and licenses.
Insurance and claims expense increased $.1 million, or only 1.8%, to $3.4
million from $3.3 million in 1996. Lower insurance rates and positive claims
experience contributed to the small rate of increase.
Communications and utilities expense increased $.1 million, or 10.1%, to $1.3
million from $1.2 million in 1996. Improved cost management contributed to the
slower rate of increase compared with revenue growth.
7
<PAGE> 5
Depreciation and amortization expense increased $.9 million, or 11.1%, to $9.2
million in 1997 from $8.3 million in 1996. The slower rate of growth compared
with revenue was due to higher utilization of equipment and the startup of the
owner/operator program. The Company had approximately 50 owner/operators at
December 31, 1997. Additionally, approximately 35 of these owner/operators
entered into lease-purchase arrangements with the Company, which resulted in
these assets being removed from the Company's depreciation records.
Gain on disposition of property and equipment decreased $.4 million, or 54.8%,
to $.4 million in 1997 from $.8 million in 1996. There were fewer equipment
trades in 1997 compared with 1996.
Other expenses decreased $.1 million, or 15.7%, to $.6 million in 1997 from $.7
million in 1996.
Interest expense (net of interest income) increased $10,510, or 0.8%, a
negligible increase considering the Company's revenue growth rate. A significant
portion of the Company's debt is LIBOR-rate based, which has been significantly
lower during most of 1997.
Net income for 1997 was $2.32 million compared with $.83 million for 1996.
Liquidity and Capital Resources
The growth of the Company's business and maintenance of its modern fleet has
required significant investments in new tractors and trailers, and has been
financed largely through long-term debt. Capital expenditures, net of proceeds
from disposals of property and equipment, were approximately $12.5 million in
1998, compared with $11.4 million in 1997. At December 31, 1998, the Company had
long-term debt (including current portions) of $25.9 million, which was
primarily incurred to purchase revenue equipment. Management anticipates
increasing the Company's fleet by approximately 100 tractors in 1999, net of
replacements, at an anticipated cost of approximately $29.3 million. Management
expects to finance such equipment purchases through equipment financing
arrangements with various lenders. Additionally, the Company will begin
construction of a new "super terminal" in Birmingham, Alabama with a cost
estimated at $3.5 million. The construction of the terminal will be financed
with a financial institution.
Net cash flow provided by operating activities was approximately $9.2 million
during 1998 compared with approximately $8.2 million in 1997. The Company had a
working capital surplus of $4.4 million at December 31, 1998.
Historically, the Company has relied on cash generated from operations to fund
its working capital requirements. However, the Company has a bank line of credit
permitting short-term borrowings of up to $1.5 million. The revolving line of
credit is collateralized by accounts receivable and inventory.
In January 1996, the Company implemented a stock repurchase program based on
management's belief that, at then current market prices, the Common Stock
represented a sound investment for the Company's corporate funds. Pursuant to
the repurchase program, the Company purchased 25,000 shares of the Common Stock
in open market or negotiated transactions during 1998, for an aggregate purchase
price of $165,625. The Company funded the purchase using working capital.
Additionally, on January 8, 1999, the Company purchased 500,000 shares of its'
outstanding Common Stock from the former CEO for $3.6 million. The stock
purchase was funded by available cash and bank line of credit.
The Company currently has outstanding letters of credit, totaling approximately
$2.9 million at December 31, 1998, to cover liability insurance claims and
outstanding claims related to its previous self-insured workers' compensation
program. Annual commitment fees relating to those letters of credit do not
exceed 1.5% of the face amounts thereof.
Management believes that cash flow from future operations and borrowings
available under its lines of credit will be sufficient to meet its needs for
working capital for the foreseeable future. Over the long term, the Company will
continue to have significant capital requirements which may require the Company
to seek additional borrowings or equity capital. The availability of debt
financing or equity capital will depend upon prevailing market conditions, the
market price of the Common Stock and other factors over which the Company has no
control, as well as the Company's financial condition and results of operations.
Interest Rate Risk
The Company is exposed to interest rate risk due to its long-term debt, which at
December 31, 1998, bore interest at rates ranging from 1.00% to 1.50% above the
bank's LIBOR rate. Under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial
Instruments, the Company has estimated the fair value of its long-term debt
approximates its carrying value, using a discounted cash flow analysis based on
borrowing rates available to the Company. The effect of a hypothetical 10%
increase in interest rates would increase the estimated fair value of the
Company's long-term debt by approximately $300,000. Management believes that
current working capital funds are sufficient to offset any adverse effects
caused by changes in the interest rates.
Year 2000 Compliance
State of Readiness- The Company is in the process of performing a
comprehensive review of its Year 2000 issues. The overall review includes six
phases: (1) inventorying Year 2000 items; (2) assigning priorities to identified
items; (3) assessing the Year 2000 compliance of items determined to be material
to the Company; (4) replacing or updating material items determined
8
<PAGE> 6
not to be Year 2000 compliant; (5) testing material items; and (6)
designing and implementing contingency and business continuation plans. The
Company has grouped its information technology (IT)-Systems and Non-IT Systems
into two categories, mission critical and support secondary. The mission
critical group includes the IT-Systems and Non-IT Systems that are necessary
to execute the Company's basic functions of hauling freight via the Company's
flat-bed trucks.
The Company has formed a committee to address both the mission critical and
support secondary categories. Each of the mission critical and support secondary
groups has inventoried Year 2000 items and assigned priorities to identified
items. The mission critical group has determined items material to the Company
and either has replaced or updated these items. As of December 31, 1998 the
testing of mission critical items that were replaced or updated is 80% complete
and is expected to be completed by the end of the second quarter of 1999. Based
on information provided to the Company by Qualcomm, the Company's supplier of
IT-Systems and software that is used to track and communicate with the fleet,
the Company believes that all systems provided to it by Qualcomm are Year 2000
compliant. The committee addressing secondary items (systems that increase
efficiencies but are not necessary for the provision of services or the receipt
of payment), has completed assessment of Year 2000 compliance. The support
secondary group is 40% complete as to replacing and updating these items, and is
expected to be completed by the end of the second quarter of 1999. The testing
is ongoing as the items are replaced or updated.
Contingency and Business Continuation Plan- The Company has not developed a
contingency plan, but such a plan is scheduled to be completed by the end of the
second quarter of 1999.
Risks and Reasonably Likely Worst Case Scenarios- As part of the Company's
comprehensive review, it is continuing to identify and verify the Year 2000
readiness of third parties (vendors and customers) with whom the Company has
material relationships. At present, the Company is not able to determine the
effect on results of operations, liquidity and financial condition in the event
the Company's material vendors and customers are not Year 2000 compliant. The
Company will continue to monitor the progress of its material vendors and
customers and formulate a contingency plan at that point in time when it does
not believe that a material vendor or customer will be compliant.
Costs- The Company expects to spend approximately $105,000 in connection with
the Year 2000 remediation. The Company is still evaluating all necessary
purchases, but as of December 31, 1998 the Company has spent $75,000.
Seasonality
In the trucking industry, results of operations show a seasonal pattern because
customers generally reduce shipments during the winter season, and the Company
does experience some seasonality due to the open, flatbed nature of its
trailers. The Company has at times experienced delays in meeting its shipping
schedules as a result of severe weather conditions, particularly during the
winter months. In addition, the Company's operating expenses have historically
been higher in the winter months due to decreased fuel efficiency and increased
maintenance costs in colder weather.
Recently Issued Accounting Standards
In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective for fiscal years
beginning after June 15, 1999. It requires that an entity recognize all
derivative financial instruments as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
Company is currently evaluating this Statement and has not yet determined its
impact on the Company's financial statements.
9
<PAGE> 7
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
1998 1997
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,361,664 $ 3,417,174
Short-term investments 250,000 250,000
Accounts receivable (less allowance for doubtful
accounts of $272,000 in 1998 and $237,000 in 1997):
Trade and interline 12,735,168 9,415,737
Other 170,094 117,034
Current portion of net investment in sales-type leases 1,495,510 508,829
Parts and supplies inventory 263,943 263,352
Prepaid tire expense 838,900 904,381
Other prepaid expenses 2,059,490 1,387,587
Deferred income taxes 644,712 174,587
----------- -----------
Total current assets 19,819,481 16,438,681
----------- -----------
PROPERTY AND EQUIPMENT:
Land and land improvements 2,262,486 1,046,245
Buildings 2,927,611 3,278,527
Revenue equipment 60,619,648 58,668,742
Other equipment 10,806,777 9,435,642
Leasehold improvements 339,994 339,944
----------- -----------
Total 76,956,516 72,769,100
Less accumulated depreciation and amortization 28,265,861 23,910,352
----------- -----------
Property and equipment, net 48,690,655 48,858,748
----------- -----------
OTHER ASSETS:
Net investment in sales-type leases 4,120,787 1,656,490
Goodwill, net of accumulated amortization of $240,578 in 1998
and $16,778 in 1997 4,235,422 4,459,222
Deposits and other assets 181,081 112,861
----------- -----------
Total other assets 8,537,290 6,228,573
----------- -----------
TOTAL $77,047,426 $71,526,002
=========== ===========
</TABLE>
10
<PAGE> 8
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
1998 1997
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 7,833,286 $ 5,914,785
Revolving line of credit 1,021,849
Accounts payable - trade and interline 1,648,537 1,517,218
Income taxes 1,686,502 230,327
Accrued liabilities:
Self-insurance claims 2,132,042 2,122,182
Salaries and wages 957,710 1,069,515
Other 1,200,642 778,148
----------- -----------
Total current liabilities 15,458,719 12,654,024
LONG-TERM DEBT 18,049,490 19,251,702
DEFERRED INCOME TAXES 10,677,510 10,165,682
----------- -----------
Total liabilities 44,185,719 42,071,408
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value - 1,000,000 shares
authorized; no shares issued and outstanding
Common stock, $.001 par value - 10,000,000 shares
authorized; 4,069,640 (1998) and 4,094,640 (1997) shares
issued and outstanding 4,070 4,095
Additional paid-in capital 16,864,622 17,030,222
Retained earnings 15,993,015 12,420,277
----------- -----------
Total stockholders' equity 32,861,707 29,454,594
----------- -----------
TOTAL $77,047,426 $71,526,002
=========== ===========
</TABLE>
See notes to consolidated financial statements.
10
<PAGE> 9
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
OPERATING REVENUES $ 118,123,424 $ 77,214,629 $ 65,523,412
------------- ------------ ------------
OPERATING EXPENSES:
Salaries, wages and employee benefits 36,607,732 32,427,094 28,419,881
Cost of independent contractors 31,817,649 2,440,687
Operating supplies 21,429,224 20,831,643 19,549,827
Taxes and licenses 2,565,842 2,305,506 2,221,710
Insurance and claims 5,392,526 3,438,761 3,378,815
Communications and utilities 1,553,511 1,305,448 1,186,131
Depreciation and amortization 10,320,379 9,181,399 8,261,253
Gain on disposition of property and equipment, net (433,023) (363,970) (805,800)
Other 1,542,703 557,508 661,110
------------- ------------ ------------
Total operating expenses 110,796,543 72,124,076 62,872,927
------------- ------------ ------------
OPERATING INCOME 7,326,881 5,090,553 2,650,485
------------- ------------ ------------
OTHER INCOME (EXPENSES):
Interest income 97,052 135,819 164,363
Interest expense (1,607,482) (1,390,455) (1,408,489)
Other income 82,308
------------- ------------ ------------
Other expenses, net (1,428,122) (1,254,636) (1,244,126)
------------- ------------ ------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 5,898,759 3,835,917 1,406,359
------------- ------------ ------------
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 2,284,318 995,000 (602,915)
Deferred 41,703 524,070 1,181,657
------------- ------------ ------------
Total provision for income taxes 2,326,021 1,519,070 578,742
------------- ------------ ------------
NET INCOME $ 3,572,738 $ 2,316,847 $ 827,617
============= ============ ============
BASIC AND DILUTED NET INCOME
PER SHARE $ 0.87 $ 0.62 $ 0.22
============= ============ ============
BASIC AND DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 4,090,175 3,726,591 3,726,496
============= ============ ============
</TABLE>
See notes to consolidated financial statements.
11
<PAGE> 10
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 $3,823 $14,708,994 $ 9,275,813 $23,988,630
Purchase and retirement of
common stock (122) (928,378) (928,500)
Net income 827,617 827,617
------ ----------- ----------- -----------
BALANCE, DECEMBER 31, 1996 3,701 13,780,616 10,103,430 23,887,747
Issuance of common stock in
connection with acquisition 394 3,249,606 3,250,000
Net income 2,316,847 2,316,847
------ ----------- ----------- -----------
BALANCE, DECEMBER 31, 1997 4,095 17,030,222 12,420,277 29,454,594
Purchase and retirement of
common stock (25) (165,600) (165,625)
Net income 3,572,738 3,572,738
------ ----------- ----------- -----------
BALANCE, DECEMBER 31, 1998 $4,070 $16,864,622 $15,993,015 $32,861,707
====== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
12
<PAGE> 11
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,572,738 $ 2,316,847 $ 827,617
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,320,379 9,181,399 8,261,253
Gain on disposal of property and equipment, net (433,023) (363,970) (805,800)
Net effect of sales-type leases on cost of
independent contractors (1,800,538) (212,780)
Provision for deferred income taxes 41,703 524,070 1,181,657
Changes in assets and liabilities provided
(used) cash:
Accounts receivable (3,372,491) (3,716,424) 805,570
Refundable income 579,573 581,738
Other current assets (1,001,836) (851,868) (9,950)
Deposits and other assets (68,220) 233,189 (30,038)
Accounts payable - trade and interline 131,319 (605,343) 1,190,036
Accrued liabilities and other current liabilities 1,776,724 1,119,302 (607,128)
------------ ------------ ------------
Net cash provided by operating activities 9,166,755 8,203,995 11,394,955
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchase of short-term investments (150,000)
Payments received on sales-type leases 1,750,705 43,374
Capital expenditures:
Revenue equipment (12,117,225) (15,341,667) (20,981,024)
Other property and equipment (2,360,188) (1,995,791) (838,881)
Proceeds from disposals of property
and equipment 1,975,628 5,948,765 6,959,399
------------ ------------ ------------
Net cash used in investing activities (10,751,080) (11,495,319) (14,860,506)
------------ ------------ ------------
FINANCING ACTIVITIES:
Purchase of common stock (165,625) (928,500)
Proceeds from line of credit 1,021,849
Proceeds from long-term debt 12,572,123 17,830,191 18,411,485
Principal payments on long-term debt (12,877,683) (15,736,748) (11,906,138)
------------ ------------ ------------
Net cash provided by (used in)
financing activities (471,185) 3,115,292 5,576,847
------------ ------------ ------------
</TABLE>
13
<PAGE> 12
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $(2,055,510) $ (176,032) $ 2,111,296
CASH AND CASH EQUIVALENTS:
BEGINNING OF YEAR 3,417,174 3,593,206 1,481,910
----------- ----------- -----------
END OF YEAR $ 1,361,664 $ 3,417,174 $ 3,593,206
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid (received) during the year for:
Interest $ 1,612,715 $ 1,254,636 $ 1,350,568
=========== =========== ===========
Income taxes, net of refunds $ 816,729 $ 30,469 $ (943,351)
=========== =========== ===========
SUPPLEMENTAL NONCASH INVESTING AND
FINANCING ACTIVITIES:
Acquisition of Welborn Transport, Inc.
in December 1997 (see Note 2)
Net investment in sales-type leases $ 2,177,249 $ 2,165,319
=========== ===========
</TABLE>
See notes to consolidated financial statements.
13
<PAGE> 13
BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS - Boyd Bros. Transportation Inc. and its subsidiary
(the "Company") are flatbed carriers, transporting a variety of products,
primarily steel and building materials. The Company has authority to
operate in the continental United States; however, its market generally
encompasses the eastern two-thirds of the United States. The Company is
headquartered in Clayton, Alabama and operates regional and satellite
terminals in locations near interstate highways or customer facilities.
All of the Company's operations (flatbed trucking) constitute only one
segment under the requirements of Statement of Financial Accounting
Standards ("SFAS") No. 131, Disclosures about Segments of an Enterprise
and Related Information.
PRINCIPLES OF CONSOLIDATION - The accompanying financial statements
include the accounts of the Company and its wholly owned subsidiary,
Welborn Transport, Inc. since its acquisition on December 8, 1997 (Note
2). All significant intercompany items have been eliminated in
consolidation.
ACCOUNTING ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on
hand, cash on deposit and highly liquid investments with a maturity of
three months or less at purchase date.
SHORT-TERM INVESTMENTS - Short-term investments, which consist of
certificates of deposit with maturities of three to twelve months, are
stated at cost, which approximates market.
TIRES IN SERVICE - Tires placed in service on newly purchased revenue
equipment are carried at cost and depreciated over their useful lives,
estimated to be eighteen months. The undepreciated cost of tires is
included in prepaid tire expense.
PROPERTY AND EQUIPMENT - Property and equipment is stated at cost.
Depreciation is computed using the straight-line method at rates intended
to distribute the cost of the assets over their estimated service lives as
follows:
Land improvements 15 years
Buildings 5 - 25 years
Revenue equipment 4 - 7 years
Other equipment 3 - 10 years
Leasehold improvements 5 - 20 years
Expenditures which significantly increase values or extend useful lives of
property and equipment are capitalized, whereas those for normal
maintenance and repairs are expensed. Gains and losses on disposal of
property and equipment are reflected in operations in the year of
disposal.
GOODWILL - Goodwill is amortized over 20 years using the straight-line
method. The Company periodically reviews goodwill to assess
recoverability, and impairments would be recognized in operating results
if a permanent diminution in value were to occur.
CLAIMS - The Company accrues estimates for the uninsured portion of claims
relating to the Company's insurance programs (see Note 6).
REVENUE RECOGNITION - Operating revenue and related costs are recognized
on the date shipments are delivered by the Company.
NET INCOME PER SHARE - In accordance with SFAS No. 128, Earnings per
Share, the Company is now required to report two separate earnings per
share numbers, basic and diluted, on the face of the income statement.
For the years ended December 31, 1998, 1997 and 1996, all of the Company's
outstanding options, totaling 444,810, 323,350, and 258,400 shares,
respectively, were excluded from the computation of weighted average
shares as such options would have been anti-dilutive.
FAIR VALUE OF FINANCIAL INSTRUMENTS - SFAS No. 107, Disclosures about Fair
Value of Financial Instruments (as amended by SFAS No. 119), requires
certain disclosures for financial instruments for which it is practicable
to estimate the fair value. The Company's financial instruments consist of
cash equivalents, short-term investments, trade receivables, trade
payables, accrued expenses, and interest-bearing debt. The fair value of
the Company's financial instruments, excluding interest-bearing debt,
approximates the carrying value reflected in the accompanying consolidated
balance sheets at December 31, 1998 and 1997, primarily because of the
short-term nature of these instruments. Fair value disclosure for the
Company's interest-bearing debt is presented in Note 5.
ACCOUNTING STANDARD NOT YET ADOPTED - In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is effective for fiscal years
beginning after June 15, 1999. It requires that an entity recognize all
derivative financial instruments as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. The Company is currently evaluating this Statement and has not yet
determined its impact on the Company's financial statements.
RECLASSIFICATIONS - Certain reclassifications have been made to the 1997
and 1996 consolidated financial statements to conform to the 1998
presentation.
14
<PAGE> 14
2. ACQUISITION
On December 8, 1997, the Company acquired Welborn Transport, Inc.
("Welborn") for a total purchase price of $6,631,000, including direct
acquisition costs. The acquisition was accounted for using the purchase
method of accounting and, accordingly, the purchase price was allocated to
the assets acquired and liabilities assumed based on their estimated fair
values at the acquisition date. Goodwill totaling $4,476,000 was
recognized on the acquisition equal to the excess of the purchase price
over the estimated fair value of the net assets acquired. The consolidated
statements of income include the results of Welborn's operations from its
acquisition date forward.
The estimated fair value of assets acquired and liabilities assumed in
this acquisition is summarized as follows:
<TABLE>
<S> <C>
Fair value of assets acquired $11,985,000
Less liabilities assumed 5,354,000
-----------
$ 6,631,000
===========
Consideration consisted of:
Fair value of common stock issued $ 3,250,000
Issuance of notes payable to stockholders (Note 5) 3,250,000
Amounts paid or accrued for acquisition costs 131,000
-----------
Total purchase price $ 6,631,000
===========
</TABLE>
The following unaudited pro forma consolidated results of operations for
the years ended December 31, 1997 and 1996 have been prepared as though
the acquisition occurred as of January 1, 1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Operating revenues $105,551,554 $88,875,373
Net income 2,119,420 1,128,198
Basic and diluted net income per share .52 .27
</TABLE>
The unaudited pro forma consolidated results of operations have been
prepared for comparative purposes only and do not purport to be indicative
of the actual results that would have been achieved had the acquisition
taken place as of January 1, 1996 or in the future.
3. EMPLOYEE BENEFIT PLAN
The Company has a contributory 401(k) retirement plan, which covers
employees who elect to participate and meet certain eligibility
requirements. The amounts charged to operations related to this plan for
the years ended December 31, 1998, 1997, and 1996 were $246,943, $151,527,
and $233,444, respectively.
4. LEASES
OPERATING LEASES - The Company leases certain terminal buildings, land and
equipment under agreements which expire at various dates through 2001. The
lease agreements generally include renewal options and the Company is
required to pay taxes, insurance and normal maintenance for the
facilities.
Future minimum lease payments under all operating leases with an initial
or remaining noncancelable lease term of more than one year are as
follows:
<TABLE>
<CAPTION>
YEAR
<S> <C>
1999 $ 90,441
2000 72,200
2001 22,615
--------
Total $185,256
========
</TABLE>
Total rental expense for all operating leases was $378,961, $112,243, and
$98,648 for the years ended December 31, 1998, 1997 and 1996,
respectively.
SALES-TYPE LEASES - The Company leases revenue equipment to certain of its
owner-operators and accounts for these transactions as sales-type leases.
These receivables have terms of four years and are collateralized by a
security interest in the related revenue equipment. There is no residual
value accruing to the Company at the end of the lease term.
The components of the net investment in sales-type leases at December 31,
1998 and 1997 are as follows:
<TABLE>
<S> <C> <C>
Minimum lease receivable $ 8,731,437 $ 3,360,117
Allowance for uncollectible receivables (1,201,245) (380,000)
----------- -----------
Net minimum lease receivable 7,530,192 2,980,117
Unearned interest income (1,913,895) (814,798)
----------- -----------
Net investment in sales-type leases 5,616,297 2,165,319
Less current portion (1,495,510) (508,829)
----------- -----------
Net amount due after one year $ 4,120,787 $ 1,656,490
=========== ===========
</TABLE>
Future minimum lease rentals are as follows:
<TABLE>
<CAPTION>
YEAR
<S> <C>
1999 $2,716,775
2000 2,668,711
2001 2,353,122
2002 992,829
----------
Total $8,731,437
==========
</TABLE>
Gains on disposition of revenue equipment leased to owner operators,
interest income on these leases, and provisions for bad debts related to
sales-type leases have been included as components of cost of independent
contractors in the accompanying consolidated statements of income.
15
<PAGE> 15
5. LONG-TERM DEBT
Long-term debt at December 31, 1998 and 1997 is summarized as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Revenue equipment obligations:
LIBOR plus 1.00% (6.06% - 1998) note payable
in monthly installments through November 2003 $13,380,676
LIBOR plus 1.25% (6.31% - 1998 and 7.06% - 1997) note
payable in monthly installments through November 2003 9,023,928 $19,820,760
LIBOR plus 1.50% (6.56% - 1998) note payable
in yearly installments through January 2001 1,500,000
LIBOR plus 1.50% (6.56% - 1998) note payable
in monthly installments through May 2003 902,632
7.35% note payable in monthly installments through
January 2000 763,444 1,549,652
Notes repaid in 1998 512,901
Note payable related to acquisition, paid in 1998 3,250,000
Other 312,096 33,174
----------- -----------
Total 25,882,776 25,166,487
Less current maturities 7,833,286 5,914,785
----------- -----------
Long-term debt $18,049,490 $19,251,702
=========== ===========
</TABLE>
Revenue equipment obligations are collateralized by revenue equipment.
On January 2, 1998, the $3,250,000 note payable to stockholders was
refinanced with a bank bearing interest at LIBOR plus 1.50% (see Note 2).
Long-term debt is scheduled to mature as follows:
<TABLE>
<CAPTION>
YEAR
<S> <C>
1999 $ 7,833,286
2000 6,412,304
2001 5,801,590
2002 4,000,392
2003 1,835,204
-----------
Total $25,882,776
===========
</TABLE>
The Company's borrowings under a line of credit of $1,021,849 at December
31, 1997 were converted in 1998 to a note payable bearing interest at
LIBOR plus 1.50%.
The Company also has a $1,500,000 line of credit under a commercial
revolving note, expiring June 3, 1999, bearing interest at LIBOR plus
1.75%. This line of credit was not utilized at December 31, 1998 and 1997.
Covenants under these loan agreements require the Company, among other
things, to maintain a tangible net worth of $14,800,000, as defined, and
to maintain certain financial ratios. The Company was in compliance with
these financial covenants at December 31, 1998.
The fair value of long-term debt approximates its carrying value and was
estimated using a discounted cash flow analysis, based on the borrowing
rate currently available to the Company for bank loans with similar terms
and average maturities.
6. COMMITMENTS AND CONTINGENCIES
The Company is currently self-insured as follows:
<TABLE>
<CAPTION>
RETENTION
AMOUNT
PER OCCURRENCE
--------------
<S> <C>
Liability - bodily injury and property damage $ 100,000
Employee medical and hospitalization 100,000
Cargo loss and damage 10,000
Collision 10,000
Environmental losses No Limit
</TABLE>
The above retention amounts represent rates which were negotiated with the
Company's insurance carriers at December 31, 1998. Retention amounts under
other previous insurance programs may vary from those stated above. At
December 31, 1998, the Company has recorded liabilities for retention
amounts related to claims under previous insurance coverage. For claims
prior to 1997, the Company had a retention amount per occurrence under
workers' compensation of $300,000.
The Company has excess primary coverage on a per claim and aggregate basis
beyond the deductible levels and also maintains umbrella policies to
supplement the primary liability coverage.
The liabilities for self-insurance are accrued based on claims incurred,
with liabilities for unsettled claims and claims incurred but not yet
reported being estimated based on management's evaluation of the nature
and severity of individual claims and the Company's past claims
experience.
The Company has outstanding letters of credit at December 31, 1998
totaling $2,913,112 to cover liability insurance claims and claims related
to its previous self-insured workers' compensation program, and to
purchase revenue equipment.
There are sundry claims and suits pending against the Company in the
ordinary course of business. In the opinion of the Company's management,
any ultimate liability in these matters will have no material adverse
effect on the financial position, operations or cash flows of the Company.
16
<PAGE> 16
7. STOCKHOLDERS' EQUITY
PREFERRED STOCK - The Board of Directors is authorized to issue, at its
discretion, up to 1,000,000 shares of preferred stock at par value of
$.001. The terms and conditions of the preferred stock are to be
determined by the Board of Directors.
STOCK OPTION PLAN - The Company has a stock option plan (the "Plan") that
provides for the granting of stock options to key employees, executive
officers and directors. The options are exercisable in increments over a
five-year period beginning on the first anniversary of the grant and will
expire ten years after the date of the grant. No options were exercised in
1996, 1997, or 1998.
Information regarding the Plan is summarized below:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE FAIR VALUE
SHARES PRICE AT GRANT DATE
<S> <C> <C> <C>
Outstanding at January 1, 1996 290,950 $ 11.00
Granted 64,500 7.84 $ 6.14
Terminated (97,050) 10.97
-------
Outstanding at December 31, 1996 258,400 10.22
Granted 92,500 7.94 6.12
Terminated (27,550) 9.61
-------
Outstanding at December 31, 1997 323,350 9.62
Granted 174,900 8.84 7.05
Terminated (53,440) 9.22
-------
Outstanding at December 31, 1998 444,810 $ 9.36
=======
</TABLE>
The number of stock options exercisable was 171,420, 117,310, and 77,960
at December 31, 1998, 1997 and 1996, respectively. At December 31, 1998,
55,190 shares were available for future grant under the Plan.
The following table summarizes information about fixed stock options as of
December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------- -------------------------
Weighted
average Weighted Weighted
Number remaining average Number average
Range of of shares contractual exercise of shares exercise
exercise prices outstanding life price exercisable price
<S> <C> <C> <C> <C> <C>
$6.00 - $11.00 444,810 7.4 years $ 9.36 171,420 $ 10.36
</TABLE>
SFAS No. 123, Accounting for Stock-Based Compensation, encourages, but
does not require companies to record compensation cost for stock-based
employee compensation plans at fair value. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and related Interpretations.
Accordingly, compensation cost for stock options is measured as the
excess, if any, of the quoted market price of the Company's stock at the
date of the grant over the amount an employee must pay to acquire the
stock. The option price of all the Company's stock options is equal to
the market value of the stock at the grant date. As such, no compensation
expense is recorded in the accompanying consolidated financial
statements.
Had compensation cost been determined based upon the fair value at the
grant date for options awarded in 1998, 1997 and 1996 under the Plan
consistent with the methodology prescribed under SFAS No. 123, the
Company's pro forma net income and net income per share would have
differed from the amounts reported as follows:
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA
-------------------------------------- ------------------------------------
1998 1997 1996 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Net income $ 3,572,738 $ 2,316,847 $ 827,617 $3,285,544 $ 2,208,410 $ 696,085
Basic and diluted net
income per share $ .87 $ .62 $ .22 $ .80 $ .59 $ .19
</TABLE>
The fair value for options was estimated at the date of the grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Risk-free interest rate 6.5 % 6.5 % 6.5 %
Dividend yield 0 % 0 % 0 %
Expected volatility 82.8 % 81.4 % 82.6 %
Weighted average expected life 7 years 7 years 7 years
</TABLE>
8. INCOME TAXES
The provision (credit) for income taxes for the years ended December 31,
1998, 1997 and 1996 consisted of the following (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Current:
Federal $1,944 $ 957 $ (545)
State 340 38 (58)
------ ------ -------
Total current 2,284 995 (603)
------ ------ -------
Deferred:
Federal 31 371 1,019
State 11 153 163
------ ------ -------
Total deferred 42 524 1,182
------ ------ -------
Total provision for income taxes $2,326 $1,519 $ 579
====== ====== =======
</TABLE>
Income tax expense for the years ended December 31, 1998, 1997 and 1996 is
greater than the amounts computed by applying the federal statutory rate
of 35% to income before income taxes primarily due to state income taxes
($185,000 in 1998, $120,000 in 1997 and $80,000 in 1996) and the effect of
the non-deductibility of goodwill amortization ($80,000 in 1998).
17
<PAGE> 17
At December 31, 1997, the Company had approximately $1,920,000 of state
net operating loss carryforwards for tax purposes available to offset
future state taxable income through 2011. The Company also had
approximately $630,000 of alternative minimum tax credit carryforwards
available to offset future federal income tax. These were utilized during
1998.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and
assets as of December 31, 1998 and 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation $10,180 $10,259
Prepaid expenses deductible when paid 590 403
Capitalized tires 292 218
Cash basis to accrual basis adjustment 542 766
Other 16 23
------- -------
Total deferred tax liabilities 11,620 11,669
------- -------
Deferred tax assets:
Accrued self insurance claims 500 494
Other accrued expenses not deductible until paid 437 145
Allowance for losses on receivables 577 180
State NOL carryforward 96
Alternative minimum tax credit carryforward 630
Other 73 133
------- -------
Total deferred tax assets 1,587 1,678
------- -------
Net deferred tax liabilities $10,033 $ 9,991
======= =======
</TABLE>
The above amounts are reflected in the accompanying consolidated balance
sheets as:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Current assets $ 645 $ 175
Noncurrent liabilities 10,678 10,166
------- -------
Net deferred tax liabilities $10,033 $ 9,991
======= =======
</TABLE>
9. MAJOR CUSTOMERS
The Company does not believe that it is dependent upon any single
customer. Sales to the Company's largest customer amounted to 8%, 12% and
13% of operating revenues during 1998, 1997 and 1996, respectively.
10. SUBSEQUENT EVENT
During January 1999, the Company re-purchased 500,000 shares of its
outstanding Common Stock for $3,660,000.
11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the
years ended December 31, 1998 and 1997 (in thousands, except per share
data):
<TABLE>
<CAPTION>
1998
-----------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <C> <C> <C> <C>
Operating revenues $27,888 $30,370 $30,221 $29,644
Operating income 1,157 2,360 2,227 1,583
Net income 459 1,203 1,106 805
Basic and diluted net income per share 0.11 0.29 0.27 0.20
<CAPTION>
1997
-----------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
<S> <C> <C> <C> <C>
Operating revenues $17,197 $19,303 $19,574 $21,141
Operating income 745 1,484 1,711 1,151
Net income 270 673 790 584
Basic and diluted net income per share 0.07 0.20 0.21 0.15
</TABLE>
18
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Boyd Bros. Transportation Inc.:
We have audited the accompanying consolidated balance sheets of Boyd Bros.
Transportation Inc. and subsidiary as of December 31, 1998 and 1997, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Boyd Bros. Transportation Inc. and
subsidiary as of December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1998 in conformity with generally accepted accounting principles.
February 5, 1999
19
<PAGE> 1
EXHIBIT 21
Subsidiaries of Boyd Bros. Transportation, Inc.
The following companies are subsidiaries of the Registrant:
Subsidiary State of Incorporation
- ---------- ----------------------
Welborn Transport, Inc. Alabama
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-83768 of Boyd Bros. Transportation Inc. on Form S-8 of our report dated
February 5, 1999, appearing in this Annual Report on Form 10-K of Boyd Bros.
Transportation Inc. for the year ended December 31, 1998.
Birmingham, Alabama
March 30, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BOYD BROS. TRANSPORTATION INC. FOR THE YEAR ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,361,664
<SECURITIES> 250,000
<RECEIVABLES> 18,351,465
<ALLOWANCES> 272,000
<INVENTORY> 263,943
<CURRENT-ASSETS> 19,819,481
<PP&E> 76,956,516
<DEPRECIATION> 28,265,861
<TOTAL-ASSETS> 77,047,426
<CURRENT-LIABILITIES> 15,458,719
<BONDS> 0
0
0
<COMMON> 4,070
<OTHER-SE> 32,857,637
<TOTAL-LIABILITY-AND-EQUITY> 77,047,426
<SALES> 118,423,424
<TOTAL-REVENUES> 118,423,424
<CGS> 110,796,543
<TOTAL-COSTS> 110,796,543
<OTHER-EXPENSES> (179,360)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,607,482
<INCOME-PRETAX> 5,898,759
<INCOME-TAX> 2,326,021
<INCOME-CONTINUING> 3,572,738
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,572,738
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
</TABLE>
