-----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, LpGjNHWaMuiQQwh31pIxbQlQysSvKg+e4xGN8O9eHF5dlor8SO4gMACtWm5fq8FQ SGZ8wkMWOUkX/LwHqT0rmw== 0000950144-96-001385.txt : 19960401 0000950144-96-001385.hdr.sgml : 19960401 ACCESSION NUMBER: 0000950144-96-001385 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUILDERS TRANSPORT INC CENTRAL INDEX KEY: 0000726617 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING & COURIER SERVICES (NO AIR) [4210] IRS NUMBER: 581186216 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-11300 FILM NUMBER: 96542005 BUSINESS ADDRESS: STREET 1: P O BOX 7005 STREET 2: 2029 W DEKALB ST CITY: CAMDEN STATE: SC ZIP: 29020 BUSINESS PHONE: 8034321400 MAIL ADDRESS: STREET 1: PO BOX 7005 CITY: CAMDEN STATE: SC ZIP: 29020 10-K405 1 BUILDERS TRANSPORT 10-K405 12-31-95 1 -------------------------------------------------------------------------- -------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD FROM TO --------- --------- COMMISSION FILE NUMBER 0-11300 -------- BUILDERS TRANSPORT, INCORPORATED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 58-1186216 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 2029 W. DEKALB ST., 29020-7005 P.O. BOX 7005, CAMDEN SC (Zip Code) (Address of Principal executive Offices)
(803) 432-1400 (Registrant's Telephone Number, Including Area Code) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, PAR VALUE $.01 PER SHARE 8% CONVERTIBLE SUBORDINATED DEBENTURES DUE AUGUST 15, 2005 6-1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE MAY 1, 2011 (Titles of Classes) INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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. (x) State the aggregate market value of the voting stock held by non-affiliates of the registrant: $44,595,360 as of March 18, 1996. Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date: the number of shares outstanding as of March 18, 1996, of the registrant's only issued and outstanding class of stock, its $0.01 per share par value common stock, was 5,099,517. DOCUMENTS INCORPORATED BY REFERENCE The information set forth under Items 10,11,12 and 13 of Part III of this Report is incorporated by reference from the registrant's definitive proxy statement for the 1996 annual meeting of stockholders that will be filed no later than April 29, 1996. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I ITEM 1. BUSINESS. GENERAL Builders is a truckload carrier that transports a wide range of commodities in both intrastate and interstate commerce. From its origins as a Southeastern regional, high service, flatbed carrier for a limited number of building materials shippers, the Company has expanded and developed into a carrier that provides dedicated contract carriage, dry van and flatbed service for shippers of a variety of products in the medium-haul, short-haul and regional markets. These products include, among others, textiles, tires, paper products, metal products, chemicals, consumer goods and building materials. Throughout its history, the Company has concentrated on tailoring its services to the specific requirements of individual customers. As a result, the preponderance of Builders' business involves providing high-quality, specialized services to service-sensitive shippers. To assure the most efficient response to the differing requirements of customers at numerous shipping locations, Builders has a network of terminals where over-the-road tractors are based and drivers are domiciled. This terminal network is supplemented by miscellaneous staging lots near certain major shipping points. The Company utilizes a computerized operations system to control and facilitate the movement of freight. Builders' operating philosophy is founded on maintaining the highest level of service in the most efficient manner possible. Builders is headquartered in Camden, South Carolina, and its total operation encompasses thousands of plants, warehouses and shipping points of regularly served customers in the eastern two-thirds of the United States and the Provinces of Ontario and Quebec, Canada. The Company holds common and contract carrier authority to transport general commodities in interstate commerce between all points in the United States. (See "Regulation.") No single customer (including groups of customers under common control and affiliated customers) accounted for as much as ten percent of Builders' consolidated revenues in 1995. OPERATIONS Builders believes its range of services is one of the most comprehensive offered by any truckload carrier. The Company's services are divided into three major categories. Flatbed Operations. Builders' Flatbed Division provides customized transportation to service-sensitive shippers. The Company strives to meet all specific pickup and delivery schedules requested by both single and multi-location shippers. This customized service is designed to accommodate the increasing number of shippers that utilize just-in-time delivery techniques or that seek to reduce costs by controlling their inventory levels. In recent years, the Flatbed Division has diversified its commodity mix that now includes, among other things, lumber, steel, aluminum, wallboard, roofing materials and pipe. This makes the division less vulnerable to periodic downturns in any single business segment represented in the Flatbed Division's customer base. The Flatbed Division also now acts as a single source provider of logistics support (that is, supervising all of a shipper's trucking needs, even though some of those needs may be met by carriers other than Builders) for certain customers. Dry Van Operations. The Company's Van Division services a broad array of customers having a variety of shipping needs in the medium-haul and regional markets. This is consistent with the Company-wide emphasis on meeting the increasing regional carrier requirements of shippers in 1 3 various regions including the Southeast, Midwest and Southwest. This division also tailors its services to specialized customer requirements such as just-in-time delivery. Further, the Van Division operates with both single drivers and teams, depending upon what is most efficient for a particular shipper. Capacity is committed to a customer where that is appropriate. Dedicated Contract Carriage. Builders' Dedicated Fleet Division provides dedicated equipment and personnel on a contractual basis to each of its customers for that customer's exclusive use, frequently as a lower cost alternative to private carriage. In some instances, Dedicated Fleet supplements this dedicated service with customized linehaul service. While providing shippers with a higher level of service, Dedicated Fleet frees for other uses that portion of a shipper's capital that would have been invested in a private fleet. This allows shippers to deploy resources to their primary businesses that otherwise would be diverted to transportation. Dedicated Fleet's service also includes the administrative staffing associated with operating a private fleet. In addition to the three categories described above, the Company operated a tire loading and warehousing business from January 1994 until Builders exited that business in February 1996. The tire loading and warehousing operation accounted for less than 2% of the Company's total revenues during 1995. Builders currently conducts operations from 48 terminals. Each terminal is the base for specific over-the-road tractors and is the domicile of the drivers who operate those tractors. 35 of these terminals have facilities and staff to provide fueling and routine and heavy maintenance. The Company also operates miscellaneous staging lots near certain major shipping points. The Company believes this network of facilities enhances its ability to provide highly responsive, specialized services at its customers' major shipping locations in an efficient manner. This extensive terminal network also should give Builders an advantage over much of its competition in responding to the increasing regional carrier requirements of many shippers. Each customer's shipment is accorded exclusive use of a trailer: goods of more than one customer are not carried on the same trailer. Builders' preferred operating procedure is for a unit carrying a shipment to proceed directly from origin to destination with no delay enroute occasioned by a change of drivers, relays or circuitous routing via terminals. The Company operates computerized Central Control Departments for van, flatbed and dedicated operations. These departments strive to maintain fleet balance by locating and procuring freight shipments that originate near the destination of another shipment that is enroute or already scheduled. The Central Control Departments send this information to the terminal, and each terminal then dispatches its domiciled drivers accordingly. In addition to those already noted, other specialized services that all Builders' divisions offer to a shipper when required to meet its needs include the following: (i) assignment of a specific number of linehaul units to the shipper on a continuing basis; (ii) establishment of a trailer pool on the shipper's property or on a Company lot near the shipper's property; (iii) close coordination with the shipper to assure delivery at specified times; (iv) establishment of individualized pricing formats and information exchange systems, including electronic data interchange, to complement the shipper's systems designs and information flows; and (v) utilization of two-driver teams in those instances where a shipper's needs can be met more efficiently in that manner. MARKETING The primary focus of Builders' marketing strategy is to increase freight density within defined market areas that are consistent with the Company's growth and profit objectives. The goal is 2 4 to provide optimal equipment utilization and superior customer service in furtherance of Builders' aim to be a leader in the truckload industry. The Company vigorously markets all its services including Flatbed, Van, Dedicated Fleet and logistics management. The directors of sales for the Flatbed and Van Divisions supervise the activities of regional sales managers in obtaining strategically located business to balance traffic flows. The directors of sales report directly to their respective division vice presidents. The Flatbed and Van Divisions have recently added several high level sales professionals in an effort to secure new business. The vice president of Dedicated Fleet and two sales vice presidents in that division are responsible for developing contacts with shippers who desire dedicated services. Builders compiles and publishes its own pricing schedules to maintain flexibility in responding rapidly to the varying service demands of its customers. It does not participate in any collective rate making with other carriers through rate bureaus or tariff publishing agents. The Company does not compete for, or handle, any less-than-truckload business. REVENUE EQUIPMENT At December 31, 1995, Builders' linehaul fleet, including owner-operators' equipment, consisted of 2,810 over-the-road tractors and 6,283 trailers. The equipment is assigned to the three operating divisions as follows: Flatbed Division 1,081 tractors and 1,683 trailers; Van Division 974 tractors and 2,576 trailers; and Dedicated Fleet 755 tractors and 2,024 trailers. The average age of Builders' tractors and trailers at December 31, 1995, was 2 years and 5.5 years, respectively. (See "Developments in the Company's Business -- Acquisition of Equipment.") All Company-owned tractors are manufactured using consistent drive-train specifications. This standardization enables the Company to repair and service any unit of equipment at any of the Company's full-service terminal locations, provide a consistent and simplified driver training program, and reduce spare parts inventory to a minimum level. All tractors purchased after 1992 are equipped with fully electronic engine systems. Additionally, all tractors purchased since late 1994 have been premium tractors that represent a significant upgrade over the Company's previously existing tractor specifications. These new tractors include, among other things, extra large cabins, double sleeper bunks and more powerful electronic engines. The Company believes that this exceptional equipment will help to attract and retain high quality, professional drivers by improving their work environment. The Company has over 1,000 two-way mobile satellite communication systems in the tractors that operate primarily in the Van Division. Builders believes that this satellite communication capability has resulted in higher productivity, lower communication and driver management costs, and improved driver retention. COMPETITION Competition is based largely on the price and quality of service offered. Builders competes predominately with private carriage and other truckload carriers. The Company competes to a lesser degree with railroads, intermodal carriers, air freight carriers, freight forwarding companies and less-than-truckload motor common carriers. Builders concentrates on providing high quality, specialized transportation in the most efficient manner possible to service-sensitive customers in various regions from Texas through the South, Southeast and Midwest. Builders believes its extensive terminal network gives it an advantage over much of its competition in responding to the increasing regional carrier 3 5 requirements of many shippers. Builders is often the primary carrier at the shipping locations that it serves. Effective January 1, 1995, Section 601(c) of the Federal Aviation Administration Authorization Act prohibited states from requiring intrastate operating authority or from regulating rates or services of motor freight carriers other than household goods movements. The effects of intrastate deregulation will vary from state-to-state, and the Company cannot predict what long-term impact this deregulation will have on specific customers, lanes or regional operations. However, Builders observed no discernible impact on its 1995 results of operations from this particular deregulation. In this connection, Builders has never been materially dependent on intrastate rate or pricing protection. Effective December 31, 1995, the Interstate Commerce Commission (the "ICC") was eliminated by the ICC Termination Act (the "Termination Act") and certain of its authority was transferred to the United States Department of Transportation (the "DOT"). Although it is too early to determine the potential long-term competitive impact of the Termination Act, the Company believes the initial impact will be minimal. (See "Regulation.") EMPLOYEES At December 31, 1995, Builders employed over 3,700 people of whom approximately 2,900 were drivers or mechanics. None of the Company's employees is a member of any collective bargaining unit, and Builders' management believes employee relations are excellent. Drivers. Builders has established several programs to increase driver loyalty and to give drivers a stake in the Company. Drivers are compensated on the basis of miles driven, and base pay for miles driven increases with a driver's length of employment with Builders. The Company maintains a KSOP benefit plan for drivers and most other employees. Under this plan, Builders may match some portion of the employees' contribution in the form of Builders' common stock. (See Note 6 to Consolidated Financial Statements.) Safety and Training. Builders conducts comprehensive training programs to promote safety, customer relations, service standards, productivity and positive attitudes. Driver training and safety programs are developed jointly by the Company's Safety and Drivers' Services Departments. The Company's goal is to earn the reputation of being the safest truckload carrier in the industry. All drivers meet or exceed all DOT qualifications. All driver qualification files are updated at least annually in an effort to ensure that compliance with DOT regulations is maintained. Since 1994, Builders has operated two driver schools to provide training for inexperienced, newly hired drivers and to help them acquire the federally mandated Commercial Drivers License. Almost all of the drivers hired by the Company who do not have prior over-the-road experience are graduates of one of these two schools. The Company believes that its own driver schools will consistently produce better trained and more safety conscious drivers. In addition, Builders has a comprehensive training program for all drivers newly hired by Builders including those with previous driving experience. Each driver applicant must pass a driving skills road test as part of the employment application and screening process. Once accepted for employment, each driver attends the Company's New Driver Orientation. New Driver Orientation is a three-day training program that is conducted at one of Builders' five regional training terminals. Among the topics included in Builders' training program, are: defensive driving; pre-trip inspection; regulatory compliance; hazardous materials handling; load 4 6 fastening and protection; equipment maintenance; equipment operations; company policies; and emergency reporting procedures. This training is conducted by full-time training specialists. Drivers, regardless of past driving experience, must successfully complete this training prior to being released to a Driver Trainer. New drivers may be assigned to a qualified Driver Trainer for a period of one to five weeks, depending on their past driving experience and their skills mastery. The Driver Trainers complete evaluations of the new drivers, ensuring competence in basic driving and customer service skills. Ongoing training is conducted through drivers' safety meetings at each terminal. The Company's Safety Department provides training topics and content. The focus of these safety efforts is the prevention of accidents and injuries. Additionally, Builders utilizes the services of an outside firm to conduct road observations to identify any drivers who may need counseling or retraining. The Company marks its trailers with a toll-free number to facilitate the motoring public's reporting of driving behaviors. Compliments and complaints are investigated and directed to the appropriate terminal manager for follow-up. As part of the Company's corrective action process, remedial training is available to all drivers upon request. Builders also requires remedial training for drivers with excessive log errors or who are involved in preventable accidents. OWNER-OPERATORS During 1995, the Company continued to expand its fleet with equipment purchased by independent contractors ("owner-operators"). This provides marketing, operating, safety, recruiting, driver retention and financial advantages to the Company. In addition, the Company believes that the owner-operators with whom it contracts are generally more mature and experienced than the general driver population and that they have a vested interest in protecting their own equipment that impels them to operate in a cautious manner. Owner-operators are responsible for paying all their operating expenses including fuel, maintenance, equipment payments and all other equipment-related expenses. Owner-operators are compensated by the Company on a rate per mile or percentage of revenue basis. At December 31, 1995, the Company had contracts with 204 owner-operators. REGULATION Builders' operations in interstate commerce were regulated by the ICC through 1995. Effective December 31, 1995, the ICC was eliminated by the Termination Act and certain of the ICC's authority was transferred to the DOT. Under the Termination Act, the DOT will assume responsibility for motor carrier licensing, financial reporting, motor carrier self-insurance and certain other matters formerly under the ICC's jurisdiction. In this connection, the Termination Act created the Surface Transportation Board, an independent body within the DOT, to assume certain duties previously performed by the ICC. The remaining motor carrier oversight will be conducted by other departments in the DOT. Although it is too early to determine the potential long-term competitive impact of the Termination Act, the Company believes the initial impact will be minimal. The Termination Act also mandates that the DOT review certain issues over the next several years, including driver fatigue, registration of carrier insurance and cargo liability. The Company cannot assess at this time what effect, if any, these reviews may have on its operations. The federal government and state agencies continue to regulate such matters as weight and dimensions of equipment. Safety requirements for motor carrier operations continue to be 5 7 prescribed by the DOT. Additionally, Builders is subject to regulation by certain governmental agencies in Ontario and Quebec, due to the Company's operations in those Provinces. Builders' operations are subject to regulation by the Environmental Protection Agency and by various state environmental regulatory agencies with respect to matters involving water quality and effluent limitation, underground storage tanks and the handling, storage and disposal of solid waste and hazardous materials. (See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Environmental Matters.") RISK MANAGEMENT AND INSURANCE Builders' Risk Management program provides a multi-faceted approach to the protection of the Company's assets and interests through a combination of insurance, self-insurance, and excess and umbrella coverages. The Company believes that the coverages described below are adequate and appropriate. The Company self-insures its automobile liability exposure with a retention of $1,000,000 combined single limits per occurrence. The funding obligation within the retention is secured by a letter of credit in the amount of $1,000,000. An umbrella liability policy increases both automobile and general liability coverage to $35,000,000. This level of umbrella coverage represents a $20,000,000 increase over what had been in place until mid-1995. Based on recent experience and the increasingly litigious nature of American society in general, Builders determined that such an increase was prudent. Workers' compensation and employer's liability exposure is covered by a combination of self-insurance programs, self-insured excess insurance contracts and insurance contracts. A self-insured retention of $500,000 per claim applies to the self-insured states of Alabama, Arkansas, Georgia, Indiana, Kansas, Mississippi, North Carolina, Oklahoma, South Carolina and Tennessee with underwriters assuming excess liability up to statutory limits for workers' compensation and $1,000,000 per occurrence for employer's liability. Workers' compensation and employer's liability exposure is covered by insurance policies in Florida, Kentucky, Virginia, Illinois, Louisiana, Massachusetts, Michigan, New Jersey, New York and Pennsylvania. Coverage is provided to statutory limits with a deductible/retention of $250,000 per claim. Employer's liability coverage is $1,000,000 per claim. The Company's funding obligation within the deductible retention is secured by letters of credit in favor of the underwriter. The Company participates in state funds providing workers' compensation coverage in Ohio and West Virginia. In Texas, occupational accident full medical and indemnity benefits are provided under a self-insured ERISA plan. The previously noted umbrella policy provides liability coverage of $35,000,000 in excess of the underlying coverages for workers' compensation and employer's liability. Executive liability, fiduciary liability and commercial crime coverage is provided by a policy with limits of $5,000,000 annual aggregate for executive liability with a deductible of $500,000; $2,500,000 each loss and annual aggregate for fiduciary liability with a deductible of $50,000; and $2,500,000 for designated commercial crime acts with a deductible of $25,000. The Company has cargo insurance coverage with limits of $500,000 per loss with deductibles of $500,000, $500,000 and $25,000 per occurrence, respectively, for the flatbed, dedicated fleet and van divisions. 6 8 DEVELOPMENTS IN THE COMPANY'S BUSINESS Operations: The Company began to experience weakened freight demand during the second quarter of 1995. The trend continued throughout the remainder of 1995 and severely impacted the Company's revenue growth and results of operations. The slower than expected growth in freight made it difficult for the Company to generate the volume it required to achieve the variable cost reductions that had been anticipated with newer equipment. Likewise, it was more difficult during the second half of 1995 to generate the utilization levels needed to cover the additional fixed costs incurred in acquiring the new tractors. Pricing deteriorated in certain markets, as many marginal carriers discounted their rates in particular areas or on certain commodities. The excess capacity existed throughout the truckload sector during 1995. Market forces should eventually correct the over-capacity situation. However, rather than depending on a gradual improvement in the overall freight market, the Company has aggressively taken actions to address the current market trend. These actions include, among other things, a substantial upgrade of the Company's sales force in an effort to secure new business; reduction of the Company's non-driver work force as a result of streamlining systems and procedures; and a very conservative capital expenditure plan for 1996. Except for the impact of severe weather experienced early in 1996, the Company's current volume has improved substantially as a result of a more aggressive marketing program. The Company has elected to exit the tire loading and warehousing business. In February 1996 a significant part of this operation was sold. The loss on the sale and exiting of this operation has been recorded as a special operating charge in 1995. The tire loading and warehousing operation represented less than 2% of the total revenue of the Company. This operation was reasonably profitable in 1994, but became unprofitable in 1995. This operation projected to be unprofitable again in 1996 and did not fit into the long-term plans of the Company. Therefore, the Company elected to exit and sell these operations. Acquisition of Equipment. In 1995, Builders acquired 863 new over-the-road tractors and 704 new 53-foot van and flatbed trailers. Capital expenditures during 1995 aggregated approximately $76.5 million relating primarily to the acquisition of revenue equipment. These expenditures were financed through internally generated funds and long-term financing. During 1995, the Company completed a sale and leaseback transaction involving its corporate headquarters facility. This transaction generated $3.5 million and the proceeds were used to repay existing debt. In December 1995, the Company increased the term loan borrowings under its credit agreement to $4 million. The term loan will be payable in quarterly installments of $500,000. The Company and its lenders also amended other aspects of the Company's credit agreement to reflect 1995 changes and 1996 projections. During 1995, the Company prefunded subordinated debenture sinking fund payments totaling $1,456,000 and repurchased common stock it viewed as undervalued totaling $460,548. ITEM 2. PROPERTIES. At March 18, 1996, Builders operated 48 terminals, at the following locations: Birmingham, Alabama -- Flatbed Cuba, Alabama (Meridian, Mississippi area) -- Van and Flatbed 7 9 Decatur, Alabama* -- Dedicated Fleet Hartselle, Alabama -- Dedicated Fleet Mobile, Alabama -- Flatbed Vernon, Alabama* -- Van Hamburg, Arkansas -- Van and Flatbed West Memphis, Arkansas -- Flatbed and Dedicated Fleet Tampa, Florida* -- Flatbed Lakeland, Florida* -- Dedicated Fleet Forest Park, Georgia -- Dedicated Fleet Ft. Valley, Georgia* -- Dedicated Fleet McDonough, Georgia (Atlanta area) -- Flatbed and Van Newnan, Georgia -- Dedicated Fleet Savannah, Georgia -- Flatbed Union Point, Georgia* -- Dedicated Fleet Akron, Indiana -- Dedicated Fleet Portage, Indiana* -- Flatbed Medicine Lodge, Kansas -- Flatbed Pineville, Louisiana -- Dedicated Fleet Nicholson, Mississippi (New Orleans, Louisiana area) -- Flatbed Kalamazoo, Michigan* -- Dedicated Fleet Halifax, North Carolina -- Flatbed Lexington, North Carolina -- Van and Dedicated Fleet Lumberton, North Carolina -- Flatbed Monroe, North Carolina* -- Dedicated Fleet North Wilkesboro, North Carolina -- Dedicated Fleet Cincinnati, Ohio -- Dedicated Fleet Munroe Falls, Ohio* -- Dedicated Fleet Newark, Ohio -- Van Sidney, Ohio* -- Dedicated Fleet Youngstown, Ohio -- Flatbed Tulsa, Oklahoma -- Flatbed and Dedicated Fleet Carlisle, Pennsylvania -- Dedicated Fleet Hartsville, South Carolina -- Dedicated Fleet Laurens, South Carolina -- Van Lugoff, South Carolina (Camden area) -- Van, Flatbed and Dedicated Fleet North Augusta, South Carolina -- Dedicated Fleet, Flatbed and Van Spartanburg, South Carolina -- Flatbed and Van Alcoa, Tennessee* -- Flatbed Carthage, Tennessee -- Dedicated Fleet Nashville, Tennessee -- Flatbed Newport, Tennessee* -- Dedicated Fleet White Pine, Tennessee -- Van Dallas, Texas -- Van and Flatbed Rotan, Texas -- Flatbed Kinsale, Virginia -- Flatbed Parkersburg, West Virginia -- Dedicated Fleet 8 10 - --------------- * These 13 terminals, while being the base for over-the-road tractors and the domicile for drivers, do not include the facilities for both routine and heavy maintenance that is otherwise characteristic of Builders' full-service terminal network. Of the 48 terminals, 24 are owned outright (subject to encumbrances securing the Company's credit facility), and 24 are operated under lease agreements. The Company's general offices and division headquarters for Flatbed, Van and Dedicated Fleet, comprising 32,000 square feet, are located in Camden, South Carolina. Builders also operates a corporate maintenance support facility in a 55,000-square foot building in Lugoff, South Carolina, near the Company's general offices. This facility includes shops where new tractors are prepared for service, and tractor and trailer body work and painting are done. Builders' general offices and division headquarters were sold during 1995 in a sale and leaseback transaction. (See Note 9 to Consolidated Financial Statements.) This lease is for a five-year term with four successive optional renewal terms of five years each. The corporate maintenance facility is owned outright by the Company. Builders believes that its general offices and division headquarters, its corporate maintenance support facility and terminal network are suitable for their intended purposes. Each of these properties is adequate for the Company's current needs. From time to time Builders opens new terminals and closes old terminals depending upon its customers' requirements. Each terminal is the base for specified over-the-road tractors and is the domicile of the drivers who operate those tractors. The Company believes this network of facilities enhances its ability to provide highly responsive, specialized services at its customers' major shipping locations in an efficient manner. In addition, Builders operates miscellaneous staging lots near major shipping points. The Company also owns certain small real estate parcels; 55 acres of unimproved property on Hutchinson Island and a 22-acre and a seven-acre tract of unimproved property, all near Savannah, Georgia; and commercial property which was formerly used for terminals in Grand Prairie, Texas, Midlothian, Texas (both near Dallas), and Amarillo, Texas. The Amarillo and Grand Prairie properties are under lease. ITEM 3. LEGAL PROCEEDINGS. The Company is a party to routine litigation incidental to its business, primarily involving claims for personal injury and property damage incurred in the transportation of freight. The Company believes that adverse results in one or more of these cases would not have a material adverse effect on its results of operations or financial position. The Company maintains excess insurance above its self-insured levels which covers extraordinary liabilities resulting from such claims to a level that management considers adequate. The Company increased its excess coverage during 1995 from $15,000,000 to $35,000,000. (See "Business -- Risk Management and Insurance" and Note 4 to the Consolidated Financial Statements.) ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There were no matters submitted to a vote of stockholders of the Company during the fourth quarter of 1995. 9 11 EXECUTIVE OFFICERS OF THE REGISTRANT Pursuant to General Instruction G(3) of Form 10-K, the following list is included as an unnumbered Item in Part I of this Report in lieu of being included in the Proxy Statement for the 1996 Annual Meeting of Stockholders. The table set forth below includes, as of March 18, 1996, the names and ages of all executive officers of the Company and all positions and offices with the Company held by such persons. Each such person has been elected to serve until the next annual meeting of the Company's Board of Directors and until his successor is duly elected and qualified, or until his earlier death, resignation or removal. Each of the officers listed below, except Robert Y. Fox has, throughout the past five years, served in one or more executive capacities with the Company and/or its affiliates. There are no family relationships among executive officers or other significant employees. Mr. Fox is a certified public accountant and was appointed to the additional position of Executive Vice President, Administration in January 1996. He has been Chief Financial Officer of the Company since February 1995 and was Vice President, Accounting and Finance from March 1993 through January 1995. From April 1991, until he joined the Company, he was Vice President of Finance and Controller for Burlington Motor Carriers, Inc. From 1984 until he joined Burlington, Mr. Fox was with Deloitte & Touche's Dallas office where he last served as Audit Manager.
Name Age Current Position - ---------------------------------------------- --- ------------------------------------------- David C. Walentas............................. 57 Chairman of the Board Stanford M. Dinstein.......................... 48 Vice Chairman and Chief Executive Officer John R. Morris................................ 52 President and Chief Operating Officer Robert Y. Fox................................. 34 Executive Vice President, Administration and Chief Financial Officer T. M. Guthrie................................. 48 Vice President, Administration and Treasurer Philip M. Adams............................... 46 Vice President, Van Division P. Michael Davis.............................. 55 Vice President, Dedicated Fleet Division J. Barry Moody................................ 47 Vice President, Flatbed Division
10 12 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Builders Transport, Incorporated's Common Stock trades on The Nasdaq Stock Market under the ticker symbol "TRUK". As of March 18, 1996, there were approximately 2,000 holders of the Company's Common Stock (including individual participants in security position listings). The following table sets forth, for the calendar periods indicated, the range of high and low sales prices from January 1, 1994:
1994 High Low -------------------------------------------------------------------- ------ ------ First Quarter....................................................... 18.75 14.375 Second Quarter...................................................... 16.00 12.50 Third Quarter....................................................... 15.25 11.625 Fourth Quarter...................................................... 12.125 10.50
1995 HIGH LOW ------------------------------------------------------------------ ------ ------ First Quarter..................................................... 12.625 10.50 Second Quarter.................................................... 12.00 10.875 Third Quarter..................................................... 13.50 11.00 Fourth Quarter.................................................... 12.25 7.375
On March 18, 1996, the last sale price for the Common Stock was $10.00 per share. The Company has never paid a cash dividend on its Common Stock. The Company has agreed, in some of the financing agreements to which it is a party, to certain restrictions on the payment of dividends. (See Note 3 to Consolidated Financial Statements.) The Company reviews its dividend policy from time to time. Future dividends, if any, will be determined by the Company's Board of Directors in light of circumstances existing from time to time, including the Company's growth, profitability, financial condition, results of operations, continued existence of the restrictions described above and other factors deemed relevant by the Company's Board of Directors. 11 13 ITEM 6. SELECTED FINANCIAL DATA.
Year Ended December 31, ---------------------------------------------------- 1995 1994 1993(1) 1992 1991 - -------------------------------------------------------------------------------------------- (In thousands, except per share amounts) STATEMENTS OF OPERATIONS DATA Operating revenues.................... $289,527 $286,243 $250,009 $221,908 $212,365 Provision for special charge(4)....... 1,420 -- -- -- -- Operating income...................... 15,149 19,710 17,131 12,206 7,694 Interest expense and other expenses... 15,145 12,593 11,499 11,183 13,000 -------- -------- -------- -------- -------- Income (loss) before income taxes, extraordinary item and cumulative effect of accounting changes........ 4 7,117 5,632 1,023 (5,306) Provision (benefit) for income taxes............................... (215) 2,602 2,590 797 (1,229) -------- -------- -------- -------- -------- Income (loss) before extraordinary item and cumulative effect of accounting changes.................. 219 4,515 3,042 226 (4,077) Extraordinary item, net of income tax(2).............................. -- -- -- -- 538 Cumulative effect of accounting changes, net of taxes(5)............ (7,291) -- -- -- -- -------- -------- -------- -------- -------- Net income (loss)..................... $ (7,072) $ 4,515 $ 3,042 $ 226 $ (3,539) ======== ========== ======== ======== ======== Earnings (loss) per common share: Income (loss) before extraordinary item & cumulative effect of accounting change................... $ .04 $ .81 $ .57 $ .04 $ (.81) Extraordinary item(2)................. -- -- -- -- .10 Cumulative effect of accounting change.............................. (1.38) -- -- -- -- -------- -------- -------- -------- -------- Net income (loss)(3).................. $ (1.34) $ .81 $ .57 $ .04 $ (.71) ======== ========== ======== ======== ======== BALANCE SHEET DATA Total assets.......................... $272,061 $244,067 $207,665 $167,874 $164,748 Long-term debt including current maturities.......................... 201,128 163,199 130,869 106,544 106,809 Total stockholders' equity............ 38,289 45,578 43,087 36,802 35,839
- --------------- (1) Includes operations of VMC truckload division since August 27, 1993. (2) Gain relating to early retirement of debt. (3) The computation of fully diluted earnings (loss) per common share is antidilutive for all periods presented. (4) Special charge relates to the sale and exiting of the tire loading and warehousing operations in February 1996. (5) Cumulative effect adjustment relates to the adoption of SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and For Long-Lived Assets To Be Disposed Of." 12 14 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following table sets forth the percentage relationship of revenue and expense items to operating revenue for the periods indicated.
Percentage of Operating Revenue Year Ended December 31 1995 1994 1993 - ---------------------------------------------------------------------------------------------- Operating revenue........................................... 100.0% 100.0% 100.0% ------ ----- ----- Operating expenses: Wages, salaries and employee benefits....................... 41.2 41.5 40.4 Operations and maintenance.................................. 20.5 22.4 24.6 Operating taxes and licenses................................ 9.5 9.8 9.8 Insurance and claims........................................ 6.2 4.8 5.6 Communications and utilities................................ 1.6 1.7 1.7 Depreciation and equipment rents............................ 8.5 9.2 8.9 (Gain) on disposition of carrier property and equipment..... (.2) (.2) (.1) Rents and purchased transportation.......................... 6.6 3.6 1.8 Miscellaneous operating expenses............................ .4 .3 .4 Special charges............................................. .5 ------ ----- ----- Total operating expenses.................................... 94.8 93.1 93.1 ------ ----- ----- Operating income............................................ 5.2 6.9 6.9 Interest and other expenses................................. 5.2 4.4 4.6 Provision (benefit) for income taxes........................ (.1) .9 1.1 Net income before cumulative effect of accounting change.... (2.5) ------ ----- ----- Net income (loss)........................................... (2.4)% 1.6% 1.2% ====== ===== =====
The following table sets forth certain industry data regarding the operations of the Company.
Year Ended December 31 1995 1994 1993 - ---------------------------------------------------------------------------------------------- Truckloads per week........................................ 9,879 9,251 8,483 Average miles per trip..................................... 495 519 515 Total tractor miles (in thousands)......................... 254,000 250,000 227,000 Total tractors operated (at year end): Company-owned.............................................. 2,606 2,474 2,605 Owner-operators............................................ 204 150 34 Total tractors............................................. 2,810 2,624 2,639 Total trailers operated (at year end)...................... 6,283 6,214 5,649
RESULTS OF OPERATIONS Year Ended December 31, 1995 Compared to Year Ended December 31, 1994 Operating revenues for the year ended December 31, 1995 were $289.5 million as compared to $286.2 million in 1994. The Company's revenue growth was negatively impacted by the weakened freight demand that was experienced industry-wide during 1995. The Company's Van and Flatbed divisions were more significantly affected by the weakened demand than was the Dedicated Fleet division. Rather than depending on gradual improvement in the overall market, 13 15 the Company more aggressively added new business during late 1995 and early 1996. Except for the impact of severe weather experienced early in 1996, the Company's current volume has improved substantially as a result of this marketing program. It is expected that volume should increase further during 1996 as the Company began service in March 1996 on new dedicated contracts that have annual revenues of approximately $10 million. During 1995, the Company recorded operating income of $15.1 million and a net loss of $7.1 million ($1.34 loss per share). In 1994, the Company recorded operating income of $19.7 million and net income of $4.5 million ($.81 per share). Results for 1995 were affected by the adoption of Statement of Financial Accounting Standards Number 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of", which resulted in an $7.3 million after-tax charge ($1.38 per share). During 1994, the Company initiated a plan to dispose of certain older revenue equipment and to significantly reduce the average age of its fleet. Throughout 1995 the Company had been actively disposing of its older equipment. The modernization plan is expected to be completed during 1996. The adoption of SFAS No. 121 as of January 1, 1995, requires the Company to recognize a cumulative effect adjustment to the extent the carrying value of the affected assets exceeds the estimated fair value less costs to sell. Results for 1995 also include pre-tax special charges of $1.4 million ($840,000 after-tax, or $.17 per share) associated with the sale and closing of its tire loading and warehousing operations in February 1996. These operations generated less than 2% of the Company's 1995 total revenues. However, the operating loss from these operations was approximately $600,000 in 1995. The withdrawal from these unprofitable activities should have a positive impact on results of operations in 1996. (See Note 10 to Consolidated Financial Statements.) Excluding the cumulative effect of the accounting changes and the special charges and operations relating to the tire loading and warehousing operation, the net income for 1995 was $1.5 million ($.29 per share) and operating income was $17.2 million. The operating ratio (operating expenses as a percentage of operating revenues) was 94.8% for 1995 as compared to 93.1% for 1994. If the special charges and operations associated with the tire loading and warehousing business were excluded, the operating ratio for 1995 would have been 93.9%. The increased operating ratio resulted from unfavorable claims settlement experience and weakened freight demand. Wages, salaries and employee benefits as a percentage of revenues decreased slightly, due to a reduction in non-driver employees and an increase in the use of owner-operators that was partly offset by increased driver training-related salary costs. The reduction in non-driver staffing occurred in mid-1995 and was made in response to the weakened freight demand experienced industry-wide. Operations and maintenance related expenses as a percentage of revenues decreased 8%, primarily as a result of maintenance cost reductions attributable to the replacement of approximately 1,000 five-to-eight-year-old tractors with new tractors. These costs were further reduced by the increased use of owner-operators, who pay their own fuel and maintenance expenses. Insurance and claims expense as a percentage of revenues rose 30%, as a result of a claim settlement at an unanticipated level that cost the Company $2.5 million and as a result of general upward revisions in other open claims. The large claim settlement was unique in the Company's experience in terms of both its size and its impact on results of operations. The 14 16 Company has increased its liability insurance limit to $35 million primarily in response to this loss. Management expects that insurance claim expenses will stabilize near a more traditional level in the future, as this unprecedented claim was fully settled during 1995. Depreciation and equipment rents as a percentage of revenue decreased principally as a result of increased use of owner-operators, certain groups of assets becoming fully depreciated during the year, the disposal of under-utilized assets and the adoption of SFAS 121. Rents and purchased transportation increased to 6.6% of revenue from 3.6% in 1994, reflecting the continued increase in the number of owner-operators used. The increase in owner-operators caused a redistribution of certain costs from expense categories related to company-owned equipment (fuel, driver wages, depreciation, etc.) to the rents and purchased transportation expense account. Interest and other expenses rose 20% to $15.1 million, principally due to the additional interest charges associated with the debt incurred as a result of the Company's equipment replacement program. The Company expects that interest expense will increase slightly during 1996 as a full year's interest charges will be incurred on the debt added in 1995. RESULTS OF OPERATIONS Year ended December 31, 1994 Compared to Year ended December 31, 1993. Net income was $4.5 million in 1994, compared to $3 million in 1993. Operating revenues for the year ended December 31, 1994, increased 14.5% over 1993 to $286.2 million. The Company achieved this revenue growth through a combination of higher equipment productivity, improved freight rates, increased use of owner-operators, the effects of a full year of operations of the truckload division of Vernon Milling Company, Inc. ("VMC") which was acquired in August 1993, and the acquisition of Applied Logistics Systems, Inc. ("ALS") on January 1, 1994. Federal tax law changes effective in 1994 have made 1994's operating results, financial statistics and earnings somewhat difficult to compare to previous years' financial results. More specifically, the Company ceased reimbursing its drivers for non-deductible expenses (meals and over-the-road living expenses) and increased driver's pay by an equal amount. While the amount actually paid to drivers remained the same, other costs such as payroll taxes and payroll-based workers' compensation insurance costs rose dramatically due to the increase in per driver taxable payroll amounts being allocated to drivers. The higher operating expenses were substantially offset by a much lower effective tax rate resulting from the tax law change. Since all driver-related compensation was fully deductible in 1994 (due to the cessation of reimbursing non-deductible driver expenses), the Company's effective tax rate approximated the statutory federal income tax rate of 34% plus applicable state income taxes. Previously, the Company's effective tax rate was 46% in 1993 and 78% in 1992 because of the payment of non-deductible expenses to the drivers during those years. The operating ratio (operating expenses as a percentage of operating revenues) was 93.1% for both 1994 and 1993. Tax law changes effective in 1994 and the inclusion of the lower margins from the ALS operations increased certain operating costs and reduced operating margins. Overall, the Company had to reduce other operating costs by 1% or approximately $3,000,000 to maintain a 93.1% operating ratio in 1994. Productivity gains, continued cost-cutting and the improvements attributable to re-engineering many operational and administrative functions combined to lower costs in most areas. Salaries, wages and employee benefits expenses 15 17 increased primarily as a result of the previously discussed 1994 tax law changes that caused the Company's payroll taxes and other payroll-related costs to increase significantly. Other less significant factors that caused wages and benefits to increase, included the following: a driver productivity bonus program initiated in June 1994, ALS wages which represent approximately 80% of ALS's total expenses, and increased driver training-related wages. Operations and maintenance as a percentage of revenue decreased significantly due to lower fuel and maintenance costs. Fuel expense decreased as a result of several factors including, among others, improved fuel efficiency as a result of a newer and more modern tractor fleet, generally lower average fuel prices, and improved fuel purchasing procedures and discounts as a result of reorganizing the Company's fuel purchasing program during 1994. Maintenance costs decreased due to a newer tractor fleet and a more cost-effective maintenance program as a result of reorganizing the Company's maintenance department and systems. Depreciation and equipment rents increased as a result of the Company acquiring 690 new tractors and disposing of 685 older tractors. The new tractors acquired are premium units with depreciation rates significantly greater than the six to eight year-old units they replaced. Rents and purchased transportation increased significantly as compared to 1993 due to an increase in the number of owner-operators from 34 in December 1993 to 150 in December 1994. The increase in owner-operators also caused a redistribution of certain costs from expense categories related to company-owned equipment (fuel, driver wages, depreciation, etc.) to the rents and purchased transportation expense account. LIQUIDITY AND CAPITAL RESOURCES Cash generated from operations, the Company's primary source of liquidity, increased to $29.9 million in 1995 from $29.4 million during 1994. The Company's cash flows and cash requirements tend to fluctuate during the year. Generally more cash is required during the first part of the year, primarily to fund the Company's annual prepayments of operating taxes and licenses. Cash flow from operations generally increases consistently beginning in the second quarter through year end. The Company uses its revolving credit facility to smooth cyclical cash flows associated with its operations. Outstanding borrowings under the revolver decreased to $3.5 million at December 31, 1995, as compared to $7.6 million at December 31, 1994. Borrowing availability at December 31, 1995, was $11.5 million. In addition to the $15 million revolving credit facility, the other items available in the $29 million credit agreement were a $4 million term loan and an irrevocable letter of credit facility of up to $10 million. Borrowings under the revolving credit facility are limited to a specified percentage of customer accounts receivable, as defined in the credit agreement, or $15 million, whichever is less. The interest rate on borrowings under the credit agreement is prime plus 1%. Fees on outstanding letters of credit are 2 1/4% per annum, and fees on the unused portion of the revolving credit and letter of credit facilities are 1/2% per annum. The credit agreement obligations are secured by substantially all the Company's assets that are not collateralized under other financing agreements. The credit agreement includes certain financial covenants and restrictions on payments of dividends, capital expenditures, indebtedness and the sale of certain assets, all of which the Company anticipates that it should be able to comply with in the foreseeable future. The term portion of the credit agreement is payable in quarterly installments of $500,000. The entire credit agreement is scheduled to expire at December 31, 1997. 16 18 Historically, Builders has replaced its then existing credit agreements well in advance of their scheduled maturities in response to changing needs and credit environments. Based on past experience, the Company's recent performance and its relationships with its current lead lender and the lender community, in general, Builders anticipates that it should be able to negotiate an extension to, or replacement of, the current credit agreement well in advance of scheduled maturities, if necessary. Management believes that cash flows generated from operations will be adequate to meet cash requirements for 1996. On a longer term basis, the Company believes it has commitments from various equipment financing sources sufficient to finance its capital expenditure needs for the foreseeable future. In October 1995, the Company completed a sale and leaseback transaction involving its corporate headquarters facility. The Company sold the headquarters building for $3.5 million and agreed to lease the facility for a period of five years at approximately $450,000 per annum, and the Company has four successive optional lease terms of five years each. The Company has the option to purchase the headquarters site, at fair market value at the end of each lease term. Proceeds from the sale were used to reduce the Company's borrowings under its revolving credit facility. The $3.5 million sale, net of closing costs, resulted in a deferred gain of approximately $400,000 which will be recognized over the lease term. The Company has posted a Letter of Credit of $1.6 million to secure future lease payments. Capital expenditures during 1995 were $76.5 million including capitalized leases of $69.7 million. These capital expenditures and capital leases were primarily for new, more efficient revenue equipment that replaced older equipment that was sold. Proceeds from the sale of property and equipment amounted to $11.4 million. The Company's capital lease obligations increased from $101 million in 1994 to $145 million during 1995, as a result of the continued aggressive equipment replacement initiative. The Company has adopted a very conservative capital expenditure budget for 1996, due to the newer fleet and the weakened freight market. While the Company has not made any 1996 capital purchase commitments, it maintains a substantial amount of available credit from several equipment financing sources. Should the Company elect to acquire equipment in 1996, it has the financing availability to complete an equipment purchase. As a result of the reduced capital expenditure budget for 1996, the Company currently plans to repay a significant amount of equipment debt during 1996. The Company will remain highly leveraged for the foreseeable future, however, without a significant equity infusion. The majority of the Company's debt relates to equipment financing and is closely matched with the expected useful lives of the equipment collateralizing the debt. At December 31, 1995, the Company had available for issuance (and not otherwise reserved) 16.9 million authorized shares of its $.01 per share per value common stock and 1,000,000 authorized shares of its $.01 per share per value preferred stock. This stock could be issued, at any time, in connection with an acquisition, to increase working capital, or for any other business purpose deemed appropriate by the Board of Directors. Currently, there are no specific plans for the use of the available authorized stock. SEASONALITY In the trucking industry generally, results of operations reflect a seasonal pattern as customers reduce shipments during and after the winter holiday season and its attendant weather variations. Accordingly, without growth in business, the first and fourth quarters of a year would 17 19 account for less revenue and net income than the second and third quarters. Builders' quarterly results have traditionally reflected this seasonality. Moreover, the extent of these seasonal variations can change significantly from one year to the next depending, particularly, on the severity of winter weather and its impact on travel conditions and the economy. IMPACT OF INFLATION Inflation has in the past been, and may in the future be, a significant factor in the economy. While the Company does not believe that inflation had a significant impact on its results of operations in 1995, Builders continues to monitor closely the impact of inflation, if any, and to optimize its impact on prevailing price trends. The Company hopes to obtain additional rate increases during 1996. The substantial downward pressure on rate structures that has existed in the truckload segment of the industry over the past several years continues, however, and may make it more difficult to obtain rate increases. Equipment. The service lives of the Company's revenue equipment are relatively short (five to ten years), and a regular cycle of equipment replacement ensures that depreciation, as reported in the financial statements, reasonably approximates current costs. This tends to neutralize, over time, the impact of inflation in the cost of new equipment on results of operations. Fuel. Over the past three years, fuel prices have been relatively stable. The cost and availability of fuel is significant to Builders' results of operations. Historically, the Company has never experienced a situation in which fuel shortages were so severe that adequate supplies could not be obtained, nor is the Company aware of this having ever been the case for other companies in the truckload segment of the industry. Fuel shortages do impact prices, however, and from time to time in the past, fuel costs have been volatile. It is likely that fuel costs will be volatile again at times in the future. When fuel prices have spiked in the past, the Company and others in the industry have been able to ameliorate, to some extent, the negative effect on results of operations by imposing fuel surcharges. Builders believes that it should be able to do this again should the need arise. Shippers' acceptance of fuel surcharges typically lags behind the increase in fuel prices. Thus, the level of such surcharges is sometimes not sufficient to offset totally the negative impact of the increased costs until fuel prices recede toward their historic norms. The Company tries to minimize fuel costs by purchasing in bulk as opposed to making spot purchases on the road. Builders' bulk-purchase program is facilitated by its 564,000 gallon active storage capacity at 17 of its terminals. Most spot purchases on the road are made at an average wholesale rack price plus a small pumping fee for the vendor. The Company believes that this pricing arrangement helps to prevent the vendor from realizing excessive retail profit margins in certain less competitive areas. The Company has hedged its fuel costs on a limited basis in the past, and is currently considering hedging part of its 1996 fuel requirements. ENVIRONMENTAL MATTERS The Environmental Protection Agency and various state environmental regulatory agencies regulate the Company's operations with respect to matters involving water quality and effluent limitation, underground storage tanks and the handling, storage and disposal of solid waste and hazardous materials. Capital expenditures include amounts spent for various environmental matters. In addition, the Company provides for costs related to contingencies when a loss is probable and the amount is 18 20 reasonably determinable (based on case by case consultation with environmental specialists). Receivables relating to claims for recovery are recorded only when realization is probable. Recorded recoveries were not material at December 31, 1995. Capital expenditures for all environmental control efforts were not material in 1995, and they are not expected to be material in 1996. FACTORS THAT MAY AFFECT FUTURE RESULTS The Company's future operating results may be affected by a number of factors such as: uncertainties relative to economic conditions; industry factors including, among others, competition, rate pressure, driver availability and fuel prices; and, the Company's ability to sell its services profitably, successfully increase market share in its core businesses and effectively manage expense growth relative to revenue growth in anticipation of continued pressure on gross margins. The Company's operating results could be adversely affected should the Company be unable to anticipate customer demand accurately or to effectively manage the impact on the Company of changes in the trucking, transportation and logistics industries. Because of the foregoing factors, as well as other factors affecting the Company's operating results, past financial performances should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. Recent Developments and Trends. During the second half of 1995, the Company experienced weakened freight demand and is uncertain as to whether this signals the beginning of a trend that may continue through future periods. It appears that some of the Company's competitors have over-expanded their fleets and are discounting their rates in order to maintain the volume needed to support their excess equipment capacity. To the extent, if any, that the weaker freight level and equipment over-capacity situation continues, its impact on the Company's results of operations would be negative. In response to the weakened freight levels, the Company has reduced non-driver payroll by approximately 5%, adopted a very conservative future capital expenditure budget, increased marketing efforts, and is considering other actions. Except for the impact of severe weather, the Company's volume in early 1996 has improved, primarily as a result of this marketing program. While the Company is more optimistic about future business levels, it cannot predict whether this positive trend will continue. 19 21 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Consolidated financial statements of the Company meeting the requirements of Regulation S-X are filed on the succeeding pages of this Item 8 of this Annual Report on Form 10-K. 20 22 Consolidated Financial Statements BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES Three years ended December 31, 1995, with Report of Independent Auditors 23 Builders Transport, Incorporated and Subsidiaries Consolidated Financial Statements Three years ended December 31, 1995 CONTENTS Report of Independent Auditors........................................... 1 Audited Consolidated Financial Statements Consolidated Statements of Operations ................................... 2 Consolidated Balance Sheets.............................................. 3 Consolidated Statements of Stockholders' Equity ......................... 4 Consolidated Statements of Cash Flows.................................... 5 Notes to Consolidated Financial Statements............................... 6
24 Report of Independent Auditors Stockholders and Board of Directors Builders Transport, Incorporated We have audited the accompanying consolidated balance sheets of Builders Transport, Incorporated and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedules listed in the index at item 14(a). These financial statements and the schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Builders Transport, Incorporated and subsidiaries at December 31, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. As discussed in Notes 1 and 11 of Notes to the Consolidated Financial Statements, the Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" in 1995. Winston-Salem, North Carolina February 23, 1996 1 25 Builders Transport, Incorporated and Subsidiaries Consolidated Statements of Operations (in thousands, except per share amounts)
YEAR ENDED DECEMBER 31 1995 1994 1993 -------- -------- -------- Operating revenues $289,527 $286,243 $250,009 Operating expenses: Wages, salaries and employee benefits 119,236 118,729 101,048 Operations and maintenance 59,370 64,247 61,486 Operating taxes and licenses 27,611 27,903 24,510 Insurance and claims 17,846 13,675 14,084 Communications and utilities 4,670 4,721 4,145 Depreciation and equipment rents 24,559 26,306 22,283 Gain on disposition of carrier property and equipment (643) (545) (285) Rents and purchased transportation 19,164 10,548 4,573 Miscellaneous operating expenses 1,145 949 1,034 Special charges 1,420 - - -------- -------- -------- 274,378 266,533 232,878 -------- -------- -------- Operating income 15,149 19,710 17,131 Interest and other expenses, net 15,145 12,593 11,499 -------- -------- -------- Income before income taxes and cumulative effect of accounting change 4 7,117 5,632 Income tax benefit (provision) 215 (2,602) (2,590) -------- -------- -------- Income before cumulative effect of accounting change 219 4,515 3,042 Cumulative effect of accounting change, net of income taxes of $4,096 (7,291) - - -------- -------- -------- Net (loss) income $ (7,072) $ 4,515 $ 3,042 ======== ======== ======== Earnings (loss) per common share: Earnings per common share before cumulative effect of accounting change $ .04 $ .81 $ .57 Cumulative effect of accounting change (1.38) - - -------- -------- -------- Earnings (loss) per common share $ (1.34) $ .81 $ .57 ======== ======== ========
See accompanying notes to consolidated financial statements. 2 26 Builders Transport, Incorporated and Subsidiaries Consolidated Balance Sheets (dollars in thousands)
DECEMBER 31 1995 1994 -------------- --------------- ASSETS Current assets: Cash and cash equivalents $ 109 $ 9 Accounts receivable: Customers, less allowances of $511 in 1995 and $354 in 1994 22,147 24,831 Other 6,668 6,202 ---------- ---------- 28,815 31,033 Prepaid expenses: Tires in service 13,897 12,985 Taxes, licenses and other 3,274 4,516 Repair parts and operating supplies 3,233 3,073 ---------- ---------- 20,404 20,574 ---------- ---------- Total current assets 49,328 51,616 Property and equipment, net 199,262 168,324 Other assets: Costs in excess of net assets of businesses acquired 19,865 20,414 Miscellaneous, less allowances of $168 in 1995 and $258 in 1994 3,606 3,713 ---------- ---------- 23,471 24,127 ---------- ---------- $ 272,061 $ 244,067 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable and accrued expenses $ 9,551 $ 8,892 Taxes other than income 1,866 1,943 Wages, salaries and benefits 3,043 2,924 Claims payable 5,285 4,479 Deferred income taxes 2,378 1,503 Current portion of long-term debt and capital lease obligations 36,366 27,217 ---------- ---------- Total current liabilities 58,489 46,958 Long-term debt and capital lease obligations, less current portion 164,762 135,982 Deferred income taxes 2,013 6,951 Reserve for claims payable and other 8,508 8,598 Stockholders' equity: Preferred stock, par value $.01 per share: authorized 1,000,000 shares; none outstanding - - Common stock, par value $.01 per share: authorized 25,000,000 shares; issued 6,218,347 shares in 1995 and 6,206,220 shares in 1994 62 62 Capital in excess of par value 33,281 33,178 Unearned compensation related to employee stock benefit plan (KSOP) receivable (4,477) (4,617) Retained earnings 24,201 31,273 ---------- ---------- 53,067 59,896 Less treasury stock, 1,168,083 shares in 1995 and 1,117,133 shares in 1994, at cost 14,778 14,318 ---------- ---------- Total stockholders' equity 38,289 45,578 ---------- ---------- Commitements and contingencies $ 272,061 $ 244,067 ========== ==========
See accompanying notes to consolidated financial statements. 3 27 Builders Transport, Incorporated and Subsidiaries Consolidated Statements of Stockholders' Equity (in thousands)
UNEARNED COMPENSATION CAPITAL RELATED TO COMMON IN EXCESS KSOP RETAINED TREASURY STOCK OF PAR RECEIVABLE EARNINGS STOCK TOTAL ------------ ---------- ---------- -------- --------- ------- Balance at January 1, 1993 $ 59 $ 29,603 $ (5,346) $ 23,716 $ (11,230) $ 36,802 Net income 3,042 3,042 Issuance of common stock for acquisition 1 1,483 1,484 Issuance of common stock to 401 (k) plan 176 176 Exercise of stock options 1 999 1,000 Contribution to KSOP 583 583 ----------- --------- --------- -------- --------- --------- Balance at December 31, 1993 61 32,261 (4,763) 26,758 (11,230) 43,087 Net income 4,515 4,515 Issuance of common stock to 401(k) plan 248 248 Exercise of stock options 1 669 670 Purchase of treasury stock (3,088) (3,088) Contribution to KSOP 146 146 ----------- --------- --------- -------- --------- --------- Balance at December 31, 1994 62 33,178 (4,617) 31,273 (14,318) 45,578 Net loss (7,072) (7,072) Issuance of common stock to 401(k) plan 25 25 Exercise of stock options 78 78 Purchase of treasury stock (460) (460) Contribution to KSOP 140 140 ----------- --------- --------- -------- --------- --------- Balance at December 31, 1995 $ 62 $ 33,281 $ (4,477) $ 24,201 $ (14,778) $ 38,289 =========== ========= ========= ======== ========= =========
See accompanying notes to consolidated financial statements. 4 28 Builders Transport, Incorporated and Subsidiaries Consolidated Statements of Cash Flows (in thousands)
YEAR ENDED DECEMBER 31 1995 1994 1993 ---------- ---------- --------- OPERATING ACTIVITIES Net income (loss) $ (7,072) $ 4,515 $ 3,042 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization, net of (gain) loss on dispositions 24,584 26,946 23,046 Deferred income taxes 33 1,895 2,440 Cumulative effect of accounting change 7,291 - - Special charges 1,420 - - Changes in operating assets and liabilities: Accounts receivable 2,218 (3,208) (3,212) Trade accounts payable and accrued expenses 596 (2,295) 3,130 Reserve for claims payable 1,206 131 (1,296) Other (398) 1,374 (2,564) ---------- --------- --------- Net cash provided by operating activities 29,878 29,358 24,586 INVESTING ACTIVITIES Purchases of equipment (6,810) (6,407) (3,395) Proceeds from disposal of equipment 11,421 5,997 2,944 Acquistion of business net of cash acquired - (550) - ---------- --------- --------- Net Cash provided by (used in) investing activities 4,611 (960) (451) FINANCING ACTIVITIES Proceeds from lines of credit and long-term borrowings 4,000 1,606 - Principal payments on line of credit, long- term debt and capital lease obligations (38,007) (27,585) (25,129) Proceeds from issuance of common stock 78 670 1,000 Purchase of common stock for treasury from related party - (2,400) - Purchase of common stock for treasury (460) (688) - ---------- --------- --------- Net cash used in financing activities (34,389) (28,397) (24,129) ---------- --------- --------- Increase in cash and cash equivalents 100 1 6 Cash and cash equivalents at beginning of year 9 8 2 ---------- --------- --------- Cash and cash equivalents at end of year $ 109 $ 9 $ 8 ========== ========= =========
See accompanying notes to consolidated financial statements. 5 29 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements Three years ended December 31, 1995 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Builders Transport, Incorporated (the "Company"), through its wholly-owned subsidiaries, operates as a truckload irregular route, common and contract carrier transporting a wide range of commodities in both interstate and intrastate commerce. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Cash Equivalents The Company considers all highly liquid investments readily convertible into cash or having a maturity of three months or less when purchased to be cash equivalents. Revenue Recognition Operating revenues and related expenses are recognized on the date the freight is picked up for shipment. This method of revenue recognition is not materially different from methods deemed preferable by the Financial Accounting Standards Board Emerging Issues Task Force in their consensus opinion Issue No. 91-9. Prepaid Tires The cost of tires acquired with revenue equipment, together with replacement tires, is capitalized and amortized on the straight-line method over the tires' estimated useful life. The average amortization period for new additions to prepaid tires is approximately three years. Recapping costs are expensed as incurred. Property and Equipment Carrier property and equipment is carried at cost including expenditures for readying the assets for use. Major additions and betterments are capitalized while maintenance and repairs that do not improve or extend the lives of the respective assets are charged to expense as incurred. Depreciation is computed on the straight-line method over the estimated useful life. Leasehold improvements are amortized over the lives of the leases. Non-carrier property comprises terminal facilities and staging lots no longer utilized in the Company's operations and land held for investment purposes. See note 11. Gains and losses on property dispositions are included in operations. 6 30 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Intangible Assets Excess cost over the fair value of net assets acquired (goodwill) generally is amortized on a straight-line basis over forty years. The carrying value of goodwill is reviewed if the facts and circumstances suggest that it may be impaired. If this review indicates that goodwill will not be recoverable, as determined based on the undiscounted cash flows of the business acquired over the remaining amortization period, the Company's carrying value of the goodwill will be reduced to the estimated discounted cash flows. Accumulated amortization was $2,277,000 and $1,717,000 at December 31, 1995 and 1994, respectively. Earnings Per Common Share The calculation of primary earnings per share of common stock is based on the weighted average number of shares outstanding, during each period as adjusted for the effect of issuance of stock options. Weighted average common and common equivalent shares outstanding were 5,262,429 in 1995, 5,608,701 in 1994, and 5,374,193 in 1993. The fully diluted earnings per share calculation assumes full conversion of convertible subordinated debentures and exercise of stock options as of the beginning of the year (or date of issue, if later), if dilutive, and shares contingently issuable. The computation of fully diluted earnings per common share is anti-dilutive for all periods presented. Stock Based Compensation The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of grant. The Company accounts for stock options grants in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly, recognizes no compensation expense for the stock option grants. Fair Values of Financial Instruments At December 31, 1995 and 1994, the carrying value of financial instruments such as cash and cash equivalents, trade accounts receivable and payable and the long-term credit agreement approximated their fair values. The fair value of the Company's 8% and 6 1/2% convertible subordinated debentures are estimated using the average of the quoted market bid and ask prices. The fair value of these debentures at December 31, 1995, was approximately $40,651,000. The carrying value of the debentures at December 31, 1995, was $48,945,000. Fair value is determined based on expected future cash flows, discounted at market interest rates, and other appropriate valuation methodologies. 7 31 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Accounting Changes The Company implemented Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS No. 121) as of January 1, 1995. This statement establishes accounting standards for determining impairment of long-lived assets. The Company periodically assesses the realizability of its long-lived assets and evaluates such assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable . For assets to be held, impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than carrying amount. For assets to be disposed of, impairment is determined to exist if the estimated net realizable value is less than the carrying account. As discussed in Note 11, the Company recognized a cumulative effect adjustment as of January 1, 1995 for certain assets that were planned to be disposed of related to the adoption. Credit Risk Financial investments that potentially subject the Company to concentrations of credit risk consist primarily of customer receivables. Concentrations of credit risk with respect to customer receivables are limited due to the Company's diversified freight base with no one customer, industry, or geographic region making up a large percentage of the customer receivables or revenues. As of December 31, 1995, the Company had no significant concentrations of credit risk. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amount reported in the financial statements and accompanying notes. Estimates made by the Company relate primarily to self insurance accruals, valuation of long-lived assets, realization of deferred tax assets and allowances for uncollectible accounts. Actual results could differ from these estimates. Reclassification Certain prior year amounts have been reclassified for comparative purposes. 8 32 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 2. PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands):
DECEMBER 31 1995 1994 ------------ ------------- Carrier property: Land $ 4,941 $ 4,712 Buildings 20,583 23,788 Revenue equipment 250,906 232,622 Service equipment and other 18,973 17,128 ------------ ------------ 295,403 278,250 Non-carrier property 6,521 6,505 ------------ ------------ 301,924 284,755 Less reserves for depreciation and amortization (102,662) (116,431) ------------ ------------ $ 199,262 $ 168,324 ============ ============
NOTE 3. CREDIT AGREEMENT, DEBT, AND CAPITAL LEASES Long-term debt is summarized as follows (in thousands):
DECEMBER 31 1995 1994 -------- -------- Credit agreement: (a) Term loan $ 4,000 $ 4,000 Revolver 3,469 7,393 8% convertible subordinated debentures (b) 26,594 26,950 61/2% convertible subordinated debentures (c) 22,351 23,451 Capital leases (d) 144,714 101,220 Industrial revenue bonds - 185 -------- -------- 201,128 163,199 Less current portion 36,366 27,217 -------- -------- Portion classified as long-term debt $164,762 $135,982 ======== ========
9 33 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 3. CREDIT AGREEMENT, DEBT, AND CAPITAL LEASES (CONTINUED) (a) The credit agreement, which expires December 31, 1997, provides for a maximum availability of $29 million, comprising a $4 million term loan, a revolving credit facility of up to $15 million, of which $3.5 million was outstanding at December 31, 1995, and irrevocable letters of credit of up to $10 million that may be reduced to $8.5 million at the request of the lenders. The Company may increase the letter of credit facility by up to an additional $2 million, however, by reducing the revolving credit facility by a like amount. The term portion of the credit agreement is payable in quarterly installments of $500,000. Borrowings under the revolving credit facility are limited to a specified percentage of customer accounts receivable, as defined in the credit agreement. The interest rate on borrowings under the credit agreement is prime plus 1%. Fees on outstanding letters of credit are 21/4% per annum, and fees on the unused portion of the revolving credit and letter of credit facilities are 1/2% per annum. The credit agreement obligations are secured by substantially all the Company's assets that are not collateralized under other financing agreements. (b) The 8% Convertible Subordinated Debentures issued in 1985 are convertible (until maturity or prior redemption) into common stock at $24.40 per share (equal to 1,089,918 shares at December 31, 1995). The debentures are subject to certain optional redemption provisions, sinking fund requirements from 1996 to 2004, inclusive, and optional retirement provisions, and are subordinated to all present and future senior indebtedness of the Company. (c) The 61/2% Convertible Subordinated Debentures issued in 1986 are convertible (until maturity or prior redemption) into common stock at $37.75 per share (equal to 592,079 shares at December 31, 1995). The debentures are subject to certain optional redemption provisions, sinking fund requirements from 2002 to 2010, inclusive, and optional retirement provisions, and are subordinated to all present and future senior indebtedness of the Company. (d) Capital leases represent primarily leased revenue equipment capitalized for $180,312,000 and $130,027,000 with accumulated amortization of $32,812,000 and $24,086,000 at year end 1995 and 1994, respectively. The leases are for periods of up to seven years and provide for various renewal options. The tractor and trailer leases also provide a purchase option, any time after 36, 48, 60, or 84 months, at predetermined termination values. The termination values have been included in the capital lease obligation. The credit agreement, and certain capital lease agreements contain financial covenants and restrictions on payments of dividends, capital expenditures, indebtedness and the sale of certain assets. As a result of these restrictive covenants, there are no retained earnings available for payment of dividends at December 31, 1995. 10 34 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 3. CREDIT AGREEMENT, DEBT, AND CAPITAL LEASES (CONTINUED) The aggregate annual maturities and sinking fund requirements of long-term debt, capital leases, and noncancelable operating leases at December 31, 1995, are as follows (in thousands):
OPERATING LONG-TERM CAPITAL LEASES DEBT LEASES TOTAL --------- --------- -------- --------- Year 1996 $ 3,022 $ 4,156 $ 41,651 $ 48,829 1997 1,646 7,625 38,171 47,442 1998 1,015 2,156 32,173 35,344 1999 691 2,156 25,284 28,131 2000 442 2,156 25,914 28,512 Thereafter 20 38,165 6,943 45,128 --------- --------- -------- -------- 6,836 56,414 170,136 233,386 Less amounts representing interest - - (25,422) (25,422) --------- --------- -------- -------- $ 6,836 $ 56,414 $144,714 $207,964 ========= ========= ======== ========
Interest expense on debt and capital leases amounted to $14,794,000 in 1995, $12,427,000 in 1994, and $11,008,000 in 1993. During 1995, approximately $600,000 of interest was capitalized. Rental expense for revenue equipment, facilities, and office equipment amounted to $3,846,000 in 1995, $3,189,000 in 1994, $2,066,000 and in 1993. NOTE 4. RESERVE FOR CLAIMS PAYABLE Under an agreement with its insurance underwriters, the Company is liable up to $1,000,000 for any single occurrence for bodily injury and personal liability claims. Excess liability is assumed by the underwriters up to $35,000,000. The Company's agreement with its underwriters is secured by letters of credit totaling $2,744,000. Additionally, $1,307,000 and letters of credit aggregating $4,959,000 have been deposited with various regulatory agencies to satisfy self-insurance requirements. That portion of the reserve for claims estimated to be payable within one year is classified as a current liability. 11 35 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 4. RESERVE FOR CLAIMS PAYABLE (CONTINUED) Reserves for workers' compensation are based upon historical trends, claim frequency, severity, the Company's experience and other factors, and are discounted to present value. The effect of future inflation for both medical costs and lost wages is considered in establishing reserves. Adjustments to previously established reserves, if required, are included in operating results. At December 31, 1995 and 1994, estimated future payments for these claims aggregated approximately $2,494,000 and $2,611,000, respectively. The present value of these estimated future payments was approximately $1,928,000 at December 31, 1995, and $1,973,000 at December 31, 1994, discounted at rates of 7.4% for 1995 and 8.64% for 1994. The estimated future payments at December 31, 1995, are $517,000 in 1996, $541,000 in 1997, $370,000 in 1998, $254,000 in 1999, $164,000 in 2000 and $648,000 thereafter. The Company does not offset claims for recovery in which the potential for realization is probable against probable contingent liabilities, such as self-insurance reserves. NOTE 5. INCOME TAXES The provision (benefit) for income taxes consists of the following (in thousands):
1995 1994 1993 ---------- ---------- --------- Current $ (111) $ 707 $ 150 Deferred (104) 1,895 2,440 ---------- ---------- --------- $ (215) $ 2,602 $ 2,590 ========== ========== =========
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 are (in thousands):
DECEMBER 31 1995 1994 -------- ------- Deferred tax liabilities: Tax over book depreciation $ 14,004 $ 17,711 Capital leases and other 3,538 558 -------- -------- Total deferred tax liabilities 17,542 18,269 -------- --------
12 36 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 5. INCOME TAXES (CONTINUED) Deferred tax assets: Allowances for accounts receivable and claims reserves (3,815) (4,498) Net operating loss carryforwards (2,074) (157) General business, minimum tax and other credit carryforwards (6,048) (4,639) Capital loss carryforward - (521) Other deferred tax assets (1,214) - -------- -------- Net deferred tax assets (13,151) (9,815) -------- -------- Net deferred tax liabilities $ 4,391 $ 8,454 ======== ========
The reasons for the difference between total income tax expense benefit and the amount computed by applying the statutory federal income tax rate to income before income taxes are as follows (in thousands):
1995 1994 1993 -------- -------- -------- Computed tax expense (benefit) using the statutory federal income tax rate $ (1) $ 2,420 $ 1,915 Increase (decrease) in taxes arising from: State taxes, net of federal benefit 7 72 - Reduction of valuation allowance - (521) - Tax rate (decreases) increases (228) 430 - Prior year (over) under accrual (100) 64 48 Nondeductible expenses 86 121 626 Other items 21 16 1 ------- -------- -------- $ (215) $ 2,602 $ 2,590 ======= ======== ========
At December 31, 1995, the Company had net operating loss carryforwards for federal tax purposes of $5,319,000 expiring in the year 2010, general business credit carryforwards of $5,404,000 expiring in years 1997 through 2004, state net operating loss carryforwards of $13,397,000 expiring in years 1996 through 2007, and minimum tax credits of $643,000 that carry forward indefinitely. 13 37 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 6. BENEFIT PLANS The Company has a stock option plan that permits the granting of options to purchase up to an aggregate of 1,450,000 shares of Common Stock to officers and key employees. Under this Plan, options to purchase shares of Common Stock may be granted at not less than 100% of the fair market value at the date of grant, or 110% of fair market value in the case of any employee who holds more than 10% of the combined voting power of the Company's Common Stock as of the date of grant if the option is designated as an incentive stock option. The Company also has a Non-employee Directors' Stock Option Plan. This plan provides for the granting of options to purchase up to an aggregate of 100,000 shares of Common Stock to members of the Board of Directors of the Company who are not employees of the Company or any of its subsidiaries. Under the Plan, options to purchase 10,000 shares of Common Stock were granted to each non-employee director upon the Board's adoption of this plan, and options to purchase 10,000 shares will be granted to any new Non-employee's Director upon his or her election to the Board of Directors. Each Non-employee Director shall receive additional options to purchase 2,000 shares each even numbered year during the Plan's existence beginning March 29, 1994, at not less than 100% of the fair market value at the date of the grant. The following table summarizes the changes in options outstanding and related price ranges for shares of Common Stock under options:
NUMBER OPTION PRICE OF SHARES PER SHARE --------- ---------------------- Outstanding at January 1, 1994 1,184,562 $ 3.75 - $ 14.75 ========= Exercised (86,514) $ 4.9375 - $ 10.50 Expired or canceled (37,522) $ 6.1875 - $ 14.75 Granted 138,500 $ 11.313 - $15.375 --------- Outstanding at December 31, 1994 1,199,026 $ 3.75 - $15.375 ========= Exercised (9,699) $ 7.0625 - $ 10.50 Expired or canceled (102,181) $ 7.0625 - $ 14.75 Granted 22,500 $12.4375 --------- Outstanding at December 31, 1995 1,109,646 $ 3.75 - $15.375 =========
At December 31, 1995, options to purchase 787,408 shares were exercisable, and 183,885 shares were reserved for future grants. 14 38 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 6. BENEFIT PLANS (CONTINUED) During 1993, there were two benefit plans available to substantially all Company employees who met the eligibility requirements: a "401(k) Plan" and an "ESOP." Under the 401(k) Plan, the Company made matching contributions in the form of common stock at a rate equal to 25% of a participant's contributions until the participant's contributions reached 6% of the participant's annual salary at which point the Company's matching contribution ceased. The ESOP was established in 1989 when 683,000 shares of Common Stock were acquired through a loan from the Company at a cost of $7 million. The KSOP released a ratable number of shares from encumbrance each year as payments were made to reduce the principal amount of the loan. The released shares were allocated to the accounts of eligible employees. Effective January 1, 1994, the 401(k) Plan and the ESOP were merged and amended to form the Builders Transport, Incorporated Employee's Retirement Savings & Profit Sharing Plan (the "KSOP"). The KSOP utilizes the shares of common stock that were acquired by the ESOP in 1989 and that remain unallocated to make the Company's future 401(k) matching contributions under the KSOP. The amount of the Company's 401(k) matching contribution under the KSOP is now discretionary. However, it is anticipated that by December 31, 2011, all of the common stock acquired by the ESOP in 1989 will have been allocated as the KSOP loan is repaid over its remaining 17-year life. The KSOP will obtain the funds to repay the loan through tax deductible contributions made by the Company to the KSOP. The Company incurred interest expense of $390,000, $398,000, and $539,000 and compensation expense of $234,000, $244,000, and $681,000 related to the KSOP/ESOP during the years ended December 31, 1995, 1994, and 1993, respectively. Compensation expense is recognized under the shares allocated method. Contributions accrued for all defined contribution plans were $1,278,000 in 1995, $856,000 in 1994, and $937,000 in 1993. 15 39 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 7. SUPPLEMENTAL INFORMATION TO CONSOLIDATED STATEMENTS OF CASH FLOWS Additional information related to the consolidated statements of cash flows with regard to certain cash payments and noncash investing and financing activities is as follows (in thousands):
YEAR ENDED DECEMBER 31 1995 1994 1993 ------- -------- -------- Cash paid: Interest $15,098 $11,915 $10,129 Income taxes 200 376 - Noncash investing activity: Equipment acquired through capital leases 69,718 59,226 33,349 Issuance of common stock (125,000 shares) and assumption of liabilities related to acquisition. Total assets acquired, including goodwill, of $24,011,000. See Note 8. - - 23,361 Noncash financing activity: Common stock issued under employee benefit plans 165 394 759
NOTE 8. ACQUISITION On August 27, 1993, the Company completed the acquisition of certain of the assets of the truckload van operations of Vernon Milling Company, Inc. ("VMC"), including among other things, 230 tractors and 701 trailers. The Company paid for these assets through the assumption of certain equipment-related debt consisting of $8,221,000 in notes payable, $7,884,000 in operating leases that were refinanced, and the issuance of 125,000 shares of the Company's common stock, valued at $1,484,000. This transaction was accounted for as a purchase. Accordingly, the purchase price has been allocated to the assets acquired (principally, tractors and trailers) and the liabilities assumed (the equipment-related debt and purchase accounting accruals of $7,220,000) based on estimated fair market values. The excess of the purchase price over the fair market value of the net assets acquired has been recorded as goodwill. During 1994, a purchase price contingency pertaining to the Company's acquisition of VMC was resolved, and the total purchase price was finalized. The resolution of the contingency increased the purchase price of VMC by $600,000 from the year-end 1993 preliminary purchase price estimate. Goodwill was increased to reflect the increased purchase price. Additionally, Goodwill was increased by approximately $3.9 million to reflect the final valuation of revenue equipment acquired. Concurrent with the final valuation, the Company reduced the economic useful lives of the tractors acquired from 5.5 years, on average, to 4 years on average. This change in estimated useful life was accounted for prospectively, in 1994. 16 40 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 8. ACQUISITION (CONTINUED) Effective January 1, 1994, the Company acquired the logistics management and truckloading operations of VMC's wholly-owned subsidiary, Applied Logistic Systems, Inc. ("ALS"). The Company paid $550,000 cash for ALS and accounted for the transaction as a purchase in 1994. The following unaudited pro forma consolidated operating results present the operating results as if both of the acquisitions had occurred at the beginning of 1993 and do not purport to be indicative of what would have occurred had the acquisitions been made as of that dates or of results which may occur in the future (in thousands, except per share amounts):
YEAR ENDED DECEMBER 31, 1993 ----------------- (UNAUDITED) Operating revenue $ 275,122 ============ Net income $ 3,730 ============ Net income per share $ .68 ============
NOTE 9. RELATED PARTY TRANSACTIONS During 1995, the Company entered into an agreement with Two Trees, a New York general partnership for the sale and leaseback of the building that houses the Company's offices and division headquarters and related land, located in Camden, South Carolina. The Company's Chairman of the Board is a general partner of Two Trees. The Company has purchase and lease renewal options at projected future fair market values under the agreement. The lease is classified as an operating lease in accordance with Statement of Financial Accounting Standards No. 13, "Accounting for Leases." The cost and associated accumulated depreciation of the building, approximately $3,473,000 and $899,000, respectively, have been removed from the accounts and the gain realized on the sale of approximately $392,000 has been deferred. The deferred gain will be credited to income as rent expense adjustments over the lease term of five years. Payments under the lease approximate $454,000 annually, commencing in October 1995. The Company has an outstanding letter of credit totaling $1,600,000 to Two Trees in support of the lease payments. In connection with the sale and leaseback, the Company paid $200,000 in brokerage commissions to Two Trees. The fees paid are based on ordinary and customary standards for such services and the lease payments are based on fair market of the property. 17 41 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 9. RELATED PARTY TRANSACTIONS (CONTINUED) In connection with the purchase of VMC, discussed in Note 8, the Company paid investment banking fees in 1994 of $650,000 to Two Trees pursuant to terms and conditions that included, among other things, a requirement that the combined operations, for a certain period post-closing, of the Company and VMC demonstrate that the increased revenues anticipated from the acquisition were in fact, achievable. The fees were based on ordinary and customary standards for such services. In October 1994, the Company purchased 200,000 shares of its common stock at $12.00 per share from its Chairman of the Board, who made these shares available for sale due to his short-term liquidity needs. The Company's Board of Directors approved this purchase and a general common stock repurchase program on the open market, because they viewed the market price of common stock as undervalued in late 1994. The purchase from the Chairman was viewed as a beneficial method to acquire the Company's stock because the repurchase could be effected with minimal transaction costs. NOTE 10. SPECIAL CHARGES In the fourth quarter of 1995, the Company recorded special charges of $1,420,000 associated with exiting the tire loading and warehousing business. The special charges comprise principally the loss on sale of equipment (consummated in February 1996) and write-downs of accounts receivable, intangibles and other assets. NOTE 11. IMPAIRMENT OF LONG-LIVED ASSETS During 1994, the Company initiated a plan to dispose of certain older revenue equipment and to reduce the average age of its fleet. The plan is expected to be completed during 1996. The adoption of SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of," as of January 1, 1995, requires the Company to recognize a cumulative effect adjustment to the extent the carrying value of the affected assets exceeds the estimated net realizable value. Prior to the cumulative effect adjustment, this revenue equipment to be disposed of had a carrying amount of $19,408,000 as of January 1, 1995. The Company recorded a pre-tax cumulative effect adjustment of $11,387,000 to reduce the carrying amount to the estimated net realizable value of $8,021,000. The after-tax cumulative effect adjustment was a charge of $7,291,000 or $1.38 per share. The carrying amount of assets remaining to be disposed of is $6,031,000 as of December 31, 1995. NOTE 12. CONTINGENCIES The Company is involved in various legal proceedings and claims that have arisen in the ordinary course of its business that have not been finally adjudicated. Many of these proceedings are covered in whole or in part by insurance. These actions, when finally concluded and determined will not, in the opinion of management, have a material adverse effect upon the financial position of the Company. 18 42 Builders Transport, Incorporated and Subsidiaries Notes to Consolidated Financial Statements (continued) NOTE 13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of unaudited quarterly results of operations for the years ended December 31, 1995 and 1994. Previously published results for the quarters ending March 31, June 30, and September 30, 1995 have been restated for the adoption of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." (See Notes 1 and 11). The computation of fully diluted earnings per common share is anti-dilutive for all periods presented (in thousands, except per share amounts).
1995 QUARTER ENDED -------------------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 ---------- ----------- ------------ ----------- Operating revenue $ 73,114 $ 74,847 $ 73,249 $ 68,317 Operating expenses 68,357 68,742 70,991 65,288 Net income (loss) as previously reported before effect of accounting change 785 1,582 (1,033) (1,115) Effect of change in accounting principle on: Operating expenses 1,055 921 515 (2,492) Provision for income taxes (414) (358) (182) 954 Cumulative effect of accounting change (7,291) - - - Net income (loss) as restated (5,865) 2,145 (700) (2,653) Net income (loss) per common share as previously reported before cumulative effect of accounting change .15 .30 (.19) - Cumulative effect of accounting change (1.38) - - - Net income (loss) per common share as restated (1) (1.11) .40 (.13) (.53)
1994 QUARTER ENDED -------------------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 ---------- ----------- ------------ ----------- Operating revenue $ 68,825 $ 71,433 $ 72,870 $ 73,115 Operating expenses 64,631 65,873 67,517 68,512 Net income 638 1,413 1,630 834 Net income per common share .11 .25 .29 .16
(1) The sum of the quarter's earnings per share does not equal the year-to-date earnings per share due to changes in average share calculations. This is in accordance with prescribed reporting requirements. 19 43 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III ITEMS 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. For information with respect to the executive officers of the Company, see "Executive Officers of the Registrant" at the end of Part I of this Report. The information set forth under the captions "Election of Directors", "Committees of the Company's Board of Directors and Meeting Attendance," "Executive Compensation and Other Information", "Security Ownership of Certain Beneficial Owners and Management", and "Certain Relationships and Related Transactions" in the Proxy Statement for the 1996 Annual Meeting of Stockholders is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) LIST OF DOCUMENTS FILED AS PART OF THIS REPORT. (1) FINANCIAL STATEMENTS. Report of Independent Auditors, Ernst & Young LLP......................... Consolidated Statements of Operations for the years ended December 31, 1995, 1994 and 1993..................................................... Consolidated Balance Sheets as of December 31, 1995 and 1994.............. Consolidated Statements of Stockholders' Equity for the years ended December 31, 1995, 1994, 1993........................................... Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993..................................................... Notes to Consolidated Financial Statements................................
(2) FINANCIAL STATEMENT SCHEDULE. Consolidated Schedule as of and for the years ended December 31, 1995, 1994 and 1993........................................................... II -- Valuation and Qualifying Accounts...................................
All other financial statements and schedules have been omitted because they are not required or are not applicable. 21 44 (3) EXHIBITS (NUMBERED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K).
EXHIBIT NO. EXHIBIT - ------- ---------------------------------------------------------------------------------- 3.1 -- Amended and Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report for the quarter ended June 30, 1992, on Form 10-Q, filed August 14, 1992 3.2 -- Amended and Restated Bylaws of the Company, as amended, incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994 4.1 -- Indenture between the Company and The First National Bank of Maryland, dated as of August 15, 1985, incorporated by reference to Exhibit (4)B to the Company's Amendment No. 1 to Registration Statement on Form S-1, filed August 29, 1985 (No. 2-99727) 4.2 -- Indenture between the Company and The First National Bank of Maryland, dated as of May 1, 1986, incorporated by reference to Exhibit (4)B to the Company's Amendment No. 1 to Registration Statement on Form S-1, filed May 1, 1986 (No. 33-5057) 4.3 -- First Supplemental Indenture between the Company and The First National Bank of Maryland, dated as of September 1, 1986, incorporated by reference to Exhibit 4a1 to the Company's Quarterly Report for the quarter ended September 30, 1986 on Form 10-Q, filed November 14, 1986 10.1* -- Builders Transport, Incorporated Restated 1986 Incentive Stock Option Plan, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,1994, filed August 11, 1994 10.2 -- Stock Purchase Agreement dated as of December 21, 1989, by and between the Company and AmSouth Bank, N.A., as Trustee (subsequently assigned to National Bank of Commerce) under the stock benefit plan, incorporated by reference to Exhibit 1 to the Company's Report on Form 8-K, filed December 29, 1989 10.3 -- Secured Loan Agreement dated as of December 21, 1989, by and among Builders Transport, Incorporated, the Subsidiaries, and AmSouth Bank, N.A., as Trustee (subsequently assigned to National Bank of Commerce) under the stock benefit plan, incorporated by reference to Exhibit 4 to the Company's Report on Form 8-K, filed December 29, 1989. 10.4 -- First Amendment dated as of January 1, 1994, to Secured Loan Agreement dated as of December 21, 1989, (subsequently assigned to National Bank of Commerce) incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994 10.5 -- Pledge Agreement dated as of December 21, 1989, by and among the Company, the Subsidiaries, and AmSouth Bank, N.A., as Trustee (subsequently assigned to National Bank of Commerce) under the stock benefit plan, incorporated by reference to Exhibit 5 to the Company's Report on Form 8-K filed December 29, 1989 10.6 -- Assignment dated as of December 22, 1992, of Promissory Note, Secured Loan Agreement, Pledge Agreement, Stock Purchase Agreement and Indemnification Agreement to National Bank of Commerce as Successor Trustee pursuant to the Builders Transport, Incorporated and Subsidiaries Employee Stock Benefit Trust, incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed March 22, 1993 10.7* -- Builders Transport, Incorporated Employees Retirement Savings & Profit Sharing Plan, as amended and restated, incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995
22 45
EXHIBIT NO. EXHIBIT - ------- ---------------------------------------------------------------------------------- 10.8 -- Trust Agreement under the Builders Transport, Incorporated Employees Retirement Savings & Profit Sharing Plan, incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995 10.9* -- Employment Agreement dated October 1, 1990, by and between the Company and Phillip M. Adams, as amended, incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed March 22, 1993 10.10* -- Employment Agreement dated October 1, 1990, by and between the Company and P. Michael Davis, as amended, incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed March 22, 1993 10.11* -- Employment Agreement dated October 1, 1990, by and between the Company and J. Barry Moody, as amended, incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed March 22, 1993 10.12* -- Employment Agreement dated March 1, 1991, between the Company and Stanford M. Dinstein, incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994 10.13* -- Employment Agreement dated December 16, 1993, between the Company and John R. Morris, incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994 10.14 -- Consulting Agreement dated April 30, 1993, between the Company and Two Trees, a New York general partnership, incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994 10.15 -- Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of Mary 28, 1993, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report for the quarter ended June 30, 1993, on Form 10-Q, filed August 12, 1993 10.16 -- Amendment No. 1 dated as of November 11, 1993, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of May 28, 1993, incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995 10.17 -- Amendment No. 2 effective as of March 31, 1994, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of May 28, 1993, incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, filed May 11, 1994 10.18 -- Amendment No. 3 effective as of October 1, 1994, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of May 28, 1993, incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995 10.19 -- Amendment No. 4 effective as of February 28, 1995, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of May 28, 1993, incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995
23 46
EXHIBIT NO. EXHIBIT - ------- ---------------------------------------------------------------------------------- 10.20 -- Registration Rights Agreement dated August 27, 1993, by and between Vernon Milling Company, Inc., Elmer Thomas, Builders Transport, Incorporated and Builders Transport, Inc., incorporated by reference to Exhibit 4.1 to the Company's Report on Form 8-K, filed September 10, 1993 10.21* -- Builders Transport, Incorporated Amended and Restated Non-Employee Directors' Stock Option Plan, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, filed May 11, 1994 10.22 -- Agreement of Purchase and Sale by and between Builders Transport, Incorporated and Two Trees 10.23 -- Lease Agreement by and between Two Trees and Builders Transport, Incorporated 10.24 -- Amendment No. 5 effective as of December 29, 1995, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc.; National Bank of Canada, as assignee of National Canada Finance Corp.; and Builders Transport, Inc. dated as of May 28, 1993 10.25 -- Amendment No. 6 effective as of March 25, 1996, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc.; National Bank of Canada, as assignee of National Canada Finance Corp.; and Builders Transport, Inc. dated as of May 28, 1993 10.26* -- Amendment No. 1 to the Builders Transport, Incorporated Employees Retirement Savings & Profit Sharing Plan 11 -- Statement re: Computation of Per Share Earnings 21 -- Subsidiaries of the Company, incorporated by reference to Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995 23 -- Consent of Independent Auditors 24 -- Powers of Attorney 27 -- Financial Data Schedule
- --------------- * Denotes a management contract or compensatory plan or arrangement. (b) REPORTS ON FORM 8-K No reports on Form 8-K were filed during the last quarter of 1995. (c) EXHIBITS. The exhibits required to be filed with this Annual Report on Form 10-K pursuant to Item 601, of Regulation S-K are listed under "Exhibits" in Part IV, Item 14(a)(3) of this Annual Report on Form 10-K, and are incorporated herein by reference. (d) FINANCIAL STATEMENT SCHEDULES. The Financial Statement Schedules required to be filed with this Annual Report on Form 10-K are listed under "Financial Statement Schedules" in Part IV, Item 14(a)(2) of this Annual Report on Form 10-K, and are incorporated herein by reference. 24 47 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. BUILDERS TRANSPORT, INCORPORATED By: * ------------------------------------ Stanford M. Dinstein Vice Chairman, Chief Executive Officer and Director March 27, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE - --------------------------------------------- ----------------------------- ---------------- * Chairman of the Board and March 27, 1996 - --------------------------------------------- Director David C. Walentas * Vice Chairman, Chief March 27, 1996 - --------------------------------------------- Executive Officer and Stanford M. Dinstein Director * President, Chief Operating March 27, 1996 - --------------------------------------------- Officer and Director John R. Morris * Executive Vice President, March 27, 1996 - --------------------------------------------- Administration and Chief Robert Y. Fox Financial Officer (Principal Financial Officer) * Vice President, March 27, 1996 - --------------------------------------------- Administration and T. M. Guthrie Treasurer (Principal Accounting Officer) * Director March 27, 1996 - --------------------------------------------- Arthur C. Baxter
25 48
SIGNATURE TITLE DATE - --------------------------------------------- ----------------------------- ---------------- * Director March 27, 1996 - --------------------------------------------- Frederick S. Morton For the Directors and officers indicated above /s/ T.M. GUTHRIE March 27, 1996 - --------------------------------------------- T. M. Guthrie Attorney-in-fact * T. M. Guthrie, pursuant to Powers of Attorney dated prior to the date hereof, executed by the officers and Directors listed above and filed with the Securities and Exchange Commission, by signing his name hereto does hereby sign and execute this Report on Form 10-K of Builders Transport, Incorporated, on behalf of the Company and each of the Directors and officers indicated above, in the capacities in which such names appear above.
26 49 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES Year Ended December 31, 1995
Column A Column B Column C Column D Column E - ----------------------------------------------------------------------------------------------------------------------------- Additions ------------------------------------ Charged to Balance at Other Beginning of Charged to Costs and Accounts- Deductions - Balance at Descriptions Period Expenses Describe Describe End of Period - ----------------------------------------------------------------------------------------------------------------------------- Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts receivable - current $ 353,779 $ 261,000 $ (1,205)(2) $ 101,890(1) $ 511,684 -noncurrent 258,210 10,119 99,999(1) 168,330 ----------- ----------- --------- ----------- ----------- $ 611,989 $ 271,119 $ (1,205) $ 201,889 $ 680,014 =========== =========== ========= =========== =========== Reserve for claims payable as self-insurer $ 6,152,000 $(400,000)(2) $ 5,752,000 Portion of claims payable in current liabilities 4,478,640 20,665,221 937,109(2) 20,796,066(3) 5,284,904 ----------- ----------- --------- ----------- ----------- $10,630,640 $20,665,221 $ 537,109 $20,796,066 $11,036,904 =========== =========== ========= =========== ===========
(1) Uncollectible accounts written off, net of recoveries. (2) Transfers between account classifications. (3) Payments of claims, net of recoveries. 27 50 SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES YEAR ENDED DECEMBER 31, 1994
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - -------------------------------- ----------- ------------------------ ------------ ----------- ADDITIONS ------------------------ CHARGED TO BALANCE AT CHARGED TO OTHER BALANCE BEGINNING COSTS AND ACCOUNTS -- DEDUCTIONS -- AT END OF DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD - -------------------------------- ----------- ----------- ---------- ------------ ----------- Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts receivable -- current.................. $ 200,386 $ 155,441 $ 2,048 (1) $ 353,779 -- noncurrent............... 334,706 76,496 (1) 258,210 ----------- ----------- ---------- ------------ ----------- $ 535,092 $ 155,441 $ 0 $ 78,544 $ 611,989 ============ ============ ============ ============== ============ Reserve for claims payable as self-insurer.................. $ 6,156,000 $ (4,000)(2) $ 6,152,000 Portion of claims payable in current liabilities........... 3,969,236 14,503,706 374,500(4) 14,312,498 (3) 4,478,640 (56,304)(2) ----------- ----------- ---------- ------------ ----------- $10,125,236 $14,503,706 $314,196 $14,312,498 $10,630,640 ============ ============ ============ ============== ============
- --------------- (1) Uncollectible accounts written off, net of recoveries. (2) Transfers between account classifications. (3) Payments of claims, net of recoveries. (4) Reserves resulting from acquisitions. 28 51 SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS BUILDERS TRANSPORT, INCORPORATED AND SUBSIDIARIES YEAR ENDED DECEMBER 31, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ------------------------------- ---------- ------------------------ ------------ ----------- ADDITIONS ------------------------ CHARGED TO BALANCE AT CHARGED TO OTHER BALANCE BEGINNING COSTS AND ACCOUNTS -- DEDUCTIONS -- AT END OF DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD - ------------------------------- ---------- ----------- ---------- ------------ ----------- Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts receivable -- current................. $ 432,722 $ 158,141 $ 5,500 (2)(4) $ 395,977 (1) $ 200,386 -- noncurrent.............. 605,131 37,000 (2)(4) 307,425 (1) 334,706 ---------- ----------- ---------- ------------ ----------- $1,037,853 $ 158,141 $ 42,500 $ 703,402 $ 535,092 =========== ============ ============ ============== ============ Reserve for claims payable as self-insurer................. $5,434,000 $ 12,000 $ 710,000 (2) $ 6,156,000 Portion of claims payable in current liabilities.......... 3,676,556 19,685,737 1,600,700 (2)(4) 20,993,757 (3) 3,969,236 ---------- ----------- ---------- ------------ ----------- $9,110,556 $19,697,737 $2,310,700 $20,993,757 $10,125,236 =========== ============ ============ ============== ============
- --------------- (1) Uncollectible accounts written off, net of recoveries. (2) Transfers between account classifications. (3) Payments of claims, net of recoveries. (4) Reserves resulting from acquisitions. 29 52 EXHIBIT INDEX
EXHIBIT SEQUENTIAL NO. EXHIBIT PAGE NO. - ------- ------------------------------------------------------------------------ ---------- 3.1 -- Amended and Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report for the quarter ended June 30, 1992, on Form 10-Q, filed August 14, 1992................................................................ 3.2 -- Amended and Restated Bylaws of the Company, as amended, incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994.................. 4.1 -- Indenture between the Company and The First National Bank of Maryland, dated as of August 15, 1985, incorporated by reference to Exhibit (4)B to the Company's Amendment No. 1 to Registration Statement on Form S-1, filed August 29, 1985 (No. 2-99727)..................................... 4.2 -- Indenture between the Company and The First National Bank of Maryland, dated as of May 1, 1986, incorporated by reference to Exhibit (4)B to the Company's Amendment No. 1 to Registration Statement on Form S-1, filed May 1, 1986 (No. 33-5057)......................................... 4.3 -- First Supplemental Indenture between the Company and The First National Bank of Maryland, dated as of September 1, 1986, incorporated by reference to Exhibit 4a1 to the Company's Quarterly Report for the quarter ended September 30, 1986 on Form 10-Q, filed November 14, 1986.................................................................... 10.1* -- Builders Transport, Incorporated Restated 1986 Incentive Stock Option Plan, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,1994, filed August 11, 1994......................................................... 10.2 -- Stock Purchase Agreement dated as of December 21, 1989, by and between the Company and AmSouth Bank, N.A., as Trustee (subsequently assigned to National Bank of Commerce) under the stock benefit plan, incorporated by reference to Exhibit 1 to the Company's Report on Form 8-K, filed December 29, 1989....................................................... 10.3 -- Secured Loan Agreement dated as of December 21, 1989, by and among Builders Transport, Incorporated, the Subsidiaries, and AmSouth Bank, N.A., as Trustee (subsequently assigned to National Bank of Commerce) under the stock benefit plan, incorporated by reference to Exhibit 4 to the Company's Report on Form 8-K, filed December 29, 1989............... 10.4 -- First Amendment dated as of January 1, 1994, to Secured Loan Agreement dated as of December 21, 1989, (subsequently assigned to National Bank of Commerce) incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994.......................................................... 10.5 -- Pledge Agreement dated as of December 21, 1989, by and among the Company, the Subsidiaries, and AmSouth Bank, N.A., as Trustee (subsequently assigned to National Bank of Commerce) under the stock benefit plan, incorporated by reference to Exhibit 5 to the Company's Report on Form 8-K filed December 29, 1989.............................. 10.6 -- Assignment dated as of December 22, 1992, of Promissory Note, Secured Loan Agreement, Pledge Agreement, Stock Purchase Agreement and Indemnification Agreement to National Bank of Commerce as Successor Trustee pursuant to the Builders Transport, Incorporated and Subsidiaries Employee Stock Benefit Trust, incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed March 22, 1993...........................
53
EXHIBIT SEQUENTIAL NO. EXHIBIT PAGE NO. - ------- ------------------------------------------------------------------------ ---------- 10.7* -- Builders Transport, Incorporated Employees Retirement Savings & Profit Sharing Plan, as amended and restated, incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995........................... 10.8 -- Trust Agreement under the Builders Transport, Incorporated Employees Retirement Savings & Profit Sharing Plan, incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995........................... 10.9* -- Employment Agreement dated October 1, 1990, by and between the Company and Phillip M. Adams, as amended, incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed March 22, 1993................................. 10.10* -- Employment Agreement dated October 1, 1990, by and between the Company and P. Michael Davis, as amended, incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed March 22, 1993................................. 10.11* -- Employment Agreement dated October 1, 1990, by and between the Company and J. Barry Moody, as amended, incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, filed March 22, 1993................................. 10.12* -- Employment Agreement dated March 1, 1991, between the Company and Stanford M. Dinstein, incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994.............................................. 10.13* -- Employment Agreement dated December 16, 1993, between the Company and John R. Morris, incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994.............................................. 10.14 -- Consulting Agreement dated April 30, 1993, between the Company and Two Trees, a New York general partnership, incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, filed March 31, 1994........................... 10.15 -- Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of May 28, 1993, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report for the quarter ended June 30, 1993, on Form 10-Q, filed August 12, 1993........................................ 10.16 -- Amendment No. 1 dated as of November 11, 1993, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of May 28, 1993, incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995.............................................. 10.17 -- Amendment No. 2 effective as of March 31, 1994, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of May 28, 1993, incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, filed May 11, 1994......................................................
54
EXHIBIT SEQUENTIAL NO. EXHIBIT PAGE NO. - ------- ------------------------------------------------------------------------ ---------- 10.18 -- Amendment No. 3 effective as of October 1, 1994, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of May 28, 1993, incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995.............................................. 10.19 -- Amendment No. 4 effective as of February 28, 1995, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc., National Canada Finance Corp. and Builders Transport, Inc. dated as of May 28, 1993, incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995.............................................. 10.20 -- Registration Rights Agreement dated August 27, 1993, by and between Vernon Milling Company, Inc., Elmer Thomas, Builders Transport, Incorporated and Builders Transport, Inc., incorporated by reference to Exhibit 4.1 to the Company's Report on Form 8-K, filed September 10, 1993.................................................................... 10.21* -- Builders Transport, Incorporated Amended and Restated Non-Employee Directors' Stock Option Plan, incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, filed May 11, 1994...................................... 10.22 -- Agreement of Purchase and Sale by and between Builders Transport, Incorporated and Two Trees.............................................. 10.23 -- Lease Agreement by and between Two Trees and Builders Transport, Incorporated............................................................ 10.24 -- Amendment No. 5 effective as of December 29, 1995, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc.; National Bank of Canada, as assignee of National Canada Finance Corp.; and Builders Transport, Inc. dated as of May 28, 1993................... 10.25 -- Amendment No. 6 effective as of March 25, 1996, to the Amended and Restated Financing Agreement among the CIT Group/Business Credit, Inc.; National Bank of Canada, as assignee of National Canada Finance Corp.; and Builders Transport, Inc. dated as of May 28, 1993................... 10.26* -- Amendment No. 1 to the Builders Transport, Incorporated Employees Retirement Savings & Profit Sharing Plan................................ 11 -- Statement re: Computation of Per Share Earnings......................... 21 -- Subsidiaries of the Company, incorporated by reference to Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed March 31, 1995.............................................. 23 -- Consent of Independent Auditors......................................... 24 -- Powers of Attorney...................................................... 27 -- Financial Data Schedule.................................................
- --------------- * Denotes a management contract or compensatory plan or arrangement. EX-10.22 2 AGREEMENT BETWEEN BT AND TWO TREES 1 EXHIBIT 10.22 STATE OF SOUTH CAROLINA ) ) AGREEMENT OF PURCHASE AND SALE COUNTY OF KERSHAW ) THIS AGREEMENT OF PURCHASE AND SALE ("Agreement"), made and entered into this 11th day of October, 1995, by and between BUILDERS TRANSPORT, INCORPORATED (hereinafter "Seller") and TWO TREES, a New York General Partnership (hereinafter "Purchaser"). W I T N E S S E T H: WHEREAS, Seller is the lessee under that certain Lease Agreement with Kershaw County dated April 1, 1980, and recorded in Book IN, Page 2701, as amended, records of Kershaw Co. (hereinafter the "Lease") of that certain tract or parcel of land containing 28.765 acres in Kershaw County, South Carolina, more particularly shown and described on the attached Exhibit A (hereinafter the "Property"); and WHEREAS, pursuant to the terms of the Lease, Kershaw County shall convey the Property to Seller upon payment of the indebtedness to Citizens and Southern National Bank of South Carolina now NationsBank; WHEREAS, the said indebtedness has been paid and Seller desires to convey its right to receive the Property to Purchaser. WHEREAS, Purchaser desires to purchase from Seller the Property and Seller desires to sell and transfer the same to Purchaser. NOW, THEREFORE, for and in consideration of the premises and mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE I PROPERTY TO BE SOLD 1.1 Property. Seller agrees to sell and Purchaser agrees to buy the Property pursuant to the terms and conditions set forth herein. 1.2 Description of Property. The Property shall consist of the land shown and described on Exhibit A, together with all improvements located thereon and all rights, privileges and easements appurtenant to the Property, including all rights-of-way, roadways, roadbeds and reversions or other appurtenances used in connection with the beneficial use of the Property. 2 ARTICLE II PURCHASE PRICE 2.1 Payment of Purchase Price. The purchase price for the Property shall be Three Million Five Hundred Thousand and No/100 ($3,500,000.00) Dollars (hereinafter the "Purchase Price") to be paid at Closing by wire transfer to the closing attorney's trust account. ARTICLE III SELLER'S REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS In order to induce Purchaser to enter into this Agreement and to purchase the Property, in addition to warranties, representations and undertakings contained elsewhere in this Agreement, Seller hereby makes the following representations, warranties and covenants, each of which is material and is relied upon by Purchaser: 3.1 Title to Property. Seller has the right to receive from Kershaw County good and marketable fee simple title to all of the Property, title insurable free and clear of all liens, claims, options, encumbrances, rights-of-way, easements, conditions, covenants and restrictions except for the permitted encumbrances under Paragraph 5.2. 3.2 Authority of Seller. Seller has the right, power and authority to enter into this Agreement and to sell the Property in accordance with the terms and conditions hereof. This Agreement, when executed and delivered by Seller, will be a valid and binding obligation of Seller in accordance with its terms. 3.3 Zoning. The current zoning classification for the Property permits its use as an office building. 3.4 No Special Taxes. Seller is current with all real property taxes and the Property is free from special taxes or assessments. 3.5 Options. No options or other contracts have been granted or entered into which are still outstanding and which give any other party a right to purchase the Property or any part thereof. 3.06 Insurance. Intentionally Deleted 3.07 Condemnation Proceedings: Roadways. There are no condemnation or eminent domain proceedings pending or to the best knowledge of Seller contemplated against the Property or any part thereof and the Seller has received no notice, oral or written, of 2 3 the desire of any public authority or other entity to take or use the Property. The Property connects to and has access to an adjacent public road. 3.08 Mechanic's Liens. No payments for work, materials, or improvements furnished to the Property will be due or owing at Closing and Seller shall execute standard mechanics lien, affidavit or waiver forms as may be required by Purchaser's title insurance company. 3.09 Pending Litigation. There is no claim, litigation, or other proceeding, pending or threatened before any court, commission, or other body or authority relating to the Property or its operation and further, Seller has not received written notification of any asserted failure of Seller to comply with applicable laws (whether statutory or not) or any rule, regulation, order, ordinance, judgment or decree of any federal, municipal or other governmental authority relating to the Property. 3.10 Utilities. The Property is currently served by public sanitary and storm sewers, public water facilities, and electrical facilities (collectively the "Utilities"). 3.11 Condition of Property. The Property is in good condition and repair. 3.12 Events Prior to Closing. Seller will not cause or permit any action to be taken which would cause any of Seller's representations or warranties to be untrue as of the Closing. Seller agrees to notify Purchaser in writing of any event or condition known to Seller which occurs prior to Closing hereunder, which causes a change in the facts related to, or the truth of any of Seller's representations. 3.13 Further Acts of Seller. On or before the closing, Seller will do, make, execute and deliver all such additional and further acts, deeds, instruments and documents as may be reasonable to completely vest in and assure to Purchaser full rights in or to the Property. 3.14 Hazardous Substances. Seller represents and warrants to Purchaser that to the best of Seller's knowledge (i) the Property has not been used as a treatment, storage or disposal facility for hazardous wastes or hazardous substances as those terms are defined by any federal or state statute or regulation including, without limitation, the Resource Conservation and Recovery Act of 1976, the Toxic Substances Control Act of 1976, the Safe Drinking Water Act of 1977, or the Comprehensive Environmental Response, Compensation and Liability Act of 1980, or any other federal or state statutes, including all amendments to and regulations under such statutes; (ii) there is no state of facts creating potential liability for remedial action or third party 3 4 liability for property damage or personal injury from environmental impairment under any federal, state or local statute, regulation, ordinance or common law; (iii) the Property is free of hazardous substances or hazardous wastes, as defined by the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") as amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act of 1976 "RCRA"), 42 U.S.C. Section 6901 et seq., or any other applicable federal or state law or regulation; and (iv) there are no conditions on the Property which constitute a violation of any environmental laws. Seller makes the foregoing representations and warranties in good faith, but without having made any investigation as to environmental matters. ARTICLE IV PURCHASER'S WARRANTIES AND REPRESENTATIONS 4.1 Purchaser's Authority. This Agreement, when executed and delivered by Purchaser, will be a valid and binding obligation of Purchaser in accordance with its terms. Purchaser has the requisite power and authority to consummate the transaction contemplated herein. ARTICLE V CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS The following shall be conditions precedent to the Purchaser's obligations to purchase the Property. Unless otherwise specified in this Article V, if any of the conditions precedent set forth below are not satisfied as of Closing, the Earnest Money shall be returned to Purchaser, this Agreement shall be null and void, and neither Purchaser nor Seller shall have any further obligation hereunder. 5.1 Representations and Warranties. The representations, warranties, covenants and agreements of Seller set forth herein shall be true and in full force and effect as of closing. 5.2 Status of Title. Purchaser shall have thirty (30) days from the date hereof to obtain a title search and submit to Seller notice in writing of any objections to title which render same unmarketable. Seller shall have thirty (30) days from the receipt of the aforesaid notice to correct at Seller's expense the title defects indicated. If, at the end of said period Seller has not corrected to Purchaser's reasonable satisfaction the objections to title, Purchaser may (1) waive its objections and consummate the within transaction without a reduction in the purchase price or (2) terminate this Agreement and receive a refund of the Earnest Money, in which event this Agreement shall be void. 4 5 5.3 No Change in Operation of Property. Seller shall continue to maintain and hold the Property in the same manner between the date hereof and the Date of Closing, as it has prior to the date hereof and shall make no changes in the condition of the Property. 5.4 Financing. Purchaser shall be able to obtain a loan to purchase the Property for no less than Three Million Five Hundred Thousand and No/100 ($3,500,000.00) Dollars payable over no less than five years (5) years at an interest rate of no more than Ten and One-Fourth (10.25%) percent. ARTICLE VI CLOSING 6.1 Closing. The purchase and sale contemplated hereunder shall be consummated at the closing (referred to herein as the "Closing") which shall take place no later than ninety (90) days from the date hereof ("Date of Closing"). The Closing shall take place at a mutually agreeable time, date and location. ARTICLE VII PRO-RATED ITEMS AND ADJUSTMENTS 7.1 Deed Stamps and Transfer Taxes. Seller shall be responsible for the cost of any and all deed stamps and transfer taxes or fees and Purchaser shall pay for the recording fees of this transaction. 7.2 Legal Fees. Purchaser and Seller shall each pay their own legal fees related to this transaction. 7.3 Taxes. Taxes for the current year shall be prorated to Date of Closing. Purchaser acknowledges that 23.77 acres of the Property are classified as agricultural for tax purposes and any change of use of the parcel will result in roll-back taxes. Purchaser shall be responsible for any such roll-back taxes. 7.4 Prorations and Adjustments. The adjustments and prorations required under this Agreement shall be computed as of the Date of Closing and the cash portion of the purchase price paid to Seller hereunder shall be adjusted to reflect such prorations. In the event that accurate prorations and other adjustments cannot be made at Closing because current bills are not obtainable, the parties shall prorate on the best available information, subject to adjustment upon receipt of the necessary information. ARTICLE VIII SELLER'S DELIVERIES AT CLOSING In addition to other conditions precedent set forth elsewhere in this Agreement, Seller shall deliver to Purchaser at Closing the 5 6 following documents, the delivery and accuracy of which shall be further conditions Purchaser's obligations to consummate the purchase and sale herein contemplated. 8.1 Assignment. Assignment of Sellers right to receive the Property from Kershaw County which assignment shall be in form and substance satisfactory to counsel for the Purchaser. 8.2 Warranty Deed. A Special Warranty Deed from Kershaw County satisfactory in form and substance to counsel for Purchaser, conveying good and marketable fee simple title to the Property, free and clear of all liens, encumbrances, easements and restrictions of every nature and description, except as specifically approved by Purchaser. 8.3 Owner's Affidavit. An Owner's Affidavit or lien waiver satisfactory for the purpose of removing the mechanics lien exception from Purchaser's Owner's Title Insurance Policy. 8.4 Termite Report. Intentionally Deleted 8.5 Tax Affidavit. An Affidavit in the form required by the South Carolina Tax Commission to meet withholding requirements. Based upon the Affidavit the closing attorney will comply with the withholding requirements of the state of South Carolina. 8.6 Survey. Seller shall obtain at Seller's expense and deliver at Closing a current survey of the Property suitable for recording and use as the legal description of the Property for the deed. 8.7 Foreign Affidavit. An affidavit of Seller pursuant to Section 1445(b)(2) of the Internal Revenue Code of 1986 to the effect that Seller is not a "foreign person: as defined therein. 8.8 Miscellaneous Forms and Affidavits. Such other forms and affidavits as may reasonably be requested by Purchaser's attorney and standard in a transaction of this nature. ARTICLE IX PURCHASER'S DELIVERIES AT CLOSING At Closing and after Seller has duly complied with the provisions of Article VIII, Purchaser shall deliver the purchase price, by wire transfer or other good funds, adjusted for the proration required in connection with the Closing. ARTICLE X CONDEMNATION AND RISK OF LOSS 10.1 Condemnation. In the event of condemnation or receipt of notice of condemnation or taking of the Property by 6 7 governmental authority prior to the Closing, Purchaser, at its option, shall have the right to terminate this Agreement. 10.2 Risk of Loss. In the event the Property is materially damaged or destroyed by fire, flood or other casualty on or after the effective date of this Agreement, but prior to the Closing, Purchaser shall have the option of notifying Seller in writing within fifteen (15) days of the damage or destruction of the Property, that this Agreement is terminated. ARTICLE XI REAL ESTATE COMMISSION 11.1 Real Estate Commissions. The parties acknowledge that a real estate commission in the amount of $200,000.00 shall be due and payable to Purchaser and Seller shall be responsible for the payment of same. Seller warrants and represents to Purchaser that no other real estate commission shall be payable in connection with this transaction as a result of Seller's activities. Seller agrees to indemnify and hold Purchaser harmless from and against any claims of any real estate broker or agent with which Seller has engaged or dealt with in connection with this transaction. ARTICLE XII DEFAULT 12.1 Default. If Seller or Purchaser has performed its covenants and agreements hereunder, but the other party has breached its covenants and agreements hereunder and has failed, refused, or is unable to consummate the purchase and sale contemplated herein, then the non-defaulting party shall be entitled to any and all remedies at law or equity, including, without limitation, specific performance. If Purchaser has performed its covenants and agreements hereunder but Seller has breached its covenants and agreements under this Agreement and has failed, refused or is unable to consummate the purchase and sale contemplated herein, the Purchaser shall be entitled to an action for specific performance of this Agreement. ARTICLE XIII MISCELLANEOUS PROVISIONS 13.1 Completeness and Modification. This Agreement constitutes the entire agreement between the parties hereto with respect to the transactions contemplated herein and it supersedes all prior discussions, undertakings or agreements between the parties. This Agreement shall not be modified except by a written agreement executed by both parties. 7 8 13.2 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns. 13.3 Waiver. Failure by Purchaser or Seller to insist upon or enforce any of its rights hereunder shall not constitute a waiver thereof. 13.4 Governing Law. This Agreement shall be governed by and construed under the laws of the State of South Carolina. 13.5 Article Headings. The Article Headings as herein used are for convenience or reference only and shall not be deemed to vary the content of this Agreement or the covenants, agreements, representations, and warranties herein set forth or limit the provisions or scope of any Article. 13.6 Pronouns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or entity may require. 13.7 Time of Essence. Both parties hereto specifically agree that time is of the essence to this Agreement. 13.8 Counterparts. To facilities execution, this Agreement may be executed in as many counterparts as any be required. 13.9 Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be personally delivered or mailed by First Class, Registered or Certified Mail, return receipt requested, postage prepaid, as follows: (a) If to Purchaser: 111 West 57th Street Suite 1000 New York, New York 10019 (b) If to Seller: 2029 W. DeKalb Street Camden, South Carolina 29020 Any such notice, request, consent or other communication shall be deemed received at such time as it is personally delivered or on third business day after it is mailed, as the case may be. 13.10 Invalid Provisions. In the event any one or more of the provisions contained in this Agreement shall be for any reason held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement; this Agreement shall be constructed as if such invalid, illegal or unenforceable provision had never been contained herein or therein. 8 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. WITNESSES: SELLER: BUILDERS TRANSPORT, INCORPORATED /s/ John C. Stewart, Jr. By: /s/ Robert Fox - -------------------------- ----------------------------- /s/ Jennifer M. Markle Its: V.P. & CFO - -------------------------- ------------------------- /s/ John C. Stewart, Jr. Attest: /s/ J. Ray Hardy - -------------------------- ------------------------- /s/ Jennifer M. Markle Its: Asst. Secretary - -------------------------- ------------------------- [CORPORATE SEAL] PURCHASER: WITNESSES: TWO TREES, a New York General Partnership /s/ By: /s/ Stanford M. Dinstein - -------------------------- ---------------------------- /s/ Judy Gluck Its: Attorney-in-Fact - -------------------------- ------------------------ 9 10 EXHIBIT "A" LEGAL DESCRIPTION All that piece, parcel or tract of land, lying and being situate near City of Camden, County of Kershaw, State of South Carolina, containing approximately twenty eight and 78/100ths (28.78) acres, more or less, and being more particularly described as follows: Point of Beginning (iron pipe corner) located 372 feet southeast from the centerline of Battleship Road Extension measured along the right of way of U.S. Highway No. 1; thence continuing in a southeasterly direction along the right of way of U.S. No. 1 South 75 degrees -51'-47" East a distance of 450.0 feet; thence in southeasterly direction South 24 degrees -36'-40" East a distance of 1133.95' to right-of-way of C.S.X. Railroad; thence in a southwesterly direction along right-of-way of C.S.X. Railroad South 65 degrees -22'-28" West a distance of 642.74 feet; thence South 65 degrees -15'-00" West a distance of 550.82 feet; thence South 63 degrees -57'-44" West a distance of 300.40 feet; thence in a northerly direction North 14 degrees -06'-52' East a distance of 196.63 feet; thence North 14 degrees -07'-37" East a distance of 494.59 feet; thence North 14 degrees -06'-14" East a distance of 754.70 feet; thence North 14 degrees -11'-05" East a distance of 380.46 feet to the Point of Beginning. The above-described property is shown and described on a survey prepared by Daniel D. Riddick, Professional Surveyor No. 3322B on August 16, 1995, revised September 27, 1995 and recorded October 2, 1995, in Plat Book B-1 at Page 2, Records of Kershaw County, which is incorporated herein by reference and made a part hereof. This being the same property conveyed to Two Trees by deed from the County of Kershaw recorded October _____, 1995, in the office of the Clerk of Court for Kershaw County, in Deed Book ______at Page ______. Tax Map Number: 284-00-00-007 10 EX-10.23 3 LEASE AGREEMENT BETWEEN TWO TREES AND BT 1 EXHIBIT 10.23 LEASE AGREEMENT BETWEEN TWO TREES, A NEW YORK GENERAL PARTNERSHIP AS LESSOR AND BUILDERS TRANSPORT, INC., A GEORGIA CORPORATION, AS LESSEE THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO CHAPTER 48 OF TITLE 15 OF THE 1976 CODE OF LAWS OF SOUTH CAROLINA, AS AMENDED, WHICH ARBITRATION PROVISIONS ARE SET FORTH IN ARTICLE XXXI OF THIS AGREEMENT. i 2 TABLE OF CONTENTS
Page No. -------- ARTICLE I LEASED PROPERTY; TERM................................. 1 --------------------- ARTICLE II RENT.................................................. 2 ---- 2.1 MINIMUM RENT AND ADJUSTMENTS TO MINIMUM RENT.......... 2 2.2 [INTENTIONALLY DELETED]............................... 2 2.3 ADDITIONAL CHARGES.................................... 2 2.4 NET LEASE............................................. 2 ARTICLE III IMPOSITION............................................ 2 ----------- 3.1 PAYMENT OF IMPOSITIONS................................ 3 3.2 PRORATION OF IMPOSITIONS.............................. 3 3.3 UTILITY CHARGES....................................... 3 3.4 INSURANCE PREMIUM .................................... 4 ARTICLE IV NO TERMINATION........................................ 4 -------------- ARTICLE V OWNERSHIP OF LEASED PROPERTY AND LESSEE'S PERSONAL PROPERTY........................ 4 ------------------------------ 5.1 OWNERSHIP OF THE PROPERTY............................. 4 5.2 LESSEE'S PERSONAL PROPERTY............................ 4 ARTICLE VI CONDITION AND USE OF LEASED PROPERTY.................. 5 ------------------------------------ 6.1 CONDITION OF THE LEASED PROPERTY...................... 5 6.2 USE OF THE LEASED PROPERTY............................ 5 6.3 LESSOR TO GRANT EASEMENTS ............................ 6 ARTICLE VII LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS........... 6 ------------------------------------------- 7.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS...... 6 7.2 LEGAL REQUIREMENT COVENANTS........................... 6 7.3 SUPPORT FOR PAYMENT OBLIGATIONS....................... 6 ARTICLE VIII REPAIRS, RESTRICTIONS................................. 7 --------------------- 8.1 MAINTENANCE AND REPAIR................................ 7 8.2 [INTENTIONALLY DELETED]............................... 8 8.3 ENCROACHMENTS; RESTRICTIONS........................... 8
ii 3 ARTICLE IX CAPITAL ADDITIONS.................................... 8 ----------------- 9.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY............................................. 8 9.2 [INTENTIONALLY DELETED].............................. 9 9.3 [INTENTIONALLY DELETED].............................. 9 9.4 TITLE TO CAPITAL ADDITIONS........................... 9 9.5 SALVAGE.............................................. 9 ARTICLE X LIENS................................................ 9 ----- ARTICLE XI PERMITTED CONTESTS................................... 9 ------------------ ARTICLE XII INSURANCE............................................ 10 --------- 12.1 GENERAL INSURANCE REQUIREMENTS....................... 10 12.2 REPLACEMENT COST..................................... 11 12.3 ADDITIONAL INSURANCE................................. 12 12.4 WAIVER OF SUBROGATION................................ 12 12.5 FORM OF INSURANCE.................................... 12 12.6 CHANGE IN LIMITS..................................... 12 12.7 BLANKET POLICY....................................... 12 12.8 NO SEPARATE INSURANCE................................ 13 ARTICLE XIII FIRE AND CASUALTY.................................... 13 ----------------- 13.1 INSURANCE PROCEEDS................................... 13 13.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY INSURANCE.................... 13 13.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY INSURANCE................ 13 13.4 LESSEE'S PROPERTY.................................... 14 13.5 RESTORATION OF CAPITAL ADDITIONS PAID FOR BY LESSEE.. 14 13.6 NO ABATEMENT OF RENT................................. 14 13.7 DAMAGE NEAR END OF TERM.............................. 14 13.8 WAIVER............................................... 14 ARTICLE XIV CONDEMNATION......................................... 14 ------------ 14.1 PARTIES' RIGHTS AND OBLIGATIONS...................... 14 14.2 TOTAL TAKING......................................... 14 14.3 PARTIAL TAKING....................................... 15 14.4 RESTORATION 15 14.5 AWARD DISTRIBUTION 15 14.6 TEMPORARY TAKING 15 iii 4 ARTICLE XV DEFAULT.............................................. 15 ------- 15.1 EVENTS OF DEFAULT.................................... 15 15.2 REMEDIES............................................. 16 15.3 ADDITIONAL EXPENSES.................................. 18 15.4 WAIVER .............................................. 18 15.5 APPLICATION OF FUNDS................................. 18 15.6 NOTICES BY LESSOR.................................... 18 ARTICLE XVI LESSOR'S RIGHT TO CURE............................... 18 ---------------------- ARTICLE XVII PURCHASE OF THE LEASED PROPERTY...................... 19 ------------------------------- ARTICLE XVIII HOLDING OVER......................................... 19 ------------ ARTICLE XIX [INTENTIONALLY DELETED].............................. 20 ARTICLE XX [INTENTIONALLY DELETED].............................. 20 ARTICLE XXI RISK OF LOSS......................................... 20 ------------ ARTICLE XXII INDEMNIFICATION...................................... 20 --------------- ARTICLE XXIII SUBLETTING AND ASSIGNMENT............................ 21 -------------------------- ARTICLE XXIV OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS...... 21 ----------------------------------------------- ARTICLE XXV INSPECTION........................................... 21 ---------- ARTICLE XXVI QUIET ENJOYMENT...................................... 21 --------------- ARTICLE XXVII NOTICES.............................................. 22 ------- ARTICLE XXVIII APPRAISAL............................................ 22 --------- iv 5 ARTICLE XXIX [INTENTIONALLY DELETED].............................. 23 ARTICLE XXX DEFAULT BY LESSOR.................................... 23 ----------------- 30.1 DEFAULT BY LESSOR.................................... 23 30.2 LESSEE'S RIGHT TO CURE............................... 24 ARTICLE XXXI ARBITRATION.......................................... 24 ----------- 31.1 CONTROVERSIES........................................ 24 31.2 APPOINTMENT OF ARBITRATORS........................... 24 31.3 THIRD ARBITRATOR..................................... 24 31.4 ARBITRATION PROCEDURE................................ 25 31.5 EXPENSES............................................. 25 ARTICLE XXXII FINANCING OF THE LEASED PROPERTY..................... 25 -------------------------------- ARTICLE XXXIII SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE........ 25 --------------------------------------------- ARTICLE XXXIV EXTENDED TERMS....................................... 26 -------------- ARTICLE XXXV MISCELLANEOUS ....................................... 26 ------------- 35.1 NO WAIVER............................................ 26 35.2 REMEDIES CUMULATIVE.................................. 26 35.3 SURRENDER............................................ 27 35.4 [INTENTIONALLY DELETED].............................. 27 35.5 TRANSFERS BY LESSOR.................................. 27 35.6 GENERAL ............................................. 27 35.7 TRANSFER OF LICENSES................................. 27 35.8 MEMORANDUM OF LEASE ................................. 28 ARTICLE XXXVI GLOSSARY OF TERMS.................................... 28 ----------------- v 6 LEASE THIS LEASE ("Lease") dated as of October 11, 1995, is entered into by and between TWO TREES, a New York general partnership, having its principal office at 111 West 57th Street, New York, New York 10019 ("Lessor") and BUILDERS TRANSPORT, INC., A GEORGIA CORPORATION, having its principal office at 2029 W. DeKalb Street, Camden, South Carolina 29020 ("Lessee"). ARTICLE I LEASED PROPERTY; TERM Upon and subject to the terms and conditions hereinafter set forth, Lessor leases to Lessee and Lessee rents from Lessor all of Lessor's rights and interest in and to the following property (collectively, the "Leased Property"): (a) the real property described on Exhibit A attached hereto (the "Land"); (b) all buildings, structures, Fixtures (as hereinafter defined) and other improvements of every kind including all alleyways and connecting tunnels, crosswalks, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures presently or hereafter situated upon the Land, and Capital Additions (collectively, the "Leased Improvements"); (c) all easements, rights and appurtenances relating to the Land and the Leased Improvements; (d) all permanently affixed equipment, machinery, fixtures and other items of real and/or personal property, including all components thereof, now and hereafter located in, on or used in connection with, and permanently affixed to or incorporated into the Leased Improvements, including all furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air-cooling and air conditioning systems and apparatus, sprinkler systems and fire and theft protection equipment, carpet, and moveable or immovable walls or partitions, all of which are hereby deemed by the parties hereto to constitute real estate, together with all replacements, modifications, alterations and additions thereto (collectively the "Fixtures"); (e) to the extent permitted by law, all permits, approvals, and other intangible property or any interest therein now or hereafter owned or held by Lessor in connection with the Leased Property; and (f) all site plans, surveys, soil and substrata studies, architectural drawings, plans and specifications, engineering plans and studies, floor plans, landscape plans, and other plans and studies that relate to the Land or the Leased Improvements and are in Lessor's possession or control. SUBJECT, HOWEVER, to the matters set forth on Exhibit B attached hereto (the "Permitted Exceptions"), to have and to hold for a fixed term of five (5) years (the "Fixed 7 Term") commencing on October 12, 1995 (the "Commencement Date") and ending at midnight on the last day of the sixtieth (60th) month after the Commencement Date, with four (4) successive optional renewal periods of five (5) years each. ARTICLE II RENT 2.1 MINIMUM RENT AND ADJUSTMENTS TO MINIMUM RENT. Lessee shall pay to Lessor, without notice, demand, set off or counterclaim, in advance in lawful money of the United States of America, at Lessor's address set forth herein or at such other place or to such other person, firms or corporations as Lessor from time to time may designate in writing, Minimum Rent (the "Minimum Rent") for the Leased Property, in the annual sum of $453,900.00 payable in advance in twelve (12) equal, consecutive monthly installments of $37,825.00 each, on the first day of each calendar month of the Fixed Term. Minimum Rent shall be prorated as to any partial month, and is subject to adjustment for each Extended Term as provided in Article XXXIV. 2.2 [INTENTIONALLY DELETED] 2.3 ADDITIONAL CHARGES. Lessee will also pay and discharge as and when due (a) all other amounts, liabilities, obligations and Impositions which Lessee assumes or agrees to pay under this Lease, and (b) in the event of any failure on the part of Lessee to pay any of those items referred to in clause (a) above, Lessee will also promptly pay and discharge every fine, penalty, interest and cost which may be added for non-payment or late payment of such items (the items referred to in clauses (a) and (b) above being referred to herein collectively as the "Additional Charges"), and Lessor shall have all legal, equitable and contractual rights, powers and remedies provided in this Lease, by statute or otherwise, in the case of non-payment of the Additional Charges, as well as the Minimum Rent. If any installment of Minimum Rent or Additional Charges (but only as to those Additional Charges which are payable directly to Lessor) shall not be paid within ten (10) days after the date when due, Lessee will pay Lessor on demand, as Additional Charges, a late charge equal to five (5%) percent of the overdue installment to cover the expenses associated with such late payment plus interest (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment, from the due date when due to the date of payment in fall thereof. To the extent that Lessee pays any Additional Charges to Lessor pursuant to any requirement of this Lease, Lessee shall be relieved of its obligation to pay such Additional Charges to the entity to which such Additional Charges would otherwise be due. 2.4 NET LEASE. The Rent shall be paid absolutely net to Lessor, so that this Lease shall yield to Lessor the full amount of the installments of Minimum Rent and the payments of Additional Charges throughout the Term but subject to any provisions of this Lease which expressly provide for payments by Lessor or the adjustment of the Rent or other charges. ARTICLE III IMPOSITIONS 2 8 3.1 PAYMENT OF IMPOSITIONS. Subject to Article XI relating to permitted contests, Lessee will pay, or cause to be paid, all Impositions before any fine, penalty, interest or cost may be added for nonpayment, such payments to be made directly to the taxing authorities where feasible, and Lessee will promptly, upon request, furnish to Lessor copies of official receipts or other satisfactory proof evidencing such payments. Lessee's obligation to pay such Impositions and the amount thereof shall be deemed absolutely fixed upon the date such Impositions become a lien upon the Leased Property or any part thereof. If any such Imposition may lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay such installments during the Term hereof as the same become due and before any fine, penalty, premium, further interest or cost may be added thereto. Lessor, at its expense, shall, to the extent permitted by applicable law, prepare and file all tax returns and reports as may be required by governmental authorities in respect of Lessor's net income, gross receipts and franchise taxes. Lessee, at its expense, shall, to the extent permitted by applicable laws and regulations, prepare and file all other tax returns and reports in respect of any Imposition as may be required by governmental authorities. If any refund shall be due from any taxing authority in respect of any Imposition paid by Lessee, the same shall be paid over to or retained by Lessee if no Event of Default shall have occurred hereunder and be continuing. Any such funds retained by Lessor due to an Event of Default shall be applied as provided in Article XV. Lessor and Lessee shall, upon request of the other, provide such data as is maintained by the party to whom the request is made with respect to the Leased Property as may be necessary to prepare any required returns and reports. In the event governmental authorities classify any property covered by this Lease as personal property, Lessee shall file all personal property tax returns in such jurisdictions where filing is required. Lessor and Lessee will provide the other party, upon request, with cost and depreciation records necessary for filing returns for any property so classified as personal property. Where Lessor is legally required to file personal property tax returns, and Lessee is obligated for the same hereunder, Lessee will be provided with copies of assessment notices in sufficient time for Lessee to file a protest. Lessee may, upon giving 30 days' prior written notice to Lessor, at Lessee's option and at Lessee's sole cost and expense, protest, appeal, or institute such other proceedings as Lessee may deem appropriate to effect a reduction of real estate or personal property assessments and Lessor, if requested by Lessee and at Lessee's expense as aforesaid, shall fully cooperate with Lessee in such protest, appeal, or other action. Lessor will cooperate with Lessee in order that Lessee may fulfill its obligations hereunder, including the execution of any instruments or documents reasonably requested by Lessee. 3.2 PRORATION OF IMPOSITIONS. Impositions imposed in respect of the tax-fiscal period during which the Term terminates shall be prorated between Lessor and Lessee, whether or not such Imposition is imposed before or after such termination, and Lessee's and Lessor's obligation to pay their prorated shares thereof shall survive such termination. 3.3 UTILITY CHARGES. Lessee will contract for, in its own name, and will pay or cause to be paid all charges for, electricity, power, gas, oil, water and other utilities used on the Leased Property during the Term. 3 9 3.4 INSURANCE PREMIUM. Lessee will contract for, in its own name, and will pay or cause to be paid all premiums for, the insurance coverage required to be maintained by Lessee pursuant to Article XII during the Term. ARTICLE IV NO TERMINATION Except as provided in this Lease, Lessee shall remain bound by this Lease in accordance with its terms and shall neither take any action without the consent of Lessor to modify, surrender or terminate the same, nor seek nor be entitled to any abatement, deduction, deferment or reduction of Rent, or set-off against the Rent, nor shall the respective obligations of Lessor and Lessee be otherwise affected by reason of (a) any damage to, or destruction of, the Leased Property or any portion thereof from whatever cause or any Taking of the Leased Property or any portion thereof, (b) the lawful or unlawful prohibition of, or restriction upon, Lessee's use of the Leased Property, or any portion thereof, or the interference with such use by any person, corporation, partnership or other entity, or by reason of eviction by paramount title, (c) any claim which Lessee has or might have against Lessor or by reason of any default or breach of any warranty by Lessor under this Lease or any other agreement between Lessor and Lessee or to which Lessor and Lessee are parties, (d) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Lessor or any assignee or transferee of Lessor, or (e) for any other cause whether similar or dissimilar to any of the foregoing. Lessee hereby specifically waives all rights arising from any occurrence whatsoever which may now or hereafter be conferred upon it by law to (i) modify, surrender or terminate this Lease or quit or surrender the Leased Property or any portion thereof, or (ii) entitle Lessee to any abatement, reduction, suspension or deferment of the Rent or other sums payable by Lessee hereunder, except as otherwise specifically provided in this Lease. The obligations of Lessor and Lessee hereunder shall be separate and independent covenants and agreements and the Rent and all other sums payable by Lessee hereunder shall continue to be payable in all events unless the obligations to pay the same shall be terminated pursuant to the express provisions of this Lease. ARTICLE V OWNERSHIP OF LEASED PROPERTY AND LESSEE'S PERSONAL PROPERTY 5.1 OWNERSHIP OF THE PROPERTY. Lessee acknowledges that the Leased Property is the property of Lessor and that Lessee has only the right to the possession and use of the Leased Property upon the terms and conditions of this Lease. 5.2 LESSEE'S PERSONAL PROPERTY. Lessee may (and shall as provided hereinbelow), at its expense, install, affix or assemble or place on any parcels of the Land or in any of the Leased Improvements any items of the Lessee's Personal Property, and may remove, replace or substitute for the same from time to time in the ordinary course of Lessee's business, and Lessee may, subject to the conditions set forth below, remove the same upon the expiration or any prior termination of this Lease. Lessee shall provide and maintain during the entire Term all such Lessee's Personal Property as shall be necessary in order to operate the Facility in compliance with all applicable Legal Requirements and Insurance Requirements and otherwise 4 10 in accordance with customary practice in the industry for the Primary Intended Use. All of the Lessee's Personal Property not removed by Lessee within sixty (60) days following the expiration or earlier termination of this Lease shall be considered abandoned by Lessee and may be appropriated, sold, destroyed or otherwise disposed of by Lessor without first giving notice thereof to Lessee, without any payment to Lessee and without any obligation to account to Lessee therefor. Lessee will, at its expense, restore the Leased Property at the expiration or earlier termination of this Lease to the condition required by Section 8.1 (d), including repair of all damage to the Leased Property caused by the removal of the Lessee's Personal Property whether effected by Lessee or Lessor, normal wear and tear excepted. ARTICLE VI CONDITION AND USE OF LEASED PROPERTY 6.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and delivery of possession of the Leased Property and that Lessee has examined and otherwise acquired knowledge of the condition of the Leased Property prior to the execution and delivery of this Lease and has found the same to be in good order and repair and satisfactory for its purpose hereunder. Lessee is leasing the Leased Property "as is" in its present condition. Lessee waives any claim or action against Lessor in respect of the condition of the Leased Property. Lessor makes no warranty or representation, express or implied, in respect of the Leased Property or any part thereof, either as to its fitness for use, suitability, design or condition for any particular use or purpose or otherwise, as to quality of the material or workmanship therein, latent or patent, it being agreed that all such risks are to be borne by Lessee. Lessee acknowledges that the Leased Property has been inspected by Lessee and is satisfactory to it. 6.2 USE OF THE LEASED PROPERTY. (a) After the Commencement Date and during the entire Term, Lessee shall use or cause to be used the Leased Property and the improvements thereon as an office building and for such other uses as may be necessary in connection with or incidental to such use (the "Primary Intended Use"). Lessee shall not use the Leased Property or any portion thereof for any other use without the prior written consent of Lessor, which consent shall not be unreasonably withheld or delayed. (b) Lessee covenants that it will obtain and maintain all licenses and approvals needed to use and operate the Leased Property and the Facility for the Primary Intended Use in compliance with all applicable Legal Requirements. (c) Lessee covenants and agrees that during the Term it will use its best efforts to operate continuously the Leased Property in accordance with its Primary Intended Use. (d) Lessee shall not commit or suffer to be committed any waste on the Leased Property, or in the Facility, nor shall Lessee cause or permit any nuisance thereon. (e) Lessee shall neither suffer nor permit the Leased Property or any portion thereof, including any Capital Addition, to be used in such a manner as (i) might reasonably tend to impair Lessor's (or Lessee's, as the case may be) title thereto or to any portion thereof, or (ii) 5 11 may reasonably result in a claim or claims of adverse usage or adverse possession by the public, as such, or of implied dedication of the Leased Property or any portion thereof. (f) Lessee will not allow or utilize any Hazardous Materials on the Leased Property and will not permit any contamination which may require remediation under any applicable Hazardous Materials Law. 6.3 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time, at the request of Lessee and at Lessee's cost and expense, but subject to the approval of Lessor (a) grant easements and other rights in the nature of easements, (b) release existing easements or other rights in the nature of easements which are for the benefit of the Leased Property, (c) dedicate or transfer unimproved portions of the Leased Property for road, highway or other public purposes, (d) execute petitions to have the Leased Property annexed to any municipal corporation or utility district, (e) execute amendments to any covenants and restrictions affecting the Leased Property and (f) execute and deliver to any person any instrument appropriate to confirm or effect such grants, releases, dedications and transfers (to the extent of its interest in the Leased Property), but only upon delivery to Lessor of an Officer's Certificate stating (and such other information as Lessor may reasonably require confirming) that such grant, release, dedication, transfer, petition or amendment is required or beneficial for and not detrimental to the proper conduct of the business of Lessee on the Leased Property and does not reduce its value. ARTICLE VII LEGAL, INSURANCE AND FINANCIAL REQUIREMENTS 7.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS. Subject to Article XI relating to permitted contests, Lessee, at its expense, will promptly (a) comply with all Legal Requirements and Insurance Requirements in respect of the use, operation, maintenance, repair and restoration of the Leased Property, whether or not compliance therewith shall require structural change in any of the Leased Improvements or interfere with the use and enjoyment of the Leased Property, and (b) directly or indirectly with the cooperation of Lessor, but at Lessee's sole cost and expense, procure, maintain and comply with all licenses, permits and other authorizations required for (i) any use of the Leased Property then being made, and for (ii) the proper erection, installation, operation and maintenance of the Leased Improvements or any part thereof, including any Capital Additions. 7.2 LEGAL REQUIREMENT COVENANTS. Lessee covenants and agrees that the Leased Property shall not be used for any unlawful purpose. Lessee shall, directly or indirectly with the cooperation of Lessor, but at Lessee's sole cost and expense, acquire and maintain all licenses, certificates, permits and other authorizations and approvals needed to operate the Leased Property in its customary manner for the Primary Intended Use and any other use conducted on the Leased Property as may be permitted from time to time hereunder. Lessee further covenants and agrees that Lessee's use of the Leased Property and Lessee's maintenance, alteration, and operation of the same, and all parts thereof, shall at all times conform to all applicable Legal Requirements. 7.3 SUPPORT FOR PAYMENT OBLIGATIONS. Lessee covenants and agrees that it shall obtain and maintain in effect at all times during the Term, as further assurance of the payment 6 12 by Lessee of all amount of Rent and other obligations payable by Lessee hereunder, a standby letter of credit, issued for the account of Lessee or a wholly owned subsidiary of Lessee, for the benefit of Lessor, in an amount available to be drawn at least equal to $1,600,000 or such lesser amount as Lessor or the Facility Mortgagee (as hereinafter defined) may specify, which letter of credit shall, among other things, be assignable for security to the Facility Mortgagee and otherwise be substantially in the form of the standby letter of credit issued by Dai-Ichi Kangyo Bank, Ltd., on or about the Closing Date, in satisfaction of Lessee's obligations pursuant to this Section 7.3. ARTICLE VIII REPAIRS, RESTRICTIONS 8.1 MAINTENANCE AND REPAIR. (a) Lessee, at its expense, will keep the Leased Property and all private roadways, sidewalks and curbs appurtenant thereto in good order and repair (whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, the elements, the age of the Leased Property or any portion thereof), and, except as otherwise provided in Articles XIII and XIV, with reasonable promptness, will make all necessary and appropriate repairs thereto of every kind and nature, whether interior or exterior, structural or non-structural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to or after the commencement of the Term of this Lease (concealed or otherwise). All repairs shall, to the extent reasonably achievable, be at least equivalent in quality to the original work and shall be accomplished by Lessee or a party selected by Lessee. Lessee will not take or omit to take any action the taking or omission of which might materially impair the value or usefulness of the Leased Property or any part thereof for the Primary Intended Use. (b) Lessor shall not under any circumstances be required to build or rebuild any improvements on the Leased Property, or to make any repairs, replacements, alterations, restorations, or renewals of any nature or description to the Leased Property, whether ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto in connection with this Lease, or to maintain the Leased Property in any way. (c) Nothing contained in this Lease and no action or inaction by Lessor shall be construed as (i) constituting the consent or request of Lessor, expressed or implied, to any contractor, subcontractor, laborer, materialman or vendor to or for the performance of any particular labor or services or the furnishing of any particular materials or other property for the construction, alteration, addition, repair or demolition of or to the Leased Property or any part thereof, or (ii) giving Lessee any right, power or permission to contract for or permit the performance of any labor or services or the finishing of any materials or other property in such fashion as would permit the making of any claim against Lessor in respect thereof or to make any agreement that may create, or in any way be the basis for, any right, title, interest, lien, claim or other encumbrance upon the estate of Lessor in the Leased Property or any portion thereof. 7 13 (d) Unless Lessor shall convey any of the Leased Property to Lessee pursuant to the provisions of this Lease, Lessee will, upon the expiration or prior termination of this Lease, vacate and surrender the Leased Property to Lessor in the condition in which the Leased Property was originally received from Lessor and except as repaired, rebuilt, restored, altered or added to as permitted or required by the provisions of this Lease, except for ordinary wear and tear (subject to the obligation of Lessee to maintain the Property in good order and repair during the entire Term), damage caused by the gross negligence or willful acts of Lessor, and damage or destruction described in Article XIII or resulting from a Taking described in Article XIV which Lessee is not required by the terms of this Lease to repair or restore. 8.2 [INTENTIONALLY DELETED] 8.3 ENCROACHMENTS; RESTRICTIONS. If any of the Leased Improvements shall, at any time, encroach upon any property, street or right-of-way adjacent to the Leased Property, or shall violate the agreements or conditions contained in any applicable Legal Requirement, lawful restrictive covenant or other agreement affecting the Leased Property, or any part thereof, or shall impair the rights of others under any easement or right-of-way to which the Leased Property is subject, then promptly upon the request of Lessor, Lessee shall, at its expense, subject to its right to contest the existence of any encroachment, violation or impairment, (a) obtain valid and effective waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation or impairment, whether the same shall affect Lessor or Lessee, or (b) make such changes in the Improvements, and take such other actions, as Lessee in the good faith exercise of its judgment deems reasonably practicable, to remove such encroachment, or to end such violation or impairment, including, if necessary, the alteration of any of the Leased Improvements, and in any event take all such actions as may be necessary in order to be able to continue the operation of the Facility for the Primary Intended Use substantially in the manner and to the extent the Facility was operated prior to the assertion of such violation or encroachment. Notwithstanding the foregoing, Lessee shall not be required to remedy any condition existing as of the Commencement Date. Any such alteration shall be made in conformity with the applicable requirements of Article IX. Lessee's obligations under this Section 8.3 shall be in addition to and shall in no way discharge or diminish any obligation of any insurer under any policy of title or other insurance, and Lessee shall be entitled to a credit for any sums recovered by Lessor under any such policy of title or other insurance. ARTICLE IX CAPITAL ADDITIONS 9.1 CONSTRUCTION OF CAPITAL ADDITIONS TO THE LEASED PROPERTY. (a) If no Event of Default shall have occurred and be continuing, Lessee shall have the right, upon and subject to the terms and conditions set forth below, to construct or install, at Lessee's sole cost and expense, Capital Additions on the Leased Property with the prior written consent of Lessor; provided that Lessee shall not be permitted to create any Encumbrance on the Leased Property in connection with such Capital Addition. Prior to commencing construction of any Capital Addition, Lessee shall submit to Lessor in writing a proposal setting forth in reasonable detail any proposed Capital Addition and shall provide to 8 14 Lessor such plans and specifications, permits, licenses, contracts and other information concerning the proposed Capital Addition as Lessor may reasonably request. (b) No Capital Addition shall be made which would tie in or connect any Leased Improvements on the Leased Property with any other improvements on property adjacent to the Leased Property (and not part of the Land covered by this Lease) including tie-ins of buildings or other structures or utilities, unless Lessee shall have obtained the prior written approval of Lessor, which approval shall not be unreasonably withheld. All proposed Capital Additions shall be architecturally integrated and consistent with the Leased Property. 9.2 [INTENTIONALLY DELETED] 9.3 [INTENTIONALLY DELETED] 9.4 TITLE TO CAPITAL ADDITIONS. Title to all Capital Additions, modifications and improvements shall, without payment by Lessor, be included under the terms of this Lease and, upon expiration or earlier termination of this Lease, shall pass to and become the property of Lessor. 9.5 SALVAGE. All materials which are scrapped or removed in connection with the making of either Capital Additions permitted by Section 9.1 or repairs required by Article VIII shall be or become the property of Lessor; provided that Lessor may require Lessee to dispose of such materials and remit the net proceeds thereof within 15 days of such disposal. ARTICLE X LIENS Subject to the provisions of Article XI relating to permitted contests, Lessee will not directly or indirectly create or suffer to exist and will promptly discharge at its expense any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property or any attachment, levy, claim or encumbrance in respect of the Rent, not including, however, (a) this Lease, (b) the matters, if any, set forth in Exhibit B attached hereto, (c) restrictions, liens and other encumbrances which are consented to in writing by Lessor, or any easements granted pursuant to the provisions of Section 6.3 of this Lease, (d) liens for those taxes of Lessor which Lessee is not required to pay hereunder, (e) subleases permitted by Article XIII, (f) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as (1) the same are not yet payable or are payable without the addition of any fine or penalty or (2) such liens are in the process of being contested as permitted by Article XI, (g) liens of mechanics, laborers, materialmen, suppliers or vendors for sums either disputed or not yet due, provided that (1) any such liens are in the process of being contested as permitted by Article XI and (2) Lessee shall have posted the necessary statutory bond to have the Leased Property released from the proceedings, and (h) any Encumbrance placed on the Leased Property by Lessor. ARTICLE XI PERMITTED CONTESTS 9 15 Lessee, after ten days' prior written notice to Lessor, on its own or on Lessor's behalf (or in Lessor's name), but at Lessee's expense, may contest, by appropriate legal proceedings conducted in good faith and with due diligence, the amount, validity or application, in whole or in part, of any Imposition, Legal Requirement, Insurance Requirement, lien, attachment, levy, encumbrance, charge or claim (collectively "Charge") not otherwise permitted by Article X, which is required to be paid or discharged by Lessee; provided that (a) in the case of an unpaid Charge, the commencement and continuation of such proceedings shall suspend the collection thereof from Lessor and from the Leased Property; (b) Lessee shall have filed any applicable statutory bond which can be filed to release the Leased Property from the lien or proceed or neither the Leased Property nor any Rent therefrom nor any part thereof or interest therein would be in any danger of being sold, forfeited, attached or lost; (c) Lessor would not be in any danger of civil or criminal liability for failure to comply therewith pending the outcome of such proceedings; (d) in the event that any such contest shall involve a sum of money or potential loss in excess of $5,000.00, then Lessee shall deliver to Lessor and its counsel an Officer's Certificate as to the matters set forth in clauses (a), (b) and (c); (e) in the case of an Insurance Requirement, the coverage required by Article XII shall be maintained, and (f) if such contest be finally resolved against Lessor or Lessee, Lessee shall, as Additional Charges due hereunder, promptly pay the amount required to be paid, together with all interest and penalties accrued thereon, or otherwise comply with the applicable Charge; provided further that nothing contained herein shall be construed to permit Lessee to contest the payment of Rent, or any other sums payable by Lessee to Lessor hereunder. Lessor, at Lessee's expense, shall execute and deliver to Lessee such authorizations and other documents as may reasonably be required in any such contest and, if reasonably requested by Lessee or if Lessor so desires and then at its own expense, Lessor shall join as a party therein. Lessor shall do all things reasonably requested by Lessee in connection with such action. Lessee shall indemnify and save Lessor harmless against any liability, cost or expense of any kind that may be imposed upon Lessor in connection with any such contest and any loss resulting therefrom. ARTICLE XII INSURANCE 12.1 GENERAL INSURANCE REQUIREMENTS. During the Term of this Lease, Lessee shall at all times keep the Leased Property, and all property located in or on the Leased Property insured with the kinds and amounts of insurance described below and written by companies reasonably acceptable to Lessor authorized to do insurance business in the state in which the Leased Property is located. The policies must name Lessor as an additional insured and losses shall be payable to Lessor and/or Lessee as provided in Article XIII. In addition, the policies shall name as an additional insured the holder ("Facility Mortgagee") of any mortgage, deed of trust or other security agreement securing any Encumbrance placed on the Leased Property in accordance with the provisions of Article XXXII ("Facility Mortgage"), if any, by way of a standard form of mortgagee's loss payable endorsement. Any loss adjustment in excess of $15,000.00 shall require the written consent of Lessor and each affected Facility Mortgagee. Evidence of insurance shall be deposited with Lessor and, if requested, with any Facility Mortgagee(s). If any provision of any Facility Mortgage which constitutes a first lien on the Leased Property requires deposits of insurance to be made with such Facility Mortgagee, Lessee shall either pay to Lessor monthly the amounts required and Lessor shall transfer such amounts to such Facility Mortgagee or, pursuant to written direction by Lessor, Lessee shall make such 10 16 deposits directly with such Facility Mortgagee. The policies on the Leased Property, including the Leased Improvements, the Fixtures and the Lessee's Personal Property, shall insure against the following risks: (a) Loss or damage by fire, vandalism and malicious mischief, extended coverage perils commonly known as "All Risk" and all physical loss perils, including sprinkler leakage, in an amount not less than 100% of the then Full Replacement Cost thereof (as defined below in Section 12.2) with a replacement cost endorsement sufficient to prevent Lessee from becoming a co-insurer together with an agreed value endorsement; (b) Loss or damage by earthquake; (c) Claims for personal injury or property damage under a policy of comprehensive general public liability insurance including insurance against assumed or contractual liability including indemnities under this Lease, with amounts not less than $1,500,000.00 per occurrence; provided that if it becomes customary for tenants occupying similar buildings in the same City where the Leased Property is located to be required to provide liability coverage with higher limits than the foregoing, then Lessee shall provide Lessor with an insurance policy with coverage limits that are not less than such customary limits; (d) Flood (when the Leased Property is located in whole or in part within a designated flood plain area) and such other hazards and in such amounts as may be customary for comparable properties in the area and if available from insurance companies authorized to do business in the state in which the Leased Property is located; and (e) If Lessee shall engage or cause to be engaged any contractor to perform work on the Leased Property, Lessee shall require such contractor to carry and maintain insurance coverage comparable to the foregoing requirements, at no expense to Lessor; provided that Lessee may allow any such contractor to carry or maintain alternative coverage in reasonable amounts upon Lessor's prior written consent, which shall not be unreasonably withheld. 12.2 REPLACEMENT COST. The term "Full Replacement Cost" as used herein shall mean the actual replacement cost of the Facility from time to time, including increased cost of construction endorsement, less exclusions provided in the normal fire insurance policy. In the event Lessor or Lessee believes that the Full Replacement Cost has increased or decreased at any time during the Term, it shall have the right at its own expense to have such Full Replacement Cost redetermined by the insurance company which is then providing the largest amount of casualty insurance carried on the Leased Property, hereinafter referred to as the "impartial appraiser". The party desiring to have the Full Replacement Cost so redetermined shall forthwith, on receipt of such determination by the impartial appraiser, give written notice thereof to the other party hereto. The determination of such impartial appraiser shall be final and binding on the parties hereto, and Lessee shall forthwith increase, or may decrease, the amount of the insurance carried pursuant to this Article to the amount so determined by the impartial appraiser. In the event such redetermination discloses that the existing insurance is less than required, Lessee shall pay the fee, if any, of the impartial appraiser. 11 17 12.3 ADDITIONAL INSURANCE. In addition to the insurance described above, Lessee shall maintain such additional insurance as may be reasonably required from time to time by any Facility Mortgagee or any applicable Legal Requirement and shall at all times maintain adequate worker's compensation insurance coverage for all persons employed by Lessee on the Leased Property, in accordance with all applicable Legal Requirements. 12.4 WAIVER OF SUBROGATION. All insurance policies carried by either party covering the Leased Property, the Fixtures, the Facility and/or the Lessee's Personal Property, including contents, fire and casualty insurance, shall expressly waive any right of subrogation on the part of the insurer against the other party. The parties hereto agree that their policies will include such a waiver clause or endorsement so long as the same is obtainable without extra cost, and in the event of such an extra charge the other party, at its election, may request and pay the same, but shall not be obligated to do so. 12.5 FORM OF INSURANCE. All of the policies of insurance referred to in this Section shall be written in form reasonably satisfactory to Lessor by insurance companies reasonably satisfactory to Lessor. Lessee shall pay all premiums therefor, and deliver such policies or certificates thereof to Lessor prior to their effective date (and, with respect to any renewal policy, at least 30 days prior to the expiration of the existing policy). In the event of the failure of Lessee to effect such insurance in the names herein called for or to pay the premiums therefor, or to deliver such policies or certificates thereof to Lessor at the times required, Lessor shall be entitled, but shall have no obligation, to enact such insurance and pay the premiums therefor, which premiums shall be repayable by Lessee to Lessor upon written demand therefor, and failure to repay the same shall constitute an Event of Default within the meaning of Section 15.1(c). Each insurer mentioned in this Section shall agree, by endorsement on the policy or policies issued by it, or by independent instrument furnished to Lessor, that it will give to Lessor 30 days' written notice before the policy or policies in question shall be altered, allowed to expire or canceled. 12.6 CHANGE IN LIMITS. In the event that Lessor shall at any time reasonably and in good faith believe the limits of the personal injury, property damage or general public liability insurance then carried to be insufficient, the parties shall endeavor to agree on the proper and reasonable limits for such insurance to be carried and such insurance shall thereafter be carried with the limits thus agreed on until further change pursuant to the provisions of this Section. If the parties shall be unable to agree thereon, the proper and reasonable limits for such insurance shall be determined by an impartial third party selected by the parties. Such redeterminations, whether made by the parties or by arbitration, shall be made no more frequently than every two years. Nothing herein shall permit the amount of insurance to be reduced below the amount or amounts reasonably required by any Facility Mortgagee. 12.7 BLANKET POLICY. Notwithstanding anything to the contrary contained in this Section, Lessee's obligations to carry the insurance provided for herein may be brought within the coverage of a so-called blanket policy or policies of insurance carried and maintained by Lessee; provided that the coverage afforded Lessor will not be reduced or diminished or otherwise be different from that which would exist under separate policies meeting all other requirements of this Lease; provided further that the requirements of this Article XII are otherwise satisfied. 12 18 12.8 NO SEPARATE INSURANCE. Lessee shall not, on Lessee's own initiative or pursuant to the request or requirement of any third party, take out separate insurance concurrent in form or contributing in the event of loss with that required in this Article XII to be furnished by, or which may reasonably be required by a Facility Mortgagee to be furnished by, Lessee, or increase the amounts of any then existing insurance required under this Article XII by securing an additional policy or additional policies, unless all parties having an insurable interest in the subject matter of the insurance, including in all cases Lessor and all Facility Mortgagees, are included therein as additional insureds and the loss is payable under said insurance in the same manner as losses are required to be payable under this Lease. Lessee shall immediately notify Lessor of the taking out of any such separate insurance or of the increasing of any of the amounts of the then-existing insurance required under this Article XII by securing an additional policy or additional policies. ARTICLE XIII FIRE AND CASUALTY 13.1 INSURANCE PROCEEDS. All proceeds payable by reason of any loss or damage to the Leased Property (except for any business interruption insurance or any proceeds pursuant to Section 13.4, or any portion thereof), and insured under any policy of insurance required by Article XII of this Lease shall be paid to Lessor and held by Lessor in trust (subject to the provisions of Section 13.7) and shall be made available for reconstruction or repair, as the case may be, of any damage to or destruction of the Leased Property, or any portion thereof, and shall be paid out by Lessor from time to time for the reasonable cost of such reconstruction or repair in accordance with this Article XIII after Lessee has expended an amount equal to or exceeding the deductible under any applicable insurance policy. Any excess proceeds of insurance remaining after the completion of the restoration or reconstruction of the Leased Property shall be retained by Lessor free and clear upon completion of any such repair and restoration. In the event neither Lessor nor Lessee is required or elects to repair and restore the Leased Property, then all such insurance proceeds shall be retained by Lessor. 13.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY INSURANCE. (a) Except as provided in Section 13.7, if during the Term, the Facility is totally or partially destroyed from a risk covered by the insurance described in Article XII and the Facility thereby is rendered Unsuitable for its Primary Intended Use, Lessor shall apply all proceeds payable with respect thereto to restore the Facility to substantially the same condition as existed immediately before the damage or destruction. Such damage or destruction shall not terminate this Lease. (b) Except as provided in Section 13.7, if during the Term, the Facility is partially destroyed from a risk covered by the insurance described in Article XII, but the Facility is not thereby rendered Unsuitable for its Primary Intended Use, Lessee shall restore the Facility to substantially the same condition as existed immediately before the damage or destruction. Such damage or destruction shall not terminate this Lease. 13.3 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY INSURANCE. Except as provided in Section 13.7 below, if during the Term the Facility is totally 13 19 or materially destroyed from a risk (including earthquake) not covered by the insurance described in Article XII, whether or not such damage or destruction renders the Facility Unsuitable for Its Primary Intended Use, Lessor shall restore the Facility to substantially the same condition it was in immediately before such damage or destruction and such damage or destruction shall not terminate this Lease. 13.4 LESSEE'S PROPERTY. Lessee shall use any insurance proceeds payable by reason of any loss of or damage to any of the Lessee's Personal Property to restore such personal property to the Leased Property in compliance with all applicable Legal Requirements. 13.5 RESTORATION OF CAPITAL ADDITIONS PAID FOR BY LESSEE. If Lessor is required to restore the Facility as provided in Sections 13.2 or 13.3, Lessor shall also restore all Capital Additions paid for by Lessee. Insurance proceeds payable by reason of damage to Capital Additions paid for Lessee shall be paid to Lessor and Lessor shall hold such insurance proceeds in trust to pay the cost of repairing or replacing such Capital Additions. 13.6 NO ABATEMENT OF RENT. This Lease shall remain in full force and effect and Lessee's obligation to make rental payments and to pay all other charges required by this Lease shall remain unabated during any period required for repair and restoration. 13.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Sections 13.2 or 13.3 to the contrary, if damage to or destruction of the Facility occurs during the last 12 months of the Term, and if such damage or destruction cannot be fully repaired and restored within the lesser of (i) six months or (ii) the period remaining in the Term immediately following the date of loss, either party shall have the right to terminate this Lease by giving notice to the other within 30 days after the date of damage or destruction, in which event Lessor shall be entitled to retain the insurance proceeds and Lessee shall pay to Lessor on demand the amount of any deductible or uninsured loss arising in connection therewith; provided that any such notice given by Lessor shall be void and of no force and effect if Lessee exercises an available option to extend the Term for one Extended Term, or one additional Extended Term, as the case may be, within 30 days following receipt of such termination notice. 13.8 WAIVER. Lessee hereby waives any statutory or common law rights of termination which may arise by reason of any damage or destruction of the Facility. ARTICLE XIV CONDEMNATION 14.1 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any Taking of all or any part of the Leased Property or any interest in this Lease by Condemnation, the rights and obligations of the parties shall be determined by this Article XIV. 14.2 TOTAL TAKING. If there is a Taking of all of the Leased Property by Condemnation, this Lease shall terminate on the Date of Taking, and the Minimum Rent and all Additional Charges paid or payable hereunder shall be apportioned and paid to the Date of Taking. 14 20 14.3 PARTIAL TAKING. If there is a Taking of a portion of the Leased Property by Condemnation such that the Facility is not thereby rendered Unsuitable for Its Primary Intended Use, this Lease shall remain in effect. If, however, the Facility is thereby rendered Unsuitable for Its Primary Intended Use, Lessee shall have the right (a) to take such proceeds of any Award as shall be necessary and restore the Facility, at its own expense, to the extent possible, to substantially the same condition as existed immediately before the partial Taking, or (b) to offer to take the proceeds from the Award and to acquire the Leased Property from Lessor for a purchase price equal to the Fair Market Value of the Leased Property immediately prior to such partial Taking, in which event this Lease shall terminate upon payment of the purchase price, or (c) terminate this Lease. Lessee shall exercise its option by giving Lessor notice thereof within 60 days after Lessee receives notice of the Taking. In the event Lessor does not accept Lessee's offer to so purchase within 30 days after receipt of the notice described in the preceding sentence, Lessee may either (a) withdraw its offer to purchase the Leased Property and proceed to restore the Facility, to the extent possible, to substantially the same condition as existed immediately before the partial Taking, or (b) terminate the offer and this Lease by written notice to Lessor. 14.4 RESTORATION. If there is a partial Taking of the Leased Property and this Lease remains in full force and effect pursuant to Section 14.3, Lessee shall accomplish all necessary restoration. 14.5 AWARD DISTRIBUTION. In the event Lessor accepts Lessee's offer to purchase the Leased Property, the entire Award shall belong to Lessee and Lessor agrees to assign to Lessee all of its rights thereto. Except as otherwise provided in Section 14.3 above, in any other event, the entire Award shall belong to and be paid to Lessor, subject to the rights of the Facility Mortgagee. If Lessee is required or elects to restore the Facility, Lessor agrees that, subject to the rights of the Facility Mortgagee, its portion of the Award shall be used for such restoration and it shall hold such portion of the Award in trust, for application to the cost of the restoration. 14.6 TEMPORARY TAKING. The Taking of the Leased Property, or any part thereof, by military or other public authority shall constitute a Taking by Condemnation only when the use and occupancy by the Taking authority has continued for longer than six months. During any such six (6) month period all the provisions of this Lease shall remain in full force and effect and the Rent shall not be abated or reduced during such period of Taking. ARTICLE XV DEFAULT 15.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute events of default (individually, an "Event of Default" and, collectively, "Events of Default") hereunder: (a) [INTENTIONALLY DELETED] (b) if Lessee shall fail to make a payment of the Rent payable by Lessee under this Lease when the same becomes due and payable and such failure continues for a period of ten (10) days after written notice from Lessor to Lessee or, after Lessor has provided such ten (10) 15 21 days' prior written notice twice in any twelve (12) month period, then if Lessee shall fail to make a payment of the Rent payable under this Lease when the same becomes due and payable, or (c) if Lessee shall fail to deliver to Lessor not later than 30 days prior to the expiration date of the standby letter of credit then in effect pursuant to Section 7.3, an extension or renewal or replacement standby letter of credit, conforming to the provisions of Section 7.3 and issued by a commercial bank in the United States acceptable to the Lessor and the Facility Mortgagee, if any, in their reasonable judgment, or otherwise shall fail to maintain in effect for the benefit of Lessor a standby letter of credit in accordance with the provisions of Section 7.3, or (d) if Lessee shall: (i) admit in writing its inability to pay its debts generally as they become due, (ii) file a petition in bankruptcy or a petition to take advantage of any insolvency law, (iii) make an assignment for the benefit of its creditors, (iv) consent to the appointment of a receiver of itself or of the whole or any substantial part of its property, or (v) file a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof, or (e) if Lessee shall fail to rebuild or purchase the Leased Property when required to do so as a result of damage or condemnation and such failure shall continue for a period of thirty (30) days after written notice from Lessor to Lessee. 15.2 REMEDIES. If an Event of Default shall have occurred, Lessor shall have the right at its election, then or at any time thereafter, to pursue any one or more of the following remedies, in addition to any remedies which may be permitted by law or by other provisions of this Lease, without further notice or demand, except as hereinafter provided: (a) Without any notice or demand whatsoever, Lessor may take any one or more actions permissible at law to ensure performance by Lessee of Lessee's covenants and obligations under this Lease. In this regard, it is agreed that if Lessee abandons or vacates the Leased Property, Lessor may enter upon and take possession of such Leased Property in order to protect it from deterioration and continue to demand from Lessee the monthly rentals and other charges provided in this Lease. Lessor shall use reasonable efforts to relet but shall have no absolute obligation to relet. If Lessor does, at its sole discretion, elect to relet the Leased Property, such action by Lessor shall not be deemed as an acceptance of Lessee's surrender of the Leased Property unless Lessor expressly notifies Lessee of such acceptance in writing pursuant to Section 15.2(b), Lessee hereby acknowledging that Lessor shall otherwise be 16 22 reletting as Lessee's agent. It is further agreed in this regard that in the event of any Event of Default described in this Section 15.2, Lessor shall have the right to enter upon the Leased Property and do whatever Lessee is obligated to do under the terms of this Lease; and Lessee agrees to reimburse Lessor on demand for any reasonable expenses which Lessor may incur in thus effecting compliance with Lessee's obligations under this Lease, and further agrees that Lessor shall not be liable for any damages resulting to the Lessee from such action provided that Lessor is not negligent. (b) Lessor may terminate this Lease by written notice to Lessee, in which event Lessee shall immediately surrender the Leased Property to Lessor, and if Lessee fails to do so, Lessor may, without prejudice to any other remedy which Lessor may have for possession or arrearage in Rent (including any interest which may have accrued pursuant to Section 2.3 of this Lease or otherwise), enter upon and take possession of the Leased Property and expel or remove Lessee and any other person who may be occupying said premises or any part thereof. In addition, Lessee agrees to pay to Lessor on demand the amount of all loss and damage which Lessor may suffer by reason of any termination effected pursuant to this Section 15.2(b), said loss and damage to be determined, at Lessor's option, by either of the following alternative measures of damages: (i) Although Lessor shall be under no absolute obligation to attempt and shall be obligated only to use reasonable efforts, to relet the Leased Property, until the Leased Property is relet Lessee shall pay to Lessor on or before the first day of each calendar month the monthly rentals and other charges provided in this Lease. After the Leased Property has been relet by Lessor, Lessee shall pay to Lessor on the 10th day of each calendar month the difference between the monthly rentals and other charges provided in this Lease for the preceding calendar month and that actually collected by Lessor for such month. If it is necessary for Lessor to bring suit in order to collect any deficiency, Lessor shall have a right to allow such deficiencies to accumulate and to bring an action on several or all of the accrued deficiencies at one time. Any such suit shall not prejudice in any way the right of Lessor to bring a similar action for any subsequent deficiency or deficiencies. Any amount collected by Lessor from subsequent tenants for any calendar month in excess of the monthly rentals and other charges provided in this Lease shall be credited to Lessee in reduction of Lessee's liability for any calendar month for which the amount collected by Lessor will be less than the monthly rentals and other charges provided in this Lease; but Lessee shall have no right to such excess other than the above described credit; or (ii) When Lessor desires, Lessor may demand a final settlement. Upon demand for a final settlement, Lessor shall have a right to, and Lessee hereby agrees to pay, the difference between the total of all monthly rentals and other charges provided in this Lease for the remainder of the Term and the Fair Market Rental Value of the Leased Property for such period (including a reasonable time to relet the Leased Property), as determined pursuant to the provisions of Article XXVIII hereof, such difference to be discounted to present value at a rate equal to the lowest rate of capitalization (highest present worth) reasonably consistent with industry standards at the time of such determination and allowed by applicable law. 17 23 (c) Lessor may make demand for payment under and apply or retain, as the case may be, the amount then available to be drawn under the standby letter of credit, as its remedy for any damages sustained by Lessor, arising out of termination of the Lease. (d) The rights and remedies of Lessor hereunder are cumulative, and pursuit of any of the above remedies shall not preclude pursuit of any other remedies prescribed in other sections of this Lease and any other remedies provided by law or equity. Forbearance by Lessor to enforce one or more of the remedies herein provided upon an Event of Default shall not be deemed or construed to constitute a waiver of such Event of Default. 15.3 ADDITIONAL EXPENSES. In addition to payments required pursuant to subsections (a) and (b) of Section 15.2 above, Lessee shall compensate Lessor for all reasonable expenses incurred by Lessor in repossessing the Leased Property (including any increase in insurance premiums caused by the vacancy of the Leased Property), all reasonable expenses incurred by Lessor in reletting (including repairs, remodeling, replacements, advertisements and brokerage fees), all reasonable concessions granted to a new tenant upon reletting (including renewal options), all losses incurred by Lessor as a direct or indirect result of Lessee's default (including any appropriate action by a Facility Mortgagee), and a reasonable allowance for Lessor's administrative efforts, salaries and overhead attributable directly or indirectly to Lessee's default and Lessor's pursuing the rights and remedies provided herein and under applicable law. 15.4 WAIVER. If this Lease is terminated pursuant to Section 15.2, Lessee waives, to the extent permitted by applicable law, (a) any right of redemption, reentry or repossession and (b) the benefit of any laws now or hereafter in force exempting property from liability for rent or for debt. 15.5 APPLICATION OF FUNDS. All payments otherwise payable to Lessee which are received by Lessor under any of the provisions of this Lease during the existence or continuance of any Event of Default shall be applied to Lessee's obligations in the order which Lessor may reasonably determine or as may be prescribed by the laws of the state in which the Facility is located. 15.6 NOTICES BY LESSOR. The provisions of this Article XV concerning notices shall be liberally construed insofar as the contents of such notices are concerned, and any such notice shall be sufficient if it shall generally apprise Lessee of the nature and approximate extent of any default, it being agreed that Lessee is in good or better position than Lessor to ascertain the exact extent of any default by Lessee hereunder. ARTICLE XVI LESSOR'S RIGHT TO CURE If Lessee shall fail to make any payment, or to perform any act required to be made or performed under this Lease and to cure the same within the relevant time periods provided in Section 15. 1, Lessor, without waiving or releasing any obligation or Event of Default, may (but shall be under no obligation to) make such payment or perform such act for the account and at the expense of Lessee, and may, to the extent permitted by law, enter upon the Leased Property for such purpose and take all such action thereon as, in Lessor's opinion, may be necessary or 18 24 appropriate therefor. No such entry shall be deemed an eviction of Lessee. All sums so paid by Lessor, together with a late charge thereon (to the extent permitted by law) at the Overdue Rate from the date on which such sums or expenses are paid or incurred by Lessor, and all costs and expenses (including reasonable attorneys' fees and expenses, in each case, to the extent permitted by law) so incurred shall be paid by Lessee to Lessor on demand. The obligations of Lessee and rights of Lessor contained in this Article shall survive the expiration or earlier termination of this Lease. ARTICLE XVII PURCHASE OF THE LEASED PROPERTY In the event Lessee purchases the Leased Property from Lessor pursuant to Section 14.3 of this Lease, Lessor shall, upon receipt from Lessee of the applicable purchase price, together with full payment of any unpaid Rent due and payable with respect to any period ending on or before the date of the purchase and any other amounts owing to Lessor hereunder, deliver to Lessee an appropriate special warranty deed for the Land (in substantially the same form used to convey the Land and Leased Improvements to Lessor) and any other documents reasonably requested by Lessee to convey the interest of Lessor in and to the Leased Property to Lessee, and such other standard documents usually and customarily prepared in connection with such transfers, free and clear of all encumbrances other than (a) those that Lessee has agreed hereunder to pay or discharge, (b) those mortgage liens, if any, which Lessee has agreed in writing to accept and to take title subject to, (c) any other Encumbrances permitted to be imposed on the Leased Property under the provisions of Article XXXII which are assumable at no cost to Lessee, and (d) any matters affecting the Leased Property on or as of the Commencement Date. The difference between the applicable purchase price and the total of the encumbrances assigned or taken subject to shall be paid in cash to Lessor, or as Lessor may direct, in federal or other immediately available funds except as otherwise mutually agreed by Lessor and Lessee. The closing of any such sale shall be contingent upon and subject to Lessee obtaining all required governmental consents and approvals for such transfer. If such sale shall fail to be consummated by reason of the inability of Lessee to obtain all such approvals and consents, any options to extend the Term which otherwise would have expired during the period from the date when Lessee elected or became obligated to purchase the Leased Property until Lessee's inability to obtain the approvals and consents is confirmed shall be deemed to remain in effect for 30 days after the end of such period. All expenses of such conveyance, including the cost of title examination or standard coverage title insurance, attorneys' fees incurred by Lessor in connection with such conveyance, documentary stamps, and transfer taxes, shall be paid by Lessor. Recording fees and similar charges shall be paid for by Lessee. ARTICLE XVIII HOLDING OVER If Lessee shall for any reason remain in possession of the Leased Property after the expiration of the Term or any earlier termination of the Term hereof, such possession shall be as a tenancy at will during which time Lessee shall pay as rental each month, (a) 150% of the aggregate of 1/12 of the aggregate Minimum Rent payable with respect to the last complete year prior to the expiration of the Term; plus (b) all Additional Charges accruing during the month; and plus (c) all other sums, if any, payable pursuant to the provisions of this Lease with respect 19 25 to the Leased Property. During such period of tenancy, Lessee and Lessor shall be obligated to perform and observe all of the terms, covenants and conditions of this Lease and to continue its occupancy and use of the Leased Property. Nothing contained herein shall constitute the consent, express or implied, of Lessor to the holding over of Lessee after the expiration or earlier termination of this Lease. ARTICLE XIX [INTENTIONALLY DELETED] ARTICLE XX [INTENTIONALLY DELETED] ARTICLE XXI RISK OF LOSS Except as otherwise provided in this Lease, during the Term of this Lease, the risk of loss or of decrease in the enjoyment and beneficial use of the Leased Property in consequence of the damage or destruction thereof by fire, the elements, casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures, attachments, levies or executions (other than by Lessor and those claiming from, through or under Lessor) is assumed by Lessee and, Lessor shall in no event be answerable or accountable therefor nor shall any of the events mentioned in this Section entitle Lessee to any abatement of Rent except as specifically provided in this Lease. ARTICLE XXII INDEMNIFICATION Notwithstanding the existence of any insurance or self insurance provided for in Article XII, and without regard to the policy limits of any such insurance or self insurance, Lessee will protect, indemnify, save harmless and defend Lessor from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including reasonable attorneys' fees and expenses), to the extent permitted by law, imposed upon or incurred by or asserted against Lessor by reason of: (a) any accident, injury to or death of persons or loss to property occurring on or about the Leased Property, (b) any use, misuse, no use, condition, maintenance or repair by Lessee of the Leased Property, (c) any Impositions (which are the obligations of Lessee to pay pursuant to the applicable provisions of this Lease), (d) any failure on the part of Lessee to perform or comply with any of the terms of this Lease, (e) the non-performance of any of the terms and provisions of any and all existing and future subleases of the Leased Property to be performed by Lessee as landlord thereunder and (f) the violation of any Hazardous Materials Law. Any amounts which become payable by Lessee under this Section shall be paid within ten days after liability therefor on the part of Lessor is finally determined by litigation or otherwise (including the expiration of any time for appeals) and, if not timely paid, shall bear interest (to the extent permitted by law) at the Overdue Rate from the date of such determination to the date of payment. Lessee, at its expense, shall contest, resist and 20 26 defend any such claim, action or proceeding asserted or instituted against Lessor or may compromise or otherwise dispose of the same as Lessee sees fit. Lessor shall cooperate with Lessee in a reasonable manner to permit Lessee to satisfy Lessee's obligations hereunder, including the execution of any instruments or documents reasonably requested by Lessee. Nothing herein shall be construed as indemnifying Lessor or its agents for their own negligent acts or omissions or willful misconduct. Lessee's liability for a breach of the provisions of this Article shall survive any termination of this Lease. ARTICLE XXIII SUBLETTING AND ASSIGNMENT Lessee may not assign or sublet all or any part of the Leased Property, without the prior written consent of Lessor, which Lessor shall not unreasonably withhold. ARTICLE XXIV OFFICER'S CERTIFICATES AND FINANCIAL STATEMENTS (a) At any time and from time to time within 20 days following written request by Lessor, Lessee will furnish to Lessor an Officer's Certificate certifying that this Lease is unmodified and in full force and effect (or that this Lease is in full force and effect as modified and setting forth the modifications) and the dates to which the Rent has been paid. Any such Officer's Certificate furnished pursuant to this Article may be relied upon by Lessor and any prospective purchaser or lender of and on the Leased Property. (b) Lessee will furnish or cause to furnish the following statements to Lessor: (i) within 120 days after the end of each of Lessee's fiscal years a copy of the Consolidated Financial Statements for the preceding fiscal year of Lessee; and (ii) with reasonable promptness, such other information respecting the financial condition and affairs of Lessee as Lessor may reasonably request from time to time. ARTICLE XXV INSPECTION Lessee shall permit Lessor and its authorized representatives to inspect the Leased Property during usual business hours subject to any security, health, safety or confidentiality requirements of Lessee, any governmental agency, any Insurance Requirements relating to the Leased Property, or imposed by law or applicable regulations. ARTICLE XXVI QUIET ENJOYMENT So long as Lessee shall pay all Rent as the same becomes due and shall fully comply with all of the terms of this Lease and fully perform its obligations hereunder, Lessee shall peaceably and quietly have, hold and enjoy the Leased Property for the Term hereof, free of any claim or other action by Lessor or anyone claiming by, through or under Lessor, but subject to all liens 21 27 and encumbrances of record as of the date hereof or hereafter consented to by Lessee. No failure by Lessor to comply with the foregoing covenant shall give Lessee any right to cancel or terminate this Lease, or to fail to pay any other sum payable under this Lease, or to fail to perform any other obligation of Lessee hereunder. Notwithstanding the foregoing, Lessee shall have the right by separate and independent action to pursue any claim it may have against Lessor as a result of a breach by Lessor of the covenant of quiet enjoyment contained in this Article. ARTICLE XXVII NOTICES All notices, demands, requests, consents, approvals and other communications hereunder shall be in writing and delivered by hand or by Federal Express or other reputable overnight delivery service, charges prepaid addressed to the respective parties, as follows: (a) if to Lessee: Builders Transport, Inc. 2029 West Dekalb Street Camden, SC 29020 (b) if to Lessor: Two Trees 111 West 57th Street Suite 1000 New York, New York 10019 or to such other address as either party may hereafter designate, and shall be effective upon receipt. ARTICLE XXVIII APPRAISAL In the event that it becomes necessary to determine the Fair Market Value, or the Fair Market Rental Value of the Leased Property for any purpose of this Lease, the party required or permitted to give notice of such required determination shall include in the notice the name of a person selected to act as an appraiser on its behalf. Within ten days after receipt of any such notice, Lessor (or Lessee, as the case may be) shall by notice to Lessee (or Lessor, as the case may be) appoint a second person as an appraiser on its behalf. The appraisers thus appointed (each of whom must be a member of the American Institute of Real Estate Appraisers or any successor organization thereto) shall, within 45 days after the date of the notice appointing the first appraiser, proceed to appraise the Leased Property as the case may be, to determine any of the foregoing values as of the relevant date (giving effect to the impact, if any, of inflation from the date of their decision to the relevant date); provided that if only one appraiser shall have been so appointed, or if two appraisers shall have been so appointed but 22 28 only one such appraiser shall have made such determination within 50 days after the making of Lessee's or Lessor's request, then the determination of such appraiser shall be final and binding upon the parties. If two appraisers shall have been appointed and shall have made their determinations within the respective requisite periods set forth above and if the difference between the amounts so determined shall not exceed ten percent of the lesser of such amounts, then the Fair Market Value or the Fair Market Rental Value shall be an amount equal to50% of the sum of the amounts so determined. If the difference between the amounts so determined shall exceed 10% of the lesser of such amounts, then such two appraisers shall have 20 days to appoint a third appraiser, but if such appraisers fail to do so, then either party may request the American Arbitration Association or any successor organization thereto to appoint an appraiser within 20 days of such request, and both parties shall be bound by any appointment so made within such 20-day period. If no such appraiser shall have been appointed within such 20 days or within 90 days of the original request for a determination of Fair Market Value or the Fair Market Rental Value, whichever is earlier, either Lessor or Lessee may apply to any court having jurisdiction to have appointment made by such court. Any appraiser appointed, by the American Arbitration Association or by such court, shall be instructed to determine the Fair Market Value or the Fair Market Rental Value within 30 days after appointment of such appraiser. The determination of the appraiser which differs most in terms of dollar amount from the determinations of the other two appraisers shall be excluded, and 50% of the sum of the remaining two determinations shall be final and binding upon Lessor and Lessee as the Fair Market Value or the Fair Market Rental Value for such interest. However, in the event that following the appraisal performed by said third appraiser, the dollar amount of two of such appraisals are higher and lower, respectively, than the dollar amount of the remaining appraisal in equal degrees, the determinations of both the highest and lowest appraisal, respectively, shall be rejected and the determination of the remaining appraisal shall be final and binding upon Lessor and Lessee as the Fair Market Value or the Fair Market Rental Value for such interest. This provision for determination by appraisal shall be specifically enforceable to the extent such remedy is available under applicable law, and any determination hereunder shall be final and binding upon the parties except as otherwise provided by applicable law. Lessor and Lessee shall each pay the fees and expenses of the appraiser appointed by it and each shall pay one-half of the fees and expenses of the third appraiser and one-half of all other costs and expenses incurred in connection with each appraisal. ARTICLE XXIX [INTENTIONALLY DELETED] ARTICLE XXX DEFAULT BY LESSOR 30.1 DEFAULT BY LESSOR. Lessor shall be in default of its obligations under this Lease if Lessor shall fail to observe or perform any term, covenant or condition of this Lease on its part to be performed and such failure shall continue for a period of 30 days after written notice thereof from Lessee, unless such failure cannot with due diligence be cured within a period of 30 days, in which case such failure shall not be deemed to continue if Lessor, within said 30-day period, proceeds promptly and with due diligence to cure the failure and diligently completes the curing thereof. The time within which Lessor shall be obligated to cure any such failure 23 29 shall also be subject to extension of time due to the occurrence of any Unavoidable Delay. In the event Lessor fails to cure any such default, Lessee, without waiving or releasing any obligations hereunder, and in addition to all other remedies available to Lessee hereunder or at law or in equity, may purchase the Leased Property from Lessor for a purchase price equal to the greater of the Fair Market Value of the Leased Property minus an amount equal to any damage suffered by Lessee by reason of such default. In the event Lessee elects to purchase the Leased Property, it shall deliver a notice thereof to Lessor specifying a Payment Date occurring no less than 90 days subsequent to the date of such notice on which it shall purchase the Leased Property, and the same shall be thereupon conveyed in accordance with the provisions of Article XVII. Any sums owed Lessee by Lessor hereunder shall bear interest at the Overdue Rate from the date due and payable until the date paid. 30.2 LESSEE'S RIGHT TO CURE. Subject to the provisions of Section 30. 1, if Lessor shall breach any covenant to be performed by it under this Lease, Lessee, after notice to and demand upon Lessor in accordance with Section 30. 1, without waiving or releasing any obligation of Lessor hereunder, and in addition to all other remedies available hereunder and at law or in equity to Lessee, may (but shall be under no obligation at any time thereafter to) make such payment or perform such act for the account and at the expense of Lessor. All sums so paid by Lessee and all costs and expenses (including reasonable attorneys' fees) so incurred, together with interest thereon at the Overdue Rate from the date on which such sums or expenses are paid or incurred by Lessee, shall be paid by Lessor to Lessee on demand. The rights of Lessee hereunder to cure and to secure payment from Lessor in accordance with this Section 30.2 shall survive the termination of this Lease. ARTICLE XXXI ARBITRATION 31.1 CONTROVERSIES. Except with respect to the payment of Minimum Rent hereunder, in case any controversy shall arise between the parties hereto as to any of the requirements of this Lease or the performance thereof which controversy the parties shall be unable to settle by agreement or as otherwise provided herein, such controversy shall be determined by arbitration to be initiated and conducted as provided in this Article XXXI. 31.2 APPOINTMENT OF ARBITRATORS. The party or parties requesting arbitration shall serve upon the other a written demand therefor specifying the matter to be submitted to arbitration, and nominating an arbitrator. Within 20 days after receipt of such written demand and notification, the other party shall, in writing, nominate a competent disinterested person and the two arbitrators so designated shall, within ten days thereafter, select a third arbitrator and give immediate written notice of such selection to the parties and shall fix in said notice a time and place for the first meeting of the arbitrators, which meeting shall be held as soon as conveniently possible after the selection of all arbitrators, at which time and place the parties to the controversy may appear and be heard. 31.3 THIRD ARBITRATOR. In case the notified party or parties shall fail to make a selection upon notice, as aforesaid, or in case the first two arbitrators selected shall fail to agree upon a third arbitrator within ten days after their selection, then such arbitrator or arbitrators may, upon application made by either of the parties to the controversy, after 20 days' written 24 30 notice thereof to the other party or parties, have a third arbitrator appointed by any judge of any United States court of record having jurisdiction in the state in which the Leased Property is located or, if such office shall not then exist, by a judge holding an office most nearly corresponding thereto. 31.4 ARBITRATION PROCEDURE. Said arbitrators shall give each of the parties not less than ten days' written notice of the time and place of each meeting at which the parties or any of them may appear and be heard and after hearing the parties in regard to the matter in dispute and taking such other testimony and making such other examinations and investigations as justice shall require and as the arbitrators may deem necessary, they shall decide the questions submitted to them. The decision of said arbitrators in writing signed by a majority of them shall be final and binding upon the parties to such controversy. In rendering such decisions and award, the arbitrators shall not add to, subtract from or otherwise modify the provisions of this Lease. 31.5 EXPENSES. The expenses of such arbitration shall be divided between Lessor and Lessee unless otherwise specified in the decision of the arbitrators. Each party in interest shall pay the fees and expenses of its own counsel. ARTICLE XXXII FINANCING OF THE LEASED PROPERTY Lessor agrees that, if it grants or creates any mortgage, deed of trust, lien, encumbrance or other title retention agreement ("Encumbrance") upon the Leased Property, the holder of each such Encumbrance shall simultaneously with or prior to recording the Encumbrance agree (a) to give Lessee the same notice, if any, given to Lessor of any default or acceleration of any obligation underlying any such Encumbrance or any sale in foreclosure of such Encumbrance, (b) to permit Lessee to cure any such default on Lessor's behalf within any applicable cure period, in which event Lessor agrees to reimburse Lessee for any and all out-of-pocket costs and expenses incurred to effect any such cure (including reasonable attorneys' fees), (c) to permit Lessee to appear with its representatives and to bid at any public foreclosure sale with respect to any such Encumbrance and (d) to enter into an agreement with Lessee containing the provisions described in Article XXXIII of this Lease. Lessee agrees to execute and deliver to Lessor or the holder of an Encumbrance any written agreement required by this Article within ten days of written request thereof by Lessor or the holder of an Encumbrance. ARTICLE XXXIII SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE At the request from time to time by one or more holders of an Encumbrance that may hereafter be placed upon the Leased Property or any part thereof, and any and all renewals, replacements, modifications, consolidations, spreaders and extensions thereof, Lessee will subordinate this Lease and all of Lessee's rights and estate hereunder to each such Encumbrance and agree with each such holder; provided that Lessee will attorn to and recognize such holder (or the purchaser at any foreclosure sale or any sale under a power of sale contained in any such Encumbrance or a holder by a deed in lieu of foreclosure, as the case may be) as Lessor under this Lease for the balance of the Term then remaining, subject to all of the terms and provisions 25 31 of this Lease; provided further that each such institutional holder simultaneously with or prior to recording any such Encumbrance executes and delivers a written agreement in recordable form (a) consenting to this Lease and agreeing that, notwithstanding any such other lease, mortgage, deed of trust, right, title or interest, or any default, expiration, termination, foreclosure, sale, entry or other act or omission under, pursuant to or affecting any of the foregoing, Lessee shall not be disturbed in peaceful enjoyment of the Leased Property nor shall this Lease be terminated or canceled at any time, except in the event Lessor shall have the right to terminate this Lease under the terms and provisions expressly set forth herein; (b) agreeing that it will be bound by all the terms of this Lease, perform and observe all of Lessor's obligations set forth herein; and (c) agreeing that all proceeds of the casualty insurance described in Article XIII of this Lease and all Awards described in Article XIV will be made available to Lessor for restoration of the Leased Property as and to the extent required by this Lease, subject only to reasonable regulation regarding the manner of disbursement and application thereof. Lessee agrees to execute and deliver to Lessor or the holder of an Encumbrance any written agreement required by this Article within ten days of written request thereof by Lessor or the holder of an Encumbrance. Lessee agrees to execute at the request from time to time of Lessor or an institutional investor a certificate setting forth any defaults of Lessor hereunder and the dates through which Rent has been paid and such other matters as may be reasonably requested. ARTICLE XXXIV EXTENDED TERMS If no Event of Default shall have occurred and be continuing, Lessee is hereby granted the right to extend the Term of this Lease for four (4) consecutive five (5) year periods ("Extended Term") for a maximum possible Term of 25 years, by giving written notice to Lessor of each such extension at least 180 days, but not more than 270 days, prior to the expiration of the then-current Term; subject, however, to the provisions of Section 13.7 hereof. Lessor agrees to use its best efforts to provide Lessee with prior written notice at least 210 days prior to the expiration of the then-current Term. Lessee may not exercise its option for more than one Extended Term at a time. During each Extended Term, all of the terms and conditions of this Lease shall continue in full force and effect, except that the Minimum Rent for and during each of the Extended Terms shall be the Fair Market Rental Value on the first day of such Extended Term. ARTICLE XXXV MISCELLANEOUS 35.1 NO WAIVER. No failure by Lessor or Lessee to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof, and no acceptance of full or partial payment of Rent during the continuance of any such breach, shall constitute a waiver of any such breach or any such term. To the extent permitted by law, no waiver of any breach shall affect or alter this Lease, which shall continue in full force and effect with respect to any other then existing or subsequent breach. 35.2 REMEDIES CUMULATIVE. To the extent permitted by law, each legal, equitable or contractual right, power and remedy of Lessor or Lessee now or hereafter provided either in this Lease or by statute or otherwise shall be cumulative and concurrent and shall be in addition to 26 32 every other right, power and remedy and the exercise or beginning of the exercise by Lessor or Lessee of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Lessor or Lessee of any or all of such other rights, powers and remedies. 35.3 SURRENDER. No surrender to Lessor of this Lease or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Lessor and no act by Lessor or any representative or agent of Lessor, other than such a written acceptance by Lessor, shall constitute an acceptance of any such surrender. 35.4 [INTENTIONALLY DELETED] 35.5 TRANSFERS BY LESSOR. If Lessor or any successor owner of the Leased Property shall convey the Leased Property in accordance with the terms hereof, other than as security for a debt, the grantee or transferee of the Leased Property shall expressly assume all obligations of Lessor hereunder arising or accruing from and after the date of such conveyance or transfer, and shall be reasonably capable of performing the obligations of Lessor hereunder and Lessor or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of Lessor under this Lease arising or accruing from and after the date of such conveyance or other transfer and all such future liabilities and obligations shall thereupon be binding upon the new owner. 35.6 GENERAL. Anything contained in this Lease to the contrary notwithstanding, all claims against, and liabilities of, Lessee and Lessor against the other arising out of or relating to this Lease and arising prior to any date of termination of this Lease shall survive such termination. If any term or provision of this Lease or any application thereof shall be invalid or unenforceable, the remainder of this Lease and any other application of such term or provision shall not be affected thereby. If any late charges provided for in any provision of this Lease are based upon a rate in excess of the maximum rate permitted by applicable law, the parties agree that such charges shall be fixed at the maximum permissible rate. Neither this Lease nor any provision hereof may be changed, waived, discharged or terminated except by an instrument in writing and in recordable form signed by Lessor and Lessee. All the terms and provisions of this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. The headings in this Lease are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. This Lease shall be governed by and construed in accordance with the laws of South Carolina, but not including its conflict of laws rules. This Lease may be executed in one or more counterparts, each of which shall be an original but, when taken together, shall constitute but one document. 35.7 TRANSFER OF LICENSES. Upon the expiration or earlier termination of the Term, Lessee shall take all action necessary to effect or useful in effecting the transfer to Lessor or Lessor's nominee of all licenses, operating permits and other governmental authorizations and all service contracts which may be necessary or useful in the operation of the Facility and which relate exclusively to the Facility. 27 33 35.8 MEMORANDUM OF LEASE. Lessor and Lessee shall, promptly upon the request of either, enter into a short form memorandum of this Lease in form suitable for recording under the laws of the state in which the Leased Property is located in which reference to this Lease, and all options contained herein, shall be made. ARTICLE XXXVI GLOSSARY OF TERMS 36.1 For purposes of this Lease, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article XXXVI have the meanings assigned to them in this Article XXXVI and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as at the time applicable, (c) all references in this Lease to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Lease, and (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or other subdivision and (e) the word "including" shall mean "including without limitation". For purposes of this Lease, the following terms shall have the meanings indicated: "Additional Charges" has the meaning set forth in Section 2.3. "Affiliate", when used with respect to any corporation, shall mean any person which, directly or indirectly, controls such corporation and has entered into a lease agreement, similar to this Lease, with Lessor or has guaranteed the lessee's performance of such a lease. For the purposes of this definition, "control", as used with respect to any person, shall mean the possession, directly and indirectly, of the power to direct or cause the direction of the management and policies of such entity, through the ownership of no less than twenty (20%) percent of the voting securities, partnership interests or other equity interests of such entity. "Award" means all compensation, sums or anything of value awarded, paid or received on a total or partial Condemnation. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which national banks are closed. "Capital Additions" means one or more new buildings or one or more additional structures annexed to any portion of any of the Leased Improvements, which are constructed on any parcel or portion of the Land during the Term, including the construction of a new wing or new story, or the rebuilding of the existing Leased Improvements or any portion thereof not normal, ordinary or recurring to maintain the Leased Property. "Charge" has the meaning set forth in Article XI hereof. "Code" means the Internal Revenue Code of 1986, as amended. "Commencement Date" has the meaning set forth in Article 1. 28 34 "Condemnation" means the transfer of all or any part of the Leased Property as a result of (i) the exercise of any governmental power, whether by legal proceedings or otherwise, by a Condemnor or (ii) a voluntary sale or transfer by Lessor to any Condemnor, either under threat of Condemnation or while legal proceedings for Condemnation are pending. "Condemnor" means any public or quasi-public authority, or private corporation or individual, having the power of Condemnation. "Consolidated Financial Statements" means for any fiscal year or other accounting period for Lessee and its respective consolidated subsidiaries, including Lessee, audited statements of earnings and retained earnings and of changes in financial position for such period and for the period from the beginning of the respective fiscal year of Lessee to the end of such period and the related balance sheet as at the end of such period, together with the notes thereto, all in reasonable detail and setting forth in comparative form the corresponding figures for the corresponding period in the preceding fiscal year of Lessee, and prepared in accordance with generally accepted accounting principles consistently applied, except as noted. "Current Yield" means as of any date the annual Minimum Rent, as adjusted from time-to-time pursuant to the terms of this Lease, divided by the sum of (i) the Purchase Price as set forth in the Purchase and Sale Agreement plus (ii) all Capital Additions Costs paid for or financed by Lessor which have not been repaid by Lessee. "Date of Taking" means the date the Condemnor has the right to possession of the property being condemned. "Encumbrance" has the meaning set forth in Article XXXII. "Event of Default" has the meaning set forth in Section 15.1. "Extended Term" has the meaning set forth in Section XXXIV. "Facility" means the three office buildings operated on the Leased Property containing a total of 35,109.05 gross square feet. "Facility Mortgage" has the meaning set forth in Section 12.1. "Facility Mortgagee" has the meaning set forth in Section 12.1. "Fair Market Rental Value" means the fair market rental value of the Leased Property (a) assuming the same is unencumbered by this Lease, and (b) determined in accordance with the appraisal procedures set forth in Article XXVIII or in such other manner as shall be mutually acceptable to Lessor and Lessee and (c) not taking into account any reduction in value resulting from an indebtedness to which the Leased Property may be subject, and (d) be the rental that would be obtained in an arms-length transaction between an informed and willing lessee under no compulsion to lease, and an informed and willing lessor under no compulsion to lease. 29 35 "Fair Market Value" means the fair market value of the Leased Property including all Capital Additions, determined in accordance with the appraisal procedures set forth in Article XXVIII or in such other manner as shall be mutually acceptable to Lessor and Lessee, and not taking into account any reduction in value resulting from any indebtedness to which the Leased Property is subject or which encumbrance Lessee or Lessor is otherwise required to remove pursuant to any provision of this Lease or agrees to remove at or prior to the closing of the transaction as to which such Fair Market Value determination is being made. The positive or negative effect on the value of the Leased Property attributable to the interest rate, amortization schedule, maturity date, prepayment penalty and other terms and conditions of any Encumbrance on the Leased Property, as the case may be, which is not so required or agreed to be removed shall be taken into account in determining such Fair Market Value. The Fair Market Value would be the purchase price that would be obtained in an arms-length transaction between an informed and willing buyer under no compulsion to buy, and an informed and willing seller under no compulsion to sell. "Fiscal Year" means the 12-month period from January I to December 31. "Fixed Term" has the meaning set forth in Article 1. "Fixtures" has the meaning set forth in Article 1. "Full Replacement Cost" has the meaning set forth in Section 12.2. "Hazardous Materials" means any substance, including asbestos or any substance containing asbestos, the group of organic compounds known as polychlorinated biphenyls, flammable explosives, radioactive materials, medical waste, chemicals known to cause cancer or reproductive toxicity, pollutants, effluents, contaminants, emissions or related materials and items included in the definition of hazardous or toxic wastes, materials or substances under any Hazardous Materials Law. "Hazardous Materials Law" means any law, regulation or ordinance relating to environmental conditions, medical waste and industrial hygiene, including the Resource Conservation and Recovery Act of 1976 ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Hazardous Materials Transportation Act, the Federal Water Pollution Control Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and all similar federal, state and local environmental statutes and ordinances, whether heretofore or hereafter enacted or effective and all regulations, orders, or decrees heretofore or hereafter promulgated thereunder. "Impositions" means, collectively, all taxes relating to the Leased Property, including all ad valorem, sales and use, gross receipts, action, privilege, rent or similar taxes, assessments (including all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the Term), water, sewer or other rents and charges, excises, tax levies, fees (including license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general 30 36 or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of the Leased Property and/or the Rent (including all interest and penalties thereon due to any failure in payment by Lessee), which at any time prior to, during or in respect of the Term hereof may be assessed or imposed on or in respect of or be a lien upon (a) Lessor or Lessor's interest in the Leased Property, (b) the Rent, the Leased Property or any part thereof or any rent therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession of, sales from, or activity conducted on, or in connection with, the Leased Property or use of the Leased Property or any part thereof, provided that nothing contained in this Lease shall be construed to require Lessee to pay (1) any tax based on net income (whether denominated as a franchise or capital stock or other tax) imposed on Lessor, (2) any transfer or net revenue tax of Lessor, (3) any tax imposed with respect to the sale, exchange or other disposition by Lessor of any portion of the Leased Property or the proceeds thereof, or (4) except as expressly provided elsewhere in this Lease, any principal or interest on any Encumbrance on the Leased Property, except to the extent that any tax, assessment, tax levy or charge which Lessee is obligated to pay pursuant to this definition and which is in effect at any time during the Term hereof is totally or partially repealed, and a tax, assessment, tax levy or charge set forth in clause (1), (2) or (3) is levied, assessed or imposed expressly in lieu thereof. "Insurance Requirements" means all terms of any insurance policy required by this Lease and all requirements of the issuer of any such policy. "Land" has the meaning set forth in Article 1. "Lease" means this Lease. "Leased Improvements" and "Leased Property" have the meanings set forth in Article 1. "Legal Requirements" means all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Leased Property or the construction, use or alteration thereof, whether now or hereafter enacted and in force, including any which may (a) require repairs, modifications or alterations of or to the Leased Property, or (b) in any way adversely affect the use and enjoyment thereof, and all permits, licenses, authorizations and regulations relating thereto, and all covenants, agreements, actions and encumbrances contained in any instruments, either of record or known to Lessee (other than encumbrances created by Lessor without the consent of Lessee), at any time in force affecting the Leased Property. "Lending Institution" means any insurance company, federally insured commercial or savings bank, national banking association, savings and loan association, employees' welfare, pension or retirement fund or system, corporate profit-sharing or pension plan, college or university, or real estate investment including any corporation qualified to be treated for federal tax purposes as a real estate investment trust having a net worth of at least $50,000,000. "Lessee" means Builders Transport, Inc., a Georgia Corporation, its successors and assigns. 31 37 "Lessor" means TWO TREES, a New York general partnership, and its successors and assigns. "Minimum Rent" has the meaning set forth in Section 2.1(a). "Officer's Certificate" means a certificate of Lessee signed by the Chairman of the Board, The Vice Chairman and Chief Executive Officer, the President, the Chief Financial Officer, or another officer authorized to so sign by the Board of Directors or By-Laws of Lessee, or any other person whose power and authority to act has been authorized by delegation in writing by any of the persons holding the foregoing offices. "Overdue Rate" means as of any date, a rate per annum equal to the Prime Rate as of such date, plus two percent, but in no event greater than the maximum rate then permitted under applicable law. "Payment Date" means any due date for the payment of the installments of Minimum Rent under this Lease. "Permitted Liens" means (i) pledges or deposits made to secure payments of worker's compensation insurance (or to participate in any fund in connection with worker's compensation insurance), unemployment insurance, pensions or social security programs, (ii) liens imposed by mandatory provisions of law such as for materialmen, mechanics, warehousemen and other like liens arising in the Ordinary Course of Business, securing indebtedness whose payment is not yet due and payable, (iii) liens for taxes, assessments and governmental charges or levies if the same are not yet due and payable or if the same are being contested in good faith and as to which adequate cash reserves have been provided, (iv) liens arising from good faith deposits in connection with tenders, leases, real estate bids or contracts (other than contracts involving the borrowing of money), pledges or deposits to secure public or statutory obligations and deposits to secure (or in lieu of) surety, stay, appeal or customs bonds and deposits to secure the payment of taxes, assessments, duties or other similar charges, (v) liens to secure purchase money indebtedness, so long as the indebtedness incurred to purchase the new asset is secured only by such asset, or (vi) encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property; provided that such items do not impair the use of such property for the purposes intended, none of which is violated by existing or proposed structures or land use. "Person" means a natural person, corporation, partnership, trust, association, limited liability company or other entity. "Personal Property" means all machinery, equipment, furniture, furnishings, computers, signage, trade fixtures or other personal property and inventory and supplies, together with all additions, substitutions and replacements thereof, necessary or appropriate for the use and operation of the Leased Property for its Primary Intended Use in compliance with applicable Legal Requirements, except for any portion of the Leased Property. "Primary Intended Use" has the meaning set forth in Section 6.2(a). 32 38 "Prime Rate" means the annual rate announced by the Wall Street Journal or its successors from time to time as being its prime rate. The prime rate is an index rate used by the Wall Street Journal to establish lending rates and may not necessarily be its most favorable lending rate. Any change in the Prime Rate hereunder shall take effect on the effective date of such change in the prime rate as established by the Wall Street Journal, without notice to Lessee or any other action by Lessor. Interest shall be computed on the basis that each year contains 360 days, by multiplying the principal amount by the per annum rate set forth above, dividing the product so obtained by 360, and multiplying the quotient thereof by the actual number of days elapsed. "Rent" means, collectively, the Minimum Rent and the Additional Charges. "Taking" means a taking or voluntary conveyance during the Term hereof of all or part of the Leased Property, or any interest therein or right accruing thereto or use thereof, as the result of, or in settlement of any Condemnation or other eminent domain proceeding affecting the Leased Property whether or not the same shall have actually been commenced. "Term" means the Fixed Term and any Extended Term as to which Lessee has exercised its options to extend contained in Article XXXIV hereof unless earlier terminated pursuant to the provisions hereof. "Unavoidable Delays" means delays due to strikes, lockouts, inability to procure materials, power failure, acts of God, government restrictions, enemy action, civil commotion, fire, unavoidable casualty or other causes beyond the control of the party responsible for performing an obligation hereunder, provided that lack of funds shall not be deemed a cause beyond the control of either party hereto unless such lack of funds is caused by the failure of the other party hereto to perform any obligations of such other party under this Lease. "Unsuitable for Its Primary Intended Use" as used anywhere in this Lease, shall mean that, by reason of damage or destruction, or a partial Taking, in the good faith judgment of Lessee, reasonably exercised, the Facility cannot be profitably operated for its Primary Intended Use. IN WITNESS WHEREOF, the parties have caused this Lease to be executed and their respective corporate seals to be hereunto affixed and attested by their respective officers thereunto duly authorized as of the date first written above. Witnesses: LESSOR /s/ TWO TREES, a New York general partnership - ---------------------- /s/ Judy Gluck By: /s/ Stanford M. Dinstein - ---------------------- -------------------------------------- Stanford M. Dinstein Its: Attorney-In-Fact 33 39 /s/ John C. Stewart, Jr. - ------------------------ LESSEE BUILDERS TRANSPORT, INC., a Georgia /s/ Jennifer M. Markle Corporation - ---------------------- By: /s/ Robert Fox ------------------------------------------- Its: V.P. & CFO -------------------------------- Attest: /s/ J. Ray Hardy --------------------------------------- Its: Asst. Secretary --------------------------------- 34 40 STATE OF NEW YORK ) ) PROBATE COUNTY OF NEW YORK ) PERSONALLY appeared before me the undersigned witness who made oath that s/he saw the within named Lessor, Two Trees, a New York general partnership, by Stanford M. Dinstein, its Attorney-In-Fact, sign, seal and as its act and deed deliver the within written instrument and that s/he with Judy Gluck witnessed the execution thereof. SWORN to and subscribed before me this 11th day of October, 1995. /s/ ------------------------ Judy Gluck (L.S.) Notary Public for State of N.Y. My Commission Expires: 6/30/97 STATE OF SOUTH CAROLINA ) ) PROBATE COUNTY OF KERSHAW ) PERSONALLY appeared before me the undersigned witness who made oath that s/he saw the within named Lessee, Builders Transport, Inc., a Georgia Corporation, by Robert Fox its Vice-President & CFO, sign, seal and as its act and deed deliver the within written instrument and that s/he with the above subscribed witness witnessed the execution thereof. /s/ John C. Stewart, Jr. ---------------------------- SWORN to and subscribed before me this 12th day of October, 1995. Jennifer M. Markle (L.S.) Notary Public for South Carolina My Commission Expires: 10/12/2002 35 41 EXHIBIT A PROPERTY DESCRIPTION All that piece, parcel or tract of land, lying and being situate near City of Camden, County of Kershaw, State of South Carolina, containing approximately twenty eight and 78/100ths (28.78) acres, more or less, and being more particularly described as follows: Point of Beginning (iron pipe corner) located 372 feet southeast from the centerline of Battleship Road Extension measured along the right of way of U.S. Highway No. 1; thence continuing in a southeasterly direction along the right of way of U.S. No. 1 South 75(degrees)-51'-47" East a distance of 450.0 feet; thence in southeasterly direction South 24(degrees)-36'-40" East a distance of 1133.95' to right-of-way of C.S.X. Railroad; thence in a southwesterly direction along right-of-way of C.S.X. Railroad South 65(degrees)-22'-28" West a distance of 642.74 feet; thence South 65(degrees)-15'-00" West a distance of 550.82 feet; thence South 63(degrees)-57'-44" West a distance of 300.40 feet; thence in a northerly direction North 14(degrees)-06'-52' East a distance of 196.63 feet; thence North 14(degrees)-07'-37" East a distance of 494.59 feet; thence North 14(degrees)-06'-14" East a distance of 754.70 feet; thence North 14(degrees)-11'-05" East a distance of 380.46 feet to the Point of Beginning. The above-described property is shown and described on a survey prepared by Daniel D. Riddick, Professional Surveyor No. 3322B on August 16, 1995, revised September 27, 1995 and recorded October 2, 1995, in Plat Book B-1 at Page 2, Records of Kershaw County, which is incorporated herein by reference and made a part hereof. This being the same property conveyed to Two Trees by deed from the County of Kershaw recorded October _____, 1995, in the office of the Clerk of Court for Kershaw County, in Deed Book ______at Page ______. Tax Map Number: 284-00-00-007 Kershaw County 42 EXHIBIT B PERMITTED EXCEPTIONS 1. Taxes for the year 1995 and subsequent years, a lien not yet due and payable. 2. Water and Sewerline easement from Town & Country, Inc., CCG Corp. and County of Kershaw to the City of Camden recorded July 27, 1981 in Book I10, Page 2588 and also on a Plat prepared by Daniel Riddick & Associates, Inc. dated August 16, 1995 and recorded August 30, 1995 in Plat Book A-7, Page 8, Kershaw County, South Carolina, as amended by that certain Amended Easement from Town & Country, Inc., CCG Corp. and County of Kershaw to the City of Camden recorded May 24, 1993 in Book 174, Page 9, Kershaw County, South Carolina. 3. Reservation of a fifty (50) foot Right-of-Way for Railroad Spur Easement as set forth in Deed Book IN, Page 2714 and also on a Plat prepared by Daniel Riddick & Associates, Inc. dated August 16, 1995 and recorded August 30, 1995 in Plat Book A-7, Page 8, Kershaw County, South Carolina. 4. Declaration of Restrictive Covenants dated April 21, 1980 and recorded in Deed Book IN, Page 2556 also referred to on that certain Plat prepared by Daniel Riddick & Associates, Inc. dated August 16, 1995 and recorded August 30, 1995 in Plat Book A-7, Page 8, Kershaw County, South Carolina. 5. Easement for Drainage and a Retention Pond between Builders Transport, Inc. and the County of Kershaw recorded January 14, 1992 in Book 64, Page 226 and referred to on that certain Plat prepared by Daniel Riddick & Associates, Inc. dated August 16, 1995 and recorded August 30, 1995 in Plat Book A-7, Page 8, Kershaw County, South Carolina. EX-10.24 4 FINANCING AGREEMENT #5 1 EXHIBIT 10.24 AMENDMENT TO AMENDED AND RESTATED FINANCING AGREEMENT dated as of May 28, 1993 THIS AMENDMENT dated as of December 29, 1995 is made by and among THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation ("CITBC"), NATIONAL CANADA FINANCE CORP., a subsidiary of National Bank of Canada ("NCFC"), NATIONAL BANK OF CANADA, a Canadian chartered bank ("NBC", and together with CITBC, the "Lenders"), CITBC, in its capacity as the agent for the Lenders ("Agent"), and BUILDERS TRANSPORT, INC., a Georgia corporation ("Company"). Preliminary Statement The Company, the Agent, NBC, as assignee of NCFC, and CITBC are parties to that certain Amended and Restated Financing Agreement, dated as of May 28, 1993, as amended to date (the "Financing Agreement"). Terms defined in the Financing Agreement and not otherwise defined herein are used herein as therein defined. The Company, the Agent and the Lenders have agreed to amend certain provisions of the financing agreement to reflect the assignment by CITBC to NCFC, pursuant to an Assignment and Acceptance dated October 12, 1995, of a portion of CITBC's right, title and interest as a Lender under the Financing Agreement, to reflect the assignment by NCFC to NBC pursuant to Assignment and Acceptance dated December 29, 1995, of all of NCFC's right, title and interest as a "Lender" under the Financing Agreement, to provide for an additional term loan advance to be made by the Lenders to the Company and to make certain other changes to the Financing Agreement as set forth in this Amendment. NOW, THEREFORE, in consideration of the Financing Agreement, the advances and other financial accommodations made thereunder, the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Amendments to Financing Agreement. The Financing Agreement is hereby amended, subject to the provisions of Section 2 hereof, effective as of the date hereof, by 2 (a) amending Section 1 Definitions by amending clause (h) of the definition "Permitted Encumbrances" in its entirety to read as follows: (h) capital lease obligations for motor vehicles not to exceed $155,000,000 in the aggregate at any time outstanding. (b) amending Section 1 Definitions by amending the definition "Promissory Notes" in its entirety to read as follows: Promissory Notes shall mean the notes and all replacements, substitutions, consolidations and restatements thereof, in substantially the forms of Exhibit A, Exhibit B, and Exhibit C attached hereto, delivered by the Company to the Agent, on behalf of the Lenders, to evidence Term Loan I, Term Loan II and the Revolving Loans, respectively, as amended hereby, pursuant to, and repayable in accordance with, the provisions of Section 4 of this Amended and Restated Financing Agreement as to the Term Loans and Section 3 of this Amended and Restated Financing Agreement as to the Revolving Loans. (c) amending Section 1 Definitions by amending the definition "Revolving Credit Commitment" in its entirety to read as follows: Revolving Credit Commitment shall mean, as to any Lender, the obligation of such Lender, in accordance with the provisions hereof, to (a) make Revolving Loans, and (b) participate in any draws under the Letter of Credit Guaranty issued on behalf of the Company hereunder or conversion of any such draws into Term Loan II hereunder, in an aggregate principal and/or face amount at any one time outstanding not to exceed such Lender's pro rata share thereof, based from and after October 12, 1995 on the percentage set forth below of the aggregate amount of such loan and advances, as follows: a) CITBC 55% b) NBC 45% as such percentages may be modified by subsequent assignments made in accordance with the provisions of this Amended and Restated Financing Agreement. (d) amending Section 1 Definitions by amending the definition "Term Loan I" in its entirety to read as follows: 2 3 Term Loan I shall mean the term loan in the original aggregate principal amount of $16,000,000.00 made by the Original Lenders pursuant to, and repayable in accordance with, the Original Financing Agreement and, subsequent to the Effective Date, repayable pursuant to the provisions of Section 4 of this Amended and Restated Financing Agreement, the outstanding balance of which is $5,000,000 as of the 1995 Amendment Effective Date after giving effect to the 1995 Term Loan to be made on the 1995 Amendment Effective Date in the original principal amount of $4,000,000, such Term Loan I principal amount being evidenced by Amended, Restated and Consolidated Term Loan Notes substantially in the form of Exhibit A to this Amended and Restated Financing Agreement, payable to each Lender. (e) amending Section 1 Definitions by amending the definition "Term Loan Commitment" in its entirety to read as follows: Term Loan Commitment shall mean as to: a) CITBC - 55% of the aggregate outstanding amount of all Term Loans; and b) NBC - 45% of the aggregate outstanding amount of all Term Loans; as such percentages may be modified by subsequent assignments made in accordance with the provisions of this Amended and Restated Financing Agreement. (f) amending Section 1 Definitions by adding the following new definitions thereto in appropriate alphabetical order: NBC shall mean National Bank of Canada, a Canadian chartered bank, successor-by-assignment to National Canada Finance Corp.'s interest hereunder, acting through its New York Branch at 125 West 55th Street, New York, New York 10019. 1995 Amendment Effective Date shall mean the date on which the Amendment dated as of December 29, 1995 to this Amended and Restated Financing Agreement becomes effective in accordance with the applicable provisions of Section 2 of such Amendment. 1995 Term Loan shall mean the term loan advance in an aggregate principal amount not to exceed $4,000,000, to the extent made in accordance with the provisions of 3 4 Section 4 of this Amended and Restated Financing Agreement. (g) amending Section 4 Term Loans by amending paragraphs 1, 2 and 3 thereof in their entirety to read as follows: TERM LOAN I 1. On the 1995 Amendment Effective Date, the Lenders will advance their ratable shares of the 1995 Term Loan, as part of Term Loan I, in exchange for Promissory Notes of the Company dated the 1995 Amendment Effective Date in the aggregate original principal amount of $5,000,000.00. 2. The Company hereby agrees to execute and deliver to the Agent said Promissory Notes in the form of Exhibit A attached hereto, one each of said Promissory Notes payable to each Lender, to evidence Term Loan I in the aggregate principal amount thereof. 3. The principal amount of Term Loan I shall be repaid to the Agent, for the benefit of the Lenders, by the Company in installments of (a) $1,000,000 on December 31, 1995 and (b) $500,000 on the last day of each March, June, September and December beginning March 31, 1996, provided that the entire remaining principal balance thereof shall be due and payable in full on December 31, 1997. No repayment of Term Loan I may be reborrowed. The proceeds of the 1995 Term Loan shall be used solely to repay principal of and accrued and unpaid interest on outstanding Revolving Loans. (h) amending Section 7 Representations. Warranties and Covenants by amending paragraph 9 thereof in its entirety to read as follows: 9. The Company shall maintain at the end of each fiscal quarter, a Net Worth of not less than:
FISCAL PERIOD AMOUNT ------------- ------ For the fiscal quarter $45,250,000 ending December 31, 1995 For the fiscal quarter $44,750,000 ending March 31, 1996 For the fiscal quarters $45,000,000 ending June 30, 1996 and September 30, 1996
4 5 For each fiscal quarter $45,250,000 ending on or after December 31, 1996 (i) amending Section 7 Representations, Warranties and Covenants by amending paragraph 11(b) thereof in its entirety to read as follows: (b) Contract for, purchase, make expenditures for, lease pursuant to a Capital Lease or otherwise incur obligations with respect to Capital Expenditures (whether subject to a security interest or otherwise) during any fiscal year in an aggregate amount in excess of: (i) $85,000,000 for the fiscal year ending December 31, 1995; (ii) $30,000,000 for the fiscal year ending December 31, 1996 and each fiscal year thereafter; provided that the amounts set forth above may increase from any one fiscal year to the next succeeding fiscal year by an amount equal to the difference, if any, between (x) the applicable cap for the Capital Expenditures for the preceding fiscal year minus (y) the Company's actual Capital Expenditures for such preceding fiscal year (as shown on the Company's audited financial statements for such year). (j) amending Section 7 Representations, Warranties and Covenants, by amending paragraph 13 thereof in its entirety to read as follows: 13. The Company shall maintain at the end of each fiscal quarter, an Interest Coverage Ratio of at least:
FISCAL PERIOD RATIO ------------- ----- For the fiscal quarter 1.00 to 1 ending December 31, 1995 For the fiscal quarter 0.90 to 1 ending March 31, 1996 For the fiscal quarter 0.75 to 1 ending June 30, 1996 For the fiscal quarter 0.85 to 1 ending September 30, 1996
5 6 For each fiscal quarter 1.00 to 1 ending on or after December 31, 1996 (k) amending Section 7 Representations. Warranties and Covenants, by amending paragraph 14 thereof in its entirety to read as follows: 14. The Company shall maintain at the end of each fiscal quarter, a Leverage Ratio of not more than:
FISCAL PERIOD RATIO ------------- ----- For the fiscal quarters 5.45 to 1 ending December 31, 1995 and March 31, 1956 For the fiscal quarter 5.50 to 1 ending June 30, 1996 For the fiscal quarter 5.35 to 1 ending September 30, 1996 For each fiscal quarter 5.15 to 1 ending on or after December 31, 1996
(1) amending Section 7 Representations. Warranties and Covenants, by adding the following immediately after paragraph 22: 23. The Company shall deliver to the Agent, on or before December 30, 1995, (i) copies of duly executed mortgage or deed of trust modifications with respect to the Real Estate (other than parcels located in White Pine, Tennessee and Medicine Lodge, Kansas) reflecting the advance to the Company of the 1995 Term Loan, in form for recording and otherwise in form and substance satisfactory to the Agent and (ii) fully paid endorsements to the existing mortgagee title insurance policies reflecting the modifications, or binding commitments to issue the same, issued by a title insurance company satisfactory to the Agent and in form and substance satisfactory to the Agent, as to the Real Estate identified by the Agent to the Company. The Company shall pay all transfer, recording and other fees and taxes relating to the preparation and recordation of the modifications. 6 7 (m) amending the Financing Agreement by adding thereto a new Section 15 Cross-Border Provisions to read in its entirety as follows: SECTION 15. CROSS-BORDER PROVISIONS: 1. Prior to the date hereof, each Lender which is not incorporated under the laws of the United States of America or a state thereof agrees that it will deliver to the Agent (i) a letter in duplicate and two duly completed copies of United States Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the case may be, certifying in each case that such Lender is entitled to receive payments under this Amended and Restated Financing Agreement without deduction or withholding of any United States Federal income taxes, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax. Each such Lender which delivers a copy of a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the next preceding sentence further undertakes to deliver to the Agent two further copies of the said letter and Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or other manner of certification, as the case may be, on or before the date that any such letter or form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent letter and form previously delivered by it to the Agent, and such extensions or renewals thereof as may reasonably be requested by the Agent, certifying in the case of a Form 1001 or 4224 that such Lender is entitled to receive payments under this Amended and Restated Financing Agreement without deduction or withholding of any United States Federal income taxes, unless in any such case an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such letter or form with respect to it and such Lender advises the Agent that it is not capable of receiving payments without any deduction or withholding of United States Federal income tax, and in the case of a Form W-8 or W-9, establishing an exemption from United States backup withholding tax, in which case, all payments by Borrower hereunder and under any Note shall be increased by the amount necessary to pay to the Lender, net of any such withholding tax(es) the amount of each payment provided for hereunder. (n) further amending the Financing Agreement by substituting for Exhibits A.1.1 and A.1.2 thereto, Exhibit A in the form attached hereto as Annex 1. 7 8 Section 2. Effectiveness of Amendment. This Amendment shall become effective as of the date hereof upon receipt by the Agent of the following, each in form and substance satisfactory to the Agent and the Lenders: (a) at least five copies of this Amendment, each duly executed and delivered by the Company and each Lender; (b) an Officer's Certificate executed by an authorized officer of the Company to the effect that after giving effect to this Amendment (i) all representations and warranties of the Company set forth in the Financing Agreement and in any other document, instrument or agreement entered into in connection with the Financing Agreement (together with the Financing Agreement, the "Loan Documents") are true and correct in all material respects on and as of the 1995 Amendment Effective Date, after giving effect to the 1995 Term Loan and application of the proceeds thereof, and (ii) the Company is in compliance with all of the terms and provisions set forth in the Financing Agreement and the other Loan Documents; (c) a legal opinion of Nelson, Mullins, Riley & Scarborough, counsel for the Company, as to such matters in connection with the transactions contemplated by this Amendment as may reasonably be requested by the Agent or any Lender; (d) confirmations duly executed and delivered by the Guarantors of their Guaranties and the Pledge Agreements in the form attached to this Amendment; (e) the amendment fee in an amount equal to $15,000, which fee is fully-earned by the Agent and the Lenders when paid and shall not be subject to refund or rebate; (f) notes duly executed by the Company, payable to the order of each Lender, in the form of Annex 1 hereto, properly completed (the "1995 Notes"); and (g) such other documents, instruments and certificates as the Agent or any Lender may reasonably request in connection with the transactions contemplated by this Amendment. Section 3. Representations and Warranties. The Company hereby represents and warrants to each Lender and the Agent as follows: (a) Organization: Power; Qualification. The Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the power and authority to own its properties and to carry on its business as now being and hereafter proposed to be conducted and is duly qualified and authorized to do business in each jurisdiction in 8 9 which the failure to be so qualified would have a materially adverse effect on the business, assets or financial condition of the Company. (b) Authorization of Amendment. The Company has the right and power, and has taken all necessary action to authorize, execute and deliver this Amendment and the 1995 Notes and to perform the Financing Agreement, as amended by this Amendment, and the 1995 Notes in accordance with their respective terms. This Amendment and the 1995 Notes have been duly executed and delivered by duly authorized officers of the Company and constitute legal, valid and binding obligations of the Company, enforceable in accordance with their respective terms. (c) Compliance of Financing Agreement and Amendment with Laws, etc. The execution, delivery and performance of the Financing Agreement as amended by this Amendment and the 1995 Notes, each in accordance with its terms, does not and will not, by the passage of time, the giving of notice or otherwise: (i) require any government approval, consent, license or registration or violate any law, rule, regulation or order applicable to the Company or the Company's properties or assets; (ii) conflict with, result in a breach of or constitute a default under the certificate of incorporation or by-laws of the Company, the Indentures, the Subordination Agreement, any indenture, agreement or other instrument to which the Company or any subsidiary of the Company is a party or by which the Company or any subsidiary of the Company or any property or assets of the Company or any subsidiary of the Company may be bound or any governmental approval, consent, license or registration applicable to the Company or any subsidiary of the Company; or (iii) result in or require the creation or imposition of any lien, security interest, charge or encumbrance upon or with respect to any property or assets now owned or hereafter acquired by the Company or any subsidiary of the Company, other than the security interest granted to the Agent, for its benefit and the benefit of the Lenders. (d) Adverse Change. Since September 30, 1995, (i) no material adverse change in the business, assets, liabilities, financial condition, results of operations or business prospects of the Company and its subsidiaries taken as a whole has occurred, and 9 10 (ii) no event has occurred or failed to occur which has had, or may have, a materially adverse effect on the Company and its subsidiaries taken as a whole. Section 4. Confirmation by Lenders. The Lenders confirm their consent to the Company entering into that certain Lease Agreement dated as of October 11, 1995 between Two Trees, a New York general partnership affiliated with the Company, as lessor, and the Company, as lessee, in respect of the Company's headquarters facility in Camden, South Carolina. Section 5. Assignment by NCFC. The Agent, CITBC and the Company hereby acknowledge notice of, and consent to, the assignment by NCFC of all of its right, title and interest in and to the Financing Agreement, any Notes held by it, and any and all rights and obligations as "Lender" under the Financing Agreement, to its affiliate, NBC. In accordance with the terms of Section 14 paragraph (5) of the Financing Agreement, NBC hereby agrees to be bound by the terms of the Financing Agreement as if it were an original signer thereof as a "Lender." Section 6. Effect of Amendment. From and after the effectiveness of this Amendment, all references in the Financing Agreement and in the Loan Documents to "the Amended and Restated Financing Agreement," "the Financing Agreement," "hereunder," "hereof" and words of like import referring to the Financing Agreement, shall mean and be references to the Financing Agreement as amended by this Amendment. Except as expressly amended hereby, the Financing Agreement and all terms, conditions and provisions thereof remain in full force and effect and are hereby ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. Section 7. Counterpart Execution: Governinq Law. (a) Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. (b) Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws of the State of Georgia, without giving effect to principles of conflicts of laws. 10 11 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. [CORPORATE SEAL] BUILDERS TRANSPORT, INC., a Georgia corporation, as the ATTEST: Company J. Ray Hardy - --------------------------- [Assistant] Secretary By: /s/ T. Michael Guthrie ------------------------------ Title: Treasurer --------------------------- THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, as Agent and as a Lender By: /s/ Neil Mulford ------------------------------ Title: Assistant Vice President --------------------------- NATIONAL BANK OF CANADA, a Canadian chartered bank, successor in interest to National Canada Finance Corp. By: /s/ Alex M. Council IV ------------------------------ Title: Vice President --------------------------- NATIONAL CANADA FINANCE CORP., a subsidiary of National Bank of Canada, for purposes of Section 5 By: /s/ Dan Shaw ------------------------------ Title: Assistant Vice President --------------------------- 11 EX-10.25 5 FINANCING AGREEMENT #6 1 EXHIBIT 10.25 AMENDMENT AND WAIVER TO AMENDED AND RESTATED FINANCING AGREEMENT dated as of May 28, 1993 THIS AMENDMENT dated as of March 25, 1996 is made by and among THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation ("CITBC"), NATIONAL BANK OF CANADA, a Canadian chartered bank ("NBC", and together with CITBC, the "Lenders"), CITBC, in its capacity as the agent for the Lenders ("Agent"), and BUILDERS TRANSPORT, INC., a Georgia corporation ("Company"). Preliminary Statement The Company, the Agent, NBC, and CITBC are parties to that certain Amended and Restated Financing Agreement, dated as of May 28, 1993, as amended to date (the "Financing Agreement"). Terms defined in the Financing Agreement and not otherwise defined herein are used herein as therein defined. The Company, the Agent and the Lenders have agreed to amend certain financial covenants of the Financing Agreement and to waive instances of noncompliance by the Company with such financial covenants upon and subject to the terms of this Amendment. NOW, THEREFORE, in consideration of the Financing Agreement, the advances and other financial accommodations made thereunder, the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Amendments to Financing Agreement. The Financing Agreement is hereby amended, subject to the provisions of Section 2 hereof, effective as of the date hereof, by amending Section 7 Representations, Warranties and Covenants by amending paragraphs 9, 13 and 14 thereof in their entireties to read, respectively, as follows: 9. The Company shall maintain at the end of each fiscal quarter, a Net Worth of not less than:
FISCAL PERIOD AMOUNT ------------- ------ For the fiscal quarter $37,000,000 ending March 31,
2
For the fiscal quarter $37,250,000 ending June 30, 1996 For the fiscal quarter $37,500,000 ending September 30, 1996 and each fiscal quarter thereafter
13. The Company shall maintain at the end of each fiscal quarter, an Interest Coverage Ratio of at least:
FISCAL PERIOD RATIO ------------- ----- For the fiscal quarter 0.75 to 1 ending March 31, 1996 For the fiscal quarter 0.60 to 1 ending June 30, 1996 For the fiscal quarter 0.70 to 1 ending September 30, 1996 For each fiscal quarter 1.00 to 1 ending on or after December 31, 1996
14. The Company shall maintain at the end of each fiscal quarter, a Leverage Ratio of not more than:
FISCAL PERIOD RATIO ------------- ----- For the fiscal quarters 6.25 to 1 ending March 31 1996 and June 30, 1996 For the fiscal quarter 6.15 to 1 ending September 30, 1996 For each fiscal quarter 6.00 to 1 ending on or after December 31, 1996
Section 2. Waiver. Subject to the provisions of Section 3, the Lenders hereby waive compliance and the effects of noncompliance by the Company with the provisions of Section 7, paragraph 9 to the extent that the Company's Net Worth as of December 31, 1995 was not less than $38,289,000 and Section 7, paragraph 14 to the extent that the Leverage Ratio as of December 31, 1995 was not greater than 6.11 to 1. 2 3 Section 3. Effectiveness of Amendment. Sections 1 and 2 of this Amendment shall become effective as of the date hereof upon receipt by the Agent of the following, each in form and substance satisfactory to the Agent and the Lenders: (a) at least five copies of this Amendment, each duly executed and delivered by the Company and each Lender; (b) an Officer's Certificate executed by an authorized officer of the Company to the effect that after giving effect to this Amendment (i) all representations and warranties of the Company set forth in the Financing Agreement and in any other document, instrument or agreement entered into in connection with the Financing Agreement (together with the Financing Agreement, the "Loan Documents") are true and correct in all material respects on and as of the date thereof and (ii) the Company is in compliance with all of the terms and provisions set forth in the Financing Agreement and the other Loan Documents; (c) confirmations duly executed and delivered by the Guarantors of their Guaranties and the Pledge Agreements in the form attached to this Amendment; and (d) such other documents, instruments and certificates as the Agent or any Lender may reasonably request in connection with the transactions contemplated by this Amendment. Section 4. Effect of Amendment. From and after the effectiveness of this Amendment, all references in the Financing Agreement and in the Loan Documents to "the Amended and Restated Financing Agreement," "the Financing Agreement," "hereunder," "hereof" and words of like import referring to the Financing Agreement, shall mean and be references to the Financing Agreement as amended by this Amendment. Except as expressly amended hereby, the Financing Agreement and all terms, conditions and provisions thereof remain in full force and effect and are hereby ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. Section 5. Counterpart Execution; Governing Law. (a) Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. 3 4 (b) Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws of the State of Georgia, without giving effect to principles of conflicts of laws. 4 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. [CORPORATE SEAL] BUILDERS TRANSPORT, INC., a Georgia corporation, as the ATTEST: Company T.M. Guthrie - ------------------------ [Assistant] Secretary By: Robert Fox -------------------------------------- Title: Executive Vice President & Chief Financial Officer ---------------------------------- THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, as Agent and as a Lender By: Robert Bernier -------------------------------------- Title:Vice President ----------------------------------- NATIONAL BANK OF CANADA, a Canadian chartered bank By: Charles Collie -------------------------------------- Title: Vice President & Manager ----------------------------------- By: Dan Shaw -------------------------------------- Title: Assistant Vice President ----------------------------------- 5 6 CONSENT, RELEASE AND CONFIRMATION OF GUARANTORS Each of the undersigned, each a "Guarantor" as defined in the Amended and Restated Financing Agreement dated May 28, 1993 among Builders Transport, Inc., as borrower, The CIT Group/Business Credit, Inc., as Agent for the Lenders (as such term is defined therein) and as a Lender and National Bank of Canada, as a Lender, hereby acknowledges receipt of the foregoing Amendment and Waiver to Amended and Restated Financing Agreement and confirms for the benefit of the Agent and the Lenders, that each of the Guaranty or Non-Recourse Guaranty, as the case may be, dated January 3, 1992, as amended, executed and delivered by the undersigned continues in full force and effect as a guaranty in accordance with its terms and continues to be secured by any collateral therefor and that each of the undersigned hereby waives and releases any and all claims it may have against the Agent or any Lender or any of their respective shareholders, directors, employees or agents arising out of any event or circumstance existing on or prior to the date hereof and arising under the Original Financing Agreement (as defined in the aforesaid Amended and Restated Financing Agreement), the aforesaid Amended and Restated Financing Agreement, the Guaranty, the Non-Recourse Guaranty or any related document or in connection with the transactions contemplated thereby. BUILDERS TRANSPORT OF TEXAS, INC. By Robert Fox ------------------------------ Name: Robert Fox Title: Chief Financial Officer CCG, INC. By Robert Fox ------------------------------ Name: Robert Fox Title: Chief Financial Officer BUILDERS TRANSPORT, INCORPORATED By Robert Fox ------------------------------ Name: Robert Fox Title: Chief Financial Officer EX-10.26 6 AMENDMENT 1 TO BT EMPLOYEE RETIREMENT 1 EXHIBIT 10.26 RESOLVED, that the Company does hereby amend the KSOP, effective as of the Effective Date (as defined under the Plan), as follows: Notwithstanding anything in the Plan to the contrary, if no more than one-third ( 1/3) of the Employer Regular ESOP Contributions and Employer Matching ESOP Contributions to the Plan for a given Plan Year, which are deductible under Code section 404(a)(9), are allocated to Highly Compensated Employees, the limitations imposed by Code section 415 shall not apply to: (A) Forfeitures of Employer Securities under the Plan, if such securities were acquired with the proceeds of a loan (as described in Code section 404(a)(9)(A)), or (B) Employer Regular ESOP Contributions or Employer Matching ESOP Contributions to the Plan which are deductible under Code section 404(a)(9)(B) and charged against the applicable Participant's Account(s). EX-11 7 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 Statement Re: Computation of Per Share Earnings
Year Ended December 31 ------------------------------------------ 1995 1994 1993 ----------- ----------- ----------- PRIMARY: Average shares outstanding 6,212,517 6,187,196 5,936,770 Net effect of dilutive stock options - based on the treasury method 178,177 326,719 292,923 Weighted average number of shares held in treasury (1,128,265) (905,214) (855,500) ------------ ----------- ----------- Shares used to compute primary per share income (loss) 5,262,429 5,608,701 5,374,193 ============ =========== =========== Income before cumulative effect of accounting change $ 218,890 $ 4,515,088 $ 3,041,745 Cumulative effect of accounting change (7,290,621) - - ------------ ----------- ----------- Net income (loss) $ (7,071,731) $ 4,515,088 $ 3,041,745 ============ =========== =========== Net Income (loss) per Common Share: Net income before cumulative effect of accounting change $ .04 .81 .57 Cumulative effect of accounting change (1.38) - - ------------ ----------- ----------- Net income (loss) per common share $ (1.34) .81 .57 ============ =========== =========== FULLY DILUTED: Average shares outstanding 6,212,517 6,187,196 5,936,770 Net effect of dilutive stock options - based on the treasury stock method using the year-end market price, if higher than average market price 250,432 326,719 484,579 Assumed conversion of 8% subordinated convertible debentures 1,089,918 1,155,260 1,178,279 Assumed conversion of 6-1/2% subordinated convertible debentures 599,344 651,665 663,444 Weighted average number of shares held in treasury (1,128,265) (905,214) (855,500) ------------ ----------- ----------- Shares used to compute fully diluted per share income 7,023,946 7,415,626 7,407,572 ============ =========== =========== Net income before cumulative effect of accounting change and adjustments $ 218,890 $ 4,515,088 $ 3,041,745 Add 8% subordinated convertible debenture interest, net of income tax effect 1,297,787 1,491,385 1,518,000 Add 6-1/2% subordinated convertible debenture interest, net of income tax effect 889,687 1,060,504 1,074,431 Cumulative effect of accounting change (7,290,621) - - ------------ ----------- ----------- Adjusted net income (loss) $ (4,884,257) $ 7,066,977 $ 5,634,176 ============ =========== =========== Net Income (loss) per Common Share: Net income before cumulative effect of accounting change $ .34 .95 .76 Cumulative effect of accounting change (1.04) - - ------------ ----------- ----------- Net income (loss) per common share $ (.70) .95 .76 ============ =========== ===========
EX-23 8 CONSENT OF INDEPENDENT AUDITORS 1 Ernst & Young LLP [Logo] EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 33-14988, 33-59948 and 33-86626) pertaining to the Incentive Stock Option Plan, Non-employee Directors' Stock Option Plan and the Employee Retirement Plan of Builders Transport, Incorporated and subsidiaries and in the related Prospectuses of our report dated February 23, 1996, with respect to the consolidated financial statements and schedule of Builders Transport, Incorporated and subsidiaries included in the Annual Report (Form 10-K) for the year ended December 31, 1995. ERNST & YOUNG LLP Winston-Salem, North Carolina March 25, 1996 EX-24 9 POWERS OF ATTORNEY 1 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned Director or officer of Builders Transport, Incorporated, a Delaware corporation (the "Company") hereby constitutes and appoints Stanford M. Dinstein, John R. Morris, Robert Y. Fox, T. Michael Guthrie or Robert E. Lee Garner the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority in each of said agents and attorneys-in-fact, acting singly, to sign for the undersigned, as Director or an officer of the Company, or as both, the Company's 1995 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission, Washington, D.C. under the Securities Exchange Act of 1934, and to sign any amendment or amendments to such Annual Report, including an Annual Report pursuant to Form 11-K to be filed as an amendment to the Form 10-K; hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact as herein authorized. DATED: March 15, 1996. /s/ DAVID C. WALENTAS -------------------------------------- David C. Walentas 2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned Director or officer of Builders Transport, Incorporated, a Delaware corporation (the "Company") hereby constitutes and appoints David C. Walentas, John R. Morris, Robert Y. Fox, T. Michael Guthrie or Robert E. Lee Garner the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority in each of said agents and attorneys-in-fact, acting singly, to sign for the undersigned, as Director or an officer of the Company, or as both, the Company's 1995 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission, Washington, D.C. under the Securities Exchange Act of 1934, and to sign any amendment or amendments to such Annual Report, including an Annual Report pursuant to Form 11-K to be filed as an amendment to the Form 10-K; hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact as herein authorized. DATED: March 15, 1996. /s/ STANFORD M. DINSTEIN -------------------------------------- Stanford M. Dinstein 3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned Director or officer of Builders Transport, Incorporated, a Delaware corporation (the "Company") hereby constitutes and appoints David C. Walentas, Stanford M. Dinstein, Robert Y. Fox, T. Michael Guthrie or Robert E. Lee Garner the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority in each of said agents and attorneys-in-fact, acting singly, to sign for the undersigned, as Director or an officer of the Company, or as both, the Company's 1995 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission, Washington, D.C. under the Securities Exchange Act of 1934, and to sign any amendment or amendments to such Annual Report, including an Annual Report pursuant to Form 11-K to be filed as an amendment to the Form 10-K; hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact as herein authorized. DATED: March 15, 1996. /s/ JOHN R. MORRIS -------------------------------------- John R. Morris 4 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned Director or officer of Builders Transport, Incorporated, a Delaware corporation (the "Company") hereby constitutes and appoints David C. Walentas, Stanford M. Dinstein, John R. Morris, Robert Y. Fox, T. Michael Guthrie or Robert E. Lee Garner the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority in each of said agents and attorneys-in-fact, acting singly, to sign for the undersigned, as Director or an officer of the Company, or as both, the Company's 1995 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission, Washington, D.C. under the Securities Exchange Act of 1934, and to sign any amendment or amendments to such Annual Report, including an Annual Report pursuant to Form 11-K to be filed as an amendment to the Form 10-K; hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact as herein authorized. DATED: March 15, 1996. /s/ ARTHUR C. BAXTER -------------------------------------- Arthur C. Baxter 5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned Director or officer of Builders Transport, Incorporated, a Delaware corporation (the "Company") hereby constitutes and appoints David C. Walentas, Stanford M. Dinstein, John R. Morris, Robert Y. Fox, T. Michael Guthrie or Robert E. Lee Garner the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority in each of said agents and attorneys-in-fact, acting singly, to sign for the undersigned, as Director or an officer of the Company, or as both, the Company's 1995 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission, Washington, D.C. under the Securities Exchange Act of 1934, and to sign any amendment or amendments to such Annual Report, including an Annual Report pursuant to Form 11-K to be filed as an amendment to the Form 10-K; hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact as herein authorized. DATED: March 15, 1996. /s/ FREDERICK S. MORTON -------------------------------------- Frederick S. Morton 6 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned Director or officer of Builders Transport, Incorporated, a Delaware corporation (the "Company") hereby constitutes and appoints David C. Walentas, Stanford M. Dinstein, John R. Morris, Robert Y. Fox, T. Michael Guthrie or Robert E. Lee Garner the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority in each of said agents and attorneys-in-fact, acting singly, to sign for the undersigned, as Director or an officer of the Company, or as both, the Company's 1995 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission, Washington, D.C. under the Securities Exchange Act of 1934, and to sign any amendment or amendments to such Annual Report, including an Annual Report pursuant to Form 11-K to be filed as an amendment to the Form 10-K; hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact as herein authorized. DATED: March 15, 1996. /s/ T. MICHAEL GUTHRIE -------------------------------------- T. Michael Guthrie 7 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that the undersigned Director or officer of Builders Transport, Incorporated, a Delaware corporation (the "Company") hereby constitutes and appoints David C. Walentas, Stanford M. Dinstein, John R. Morris, Robert Y. Fox, T. Michael Guthrie or Robert E. Lee Garner the true and lawful agents and attorneys-in-fact of the undersigned with full power and authority in each of said agents and attorneys-in-fact, acting singly, to sign for the undersigned, as Director or an officer of the Company, or as both, the Company's 1995 Annual Report on Form 10-K to be filed with the Securities and Exchange Commission, Washington, D.C. under the Securities Exchange Act of 1934, and to sign any amendment or amendments to such Annual Report, including an Annual Report pursuant to Form 11-K to be filed as an amendment to the Form 10-K; hereby ratifying and confirming all acts taken by such agents and attorneys-in-fact as herein authorized. DATED: March 15, 1996. /s/ ROBERT Y. FOX -------------------------------------- Robert Y. Fox 8 BUILDERS TRANSPORT, INCORPORATED SECRETARY'S CERTIFICATE I, Robert E. Lee Garner, hereby certify as follows: 1. I am the Secretary of Builders Transport, Incorporated, a corporation duly organized and existing in good standing under the laws of the State of Delaware (the "Company"), and as such I am authorized to execute and deliver this certificate. 2. Attached hereto as Annex I is a true, complete and correct copy of a resolution duly adopted on November 10, 1995, by the Company's Board of Directors; said resolution has not been altered, amended or repealed; said resolution has been in full force and effect at all times since the date of its adoption; and said resolution is in full force and effect as of the date of this certificate. IN WITNESS WHEREOF, I have hereunto set my hand as of this 27th day of March, 1996. /s/ ROBERT E. LEE GARNER -------------------------------------- Robert E. Lee Garner Secretary Builders Transport, Incorporated 9 ANNEX I RESOLVED, that in connection with the preparation and filing of the Company's Annual Report on Form 10-K with the Securities and Exchange Commission, each of the Company's officers and Directors who may be required to execute said Form 10-K or any amendment thereto (whether on behalf of the Company or as an officer or Director thereof or by attesting the seal of the Company or otherwise) be, and he hereby is, authorized to execute a power of attorney appointing the Company's Chairman of the Board of Directors, the Vice Chairman of the Board of Directors and Chief Executive Officer, President, Treasurer or Secretary his true and lawful agent and attorney-in-fact to execute in his name, place and stead (in any such capacity) and as attorney and agent for the Company said Form 10-K and any and all amendments thereto, and all instruments necessary in connection therewith, to attest the seal of the Company thereon, and to file the same with the Securities and Exchange Commission, said attorney-in-fact and agent to have full power and authority to do and perform every act whatsoever necessary, appropriate or desirable to be done in the premises as fully and to all intents and purposes as any such officer or Director might or could do in person. EX-27 10 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF BUILDERS TRANSPORT, INC. FOR THE YEAR ENDED DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 109 0 28,815 511 3,233 49,328 301,924 102,662 272,061 58,489 164,762 0 0 62 38,227 272,061 289,527 289,527 0 272,958 1,420 0 15,145 4 (215) 219 0 0 (7,291) (7,072) (1.34) 0 OTHER EXPENSES OF $1,420,000 RELATES TO SPECIAL CHARGES ASSOCIATED WITH THE SALE AND EXITING OF THE TIRE LOADING AND WAREHOUSING OPERATIONS IN FEBRUARY 1996. CUMULATIVE EFFECT ADJUSTMENT RELATES TO THE ADOPTION OF SFAS NO. 121 "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR ASSETS TO BE DISPOSED OF"
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