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The following is an excerpt from a DEF 14A SEC Filing, filed by CENTRAL FREIGHT LINES INC on 4/23/2004.
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CENTRAL FREIGHT LINES INC - DEF 14A - 20040423 - COMMITTEE_INTERLOCKS

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is currently comprised of Duane Acklie, Porter Hall, and Gordan W. Winburne. No current member of the Compensation Committee is or has been an officer or employee of the Company. Prior to our initial public offering, our Compensation Committee consisted of Jerry Moyes and Earl H. Scudder. Mr. Scudder resigned as a director and member of the Compensation Committee on September 19, 2003. Mr. Moyes ceased to be a member of the Compensation Committee on December 11, 2003. From time to time, we have engaged in transactions with Mr. Moyes, parties affiliated with Mr. Moyes, and parties affiliated with Mr. Scudder.

On-Going Transactions with Mr. Moyes and His Affiliates

We currently lease 26 active terminals and eight dormant terminals from Southwest Premier Properties, L.L.C. Southwest Premier is owned by some of our directors, executive officers and existing stockholders, including 77% by Jerry Moyes, 10% by Robert Fasso, and 1% by members of Scudder Law Firm. In 1998, we sold thirty-four of these properties to Southwest Premier, along with additional terminals that have since been sold, for an aggregate of $27.8 million in a sale-and-leaseback transaction that was accounted for as a financing transaction. We also currently have operating leases for two active terminals owned by Mr. Moyes. We incurred aggregate expense to Southwest Premier of approximately $6.6 million in 2003. We incurred aggregate lease expense to Mr. Moyes of approximately $0.3 million in 2003.

Swift Transportation Co., Inc. and Central Refrigerated Service, Inc. provide us with a variety of transportation services. Mr. Moyes is the Chairman and Chief Executive Officer of Swift and the owner and Chairman of the Board of Central Refrigerated. Together, these companies provided us with approximately 58% of all third-party linehaul transportation services in 2003. Under these arrangements, Swift provided us with approximately $14.6 million in services in 2003. At year end, we owed Swift approximately $1.0. Central Refrigerated provided us with approximately $2.7 million in services in 2003. At year end, we owed Central Refrigerated approximately $0.2 million. We believe that the amounts paid are equivalent to rates that could have been obtained in an arm's length transaction with an unrelated third party.

We currently lease terminal space from Swift in Memphis, Tennessee at a lease rate of $15,836 per month and in Fontana, California at a lease rate of $60,500 per month. We also sublease portions of our terminal facilities to Swift at seven different locations. Swift leases property from us in Tyler, Texas, for $3,750 per month, in Houston, Texas, for $9,181 per month, in Little Rock, Arkansas, in San Antonio, Texas for $17,755 per month, and in Amarillo, Texas for $160 per month. All leases with Swift are, either by their terms or due to expiration of the contract, on a month-to-month basis. Under these subleases and other subleases we formerly had with Swift, our rental income from Swift was approximately $0.6 million in 2003.

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We believe that the amounts paid are equivalent to lease terms and rates that could have been obtained in an arms' length transaction with an unrelated third party.

We lease independent contractor drivers and their tractors through Interstate Equipment Leasing, Inc., a company owned by Jerry Moyes. The independent contractors provide linehaul services for us at a rate per mile that we believe is equivalent to rates that could have been obtained in an arm's length transaction with an unrelated third party. We incurred expenses with Interstate of approximately $1.2 million in 2003. At year end, we owed Interstate approximately $12,000.

Past Transactions with Mr. Moyes and His Affiliates

In 2002, we both formed and disposed of Central Refrigerated, a refrigerated truckload carrier. Central Refrigerated was formed as our wholly-owned subsidiary to acquire certain assets from the bankruptcy estate of Simon Transportation Services Inc. and its subsidiaries, Dick Simon Trucking, Inc. and Simon Terminal, LLC. Simon Transportation and its subsidiaries filed bankruptcy petitions under Chapter 11 of the United States Bankruptcy Code on February 25, 2002. Jerry Moyes was the Chairman of the Board of Simon Transportation commencing in September 2000 and was also the majority stockholder during this period. In the acquisition, we assumed approximately $11.4 million owed by Simon Transportation to Jerry Moyes and his affiliates. We also borrowed $3.3 million from Mr. Moyes to pay $2.6 million in cash to the bankruptcy estate, and $0.7 million in transaction costs. The approximately $14.7 million we owed to Mr. Moyes and his affiliates was secured solely by all of the outstanding stock of Central Refrigerated. At the closing of the acquisition, Central Refrigerated assumed leases for approximately 1,360 tractors and 1,920 trailers, approximately $13.0 million in real estate financing, and approximately $56.1 million in other liabilities. We did not guarantee or otherwise become obligated for any of these amounts. The acquisition closed, and the operations of Central Refrigerated began, on April 22, 2002.

On December 31, 2002, we transferred the shares of Central Refrigerated to Jerry Moyes and one of his affiliates in exchange for the cancellation of the approximately $14.7 million of indebtedness owed by us to them, at which time Central Refrigerated obtained separate insurance coverage. As part of the disposition, we agreed to make a payment of $8.3 million to Central Refrigerated to compensate Central Refrigerated and Jerry Moyes for facilitating the transaction. This payment was made on October 28, 2003. Central Refrigerated was under our group insurance policy between April 22, 2002, and December 31, 2002, and under our workers' compensation policy through June 2003, and has posted letters of credit in the aggregate amount of $9.3 million with respect to its self-insured retentions during those periods. Central Refrigerated has also agreed to indemnify us for any losses we suffer as a result of those retentions.

During 2003, we had tire sales of approximately $1.0 million to an affiliate of Jerry Moyes. We had no receivables, at December 31, 2003, from these transactions.

From time to time prior to our initial public offering, we made unsecured loans to Jerry Moyes and Southwest Premier pursuant to a revolving line of credit arrangement. The interest rate charged by us for these loans was a floating rate that was generally equivalent to our cost of borrowing. During 2003, the maximum aggregate principal amount outstanding for such loans was $18.0 million, and the interest rate on such loans was 4.1 percent. We received interest payments of approximately $600,000 in 2003 in respect of these borrowings. On October 28, 2003, Jerry Moyes repaid to us all principal and accrued interest due on these borrowings, and there were no amounts owed to us by either Jerry Moyes or Southwest Premier at year end.

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Transactions with Former Director's Law Firm

Earl H. Scudder, our former director and a former member of the Compensation Committee, is a principal of Scudder Law Firm, which provided legal services to the Company in 2003 and which will provide such services in 2004. Scudder Law Firm earned approximately $484,000 in 2003. Scudder Law Firm also provides legal services to Swift, Central Refrigerated, Jerry Moyes personally, and other companies controlled by Mr. Moyes. Mr. Scudder also serves on the Boards of Directors of Swift and Central Refrigerated.

BROKERAGE PARTNERS