-----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, GDq+KX9UmVXPGHzxnDAU2GB6mCwQMrUC/dzMpuoTUKC/L5EhHel+GY0XxrHhxwKr 1mkUXgIV9uc5OMNt/WTj2g== 0000950144-01-004417.txt : 20010402 0000950144-01-004417.hdr.sgml : 20010402 ACCESSION NUMBER: 0000950144-01-004417 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOYD BROS TRANSPORTATION INC CENTRAL INDEX KEY: 0000920907 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 636006515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-23948 FILM NUMBER: 1587412 BUSINESS ADDRESS: STREET 1: 3275 HIGHWAY 30 CITY: CLAYTON STATE: AL ZIP: 36016 BUSINESS PHONE: 3347753261 MAIL ADDRESS: STREET 1: 3275 HWY 30 CITY: CLAYTON STATE: AL ZIP: 36016 10-K 1 g67752e10-k.txt BOYD BROS. TRANSPORTATION INC. 1 =============================================================================== 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, 2000 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. (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: $1,393,611 AS OF MARCH 23, 2001 INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE. 2,894,919 SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE, OUTSTANDING AS OF MARCH 23, 2001. 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 2001 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, 2000 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. [ ] =============================================================================== 2 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 1,017 tractors and 1,398 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 his or her status as an independent contractor. 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 191 tractors and over 275 flatbed trailers. Owner-operators own 161 of the 191 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. Welborn utilizes agents in some areas to solicit and book freight. During 2000, the Company closed its Welborn logistics unit and reopened it at the Boyd division, and Welborn closed its specialized over-dimensional transport unit due to a slowdown in freight and a reduction in overall profitability. 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: 3 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 to only those "core carriers" that offer consistently superior service. The Company 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 utilizes satellite-tracking systems that enable Boyd to monitor equipment locations and schedules more effectively and to communicate with both drivers and customers. Customers are also able to track their loads by utilizing Boyd's 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 it to improve customer service and operating efficiency. Premium Quality Tractors. Boyd continuously upgrades its fleet of tractors. Boyd's management believes that 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 25, 10 and 5 customers accounted for approximately 54.2%, 38.9% and 27.3% respectively, of the Company's revenues during the year ended December 31, 2000. Many of the Company's largest 25 customers are publicly held companies. No single customer accounted for more than 10% of the Company's revenues during the year ended December 31, 2000. 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 9 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; Conley, Ga.; and Walworth, Wisconsin. These service centers allow Boyd to re-dispatch equipment terminating in a given area, enhance driver recruitment 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. 2 4 Welborn's corporate offices are located in Tuscaloosa, Alabama. Welborn utilizes independent agents located in Atlanta, Georgia; Houston, Texas; Knoxville, Tennessee; Weirton, West Virginia; and Fort Myers, Florida. 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 records, driving experiences and personal evaluations, including drug testing. To maintain high equipment utilization, particularly during periods of growth, the Company strongly emphasizes continuous driver and owner-operator recruitment and training. Drivers are recruited at all of the Company's regional terminal locations and primarily at the Company's corporate headquarters. Drivers attend orientation at the Birmingham terminal. Drivers are trained in Company policies and operations, safety techniques and fuel-efficient operation of equipment. In addition, each driver must pass a rigorous road test prior to his or her assignment to a vehicle. The Company believes that experienced drivers have better safety records than new driver-school graduates, and management believes that their skills will help Boyd improve overall fleet efficiency as a result of higher utilization and historically lower maintenance costs on tractors operated by experienced drivers. As a result, beginning in February 2001 Boyd began hiring only experienced drivers and has discontinued hiring drivers from drivers school. All drivers are required to participate in annual safety training and defensive driving courses for re-certification 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 its fleet. At December 31, 2000, the Company had 962 employees; of these, approximately 745 were Company drivers, and the balance were mechanics, other equipment maintenance personnel and support personnel, including management and administration. In addition, owner-operators accounted for the operation of approximately 272 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, 2000, the Company owned and operated 1,017 tractors and 1,398 flatbed trailers. The tractors are manufactured by Freightliner and International, and the trailers are manufactured by Utility, Dorsey, 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 and fleet-wide implementation of its satellite systems as well as its tracking and load tendering ability. 3 5 Boyd's satellite system permits more efficient transmission of load assignments to drivers, and enhances the Company's ability to monitor loads in transit and rapidly bill customers for completed deliveries. Once a load planner assigns a load, 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 display unit in each of Boyd's vehicles. The driver can respond to the dispatcher 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. Boyd can electronically record a load assignment, report the load to the billing department and generate customer invoices. In addition, Boyd uses the satellite system 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. Customers are able to access and track their loads through Boyd's internet web site. Boyd has also equipped its entire fleet of tractors with the SENSORTRACS(C) on-board computer system ("Sensortracs"). This system 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. 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, Boyd utilizes a software program by The LOGISTICS.COM 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 Company's management believes that as a result of these enhanced capabilities, 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 without 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 orientation 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 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 is self insured for workers' compensation claims as well as physical damage claims for its own tractors. The Company currently purchases excess primary and umbrella insurance coverage in amounts that management believes are adequate to supplement its retained liabilities. The Company will be facing an increase in its auto and insurance rates during the second half of 2001. These rates could increase as much as 25%, and in addition to an increase in the retention per occurrence. 4 6 FUEL Motor carrier service is dependent upon the availability of diesel fuel. The Company's fuel expense comprised 11.2% and 8.7% of revenues in 2000 and 1999, 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. Because of the high cost of fuel in 2000, the Company has implemented a fuel surcharge program with most of its customers. 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 hiring and retaining 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 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. 5 7 Currently, management does no know of any 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 of the statements contained in this report 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, particularly fuel costs which have continued to rise materially during 2000 that may or may not be passed on to the Company's customers, departures and defaults by owner-operators, the cost of complying with governmental regulations that are applicable to the Company, 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. These 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. During 2000, the Company completed the construction of an 80,000 sq. ft. terminal in Birmingham, Alabama, which contains several maintenance and safety bays. The following table sets forth information regarding the location and ownership of each of Boyd's service centers and shuttle facilities: Clayton, AL........................................................ Owned Springfield, OH.................................................... Owned Birmingham, AL..................................................... Owned Greenville, MS..................................................... Owned Calvert City, KY................................................... Leased Danville, VA....................................................... Leased Lisbon Falls, ME................................................... Leased Conley, GA......................................................... Leased Walworth, WI....................................................... Leased
Additionally, Welborn owns its corporate offices in Tuscaloosa, Alabama and leases service centers located as follows: Birmingham, AL..................................................... Leased Atlanta, GA........................................................ Leased
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, 2000, either through the solicitation of proxies or otherwise. 6 8 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 SmallCap Market under the symbol "BOYD". In May 2000, Nasdaq notified the Company that its Common Stock no longer met certain requirements necessary for continued listing on the Nasdaq National Market. In response to this development, the Company elected to voluntarily transfer its Common Stock from the Nasdaq National Market to the Nasdaq SmallCap Market. This transfer became effective, and the Company's Common Stock began trading on the Nasdaq SmallCap Market, on August 30, 2000. As of March 16, 2001, the Common Stock was held by approximately 75 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 or the Nasdaq SmallCap Market, as applicable, for each fiscal quarter during 2000 and 1999.
Price Range -------------------- 2000 High Low ---- -------------------- First Quarter..................................... $7.38 $5.00 Second Quarter.................................... 6.00 4.13 Third Quarter..................................... 4.75 3.56 Fourth Quarter.................................... 4.25 2.38
Price Range -------------------- 1999 High Low ---- -------------------- First Quarter..................................... $ 8.38 $6.13 Second Quarter.................................... 11.75 7.75 Third Quarter..................................... 11.63 8.75 Fourth Quarter.................................... 9.75 6.13
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. 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 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. Pursuant to the Company's stock repurchase program, the Company purchased 263,940 and 370,463 shares of the common stock in open market or negotiated transactions during 1999 and 2000, for aggregate purchase prices of $2,342,746 and $2,248,941, respectively, including an aggregate 126,000 shares of Common Stock purchased from Miller Welborn, the Vice-Chairman of the Company, during 2000 at a price per share of $6.50. The Company funded these purchases using working capital. On January 8, 1999, the Company purchased 500,000 shares of its outstanding common stock from a former Chief Executive Officer of the Company for $3,660,000. The stock purchase was funded by available cash and a bank line of credit. 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, 2000. 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, 2000. 7 9 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, 2000, bore interest at rates ranging from 1.25% to 1.75% above the applicable 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 $640,000. Management believes that current working capital funds are sufficient to offset any adverse effects caused by changes in these 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, 2000. 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 Executive Officers of the Company as of March 16, 2001. Additional information required by Part III, Item 10 is incorporated herein by reference to the Company's definitive Proxy Statement relating to the 2001 Annual Meeting of Stockholders, which is scheduled to be filed on or before April 12, 2001. Dempsey Boyd, age 73, 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. Gail B. Cooper, age 50, has served as President and Chief Executive Officer and as a Director of the Company since February 17, 2000. Ms. Cooper served as Secretary of Boyd from December 1969 until February 2000. 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. Richard C. Bailey, age 50, has served as Executive Vice President and Chief Financial Officer of the Company 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 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. Ginger B. Tibbs, age 47, has been the Secretary/Treasurer of Boyd since February 2000, 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. 8 10 ITEM 11. EXECUTIVE COMPENSATION All information required by Item 11 is incorporated by reference to the Company's definitive Proxy Statement relating to the 2001 Annual Meeting of Stockholders, which is scheduled to be filed on or before April 12, 2001. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT All information required by Item 12 is incorporated by reference to the Company's definitive Proxy Statement relating to the 2001 Annual Meeting of Stockholders, which is scheduled to be filed on or before April 12, 2001. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS All information required by Item 13 is incorporated by reference to the Company's definitive Proxy Statement relating to the 2001 Annual Meeting of Stockholders, which is scheduled to be filed on or before April 12, 2001 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, 2000: Independent Auditors' Report Consolidated Balance Sheets at December 31, 2000 and 1999 Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998 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, 2000
9 11 3. Exhibits required by Item 601 of Regulation S-K. The following exhibits are included in this Form 10-K:
EXHIBIT NO. DESCRIPTION ------- ----------- 10.1 Credit and Security Agreement dated April 11, 2000 between the Company and Compass Bank in the amount of $3,267,160 for truck equipment 10.2 Security Agreement dated April 11, 2000 between the Company and Compass Bank in the amount of $3,267,160 for truck equipment 10.3* First Amendment to Acquisition Agreement, Employment Agreement and Covenant Not To Compete dated March 17, 2000 between the Company, Miller Welborn and Steven Rumsey 10.4 Second Amendment to Acquisition Agreement dated May 30, 2000 between the Company, Miller Welborn and Steven Rumsey 10.5* Second Amendment to Employment Agreement dated May 22, 2000 between the Company and Steven Rumsey 10.6 Consulting Agreement dated June 1, 2000 between the Company and Miller Welborn 10.7 Master Note for Business and Commercial Loans dated July 7, 2000 between the Company and Amsouth Bank in the amount of $2,500,000. 10.8 Debt Covenant Waiver dated March 27, 2001 from Compass Bank relating to Credit and Security Agreement dated April 11, 2000. 10.9 Waiver and Consent Agreement dated March 28, 2001 by and between the Company and AmSouth Bank N.A. relating to Credit Agreement dated April 1, 1994. 13 Those portions of the Company's Annual Report to Stockholders for the year ended December 31, 2000 that are specifically incorporated herein by reference 21 Subsidiaries of the Registrant 23 Consent of Deloitte & Touche LLP
The following exhibits are incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 000-23948):
EXHIBIT NO. DESCRIPTION ------- ----------- 10.1 Credit and Security Agreement dated March 16, 1999 between the Company and Compass Bank in the amount of $10,000,000 for truck equipment 10.2 Security Agreement dated March 16, 1999 between the Company and Compass Bank in the amount of $10,000,000 for truck equipment
- ------------------- * 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 12 10.3 Master Note for Business and Commercial Loans dated April 9, 1999 between the Company and Amsouth Bank in the amount of $2,500,000. 10.3 Master Note for Business and Commercial Loans dated April 9, 1999 between the Company and Amsouth Bank in the amount of $1,750,000.
The following exhibits are incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 000-23948):
EXHIBIT NO. DESCRIPTION ------- ----------- 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
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):
EXHIBIT NO. DESCRIPTION ------- ----------- 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
The following exhibit is incorporated by reference to the Company's Registration Statement on Form S-8 (File No. 333-78925), declared effective on May 20, 1999:
EXHIBIT NO. DESCRIPTION ------- ----------- 4 Boyd Bros. Transportation Inc. 1999 Employee Stock Purchase Plan
11 13 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:
EXHIBIT NO. DESCRIPTION ------- ----------- 3.1 Certificate of Incorporation of the Company 3.2 By-laws of the Company 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 10.37 Credit Agreement dated April 1, 1994 by and between the Company and AmSouth Bank N.A.
The following exhibit is incorporated by reference to the Company's Amendment to Report on Form 10-Q filed on August 5, 1997:
EXHIBIT NO. DESCRIPTION ------- ----------- 10.33 OMNITRACS contract dated February 5, 1997, between the Company and QUALCOMM, Inc.
The following exhibit is incorporated by reference to the Company's Report on Form 8-K filed on December 19, 1997:
EXHIBIT NO. DESCRIPTION ------- ----------- 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
(b) Reports on Form 8-K None. 12 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/ GAIL B. COOPER --------------------------------------- Gail B. Cooper President and Chief Executive Officer Date: March 30, 2001 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:
SIGNATURES TITLE DATE ---------- ----- ---- /s/ GAIL B. COOPER - ------------------------------- Gail B. Cooper Chief Executive Officer, President March 30, 2001 and Director (Principal Executive Officer) /s/ RICHARD C. BAILEY Executive Vice President, - ------------------------------- Chief Financial Officer and March 30, 2001 Richard C. Bailey Director (Principal Financial and Accounting Officer) /s/ DEMPSEY BOYD Chairman and Director March 30, 2001 - ------------------------------- Dempsey Boyd /s/ W. MILLER WELBORN Vice-Chairman and Director March 30, 2001 - ------------------------------- W. Miller Welborn /s/ J. MARK DUNNING Director March 30, 2001 - ------------------------------- J. Mark Dunning /s/ BOYD WHIGHAM Director March 30, 2001 - ------------------------------- Boyd Whigham /s/ STEPHEN J. SILVERMAN Director March 30, 2001 - ------------------------------- Stephen J. Silverman /s/ J. LARRY BAXTER Director March 30, 2001 - ------------------------------- J. Larry Baxter
13 15 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Boyd Bros. Transportation Inc.: We have audited the consolidated financial statements of Boyd Bros. Transportation Inc. and subsidiary as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000, and have issued our report thereon dated February 9, 2001 (March 28, 2001 as to the waiver letters described in Note 4); such consolidated financial statements and report are included in your 2000 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Boyd Bros. Transportation Inc. and subsidiary, listed in Item 14. This consolidated financial schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements as a whole, presents fairly in all material respects the information shown therein. Deloitte & Touche LLP Birmingham, Alabama February 9, 2001 16 SCHEDULE II BOYD BROS. TRANSPORTATION INC. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Three Fiscal Years Ended December 31, 2000
Additions Additions Balance at Charged to Charged to Beginning of Costs and Other Balance at Description Year Expenses Accounts Deductions(a) End of year - ------------ ------------ ---------- ---------- ------------- ----------- Allowance for doubtful accounts--deducted from trade receivables in the balance sheet Year ended December 31, 1998 $ 237,000 $ 150,400 $ -- $ 115,400 $272,000 ========== ========== ========== ========== ======== Year ended December 31, 1999 $ 272,000 $ 220,000 $ -- $ 145,000 $347,000 ========== ========== ========== ========== ======== Year ended December 31, 2000 $ 347,000 $ 84,000 $ -- $ 155,000 $276,000 ========== ========== ========== ========== ========
Additions Balance at Charged to Beginning of Costs and Balance at Description Year Expenses Deductions(a) End of year - ------------ ------------ ---------- ------------- ----------- Allowance for uncollectible receivables related to sales-type leases--deducted from investment in sales-type leases in the balance sheet Year ended December 31, 1998 $ 380,000 $1,627,506 $ 806,261 $1,201,245 ========== ========== ========== ========== Year ended December 31, 1999 $1,201,245 $1,259,144 $1,549,635 $ 910,754 ========== ========== ========== ========== Year ended December 31, 2000 $ 910,754 $1,650,967 $1,883,812 $ 677,909 ========== ========== ========== ==========
(a) Uncollectible accounts written off EX-10.1 2 g67752ex10-1.txt CREDIT AND SECURITY AGREEMENT DATED 4/11/2000 1 EXHIBIT 10.1 CREDIT AND SECURITY AGREEMENT THIS CREDIT AND SECURITY AGREEMENT is being executed and entered into as of the 11th day of April, 2000, by and among BOYD BROS. TRANSPORTATION, INC., a Delaware 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 THREE MILLION TWO HUNDRED SIXTY-SEVEN THOUSAND ONE HUNDRED SIXTY AND NO/100 DOLLARS ($3,267,160.00) (the "LOAN") the proceeds of which are to be made available to Borrower for use between the date hereof and April 11, 2001 (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"). 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: 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 2 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 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 2 3 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 1, 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. ARTICLE II THE LOAN Section 2.01 LOAN. Subject to the terms and conditions hereof, during the Advance Period provided that 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 $3,267,160 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 3 4 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. 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. 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 the last day of the Advance Period; 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. 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 4 5 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. 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: 5 6 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 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. 6 7 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 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 7 8 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 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. 8 9 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 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 9 10 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. 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 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 10 11 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. 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 an 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. 11 12 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 (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. 12 13 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 be less than 1.2:1. 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 FINANCIAL RATIOS. 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. 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 2.75:1. 13 14 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. 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 14 15 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 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 15 16 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. 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, 16 17 instruments, chattel paper, choices 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 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 BANKS 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. 17 18 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 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. 18 19 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 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 Bros. Transportation, Inc. Route 1, Box 40 Clayton, Alabama 36016 19 20 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 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, 20 21 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 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 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 21 22 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 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 22 23 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. 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 BROS. TRANSPORTATION, INC. /s/ Ginger B. Tibbs By: /s/ Richard C. Bailey - ------------------------- ---------------------------- Richard C. Bailey ----------------------- Its: CFO/Exec VP BANK: WITNESS: COMPASS BANK /s/ Rosie M. Clark By: /s/ Billy V. Houston - ------------------------- ---------------------------- Billy V. Houston ----------------------- Its: City President 23 24 EXHIBIT A DESCRIPTION OF COLLATERAL DEBTOR: Boyd Bros. Transportation Inc. SECURED PARTY: Compass Bank 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: (15) New 2000 International Trucks Model 99001 SFA 6 x 4 Serial Numbers: 2HSCHAPR4YCO39802 2HSCHAPR6YCO39803 2HSCHAPR8YCO39804 2HSCHAPRXYCO39805 2HSCHAPRIYCO39806 2HSCHAPR3YCO39807 2HSCHAPR5YCO39808 2HSCHAPR7YCO39809 2HSCHAPR3YCO39810 2HSCHAPR5YCO39811 2HSCHAPR7YCO39812 2HSCHAPR9YCO39813 2HSCHAPROYCO39814 2HSCHAPR2YCO39815 2HSCHAPR4YCO39816 FOR VALUE RECEIVED, Debtor hereby grants to Secured Party a security interest in all of the foregoing property. Boyd Bros. Transportation Inc. /s/ Richard C. Bailey - ---------------------------------- Richard C. Bailey Its: CFO/Exec VP EX-10.2 3 g67752ex10-2.txt SECURITY AGREEMENT DATED 4/11/2000 1 EXHIBIT 10.2 COMPASS BANK SECURITY AGREEMENT KNOW ALL MEN BY THESE PRESENTS: That WHEREAS, BOYD BROS. TRANSPORTATION, 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 THREE MILLION TWO HUNDRED SIXTY-SEVEN THOUSAND ONE HUNDRED SIXTY AND NO/100 DOLLARS ($3,267,160.00), 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. 2 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. 2 3 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. 3 4 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 hold by the Secured Party. If at any time the Secured Party is of the opinion that the Debtor's insurance 4 5 coverage is inadequate, the Debtor will, within ten (10) 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. 5 6 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: 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 6 7 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. 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 sale 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 7 8 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. 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. 8 9 IN WITNESS WHEREOF, the undersigned Debtor and Secured Party have caused this Agreement to be duly executed and delivered effective on the 11 day of April, 2000. ATTEST: DEBTOR: BOYD BROS. TRANSPORTATION, INC. By: /s/ Ginger B. Tibbs By: /s/ Richard C. Bailey ------------------------------ ----------------------------- Its: Secretary Richard C. Bailey ----------- ------------------------ Its: CFO/Exec VP Debtor's address: Route 1, Box 40 Clayton, Alabama 36016 WITNESS: SECURED PARTY: COMPASS BANK /s/ Rosie M. Clark By: /s/ Billy V. Houston - ---------------------------- ----------------------------- Billy V. Houston ---------------------------- Its: City President Secured Party's address: 223 E. Broad Street Eufaula, Alabama 36027 9 10 STATE OF ALABAMA ) COUNTY OF Barbour ) I, the undersigned, a Notary Public in and for said County in said State, hereby certify that Richard C Bailey, whose name as CFO/Exec VP of BOYD BROS. TRANSPORTATION, 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 11 day of April, 2000. /s/ Ray Nell Pelham ------------------------------- Notary Public [NOTARIAL SEAL] My commission expires: 1-1-2002 -------- 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 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 11 day of April, 2000. /s/ Tonya Henderson ------------------------------- Notary Public [NOTARIAL SEAL] My commission expires: 1-22-01 ------- 10 11 EXHIBIT A DESCRIPTION OF COLLATERAL DEBTOR: Boyd Bros. Transportation Inc. SECURED PARTY: Compass Bank 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: (15) New 2000 International Trucks Model 99001 SFA 6 x 4 Serial Numbers: 2HSCHAPR4YCO39802 2HSCHAPR6YCO39803 2HSCHAPR8YCO39804 2HSCHAPRXYCO39805 2HSCHAPRIYCO39806 2HSCHAPR3YCO39807 2HSCHAPR5YCO39808 2HSCHAPR7YCO39809 2HSCHAPR3YCO39810 2HSCHAPR5YCO39811 2HSCHAPR7YCO39812 2HSCHAPR9YCO39813 2HSCHAPROYCO39814 2HSCHAPR2YCO39815 2HSCHAPR4YCO39816 FOR VALUE RECEIVED, Debtor hereby grants to Secured Party a security interest in all of the foregoing property. Boyd Bros. Transportation Inc. /s/ Richard C. Bailey - ---------------------------------- Richard C. Bailey Its: CFO/Exec VP EX-10.3 4 g67752ex10-3.txt FIRST AMENDMENT TO ACQUISITION AGREEMENT 1 EXHIBIT 10.3 FIRST AMENDMENT TO ACQUISITION AGREEMENT, EMPLOYMENT AGREEMENT AND COVENANT NOT TO COMPETE THIS FIRST AMENDMENT TO ACQUISITION AGREEMENT, EMPLOYMENT AGREEMENT AND COVENANT NOT TO COMPETE (this "Amendment"), made this 17 day of March, 2000, by and among BOYD BROS. TRANSPORTATION INC., a Delaware corporation (hereinafter referred to as "Boyd"), WELBORN TRANSPORT, INC., (formerly known as W. T. Acquisition Corp.), an Alabama corporation (hereinafter referred to as "Boyd Sub"), MILLER WELBORN ("Welborn") and STEVEN RUMSEY ("Rumsey") (Welborn and Rumsey are hereinafter sometimes collectively referred to as the "Shareholders"). W I T N E S S E T H: WHEREAS, Boyd, Boyd Sub and the Shareholders (together with Welborn Transport, Inc., which was merged into Boyd Sub) entered into an Acquisition Agreement, dated October 8, 1997 (the "Acquisition Agreement"); and WHEREAS, Boyd, Boyd Sub and Welborn entered into a Covenant Not to Compete, erroneously dated as of December 8, 1998 (the "Welborn Noncompete Agreement"); and WHEREAS, Boyd, Boyd Sub and Rumsey entered into a Covenant Not to Compete, erroneously dated as of December 8, 1998 (the "Rumsey Noncompete Agreement", the Welborn Noncompete Agreement and the Rumsey Noncompete Agreement are hereinafter collectively referred to as the "Noncompete Agreements"); and WHEREAS, Boyd and Welborn entered into an Employment Agreement, dated as of December 8, 1997 (the "Welborn Employment Agreement"); and WHEREAS, Boyd, Boyd Sub and the Shareholders desire to amend the Acquisition Agreement, the Noncompete Agreements and the Welborn Employment Agreement to correct certain typographical errors contained therein and to modify certain terms and conditions contained therein, all as more particularly set forth herein. NOW, THEREFORE, for and in consideration of the premises and the mutual promises, agreements, representations, warranties and covenants hereinafter set forth, and the sum of ten dollars and other good and valuable consideration, the receipt and sufficiency of which is hereby specifically agreed to and acknowledged, the Acquisition Agreement, Noncompete Agreements and Welborn Employment Agreement are each hereby amended as follows: 1. AMENDMENT TO ACQUISITION AGREEMENT. Section 4.5.1. of the Acquisition Agreement is hereby amended by deleting said Section in its entirety and substituting in lieu thereof a new 4.5.1 reading as follows: "4.5.1 For a period of one (1) year from the Closing Date (the "Restricted Period"), the shares of Boyd Common Stock held by Miller Welborn shall not be voluntarily or involuntarily transferred, assigned, sold or conveyed and the certificates representing such shares shall bear a legend to that effect. The words "transfer, assign, sell or convey" as used in this Section 4.5.1 shall include the grant of any proxy, the establishment of any voting 2 trust or any sale, hypothecation, pledge, assignment or other conveyance, with or without consideration or incidence of ownership or title as to any share of Boyd Common Stock owned of record or beneficially by the Shareholder, regardless of whether record or beneficial title to such shares is thereby transferred. After the Restricted Period, Miller Welborn may not, during any one calendar quarter, voluntarily or involuntarily transfer, assign, sell or convey a number of shares of Boyd Common Stock which is greater than one percent (1%) of the number of shares of Boyd Common Stock outstanding at the beginning of such calendar quarter. In the event that Miller Welborn sells shares of Boyd Common Stock on the open market during the ten (10) calendar quarters immediately following the second anniversary of the Closing Date at a per share price which is less than $6.50 per share (the "Per Share Minimum Price") (as the same may be adjusted pursuant to Section 2.1.4 hereof), Boyd shall pay to Welborn the difference between the Per Share Minimum Price and the per share price at which such shares were sold on the open market, such payment to be made within ten (10) days after Welborn transmits to Boyd confirmation of such sale. Notwithstanding anything to the contrary contained in this Agreement, in the event Miller Welborn elects to sell shares of Boyd Common Stock on the open market during the ten (10) calendar quarters immediately following the second anniversary of the Closing Date at a price that is less than the Per Share Minimum Price, then Miller Welborn must first deliver written notice thereof, in the form of Exhibit 4.5.1(a) attached hereto (an "Offer Notice"), to the Chief Financial Officer of the Company in order to provide the Company a right of first refusal on the following terms and conditions: (a) The Offer Notice must contain a full description of the proposed sale of Boyd Common Stock by Miller Welborn, including, without limitation, the number of shares of to be sold (the "Affected Shares"), the proposed price per share of the Boyd Common Stock, terms of payment for the Affected Shares and the proposed date of such sale. An Offer Notice shall constitute Miller Welborn's binding agreement to sell all of the Affected Shares to the Company on the terms and conditions specified therein. (b) If the Company elects to purchase all, and not less than all, of the Affected Shares from Miller Welborn, the Company shall have until 5 p.m. Clayton, Alabama time on the first business day following the Company's receipt of the Offer Notice (the "Offer Deadline") to deliver to Miller Welborn, in writing, notice of its election to so purchase the Affected Shares (the "Company Acceptance"). Upon such election by the Company, the Company shall purchase, and Miller Welborn shall sell, of the Affected Shares to the Company upon the terms and conditions contained in the Offer Notice within three (3) business days following Miller Welborn's receipt of the Company Acceptance. At the closing, Miller Welborn shall deliver to the Company his confirmation that he has transferred the Affected Shares free and clear of any and all pledges, liens, claims, security interests or other encumbrances (other than restrictions imposed by this Agreement or applicable securities laws) and the Company shall pay to Miller Welborn the consideration set forth in the Offer Notice in accordance with the terms described therein, as well as any additional payments in connection with the Per Share Minimum Price contemplated by the first paragraph of this Section 4.5.1. 2 3 (c) If the Company fails to provide Miller Welborn notice of its election to purchase or not to purchase the Affected Shares on or before the Offer Deadline, or if the Company notifies Miller Welborn that it has elected not to purchase the Affected Shares, Miller Welborn shall be free to sell the Affected Shares on the open market in strict accordance with the terms set forth in the Offer Notice at any time within ninety (90) days after the Offer Deadline (the "Transfer Period Termination Date"). In the event that Miller Welborn does not sell or otherwise dispose of all of such Affected Shares in the manner set forth in the immediately preceding sentence prior to the Transfer Period Termination Date, the right of first refusal provided for in this Section 4.5.1 shall continue to be applicable to any subsequent sale or transfer of such Affected Shares. 2. AMENDMENTS TO NONCOMPETE AGREEMENTS. Solely in order to correct an unintended typographical error contained therein, the date of each Noncompete Agreement appearing on the first and second lines of the Noncompete Agreements (below the titles thereof) shall be changed from "8th day of December 1998" to "8th day of December, 1997" to correctly reflect the date on which each of these Noncompete Agreements was executed. 3. AMENDMENTS TO WELBORN EMPLOYMENT AGREEMENT. (a) Solely to correct an unintended typographical error contained therein, and to accurately reflect the actual intent of the parties thereto, Section 2 of the Welborn Employment Agreement is hereby amended by deleting the last clause of the first sentence thereof, which reads as follows: "which duties shall include acting as Chairman of the Board of Boyd." and substituting in lieu thereof the following clause: "which duties shall include acting as Chairman of the Board of Welborn." (b) Solely to correct an unintended typographical error contained therein, Section 7(d) of the Welborn Employment Agreement is hereby amended by deleting the bracket symbols ("[" and "]") immediately preceding and immediately following sub-clause (ii) therein. 4. NO OTHER MODIFICATIONS. Except to the extent expressly amended herein, all terms and conditions of the Acquisition Agreement, Noncompete Agreements and Welborn Employment Agreement are hereby affirmed and shall remain in full force and effect. 5. GOVERNING LAW. This Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of Alabama without giving effect to any conflict or choice of laws principles. 6. COUNTERPARTS. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 3 4 IN WITNESS WHEREOF, each party hereto has executed or caused this Amendment to be executed on its behalf, all on the day and year first above written. BOYD BROS. TRANSPORTATION INC. "Boyd" By: /s/ Richard Bailey ---------------------------------------- Name: Richard Bailey -------------------------------------- Title: CFO ------------------------------------- WELBORN TRANSPORT, INC. "Boyd Sub" By: /s/ Miller Welborn ---------------------------------------- Name: Miller Welborn -------------------------------------- Title: Chairman ------------------------------------- SHAREHOLDERS /s/ Miller Welborn -------------------------------------------- Miller Welborn /s/ Steven Rumsey -------------------------------------------- Steven Rumsey 4 5 EXHIBIT 4.5.1 FORM OF OFFER NOTICE Boyd Bros. Transportation, Inc. VIA FAX:_____________________ 32 75 Highway 30 Clayton, Alabama 36016 Gentlemen: Pursuant to Section 4.5.1 of the Acquisition Agreement, this is to provide notice that the undersigned proposes to sell in the open market during the next _______ days (not to exceed 90 days), ____________ shares of Boyd Common Stock at a proposed price per share of not less than $____________ for ______________ (state terms of sale, i.e., cash, credit, etc.). Please advise if you wish to exercise your right of first refusal to purchase pursuant to Section 4.5.1 of the Acquisition Agreement. As used herein, all defined terms shall have the same meaning as found in that certain Acquisition Agreement between and among Boyd, Boyd Sub, Miller Welborn and Steven Rumsey, dated October 8, 1997. -------------------------------------------- Miller Welborn 5 EX-10.4 5 g67752ex10-4.txt SECOND AMENDMENT TO ACQUISITION AGREEMENT 1 EXHIBIT 10.4 SECOND AMENDMENT TO ACQUISITION AGREEMENT THIS SECOND AMENDMENT TO ACQUISITION AGREEMENT (this "Amendment"), made as of the 30 day of May, 2000, by and among BOYD BROS. TRANSPORTATION INC., a Delaware corporation (hereinafter referred to as "Boyd"), WELBORN TRANSPORT, INC., (formerly known as W. T. Acquisition Corp.), an Alabama corporation (hereinafter referred to as "Boyd Sub"), MILLER WELBORN ("Welborn") and STEVEN RUMSEY ("Rumsey") (Welborn and Rumsey are hereinafter sometimes collectively referred to as the "Shareholders"). W I T N E S S E T H: WHEREAS, Boyd, Boyd Sub and the Shareholders (together with Welborn Transport, Inc., which was merged into Boyd Sub) entered into an Acquisition Agreement, dated October 8, 1997, as amended by that certain First Amendment to Acquisition Agreement, Employment Agreement and Covenant Not to Compete, dated March 17, 2000 (as amended, the "Acquisition Agreement"); and WHEREAS, Boyd, Boyd Sub and the Shareholders desire to amend the Acquisition Agreement to modify certain terms and conditions contained therein, all as more particularly set forth herein. NOW, THEREFORE, for and in consideration of the premises and the mutual promises, agreements, representations, warranties and covenants hereinafter set forth, and the sum of ten dollars and other good and valuable consideration, the receipt and sufficiency of which is hereby specifically agreed to and acknowledged, the Acquisition Agreement is hereby amended as follows: 1. AMENDMENT TO ACQUISITION AGREEMENT. Section 4.5.2. of the Acquisition Agreement is hereby amended by deleting said Section in its entirety and substituting in lieu thereof a new 4.5.2 reading as follows: "4.5.2. During the Restricted Period, the shares of Boyd Common Stock held by Steven Rumsey shall not be voluntarily or involuntarily transferred, assigned, sold or conveyed and the certificates representing such shares shall bear a legend to that effect. The words "transfer, assign, sell or convey" shall have the meaning set forth in Section 4.5.1. After the Restricted Period, Steven Rumsey may not, during any one (1) calendar quarter, voluntarily or involuntarily transfer, assign, sell or convey a number of shares of Boyd Common Stock which is greater than one percent of the number of shares of Boyd Common Stock outstanding at the beginning of such calendar quarter. In the event that during (a) the five (5) calendar quarters immediately following the Restricted Period or (b) the five (5) calendar quarters immediately following the third (3rd) anniversary of the Closing Date (collectively, these two five-quarter periods are hereinafter referred to as 2 the "Floor Periods") Steven Rumsey sells shares of Boyd Common Stock on the open market at a per share price which is less than the Per Share Minimum Price, Boyd shall pay to Steven Rumsey the difference between the Per Share Minimum Price and the per share price at which such shares were sold on the open market, such payment to be made within ten (10) days after Steven Rumsey transmits to Boyd confirmation of such sale. Notwithstanding anything to the contrary contained in this Agreement, in the event Steven Rumsey elects to sell shares of Boyd Common Stock on the open market during the Floor Periods at a price that is less than the Per Share Minimum Price, then Steven Rumsey must first deliver written notice thereof, in the form of Exhibit 4.5.2(a) attached hereto (a "Rumsey Offer Notice"), to the Chief Financial Officer of the Company in order to provide the Company a right of first refusal on the following terms and conditions: (a) The Rumsey Offer Notice must contain a full description of the proposed sale of Boyd Common Stock by Steven Rumsey, including, without limitation, the number of shares of to be sold (the "Rumsey Affected Shares"), the proposed price per share of the Boyd Common Stock, terms of payment for the Rumsey Affected Shares and the proposed date of such sale. A Rumsey Offer Notice shall constitute Steven Rumsey's binding agreement to sell all of the Rumsey Affected Shares to the Company on the terms and conditions specified therein. (b) If the Company elects to purchase all, and not less than all, of the Rumsey Affected Shares from Steven Rumsey, the Company shall have until 5 p.m. Clayton, Alabama time on the first business day following the Company's receipt of the Rumsey Offer Notice (the "Rumsey Offer Deadline") to deliver to Steven Rumsey, in writing, notice of its election to so purchase the Rumsey Affected Shares (the "Company Rumsey Acceptance"). Upon such election by the Company, the Company shall purchase, and Steven Rumsey shall sell, of the Rumsey Affected Shares to the Company upon the terms and conditions contained in the Rumsey Offer Notice within three (3) business days following Steven Rumsey's receipt of the Company Rumsey Acceptance. At the closing, Steven Rumsey shall deliver to the Company his confirmation that he has transferred the Rumsey Affected Shares free and clear of any and all pledges, liens, claims, security interests or other encumbrances (other than restrictions imposed by this Agreement or applicable securities laws) and the Company shall pay to Steven Rumsey the consideration set forth in the Rumsey Offer Notice in accordance with the terms described therein, as well as any additional payments in connection with the Per Share Minimum Price contemplated by the first paragraph of this Section 4.5.2. If the Company fails to provide Steven Rumsey notice of its election to purchase or not to purchase the Rumsey Affected Shares on or before the Rumsey Offer Deadline, or if the Company notifies that it has elected not to purchase the Rumsey Affected Shares, Steven Rumsey shall be free to sell the Rumsey Affected Shares on the open market in strict accordance with the terms set forth in the Rumsey Offer Notice at any time within 3 ninety (90) days after the Rumsey Offer Deadline (the "Rumsey Transfer Period Termination Date"). In the event that Steven Rumsey does not sell or otherwise dispose of all of such Rumsey Affected Shares in the manner set forth in the immediately preceding sentence prior to the Rumsey Transfer Period Termination Date, the right of first refusal provided for in this Section 4.5.2 shall continue to be applicable to any subsequent sale or transfer of such Rumsey Affected Shares." 2. NO OTHER MODIFICATIONS. Except to the extent expressly amended herein, all terms and conditions of the Acquisition Agreement are hereby affirmed and shall remain in full force and effect. 3. GOVERNING LAW. This Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of Alabama without giving effect to any conflict or choice of laws principles. 4. COUNTERPARTS. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [SIGNATURES BEGIN ON FOLLOWING PAGE] 4 IN WITNESS WHEREOF, each party hereto has executed or caused this Amendment to be executed on its behalf, all on the day and year first above written. BOYD BROS. TRANSPORTATION INC. "Boyd" By: /s/ Richard Bailey -------------------------------------------- Name: Richard Bailey -------------------------------------- Title: CFO ------------------------------------- WELBORN TRANSPORT, INC. "Boyd Sub" By: /s/ Richard Bailey -------------------------------------------- Name: Richard Bailey -------------------------------------- Title: CFO ------------------------------------- SHAREHOLDERS /s/ Miller Welborn -------------------------------------------- Miller Welborn /s/ Steven Rumsey -------------------------------------------- Steven Rumsey EX-10.5 6 g67752ex10-5.txt SECOND AMENDMENT TO EMPLOYMENT AGREEMENT 1 EXHIBIT 10.5 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment"), made as of the 22 day of May, 2000, by and among BOYD BROS. TRANSPORTATION INC., a Delaware corporation (hereinafter referred to as "Boyd"), and STEVEN RUMSEY ("Rumsey"). W I T N E S S E T H: WHEREAS, Boyd and Rumsey entered into an Employment Agreement, dated as of December 8, 1997, as amended by that certain First Amendment to Acquisition Agreement, Employment Agreement and Covenant Not to Compete by and between Boyd, Rumsey, Miller Welborn and Welborn Transport, Inc., an Alabama corporation, dated March 17, 2000 (as amended, the "Rumsey Employment Agreement"); and WHEREAS, Boyd and Rumsey desire to amend the Rumsey Employment Agreement to modify certain terms and conditions contained therein, all as more particularly set forth herein. NOW, THEREFORE, for and in consideration of the premises and the mutual promises, agreements, representations, warranties and covenants hereinafter set forth, and the sum of ten dollars and other good and valuable consideration, the receipt and sufficiency of which is hereby specifically agreed to and acknowledged, the Rumsey Employment Agreement is hereby amended as follows: 1. AMENDMENT TO RUMSEY EMPLOYMENT AGREEMENT. The parties acknowledge that the Rumsey Employment Agreement has been extended for each of the two one-year extension periods set forth in Section 1 of the Rumsey Employment Agreement, as such Section exists prior to being amended hereby. Section 1 of the Rumsey Employment Agreement is hereby amended by deleting said Section in its entirety and substituting in lieu thereof a new Section 1 reading as follows: "1. Term of Employment. Boyd hereby employs Employee and Employee hereby accepts such employment upon the terms and conditions set forth in this Agreement. The term ("Term") of Employee's employment under this Agreement shall be for a period commencing from the date hereof (the "Effective Date") and terminating on the first anniversary of the Effective Date (the "Termination Date"), unless such employment is terminated or extended prior to the expiration of said period as hereinafter provided. Employee shall have the right to extend the Term for up to three (3) additional one year periods by providing notice to Boyd, in the case of the first such extension, within thirty (30) days prior to the Termination Date, in the case of the second such extension, within thirty (30) days prior to the anniversary of the Termination Date, and in the case of the third such extension, within thirty (30) days prior to the second (2nd) anniversary of the Termination Date." 2 2. NO OTHER MODIFICATIONS. Except to the extent expressly amended herein, all terms and conditions of the Rumsey Employment Agreement are hereby affirmed and shall remain in full force and effect. 3. GOVERNING LAW. This Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of Alabama without giving effect to any conflict or choice of laws principles. 4. COUNTERPARTS. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [SIGNATURES BEGIN ON FOLLOWING PAGE] 3 IN WITNESS WHEREOF, each party hereto has executed or caused this Amendment to be executed on its behalf, all on the day and year first above written. BOYD BROS. TRANSPORTATION INC. "Boyd" By: /s/ Richard Bailey ---------------------------------------- Name: Richard Bailey -------------------------------------- Title: CFO ------------------------------------- /s/ Steven S. Rumsey -------------------------------------------- Steven Rumsey EX-10.6 7 g67752ex10-6.txt CONSULTING AGREEMENT DATED 6/1/2000 1 EXHIBIT 10.6 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT ("Agreement") is made and entered into as of June 1, 2000 by and between MILLER WELBORN, 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 Vice Chairman, and prior thereto was employed by the Company as President and Chief Executive Officer; WHEREAS, Consultant has resigned from his employment with the Company; WHEREAS, the Company desires for Consultant to provide certain consulting services for the Company and to agree to certain restrictions concerning confidential information 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. TERMINATION OF EMPLOYMENT AGREEMENT; CONSULTING. 1.1 Consultant and the Company hereby covenant and agree that the employment relationship between Consultant and the Company more particularly described in that certain Employment Agreement between the parties hereto, dated December 8, 1997, as amended by that certain First Amendment to Acquisition Agreement, Employment Agreement and Covenant Not to Compete, dated as of March 17, 2000 (the "Employment Agreement"), shall be terminated as of the end of business on May 31, 2000; provided, however, that those provisions of the Employment Agreement that by their terms survive any termination or expiration of the Employment Agreement shall continue in full force and effect thereafter. Notwithstanding Section 7(a) of the Employment Agreement, the termination of Consultant's employment with the Company shall not constitute Consultant's resignation from the Company's Board of Directors. 1.2 The Company hereby engages the Consultant to perform and the Consultant hereby agrees to perform the consulting services in Section 1.3 below to commence June 1, 2000 and terminate on November 30, 2001 (the "Term"). Consultant shall make himself available to perform consulting services for the Company for up to Ten working days per month, on 2 such days, at such times, and in such locations as the Chief Executive Officer of the Company shall reasonably request. 1.3 The consulting services to be performed by Consultant shall include advice on [marketing, sales, owner/operator issues, 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, or to the Chief Executive Officer of Welborn Transport, Inc., a wholly owned subsidiary of the Company. 1.4 It is the intention of the parties that Consultant be an independent contractor and not an employee, agent, joint venturer, or partner of the Company. Nothing in this Agreement shall be interpreted or construed as creating or establishing the relationship of employer and employee between the Company and Consultant. Consultant shall not incur any liability or obligation on the part of the Company without the prior written consent of the Company or represent to any third party that Consultant has the authority to incur any obligation on behalf of the Company. 2. COMPENSATION. 2.1 In consideration for the Consulting Services to be performed by Consultant described in Section 1.3 hereof and Consultant's undertakings concerning Confidential Information set forth in Section 3 hereof, the Company shall pay Consultant a consultant fee of $6,250 per month (the "Consulting Fee") through and including November 30, 2001 or the earlier termination of this Agreement. 2.2 The Company and Consultant acknowledge and agree that Consultant is not the Company's employee, and the Company therefore shall not take any action or provide Consultant with any benefits or commitments inconsistent with any of such undertakings by Consultant. Accordingly, Consultant shall pay and report federal and state income tax withholding, workers' compensation, social security taxes, and unemployment insurance applicable to Consultant. Consultant shall bear sole responsibility for any health or disability insurance, retirement benefits, or other welfare or pension benefits, if any, of Consultant. Consultant agrees to defend, indemnify, and hold harmless the Company, its officers, directors, employees and agents, and the administrators of the Company's benefit plans, from and against any claims, liabilities, or expenses relating to such compensation, tax, insurance, or benefit matters, provided that the Company shall notify Consultant of each such claim and cooperate with Consultant in the defense and resolution of such claim. 2.3 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. 2.4 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. 2 3 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, recruitment and employment 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 collectively 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 right from a source other than the Company or another person subject to a confidentiality obligation to the 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. 3 4 5. CONTINUATION OF NONCOMPETITION COVENANTS. Consultant acknowledges and agrees that the terms, conditions, restrictions and requirements of (i) that certain Covenant Not To Compete by and between the Consultant, W.T. Acquisition Company and the Company, dated December 8, 1998, as amended by that certain First Amendment to Acquisition Agreement, Employment Agreement and Covenant Not to Compete, dated as of March 17, 2000, and (ii) Sections 8, 9, 10, 11, 12, 13, 14 and 15 of the Employment Agreement, shall continue in full force and effect and shall not be amended, terminated or otherwise modified by this Agreement in any way. 6. INJUNCTION. 6.1 It is the understanding of the parties that the obligations of the Consultant set forth in Section 3 of this Agreement relating to Confidential Information 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. 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. TERMINATION. 7.1 Either party may terminate this Agreement in the event of a material breach by the other party of any obligation provided herein. Any such termination may be made only by written notice to the other party, specifically identifying the breach or breaches on which termination is based. Following receipt of such notice, the party in breach shall have fifteen (15) days to cure such breach or breaches, and this Agreement shall terminate in the event that such cure is not made by the end of such period. 4 5 7.2 Upon the termination of this Agreement, Consultant shall promptly return to the Company all materials furnished by the Company to Consultant during the term of this Agreement, without regard to whether such materials contain proprietary or confidential information of the Company and all materials containing any proprietary information or Confidential Information of the Company. 7.3 In the event of any termination of this Agreement, Sections 2.3, 3, 5 and 6 hereof shall survive and continue in full force and effect. 8. 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. 9. 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. 10. AMENDMENT; NO WAIVER; ENTIRE AGREEMENT; 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. Any term or condition of this Agreement may be waived at any time by the party hereto which is entitled to the benefit thereof. A waiver on one occasion shall not be deemed to be a waiver of the same or of any other breach on a future occasion. This Agreement supersedes all prior discussions and agreements between Contractor and the Company with respect to the matters herein contained, and, unless otherwise expressly provided herein, this Agreement contains the sole and entire agreement between the parties with respect to the transactions contemplated hereby. 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. 11. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Alabama. 5 6 12. 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. 13. COUNTERPARTS AND HEADINGS. This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. The headings set out are for convenience or reference and shall not be deemed a part of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement and set their hands and seals thereto as of the date first above written. "COMPANY": BOYD BROS. TRANSPORTATION INC. By: /s/ Richard Bailey ---------------------------------------- Name: Richard Bailey -------------------------------------- Title: Chief Financial Officer "CONSULTANT": /s/ Miller Welborn [SEAL] -------------------------------------- MILLER WELBORN EX-10.7 8 g67752ex10-7.txt MASTER NOTE FOR BUSINESS AND COMMERCIAL LOANS 1 EXHIBIT 10.7 AMSOUTH(R) BANK MASTER NOTE FOR BUSINESS AND COMMERCIAL LOANS Montgomery, Alabama $ 2,500,000.00 July 7, 2000 Date FOR VALUE RECEIVED, the undersigned (hereinafter called, whether one or more, the "Borrower"), jointly and severally (if more than one) promises to pay to the order of AmSouth Bank, its successors and assigns (hereinafter sometimes called the "Bank" and sometimes, together with any other holder of this note, called "Holder"), at any office of Holder or at such other place as Holder may from time to time designate, the sum of ***Two Million Five Hundred Thousand and 00/100***Dollars ($ 2,500,000), or so much thereof as the Bank has advanced to the Borrower hereunder (the "Loan"), plus interest from the date hereof until maturity (whether by acceleration or otherwise) on the outstanding unpaid principal balance of the Loan, at the rate of [check (1), (2), or (3)]: [ ] (1)________ % per annum. [ ] (2)________ % per annum in excess of the prime rate of the Bank in effect from time to time as designated by the Bank (the "Prime Rate"), with changes in the interest rate on this note caused by changes in the Prime Rate to take effect on the date the Prime Rate changes without notice to the Borrower or any action by Holder. [x] (3) See Exhibit "A" attached hereto and by this reference becomes a party hereto. Interest will be computed on the basis of the actual number of days elapsed over (check one) [x] to the extent allowed by applicable law, an assumed 360-day year, [ ] a 365 (or 366-, if leap year) day year. If none of the foregoing provisions for a rate of interest is checked, the rate of interest payable on the Loan until maturity (whether by acceleration or otherwise) shall be the Prime Rate of the Bank in effect from time to time, or such lesser rate as shall be the maximum permitted by law, computed on the basis of the actual number of days elapsed over an assumed 360-day year. Notwithstanding anything to the contrary contained in this note, the amount paid or agreed to be paid as interest on the principal The Borrower hereby agrees to repay principal and interest as follows: The Borrower will pay the principal amount of the Loan (check one and complete if applicable:) [ ] on demand, [x] 364 days after date, or [ ] _______________________________________________________________________ ______________________________________________________________________, and will pay the interest on the Loan (check one and complete if applicable): [ ] at maturity, [x] in monthly installments on the 6th day of each month hereafter, and at maturity [ ] in quarterly installments on the _____ day of each __________, _______, _____________, and ______________________ hereafter and at maturity, or [ ] _______________________________________________________________________ ______________________________________________________________________. For purposes of sending periodic billing statements in advance of each interest payment date, at the Holder's option, the Prime Rate in effect 15 days prior to each interest payment date shall be deemed to be the Prime Rate that continues in effect until the date prior to such interest payment date for purposes of computing the amount of interest payable on such interest payment date. If the Prime Rate changes during such 15-day period, the difference between the amount of interest that in fact accrues during such period and the amount of interest actually paid will be added to or subtracted from, as the case may be, the interest otherwise payable in preparing the periodic billing statement for the next succeeding interest payment date. In determining the amount of interest payable at the final maturity or upon full prepayment of this Master Note, all changes in the Prime Rate occurring on or prior to the day before the final maturity date or the date of such full prepayment shall be taken into account. If none of the foregoing provisions for the repayment of principal and/or interest is checked, the principal, if not checked, and interest, if not checked, due hereunder shall be payable on demand of the Holder. For purposes of sending periodic billing statements in advance of each interest payment date, at the Holder's option, the Prime Rate in effect 15 pays prior to each interest payment date shall be deemed to be the Prime Rate that continues in effect until the date prior to such interest payment date for purposes of computing the amount of interest payable on such interest payment date. If the Prime Rate changes during such 15-day period, the difference between the amount of interest that in fact accrues during such period and the amount of interest actually paid will be added to or subtracted from, as the case may be, the interest otherwise payable in preparing the periodic billing statement for the next succeeding interest payment date. In determining the amount of interest payable at the final maturity or upon full prepayment of this Master Note, all changes in the Prime Rate occurring on or prior to the day before the final maturity date or the date of such full prepayment shall be taken into account. If none of the foregoing provisions for the repayment of principal and/or interest is checked, the principal, if not checked, and interest, if not checked, due hereunder shall be payable on demand of the Holder. If permitted under applicable law, the Borrower agrees to pay to Holder, on demand, a late charge. This late charge will be 5% of any installment that is not paid within 12 days after it is due and will be 5% of the interest portion of the payment due upon the final maturity date of this note if that payment is not paid within 12 days after it is due. This late charge will never be less than $10 nor more than $250 on each payment. This provision shall not be deemed to excuse a late payment or be deemed a waiver of any other right Holder may have, including, without limitation, the right to declare the entire unpaid principal and interest immediately due and payable. All payments coming due on this Master Note shall be made in cash or immediately available funds at the Holder's office at which the payment is made. At its option, the Holder may elect to give the Borrower credit for any payment made by check or other instrument in accordance with the Holder's availability schedule in effect from time to time for such items and instruments, which the Holder will make available to the Borrower on request. Each payment on the indebtedness evidenced hereby will first reduce charges owed by the Borrower that are neither principal nor interest. The remainder of each payment will be applied first to accrued but unpaid interest and then to unpaid principal. Any partial prepayments of principal will be applied to installments due in the inverse order of their maturity and no such partial prepayment of principal will have the effect of postponing, satisfying, reducing, or otherwise affecting any scheduled installment before the principal of and interest on the Loan is, and all other charges due hereunder are, paid in full. This note is a master note, and it is contemplated that the proceeds of the Loan evidenced hereby will be advanced from time to time to the Borrower by Holder in installments, as requested by the Borrower and agreed to by Holder. It is further contemplated that any amounts advanced under this note may be prepaid from time to time by the Borrower and subsequently re-advanced by Holder, so long as the principal amount outstanding does not exceed the face amount of this note. By reason of prepayments hereon there may be times when no indebtedness is owing hereunder, and notwithstanding any such occurrence, this note shall remain valid and shall be in full force and effect as to each subsequent principal advance made hereunder. The Holder shall maintain a record (by computer or otherwise) of all principal advances and repayments under this Master Note and that record shall be presumed to be correct in the absence of clear and convincing evidence to the contrary. Unless the Holder has otherwise agreed in writing, the Holder is not obligated to make any advances or re-advances hereunder, and all advances and re-advances shall be made at the option of Holder. This note shall be valid and enforceable as to the aggregate amount advanced at any time hereunder, whether or not the full face amount hereof is advance. If the Loan is payable on demand, this paragraph is inoperative and is not applicable; otherwise, this paragraph is operative and applies to the Loan in accordance with its terms. In the event of default in the payment of any one or more installments of principal or interest which may become due hereunder, when and as the same fall due, or in the payment of all of principal and interest due hereunder at maturity, or the failure of any maker, endorser, surety or guarantor hereof (hereinafter called the "Obligors") to pay when due or perform any of the Obligations (meaning thereby this note and any and all renewals and extensions thereof and all other liabilities and indebtedness of the Borrower to Holder, now existing or hereafter incurred or arising, direct or indirect, and however incurred) or any part thereof or the failure of any Obligor to pay when due any other liability to Holder, in the event a default occurs under the terms of any loan agreement or other instrument (other than this note), document or paper evidencing, securing, guaranteeing, or executed in connection with all or any part of the Obligations (hereinafter, together with this note, collectively called the "Loan Documents"), or in the event Holder shall in good faith deem itself insecure for any reason, or on the happening of any one or more of said events, Holder shall have the right at its election and without notice to any Obligor to declare the Obligations immediately due and payable with interest to date. No delay in making such election shall be construed to waive the right to make such election. Holder may note the fact of acceleration hereon without stating the ground therefor and whether or not noted hereon such election to accelerate shall be effective. In the event of death of, insolvency of, general assignment by, judgment against, filing of a petition in bankruptcy by or against, filing a petition for the reorganization of, filing of application in any court for receiver for, or issuance of a writ of garnishment or attachment in a suit or action against any Obligor or against any of the assets of any Obligor, or on the happening of any one or more of said events, the Obligations shall, without notice to or demand upon any Obligor, immediately become due and payable with interest to date unless Holder shall on notice of such event elect to waive such acceleration by written notation hereon. Each of the Obligors hereby severally (a) waives as to this debt or any renewal or extension thereof all rights of exemption under the Constitution or laws of Alabama or any other state as to personal property; (b) waives demand (unless this note is payable on demand), presentment, protect, notice of protest, notice of dishonor, suit against any party and all other waivable requirements necessary to hold any Obligor liable; (c) agrees that time of payment may be extended one or more times for any period of time (whether such period is shorter or longer than the initial term of this note) or renewal notes taken or other indulgence granted without notice of or consent to such action and without release of liability as to any Obligor; (d) as to all or any part of the Obligations, consents to Holder's releasing, agreeing not to sue, suspending the right to enforce this instrument against or otherwise discharging or compromising any Obligation of any Obligor or other person against whom any Obligor has to the knowledge of Holder a right of recourse, all without notice to or further reservations of rights against any Obligor, and all without in any way affecting or releasing the liability of any Obligor; (e) consents to Holder's releasing, exchanging or otherwise dealing in any manner with all or any portion of any collateral, lien, or right of set-off which may now or hereafter secure this note, all without notice to or further reservations of rights against any Obligor, and all without in any way affecting or releasing the liability of any Obligor, even though such release, exchange or other dealing may in any manner and to any extent impair any such collateral, lien or right of set-off; (f) agrees to pay all costs of collecting or securing or attempting to collect or secure this note or defending any unsuccessful claim asserted against the Holder in connection with this note, including reasonable attorneys' fees; and (g) warrants that this Loan is for business, commercial or agricultural purposes. In addition to all liens upon, and rights of set-off against, any monies, securities, or other property of any of the Obligors given to Holder by law, Holder shall have a lien upon and a right of set-off against all monies, securities and other property of any of the Obligors now or hereafter in the possession of, or on deposit with, Holder, whether held in a general or special account or deposit, for safekeeping, or otherwise; and every such lien and right of set-off may be exercised without demand upon or notice to any Obligor, and the Bank shall have no liability with respect to any of Obligor's checks or other items which may be returned or other funds transfers which may not be made due to insufficient funds thereafter. The Borrower understands that the Bank may from time to time enter into a participation agreement or agreements with one or more participants pursuant to which such participant or participants shall be given participations in the Loan and that such participants may from time to time similarly grant to other participants sub-participations in the Loan. The Borrower agrees that any participant may exercise any and all rights of banker's lien or set-off whether arising by operation of law or given to Holder by the provisions of this note, with respect to the Borrower as fully as if such participant had made the Loan directly to the Borrower. For the purposes of this Paragraph only, the Borrower shall be deemed to be directly obligated to each participant or subparticipant in the amount of its participating interest in the principal of, and interest on, the Loan. Neither any failure nor any delay on the part of Holder in exercising any right, power or privilege under this note shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right power or privilege. No modification, amendment or waive of any provisions of this note shall be effective unless in writing and signed by a duly authorized officer of Holder, and then the same shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Obligor in any case shall entitle Obligor to any other or further notice or demand in the same, similar or other circumstances. Any provision of this note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. The provisions of this note shall inure to the benefit of the Holder, its successors and assigns and shall be binding upon their heirs, successors and assigns of each Obligor, except that no Obligor may assign or transfer his, her or its obligation hereunder without the written consent of Holder. All rights, powers and remedies of Holder under this note and now or hereafter existing at law, in equity or otherwise shall be cumulative and may be exercised successively or concurrently. The Loan Documents contain the entire understanding and agreement between the Borrower and the Holder with respect to the Loan and supersede any and all prior agreements, understandings, promises, and statements with respect to the Loan. This Master Note may not be modified, amended, or supplemented in any manner except by a written agreement executed by both the Borrower and the Holder. This note shall be construed in accordance with and governed by the laws of the State of Alabama. This agreement is executed under seal by the Borrower of each of them. CAUTION-IT IS IMPORTANT THAT YOU THOROUGHLY READ THIS MASTER NOTE BEFORE YOU SIGN IT No. 468156 702159 Boyd Brothers Transportations, Inc. -------------- ----------------------------------- [SEAL] Due July 6, 2001 By: /s/ Richard C. Bailey -------------- ----------------------------------- [SEAL] Its: CFO ----------------------------------- [SEAL] ----------------------------------- [SEAL] ----------------------------------- [SEAL] 2 GUARANTY OF NOTE For value received and in consideration of the credit extended or to be extended to the maker or makers (whether one or more, called the "Maker") of the master note on the reverse side hereof (together with any extension and renewal thereof called the "Note") by the payee hereof (together with its successors and assigns and every subsequent holder of the Note called the "Holder"), which the undersigned requested, and in further consideration of the sum of ten dollars and other good and valuable consideration to the undersigned in hand paid by said payee, the receipt and sufficiency of which are hereby acknowledged, the undersigned (if more than one, jointly and severally) hereby (a) unconditionally and absolutely guarantees to the Holder the prompt payment, when and as due and payable (whether by acceleration or otherwise), of all indebtedness evidenced by the Note, including without limitation principal, interest, Recovered payments (as hereinafter defined), costs, and expenses (collectively, the "Debts") and agrees to pay any of the Debts on demand at any time after the maturity thereof; (b) agrees to be bound by all of the terms and provisions of the Note (including the terms waiving notice and agreeing to pay costs and expenses of collection, such as reasonable attorneys' fees, in the event of default); (c) agrees that the Holder will not be required first to resort to the maker or any other endorser, surety, or guarantor (each maker, other endorser, surety, or guarantor being hereinafter individually called an "Obligor") or to any guaranty or other security (collectively, the "Collateral") pledged or granted to it by any instrument or agreement (collectively, the "Security Documents" and individually , a "Security Document"), or otherwise assigned or conveyed to it, but in case of default in the payment of any of the Debts, the Holder may forthwith look to the undersigned, jointly and severally, for payment under the provisions hereof; (d) agrees that the obligations of the undersigned hereunder are absolute, unconditional, present and continuing guaranties of payment and not collectively and shall not be subject to any counterclaim, recoupment, set-off, reduction or defense based upon any claim that the undersigned, or any of them, may have against the Maker, the Holder or any Obligor; (e) agrees that any of the Debts may be renewed, extended or modified, in whole or in part, by the execution of a new Note or otherwise, and this guaranty shall be made to extend to and cover such extended, renewed or modified Debts, on whatever terms and conditions the same may be extended, renewed or modified, without the necessity for the undersigned to execute any new guaranty agreement guaranteeing or Note evidencing the same or any other document and without regard to the number of times or the manner in which the same may have been or shall be extended, renewed or modified; (f) agrees that the obligations and liabilities of the undersigned hereunder shall not be discharged, impaired, modified or otherwise affected by (i) the unenforceability, non-existence, invalidity, non-perfection, or impairment of the Note, any of the Debts, any Collateral or any Security Document, (ii) any understanding or agreement that any other person, firm or corporation was or is to sign, guarantee or become bound on or for the Note or any Security Document, (iii) the Holder's resort or failure or refusal to resort to any other security or remedy for the collection of any of the Debts, (iv) the sale, exchange, release or surrender of any of the Collateral or the release or discharge of any Obligor, (v) the death or bankruptcy of any Obligor, or in the case of such death or bankruptcy, the failure of the Holder to file a claim against the estate of such deceased or bankrupt Obligor, (vi) any renewal, extension, modification, amendment, supplement, or change in the status or terms of the Note, the Debts, any Collateral, or Security Document, (vii) any default by the maker under the Note or any Security Document, (viii) any compromise, settlement, release, discharge, termination, waiver, or extension of time for payment, performance, or observance of any of the Debts, (ix) the application of any payments, proceeds of Collateral or other sums to the Debts or any other indebtedness, obligations or liabilities of the Maker to the Holder, now or hereafter existing, in such order as the Holder may elect, (x) any exercise or non-exercise of any right, remedy, power, or privilege of the Holder with respect to the Debts, any Collateral or any Obligor, (xi) any failure, omission, delay or lack of diligence on the part of Holder to enforce, assert or exercise any such right, power, privilege, or remedy, or (xii) any claim (including, but not limited to, a counterclaim) that any Obligor may have against the Holder, (viii) any other event, circumstance, or condition, and (g) agrees that it shall not be necessary for the Holder to give the undersigned notice of, or obtain consent or approval of the undersigned in connection with, (i) the making of any advances or extensions of credit under the Note, (ii) any of the matters set forth in clauses (a) through (f) hereof, or (iii) the Holder's acceptance of this agreement and reliance thereon. This Guaranty, and the undersigned's obligations hereunder shall continue to be effective or be automatically reinstated, as the case may be, any time payment of all or any part of the Debts is recovered (a "Recovered Payment") from the Holder as a result of a preference or other claim made under any bankruptcy, insolvency, dissolution, liquidation, reorganization, receivorship, or similar law or otherwise. The collateral, if any, securing this Guaranty may be held by the Holder until it is satisfied that all time periods during which the payment of all or any part of the Debts may be recovered from the Holder as a result of a preference or other claim under any bankruptcy, insolvency, dissolution, liquidation, reorganization, receivorship, or similar law or otherwise have elapsed. Any act or circumstance that shall toll any statute of limitations applicable to the Debts shall also toll the statute of limitations applicable to the undersigned's liability for the Debts under this Guaranty. Each of the undersigned who now is or hereafter becomes an "insider," as defined in the 11 U.S.C. ss. 101 (or any amendment or successor thereto or replacement thereof), of the maker herby waives and relinquishes all rights (including without limitation rights or subrogation) that such undersigned now has or hereafter may have to recover from or be reimbursed by the Maker or the Maker's property, or from any person, firm, or corporation that may now or hereafter have such a right to recover from or be reimbursed by the Maker or the Maker's property, any amounts paid by such undersigned to satisfy, in whole or in part, the Debts. The provisions of this paragraph are made for the express benefit of the maker as well as the Holder and may be enforced independently by the Maker. This Guaranty, the Mater Note on the other side and all other agreements or instruments evidencing, guaranteeing, securing, or executed in connection with the Debts contain the entire understanding and agreement between the undersigned and the Holder and supersede any and all prior agreements, understandings, promises, and statements with respect to the Debts. CAUTION-IT IS IMPORTANT THAT YOU THOROUGHLY READ THIS CONTRACT BEFORE YOU SIGN IT. [SEAL] ------------------------------ [SEAL] ------------------------------ 3 EXHIBIT A The interest rate on this note shall be one and three quarters percent (1.75%) per annum in excess of the average offered rate in the London interbank market for deposits in U.S. dollars for ninety (90) days (the "LIBOR Rate") as published in the Wall Street Journal or such other comparable financial information reporting service used by the Bank at the time such rate is determined. Boyd Brothers Transportation, Inc. By: /s/ Robert Bailey ------------------------------ Its: CFO July 7, 2000 EX-10.8 9 g67752ex10-8.txt DEBT COVENANT WAVIVER DATED 3/27/01 1 EXHIBIT 10.8 COMPASS BANK COMPASS BANK [LOGO] P.O. BOX 2006 DOTHAN, ALABAMA 36302 334-712-7030 March 27, 2001 Mr. Richard Bailey Boyd Bros. Transportation, Inc. 3275 Highway 30 Clayton, AL 36016 RE: CREDIT AND SECURITY AGREEMENT BETWEEN COMPASS BANK ("BANK") AND BOYD BROS. TRANSPORTATION, INC. ("BORROWER") DATED APRIL 11, 2000 Dear Richard: As of December 31, 2000, Boyd Bros. Transportation, Inc. was in violation of Section 6.01 and Section 6.05 of the above referenced Credit and Security Agreement (as amended, the "Agreement"). The Borrower has requested and Bank has agreed to waive the defaults under the Loan Agreement existing as of December 31, 2000 solely by virtue of the violations of Section 6.01 and Section 6.05 of the Agreement, as outlined above. This one-time limited waiver is effective only in the specific instance and for the purpose for which given and nothing contained or provided herein shall be construed as granting a waiver of any default as specifically set forth herein or as allowing Borrower to violate or fail to perform fully (i) Section 6.01 and Section 6.05 of Agreement after December 31, 2000 or (ii) any other provisions of the Loan Documents at any time. Further, Compass Bank agrees to modify the covenants of these two section as follows: Cash Flows-To-Current Maturities of Long-Term Debt This covenant references in Section 6.01 of the above-referenced Agreement will be modified from 1.2:1.0 to 1.1:1.0. This modified covenant will be tested at June 30, 2001. On July 1, 2001, the covenant will return to 1.2:1.0 as defined in the Agreement. Debt-to-Tangible Net Worth This covenant referenced in Section 6.05 of the above-referenced Agreement will be modified from 2.75:1.00 to 2.8:1.0. This modified covenant will be tested at June 30, 2001. Only July 1, 2001, the covenant will return to 2.75:1.00 as defined in the Agreement. Tangible Net Worth is defined as the Borrower's Net Worth less any intangible assets, receivables from shareholders or related entities. 2 If the terms of this letter are acceptable to you, please execute this letter below and return the original hereof to the Bank. Sincerely, /s/ Jim Tate - ------------------------------ Jim Tate Vice President ACKNOWLEDGED AND AGREED; BOYD BROS. TRANSPORTATION, INC. By: [signature illegible] -------------------------- Its: CFO ------------------------- EX-10.9 10 g67752ex10-9.txt WAIVER AND CONSENT AGREEMENT DATED 3/28/01 1 EXHIBIT 10.9 WAIVER AND CONSENT AGREEMENT THIS WAIVER AND CONSENT AGREEMENT ("this Agreement"), effective as of December 31, 2000, but executed on March 28, 2001, is entered into by BOYD BROTHERS TRANSPORTATION, INC., a Delaware corporation (the "Borrower"), and AMSOUTH BANK, an Alabama banking corporation (the "Lender"). RECITALS A. The Borrower and the Lender have entered into a Credit Agreement dated as of April 1, 1994, as amended (the "Credit Agreement"). B. The Borrower has requested that the Lender enter into this Agreement in order to grant certain consents and waivers with respect to the Credit Agreement as hereinafter described. AGREEMENT NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual agreements of the parties hereto: 1. The parties agree that capitalized terms used in this Agreement and not otherwise defined herein have the respective meanings attributed thereto in the Credit Agreement. 2. The Lender consents to and waives the failure of the Borrower to: (a) maintain a ratio of Total Liabilities to Tangible Net Worth plus subordinated debt of not greater than 2.0 to 1.0 for the fiscal year ending December 31, 2000, as required by Section 6.07 of the Credit Agreement, without which consent the Borrower would be in default under Article VII(a) of the Credit Agreement; and (b) maintain a ratio of Gross Cash Flow to Current Maturities of Long-Term Debt less than 1.25 to 1.0 for the fiscal year ending December 31, 2000 as required by Section 6.09 of the Credit Agreement, without which consent the Borrower would be in default under Article VII(a) of the Credit Agreement. 2 3. In consideration of the waivers and consents granted by the Lender herein, the Borrower hereby agrees to modify the existing documentation with the Lender prior to April 30, 2001 to, among other things, adopt a pricing matrix tied to the financial performance of the Borrower and add financial covenants applicable to the Borrower and its affiliates (including, but not limited to, a Funded Debt Ratio, a Leverage Ratio and a Debt Service Coverage Ratio). 4. This Agreement may be executed in one or more counterparts, each of which shall for all purposes by deemed to be an original and all of which shall constitute the same instrument, but only one of which need be produced. 5. The Borrower hereby represents and warrants that all representations and warranties contained in the Credit Agreement are true and correct as of the date hereof (except representations and warranties that are expressly limited to an earlier date); and the Borrower certifies that except for those matters waived or contained to herein, no Event of Default nor any event that, upon notice or lapse of time or both, would constitute an Event of Default, has occurred and is continuing. 6. Nothing contained herein shall be construed as a waiver, acknowledgement or consent to any breach or Event of Default of the Credit Agreement and the Credit Documents not specifically mentioned herein, and the consents granted herein are effective only in the specific instance and for the purposes which given. 7. This Agreement shall be governed by the laws of the State of Alabama. IN WITNESS WHEREOF, each of the Borrower and the Lender has caused this Agreement to be executed by its duly authorized officer as of the day and year first above written. BOYD BROTHERS TRANSPORTATION, INC. AMSOUTH BANK By: [signature illegible] By: [signature illegible] --------------------- --------------------- Its: CFO Its: Senior Vice President -------------------- --------------------- EX-13 11 g67752ex13.txt PORTIONS OF THE COMPANY'S ANNUAL REPORT 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, 2000, 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.
Year Ended December 31, 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------- Statement of Operations Data: (in thousands, except per share data) Operating revenues $ 126,725 $ 133,137 $ 118,123 $ 77,215 $ 65,523 Operating expenses: Salaries, wages and employee benefits 39,263 35,461 36,608 32,427 28,420 Cost of independent contractors 35,173 45,132 31,818 2,500 -- Operating supplies 25,404 22,934 21,429 20,832 19,550 Taxes and licenses 2,965 2,847 2,566 2,306 2,222 Insurance and claims 7,060 6,111 5,393 3,439 3,379 Communications and utilities 1,520 1,480 1,554 1,305 1,186 Depreciation and amortization 11,611 10,720 10,320 9,181 8,261 Gain on disposition of property and equipment, net (1,113) (1,627) (433) (577) (805) Other 2,008 1,862 1,541 711 660 - ------------------------------------------------------------------------------------------------------------------------- Total operating expenses 123,891 124,920 110,796 72,124 62,873 - ------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 2,834 8,217 7,327 5,091 2,650 Interest income 80 92 97 136 164 Interest expense (3,904) (2,422) (1,608) (1,391) (1,408) Other -- -- 82 -- -- - ------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes (990) 5,887 5,898 3,836 1,406 Income taxes (benefit) (15) 2,430 2,326 1,519 578 - ------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ (975) $ 3,457 $ 3,572 $ 2,317 $ 828 ========================================================================================================================= Basic and diluted net income (loss) per share $ (0.32) $ 0.99 $ 0.87 $ 0.62 $ 0.22 =========================================================================================================================
December 31, 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------- (in thousands) Balance Sheet Data: Working capital $ (1,481) $ (1,049) $ 4,360 $ 3,785 $ 2,495 Net property and equipment 66,737 61,882 48,691 48,859 44,593 Total assets 95,052 99,456 77,047 71,526 57,262 Long-term debt, less current maturities 33,322 34,689 18,049 19,252 15,198 Total liabilities 67,870 69,062 44,186 42,071 33,374 Stockholders' equity 27,182 30,393 32,862 29,455 23,888
Selected Operating Data: The following table sets forth certain operating data regarding the Company.
Year Ended December 31, 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------- Operating ratio 97.76% 93.83% 93.80% 93.41% 95.95% Average length of haul in miles 661 634 576 663 677 Average number of truckloads per week 3,145 3,368 3,330 1,908 1,607 Average revenues per total mile $ 1.19 $ 1.18 $ 1.17 $ 1.17 $ 1.14 Equipment at period end: Tractors 1,017 1,112 1,032 950 575 Trailers 1,398 1,451 1,337 1,227 916
2 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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, 2000. 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 1,017 tractors and 1,398 trailers operating in the eastern two-thirds of the United States. Historically, the Company owned its revenue equipment and operated through employee drivers. The Company's expansion in the past, therefore, has required significant capital expenditures that 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. ("Welborn"), which specializes in short-haul routes using largely an owner-operated fleet. RESULTS OF OPERATIONS The following table sets forth the percentage relationship of the expense items to operating revenues for the periods indicated.
Percentage of Operating Revenues Year Ended December 31, 2000 1999 1998 Operating revenues 100.00% 100.00% 100.00% ------------------------------------------------------------------------------------------------ Operating expenses Salaries, wages, and employee benefits 30.98 26.64 31.00 Cost of independent contractors 27.76 33.89 26.94 Operating supplies 20.06 17.23 18.14 Taxes and licenses 2.34 2.14 2.17 Insurance and claims 5.58 4.59 4.57 Communication and utilities 1.20 1.11 1.31 Depreciation and amortization 9.16 8.05 8.74 Gain on disposition of property and equipment, net (0.90) (1.22) (0.37) Other 1.58 1.40 1.30 Total operating expenses 97.76 93.83 93.80 ------------------------------------------------------------------------------------------------ Operating income 2.24 6.17 6.20 Interest expense, net (3.02) (1.75) (1.28) Other income -- -- 0.07 Income (loss) before income taxes (0.78) 4.42 4.99 ------------------------------------------------------------------------------------------------ Income taxes (benefit) (0.01) 1.83 1.97 Net income (loss) (0.77)% 2.59% 3.02% ------------------------------------------------------------------------------------------------
3 COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999 Operating revenues for 2000 decreased $6.4 million, or 4.8%, to $126.7 million compared to $133.1 million for 1999. The decrease was due in part to the closing of the brokerage company at Welborn Transport, which was replaced by a new freight brokerage company at the Boyd division, and also the closing of the specialized division at Welborn. This interruption in brokerage services and the closing of the specialized division at Welborn accounted for $4.0 million of the decrease in revenues. The remainder of the decrease in revenues was attributable to a reduction in freight volume, especially in the steel industry. Salaries, wages and employee benefits for 2000 increased $3.8 million, or 10.7%, to $39.2 million compared to $35.5 million in 1999. Salaries increased due to the decrease in the owner-operator fleet, and therefore, an increase in employee drivers. Owner-operators left the business due to reduced freight volume and increased fuel costs during 2000. Salaries made up 31.0% of operating revenue in 2000 compared to 26.6% in 1999. Cost of independent contractors for 2000 decreased $10.0 million, or 22.1%, to $35.1 million from $45.1 million in 1999. As of December 31, 2000 the Boyd Bros. division had an owner-operator fleet of 111 operators compared to 209 owner-operators as of December 31, 1999. Additionally, Welborn Transport, had 161 owner-operators as of December 31, 2000 compared to 298 operators in 1999. Operating supplies expense for 2000 increased $2.5 million, or 10.8%, to $25.4 million compared with $22.9 million for 1999. The increase in operating supplies, which includes fuel costs, net of fuel surcharges, is partly due to the decrease in the owner-operator fleet which has resulted in an increase of Company-operated units. The Company absorbs all of the variable costs for the Company-operated units. The increase in fuel cost per gallon has also impacted overall fuel costs. Taxes and licenses expense for 2000 increased $.1 million, or 4.2%, to $2.9 million compared to $2.8 million in 1999. Taxes and licenses increased due to the decrease in the owner-operator leased fleet, which has resulted in an increase of Company-operated trucks for which the Company bears all of the licensing and permitting expenses. Insurance and claims expense for 2000 increased $.9 million, or 15.5%, to $7.0 million compared to $6.1 million in 1999. The increase was primarily due to an increase in accident claims and insurance rates. Communications and utilities expense for 2000 increased $.01 million, or 2.8%, to $1.51 million from $1.5 million in 1999. The increase was primarily due to a decrease in the owner-operator fleet, which has resulted in a decrease of the fees the Company charges for the use of the Company's satellite units. Depreciation and amortization expense for 2000 increased $.9 million, or 8.3%, to $11.6 million from $10.7 million in 1999. Depreciation expense increased due to the Company's absorption of leased owner-operator tractors back into the Company fleet. 4 Gain on disposition of property and equipment decreased $.5 million or 31.6%, to $1.1 million from $1.6 million. The Company traded less units during 2000 ,and additionally trade values were depressed during 2000. Rent expense for 2000 decreased $.1 million, or 9.3%, to $.4 million from $.5 million in 1999. Rent expense includes operating leases for both trailers and terminals. Rent expense decreased due to the Company's cancellation of leases at some of its outlying facilities. Other expenses for 2000 increased approximately $.1 million, or 10.6%, to $1.5 million in 2000 from $1.4 million in 1999. Other expenses include, but are not limited to, consulting fees, legal fees, advertising costs, bank charges and bad debts. The Company incurred higher bad debt writeoffs in 2000. Also, the Company contracted with more Consultants in 2000. Interest expense (net of interest income) increased $1.4 million, or 64.1%, to $3.8 million from $2.4 million in 1999. Interest expense increased due to an approximately 125 basis points increase in the LIBOR rate, on which the interest rate charged on all of the Company's debt is based. Net income for 2000 decreased approximately $4.4 million, or 128.2%, to ($.9) million compared to $3.5 million for 1999. COMPARISON OF YEAR ENDED DECEMBER 31, 1999 TO YEAR ENDED DECEMBER 31, 1998 Operating revenues for 1999 increased $15.0 million, or 12.7%, to $133.1 million compared to $118.1 million for 1998. Revenues increased due to better equipment utilization and the addition of 80 tractors. Salaries, wages and employee benefits decreased $1.1 million, or 3.1%, to $35.5 million compared to $36.6 million in 1998. Salaries decreased due to the increase in the owner-operator fleet, and therefore, a decrease in employee drivers. Salaries made up 26.6% of operating revenue in 1999 compared to 31.0% in 1998. Cost of independent contractors for 1999 increased $13.3 million, or 41.8%, to $45.1 million from $31.8 million in 1998. As of December 31, 1999 Boyd Bros. had an owner-operator fleet of 209 operators compared to 150 owner-operators in 1998. Additionally, Welborn had 298 owner-operators as of December 31, 1999 compared to 281 operators in 1998. Operating supplies expense for 1999 increased $1.5 million, or 7.0%, to $22.9 million compared with $21.4 million for 1998, despite the fact that a large portion of the fleet is comprised of owner-operators. This increase is almost entirely due to increased fuel prices. Taxes and licenses expense for 1999 increased $.2 million, or 7.7%, to $2.8 million compared to $2.6 million in 1998. Taxes and licenses increased at a slower rate than revenue due to the greater percentage of owner-operators. Insurance and claims expense increased $.7 million, or 13.0%, to $6.1 million compared to $5.4 million in 1998. The increase was primarily due to an increase in accident claims. 5 Communications and utilities expense decreased $.1 million, or 6.3%, to $1.5 million from $1.6 million in 1998. Improved cost management contributed to the decrease in communications costs. Depreciation and amortization expense increased $.4 million, or 3.9%, to $10.7 million from $10.3 million in 1998. Depreciation expense increased due to the addition of newer and more expensive tractors in order to reduce the age of the Company's tractor fleet and due to the replenishing of the Company's trailer fleet with longer and more expensive trailers. Rent expense for 1999 increased $.2 million, or 67.0%, to $.5 million from $.3 million in 1998. Rent expense includes operating leases for both trailers and terminals. Rent expense increased due to the Company entering into several lease agreements for new trailers during 1999. Other expenses for 1999 increased approximately $.2 million, or 17.0%, to $1.4 million in 1999 from $1.2 million in 1998. Other expenses include, but are not limited to, consulting fees, legal fees, advertising costs and bank charges. Interest expense (net of interest income) for 1999 increased $.8 million, or 50%, to $2.4 million from $1.6 million in 1998. During 1999 the Company incurred additional indebtedness for the purpose of financing an increase in its tractor and trailer fleets. Net income for 1999 decreased approximately $.1 million, or 2.8%, to $3.5 million compared to $3.6 million for 1998. LIQUIDITY AND CAPITAL RESOURCES The Company's primary cash requirements are for capital expenditures and operating expenses, including labor costs, fuel costs and operating supplies. Historically, the Company's primary sources of cash have been continuing operations, bank borrowings and the issuance of common stock of the Company. 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 related to Company tractors, was approximately $8.4 million in 2000, compared to $28.4 million in 1999. At December 31, 2000, the Company had long-term debt (including current portions) of $46.9 million, which was primarily incurred to purchase revenue equipment. In March 2001, the Company received waivers executed by two of its lenders relating to certain financial covenant ratio requirements contained in two of the Company's long-term debt loan agreements as to which the Company was not in compliance as of December 31, 2000. There can be no assurance that the Company will be able to comply with these covenants in the future. If the Company is unable to comply with these covenants in the future, there can be no assurance that the Company's lenders will provide any additional waivers with respect to any such noncompliance. Net cash flow provided by operating activities was approximately $10.1 million during 2000 compared to approximately $11.6 million in 1999. 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 $2.5 million. The revolving line of credit is collateralized by accounts receivable and inventory. As of December 31, 2000, the Company had $1.0 million outstanding on its line of credit. 6 During the second half of 2000, as well as the first quarter of 2001, the Company experienced an increase in bad debt writeoffs. Due to the difficult economic conditions facing the steel industry, in particular, additional bad debt reserves maybe required if industry conditions continue to deteriorate. Pursuant to the Company's stock repurchase program, the Company purchased 263,940 and 370,463 shares of the common stock in open market or negotiated transactions during 1999 and 2000, for an aggregate purchase prices of $2,342,746 and $2,248,941, respectively, including an aggregate 126,000 shares of Common Stock purchased from Miller Welborn, the Vice-Chairman of the Company, during 2000 at a price per share of $6.50. The Company funded these purchases using working capital. On January 8, 1999, the Company purchased 500,000 shares of its outstanding common stock from a former Chief Executive Officer of the Company for $3,660,000. The stock purchase was funded by available cash and a bank line of credit. The Company currently has outstanding letters of credit, totaling approximately $3.7 million at December 31, 2000, to cover liability insurance claims and outstanding claims related to its previous self-insured workers' compensation program. Annual commitment fees relating to these letters of credit do not exceed 1.5% of the face amounts thereof. During the first quarter of 2001 the Company purchased 10 trucks for its' Welborn fleet at a net cost of $.4 million (Net of 23 trade trucks). The Company has no plans to purchase any additional tractors during the remainder of 2001. Management believes that cash flow from future operations and borrowings available under its line 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 that 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 its 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, 2000, bore interest at rates ranging from 1.25% 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 $640,000. Management believes that current working capital funds are sufficient to offset any adverse effects caused by changes in the interest rates. 7 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. FUEL PRICE TREND The average price per gallon of diesel fuel increased from about $.96 per gallon at the beginning of 1999 and peaked at $1.67 during the fourth quarter of 2000. If fuel prices continue to increase or are sustained at these higher levels for a continuing period of time, the higher fuel costs may have a materially adverse effect on the financial condition and business operations of the Company. Additionally, the increased fuel costs may continue to have a materially adverse effect on the Company's efforts to attract and retain owner-operators, expand its pool of available trucks and diversify its operations. Higher fuel costs dilute the financial incentive for owner-operators, who are typically paid a flat rate per mile; therefore, as a result of higher fuel prices about 50 drivers left the Company's owner-operator program in the fourth quarter of 2000, and an additional 25 drivers have departed in the first quarter of 2001. The diminishing number of owner-operators further impacts the Company's financial condition - and therefore compounds the direct impact of higher fuel costs - because each owner-operator that leaves the Company's program also leaves behind a power unit that must then be absorbed into the Company's fleet. As a result, each of these trucks can no longer be recorded as a variable expense that is related to a contractual rate per mile and is incurred only if freight is moved, but must instead be recorded as a Company-owned truck with indirect costs of ownership, such as depreciation, maintenance and capital expenses. As a result, the continuing higher fuel costs may lead to empty trucks, diminished fleet efficiency, and reduced revenue potential. SAFETY AND INSURANCE 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 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 is self insured for workers' compensation claims as well as physical damage claims for its own tractors. The Company currently purchases excess primary and umbrella insurance coverage in amounts that management believes are adequate to supplement its retained liabilities. The Company will be facing an increase in its auto and insurance rates during the second half of 2001. These rates could increase as much as 25%, and in addition to an increase in the retention per occurrence. 8 RECENTLY ISSUED ACCOUNTING STANDARD Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, is effective for all fiscal years beginning after June 15, 2000. SFAS 133, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Under SFAS 133, certain contracts that were not formerly considered derivatives may now meet the definition of a derivative. The Company has adopted SFAS 133 effective January 1, 2001. Management does not expect the adoption of SFAS 133 to have a significant impact on the financial position, results of operations, or cash flows of the Company. 9 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2000 AND 1999 - --------------------------------------------------------------------------------
2000 1999 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,273,281 $ 1,006,826 Short-term investments 250,000 250,000 Accounts receivable, less allowance for doubtful accounts of $276,000 (2000) and $347,000 (1999): Trade and interline 10,907,099 12,475,739 Other 690,212 1,082,615 Income tax receivable 1,954,786 Current portion of net investment in sales-type leases 1,562,329 3,620,723 Parts and supplies inventory 431,967 326,202 Prepaid tire expense 282,915 837,136 Other prepaid expenses 1,606,814 2,488,484 Deferred income taxes 919,811 281,834 ------------ ------------ Total current assets 19,879,214 22,369,559 ------------ ------------ PROPERTY AND EQUIPMENT: Land and land improvements 2,263,326 2,263,326 Buildings 2,927,611 2,927,611 Revenue equipment 76,637,858 69,944,259 Other equipment 11,781,884 11,510,214 Leasehold improvements 384,884 377,831 Construction in progress 5,090,631 3,539,437 ------------ ------------ Total 99,086,194 90,562,678 Less accumulated depreciation and amortization 32,348,826 28,680,556 ------------ ------------ Property and equipment, net 66,737,368 61,882,122 ------------ ------------ OTHER ASSETS: Net investment in sales-type leases 2,908,691 8,522,614 Goodwill, net of accumulated amortization of $688,277 (2000) and $464,378 (1999) 3,676,246 3,955,834 Revenue equipment held for lease 1,395,865 2,287,267 Deposits and other assets 454,739 438,372 ------------ ------------ Total other assets 8,435,541 15,204,087 ------------ ------------ TOTAL $ 95,052,123 $ 99,455,768 ============ ============
10 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2000 AND 1999 - --------------------------------------------------------------------------------
2000 1999 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 13,534,198 $ 14,245,584 Line of credit 1,049,831 Accounts payable - trade and interline 2,575,676 4,070,946 Income taxes 802,395 Accrued liabilities: Self-insurance claims 2,510,396 1,768,114 Salaries and wages 505,181 746,805 Other 1,184,493 1,785,087 ------------ ------------ Total current liabilities 21,359,775 23,418,931 LONG-TERM DEBT 33,322,377 34,688,582 DEFERRED INCOME TAXES 13,187,549 10,954,964 ------------ ------------ Total liabilities 67,869,701 69,062,477 ------------ ------------ COMMITMENTS AND CONTINGENCIES (Note 5) 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 shares issued and outstanding 4,070 4,070 Additional paid-in capital 16,864,622 16,864,622 Retained earnings 18,451,689 19,438,142 Treasury stock, at cost; 1,118,746 shares (2000) and 751,670 shares (1999) (8,137,959) (5,913,543) ------------ ------------ Total stockholders' equity 27,182,422 30,393,291 ------------ ------------ TOTAL $ 95,052,123 $ 99,455,768 ============ ============
See notes to consolidated financial statements. 11 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 - --------------------------------------------------------------------------------
2000 1999 1998 OPERATING REVENUES $126,724,786 $133,137,272 $118,123,424 ------------ ------------ ------------ OPERATING EXPENSES: Salaries, wages and employee benefits 39,262,650 35,461,400 36,607,732 Cost of independent contractors 35,172,619 45,132,153 31,817,649 Operating supplies 25,403,579 22,934,366 21,429,224 Taxes and licenses 2,965,480 2,846,677 2,565,842 Insurance and claims 7,060,347 6,110,604 5,392,526 Communications and utilities 1,520,342 1,479,546 1,553,511 Depreciation and amortization 11,611,081 10,719,647 10,320,379 Gain on disposal of property and equipment, net (1,113,574) (1,626,983) (433,023) Other 2,008,131 1,862,170 1,542,703 ------------ ------------ ------------ Total operating expenses 123,890,655 124,919,580 110,796,543 ------------ ------------ ------------ OPERATING INCOME 2,834,131 8,217,692 7,326,881 ------------ ------------ ------------ OTHER INCOME (EXPENSES): Interest income 80,338 91,740 97,052 Interest expense (3,904,241) (2,421,910) (1,607,482) Other income 82,308 ------------ ------------ ------------ Other expenses, net (3,823,903) (2,330,170) (1,428,122) ------------ ------------ ------------ INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES (989,772) 5,887,522 5,898,759 ------------ ------------ ------------ PROVISION (BENEFIT) FOR INCOME TAXES: Current (1,605,932) 1,789,821 2,284,318 Deferred 1,590,614 640,331 41,703 ------------ ------------ ------------ Total provision (benefit) for income taxes (15,318) 2,430,152 2,326,021 ------------ ------------ ------------ NET INCOME (LOSS) $ (974,454) $ 3,457,370 $ 3,572,738 ============ ============ ============ BASIC AND DILUTED NET INCOME (LOSS) PER SHARE $ (0.32) $ 0.99 $ 0.87 ============ ============ ============ BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING 3,090,292 3,507,311 4,090,175 ============ ============ ============
See notes to consolidated financial statements. 12 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 - --------------------------------------------------------------------------------
ADDITIONAL COMMON PAID-IN RETAINED TREASURY STOCK CAPITAL EARNINGS STOCK TOTAL BALANCE, JANUARY 1, 1998 $ 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 Exercise of stock options (4,932) $ 43,620 38,688 Sale of common stock under employee stock purchase plan (7,311) 45,583 38,272 Purchase of treasury stock (6,002,746) (6,002,746) Net income 3,457,370 3,457,370 ----------- ------------ ------------ ------------ ------------ BALANCE, DECEMBER 31, 1999 4,070 16,864,622 19,438,142 (5,913,543) 30,393,291 Sale of common stock under employee stock purchase plan (11,999) 24,525 12,526 Purchase of treasury stock (2,248,941) (2,248,941) Net loss (974,454) (974,454) ----------- ------------ ------------ ------------ ------------ BALANCE, DECEMBER 31, 2000 $ 4,070 $ 16,864,622 $ 18,451,689 $ (8,137,959) $ 27,182,422 =========== ============ ============ ============ ============
See notes to consolidated financial statements. 13 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 - --------------------------------------------------------------------------------
2000 1999 1998 OPERATING ACTIVITIES: Net income (loss) $ (974,454) $ 3,457,370 $ 3,572,738 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 11,611,081 10,719,647 10,320,379 Gain on disposal of property and equipment, net (1,113,574) (1,626,983) (433,023) Net effect of sales-type leases on cost of independent contractors 253,990 (1,741,454) (1,800,538) Provision for deferred income taxes 1,590,614 640,331 41,703 Changes in assets and liabilities provided (used) cash: Accounts receivable 1,902,149 (493,392) (3,372,491) Other current assets 1,158,104 (666,292) (1,001,836) Deposits and other assets (16,367) (257,291) (68,220) Accounts payable - trade and interline (1,436,371) 2,414,894 131,319 Accrued liabilities and other current liabilities (2,866,338) (874,865) 1,776,724 ------------ ------------ ------------ Net cash provided by operating activities 10,108,834 11,571,965 9,166,755 ------------ ------------ ------------ INVESTING ACTIVITIES: Payments received on sales-type leases 3,407,859 3,939,430 1,750,705 Capital expenditures: Revenue equipment (14,459,770) (36,950,717) (12,117,225) Other property and equipment (1,617,129) (4,650,303) (2,360,188) Proceeds from disposals of property and equipment 6,090,836 8,542,604 1,975,628 Receipt of acquisition escrow 55,788 ------------ ------------ ------------ Net cash used in investing activities (6,578,204) (29,063,198) (10,751,080) ------------ ------------ ------------ FINANCING ACTIVITIES: Purchase of common stock (165,625) Proceeds from sales of common stock 12,526 38,272 Proceeds from exercise of stock options 38,688 Purchase of treasury stock (2,248,941) (6,002,746) Proceeds from line of credit 1,049,831 Proceeds from long-term debt 9,949,052 36,785,635 12,572,123 Principal payments on long-term debt (12,026,643) (13,723,454) (12,877,683) ------------ ------------ ------------ Net cash provided by (used in) financing activities (3,264,175) 17,136,395 (471,185) ------------ ------------ ------------
14 BOYD BROS. TRANSPORTATION INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 - --------------------------------------------------------------------------------
2000 1999 1998 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 266,455 $ (354,838) $ (2,055,510) CASH AND CASH EQUIVALENTS: BEGINNING OF YEAR 1,006,826 1,361,664 3,417,174 ------------ ------------ ------------ END OF YEAR $ 1,273,281 $ 1,006,826 $ 1,361,664 ============ ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 3,904,593 $ 2,358,576 $ 1,612,715 ============ ============ ============ Income taxes, net of refunds $ 1,138,562 $ 2,727,399 $ 816,729 ============ ============ ============ SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES - Net investment in sales-type leases $ (3,160,246) $ 1,817,598 $ 2,177,249 ============ ============ ============
See notes to consolidated financial statements. 15 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 consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Welborn Transport, Inc. All significant intercompany items have been eliminated in consolidation. ACCOUNTING ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. REVENUE EQUIPMENT HELD FOR LEASE - Revenue equipment held for lease and not in use is stated at cost, less accumulated depreciation, which approximates net realizable value. 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 3 - 20 years
16 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. IMPAIRMENT OF LONG-LIVED ASSETS - The Company periodically evaluates the carrying value of long-lived assets to be held and used, including goodwill and other intangible assets, when events and circumstances warrant such a review. The carrying value of long-lived assets is considered impaired when the anticipated undiscounted cash flow from such assets is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived assets. CLAIMS - The Company accrues estimates for the uninsured portion of claims relating to the Company's insurance programs (see Note 5). REVENUE RECOGNITION - Operating revenue and related costs are recorded upon shipment of products to customers provided that pervasive evidence of an arrangement exists, the selling price is fixed and determinable, and collectibility of the resulting receivables is probable. NET INCOME (LOSS) PER SHARE - In accordance with SFAS No. 128, Earnings per Share, the Company reports two separate net income (loss) per share numbers, basic and diluted. Options that could potentially dilute basic net income (loss) per share in the future were not included in the computation of diluted net income (loss) per share because to do so would have been antidilutive. Antidilutive options were 408,300, 456,100 and 444,810 for the years ended December 31, 2000, 1999 and 1998, respectively. FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value of the Company's cash equivalents, short-term investments, trade receivables, trade payables and accrued expenses approximates fair value because of the short-term nature of these instruments. Additional fair value disclosure for the Company's interest-bearing debt is presented in Note 4. RECENT ACCOUNTING PRONOUNCEMENTS - SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, is effective for all fiscal years beginning after June 15, 2000. SFAS 133, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Under SFAS 133, certain contracts that were not formerly considered derivatives may now meet the definition of a derivative. The Company will adopt SFAS 133 effective January 1, 2001. Management does not expect the adoption of SFAS 133 to have a significant impact on the financial position, results of operations, or cash flows of the Company. RECLASSIFICATIONS - Certain reclassifications have been made to the 1999 and 1998 consolidated financial statements to conform to the 2000 presentation. 2. 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, 2000, 1999 and 1998 were $165,562, $280,890 and $246,943, respectively. 17 3. LEASES LESSEE: 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 are insignificant. Total rental expense for all operating leases was $356,791, $384,723, and $378,961 for the years ended December 31, 2000, 1999 and 1998, respectively. LESSOR: 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 three and one-half to four years and are collateralized by a security interest in the related revenue equipment. Certain revenue equipment under these leases have a guaranteed residual value from the vendor which will be redeemed by the Company at the end of the lease term. The components of the net investment in sales-type leases at December 31, 2000 and 1999 are as follows:
2000 1999 Minimum lease receivable $ 6,120,316 $ 16,212,485 Allowance for uncollectible receivables (677,910) (910,754) ------------ ------------ Net minimum lease receivable 5,442,406 15,301,731 Unearned interest income (971,386) (3,158,394) ------------ ------------ Net investment in sales-type leases 4,471,020 12,143,337 Less current portion (1,562,329) (3,620,723) ------------ ------------ Net amount due after one year $ 2,908,691 $ 8,522,614 ============ ============
18 Future minimum lease rentals for sales-type leases are as follows:
Year 2001 $ 2,257,934 2002 1,966,285 2003 1,367,234 2004 520,836 2005 8,027 ------------ Total $ 6,120,316 ============
Gains on disposition of revenue equipment leased to owner-operators, interest income on these leases, rental income on operating 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 operations. OPERATING LEASES - The Company also leases revenue equipment to certain of its owner-operators and accounts for these transactions as operating leases. These leases have terms of three to three and one-half years. The revenue equipment under these leases had a cost of $550,751 and $2,517,591, and accumulated depreciation of $197,223 and $477,298 at December 31, 2000 and 1999, respectively. Future minimum lease rentals for operating leases are as follows:
Year 2001 $ 181,560 2002 106,590 2003 1,000 --------- Total $ 289,150 =========
Total rental income from operating leases was $273,360, $713,030 and $13,770 for the years ended December 31, 2000, 1999 and 1998, respectively. 19 4. BORROWING ARRANGEMENTS Long-term debt at December 31, 2000 and 1999 is summarized as follows:
2000 1999 Revenue equipment obligations: LIBOR plus 1.25% (7.65% - 2000 and 7.00% to 7.25% - 1999) notes payable in monthly installments through December 2005 $ 39,513,292 $ 48,321,070 LIBOR plus 1.50% (7.90% - 2000 and 7.50% - 1999) notes payable in yearly installments through February 2006 3,621,086 571,429 LIBOR plus 1.75% (8.15% - 2000) notes payable in monthly installments through November 2005 3,722,197 Other 41,667 ------------ ------------ Total 46,856,575 48,934,166 Less current maturities 13,534,198 14,245,584 ------------ ------------ Long-term debt $ 33,322,377 $ 34,688,582 ============ ============
Revenue equipment obligations are collateralized by revenue equipment. The notes payable bear interest ranging from LIBOR plus 1.00% to LIBOR plus 1.75% based on the Company's level of cash flows as defined in their loan agreements. Long-term debt is scheduled to mature as follows:
Year 2001 $ 13,534,198 2002 12,527,230 2003 10,659,237 2004 5,947,120 2005 1,168,486 Thereafter 3,020,304 ------------ Total $ 46,856,575 ============
A construction line of credit with borrowings outstanding of $3,621,086, due in 2001, became a term loan in January 2001. Current and long-term portions of the amount outstanding at December 31, 2000 are reflected according to the subsequent loan agreement. The Company also has a $2,500,000 line of credit under a commercial revolving note expiring July 6, 2001, bearing interest at LIBOR plus 1.75%. There were borrowings of $1,049,831 outstanding at December 31, 2000 and no borrowings outstanding at December 31, 1999. 20 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. On March 28, 2001, the Company received waivers from certain creditors due to non-compliance with financial ratios at December 31, 2000. The amount of long-term debt subject to these waivers was $23,672,979 and $20,163,184 at December 31, 2000, and the waivers extended through the periods ended April 30, 2001 and June 30, 2001, respectively. 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. 5. COMMITMENTS AND CONTINGENCIES At December 31, 2000, the Company is self-insured as follows:
RETENTION AMOUNT PER OCCURRENCE Workers' compensation $250,000 Liability - bodily injury 100,000 Liability - physical damage 100,000 Employee medical and hospitalization 100,000 Cargo loss and damage 10,000 Collision 10,000 Environmental losses No Limit
The above retention amounts represent rates which were negotiated with the Company's insurance carriers at December 31, 2000. Retention amounts under other previous insurance programs may vary from those stated above. At December 31, 2000, the Company has recorded liabilities for retention amounts related to claims under previous insurance coverage. For claims prior to June 30, 1997, the Company had a retention amount per occurrence under workers' compensation of $300,000. For the period from July 1, 1997 to June 30, 2000, workers' compensation insurance was provided under fully insured policies. As of July 1, 2000, the Company has a retention amount per occurrence under workers' compensation of $250,000. 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. Effective January 2001, the Company became fully self-insured for liability - physical damage, except for claims related to catastrophic physical damage. The Company has a retention amount per occurrence under liability - catastrophic physical damage of $10,000. 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, 2000 totaling approximately $3,712,000 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. 21 6. 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. EMPLOYEE STOCK PURCHASE PLAN - During 1999, the Company established an Employee Stock Purchase Plan under which 175,000 shares of the Company's common stock may be issued to eligible employees at a price equal to the lesser of 90% of the market price of the stock as of the first or last day of the offering periods (as defined). Employees may elect to have a portion of their compensation withheld, subject to certain limits, to purchase the Company's common stock. The expense associated with this plan in 2000 and 1999 was insignificant. 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. An aggregate of 500,000 shares of the Company's common stock are reserved for this Plan. 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 1998 or 2000. Information regarding the Plan is summarized below:
WEIGHTED WEIGHTED AVERAGE AVERAGE EXERCISE FAIR VALUE SHARES PRICE AT GRANT DATE 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 Granted 65,250 10.25 $ 7.93 Exercised (6,000) 6.00 Terminated (47,960) 9.40 ------- Outstanding at December 31, 1999 456,100 $ 9.53 Terminated (47,800) 8.58 ------- Outstanding at December 31, 2000 408,300 $ 9.62 ======= ====== Options exercisable at December 31, 2000 262,380 $ 9.88 ======= ====== Options exercisable at December 31, 1999 228,830 $10.04 ======= ====== Options exercisable at December 31, 1998 171,420 $10.36 ======= ======
At December 31, 2000, 85,700 shares were available for future grant under the Plan. 22 The following table summarizes information concerning stock options outstanding at December 31, 2000:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE -------------------------------------------- ---------------------------- WEIGHTED AVERAGE WEIGHTED NUMBER REMAINING WEIGHTED NUMBER AVERAGE RANGE OF OF SHARES CONTRACTUAL AVERAGE OF SHARES EXERCISE EXERCISE PRICES OUTSTANDING LIFE EXERCISE PRICE EXERCISABLE PRICE $6.00 - $11.00 408,300 5.9 $9.62 262,380 $9.88
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 1999 and 1998 under the Plan consistent with the methodology prescribed under SFAS No. 123, the Company's pro forma net income (loss) and net income (loss) per share would have differed from the amounts reported as follows:
AS REPORTED PRO FORMA ----------------------------------------- ------------------------------------------- 2000 1999 1998 2000 1999 1998 Net income (loss) $ (974,454) $3,457,370 $3,572,738 $(1,506,993) $ 2,652,128 $2,813,516 Basic and diluted net income (loss) per share $ (.32) $ .99 $ .87 $ (.49) $ .76 $ .69
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:
2000 1999 1998 Risk-free interest rate 6.5% 6.5% 6.5% Dividend yield 0% 0% 0% Expected volatility 81.2% 81.2% 82.8% Weighted average expected life 7 years 7 years 7 years
23 7. INCOME TAXES (BENEFIT) The provision (benefit) for income taxes for the years ended December 31, 2000, 1999 and 1998 consisted of the following (in thousands):
2000 1999 1998 Current: Federal $(1,604) $ 1,555 $ 1,944 State (2) 235 340 ------- ------- ------- Total current (1,606) 1,790 2,284 ------- ------- ------- Deferred: Federal 1,626 550 31 State (35) 90 11 ------- ------- ------- Total deferred 1,591 640 $ 42 ------- ------- ------- Total provision (benefit) for income taxes $ (15) $ 2,430 $ 2,326 ======= ======= =======
Total income tax provision (benefit) for 2000, 1999, and 1998 is different from the amount that would be computed by applying the statutory federal income tax rate of 35% to income before income taxes. The reasons for this difference are as follows (in thousands):
2000 1999 1998 Income tax at expected federal income tax rate $ (340) $ 2,005 $ 2,006 State income taxes, net of federal tax effect (24) 214 214 Non-deductible operating expenses 58 38 29 Non-deductible goodwill amortization 77 77 77 Adjustment to estimated income tax accruals 192 Other 22 96 -- ------- ------- ------- $ (15) $ 2,430 $ 2,326 ======= ======= =======
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 carryforwards were utilized during 1998. At December 31, 2000, the Company had state net operating loss carryforwards of approximately $5,260,000, which will expire in 2021. 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, 2000 and 1999 are as follows (in thousands): 24
2000 1999 Deferred tax liabilities: Tax over book depreciation $13,497 $10,722 Prepaid expenses deductible when paid 501 797 Capitalized tires 111 327 Cash basis to accrual basis adjustment 271 Other 8 ------- ------- Total deferred tax liabilities 14,109 12,125 ------- ------- 2000 1999 Deferred tax assets: Accrued self insurance claims $ 710 $ 389 Other accrued expenses not deductible until paid 416 496 Allowance for losses on receivables 376 496 State NOL carryforward 269 Other 70 71 ------- ------- Total deferred tax assets 1,841 1,452 ------- ------- Net deferred tax liabilities $12,268 $10,673 ======= =======
The above amounts are reflected in the accompanying consolidated balance sheets as:
2000 1999 Current assets $ 920 $ 282 Noncurrent liabilities (13,188) 10,955 ------- ------- Net deferred tax liabilities $12,268 $10,673 ======= =======
8. MAJOR CUSTOMERS The Company does not believe that it is dependent upon any single customer. Sales to the Company's largest customer amounted to 9%, 8% and 8% of operating revenues during 2000, 1999 and 1998, respectively. 25 9. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of the quarterly results of operations for the years ended December 31, 2000 and 1999 (in thousands, except per share data):
2000 -------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 Operating revenues $33,826 $32,601 $31,202 $29,096 Operating income (loss) 1,406 1,393 896 (861) Net income (loss) 231 208 (65) (1,349) Basic and diluted net income (loss) per share 0.07 0.07 (0.02) (0.45) 1999 -------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 Operating revenues $30,038 $33,247 $35,475 $34,377 Operating income 1,563 2,900 2,242 1,513 Net income 662 1,415 982 398 Basic and diluted net income per share 0.18 0.40 0.28 0.12
26 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, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. 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 auditing standards generally accepted in the United States of America. 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, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. Birmingham, Alabama February 9, 2001 (March 28, 2001 as to the waiver letters described in Note 4) EX-21 12 g67752ex21.txt SUBSIDIARIES OF THE REGISTRANT 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 EX-23 13 g67752ex23.txt CONSENT OF DELOITTE & TOUCHE LLP 1 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements Nos. 33-83768 and 33-78925 of Boyd Bros. Transportation Inc. and subsidiary on Form S-8 of our reports dated February 9, 2001 (March 28, 2001 as to the waiver letters described in Note 4), appearing in and incorporated by reference in this Annual Report on Form 10-K of Boyd Bros. Transportation Inc. and subsidiary for the year ended December 31, 2000. Birmingham, Alabama March 29, 2001 -----END PRIVACY-ENHANCED MESSAGE-----