-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SyN2dRSoAe28AhdRxxAVJiKkLtzNKCoDyvElZMKHTmUqXVwJCLzbgK8t0Mthf89u D59JzJKfrzRqTOWOjKFKvA== 0000846729-98-000004.txt : 19980721 0000846729-98-000004.hdr.sgml : 19980721 ACCESSION NUMBER: 0000846729-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980720 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN FREIGHTWAYS CORP CENTRAL INDEX KEY: 0000846729 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 742391754 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17570 FILM NUMBER: 98668862 BUSINESS ADDRESS: STREET 1: 2200 FORWARD DR CITY: HARRISON STATE: AR ZIP: 72601 BUSINESS PHONE: 5017419000 MAIL ADDRESS: STREET 1: 2200 FORWARD DR CITY: HARRISON STATE: AR ZIP: 72601 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 34-0-17570 AMERICAN FREIGHTWAYS CORPORATION (Exact name of registrant as specified in its charter) Arkansas 74-2391754 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 2200 Forward Drive, Harrison, Arkansas 72601 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (870) 741-9000 Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act 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. [X] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares of common stock outstanding at June 30, 1998: 31,635,418. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (000'S OMITTED) JUNE 30, December 31, 1998 1997 ----------- ----------- (UNAUDITED) (Note) ASSETS Current assets Cash and cash equivalents $ 5,598 $ 1,755 Trade receivables, less Allowance for doubtful accounts (1998-$1,911; 1997-$1,774) 88,063 78,700 Operating supplies and inventories 3,849 2,882 Prepaid expenses 13,761 8,671 Deferred income taxes 16,835 13,306 Income taxes receivable - 1 ----------- ----------- Total current assets 128,106 105,315 Property and equipment 735,653 699,176 Accumulated depreciation and amortization (257,896) (230,870) ----------- ----------- 477,757 468,306 Other assets 2,112 1,952 ----------- ----------- $ 607,975 $ 575,573 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable $ 12,316 $ 12,910 Accrued expenses 67,260 54,114 Federal and state income taxes 3,278 - Current portion of long-term debt 11,530 11,497 ----------- ----------- Total current liabilities 94,384 78,521 Long-term debt, less current portion (Note B) 209,920 210,411 Deferred income taxes 64,743 59,225 Shareholders' equity Common stock, par value $.01 per share-- authorized 250,000 shares; issued and outstanding 31,635 in 1998 and 31,568 in 1997 316 316 Additional paid-in capital 105,515 104,832 Retained earnings 133,097 122,268 ----------- ----------- 238,928 227,416 ----------- ----------- $ 607,975 $ 575,573 =========== ===========
Note: The condensed consolidated balance sheet at December 31, 1997, has been derived from the audited consolidated financial statements at that date. See notes to condensed consolidated financial statements. AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (000'S OMITTED, EXCEPT PER SHARE DATA) Three Months Ended Six Months Ended June 30 June 30 1998 1997 1998 1997 ------------------------------------ OPERATING REVENUE $246,402 $219,088 $477,051 $412,140 OPERATING EXPENSES AND COSTS Salaries, wages and benefits 149,547 130,272 292,977 248,577 Operating supplies and expenses 20,163 18,663 40,180 37,175 Operating taxes and licenses 10,446 8,877 20,441 17,478 Insurance 7,376 6,732 14,517 13,414 Communications and utilities 4,756 3,581 8,711 7,076 Depreciation and amortization 13,772 13,024 27,581 25,870 Rents and purchased transportation 14,416 13,607 27,435 23,497 Other 10,039 8,760 20,017 17,079 ------------------ ------------------ 230,515 203,516 451,859 390,166 ------------------ ------------------ OPERATING INCOME 15,887 15,572 25,192 21,974 OTHER INCOME (EXPENSE) Interest expense (3,925) (4,174) (8,013) (8,260) Interest income 65 67 129 122 Gain on disposal of assets 820 16 841 33 Other, net 24 9 52 19 ------------------ ------------------ (3,016) (4,082) (6,991) (8,086) INCOME BEFORE INCOME TAXES 12,871 11,490 18,201 13,888 ------------------ ------------------ FEDERAL AND STATE INCOME TAXES Current 4,156 2,088 5,383 3,381 Deferred 1,057 2,416 1,988 2,063 ------------------ ------------------ 5,213 4,504 7,371 5,444 ------------------ ------------------ NET INCOME $ 7,658 $ 6,986 $ 10,830 $ 8,444 ================== ================== PER SHARE (NOTE D) Net income-basic $ 0.24 $ 0.22 $ 0.34 $ 0.27 Net income-assuming dilution $ 0.24 $ 0.22 $ 0.34 $ 0.27 ================== ================== AVERAGE SHARES OUTSTANDING (NOTE D) Basic 31,612 31,301 31,590 31,280 Assuming dilution 31,752 31,597 31,688 31,544 ================== ==================
See notes to condensed consolidated financial statements. AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (000'S OMITTED) Six Months Ended June 30 1998 1997 ---------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 39,892 $ 33,690 INVESTING ACTIVITIES Proceeds from sales of assets 1,963 67 Capital expenditures (38,223) (27,983) ----------- ----------- Net cash used by investing activities (36,260) (27,916) FINANCING ACTIVITIES Principal payments on long-term debt (15,665) (55,694) Proceeds from notes payable and long-term borrowings 15,208 48,400 Proceeds from issuance of common stock 668 1,188 ----------- ----------- Net cash provided (used) by financing activities 211 (6,106) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 3,843 $ (332) =========== ===========
See notes to condensed consolidated financial statements. AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 1998 NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results of the six month period ended June 30, 1998, are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. For further information, refer to the Company's consolidated financial statements and footnotes thereto included in Form 10-K for the year ended December 31, 1997. NOTE B - LONG-TERM DEBT As of June 30, 1998, the Company has outstanding borrowings of $65,000,000 under its existing $160,000,000 unsecured revolving line of credit. The proceeds of these borrowings were used for the purchase of revenue equipment and for the purchase and construction of Customer Center facilities. At June 30, 1998, the amount available for borrowing under the line of credit was $95,000,000. In addition to this credit facility, the Company has obtained letters of credit totaling $3,976,000 to provide collateral on its self-insurance plan. As of June 30, 1998, the Company has outstanding borrowings of $129,250,000 under an uncommitted Master Shelf Agreement which provides for the issuance of up to $140,000,000 of senior promissory notes with an average life not to exceed twelve years. In addition, the Company has outstanding an unsecured senior note for $20,000,000 payable in equal annual installments of $5,000,000 through November 2001. NOTE C - COMMITMENTS Commitments for the purchase of revenue equipment and the purchase or construction of Customer Centers aggregated approximately $53,794,000 at June 30, 1998. NOTE D - EARNINGS PER SHARE Net income for purposes of basic earnings per share and earnings per share--assuming dilution was $7,658,000 and $6,986,000 for the three month periods ended June 30, 1998 and 1997, respectively. For the six month periods ended June 30, 1998 and 1997, net income for purposes of basic earnings per share and earnings per share--assuming dilution was $10,830,000 and $8,444,000, respectively. A reconciliation of average shares outstanding for these periods is presented below: Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 --------------------------------------- (In Thousands) (In Thousands) Average shares outstanding-basic 31,612 31,301 31,590 31,280 Effect of dilutive stock options 140 296 98 264 Average shares outstanding -assuming dilution 31,752 31,597 31,688 31,544 ========= ========= ========= =========
NOTE E - RECENT ACCOUNTING PRONOUNCEMENTS The impact of adoption of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" which is effective for fiscal years beginning after December 15, 1997 was not material. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the percentages of operating expenses and other items to operating revenue: Three Months Six Months Ended Ended June 30 June 30 1998 1997 1998 1997 ------------------------------ Operating revenue 100.0% 100.0% 100.0% 100.0% Operating expenses and costs: Salaries, wages and benefits 60.7% 59.5% 61.4% 60.3% Operating supplies and expenses 8.2% 8.5% 8.4% 9.0% Operating taxes and licenses 4.2% 4.1% 4.3% 4.2% Insurance 3.0% 3.1% 3.0% 3.3% Communications and utilities 1.9% 1.6% 1.8% 1.7% Depreciation and amortization 5.6% 5.9% 5.8% 6.3% Rents and purchased transportation 5.9% 6.2% 5.8% 5.7% Other 4.1% 4.0% 4.2% 4.2% ----- ----- ----- ----- Total operating expenses and costs 93.6% 92.9% 94.7% 94.7% ----- ----- ----- ----- Operating income 6.4% 7.1% 5.3% 5.3% Interest expense (1.6%) (1.9%) (1.7%) (2.0%) Other income, net 0.4% 0.1% .2% 0.1% ----- ----- ----- ----- Income before income taxes 5.2% 5.3% 3.8% 3.4% Income taxes 2.1% 2.1% 1.5% 1.3% ----- ----- ----- ----- Net income 3.1% 3.2% 2.3% 2.1% ===== ===== ===== =====
RESULTS OF OPERATIONS Operating Revenue Operating revenue for the six months ended June 30, 1998 was $477,051,000, up 15.7%, compared to $412,140,000 for the six months ended June 30, 1997. Operating revenue for the three months ended June 30, 1998 was $246,402,000, up 12.5%, compared to $219,088,000 for the three months ended June 30, 1997. The growth in operating revenue was primarily the result of increased revenue per hundred weight and increased tonnage from new and existing customers. Tonnage handled by the Company during the six and three months ended June 30, 1998, increased 12.8% and 9.3%, respectively, over the same time periods of 1997. This increase in tonnage was mainly a result of the following: - - The Company continued to increase its market penetration into existing service territories, particularly those geographic areas added during 1995, 1996 and 1997. During 1995, the Company expanded its all-points coverage to the states of Colorado, Florida, Iowa, Nebraska, North Carolina, South Carolina and Wisconsin. 1996 expansions included the states of Delaware, Maryland, Minnesota, Virginia and West Virginia. Effective August 4, 1997, all-points coverage was added to the state of New Mexico. - - The continued increase in intrastate tonnage following the deregulation of intrastate commerce effective January 1, 1995. - - Effective January 1, 1998, the Company increased its all-points coverage to 28 states with the addition of the state of Michigan. Revenue per hundred weight for the first six months of 1998 was up 2.3% from levels experienced in the first six months of 1997. Factors contributing to the increase in revenue per hundred weight were: - - A general rate increase of approximately 5.5% effective January 1, 1998. General rate increases initially affect approximately 45% of the Company's customers. The remaining customers' rates are determined by contracts and guarantees and are negotiated throughout the year. - - A fuel surcharge was in effect during the first six months of 1997, but not in effect for the majority of 1998. The Company initiated a fuel surcharge beginning September 6, 1996 to help recover the increased costs of fuel. This surcharge is tied to the Department of Energy's National Diesel Fuel Index and ranged from 0.7% to 1.3% for LTL shipments as of June 30, 1997. The surcharge is designed to suspend at the time this national index moves below $1.15 per gallon. Effective January 7, 1998, the fuel surcharge was suspended and remains suspended as of June 30, 1998. - - The percentage of the Company's total revenue that was derived from truckload shipments (greater than 10,000 pounds) declined to 5.7% during the six months ended June 30, 1998 as compared to 5.8% during the six months ended June 30, 1998. Even though inventory adjustments in the softening consumer goods sector of the economy appeared to have reduced demand for less-than- truckload services during the second quarter of 1998, management expects that growth in operating revenue is sustainable in the near term. The Company's expansions of service territory during 1998 and 1997 were less aggressive than those initiated in prior years, and the primary focus for growth in operating revenue in the near term will be further penetration of existing markets. As a result, any near-term percentage growth in operating revenue will likely be less than that experienced in recent years. The foregoing statement concerning the sustainability of revenue growth is subject to a number of factors, including LTL industry capacity, increased tonnage and general economic conditions. Operating Expenses Operating expenses as a percentage of operating revenue were 94.7% for the six months ended June 30, 1998 and 1997. Operating expenses as a percentage of operating revenue increased to 93.6% in the three months ended June 30, 1998 from 92.9% in the three months ended June 30, 1997. The following categories of expenses declined as a percentage of revenue for the first six months of 1998 as compared to the same time period during 1997: - - Operating supplies and expenses as a percentage of operating revenue decreased to 8.4% in the six months ended June 30, 1998 from 9.0% in the six months ended June 30, 1997. This improvement was due to reduced fuel costs resulting from lower fuel prices and the increased use of purchased transportation. This improvement in fuel costs was partially offset by increased costs of maintaining equipment and facilities. In the near term, management expects this gradual upward trend in maintenance costs to continue as the Company's fleet ages. - - Depreciation and amortization as a percentage of operating revenue improved to 5.8% in the six months ended June 30, 1998 from 6.3% in the six months ended June 30, 1997. This improvement was largely due to the increased usage of purchased transportation and operating lease financing of revenue equipment. - - Insurance as a percentage of operating revenue decreased to 3.0% in the six months ended June 30, 1998 from 3.3% in the six months ended June 30, 1997. This improvement was largely due to improved experience involving vehicle accidents and cargo claims. Management does not expect this downward trend to continue. Rather, it is expected that insurance costs as a percentage of operating revenue will stabilize or gradually increase during 1998. These improvements in operating expenses as a percentage of operating revenue were partially offset by increases in the following areas: - - Salaries, wages and benefits as a percentage of operating revenue increased to 61.4% in the six months ended June 30, 1998 from 60.3% in the six months ended June 30, 1997. This increase was largely the result of increased costs in the areas of workmen's compensation and health care. After benefiting from relatively low claims in these areas during the first six months of 1997, the level of claims returned to a level more typically experienced by the Company. Management expects that during the remainder of 1998, these expenses will remain at current levels. Comparing the first six months of 1998 to the same period of 1997, salaries and wages as a percentage of operating revenue remained relatively flat despite a general wage increase of 3.5% in March 1998. During the remainder of 1998, management anticipates that ongoing educational programs and changes in operations will result in productivity gains in the form of improved pickup and delivery density, increased line haul load factor and more direct line haul schedules. However, these gains cannot be assured and are subject to a variety of factors which may or may not be within the control of management. - - Rents and purchased transportation as a percentage of operating revenue increased to 5.8% in the six months ended June 30, 1998 from 5.7% in the six months ended June 30, 1997. This increase was a result of the increased use of operating lease financing and the utilization of purchased transportation in selected line haul lines in order to improve asset utilization and decrease overall costs of operations. Management expects rents and purchased transportation as a percentage of operating revenue to remain at current levels. Other Interest expense as a percentage of operating revenue decreased to 1.7% in the six months ended June 30, 1998, compared to 2.0% in the six months ended June 30, 1997. This improvement is primarily the result of lower interest rates and of reducing total debt to $221,450,000 as of June 30, 1998 from $230,945,000 as of June 30, 1997. The quarter and year to date results for 1998 were favorably impacted by $822,000 before taxes as a result of the sale of a surplus property. The effective tax rate of the Company was 40.5% for the six months ended June 30, 1998, up from 39.2% for the same time period of 1997. This increase was due to increased federal tax rates on higher levels of income, as well as higher state tax rates. Net income for the six months ended June 30, 1998, was $10,830,000, up 28.3%, from $8,444,000 for the six months ended June 30, 1997. Net income for the three months ended June 30, 1998, was $7,658,000, up 9.6%, from $6,986,000 for the three months ended June 30, 1997. LIQUIDITY AND CAPITAL RESOURCES Capital requirements during the six months ended June 30, 1998 consisted primarily of $36,260,000 in investing activities. The Company invested $38,223,000 in capital expenditures during the six months ended June 30, 1998 comprised of $4,862,000 in additional revenue equipment, $20,116,000 in new Customer Center facilities or the expansion of existing facilities and $13,245,000 in other equipment. Management expects capital expenditures for the full year of 1998 will be approximately $100,000,000. However, the amount of capital expenditures required in 1998 will be dependent on the growth rate of the Company and the timing and size of any future expansions of service territory. At June 30, 1998, the Company had commitments for land, Customer Centers, revenue and other equipment of approximately $53,794,000. These commitments were mostly for the completion of projects in process at June 30, 1998. The Company provided for its capital resource requirements in the six months ended June 30, 1998 predominantly with cash from operations. Cash from operations totaled $39,892,000 in the six months ended June 30, 1998 compared to $33,690,000 provided by operations in the six months ended June 30, 1997. Net financing activities provided an additional $211,000 of cash flow in the six months ended June 30, 1998. Two primary sources of credit financing were available to the Company: the revolving line of credit and the Master Shelf facility. - - The Company experiences periodic cash flow fluctuations common to the industry. Cash outflows are heaviest during the first part of any given year while cash inflows are normally weighted towards the last two quarters of the year. To smooth these fluctuations and to provide flexibility to fund future growth, the Company utilizes a variable-rate, unsecured revolving line of credit of $160,000,000 provided by NationsBank of Texas, N.A. (agent), Chase Bank of Texas, N.A., Wachovia Bank of Georgia, N.A., ABN-AMRO Bank N.V. and The First National Bank of Chicago. At June 30, 1998, $65,000,000 was outstanding on the revolving line of credit, leaving $95,000,000 available for borrowing. The Company also had $10,000,000 available under its short-term, unsecured revolving $10,000,000 line of credit with NationsBank of Texas, N.A. In addition, the Company maintains a $10,000,000 line of credit with NationsBank of Texas, N.A. to obtain letters of credit required for its self-insurance program. At June 30, 1998, the Company had obtained letters of credit totaling $3,976,000 for this purpose. -To assist in financing longer-lived assets, the Company has an uncommitted Master Shelf Agreement with the Prudential Insurance Company of America which provides for the issuance of up to $140,000,000 in medium to long-term unsecured notes at an interest rate calculated at issuance. At June 30, 1998, the Company had $129,250,000 outstanding under this facility. Management expects that the Company's existing working capital and its available lines of credit are sufficient to meet the Company's commitments as of June 30, 1998, and to fund current operating and capital needs. However, if additional financing is required, management believes it will be available. The Company uses off-balance sheet financing in the form of operating leases primarily in the following areas; land and structures, revenue equipment and other equipment. At June 30, 1998, future rental commitments on operating leases were $97,735,000. The Company prefers to utilize operating leases for these areas and plans to use them in the future when such financing is available and suitable. Future rental commitments on operating leases are as follows: Land and Revenue Other Total Structures Equipment Equipment ------------------------------------------ 1998 $15,457 $ 2,783 $ 4,917 $ 7,757 1999 25,240 3,842 9,833 11,565 2000 22,549 2,472 9,833 10,244 2001 14,365 1,833 9,057 3,475 2002 10,537 1,036 9,303 198 Thereafter 9,587 1,981 7,606 --- ------------------------------------------ Total $97,735 $13,947 $ 50,549 $ 33,239 ------------------------------------------
YEAR 2000 ISSUES The Company has assessed the impact of the Year 2000 issues on its computer software systems and applications, and determined that although many of its applications are already compliant the Company will have to modify or replace other applications. The Company expects to have all applications fully compliant by the end of 1998. The Company also has initiated discussions with its significant customers and suppliers to determine the extent to which the Company's interface systems would be vulnerable to those third parties' failure to remediate their own Year 2000 issues. There is no assurance that the systems of other companies on which the Company's systems rely will be timely converted and would not have an adverse effect on the Company's systems. Expenditures related to the Company's Year 2000 initiatives have not been and are not expected to be material to the Company's results of operations or financial position. ENVIRONMENTAL At June 30, 1998, the Company had no outstanding inquiries with any state or federal environmental agency. INDEX AMERICAN FREIGHTWAYS CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Condensed consolidated balance sheets--June 30, 1998 and December 31, 1997 Condensed consolidated statements of income-Three months ended June 30, 1998 and 1997; Six months ended June 30, 1998 and 1997 Condensed consolidated statements of cash flows--Six months ended June 30, 1998 and 1997 Notes to condensed consolidated financial statements--June 30, 1998 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: (10) Fifth Amendment to Amended and Restated Credit Agreement among NationsBank of Texas, N.A., as Agent, the Registrant and its Subsidiary dated May 15, 1998. Amended and Restated Appointed Non-Employee Director Stock Option Plan Amended and Restated Elected Non-Employee Director Stock Option Plan (27) Financial Data Schedule (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the three month period ended June 30, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN FREIGHTWAYS CORPORATION (Registrant) Date: July 20, 1998 /s/Frank Conner Frank Conner Executive Vice President Accounting & Finance and Chief Financial Officer EX-10 2 FIFTH AMEND TO AMENDED AND RESTATED CREDIT AGRMT FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this "Fifth Amendment"), dated as of May 15, 1998, is entered into among AMERICAN FREIGHTWAYS CORPORATION, an Arkansas corporation ("AFC"), AMERICAN FREIGHTWAYS, INC., an Arkansas corporation ("AFI"; AFC and AFI are referred to collectively as the "Companies" and individually as a "Company"), the banks listed on the signature pages hereof (the "Lenders"), NATIONSBANK OF TEXAS, N.A., in its capacity as agent (in said capacity, the "Agent"). BACKGROUND A. Companies, Lenders and Agent are parties to that certain Amended and Restated Credit Agreement, dated as of October 20, 1994, as amended by that certain First Amendment to Amended and Restated Credit Agreement, dated as of May 31, 1995, that certain Second Amendment to Amended and Restated Credit Agreement, dated as of March 26, 1996, that certain Third Amendment to Amended and Restated Credit Agreement, dated as of May 31, 1996, and that Fourth Amendment to Amended and Restated Credit Agreement, dated as of March 31, 1997 (said Credit Agreement, as amended, the "Credit Agreement"; the terms defined in the Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit Agreement). B. Companies, Lenders and Agent desire to amend the Credit Agreement to (i) remove Credit Lyonnais New York Branch ("Credit Lyonnais") as a Lender, (ii) decrease the Commitment, and (iii) extend the Maturity Date. NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are all hereby acknowledged, Companies, Lenders and Agent covenant and agree as follows: 1. AMENDMENTS. (a) The amount of "$175,000,000" set forth in the introductory paragraph of the Credit Agreement is hereby amended to be "$160,000,000". (b) The definition of "Commitment" set forth in Article I of the Credit Agreement is hereby amended to read as follows: "'Commitment' means $160,000,000, as reduced from time to time pursuant to Section 2.04 hereof." (c) The definition of "Maturity Date" set forth in Article I of the Credit Agreement is hereby amended to read as follows: "'Maturity Date' means April 1, 2003, or such earlier date the Obligation becomes due and payable (whether by acceleration, prepayment in full or otherwise) or such later date as extended pursuant to Section 2.12." (d) The Specified Percentage of each Lender is hereby amended to be the percentage beside each such Lender's name on the signature pages hereof. 2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its execution and delivery hereof, each Company represents and warrants that, as of the date hereof and after giving effect to the amendments contemplated by the foregoing Section 1: (a) the representations and warranties contained in the Credit Agreement are true and correct on and as of the date hereof as made on and as of such date; (b) no event has occurred and is continuing which constitutes a Default or an Event of Default; (c) each Company has full power and authority to execute and deliver this Fifth Amendment, and this Fifth Amendment and the Credit Agreement, as amended hereby, constitute the legal, valid and binding obligations of such Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and except as rights to indemnity may be limited by federal or state securities laws; and (d) no authorization, approval, consent, or other action by, notice to, or filing with, any governmental authority or other Person (including, but not limited to, with respect to the Prudential Debt), other than the Board of Directors of the Companies is required for the execution, delivery or performance by each Company of this Fifth Amendment. 3. CONDITIONS OF EFFECTIVENESS. This Fifth Amendment shall be effective as of May 15, 1998, subject to the following: (a) Agent shall have received counterparts of this Fifth Amendment executed by each Lender; (b) Agent shall have received counterparts of this Fifth Amendment executed by each Company; (c) Agent shall have received certified copies of resolutions of each Company authorizing execution, delivery and performance of this Fifth Amendment; and (d) Credit Lyonnais shall have received payment in full of all amounts due and owing to it under the Credit Agreement; and (e) Agent shall have received, in form and substance satisfactory to Agent and its counsel, such other documents, certificates and instruments as Agent shall require. 4. CREDIT LYONNAIS. Upon satisfaction of the conditions set forth in Section 3 of this Fifth Amendment, Credit Lyonnais shall (a) not be a Lender under the Credit Agreement and shall no longer have any rights or obligations with respect thereunder, except for those which expressly survive termination of the Credit Agreement or termination of any commitment thereunder, and (b) mark its Note "PAID IN FULL" and return its Note to the Companies. 5. REFERENCE TO THE CREDIT AGREEMENT. (a) Upon the effectiveness of this Fifth Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended hereby. (b) The Credit Agreement, as amended by the amendments referred to above, shall remain in full force and effect and is hereby ratified and confirmed. 6. COSTS, EXPENSES AND TAXES. The Companies, jointly and severally, agree to pay on demand all costs and expenses of Agent in connection with the preparation, reproduction, execution and delivery of this Fifth Amendment and the other instruments and documents to be delivered hereunder (including the reasonable fees and out-of-pocket expenses of counsel for Agent with respect thereto and with respect to advising Agent as to its rights and responsibilities under the Credit Agreement, as hereby amended). 7. EXECUTION IN COUNTERPARTS. This Fifth Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. 8. GOVERNING LAW: BINDING EFFECT. This Fifth Amendment shall be governed by and construed in accordance with the laws of the State of Texas and shall be binding upon each Company and each Lender and their respective successors and assigns. 9. HEADINGS. Section headings in this Fifth Amendment are included herein for convenience of reference only and shall not constitute a part of this Fifth Amendment for any other purpose. 10. JOINT AND SEVERAL OBLIGATIONS. The Companies acknowledge and agree that their obligations and duties under the Credit Agreement and the other Loan Papers are joint and several in all instances. 11. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIFTH AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. REMAINDER OF PAGE LEFT INTENTIONALLY BLANK IN WITNESS WHEREOF, the parties hereto have executed this Fifth Amendment as the date first above written. AMERICAN FREIGHTWAYS CORPORATION By: /s/Frank Conner Name: Frank Conner Title:Executive Vice President AMERICAN FREIGHTWAYS, INC. By: /s/Frank Conner Name: Frank Conner Title:Executive Vice President NATIONSBANK OF TEXAS, N.A. as Agent and as a Lender SPECIFIED PERCENTAGE: 31.250% By: /s/Dan Killian Name: Dan Killian Title: Vice President CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (formerly Texas Commerce Bank National Association SPECIFIED PERCENTAGE: 21.875% By: /s/Ana Moreira Name: Ana Moreira Title: Vice President WACHOVIA BANK OF GEORGIA, N.A. SPECIFIED PERCENTAGE: 15.625% By: /s/Kenneth Washington Name: Kenneth Washington Title: Vice President ABN-AMRO BANK N.V. SPECIFIED PERCENTAGE: 15.625% By: /s/David J. Thomas Name: David J. Thomas Title: Vice President By: /s/Gerald F. Mackin Name: Gerald F. Mackin Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO SPECIFIED PERCENTAGE: 15.625% By: /s/Michael J. Johnson Name: Michael J. Johnson Title: Authorized Agent ACKNOWLEDGED AND AGREED (For purposes of Section 4 of this Fifth Amendment): CREDIT LYONNAIS NEW YORK BRANCH By: /s/Alain Papiasse Name: Alain Papiasse Title: Executive Vice President EX-10 3 AMEND AND RESTATED APPTED NON-EMP DIR STK OPT PLAN AMERICAN FREIGHTWAYS CORPORATION AMENDED AND RESTATED APPOINTED NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN SECTION 1 1. This 1997 Non-Employee Director Stock Option Plan (the "Plan") as last amended and restated in July, 1998 is intended to attract and retain the services of a non-employee director ("Director") of American Freightways Corporation (the "Company"), for the benefit of the Company and its shareholders and to provide additional incentive for such persons to continue to work for the best interests of the Company and its shareholders. This Plan is intended exclusively for the benefit of persons who are appointed by the Board (defined below) to fill an existing vacancy on such Board. The effective date of the Plan, prior to its amendment and restatement, was May 20, 1997. 2. ADMINISTRATION. The Plan shall be administered by the Board of Directors of the Company (the "Board"). The Board shall have the power to construe the Plan, to determine all questions arising thereunder and to adopt and amend such rules and regulations for the administration of the Plan as it may deem desirable. The interpretation and construction by the Board of any provisions of the Plan or of any option granted under it shall be final. No member of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it. 3. ELIGIBILITY. Each person who shall have been appointed by the Board to fill an then-existing vacancy shall automatically be granted options to purchase 2,000 shares of the Company's common stock (subject to further adjustment as provided herein) as of the date of such appointment and on each succeeding first day in February, provided, that such automatic option grants shall be made only if the recipient director (i) is not otherwise an employee of the Company or any subsidiary on the date of grant, (ii) is a member of the Board of Directors on the date such option is granted. Effective February 1, 1998, grants of options under this Plan shall be for 6,000 shares of the Company's common stock. The dates on which options are granted hereunder are referred to herein as the "Grant Date." All options granted to any Directors under this Section 1 shall vest at the rate of 33.3% per year beginning on the first anniversary of the Grant Date, except as otherwise provided in Section 2. No person may receive in a single year grants of options under this Plan and grants of options under the Company's Elected Non- Employee Director Stock Option Plan. 4. SHARES OF STOCK SUBJECT TO THE PLAN. The shares that may be issued under the Plan shall be authorized and unissued or reacquired shares of the Company's common stock (the "Common Stock"). The aggregate number of shares which may be issued under the Plan shall not exceed 22,000 shares of Common Stock, unless an adjustment is required in accordance with Section 3. 5. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors may, insofar as permitted by law, from time to time, suspend or terminate the Plan or revise or amend it in any respect whatsoever, except that no such amendment shall alter or impair or diminish any rights or obligations under any option theretofore granted under the Plan without the consent of the person to whom such option was granted. In addition no such amendment shall be effective without shareholder approval if such approval is required in order to assure the Plan's continued qualification under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. The Plan's provisions regarding the formula for determining the amount, exercise price, and timing of options to be granted under the Plan shall in no event be amended more than once every six months, other than to comport with changes in the Internal Revenue Code of 1986, as amended. 6. EXPIRATION OF PLAN. Options may be granted under the Plan until February 1, 1999. Notwithstanding the foregoing, each option granted under the Plan shall remain in effect until such option has been satisfied by the issuance of shares or terminated in accordance with its terms and the terms of the Plan. 7. NONASSIGNABILITY. No option shall be assignable or transferable by the grantee except by will or by the laws of descent and distribution. Except as provided in Section 2, during the lifetime of the optionee, the option shall be exercisable only by him or her, and no other person shall acquire any rights therein. 8. WITHHOLDING TAXES. Whenever shares of Common Stock are to be issued under the Plan, the Company shall, at its option, require the optionee to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such shares. 9. DEFINITION OF "FAIR MARKET VALUE". For the purposes of this Plan, the term "fair market value," when used in reference to the date of grant of an option shall be the mean: If the Shares of the Company are listed on a national securities exchange (including the New York, American or NASDAQ National Market System) in the United States on the date any Option is granted, the fair market value per Share shall be deemed to be the average of the high and low sale prices per share of such Shares of the Company on such national securities exchange in the United States on such date, as published by the Wall Street Journal or other reliable publication, but if the Shares of the Company are not traded on such date or such national securities exchange is not open for business on such date, the fair market value per Share shall be the average of such high and low sale prices on the last preceding date on which such exchange shall have been open for business and the Shares of the Company were traded. If the Shares of the Company are listed on more than one national securities exchange in the United States on the date any such Option is granted, the Committee shall determine, in its discretion, which national securities exchange shall be used for the purpose of determining the fair market value per Share. If at any date any Option is granted a public market exists for the Shares of the Company but such Shares are not listed on a national securities exchange in the United States, the fair market value per Share shall be deemed to be the mean between the closing bid and asked quotations in the over-the-counter market for such Shares of the Company in the United States on the date such Option is granted. If there are no bid and asked quotations for such Shares on such date, the fair market value per Share shall be deemed to be the mean between the closing bid and asked quotations in the over-the-counter market in the United States for such Shares of the Company on the closest date preceding the date such Option is granted, for which such quotations are available. SECTION 2 STOCK OPTIONS 1. AWARD OF STOCK OPTIONS. Awards of stock options shall be made under the Plan under all the terms and conditions contained herein. Each option granted under the Plan shall be evidenced by an option agreement duly executed on behalf of the Company and by the recipient, which option agreements shall comply with and be subject to the terms and conditions of the Plan. Any option agreement may contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Board. 2. TERM OF OPTIONS AND EFFECT OF TERMINATION. Notwithstanding any other provision of the Plan, no option granted under the Plan shall be exercisable after the expiration of ten years from the date of its grant. In the event that any outstanding option under the Plan expires by reason of lapse of time or otherwise is terminated for any reason, the shares of Common Stock subject to any such option which have not been issued pursuant to the exercise of the option shall again become available in the pool of shares of Common Stock for which options may be granted under the Plan. 3. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the Plan shall be evidenced by agreements in such form as the Board shall from time to time determine, which agreements shall comply with the following terms and conditions. A. Number of Shares. Each option agreement shall state the number of shares to which the option pertains. B. Option Price. Each option agreement shall state the option price per share (or the method by which such price shall be computed), which shall be equal to 100% of the Fair Market Value of a share of the Common Stock on the date such option is granted. C. Medium and Time of Payment. The option price shall be payable upon the exercise of an option in the legal tender of the United States. Upon receipt of payment, the Company shall deliver to the optionee (or person entitled to exercise the option) a certificate or certificates for the shares of Common Stock to which the option pertains. D. Exercise of Options. Except as otherwise specifically provided herein, options granted under the Plan shall vest and become exercisable in 33.3% increments per year, beginning on the first anniversary of the Grant Date of the Option. To the extent that an option has become exercisable and subject to the restrictions and limitations set forth in this Plan and any option agreement, it may be exercised in whole or such lesser amount as may be authorized by the option agreement. If exercised in part, any vested, unexercised portion of an option shall continue to be held by the optionee and may thereafter be exercised as provided herein. E. Termination of Director. If an optionee ceases to be a director for any reason other than (a) his death or disability or (b) his decision not to stand for reelection as director at the expiration of his term, any option held by such person may be exercised at any time within 90 days after the date on which such person ceased to be a director, but only to the extent the option was vested and exercisable at such date. If an optionee declines to stand for reelection as director at the expiration of his term, or if an optionee becomes disabled prior to the expiration of his term, any vested or unvested options held by such person as of the date of term expiration or disability, as the case may be, shall continue to be subject to this agreement for vesting, exercise and expiration purposes. If an optionee dies prior to the expiration of his term as director (or dies after declining to stand for reelection or after becoming disabled while serving pursuant to the preceding paragraph), any unvested option held by such person shall immediately become fully vested and exercisable on the date of death, and any option held by such director, whether vesting on or before the date of his death, may be exercised at any time by such person's estate within one year after the date of death, unless earlier terminated by lapse of time as provided in Subsection 2 of Section 2. F. Death or Disability of Optionee. Any such option granted hereunder may be exercised by the optionee's guardian in the case of a disabled optionee, or by the executors or administrators of the optionee's estate or by any person or persons who shall have acquired the option directly from the optionee by his will or the applicable law of descent and distribution. SECTION 3 RECAPITALIZATIONS AND REORGANIZATIONS The number of shares of Common Stock covered by the Plan, the number of shares and price per share of each outstanding option, and the number of shares subject to each grant provided for in Section 1 hereof shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares of Common Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend or any other increase or decrease in the number of issued and outstanding shares of Common Stock effected without receipt of consideration by the Company. If the Company shall be the surviving corporation in any merger or consolidation, each outstanding option shall pertain to and apply to the securities to which a holder of the same number of shares of Common Stock that are subject to that option would have been entitled. A dissolution or liquidation of the Company, or a merger or consolidation in which the Company is not the surviving corporation, shall cause each outstanding option to terminate, unless the agreement of merger or consolidation shall otherwise provide; provided that, in the event such dissolution, liquidation, merger or consolidation will cause outstanding options to terminate, optionee shall have the right immediately prior to such dissolution, liquidation, merger or consolidation to exercise his option in whole or in part without regard to any limitations on the exercisability of such option other than the expiration date of the option. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. SECTION 4 MISCELLANEOUS PROVISIONS 1. RIGHTS AS A SHAREHOLDER. An optionee or a transferee of an option as such shall have no rights as a shareholder with respect to any shares covered by an option until the date of the receipt of payment (including any amounts required by the Company pursuant to Subsection 8 of Section 1) by the Company. 2. PURCHASE FOR INVESTMENT. Unless the shares of Common Stock to be issued upon exercise of an option granted under the Plan have been effectively registered under the Securities Act of 1933, as amended (the "Securities Act"), the Company shall be under no obligation to issue any shares of Common Stock covered by any option unless the person who exercises such option, in whole or in part, shall give a written representation and undertaking to the Company which is satisfactory in form and scope to counsel to the Company and upon which, in the opinion of such counsel, the Company may reasonably rely, that he is acquiring the shares of Common Stock issued to him pursuant to such exercise of the option for his own account as an investment and not with a view to, or for sale in connection with, the distribution of any such shares of Common Stock, and that he will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the Securities Act, or any other applicable law, and that if shares of Common Stock are issued without such registration, a legend to this effect may be endorsed upon the securities so issued. 3. OTHER PROVISIONS. The option agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the option or restrictions required by any applicable securities laws, as the Board shall deem advisable. 4. APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Common Stock pursuant to the exercise of options will be used for general corporate purposes. 5. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall impose no obligation upon the optionee to exercise such option. (The remainder of this page left blank intentionally) I, Will Garrison, Secretary of American Freightways Corporation, certify that the foregoing is a true and correct copy of the American Freightways Corporation Amended and Restated Appointed Non-Employee Director Stock Option Plan as adopted by the Board of Directors of the corporation on July 15, 1998. /s/Will Garrison EX-10 4 AMEND AND RESTATED ELECTED NON-EMP DIR STK OPT PLN AMERICAN FREIGHTWAYS CORPORATION AMENDED AND RESTATED ELECTED NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN SECTION 1 1. This 1995 Non-Employee Director Stock Option Plan (the "Plan") as last amended and restated in July, 1998 is intended to attract and retain the services of a non-employee director ("Director") of American Freightways Corporation (the "Company"), for the benefit of the Company and its shareholders and to provide additional incentive for such persons to continue to work for the best interests of the Company and its shareholders. 2. ADMINISTRATION. The Plan shall be administered by the Board of Directors of the Company (the "Board"). The Board shall have the power to construe the Plan, to determine all questions arising thereunder and to adopt and amend such rules and regulations for the administration of the Plan as it may deem desirable. The interpretation and construction by the Board of any provisions of the Plan or of any option granted under it shall be final. No member of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it. 3. ELIGIBILITY. Each person who shall have been elected a director of the Company at its annual meeting of stockholders shall automatically be granted options to purchase 6,000 shares of the Company's common stock (subject to further adjustment as provided herein) on the date such person is initially elected to the Board (but not on subsequent election dates) and on each succeeding first day in February (beginning February 1, 1998), provided, that such automatic option grants shall be made only if the recipient director (i) is not otherwise an employee of the Company or any subsidiary on the date of grant, (ii) is a member of the Board of Directors on the date such option is granted. The dates on which options are granted hereunder are referred to herein as the "Grant Date." No person may receive more than one option grant in any calendar year under the Plan. All options granted to any Directors under this Section 1 shall vest at the rate of 33.3% per year beginning on the first anniversary of the Grant Date, except as otherwise provided in Section 2. 4. SHARES OF STOCK SUBJECT TO THE PLAN. The shares that may be issued under the Plan shall be authorized and unissued or reacquired shares of the Company's common stock (the "Common Stock"). The aggregate number of shares which may be issued under the Plan shall not exceed 150,000 shares of Common Stock, unless an adjustment is required in accordance with Section 3. 5. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors may, insofar as permitted by law, from time to time, suspend or terminate the Plan or revise or amend it in any respect whatsoever, except that no such amendment shall alter or impair or diminish any rights or obligations under any option theretofore granted under the Plan without the consent of the person to whom such option was granted. In addition no such amendment shall be effective without shareholder approval if such approval is required in order to assure the Plan's continued qualification under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. The Plan's provisions regarding the formula for determining the amount, exercise price, and timing of options to be granted under the Plan shall in no event be amended more than once every six months, other than to comport with changes in the Internal Revenue Code of 1986, as amended. 6. EXPIRATION OF PLAN. Options may be granted under the Plan until February 1, 2003. Notwithstanding the foregoing, each option granted under the Plan shall remain in effect until such option has been satisfied by the issuance of shares or terminated in accordance with its terms and the terms of the Plan. 7. NONASSIGNABILITY. No option shall be assignable or transferable by the grantee except by will or by the laws of descent and distribution. Except as provided in Section 2, during the lifetime of the optionee, the option shall be exercisable only by him or her, and no other person shall acquire any rights therein. 8. WITHHOLDING TAXES. Whenever shares of Common Stock are to be issued under the Plan, the Company shall, at its option, require the optionee to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such shares. 9. DEFINITION OF "FAIR MARKET VALUE". For the purposes of this Plan, the term "fair market value," when used in reference to the date of grant of an option shall be the mean: If the Shares of the Company are listed on a national securities exchange (including the New York, American or NASDAQ National Market System) in the United States on the date any Option is granted, the fair market value per Share shall be deemed to be the average of the high and low sale prices per share of such Shares of the Company on such national securities exchange in the United States on such date, as published by the Wall Street Journal or other reliable publication, but if the Shares of the Company are not traded on such date or such national securities exchange is not open for business on such date, the fair market value per Share shall be the average of such high and low sale prices on the last preceding date on which such exchange shall have been open for business and the Shares of the Company were traded. If the Shares of the Company are listed on more than one national securities exchange in the United States on the date any such Option is granted, the Committee shall determine, in its discretion, which national securities exchange shall be used for the purpose of determining the fair market value per Share. If at any date any Option is granted a public market exists for the Shares of the Company but such Shares are not listed on a national securities exchange in the United States, the fair market value per Share shall be deemed to be the mean between the closing bid and asked quotations in the over-the-counter market for such Shares of the Company in the United States on the date such Option is granted. If there are no bid and asked quotations for such Shares on such date, the fair market value per Share shall be deemed to be the mean between the closing bid and asked quotations in the over-the-counter market in the United States for such Shares of the Company on the closest date preceding the date such Option is granted, for which such quotations are available. SECTION 2 STOCK OPTIONS 1. AWARD OF STOCK OPTIONS. Awards of stock options shall be made under the Plan under all the terms and conditions contained herein. Each option granted under the Plan shall be evidenced by an option agreement duly executed on behalf of the Company and by the recipient, which option agreements shall comply with and be subject to the terms and conditions of the Plan. Any option agreement may contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Board. 2. TERM OF OPTIONS AND EFFECT OF TERMINATION. Notwithstanding any other provision of the Plan, no option granted under the Plan shall be exercisable after the expiration of ten years from the date of its grant. In the event that any outstanding option under the Plan expires by reason of lapse of time or otherwise is terminated for any reason, the shares of Common Stock subject to any such option which have not been issued pursuant to the exercise of the option shall again become available in the pool of shares of Common Stock for which options may be granted under the Plan. 3. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the Plan shall be evidenced by agreements in such form as the Board shall from time to time determine, which agreements shall comply with the following terms and conditions. A. Number of Shares. Each option agreement shall state the number of shares to which the option pertains. B. Option Price. Each option agreement shall state the option price per share (or the method by which such price shall be computed), which shall be equal to 100% of the Fair Market Value of a share of the Common Stock on the date such option is granted. C. Medium and Time of Payment. The option price shall be payable upon the exercise of an option in the legal tender of the United States. Upon receipt of payment, the Company shall deliver to the optionee (or person entitled to exercise the option) a certificate or certificates for the shares of Common Stock to which the option pertains. D. Exercise of Options. Except as otherwise specifically provided herein, options granted under the Plan shall vest and become exercisable in 33.3% increments per year, beginning on the first anniversary of the Grant Date of the Option. To the extent that an option has become exercisable and subject to the restrictions and limitations set forth in this Plan and any option agreement, it may be exercised in whole or such lesser amount as may be authorized by the option agreement. If exercised in part, any vested, unexercised portion of an option shall continue to be held by the optionee and may thereafter be exercised as provided herein. E. Termination of Director. If an optionee ceases to be a director for any reason other than (a) his death or disability or (b) his decision not to stand for reelection as director at the expiration of his term, any option held by such person may be exercised at any time within 90 days after the date on which such person ceased to be a director, but only to the extent the option was vested and exercisable at such date. If an optionee declines to stand for reelection as director at the expiration of his term, or if an optionee becomes disabled prior to the expiration of his term, any vested or unvested options held by such person as of the date of term expiration or disability, as the case may be, shall continue to be subject to this agreement for vesting, exercise and expiration purposes. If an optionee dies prior to the expiration of his term as director (or dies after declining to stand for reelection or after becoming disabled while serving pursuant to the preceding paragraph), any unvested option held by such person shall immediately become fully vested and exercisable on the date of death, and any option held by such director, whether vesting on or before the date of his death, may be exercised at any time by such person's estate within one year after the date of death, unless earlier terminated by lapse of time as provided in Subsection 2 of Section 2. F. Death or Disability of Optionee. Any such option granted hereunder may be exercised by the optionee's guardian in the case of a disabled optionee, or by the executors or administrators of the optionee's estate or by any person or persons who shall have acquired the option directly from the optionee by his will or the applicable law of descent and distribution. SECTION 3 RECAPITALIZATIONS AND REORGANIZATIONS The number of shares of Common Stock covered by the Plan, the number of shares and price per share of each outstanding option, and the number of shares subject to each grant provided for in Section 1 hereof shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares of Common Stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend or any other increase or decrease in the number of issued and outstanding shares of Common Stock effected without receipt of consideration by the Company. If the Company shall be the surviving corporation in any merger or consolidation, each outstanding option shall pertain to and apply to the securities to which a holder of the same number of shares of Common Stock that are subject to that option would have been entitled. A dissolution or liquidation of the Company, or a merger or consolidation in which the Company is not the surviving corporation, shall cause each outstanding option to terminate, unless the agreement of merger or consolidation shall otherwise provide; provided that, in the event such dissolution, liquidation, merger or consolidation will cause outstanding options to terminate, optionee shall have the right immediately prior to such dissolution, liquidation, merger or consolidation to exercise his option in whole or in part without regard to any limitations on the exercisability of such option other than the expiration date of the option. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. SECTION 4 MISCELLANEOUS PROVISIONS 1. RIGHTS AS A SHAREHOLDER. An optionee or a transferee of an option as such shall have no rights as a shareholder with respect to any shares covered by an option until the date of the receipt of payment (including any amounts required by the Company pursuant to Subsection 8 of Section 1) by the Company. 2. PURCHASE FOR INVESTMENT. Unless the shares of Common Stock to be issued upon exercise of an option granted under the Plan have been effectively registered under the Securities Act of 1933, as amended (the "Securities Act"), the Company shall be under no obligation to issue any shares of Common Stock covered by any option unless the person who exercises such option, in whole or in part, shall give a written representation and undertaking to the Company which is satisfactory in form and scope to counsel to the Company and upon which, in the opinion of such counsel, the Company may reasonably rely, that he is acquiring the shares of Common Stock issued to him pursuant to such exercise of the option for his own account as an investment and not with a view to, or for sale in connection with, the distribution of any such shares of Common Stock, and that he will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the Securities Act, or any other applicable law, and that if shares of Common Stock are issued without such registration, a legend to this effect may be endorsed upon the securities so issued. 3. OTHER PROVISIONS. The option agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the option or restrictions required by any applicable securities laws, as the Board shall deem advisable. 4. APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Common Stock pursuant to the exercise of options will be used for general corporate purposes. 5. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall impose no obligation upon the optionee to exercise such option. (The remainder of this page left blank intentionally) I, Will Garrison, Secretary of American Freightways Corporation, certify that the foregoing is a true and correct copy of the American Freightways Corporation Amended and Restated Elected Non-Employee Director Stock Option Plan as adopted by the Board of Directors of the corporation on July 15, 1998. /s/Will Garrison EX-27 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the June 30, 1998 quarterly consolidated financal statements and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 5,598 0 89,974 1,911 3,849 128,106 735,653 257,896 607,975 94,384 209,920 0 0 316 238,612 607,975 0 477,051 0 451,859 0 0 8,013 18,201 7,371 10,830 0 0 0 10,830 .34 .34 Provision for Doubtful accounts included in costs and expenses applicable to revenues.
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