<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 4, 1997.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
(Name of Small Business Issuer in Its Charter)
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<S> <C> <C>
GEORGIA 4731 58-1915632
- ----------------------------------- ----------------------------------- -----------------------------------
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
5025 DERRICK JONES ROAD, SUITE 120
ATLANTA, GEORGIA 30349
(770) 907-3360
(Address and Telephone Number of Principal Executive Offices)
---------------------
DENNIS A. BAKAL
PRESIDENT
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
5025 DERRICK JONES ROAD, SUITE 120
ATLANTA, GEORGIA 30349
(770) 907-3360
(Name, Address including Zip Code, Telephone Number, including Area Code, of
Agent for Service)
---------------------
COPIES OF ALL COMMUNICATIONS, INCLUDING COPIES OF ALL COMMUNICATIONS
SENT TO AGENT FOR SERVICE, SHOULD BE SENT TO:
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STEVEN A. CUNNINGHAM, ESQ. ROBERT E. ALTENBACH, ESQ.
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P. JOHNSON & MONTGOMERY
FIRST UNION PLAZA, SUITE 1400 ONE BUCKHEAD PLAZA, SUITE 400
999 PEACHTREE STREET, N.E. 3060 PEACHTREE ROAD, N.W.
ATLANTA, GEORGIA 30309 ATLANTA, GEORGIA 30305
(404) 817-6000 (404) 262-1000
(404) 817-6050 (FAX) (404) 262-1222 (FAX)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock................................................ $28,481,250(2) $8,631
Redeemable Common Stock Purchase Warrants(3)(4)............. 217,125 66
Total.................................................. $28,698,375 $8,697
==================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
(2) Includes (i) 1,500,000 shares of Common Stock offered hereby, (ii) 1,500,000
shares of Common Stock issuable upon exercise of the Redeemable Common Stock
Purchase Warrants (the "Warrants") offered hereby, (iii) 225,000 shares of
Common Stock subject to the Underwriters' over-allotment option, (iv)
225,000 shares of Common Stock issuable upon exercise of Warrants subject to
the Underwriters' over-allotment option, (v) 150,000 shares of Common Stock
issuable upon exercise of the Underwriters' Warrants and (vi) 150,000 shares
of Common Stock underlying the Warrants issuable upon exercise of the
Underwriters' Warrants.
(3) Includes (i) 1,500,000 Warrants offered hereby, (ii) 225,000 Warrants
subject to the Underwriters' over-allotment option and (iii) 150,000
Warrants subject to the Underwriters' Warrants.
(4) Pursuant to Rule 416, this Registration Statement also covers such
indeterminate number of shares of Common Stock as may be issuable upon
exercise of the Warrants.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 4, 1997
PROSPECTUS
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
1,500,000 SHARES OF COMMON STOCK AND
1,500,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
Professional Transportation Group Ltd., Inc., a Georgia corporation (the
"Company"), hereby offers 1,500,000 shares of Common Stock, no par value per
share (the "Common Stock"), and 1,500,000 Redeemable Common Stock Purchase
Warrants (the "Warrants"). The shares of Common Stock and the Warrants offered
hereby (sometimes hereinafter collectively referred to as the "Securities") may
be purchased separately. Each Warrant is transferable immediately upon issuance
and entitles the holder thereof to purchase one share of Common Stock at a price
of $6.90 per share (assuming an initial offering price of $6.00 per share)
during the four-year period commencing on the first anniversary of the effective
date of this offering (the "First Exercise Date"). The Warrants are redeemable
by the Company at a redemption price of $0.125 per Warrant, at any time after
the First Exercise Date, upon 30 days written notice to the holders thereof, if
the average closing price of the Common Stock equals or exceeds $10.50 per share
for the 10 consecutive trading days ending three days prior to the date of the
notice of redemption. See "Description of Securities."
Prior to this offering (the "Offering"), there has been no public market
for the Common Stock or Warrants and there can be no assurance that any such
market will develop. It is currently anticipated that the initial public
offering price of the Common Stock will be between $5.00 and $7.00 per share and
the initial public offering price of the Warrants will be $0.125 per Warrant.
The initial public offering price of the shares of Common Stock, the Warrants
and the exercise price and other terms of the Warrants have been determined by
negotiations between the Company and Argent Securities, Inc., as representative
of the Underwriters (the "Representative"). See "Underwriting." The Company has
applied to include the shares of Common Stock and Warrants on The Nasdaq Stock
Market's SmallCap Market (the "Nasdaq SmallCap Market") under the symbols "TRUC"
and "TRUCW," respectively.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION FROM THE PUBLIC OFFERING PRICE.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED UNDER THE
CAPTION "RISK FACTORS" WHICH APPEAR BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share of Common Stock.............. $ $ $
- ------------------------------------------------------------------------------------------------------------------
Per Warrant............................ $ $ $
- ------------------------------------------------------------------------------------------------------------------
Total(3)..................... $ $ $
==================================================================================================================
</TABLE>
(1) Does not reflect additional compensation to be received by the Underwriters
in the form of: (i) a non-accountable expense allowance equal to 3% of the
gross proceeds of this Offering, and (ii) an option to purchase up to
150,000 shares of Common Stock and 150,000 Warrants at 120% of the initial
public offering price (the "Underwriters' Warrants"), exercisable for a
period of four years, commencing one year after the effective date of the
Registration Statement of which this Prospectus is a part. The Company and
the Underwriters have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses of the Offering payable by the Company estimated
at approximately $670,625, including the Underwriters' non-accountable
expense allowance (assuming no exercise of the Underwriters' over-allotment
option).
(3) The Company has granted the Underwriters an option, exercisable within 45
days of the date hereof, to purchase up to an additional 225,000 shares of
Common Stock and Warrants solely to cover over-allotments, if any. If the
Underwriters' over-allotment option is exercised in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $ ,
$ , and $ , respectively. See "Underwriting."
The Securities offered by this Prospectus are being offered by the
Underwriters on a "firm commitment" basis subject to prior sale, when, as and if
accepted by the Underwriters, approval of certain legal matters by counsel for
the Underwriters and certain other conditions. The Underwriters reserve the
right to withdraw, cancel or modify such offer without notice and reject any
order in whole or in part. It is expected that delivery of the certificates
representing the Securities will be made in Atlanta, Georgia on or about
, 1997.
ARGENT SECURITIES, INC.
The Date of this Prospectus is , 1997
<PAGE> 3
[ARTWORK TO BE DETERMINED]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OR
WARRANTS. SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE
OFFERING AND MAY BID FOR, AND PURCHASE, COMMON STOCK OR WARRANTS IN THE OPEN
MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
The Company intends to furnish to its security holders annual reports
containing audited financial statements and such other periodic reports as the
Company may determine to be appropriate or as may be required by law.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information, and the financial statements and
notes thereto, appearing elsewhere in this Prospectus. Unless otherwise
indicated, the information in this Prospectus reflects a 5,000-to-one stock
split effected in December 1996 and assumes (i) a public offering price of $6.00
per share of Common Stock (the midpoint of the price range set forth on the
cover page of this Prospectus), (ii) that the Underwriters' over-allotment
option has not been exercised, and (iii) that the Underwriters' Warrants have
not been exercised. Unless the context otherwise requires, all references to the
Company include the Company and each of its subsidiaries. Each prospective
investor is urged to read this Prospectus in its entirety.
THE COMPANY
The Company is a transportation services company that provides ground
transportation and logistics services for the air freight industry throughout
the continental United States. The Company was founded by Dennis A. Bakal in
October 1990, and he is the Company's majority shareholder and sole director.
The Company serves as a holding company for its three operating subsidiaries:
Timely Transportation, Inc. ("Timely"), Truck-Net, Inc. ("Truck-Net") and PTG,
Inc. ("PTG"). Effective January 1, 1997, Mr. Bakal contributed all of his shares
of Timely, Truck-Net and PTG to the Company. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation" and "Certain
Transactions." For the year ended December 31, 1996, Timely accounted for
approximately $13.6 million or 64.1% of the Company's revenues, Truck-Net
accounted for approximately $6.5 million or 30.7% of the Company's revenues and
PTG accounted for approximately $1.1 million or 5.2% of the Company's revenues.
The Company's consolidated revenues increased by 37% from 1994 to 1995 and
by 21% from 1995 to 1996. The Company attributes its growth to management's
knowledge and experience in the air freight industry, consistent on-time
deliveries, and superior customer service. Management believes that revenues
will continue to increase, as trends toward an expansion of core carrier
relationships (where a shipper utilizes a select number of carriers for its
routes), reductions of private fleets and greater outsourcing by shippers favor
more efficient and cost-effective providers of transportation services.
Through its Timely subsidiary, which was formed in 1991, the Company
provides time-definite truckload transportation services for companies in the
air freight and expedited delivery markets. Operating both common carrier and
dedicated fleet services for its air freight customers, Timely moves freight
across long and short distances with very precise schedules for pickups and
deliveries. The Company's "Almost as Fast as Air"(SM) service has transit times
comparable to those of deferred air freight (freight requiring two or three day
delivery). The Company serves as one of eight core carriers for Federal Express
Corporation ("FedEx").
Through its Truck-Net subsidiary, which was acquired by Mr. Bakal in July
1991, the Company operates as a broker of truckload services to the air freight
industry. Since many air cargo carriers and air freight forwarders do not own
trucks, they rely upon third party carriers for ground transportation services.
Through logistics companies like Truck-Net, a shipper can place a single call to
arrange truckload services anywhere in the United States, without having to
contact numerous individual carriers who may or may not have a truck available
for a particular shipment to a particular destination.
Through its PTG subsidiary, which was formed in 1990, the Company operates
a courier delivery service known as "Rapid Transit" in the metropolitan Atlanta,
Georgia area. In addition to providing general courier services, PTG also
retrieves office equipment that is in need of repair or coming off lease and
returns such equipment to the manufacturer.
The Company's business strategy is to establish itself as a preferred
provider of high-quality, cost-effective transportation and logistics services
to the air freight industry. Key elements of the Company's strategy include the
following:
Deliver Superior Customer Service and Add Value. Expedited on-time
delivery is the mission of the air freight industry, and in order to meet
the needs of the industry, the Company provides time-
3
<PAGE> 5
definite pickup and delivery. Compared with deferred air freight services,
the Company offers comparable transit times at much lower prices. The
Company uses experienced driver teams and modern technology to ensure that
customers receive quality service. The Company does not always strive to be
the lowest-cost carrier for its customers, but instead focuses on providing
value (such as real time tracking of a shipment) beyond any marginally
higher price its customers might pay.
Utilize Available Technology and Modern Equipment. Due to customers'
demands for real time information on their shipments and on-time
deliveries, the Company utilizes modern satellite technology to track its
vehicles. Specifically, the Company's use of QUALCOMM Inc.'s ("QUALCOMM")
tracking system allows the Company to provide customers with precise
information on the status of their shipments and notify them of any
potential delays. In addition, the system provides valuable information on
a truck's speed, mileage, fuel consumption, and other factors that enables
the Company to increase efficiency and reduce costs. The Company also has
developed a proprietary route optimization software program to assist
management in analyzing the most cost-effective route system for the
Company's fleet.
Attract and Retain Highly-Skilled and Motivated Employees. To provide
superior customer service, the Company relies on a dedicated team of
professional drivers, administrators and managers committed to serving
customers. Through its recruitment and hiring program, the Company hires
only professional drivers who are selected based on experience, safety
record, and a personal evaluation. The competition for experienced drivers
is intense, but by providing modern equipment and offering competitive
salaries and dedicated routes, the Company is successful in recruiting and
retaining productive, satisfied drivers. The Company's success in reducing
driver turnover rate has contributed to an overall increase in its
efficiency and reduction of the expenses associated with hiring, training
and integrating new employees.
The Company intends to continue to invest in modern equipment, to expand
its marketing capabilities and to improve its operating and distribution
efficiencies through acquisitions, strategic alliances and capital expenditures.
In implementing this plan, the Company believes it will increase its market
share, obtain greater control over the quality, availability and cost of its
services, and improve operating margins.
The Company's principal offices are located at 5025 Derrick Jones Road,
Suite 120, Atlanta, Georgia 30349 and its telephone number is (770) 907-3360.
THE OFFERING
Securities Offered......... 1,500,000 shares of Common Stock and 1,500,000
Warrants. See "Description of Securities."
Warrants................... Each Warrant entitles the holder thereof to
purchase one share of Common Stock at a price of
$6.90 per share (assuming an initial offering price
of $6.00 per share) during the four year period
commencing on the first anniversary of the
effective date of this Offering (the "First
Exercise Date"). The Warrants are redeemable by the
Company at a redemption price of $0.125 per
Warrant, at any time after the First Exercise Date,
upon 30 days prior written notice to the holders
thereof, if the average closing price of the Common
Stock equals or exceeds $10.50 per share, for the
10 consecutive trading days ending three days prior
to the date of the notice of redemption. See
"Description of Securities."
Securities Outstanding
Prior to the Offering.... 2,600,000 shares of Common Stock
Securities Outstanding
Subsequent to the
Offering(1).............. 4,100,000 shares of Common Stock and 1,500,000
Warrants
4
<PAGE> 6
Use of Proceeds by
Company.................... The net proceeds of this Offering will be used for
the purchase of operating and computer equipment
and working capital and other corporate purposes.
See "Use of Proceeds."
Risk Factors............... This offering involves a high degree of risk and
immediate and substantial dilution. See "Risk
Factors" and "Dilution."
Proposed Nasdaq
Symbols(2)................. Common Stock -- TRUC
Warrants -- TRUCW
--------------------------------------------
(1) Does not include (i) the 1,500,000 shares of Common Stock issuable upon the
exercise of the Warrants offered hereby, (ii) up to 225,000 shares of Common
Stock and 225,000 Warrants issuable upon exercise of the Underwriters'
over-allotment option, (iii) the 225,000 shares of Common Stock issuable
upon exercise of the Warrants included in the Underwriters' over-allotment
option, (iv) the 345,000 shares of Common Stock issuable upon exercise of
the Underwriters' Warrants (including the Warrants therein), or (v)
1,300,000 shares of Common Stock issuable upon the exercise of stock options
outstanding on the date hereof. See "Management -- Stock Option Plan,"
"Description of Securities" and "Underwriting."
(2) The Securities have not yet been approved for quotation on the Nasdaq
SmallCap Market and there can be no assurance that the Company will be able
to meet the requirements for quotation, or that a public trading market will
develop or that if such market develops, it will be sustained. See "Risk
Factors -- Lack of Prior Market for Securities."
5
<PAGE> 7
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table presents summary consolidated historical data of the
Company as of December 31, 1996 and for the two years ended December 31, 1995
and 1996 which have been derived from the Company's audited financial statements
included elsewhere in this Prospectus. The summary financial information should
be read in conjunction with "Selected Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and the notes thereto appearing
elsewhere in this Prospectus.
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YEARS ENDED DECEMBER 31,
--------------------------
1995 1996
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STATEMENT OF OPERATIONS DATA:
Operating revenues.......................................... $17,484,765 $21,172,201
Operating expenses.......................................... 17,704,476 20,509,835
Income (loss) from operations............................... (219,711) 662,366
Other income (expense)...................................... (30,489) (179,288)
Pro forma income (loss) before income taxes................. (250,200) 483,078
Pro forma net income (loss)................................. $ (155,200) $ 300,078
=========== ===========
Pro forma net income (loss) per share....................... $ (0.06) $ 0.09
=========== ===========
Weighted average number of common and common equivalent
shares outstanding........................................ 2,500,000 3,281,862
=========== ===========
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DECEMBER 31, 1996
----------------------------
ACTUAL AS ADJUSTED(1)
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BALANCE SHEET DATA:
Working capital............................................. $ 354,092 $ 5,702,217
Total assets................................................ 5,344,879 12,943,004
Total liabilities........................................... 5,345,826 5,345,826
Shareholders' equity (deficit).............................. (947) 7,597,178
</TABLE>
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(1) Adjusted to give effect to (i) the sale of 1,500,000 shares of Common Stock
and 1,500,000 Warrants offered hereby at assumed initial public offering
prices of $6.00 per share and $0.125 per Warrant, and the application of the
net proceeds therefrom. See "Use of Proceeds." No effect has been given to
the exercise of (i) the Warrants, (ii) the Underwriters' over-allotment
option or (iii) the Underwriters' Warrants (including the Warrants therein).
See "Underwriting."
This Prospectus contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Those statements appear in a number of
places in this Prospectus and include statements regarding the intent, belief or
current expectations of the Company, its director or its officers with respect
to, among other things: (i) the use of the proceeds of the Offering, (ii) the
Company's financing plans, (iii) trends affecting the Company's financial
condition or results of operations, (iv) the Company's business strategy, and
(v) the declaration and payment of dividends. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements as a
result of various factors. The accompanying information contained in this
Prospectus, including, without limitation, the information set forth under the
headings "Risk Factors," "Dividend Policy," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business,"
identifies important factors that could cause such differences.
6
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RISK FACTORS
The Securities offered hereby are speculative and involve a high degree of
risk and substantial dilution and should only be purchased by investors who can
afford to lose their entire investment. Prospective investors, prior to making
an investment, should carefully consider the following risks and speculative
factors, as well as other information set forth elsewhere in this Prospectus,
associated with this Offering, including the information contained in the
Financial Statements herein.
LOSSES FROM OPERATIONS; ACCUMULATED DEFICIT; NO ASSURANCES OF PROFITABILITY
Although the Company had net income of $300,078 for the year ended December
31, 1996, the Company experienced a net loss in the year ended December 31, 1995
of $155,200, and there can be no assurance that the Company will not incur net
losses in the future. The Company had an accumulated deficit of $16,113 at
December 31, 1996. The Company's operating expenses have increased as its
business has grown and can be expected to increase significantly as a result of
the Company's expansion efforts. There can be no assurance that the Company will
be able to generate sufficient revenue to meet its operating expenditures or to
operate profitably. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
DEPENDENCE ON CERTAIN CUSTOMERS/ABSENCE OF WRITTEN AGREEMENTS
For the year ended December 31, 1996, the Company's five largest customers
accounted for approximately 66% of the Company's combined revenue. Of these five
customers, FedEx and Panalpina, Inc. ("Panalpina") accounted for approximately
35% and 16%, respectively, of the revenue generated during this period. While
the Company has written agreements with FedEx and Panalpina for its services,
the Company does not have written agreements with any of its other customers.
Therefore, such customers can terminate the Company's services at any time and
for any reason. In addition, the FedEx agreement provides that FedEx may perform
the services itself or through its subsidiaries or affiliates and that FedEx may
terminate the agreement for any reason upon 30 days written notice. The loss of
either FedEx or Panalpina or a high rate of termination of services by the
Company's other customers would have a material adverse effect on the Company,
its profitability and its financial condition. See "Business -- Customers."
ECONOMIC FACTORS
Fuel prices, cost of employees and employee benefits, interest rates,
insurance premiums and customers' business cycles are economic factors over
which the Company has little or no control. Increases in the cost of any of
these items, if not offset by increases in freight revenues, could have a
material adverse effect on the Company, its profitability and its financial
condition. Furthermore, if customers' businesses are impacted by changes in
interest rates or fluctuations in business cycles, there could be a material
adverse effect on the Company, its profitability and its financial condition.
See "Business."
GROWTH OF BUSINESS; EXPANSION OF OPERATIONS
The Company has experienced significant and rapid growth in revenues since
the inception of its business in 1990. There can be no assurance that the
Company's business will continue to grow in a similar fashion in the future or
that the Company can effectively adapt its management, administrative and
operational systems to respond to any future growth. Further, there can be no
assurance that the Company's operating margins will not be adversely affected by
future changes in and expansion of the Company's business or by changes in
economic conditions.
COMPETITION
The truckload transportation industry is heavily fragmented and intensely
competitive and includes numerous regional, inter-regional and national
truckload carriers, none of which dominates the market. The Company's
competition ranges from small operators who can compete on certain lane
segments, often with
7
<PAGE> 9
lower overhead, to significantly larger companies with greater financial and
other resources than those of the Company, such as Landair, Inc. Competition for
the freight transported by the Company is based on freight rates, service and
efficiency. See "Business -- Competition."
AVAILABILITY OF DRIVERS
The Company utilizes the services of both employee drivers and independent
contractors. Competition for employee drivers and independent contractors is
intense within the trucking industry. From time to time, there have been
industry-wide shortages of qualified drivers and independent contractors and
there can be no assurance that the Company will not be affected by a shortage of
qualified drivers or independent contractors in the future. Prolonged difficulty
in attracting or retaining qualified drivers or independent contractors could
have a material adverse effect on the Company, its profitability and its
financial condition. See "Business -- Drivers and Other Employees."
CAPITAL REQUIREMENTS
The trucking industry is very capital intensive. The Company depends on
operating leases and debt financing in order to expand and maintain a modern
operating fleet. If the Company were unable in the future to enter into
acceptable operating lease arrangements, raise additional equity or borrow
sufficient funds, it would be forced to limit its growth or operate its fleet
for longer periods, which could adversely affect the Company, its profitability
and its financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
REGULATION
The Company's operations are subject to various federal, state and local
laws and regulations. Although compliance with these laws and regulations has
not had a material effect on the Company's operations or financial condition,
there is no assurance that additions or changes to current laws or regulations
will not have a material effect on the Company, its profitability and its
financial condition. See "Business -- Regulation."
DEPENDENCE ON OFFERING PROCEEDS TO IMPLEMENT PROPOSED EXPANSION; POSSIBLE NEED
FOR ADDITIONAL FINANCING
The Company's capital requirements have been and will continue to be
significant. The Company is dependent on and intends to use a substantial
portion of the proceeds of this Offering to implement its proposed expansion.
The Company anticipates, based on currently proposed plans and assumptions
relating to its operations (including the anticipated costs associated with, and
timetable for, its proposed expansion), that the proceeds of this Offering,
together with cash flow from operations, will be sufficient to satisfy its
contemplated cash requirements for at least 12 months following the consummation
of this Offering. In the event that the Company's plans change, its assumptions
change or prove to be inaccurate or if the proceeds of this Offering or cash
flows otherwise prove to be insufficient to fund expansion (due to unanticipated
expenses, delays, problems, difficulties or otherwise), the Company will be
required to minimize cash expenditures and/or obtain additional financing in
order to support its plan of operations. The Company has no current arrangements
with respect to, or sources of, additional financing and there can be no
assurance that any additional financing will be available to the Company on
acceptable terms, or at all.
DEPENDENCE ON KEY PERSONNEL
The success of the Company will be largely dependent on the continued
services and efforts of Dennis A. Bakal, the Company's President and Chief
Executive Officer, and other key personnel. The loss of the services of Mr.
Bakal or certain other key personnel could have a material adverse effect on the
Company's business and prospects. The Company's success and plans for future
growth will also depend on its ability to attract and retain additional
qualified management and other personnel. There can be no assurance that the
Company will be able to hire or retain such personnel on terms satisfactory to
the Company. Mr. Bakal and certain of the Company's executive officers and the
Company have entered into three-year employment agreements which
8
<PAGE> 10
are automatically renewable unless otherwise terminated. See
"Management -- Executive Compensation/ Employment Agreements."
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company's quarterly operating results have varied significantly in the
past and may vary significantly in the future. Special factors that may cause
the Company's future operating results to vary include, without limitation: the
timing of changes in pricing policies by the Company and its competitors;
increased competition; changes in operating expenses, including expenses related
to acquisitions; changes in Company strategy; personnel changes; changes in
legislation and regulation; and general economic factors. Due to all of the
foregoing factors, it is likely that in some future quarter the Company's
operating results will be below the expectations of public market analysts and
investors. In such an event, the price of the Common Stock and Warrants would
likely be materially adversely affected. See "Selected Consolidated Financial
Data" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
POTENTIAL LIABILITY/UNINSURED LOSSES
The Company's business, by its nature, is subject to risk of liability
resulting from the movement of freight. Furthermore, as the Company expands its
operations, an additional risk of liability may occur. Currently, the Company
carries commercial liability insurance in amounts believed to be adequate to
cover any losses. However, no assurance can be given that such insurance
coverage will be sufficient to fully protect the business and assets of the
Company from all claims or that the Company will be able to obtain additional
insurance at commercially reasonable rates. To the extent losses or claims are
beyond the limits or scope of the Company's insurance coverage, the Company's
business and assets could be materially adversely affected. See
"Business -- Safety and Risk Management."
CONTROL BY MANAGEMENT
Upon completion of this Offering, Dennis A. Bakal, the Company's President
and Chief Executive Officer, will beneficially own or have voting control over
2,700,000 shares of Common Stock, or approximately 62.8% (59.7% if the
Underwriters' over-allotment option is exercised in full) of the then
outstanding shares of Common Stock. Mr. Bakal will therefore be in a position to
control the outcome of matters submitted for shareholder approval, including
election of the Company's directors, and could thereby affect the selection of
management and direct the policies and affairs of the Company. See "Principal
Shareholders."
DILUTION
Based upon the net tangible book value of the Company at December 31, 1996,
investors in this Offering will suffer an immediate and substantial dilution of
their investment of approximately $4.15 in net tangible book value per share.
See "Dilution."
LACK OF PRIOR MARKET FOR SECURITIES
Prior to this Offering, there has been no public trading market for the
Securities and there can be no assurances that a public trading market for the
Securities will develop or, if developed, will be sustained. The Company's
Securities have not yet been approved for quotation on the Nasdaq SmallCap
Market and there can be no assurance that a regular trading market will develop
for the Securities offered hereby, or, if developed, that it will be maintained.
If for any reason the Company fails to maintain sufficient qualifications for
continued listing on the Nasdaq SmallCap Market or a public trading market does
not develop, purchasers of the Securities may have difficulty selling their
Securities should they desire to do so. In addition, under the "penny stock"
rules, certain restrictions may be placed upon the sale of securities at prices
under $5.00, unless such securities qualify for an exemption from the "penny
stock" rules, such as a listing on the Nasdaq SmallCap Market. As a result, some
brokerage firms will not effect transactions in the Securities if they trade
below $5.00, and it is unlikely that any bank or financial institution will
accept the Securities as collateral,
9
<PAGE> 11
which could have an adverse effect in developing or sustaining any market for
the Securities. See "-- Listing and Maintenance Criteria for Nasdaq System;
'Penny Stock' Regulations."
ARBITRARY DETERMINATION OF OFFERING PRICE AND WARRANT EXERCISE PRICE
The initial public offering price of the Common Stock and the Warrants have
been determined by negotiations between the Company and the Representative and
do not necessarily bear any relationship to the Company's assets, net worth or
results of operations, or any other established criteria of value. The offering
price set forth on the cover page of this Prospectus should not be considered an
indication of the actual value of the Securities offered hereby. After
completion of this Offering, such price may vary as a result of market
conditions and other factors. See "Description of Securities" and
"Underwriting."
BROAD DISCRETION IN APPLICATION OF PROCEEDS
Management of the Company presently intends to use a significant portion of
the net proceeds of this Offering for general corporate and working capital
purposes as set forth in "Use of Proceeds." A significant portion of the
proceeds will be available for projects and acquisitions that are not yet
identified. As a result, the success of the Company will be substantially
dependent upon the judgment of the management of the Company with respect to the
application and allocation of the net proceeds of this Offering. See "Use of
Proceeds."
BENEFITS TO AFFILIATES FROM PROCEEDS OF PUBLIC OFFERING
Although the Company's shareholders and management will not receive any of
the Company's proceeds from this Offering, except as described below, certain
benefits will accrue to them as a result of the Offering. In the event that the
Company applies a portion of the net proceeds of this Offering to reduce the
Company's bank debt, Mr. Bakal will be relieved of his personal guaranty of such
indebtedness. See "Use of Proceeds" and "Certain Transactions."
CONFLICTS OF INTEREST BETWEEN MAJORITY SHAREHOLDER AND THE COMPANY
Dennis A. Bakal, the majority shareholder and sole director of the Company,
and his affiliates have in the past engaged in certain transactions with the
Company. For example, Mr. Bakal is the sole owner of Professional Sales Group,
Inc., a company which subleases to the Company the office and warehouse space
from which the Company operates. The interest of the Company may at times be
inconsistent with the interests of Mr. Bakal in his capacity as an officer,
director or shareholder of his affiliated entities. See "Certain Transactions."
PENDING LITIGATION
The Company, from time to time, is involved in lawsuits in the ordinary
course of business. On February 26, 1997 a lawsuit was filed in the U.S.
Bankruptcy Court for the Central District of California against both Timely and
Truck-Net by the trustee in bankruptcy of a former customer of Timely and Truck-
Net seeking to recover alleged preferential payments to and for the benefit of
Timely and Truck-Net within the 90 days preceding the filing of such customer's
bankruptcy petition. The Company intends to vigorously defend this lawsuit. The
Company is unable to predict the outcome of this litigation. If the trustee is
successful in this action and is awarded a judgment, such judgment could have a
material adverse effect on the Company, its profitability and its financial
condition. See "Business -- Litigation."
IMPACT ON MARKET OF WARRANT EXERCISE
In the event of the exercise of a substantial number of Warrants within a
reasonably short period of time after the right to exercise commences, the
resulting increase in the amount of Common Stock of the Company in the trading
market could materially adversely affect the market price of the Common Stock.
See "Description of Securities -- Warrants."
10
<PAGE> 12
ADJUSTMENTS TO WARRANT EXERCISE PRICE AND EXERCISE DATE
The Company, in its sole discretion, may reduce the exercise price of the
Warrants and/or extend the time within which the Warrants may first be
exercised. Further, in the event the Company issues certain securities or makes
certain distributions to its shareholders, the exercise price of the Warrants
may be reduced. Any such price reductions (assuming exercise of the Warrants)
will provide less money for the Company and possibly materially adversely affect
the market price of the Securities.
POSSIBLE RESTRICTIONS ON MARKET MAKING ACTIVITIES IN THE SECURITIES
Although they have no legal obligation to do so, the Underwriters from time
to time may act as market makers and otherwise effect transactions in the
Securities. Unless granted an exemption by the Securities and Exchange
Commission (the "Commission") from Rule 103 of Regulation M under the Exchange
Act, the Underwriters will be prohibited from engaging in any market making
activities or solicited brokerage activities with respect to the Securities for
the period from five business days prior to any solicitation of the exercise of
any Warrant or five business days prior to the exercise of any Warrant based on
a prior solicitation until the later of the termination of such solicitation
activity or the termination (by waiver or otherwise) of any right the
Underwriters may have to receive such a fee for the exercise of the Warrants
following such solicitation. As a result, the Underwriters may be unable to
continue to provide a market for the Securities during certain periods while the
Warrants are exercisable. The prices and liquidity of the Securities may be
materially and adversely affected by the cessation of the Underwriters' market
making activities. In addition, there is no assurance that the Underwriters will
continue to be market makers in the Securities. The prices and liquidity of the
Securities may be affected significantly by the degree, if any, of the
Underwriters' participation in the market. The Underwriters may voluntarily
discontinue such participation at any time. Further, the market for, and
liquidity of, the Securities may be adversely affected by the fact that a
significant amount of the Securities may be sold to customers of the
Underwriters. See "Underwriting."
REDEMPTION OF REDEEMABLE WARRANTS
The Warrants are subject to redemption by the Company, at any time after
the First Exercise Date, at a price of $0.125 per Warrant upon 30 days prior
written notice to the holders thereof, if the average closing bid price for the
Common Stock equals or exceeds $10.50 per share for the 10 consecutive trading
days ending on the third day prior to the date of notice of redemption. In the
event that the Warrants are called for redemption by the Company, holders
thereof will have 30 days during which they may exercise their rights to
purchase shares of Common Stock. In the event a current prospectus is not
available, the Warrants may not be exercised and the Company will be precluded
from redeeming the Warrants. If holders of the Warrants elect not to exercise
them upon notice of redemption thereof, and the Warrants are subsequently
redeemed prior to exercise, the holders thereof would lose the benefit of the
difference between the market price of the underlying Common Stock as of such
date and the exercise price of such Warrants, as well as any possible future
price appreciation in the Common Stock. As a result of an exercise of the
Warrants, existing shareholders would be diluted and the market price of the
Common Stock may be adversely affected. If holders of the Warrants fail to
exercise their rights under the Warrants prior to the date set for redemption,
then they will be entitled to receive only the redemption price, $0.125 per
Warrant. See "Description of Securities -- Warrants."
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN CONNECTION WITH THE
EXERCISE OF THE WARRANTS
The Company will be able to issue shares of its Common Stock upon the
exercise of the Warrants only if (i) there is a current prospectus relating to
the Common Stock issuable upon exercise of the Warrants under an effective
registration statement filed with the Commission and (ii) such Common Stock is
then qualified for sale or exempt therefrom under applicable state securities
laws of the jurisdictions in which the various holders of Warrants reside.
Although the Company will undertake to use its best efforts to maintain the
effectiveness of a current prospectus covering the Common Stock subject to the
Warrants offered hereby, there can be no assurance that the Company will be
successful in doing so. After a registration statement becomes effective, it may
require continuous updating by the filing of post-effective amendments. A post-
11
<PAGE> 13
effective amendment is required (i) when, for a prospectus that is used more
than nine months after the effective date of the registration statement, the
information contained therein (including the audited financial statements) is as
of a date more than 16 months prior to the use of the prospectus, (ii) when
facts or events have occurred which represent a fundamental change in the
information contained in the registration statement, or (iii) when any material
change occurs in the information relating to the plan of distribution of the
securities registered by such registration statement. The Company anticipates
that this Registration Statement will remain effective for at least nine months
following the date of this Prospectus, assuming a post-effective amendment is
not filed by the Company. The Company intends to qualify the sale of the
Securities in a limited number of states, although certain exemptions under
certain state securities laws may permit the Warrants to be transferred to
purchasers in states other than those in which the Warrants were initially
qualified. The Company will be prevented, however, from issuing Common Stock
upon exercise of the Warrants in those states where exemptions are unavailable
and the Company has failed to qualify the Common Stock issuable upon exercise of
the Warrants. The Company may decide not to seek, or may not be able to obtain,
qualification of the issuance of such Common Stock in all of the states in which
the ultimate purchasers of the Warrants reside. In such a case, the Warrants of
those purchasers will expire and have no value if such Warrants cannot be
exercised or sold. Accordingly, the market for the Warrants may be limited
because of the foregoing requirements. See "Description of Securities."
UNDERWRITERS' WARRANTS
In connection with the Offering, the Company will sell to the Underwriters,
for nominal consideration, warrants to purchase an aggregate of 172,500 shares
of Common Stock and 172,500 Warrants (assuming 1,500,000 shares of Common Stock
and 1,500,000 Warrants are sold and assuming the Underwriters' over-allotment is
exercised) (the "Underwriters' Warrants"). The Underwriters' Warrants will be
exercisable for a period of four years, commencing one year after the effective
date of the Registration Statement of which this Prospectus is a part, at an
exercise price of 120% of the initial public offering price of the Common Stock
and Warrants. The terms of the Warrants underlying such Underwriters' Warrants
will be the same as those offered to the public hereby. The holders of the
Underwriters' Warrants will have the opportunity to profit from a rise in the
market price of the Securities, if any, without assuming the risk of ownership.
The Company may find it more difficult to raise additional equity capital if it
should be needed for the business of the Company while the Underwriters'
Warrants are outstanding. At any time when the holders thereof might be expected
to exercise them, the Company would probably be able to obtain additional
capital on terms more favorable than those provided by the Underwriters'
Warrants.
The Underwriters have demand and "piggyback" registration rights with
respect to the Common Stock, the Warrants and the underlying Common Stock
subject to the Underwriters' Warrants. Any future exercise of these registration
rights may cause the Company to incur substantial expense and could impair the
Company's ability to raise capital through the public sale of its securities.
See "Dilution," "Shares Eligible for Future Sale" and "Underwriting."
LISTING AND MAINTENANCE CRITERIA FOR NASDAQ SYSTEM; "PENNY STOCK" REGULATIONS
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers the Nasdaq SmallCap Market, requires that, in order for a company's
securities to be listed on the Nasdaq SmallCap Market, the Company must have
$4,000,000 in total assets, a $1,000,000 market value of the public float and
$2,000,000 in total capital and surplus. Further, initial listing requires two
market makers and a minimum bid price of $3.00 per share. Continued inclusion on
the Nasdaq SmallCap Market currently requires two market makers and a minimum
bid price of $1.00 per share; provided, however, if the price of the Common
Stock falls below the minimum bid price, the shares will remain eligible for
continued inclusion if the market value of the public float is at least
$1,000,000 and the Company has $2,000,000 in capital and surplus. If the Company
fails to maintain the minimum threshold requirements to maintain its inclusion
on the Nasdaq SmallCap Market, it would lose its listing, and trading in the
Securities would be conducted, if at all, in the over-the-counter market known
as the NASD OTC Electronic Bulletin Board. As a result, an investor may find it
more difficult to dispose of, or to obtain accurate quotations as to the market
value of, the Securities.
12
<PAGE> 14
The Commission has adopted regulations which generally define "penny stock"
to be any equity security that has a market price (as defined) less than $5.00
per share or an exercise price of less than $5.00 per share subject to certain
exceptions. At such time as the Securities have been accepted for quotation on
the Nasdaq SmallCap Market, they will initially be exempt from the definition of
"penny stock." If the Securities are later removed from listing, and are traded
at a price below $5.00, the Securities may become subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
Securities to persons other than established customers and institutional
accredited investors. For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of such
Securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the transaction,
of a disclosure schedule prepared by the Commission relating to the penny stock
market and the risks of investing in the Common Stock and Warrants. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
Securities, and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the Securities and may affect the
ability of purchasers in this Offering to sell the Securities in the secondary
market.
FUTURE SALES OF COMMON STOCK PURSUANT TO RULE 144
The 2,600,000 shares of Common Stock issued prior to this Offering are
"restricted securities" as that term is defined by Rule 144 under the Securities
Act, and, in the future, may be sold in compliance with Rule 144 or pursuant to
an effective registration statement. The 2,500,000 shares owned by Mr. Bakal are
subject to the provisions of a lock-up agreement between Mr. Bakal and the
Representative. Ordinarily, under Rule 144, a person who is an affiliate of the
Company (as that term is defined in Rule 144) and who has beneficially owned
restricted securities for a period of two years (recently reduced to one year by
the Commission effective in late April 1997) may, every three months, sell in
brokerage transactions an amount that does not exceed the greater of (i) 1% of
the outstanding number of shares of a particular class of such securities or
(ii) the average weekly trading volume in such securities on all national
exchanges and/or reported through the automated quotation system of a registered
securities association during the four weeks prior to the filing of a notice of
sale by a securities holder. In the future, sales of restricted stock pursuant
to Rule 144 may have an adverse effect on the market price of the Company's
Common Stock should a public trading market develop for such shares.
In addition to the restrictions under Rule 144, the shares of Common Stock
owned by Mr. Bakal upon completion of the Offering or upon the exercise of any
stock options held by him will be subject to a lock-up period of 60 months from
the date of this Prospectus, subject to earlier release if consented to by the
Representative or upon the Company's achievement of certain performance goals.
See "Shares Available for Future Sale."
Prior to this Offering, there has been no market for the Common Stock. The
Company can make no prediction as to the effect, if any, that sales of shares of
Common Stock, or the availability of such shares for sale, will have on the
market price of Common Stock prevailing from time to time. Nevertheless, sales
of substantial amounts of Common Stock in the public market could adversely
affect prevailing market prices.
NO DIVIDENDS ANTICIPATED
The Company intends to retain all future earnings for use in the
development of its business and does not anticipate paying any cash dividends on
the Common Stock in the foreseeable future. See "Dividend Policy."
13
<PAGE> 15
ANTI-TAKEOVER PROVISIONS; POSSIBLE ADVERSE EFFECT OF ISSUANCE OF PREFERRED STOCK
ON MARKET PRICE AND RIGHTS OF COMMON STOCK
The Company's Articles of Incorporation and Bylaws include provisions that
may discourage or prevent certain types of transactions involving an actual or
potential change of control of the Company, including transactions in which the
shareholders might otherwise receive a premium for their shares over then
current market prices. In addition, the Board of Directors has the authority to
issue 100,000 shares of "blank check" preferred stock (the "Preferred Stock")
and fix the rights and preferences thereof. Accordingly, the Board of Directors
is empowered, without shareholder approval, to issue Preferred Stock with
dividend, liquidation, conversion, voting or other rights that could adversely
affect the voting power or other rights of the holders of the Common Stock. The
issuance of any series of Preferred Stock having rights superior to those of the
Common Stock may result in a decrease in the value or market price of the Common
Stock. Holders of Preferred Stock issued in the future may have the right to
receive dividends and certain preferences in liquidation and conversion rights.
The issuance of such Preferred Stock could make the possible takeover of the
Company or the removal of management of the Company more difficult, discourage
hostile bids for control of the Company in which shareholders may receive
premiums for their Common Stock and adversely affect the voting and other rights
of the holders of the Common Stock. See "Description of Securities."
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
The Company's Bylaws provide that shareholders seeking to bring business
before an annual meeting of shareholders, or to nominate candidates for election
as directors at an annual or special meeting of shareholders, must provide
timely notice thereof in writing. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company not less than 60 days nor more than 90 days prior to the meeting. The
Bylaws of the Company also specify certain requirements for a shareholder's
notice to be in proper written form. These provisions may preclude shareholders
from bringing matters before the shareholders at an annual or special meeting or
from making nominations for directors at an annual or special meeting.
CONTINUING RELATIONSHIP WITH REPRESENTATIVE; POTENTIAL INFLUENCE
In connection with this Offering, the Company will have certain continuing
relationships with the Representative, some of which may adversely affect the
Company's results of operations. The Company has agreed with the Representative
that (i) it will sell to the Underwriters the Underwriters' Warrants (including
the grant of "piggyback" and demand registration rights), (ii) it will pay,
under certain conditions, to the Underwriters a warrant solicitation fee equal
to 5% of the exercise price of the Warrants exercised and (iii) it will use its
best efforts to cause the election to its Board of Directors one designee of the
Representative. Any of the foregoing relationships may adversely impact the
Company, its profitability and its financial condition, or its ability to raise
additional capital for its business should the need arise during the term of the
above agreements. See "Underwriting."
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK
Management believes that this prospectus contains forward looking
statements, including statements regarding, among other items, the Company's
future plans and growth strategies and anticipated trends in the industry in
which the Company operates. These forward-looking statements are based largely
on the Company's expectations and are subject to a number of risks and
uncertainties, many of which are beyond the Company's control. Actual results
could differ materially from these forward-looking statements as a result of the
factors described herein, including, among others, regulatory or economic
influences. In light of these risks and uncertainties, there can be no assurance
that the forward-looking information contained in this Prospectus will in fact
transpire or prove to be accurate.
14
<PAGE> 16
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the shares
of Common Stock and Warrants offered by the Company hereby are estimated to be
approximately $7,598,000, based on an assumed initial public offering price of
$6.00 per share of Common Stock and $0.125 per Warrant (approximately $8,797,000
if the Underwriters' over-allotment option is exercised in full). The Company
expects such net proceeds (assuming no exercise of the Underwriters'
overallotment option) to be utilized in approximately the manner set forth in
the following table:
<TABLE>
<CAPTION>
APPROXIMATE DOLLAR APPROXIMATE PERCENTAGE
APPLICATION OF PROCEEDS AMOUNT OF NET PROCEEDS
----------------------- ------------------ ----------------------
<S> <C> <C>
Purchase of trailers(1).......................... $2,000,000 26.3%
Purchase of computer and related equipment(2).... 250,000 3.3
Working capital and general corporate
purposes(3).................................... 5,348,000 70.4
---------- -----
Total.................................. $7,598,000 100%
========== =====
</TABLE>
- ---------------
(1) The Company intends to purchase trailers in order to permit expansion of its
operations. These trailers will generally consist of 53-feet long, high
cubic capacity units. See "Business -- Equipment and Technology."
(2) The Company plans in the next year to upgrade its computer hardware,
software and communications technology in order to further streamline the
Company's operations. See "Business -- Equipment and Technology."
(3) Such purposes may include the payment of rent for the Company's executive
offices, general and administrative expenses, capital expenditures, payment
of accounts payables and accrued expenses, marketing expenses,working
capital in the form of accounts receivable as a result of the expansion of
the Company's operations and satisfaction of certain corporate obligations.
A portion of the net proceeds may be used for acquisitions. Although the
Company is engaged from time to time in discussions relating to possible
acquisitions, the Company presently has no agreements, understandings or
commitments with respect to any acquisitions. The foregoing represents the
Company's current estimate of its allocation of the net proceeds of this
Offering based upon the current status of its business operations, its current
plans, and current economic and industry conditions. Future events, as well as
changes in economic or competitive conditions or the Company's business and the
results of the Company's sales and marketing activities, may make different uses
of funds necessary or desirable.
If the Underwriters exercise the over-allotment option in full, the Company
will realize additional net proceeds of approximately $1,199,000, which will be
added to the Company's working capital.
The Company believes that the proceeds of this Offering, together with cash
flow from operations, will be sufficient to satisfy its contemplated cash
requirements for at least 12 months following the consummation of this Offering.
The Company's financial requirements will depend upon, among other things, the
growth rate of the Company's business, the amount of cash flow generated by
operations and the Company's ability to borrow funds or enter into lease or
purchase financing arrangements for the acquisition of new vehicles or for
working capital purposes. Should the Company require additional debt or equity
financing to support its operations, there can be no assurance that such
additional financing will be available to the Company on commercially reasonable
terms, or at all.
Proceeds not immediately required for the purposes described above will be
invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term interest-bearing
investments.
The Company anticipates that the proceeds, if any, received from any
exercise of the Warrants or the Underwriters' Warrants (including the Warrants
therein) will be utilized for working capital and other corporate purposes.
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<PAGE> 17
DILUTION
The difference between the initial public offering price per share of
Common Stock and the pro forma net tangible book value per share of Common Stock
after this Offering constitutes the dilution to investors in this Offering. Net
tangible book value per share is determined by dividing the net tangible book
value of the Company (total assets less intangible assets and liabilities) by
the total number of shares of Common Stock outstanding.
At December 31, 1996, the net tangible book value (deficit) of the Company
was $(947), or approximately $0.00 per share. After giving effect to the sale by
the Company of the 1,500,000 shares of Common Stock (at an assumed initial
offering price of $6.00 per share) and the 1,500,000 Warrants (at an assumed
initial public offering price of $0.125 per Warrant) and the Company's use of
the estimated net proceeds therefrom as set forth under "Use of Proceeds," the
pro forma net tangible book value of the Common Stock at December 31, 1996 would
have been $7,597,178, or approximately $1.85 per share. This represents an
immediate increase in pro forma net tangible book value of $1.85 per share to
the Company's present shareholders and an immediate dilution of $4.15 per share
to the purchasers of shares of Common Stock in this Offering. The following
table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price (per share of Common
Stock)(1)................................................. $6.00
Net tangible book value per share at December 31, 1996...... $ 0.00
Increase per share attributable to shares offered hereby.... 1.85
------
Pro forma net tangible book value per share after
Offering.................................................. 1.85
------
Dilution of net tangible book value per share to purchasers
in this Offering(2)....................................... $4.15
</TABLE>
- ---------------
(1) Represents the anticipated initial public offering price per share of Common
Stock (excluding Warrants) before deduction of the underwriting discount and
estimated expenses of the Offering.
(2) Assuming no exercise of Warrants or the Underwriters' over-allotment option.
See "Description of Securities" and "Underwriting."
The following table sets forth on a pro forma basis as of December 31,
1996, the number and percentage of shares of Common Stock issued, and the amount
and percentage of consideration and average price per share paid by existing
shareholders of the Company, and to be paid by purchasers pursuant to this
Offering (based upon an assumed initial public offering price of $6.00 per share
of Common Stock and before deducting the underwriting discount and estimated
expenses of this Offering):
<TABLE>
<CAPTION>
OWNERSHIP CONSIDERATION
------------------- -------------------- AVERAGE
NUMBER OF PRICE
SHARES PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shareholders............... 2,600,000 63.4% $ 15,166 0.17% $ 0.01
New Shareholders.................... 1,500,000 36.6 9,000,000 99.83 6.00
--------- ------ ---------- ------
Total..................... 4,100,000 100.00% $9,015,166 100.00%
========= ====== ========== ======
</TABLE>
The foregoing table gives effect to the sale of the shares of Common Stock
offered hereby and does not give effect to the exercise of the Underwriters'
over-allotment option, any Warrants or the Underwriters' Warrants.
16
<PAGE> 18
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1996 and as adjusted giving effect to the sale by the Company of
the 1,500,000 shares of Common Stock and 1,500,000 Warrants offered hereby and
the application of estimated net proceeds therefrom as set forth under "Use of
Proceeds." The table has not been adjusted to give effect to the exercise of the
Underwriters' over-allotment option, the exercise of the Warrants, or the
exercise of the Underwriters' Warrants. This table should be read in conjunction
with the Financial Statements, including the notes thereto, appearing elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------
PRO FORMA
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
Cash........................................................ $ 248,454 $7,846,579
========== ==========
Current maturities of long-term debt and capital lease
obligations............................................... $ 397,977 $ 397,977
========== ==========
Long-term debt and capital lease obligations, net of current
maturities................................................ $2,065,443 $2,065,443
Shareholders' equity:
Preferred Stock, no par value, 100,000 shares authorized,
none issued and outstanding............................ -- --
Common Stock, no par value, (20,000,000 shares authorized,
2,600,000 shares issued and outstanding; as adjusted,
4,100,000 shares issued and outstanding)(1)............ -- --
Additional paid-in capital................................ 15,166 7,458,227
Warrants.................................................. -- 155,064
Accumulated deficit....................................... (16,113) (16,113)
---------- ----------
Total shareholders' equity (deficit).............. (947) 7,597,178
---------- ----------
Total capitalization............................ $2,064,496 $9,662,621
========== ==========
</TABLE>
- ---------------
(1) Does not include (i) the 1,500,000 shares of Common Stock issuable upon the
exercise of the Warrants offered hereby, (ii) up to 225,000 shares of Common
Stock and 225,000 Warrants issuable upon exercise of the Underwriters'
over-allotment option, (iii) the 225,000 shares of Common Stock issuable
upon exercise of the Warrants included in the Underwriters' over-allotment
option, (iv) the 345,000 shares of Common Stock issuable upon exercise of
the Underwriters' Warrants (including the Warrants therein), or (v)
1,300,000 shares of Common Stock issuable upon the exercise of stock options
outstanding on the date hereof. See "Management -- Stock Option Plan,"
"Description of Securities" and "Underwriting."
DIVIDEND POLICY
The Company intends to retain any future earnings for the operation and
expansion of its business and does not anticipate paying any cash dividends in
the foreseeable future. Any future determination as to the payment of cash
dividends will depend upon a number of factors, including the Company's
earnings, capital requirements, financial condition and other factors considered
relevant by the Company's Board of Directors.
17
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data as of and
for each of the fiscal years ended December 31, 1995 and 1996 which have been
derived from the Company's audited consolidated financial statements included
elsewhere in this Prospectus. The information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and the related notes thereto.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1996
----------- -----------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues.......................................... $17,484,765 $21,172,201
Operating expenses.......................................... 17,704,476 20,509,835
Income (loss) from operations............................... (219,711) 662,366
Other income (expense)...................................... (30,489) (179,288)
Pro forma income (loss) before income taxes................. (250,200) 483,078
Pro forma net income (loss)................................. $ (155,200) $ 300,078
=========== ===========
Pro forma net income (loss) per share....................... $ (0.06) $ 0.09
=========== ===========
Weighted average number of common and common equivalent
shares outstanding(1)..................................... 2,500,000 3,281,862
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1996
------------------------------
ACTUAL AS ADJUSTED(2)
----------- ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 354,092 $ 5,702,217
Current assets.............................................. 3,473,736 8,821,861
Total assets................................................ 5,344,879 12,943,004
Current liabilities......................................... 3,119,644 3,119,644
Long-term debt.............................................. 2,065,443 2,065,443
Total liabilities........................................... 5,345,826 5,345,826
Shareholders' equity........................................ (947) 7,597,178
</TABLE>
- ---------------
(1) The weighted average number of shares used in the calculation of earnings
per share includes all common and dilutive common equivalent shares
outstanding during the periods presented. Such number does not include (i)
the 1,500,000 shares of Common Stock offered by the Company hereby, (ii) the
1,500,000 shares of Common Stock issuable upon exercise of the Warrants
offered hereby, (iii) up to 225,000 shares of Common Stock issuable by the
Company upon exercise of the Underwriters' over-allotment option, (iv) the
225,000 shares of Common Stock issuable upon exercise of the Warrants
included in the Underwriters' over-allotment option, or (v) the 345,000
shares of Common Stock issuable upon exercise of the Underwriters' Warrants
(including the Warrants therein). See "Description of Securities."
(2) Adjusted to give effect to (i) the sale of 1,500,000 shares of Common Stock
and 1,500,000 Warrants offered hereby at assumed initial public offering
prices of $6.00 per share and $0.125 per Warrant, respectively, and the
application of the net proceeds therefrom. See "Use of Proceeds." No effect
has been given to the exercise of (i) the Warrants, (ii) the Underwriters'
over-allotment option or (iii) the Underwriters' Warrants (including the
Warrants therein). See "Underwriting."
18
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis of the Company's financial condition as of December
31, 1996 and the Company's results of operations for the years ended December
31, 1995 and 1996 should be read in conjunction with the Company's Financial
Statements and notes thereto included elsewhere in this Prospectus. The
following discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements.
OVERVIEW
Through December 31, 1996, the Company, Timely and Truck-Net operated as
three separate entities. At such time, Dennis A. Bakal, the Company's majority
shareholder and sole director owned all of the shares of Timely and Truck-Net.
Effective January 1, 1997, Mr. Bakal contributed his ownership in Timely and
Truck-Net to the Company, along with his ownership of PTG, a previously inactive
company. On December 31, 1996, PTG acquired certain assets (subject to certain
liabilities), business, operating authorities, names and customer lists of Rapid
Transit ("Rapid"), the courier division of a company controlled by Mr. Bakal,
and certain fixed assets from another company owned by Mr. Bakal, all in
exchange for amounts due the Company, Timely and Truck-Net from the former
corporate owner of Rapid. See "Certain Transactions."
Timely, organized in 1991, performs contract truckload ground
transportation services primarily for customers in the air freight and expedited
delivery markets. In November 1995, Timely entered into an agreement to perform
trucking services for FedEx and became one of FedEx's eight core carriers. Under
the core carrier concept, a limited number of carriers are selected by a shipper
to provide scheduled services between points for a contractually determined
period of time. Such agreements specify routes, pricing (normally determined by
route), equipment specifications and performance standards. In addition, such
agreements generally provide for pricing adjustments based on fuel pricing or
changes in cost structure at predetermined times. For the years ended December
31, 1996 and 1995, FedEx accounted for approximately 35% and 30%, respectively,
of the consolidated operating revenues of the Company. Since the inception of
the agreement, the Company has consistently exceeded the required performance
standards under the agreement, and management anticipates the renewal of the
agreement when it expires in November 1998. There can be no assurance, however,
that this agreement will be renewed.
In developing its niche in the industry, Timely has concentrated, since
January 1994, on the contract carriage of truckload freight for the air freight
and expedited delivery markets. By concentrating in these markets, the Company
has eliminated the need for terminals and has been able to focus its efforts on
acquiring equipment and recruiting drivers and other personnel.
Truck-Net, a licensed freight broker acquired by Mr. Bakal in 1991,
performs truckload brokerage services in the same air freight and expedited
delivery markets served by Timely. As a broker, Truck-Net matches a shipper with
a specific routing and/or equipment need with a carrier able to satisfy the
shipper's particular requirements. All carriers used by Truck-Net are required
to be properly certificated and to have a current certificate of insurance. When
logistically feasible, Truck-Net utilizes Timely's equipment to complete the
brokerage contracts. During the year ended December 31, 1996, Truck-Net was able
to utilize Timely's equipment for approximately 14.5% of its shipments. The
Company anticipates that this utilization will increase in the future as the
Company expands.
Truck-Net offers its services to customers on a contract basis. Some of its
services provide specific scheduled runs for a definite time period, and others
provide deliveries on an as needed basis by the shipper. Truck-Net's largest
customer, Panalpina, the U.S. subsidiary of a major European air freight
forwarder, accounted for approximately 16% and 8% of the Company's consolidated
operating revenues for the year ended December 31, 1996 and 1995, respectively.
19
<PAGE> 21
RESULTS OF OPERATIONS
Year ended December 31, 1996 compared to Year ended December 31, 1995.
The Company's operating revenues increased approximately $3.8 million, or
21%, to approximately $21.2 million during the year ended December 31, 1996,
from approximately $17.4 million for the year ended December 31, 1995. This
increase is attributable to (i) the inclusion for the entire year of revenues
from the FedEx agreement, which commenced in November 1995, (ii) the growth of
the transit services provided for Panalpina, the scope of which expanded in
August 1996, and (iii) the inclusion of the revenues of Rapid for the year ended
December 31, 1996.
While revenues in 1996 increased, the Company believes that certain factors
prevented additional revenue growth. Specifically, in February 1996, a major
customer of both Timely and Truck-Net filed a Chapter 7 bankruptcy petition. See
"Business -- Litigation." At the time of the bankruptcy this customer was
responsible for approximately $70,000 in weekly aggregate revenues for the two
companies and had generated revenues for the companies of approximately $2.1
million for the year ended December 31, 1995. The bad debt expense recorded by
the Company in 1995 due to this bankruptcy filing was in excess of $425,000. In
addition, severe weather conditions during January and February 1996 in the
northeastern portion of the U.S. reduced trucking activities, idling certain of
the Company's drivers and equipment during the first quarter of 1996.
The Company's operating expenses increased approximately $2.8 million, or
15.8%, to approximately $20.5 million in the year ended December 31, 1996 from
approximately $17.7 million in the year ended December 31, 1995. The increase is
primarily due to increased levels of operation which required additional support
staff and office space and increased investment in support equipment and
systems. The Company's operating expenses consist primarily of the direct costs
attributable to operation of the Company's equipment including driver payroll
and related costs, fuel, equipment rental, etc., and in the case of Truck-Net,
the cost of purchased transportation. In June 1995, Timely began using an
unrelated third party employee leasing company to provide drivers. This move was
prompted by growing payroll-related costs, such as employee health and worker's
compensation insurance, being incurred by the Company. The leasing company, with
a much broader employee base, is able to obtain more favorable rates for the
requisite coverage. The fee charged by the leasing company for its services
includes all employer-related taxes and expenses and allows the Company to
realize a substantial savings in such costs. In February 1997, all remaining
Company employees (except for executive officers) were transferred to the
leasing company.
Other income (expense) increased approximately $149,000 to approximately
$(179,000) in 1996 from approximately $(30,000) in 1995 primarily due to
increased interest costs in 1996 over 1995. This increase was due to increased
financing activity related to the purchase of equipment in lieu of leasing. In
addition, in 1995 a subsidiary of the Company received a one-time $100,000
management fee from a company controlled by Mr. Bakal, which fee was not
received in 1996.
Prior to January 1, 1997, the Company and all of its subsidiaries except
Truck-Net had elected to be treated as S corporations for federal and state
income tax purposes. Accordingly, all income or losses of these companies were
recognized by the shareholders of the companies on their individual tax returns.
The accompanying statements of operations reflect income tax provisions or
benefits on a pro forma basis as if the Company and all of its subsidiaries were
liable for federal and state income taxes as taxable corporate entities for both
of the years presented. The change in the Company's income tax expense from a
benefit of $95,000 in 1995 to a provision of $183,000 in 1996 is a direct result
of the change in pretax income from a loss of $250,000 in 1995 to income of
$483,000 in 1996.
Pro forma net income increased approximately $455,000, or 293%, to
approximately $300,000 in 1996 from a loss of approximately $155,000 in 1995
primarily as a result of increased revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of approximately $354,000 at December 31,
1996. The Company's primary long-term and working capital requirements have been
to fund capital expenditures for tractors,
20
<PAGE> 22
trailers, computer and satellite communications equipment and for financing
accounts receivable. The Company's expansion over the last several years
primarily has been financed by bank borrowings and lease financing. Most of the
Company's requirements for tractors have been met through leases from large
national leasing companies or through the leasing programs of the manufacturer.
It is the Company's intention to continue to acquire new tractors through
operating leases, while purchasing new trailers. The Company is unable to
estimate the amounts of cash which will be required to fund its future equipment
needs. However, the Company anticipates that upon completion of this Offering it
will be able to replace its currently leased equipment, as the leases terminate,
and obtain equipment on more favorable terms.
On March 28, 1997, Dennis A. Bakal, the Company's sole director and
majority shareholder, entered into a revolving loan agreement with SouthTrust
Bank of Georgia, NA ("SouthTrust") under which SouthTrust advanced to the
Company, through Mr. Bakal, approximately $1.9 million, including a sub-limit of
up to $300,000 for stand-by letters of credit. Mr. Bakal has pledged certain
personal assets as security for the loan and the Company and its subsidiaries
have pledged substantially all of their assets, including accounts receivable,
to provide further security for the loan and have guaranteed Mr. Bakal's
performance under the agreement. Mr. Bakal's agreement with SouthTrust provides
for an interest rate equal to 0.75% above SouthTrust's Base Rate (as defined
therein) and the loan matures on January 31, 1998. It is anticipated that
subsequent to the completion of this Offering, the loan will be restructured
with the Company replacing Mr. Bakal as the borrower, the amount available under
the line increased and the maturity date of the loan extended. Such
restructuring will assist the Company to fund future growth. Under the terms of
an agreement between Mr. Bakal, the Company and its subsidiaries, such entities
have agreed to accept advances, through Mr. Bakal, on the same terms and
conditions agreed to by Mr. Bakal and SouthTrust. The letter of credit facility
has been granted to Timely, and its performance has been guaranteed by the
Company, its other subsidiaries and Mr. Bakal. The Company used the proceeds of
the loan from SouthTrust to repay all of its outstanding indebtedness with
SunTrust Bank, Atlanta.
The Company believes that the proceeds of this Offering, together with cash
flow from operations, will be sufficient to satisfy its contemplated cash
requirements for at least 12 months following the consummation of this Offering.
The Company's financial requirements will depend upon, among other things, the
growth rate of the Company's business, the amount of cash flow generated by
operations and the Company's ability to borrow funds or enter into lease or
purchase financing arrangements for the acquisition of new equipment or for
working capital purposes. Should the Company require additional debt or equity
financing to support its operations, there can be no assurance that such
additional financing will be available to the Company on commercially reasonable
terms, or at all. At December 31, 1996, the Company had approximately $248,000
of cash.
INFLATION
Inflation has not had a material effect on the Company's operations. If
inflation increases, the Company will attempt to increase its rates to offset
its increased expenses. No assurances can be given, however, that the Company
will be able to adequately increase its prices in response to inflation.
21
<PAGE> 23
BUSINESS
OVERVIEW
Professional Transportation Group Ltd., Inc., a Georgia corporation (the
"Company"), is a transportation services company that provides ground
transportation and logistics services for the air freight industry throughout
the continental United States. The Company was founded by Dennis A. Bakal in
October 1990, and he is the Company's majority shareholder and sole director.
The Company serves as a holding company for its three operating subsidiaries:
Timely Transportation, Inc. ("Timely"), Truck-Net, Inc. ("Truck-Net"), and PTG,
Inc. ("PTG"). Effective January 1, 1997, Mr. Bakal contributed his shares of
Timely, Truck-Net, and PTG to the Company. For the year ended December 31, 1996,
Timely accounted for approximately $13.6 million or 64.1% of the Company's
revenues, Truck-Net accounted for $6.5 million or 30.7% of the Company's
revenues and PTG accounted for $1.1 million or 5.2% of the Company's revenues.
The Company's consolidated revenues increased by 37% from 1994 to 1995 and
by 21% from 1995 to 1996. The Company attributes its growth to management's
knowledge and experience in the air freight industry, consistent, on-time
deliveries, and superior customer service. Management believes that revenues
will continue to increase, as trends toward an expansion of core carrier
relationships and a trend toward reductions of private fleets and greater
outsourcing by shippers favor more efficient and cost-effective providers of
transportation services.
INDUSTRY
The Company's two main businesses, Timely and Truck-Net, operate in the
non-local segment of the trucking industry, which segment had revenues of $330
billion in 1995. A further refinement of the industry segment would place
Timely's and Truck-Net's operations in the $55 billion (1995) for-hire truckload
carrier segment. Truckload carriers typically transport full trailer loads
directly from origin to destination without enroute handling.
The air freight industry has changed dramatically over the last two
decades. Prior to 1980, shippers of air freight used both freighter aircraft
operated by passenger and freight airlines and passenger aircraft, with the
limited capacity of their cargo compartments, for the movement of goods. In the
late 1970s and the early 1980s, fundamental changes in the air freight industry
began to constrain freight activity. The passenger airlines gradually eliminated
their freighter aircraft, coinciding with the consolidation of the major U.S.
based all-freight airlines and the emergence and growth of the integrated
carriers, such as FedEx, United Parcel Service ("UPS"), Emery Worldwide
("Emery"), Burlington Air Express ("Burlington") and Airborne Freight. Although
these integrated carriers operate their own dedicated fleets of aircraft, trucks
and delivery vans, they focus on the shipment of size- and weight-restricted
packages and freight. Freighters and "combi" (combination passenger/freight)
aircraft continued to carry international freight, but domestic packages and
freight not meeting the restrictions of the integrated carriers were relegated
to available space in the limited-capacity cargo holds of passenger aircraft.
Passenger aircraft operate predominately during the daytime, although freight
had historically moved at night. The imposition of curfews at major airports to
reduce noise during early morning hours and the elimination of freighter
aircraft operated by passenger airlines limited freight activity even more.
All of these changes resulted in the development of the concept of
"deferred freight," which is freight that generally is time sensitive (two or
three day delivery), but does not have the immediacy of next day or overnight
delivery. The additional time available for completion of a deferred freight
shipment makes overland transportation by truck a viable alternative to
transportation by air. Time definite trucking of air freight has developed as
the answer to the overland movement of deferred freight. While many in the
industry have focused on regional business, the Company's emphasis has been on
servicing the "deferred freight" needs of the air freight industry nationally.
This service meets the required delivery parameters of the customers, but in a
much more cost sensitive environment than overnight freight. The overnight
delivery so common in today's business environment is primarily limited to
package (letter and document) freight and the movement of heavier freight (up to
150 pounds per piece or 300 pounds per shipment). The deferred freight market
has
22
<PAGE> 24
developed to primarily handle shipments of greater than 300 pounds. The Company,
through the operations of Timely and Truck-Net, has positioned itself to serve
the needs of this market.
STRATEGY
The Company's business strategy is to establish itself as a preferred
provider of high-quality, cost-effective transportation and logistics services
to the air freight industry. Key elements of the Company's strategy include the
following:
Deliver Superior Customer Service and Add Value. Expedited on-time
delivery is the mission of the air freight industry, and in order to meet
the needs of the industry, the Company provides time-definite pickup and
delivery. Compared with deferred air freight services, the Company offers
comparable transit times at much lower prices. The Company uses experienced
driver teams and modern technology to ensure that customers receive quality
service. The Company does not always strive to be the lowest-cost carrier
for its customers, but instead focuses on providing value (such as real
time tracking of a shipment) beyond any marginally higher price its
customers might pay.
Utilize Available Technology and Modern Equipment. Due to customer
demands for real time information on their shipments and on-time
deliveries, the Company utilizes modern satellite technology to track its
vehicles. The Company's use of the QUALCOMM tracking system allows the
Company to provide customers with precise information on the status of
their shipments and notify them of any potential delays. In addition, the
system provides valuable information on a truck's speed, mileage, fuel
consumption, and other factors that enable the Company to increase
efficiency and reduce costs. The Company also has developed a proprietary
route optimization software program to assist management in analyzing the
most cost-effective route system for the Company's fleet.
Attract and Retain Highly-Skilled and Motivated Employees. To provide
superior customer service, the Company relies on a dedicated team of
professional drivers, administrators and managers committed to serving
customers. Through a recruitment and hiring program, the Company hires only
professional drivers who are selected based on experience, safety record,
and a personal evaluation. The competition for experienced drivers is
intense, but by providing modern equipment and offering competitive
salaries and dedicated routes, the Company is successful in recruiting and
retaining productive, satisfied drivers. The Company's success in reducing
driver turnover rate has contributed to an overall increase in its
efficiency and reduction of the expenses associated with hiring, training
and integrating new employees.
TRANSPORTATION SERVICES
Through its Timely subsidiary, which was formed in 1991, the Company
provides time-definite truckload transportation services for companies in the
air freight and expedited delivery markets. Operating both common carrier and
dedicated fleet services for its air freight customers, Timely moves freight
across long and short distances with very precise schedules for pickups and
deliveries. The Company's "Almost as Fast as Air"(SM) service has transit times
comparable to those of deferred air freight.
As of March 31, 1997, Timely operated approximately 150 company-owned or
leased tractors and used ten owner-operators that may provide one or more pieces
of operating equipment. Timely operates in all of the 48 contiguous states, but
its primary activity is in the eastern half of the U.S. As of March 31, 1997,
approximately 82% of the tractors operated by Timely served dedicated lane
segments.
LOGISTICS-MANAGEMENT SERVICES
Through its Truck-Net subsidiary, which was acquired by Mr. Bakal in July
1991, the Company operates as a broker of truckload services to the air freight
industry. Since many air cargo carriers and air freight forwarders do not own
trucks, they rely upon third party carriers for ground transportation services.
Through logistics companies like Truck-Net, a shipper can place a single call to
arrange truckload services anywhere in
23
<PAGE> 25
the United States, without having to contact numerous individual carriers who
may or may not have a truck available for a particular shipment to a particular
destination.
Truck-Net maintains a network of over 350 truckload carriers. Upon
receiving a call from a customer, a Truck-Net representative contacts various
truckload carriers until locating one that has the time and the proper equipment
to transfer the freight. The Truck-Net representative will make all of the
arrangements to have the freight picked up and delivered. In addition, Truck-Net
tracks the vehicles and monitors the shipment from pickup through delivery,
enabling customers to contact Truck-Net rather than the individual carrier to
get information on their shipment. Truck-Net's customers are sent a single
invoice for all shipments and payments for those shipments are made directly to
Truck-Net. Truck-Net then pays the hired carrier, retaining a portion of the fee
paid by the customer. Thus, customers avoid having to pay multiple invoices from
carriers.
COURIER/DELIVERY SERVICES
PTG operates a courier/delivery service known as "Rapid Transit" in the
Atlanta, Georgia metropolitan area. As of March 31, 1997, PTG had 22 drivers. In
addition to providing general courier services, PTG has entered into agreements
with several major manufacturers of office equipment. Under these agreements,
PTG retrieves copiers, fax machines, and telephone equipment that are in need of
repair or coming off lease and returns such items to the manufacturer. Although
PTG accounts for only 5.2% of the Company's revenues, management believes that
potential for the growth and expansion of this operation exists either through
internal growth or acquisition. Management believes that PTG will account for
approximately the same percentage of the Company's consolidated revenues in the
near future.
CUSTOMERS
The Company's customers are primarily businesses in the air freight
industry. The Company generates over 90% of its total revenue from dedicated
shipments for air freight customers. The Company's customers include traditional
air freight forwarders and integrated carriers such as FedEx, UPS, Emery, and
Burlington, all of whom operate fleets of their own dedicated aircraft, trucks
and delivery vans.
Major customers of the Company, such as FedEx, have developed the concept
of "core carriers" for the contract movement of their freight by independent
trucking companies. Under this concept, a limited number of carriers are
selected to perform the line haul (point to point, or terminal to terminal)
carriage of the shipper's freight. Core carrier relationships offer steady
revenues from dedicated lane segments, which allows the Company to offer its
drivers regular routes. As a means of diversifying its customer base, the
Company may seek to establish core carrier relationships with businesses in
industries outside the air freight industry.
FedEx is the Company's largest customer, and the Company serves as one of
eight core carriers for FedEx. The Company has entered into a three-year
agreement to provide services for FedEx over certain lane segments. The lane
segments are awarded based on competitive bids solicited among the group of core
carriers. As new lane segments become available, the Company bids for such
segments, and any new segments awarded will terminate at the end of the initial
three-year period, which will expire on November 18, 1998. FedEx is not
precluded from performing the services itself or through its subsidiaries or
affiliates. In addition, FedEx may terminate its agreement with the Company upon
30 days notice and the payment of a termination charge. The Company is required
under the agreement to maintain a minimum service level, and its performance to
date has exceeded the minimum operating performance requirements of the
agreement. It is currently anticipated that, provided the Company maintains its
level of performance, the agreement will be renewed upon expiration. There can
be no assurance, however, that this agreement will be renewed.
For the year ended December 31, 1996, the Company's five largest customers
accounted for approximately 66% of the Company's combined revenue. Of these five
customers, FedEx and Panalpina accounted for approximately 35% and 16%,
respectively, of the revenue generated during this period. No other customer
accounted for more than 6% of the Company's combined revenues. The loss of
either FedEx or Panalpina would have a material adverse effect on the results of
operations for the Company.
24
<PAGE> 26
EQUIPMENT AND TECHNOLOGY
Most of the Company's equipment is utilized by Timely. As of March 31,
1997, the Company operated a modern fleet of approximately 150 tractors with an
average age of less than two years. The Company leases its tractors from large
national leasing companies or through the leasing programs of the manufacturer.
This leasing strategy gives the Company the availability of nationwide
maintenance facilities to ensure minimal down time in case of mechanical
failure, as well as a nationwide system for the performance of scheduled
preventative maintenance, no matter where the individual unit is located. The
Company launched a program in 1996 to purchase or lease, on more favorable
terms, its operating equipment. Prior to 1996, most of the Company's operating
equipment was leased under terms which included a 15% premium for rented
tractors, and a mileage charge for maintenance on the vehicles. During 1996, the
Company acquired 30 new tractors through a financing source which charged lower
monthly rates and eliminated the mileage charge. These tractors are covered by
manufacturer warranties during most of their lease term, which will lead to
additional maintenance savings. In February 1997, the Company ordered 20
additional tractors under similar lease terms.
In the early years of Timely's operations, it also leased its trailer
fleet. In 1995 and 1996 the Company began purchasing its trailers through either
direct bank borrowings or capitalized leases. In coming to the decision to own
rather than lease trailers, the Company considered the longer life, relatively
higher salvage value, simplified maintenance costs of trailers as compared with
tractors, and the need to install required cargo handling systems in certain
trailers. While it has been necessary to install cargo handling systems in
certain leased trailers in the past, it is the Company's intention to install
the required equipment only in Company owned vehicles in the future. Any cargo
handling equipment will be removed from leased trailers at the termination of
the lease agreement. The current trailer fleet mostly contains modern, 53-feet
long, high cubic capacity units, many equipped with roller systems to facilitate
cargo loading and unloading. The average age of the trailer fleet is less than
two years. As of March 31, 1997, the Company operated a fleet of 240 trailers,
of which 128 (53%) were leased.
The Company has invested heavily in modern computer and communications
technology, and considers itself a leader in the industry in this aspect. The
modern tractor fleet operated by Timely (and most of the equipment operated by
companies utilized by Truck-Net) utilizes onboard computers with satellite
communications capabilities. In the case of the Timely fleet, each tractor is
equipped with a QUALCOMM satellite communications system, which allows the
dispatchers to follow the progress of a vehicle, its speed, fuel consumption,
and most importantly, its adherence to schedule, while allowing the timely and
efficient communication of operating data, such as pickup and delivery
instructions, directions to customer facilities, loading instructions, routing,
fuel, taxes, mileage, payroll, safety, weather advisories, and traffic and
maintenance information. The satellite tracking of the movement of the vehicles,
the constant monitoring of schedule, speed, and fuel consumption, and the
availability of two-way communication has allowed the Company to fine tune its
operation and deliver its customers a high level of on-time service.
In order to maintain the highest level of quality control and maintain the
Company's and its customers' strict performance standards, the Company's central
dispatching/customer service unit operates 24 hours a day, seven days a week. If
any problem should develop, managers and supervisors are either on hand or
readily available to the dispatch center.
DRIVERS AND EMPLOYEES
Beginning in 1995, the Company faced increasing costs of workers'
compensation insurance and related items. To address this problem, pursuant to a
written agreement, in May 1995, the Company transferred all of its drivers (and
certain of its other employees) to an employee leasing company owned by an
unrelated third party. New drivers are located through a recruitment and hiring
program managed by the Company and, after completing the required testing and
orientation, are hired by the leasing company. The Company reimburses the
leasing company for all of the direct costs associated with the driver payroll,
plus a percentage fee of the total amount of the payroll. The leasing company is
able to obtain lower rates for certain expenses, such as workers' compensation
insurance and employee benefits, due to the large size of its employee pool.
Thus, even
25
<PAGE> 27
after payment of the percentage fee, the Company believes it has reduced its
driver costs per mile by utilizing the third party leasing company.
The recruitment, training and retention of qualified drivers is essential
to support the Company's continued growth and to meet the service requirements
of the Company's customers. Drivers are selected in accordance with
Company-specific quality guidelines relating primarily to safety history,
driving experience, road test evaluations and other personal evaluations,
including physical examinations and mandatory drug and alcohol testing. Drivers
are trained in all phases of the Company's policies and procedures, including
customer service requirements, general operations, fuel conservation and
equipment maintenance, operation and safety.
The Company seeks to maintain a qualified driver force by providing
attractive and comfortable equipment, direct communication with senior
management, competitive wages and benefits and other incentives designed to
encourage driver retention and long-term employment. Many drivers are assigned
to dedicated or semi-dedicated routes, thereby enhancing job predictability.
Drivers are recognized for providing superior service and developing good safety
records and must successfully complete driver reviews administered by the
Company's human resources department. In an industry where annual driver
turnover rates can exceed 100%, the Company has maintained over the past year a
turnover rate of approximately 44%.
As of March 31, 1997, the Company employed 314 persons, 248 of which were
drivers, 3 were in sales and marketing, and 63 were in administration and
management. The Company also had contracted with ten independent contractors as
of March 31, 1997 to provide tractors. None of the Company's employees is
represented by a labor union. The Company believes its relationship with its
employees is good.
INDEPENDENT CONTRACTORS
Because independent contractors provide their own tractors, they provide
the Company an alternative method of obtaining additional revenue equipment. The
Company intends to continue to increase its use of independent contractors. As
of March 31, 1997, the Company utilized ten independent contractors. Each
independent contractor enters into a contract with the Company pursuant to which
it is required to furnish a tractor and a driver or team of drivers exclusively
to transport, load and unload goods carried by the Company. Independent
contractors are paid a fixed level of compensation based on a fee per mile.
Independent contractors are obligated to maintain their own equipment and pay
for their own fuel. The Company provides trailers for each independent
contractor.
SAFETY AND RISK MANAGEMENT
The Company is committed to ensuring that it has safe drivers and
independent contractors. The Company regularly communicates with drivers to
promote safety and to instill safe work habits through Company media and safety
review sessions. These programs reinforce the importance of driving safety,
abiding by all laws and regulations, regarding such matters as speed and driving
hours, and performing equipment inspections. The Company conducts quarterly
safety training meetings for its drivers and independent contractors. In
addition, the Company has a recognition program for driver safety performance.
The Company's Safety Director reviews all accidents, takes appropriate
action related to drivers, examines trends and implements changes in procedures
or communications to address any safety issues. Management's emphasis on safety
also is demonstrated through its equipment specifications and maintenance
programs.
The Company requires prospective drivers to meet or exceed the
qualification standards required by the U.S. Department of Transportation
("DOT"). The DOT requires the Company's drivers and independent contractors to
obtain national commercial driver's licenses pursuant to regulations promulgated
by the DOT. The DOT also requires that the Company implement a drug testing
program in accordance with DOT regulations. The Company's program includes
preemployment, random, post-accident and post-injury drug testing.
The principal claims arising in the Company's business consist of cargo
loss and damage, workers' compensation, and auto liability (personal injury and
property damage). The Company's insurance policies
26
<PAGE> 28
provide for general liability coverage up to $1,000,000 per occurrence,
automobile liability coverage up to $1,000,000 per occurrence, and cargo
insurance coverage up to $500,000 per occurrence. The Company carefully monitors
claims and participates actively in claims estimate and adjustment. The Company
believes that any exposure for claims in Timely's operations is reduced due to
the fact that no physical handling, loading or unloading of freight or equipment
occurs at the Company's facility.
REGULATION
Historically, the Interstate Commerce Commission ("ICC") and various state
agencies regulated truckload carriers' operating rights, accounting systems,
rates and charges, safety, mergers and acquisitions, periodic financial
reporting and other matters. In 1995, the passage of federal legislation
preempted, in many respects, state regulation of prices, rates, and services of
motor carriers and eliminated the ICC. Several ICC functions were transferred to
the DOT, and will be administered by the Surface Transportation Board, but a
lack of implementing regulations to date currently prevents the Company from
assessing the full impact of this action. Generally, the trucking industry is
subject to regulatory and legislative changes that can have a material effect on
operations.
Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. Such matters as weight and dimensions of equipment are
also subject to federal and state regulation. In 1988, the DOT began requiring
national commercial driver's licenses for interstate truck drivers.
The Company's motor carrier operations are also subject to federal and
state environmental laws and regulations, including laws and regulations dealing
with the transportation of hazardous materials and other environmental matters.
The Company has initiated programs to comply with all applicable environmental
regulations. As part of its safety and risk management program, the Company
periodically performs an internal environmental review to assist in
environmental compliance and avoid environmental risk. The Company has operating
authority to ship environmentally hazardous substances and, to date, has
experienced no claims for hazardous substance shipments. In the event the
Company should fail to comply with applicable regulations, the Company could be
subject to substantial fines or penalties and to civil or criminal liability.
The Company believes it is currently in material compliance with applicable
laws and regulations and that the cost of compliance has not materially affected
results of operations.
FUEL
The Company purchases fuel from numerous suppliers and is not materially
dependent on any one or a group of suppliers for its fuel requirements.
Derivatives are not used by the Company to hedge against increased fuel prices.
Although fuel price increases may be passed through to the Company's customers,
increases in fuel taxes or fuel prices would have a direct effect on the
Company's operating results if the Company is unable to pass on such increase.
Similarly, any increases in fuel taxes or fuel prices could also adversely
affect the profitability of independent contractors and the Company's cost of
retaining such contractors, to the extent such increases could not be passed
along to the Company's customers. As of the date of this Prospectus, the Company
believes that there is a stable market for fuel. Although fuel prices rose
sharply in the first half of 1996, they have tended to stabilize since and in
some areas decreased, but not to previous levels. The Company stores no fuel and
has no storage tanks at its facilities.
COMPETITION
The truckload transportation industry is heavily fragmented and intensely
competitive. The Company has numerous competitors that vary in size, ranging
from small operators who can compete on certain lane segments due to lower
overhead, to significantly larger companies with greater financial resources,
more equipment, and larger volume capacities than the Company. The main
competitive factors in the truckload industry are service, pricing, and
availability of equipment.
Within the logistics services industry, key competitive factors include
information technology and carrier relationships. There are a number of other
companies in the logistics services business that have more
27
<PAGE> 29
employees and a greater number of branch offices than the Company. Management
believes that Truck-Net is one of the largest logistics company exclusively
serving the air freight industry in the United States.
PROPERTIES
The Company's offices are located in a modern office/warehouse facility at
5025 Derrick Jones Road, Atlanta, Georgia 30349. This facility, which includes a
terminal, administrative offices, and dispatching services, is subleased from
Professional Sales Group, Ltd, a company wholly-owned by Dennis A. Bakal. For
further information on this sublease see "Certain Transactions." Since the
Company's operations through Timely do not require physical handling, loading or
unloading of its freight or of equipment at the Company's facility, the Company
has no other office or warehouse facilities.
LITIGATION
On or about February 26, 1997, an action was brought against both Timely
and Truck-Net by the trustee in bankruptcy in the U.S. Bankruptcy Court for the
Central District of California in the matter of In re Right O Way
Transportation, Inc. (Case No. SA96-11774 JR), seeking to recover alleged
preferential transfers to and for the benefit of Timely and Truck-Net in the
aggregate of approximately $435,000 within the 90 days preceding the filing of
Right O Way's bankruptcy petition under Chapter 7 of the U.S. Bankruptcy Code.
Answers have been filed on behalf of Timely and Truck-Net which generally deny
all of the trustee's material allegations and asserting several affirmative
defenses as a bar to recovery by the trustee. The Company intends to vigorously
defend this action.
The Company is not a party to any other material legal proceedings other
than routine litigation arising in the normal course of business.
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<PAGE> 30
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions with the
Company as of the date of this Prospectus of all of the officers and directors
(the "Named Executive Officers") of the Company. Also set forth below is
information as to the principal occupation and background for each person in the
table.
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICE
- ---- --- -------------------
<S> <C> <C>
Dennis A. Bakal............................ 52 Chairman of the Board, President and Chief
Executive Officer
Linda K. Roberts........................... 49 Vice President/Administration and Secretary
Peter C. Roth.............................. 54 Chief Financial Officer
William M. Kelly........................... 49 Vice President/Transportation
Stanley E. Laiken.......................... 55 Vice President/Sales
</TABLE>
Mr. Bakal is President and Chief Executive Officer of the Company. His
career in the airfreight industry began over 30 years ago and includes all
operational, marketing and sales aspects associated with the business.
Immediately prior to founding the Company in 1990, he was the President and
Chief Executive Officer of LEP Profit, responsible for its North and South
American marketing and operations.
Mr. Bakal joined Profit Freight Systems ("Profit") in 1973 and progressed
from District Manager to Regional Manager, Regional Vice President, Vice
President of Operations and Senior Vice President. During this period, he was a
leader in the development, implementation and selling of the company's
successful pharmaceutical distribution program between Puerto Rico and the
United States. In 1983, Mr. Bakal was promoted to Chief Operating Officer of
Profit. In 1984, he was named President and in 1988 he was named Chief Executive
Officer. He directed the company's successful merger with the British-based LEP
Group, one of the world's largest international freight forwarding companies.
Mr. Bakal served on the LIM (LEP International Management) Board of Directors
and was responsible for all LEP Group companies in North and South America.
In 1978, Mr. Bakal received the Air Cargo News Achievement of the Year
Award for his outstanding industry contribution. He has served as an Air Cargo
World Magazine advisory board member and Vice President of the Air Freight
Association since July 1987 and was appointed to their Board of Directors in
July 1988. Mr. Bakal graduated from the New York Institute of Technology with a
degree in Business Science in 1966.
Ms. Roberts is currently Vice President/Administration and Secretary of the
Company and has been affiliated with the Company since its inception. Her career
in the airfreight industry began over 16 years ago and includes all
administrative, operations and marketing aspects associated with the business.
Immediately prior to joining the Company, she was Assistant to the Chief
Executive Officer of Profit. She joined Profit in June 1980 and progressed from
various administrative and staff jobs to become Assistant to the Chief Executive
Officer. During this period, Ms. Roberts was involved in the implementation of
various sales, as well as internal, programs for the company.
Mr. Roth became Chief Financial Officer of the Company in October 1996. A
1963 graduate of St. John's University with a degree in accounting, he has more
than 30 years experience in accounting and finance. He spent nine years in
public accounting with S.D. Leidesdorf & Co., now part of the international
accounting firm of Ernst & Young LLP, achieving the level of Senior Manager.
After leaving Ernst & Young, Mr. Roth served as Secretary and Controller of the
John B. Stetson Co., Assistant Corporate Controller of Downe Communications,
Inc., Vice President and Treasurer of Profit, and Vice President -- Finance and
Treasurer of The Aviation Group, Inc. All of the foregoing companies were public
companies during the time of Mr. Roth's employment. In addition to overall
responsibilities related to finance, accounting and, in some instances,
administration, Mr. Roth was responsible for all reporting functions for each
company and assisted two of the companies with public offerings. Immediately
prior to joining the Company, from May 1987 to
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<PAGE> 31
March 1992 Mr. Roth operated a family-owned business and from May 1992 to
October 1996 served as a financial and accounting consultant to public and
private companies in a variety of industries.
Mr. Kelly is Vice President/Transportation of the Company and is in charge
of the day-to-day operations of the Company and is also responsible for federal
and state regulatory compliance, safety and maintenance programs, equipment
acquisition and logistics planning. Immediately prior to joining the Company in
November 1991, he was Vice President of Wayne Systems, in charge of operations.
Prior to joining Wayne Systems, he was General Manager for Pinto Trucking, where
he was responsible for regulatory compliance and the complete operations of a
fleet in excess of 200 tractors.
Mr. Laiken, a 1963 graduate of Pratt Institute with a Bachelor of
Engineering degree, is Vice President/ Marketing of the Company. Immediately
prior to joining the Company in February 1993, Mr. Laiken was Vice
President/National Accounts with Profit and had also served Profit as Operations
Manager, Regional Vice President and Vice President/Agent Development. Prior to
joining Profit in 1974, Mr. Laiken was employed by Johns-Manville Corporation in
various capacities including Traffic Manager and Physical Distribution Manager.
Mr. Bakal and Mr. Laiken are brothers-in-law.
The Company has agreed with the Representative that, within 30 days after
the completion of this Offering, the Company will increase to five the number of
individuals serving on the Company's Board of Directors, at least two of whom
will be independent directors. The Company has also agreed that, for a period of
five years following the completion of this Offering, it will use its best
efforts to cause the election to its Board of Directors, one designee of the
Representative, provided that such designee is reasonably acceptable to and
approved by the Company. Alternatively, the Representative may appoint an
observer to attend all meetings of the Board of Directors during such period. As
of this date, no person has been identified by the Representative for election
as a director or for appointment as an observer.
The Board of Directors of the Company will establish audit and compensation
committees, each to be comprised of a majority of independent directors,
following the completion of this Offering. The Audit Committee will recommend to
the Board of Directors the appointment of independent auditors and review the
plan and scope of any audit of the Company's financial statements, the Company's
significant accounting policies and other related matters. The Compensation
Committee will make recommendations to the Board of Directors regarding the
compensation of executive officers and administer the company's employee benefit
plans. The Compensation Committee will also make recommendations to the Board of
Directors with respect to the issuance of options under the Company's 1996 Stock
Option Plan.
The Company's directors will be reimbursed for any out-of-pocket expenses
incurred by them for attendance at meetings of the Board of Directors or
committees thereof. The Board of Directors also intends to compensate
non-employee directors $500 for each meeting of the Board attended by such
director, except that the designee of the Representative will be paid $1,000 a
month.
EXECUTIVE COMPENSATION/EMPLOYMENT AGREEMENTS
The Company did not directly pay any compensation to Dennis A. Bakal, its
President and Chief Executive Officer during the year ended December 31, 1996.
However, Truck-Net paid a company which is wholly-owned by Mr. Bakal $120,000 in
1996 and $240,000 in 1995, for certain management services provided to
Truck-Net. The purpose of such payments was to furnish compensation to Mr.
Bakal. See "Certain Transactions." No other executive officer's salary and bonus
equaled or exceeded $100,000 for services rendered to the Company during such
years.
Bakal Agreement. On April 1, 1997, Mr. Bakal and the Company entered into
an employment agreement (the "Bakal Agreement") pursuant to which he will serve
as the Chief Executive Officer and President of the Company. The Bakal Agreement
provides that Mr. Bakal will receive a base salary of not less than $300,000 per
year and an annual bonus as determined by the Compensation Committee based upon
achievement of targeted levels of performance and such other criteria as the
Compensation Committee shall establish from time to time. In addition, he may
participate in the Company's 1996 Stock Option Plan (the
30
<PAGE> 32
"Plan"), and will receive health insurance for himself and his dependents,
long-term disability insurance, civic and social club dues, use of an automobile
owned or leased by the Company and other benefits of similarly situated
employees. Mr. Bakal's base salary may be increased upon a periodic review by
the Board of Directors or the Compensation Committee. The Bakal Agreement has a
term of three years and renews daily until either party fixes the remaining term
at three years by giving written notice. The Company can terminate Mr. Bakal's
employment upon his death or disability or for cause, and Mr. Bakal can
terminate his employment for any reason within a 90-day period beginning on the
30th day after any occurrence of any change in control or within a 90-day period
beginning on the one-year anniversary of the occurrence of any change of
control. If Mr. Bakal's employment is terminated by the Company in breach of the
Bakal Agreement or if Mr. Bakal terminates the Bakal Agreement for any reason
after a change in control, the Company must pay Mr. Bakal one-twelfth of his
annual base salary and bonus for each of 36 consecutive 30-day periods following
the termination and must continue Mr. Bakal's life and health insurance until he
reaches 65, and Mr. Bakal's outstanding options to purchase Common Stock would
vest and become immediately exercisable.
In the Bakal Agreement, the Company also granted Mr. Bakal, with respect to
his shares of Common stock, piggyback and, after any termination of employment
or if he is no longer a director of the Company, demand registration rights. See
"Shares Eligible for Future Sale." Under the Bakal Agreement, Mr. Bakal agrees
to maintain the confidentiality of the Company's trade secrets. Mr. Bakal agrees
that for a period of two years, if he is terminated for cause, not to compete
with or solicit employees or customers of the Company within the United States.
Other Employment Agreements. On April 1, 1997, the Company entered into
employment agreements with each of Messrs. Kelly and Laiken and Ms. Roberts
(collectively, the "Other Agreements"). The Other Agreements provide for a
minimum base salary per year, and an annual bonus as determined by the Chief
Executive Officer and President based upon achievement of targeted levels of
performance and such other criteria as he shall establish from time to time. In
addition, each employee may participate in the Plan and will receive insurance
and other benefits of similarly situated employees. Each of the Other Agreements
has a term of three years and renews daily until either party fixes the
remaining term at three years by giving written notice. The Company can
terminate each of the employees upon death or disability or for cause, and the
employee can terminate employment for any reason within one year of a change in
control with adequate justification. If the employee's employment is terminated
by the Company for any reason within one year after a change in control or if
the employee terminates the agreement with adequate justification, the Company
must pay the employee one-twelfth of his or her base salary and bonus for each
of 36 consecutive 30-day periods following the termination and must continue the
employee's life and health insurance until age 65, and the employee's
outstanding options to purchase Common Stock would vest and become immediately
exercisable. Under the Other Agreements, each employee agrees to maintain the
confidentiality of the Company's trade secrets. The employee also agrees for a
period of one year, if he or she is terminated for cause or resigns without
adequate justification, not to compete with or solicit employees or customers of
the Company within the United States.
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<PAGE> 33
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning each grant of stock
options to each of the Named Executive Officers during the year ended December
31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE
- ---- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C>
Dennis A. Bakal................................. 750,000(2) 70.4% $0.50 2001
Linda K. Roberts................................ 70,000(3) 6.6 0.15 2001
Peter C. Roth................................... 50,000(4) 4.8 4.00 2001
William M. Kelly................................ 70,000(3) 6.6 0.15 2001
Stanley E. Laiken............................... 70,000(3) 6.6 0.15 2001
</TABLE>
- ---------------
(1) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Commission. There can be no assurance provided
to any executive officer or any other holder of the Company's securities
that the actual stock price appreciation over the term will be at the
assumed 5% and 10% levels or at any other defined level.
(2) Options were granted at approximately 520% of the fair market value of the
Common Stock on the date of grant as determined by the Board. Represents
incentive stock options which were granted on February 16, 1996 and vest as
to 200,000 shares on each of January 1, 1997, 1998 and 1999 and as to
150,000 shares on January 1, 2000 upon the attainment of certain performance
requirements or if such performance requirements are not met, such options
vest as to all shares on February 15, 2001.
(3) Options were granted at approximately 150% of the fair market value of the
Common Stock on the date of grant as determined by the Board. Represents
stock options which were granted on February 16, 1996 and vest on the
earlier of February 16, 1999 or 60 days after the consummation of this
Offering.
(4) Options were granted at the fair market value of the Common Stock on the
date of grant as determined by the Board. Represents incentive stock options
which were granted on November 1, 1996 and vest as to 25,000 shares on the
earlier of November 1, 1999 or 60 days after the consummation of this
Offering and to the remaining 25,000 shares on the earlier November 1, 2000
or 60 days after the one year anniversary of the consummation of this
Offering.
STOCK OPTION PLAN
The Company has adopted the Plan, under which 1,500,000 shares of Common
Stock are reserved for issuance upon exercise of options. The Plan is designed
to serve as an incentive for retaining qualified and competent employees. The
Company's Board of Directors, or, when established, the Compensation Committee,
administers and interprets the Plan and is authorized to grant options
thereunder to all eligible employees of the Company, including officers and
directors (whether or not employees) of the Company and consultants.
The Plan provides for the granting of both "incentive stock options" (as
defined in Section 422A of the Internal Revenue Code) and nonqualified stock
options. Options are granted under the Plan on such terms and at such prices as
determined by the Committee, except that the per share exercise price of options
cannot be less than the fair market value of the Common Stock on the date of
grant. Incentive stock options granted to any employee who is also a greater
than 10% shareholder may not have a per share exercise price which is less than
110% of the fair market value on the date of grant. Each option is exercisable
after the period or periods specified in the option agreement, but no option can
be exercised after the expiration of 10 years from the date of grant. Options
granted under the Plan are not transferable other than by will or by the laws of
descent and distribution. The Plan allows the holders of options to use Common
Stock to pay for the exercise of their options. To date, 1,300,000 options have
been granted under the Plan.
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<PAGE> 34
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock immediately prior to this
Offering, and as adjusted to reflect the sale of the shares of Common Stock
offered by the Company by (i) each person known by the Company to beneficially
own more than five percent of the Common Stock, (ii) each director and the
Company's Chief Executive Officer, (iii) the Named Executive Officers and (iv)
all directors and executive officers of the Company as a group. Except as
otherwise indicated, the address of each beneficial owner of five percent of
such Common Stock is the same as the Company. See "Management."
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO THE OFFERING AFTER THE OFFERING
---------------------- --------------------
NUMBER OF NUMBER OF
NAME OF BENEFICIAL OWNER SHARES PERCENT SHARES PERCENT
- ------------------------ ---------- -------- --------- -------
<S> <C> <C> <C> <C>
Dennis A. Bakal(2)............................... 2,700,000 96.4% 2,700,000 62.8%
Linda K. Roberts(3).............................. 0 * 0 *
Peter C. Roth(4)................................. 0 * 0 *
William M. Kelly(3).............................. 0 * 0 *
Stanley E. Laiken(3)............................. 0 * 0 *
All directors and executive officers as a group
(5 persons).................................... 2,700,000 96.4% 2,700,000 62.8%
</TABLE>
- ---------------
* Represents less than 1%
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them. Under the rules of the Securities
and Exchange Commission, a person is deemed to be a "beneficial" owner of
securities if he or she has or shares the power to vote or direct the voting
of such securities or the power to dispose or direct the disposition of such
securities. A person is also deemed to be a beneficial owner of any
securities of which that person has the right to acquire beneficial
ownership within 60 days. More than one person may be deemed to be a
beneficial owner of the same securities.
(2) Includes options to acquire 200,000 shares of Common Stock held by Mr. Bakal
which are currently exercisable at an exercise price of $0.50 per share.
Does not include options to acquire 800,000 shares of Common Stock, which
are not exercisable within 60 days of the date of this Prospectus.
(3) Does not include options to acquire 70,000 shares of Common Stock, which are
not exercisable within 60 days of the date of this Prospectus.
(4) Does not include options to acquire 50,000 shares of Common Stock, which are
not exercisable within 60 days of the date of this Prospectus.
CERTAIN TRANSACTIONS
Commencing in May 1996, the Company moved its operations to a facility
leased to Professional Sales Group Ltd. ("PSG"), a company wholly-owned by
Dennis A. Bakal. Under the terms of the sublease with PSG, the Company subleases
certain portions of the facility from PSG at a competitive market rate and is
committed to the facility for a period of eight years (the remaining term of
PSG's lease with the owner, an unrelated third party). Currently, the Company
pays rent of approximately $10,000 per month. The sublease provides for
escalations for items such as taxes and common area maintenance, with a
scheduled rent increase for the last five years of the term. If Mr. Bakal finds
suitable tenants to take the entire premises currently leased by PSG, it is his
intention to terminate the sublease with the Company and move to other
facilities. Currently, more than 60% of the space leased by PSG has been
subleased to unrelated third parties.
Certain credit facilities available to the Company have been arranged, at
the request of the lender, through Mr. Bakal. Mr. Bakal is the nominee for the
major portion of the Company's credit facility, which is guaranteed by the
Company and its subsidiaries. Any advances under this credit facility are made
directly to the operating companies pursuant to loan agreements between such
entities and Mr. Bakal. Such loan
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<PAGE> 35
agreements require the payment of interest and principal by the borrowing
entities under the same terms and conditions as required under the agreement
between Mr. Bakal and the financial institution. The letter of credit facility
of one of the subsidiaries, as a guarantee for certain of the equipment leases
of the subsidiary, has been guaranteed by the Company, its other subsidiaries,
and personally by Mr. Bakal.
Mr. Bakal has personally guaranteed a portion of the PSG facilities lease
and many of the equipment operating leases and other liabilities of the Company
and its subsidiaries. In the past, Mr. Bakal has personally provided loans and
advances to and has borrowed funds from the Company on an informal basis.
Certain of the loans and advances have been repaid, converted to equity or
remain unpaid at the present time. As of December 31, 1996, the net amount owed
by the Company to Mr. Bakal was approximately $48,000.
PSG provided certain management services to Truck-Net in 1996 and 1995.
Fees paid by Truck-Net for such services amounted to $120,000 and $240,000 in
1996 and 1995, respectively. Effective June 30, 1996, the payment of management
fees to PSG was discontinued.
As of December 31, 1996, PSG owed approximately $170,000 to the Company and
its subsidiaries, which amounts are guaranteed by Mr. Bakal.
On December 31, 1996, PTG purchased, in a nonmonetary exchange, the assets
of Rapid and certain other physical assets from a group of companies owned by
Mr. Bakal. As consideration for the purchase, PTG assumed accounts payable
associated with Rapid from these entities. In addition, PTG agreed to pay to a
related party 5% of the gross sales of Rapid for a period of five years.
Also on December 31, 1996, PTG purchased certain fixed assets valued at
$47,967 from USA Holdings, Inc., a company wholly-owned by Mr. Bakal. In
exchange for the assets, PTG transferred to USA Holdings, Inc. $47,967 of
receivables owed to PTG by the former corporate owner of Rapid.
On December 17, 1996, Truck-Net transferred 14,570 shares of restricted
common stock of Amertranz Worldwide Holding Corp. to PSG. The shares had been
received by Truck-Net in July 1996 in exchange for $100,000 due Truck-Net by
Amertranz. In exchange for the shares, PSG issued a non-interest bearing note to
Truck-Net in the amount of $100,000, which note becomes due within 60 days after
certain transfer restrictions on the shares are eliminated.
Mr. Bakal, as the majority owner of the Company and other entities, directs
the operations of the various entities and the transactions between them. All
long-term financial commitments of the Company and its subsidiaries with Mr.
Bakal and/or other companies controlled by him are subject to written agreements
at terms, in the opinion of management, comparable to arms-length, third-party
transactions of a similar nature. It is anticipated that after the Offering,
many of the financing and/or lease transactions of the Company, will be
restructured to remove the personal guarantees of Mr. Bakal.
The Company believes that all the foregoing related-party transactions were
on terms no less favorable to the Company than could reasonably be obtained from
unaffiliated third parties. All future transactions with affiliates will be
approved by a majority of disinterested directors of the Company and on the
terms no less favorable to the Company than those that are generally available
from unaffiliated third parties.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock, no par value, and 100,000 shares of Preferred Stock, no par value.
As of the date of this Prospectus, 2,600,000 shares of Common Stock were issued
and outstanding and no shares of Preferred Stock were outstanding.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share. The holders of
Common Stock are entitled to receive ratably such dividends, if any, as may be
declared by the Board of Directors out of legally available funds. Upon
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets of the Company which are
legally available for distribution, after payment of or
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<PAGE> 36
provisions for all debts and liabilities and the liquidation preferences of any
outstanding shares of Preferred Stock. Holders of Common Stock have no
preemptive, subscription, or redemption rights. The shares of Common Stock
offered hereby will be, when and if issued, fully paid and nonassessable.
PREFERRED STOCK
The Company is authorized to issue Preferred Stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without shareholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the value or market price of
the Common Stock and voting power or other rights of the holders of Common
Stock. In the event of issuance, the Preferred Stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company. See "-- Certain Effects of Authorized but
Unissued Stock."
WARRANTS
Each Warrant entitles the holder thereof to purchase one share of Common
Stock at a price of $6.90 per share (assuming an initial offering price of $6.00
per share) for a period of four years commencing on the first anniversary of the
effective date of this Offering (the "First Exercise Date"). Each Warrant is
redeemable by the Company at a redemption price of $0.125 per Warrant at any
time after the First Exercise Date, upon 30 days prior written notice to the
holders thereof, if the average closing bid price of the Common Stock, as
reported on the principal exchange on which the Common Stock is traded, equals
or exceeds $10.50 per share for 10 consecutive trading days ending three days
prior to the date of the notice of redemption.
Pursuant to applicable federal and state securities laws, in the event a
current prospectus is not available, the Warrants may not be exercised by the
holders thereof and the Company will be precluded from redeeming the Warrants.
There can be no assurance that the Company will not be prevented by financial or
other considerations from maintaining a current prospectus. Any Warrant holder
who does not exercise prior to the redemption date, as set forth in the
Company's notice of redemption, will forfeit the right to purchase the Common
Stock underlying the Warrants, and after the redemption date or upon conclusion
of the exercise period, any outstanding Warrants will become void and be of no
further force or effect, unless extended by the Board of Directors of the
Company. See "Underwriting" for the terms of the Warrants issuable pursuant to
the Underwriters' Warrants.
The number of shares of Common Stock that may be purchased is subject to
adjustment upon the occurrence of certain events, including a dividend
distribution to the Company's shareholders or a subdivision, combination or
reclassification of the outstanding shares of Common Stock. Further, the Warrant
exercise price is subject to adjustment in the event the Company issues
additional stock or rights to acquire stock at a price per share that is less
than the current market price per share of Common Stock on the record date
established for the issuance of additional stock or rights to acquire stock. The
term "current market price" is defined as the average of the daily closing
prices for the 20 consecutive trading days ending three days prior to the record
date. However, the Warrant exercise price will not be adjusted in the case of
the issuance or exercise of options pursuant to the Company's stock option
plans, the issuance or exercise of the Underwriters' Warrants (or the Warrants
included therein) or any other options or warrants outstanding as of the date of
this Offering. The Warrant exercise price is also subject to adjustment in the
event of a consolidation or merger where a distribution by the Company is made
to its shareholders of the Company's assets or evidences of indebtedness (other
than cash or stock dividends) or pursuant to certain subscription rights or
other rights to acquire Common Stock.
The Company may at any time, and from time to time, extend the exercise
period of the Warrants, provided that written notice of such extension is given
to the Warrant holders prior to the expiration date then in effect. Also, the
Company may reduce the exercise price of the Warrants for limited periods or
through the end of the exercise period if deemed appropriate by the Board of
Directors. Any extension of the term and/or
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<PAGE> 37
reduction of the exercise price of the Warrants will be subject to compliance
with Rule 13e-4 under the Exchange Act including the filing of a Schedule 13e-4.
Notice of any extension of the exercise period and/or reduction of the exercise
price will be given to the Warrant holders. The Company does not presently
contemplate any extension of the exercise period nor does it contemplate any
reduction in the exercise price of the Warrants. The Warrants are also subject
to price adjustment upon the occurrence of certain events including subdivisions
or combinations of the Common Stock.
The Warrants will be issued pursuant to the terms and conditions of a
Warrant Agreement between the Company and .
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Company's Articles of Incorporation adopt the provisions of the Georgia
Business Corporation Code (the "Corporation Code") providing that no member of
the Company's Board of Directors shall be personally liable to the Company or
its shareholders for monetary damages for any breach of his duty of care or any
other duty he may have as a director, except liability for any appropriation, in
violation of the director's duties, of any business opportunity of the Company,
for any acts or omissions that involve intentional misconduct or a knowing
violation of law, for liability under the Corporation Code for unlawful
distributions to shareholders, and for any transaction from which the director
receives an improper personal benefit.
The Company's Bylaws provide that each officer and director shall be
indemnified for all losses and expenses (including attorneys' fees and costs of
investigation) arising from any action or other legal proceeding, whether civil,
criminal, administrative or investigative, including any action by and in the
right of the Company, because he is or was a director, officer, employee or
agent of the Company or, at the Company's request, of any other organization. In
the case of action by or in the right of the Company, such indemnification is
subject to the same exceptions, described in the preceding paragraph, that apply
to the limitation of a director's monetary liability to the Company. The Bylaws
also provide for the advancement of expenses with respect to any such action,
subject to the officer's or director's written affirmation of his good faith
belief that he has met the applicable standard of conduct, and the officer's or
director's written agreement to repay any advances if it is determined that he
is not entitled to be indemnified. The Bylaws permit the Company to enter into
agreements providing to each officer or director indemnification rights
substantially similar to those set forth in the Bylaws, and such agreements are
expected to be entered into between the Company and each of the members of its
Board of Directors. Although the form of indemnification agreement offers
substantially the same scope of coverage afforded by provisions in the Articles
of Incorporation and Bylaws, it provides greater assurances to officers and
directors that indemnification will be available, because, as a contract, it
cannot be modified unilaterally in the future by the Board of Directors or by
the shareholders to eliminate the rights it provides.
In accordance with the applicable provisions of the Corporation Code, the
shareholders of the Company have approved the limitation of liability provision
in the Articles of Incorporation and the indemnification provisions of the
Bylaws.
DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Company is attempting to obtain a directors and officers liability
insurance policy in the aggregate annual maximum amount of $6,000,000 with a
$50,000 deductible. This policy insures (i) the officers and directors of the
Company from any claims arising out of an alleged wrongful act by such persons
while acting as directors and officers of the Company and (ii) the Company to
the extent that it has indemnified the directors and officers for any such loss.
There is no assurance that the Company will be able to obtain such policy.
OTHER PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
Shareholders' rights and related matters are governed by the Company's
Articles of Incorporation and Bylaws. Certain provisions of the Articles of
Incorporation and Bylaws of the Company, which are summarized below, may make it
more difficult to change the composition of the Company's Board of
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<PAGE> 38
Directors and may discourage or make more difficult any attempt by a person or
group to obtain control of the Company. The Company believes that the benefits
of these provisions, which protect the Company's ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure the
Company, outweigh the disadvantages of discouraging such proposals because these
provisions typically enhance the Board of Directors' leverage to negotiate a
more favorable transaction with a potential acquiror.
Advance Notice of Director Nominations and Shareholder Proposals. The
Company's Bylaws establish an advance notice procedure for shareholders to make
nominations of candidates for election as directors or bring other business
before an annual meeting of shareholders of the Company (the "Shareholder Notice
Procedure"). The Shareholder Notice Procedure provides that (i) only persons who
are nominated by, or at the direction of, the Board of Directors, or by a
shareholder who has given timely written notice containing specified information
to the Secretary of the Company prior to the meeting at which directors are to
be elected, will be eligible for election as directors of the Company and (ii)
at an annual meeting, only such business may be conducted as has been brought
before the meeting by, or at the direction of, the Chairman of the Board of
Directors or by a shareholder who has given timely written notice to the
Secretary of the Company of such shareholder's intention to bring such business
before such meeting. In general, for notice of shareholder nominations or
business to be addressed at an annual meeting to be timely, such notice must be
received by the Company not less than 60 days nor more than 90 days prior to the
first anniversary of the previous year's annual meeting.
The purpose of requiring shareholders to give the Company advance notice of
nominations and other business is to afford the Board of Directors a meaningful
opportunity to consider the qualifications of the proposed nominees or the
advisability of the other proposed business and, to the extent deemed necessary
or desirable by the Board of Directors, to inform shareholders and make
recommendations about such qualifications or business, as well as to provide a
more orderly procedure for conducting meetings of shareholders. Although the
Bylaws do not give the Board of Directors any power to disapprove shareholder
nominations for the election of directors or proposals for action, they may have
the effect of precluding a contest for the election of directors or the
consideration of shareholder proposals if the proper procedures are not
followed, and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or to approve its
own proposal, without regard to whether consideration of such nominees or
proposals might be harmful or beneficial to the Company and its shareholders.
Relevant Factors to be Considered by the Board of Directors. The Company's
Articles of Incorporation provide that, in determining what is in the best
interests of the Company, a director of the Company, in addition to considering
the effects of any action on the Company or the shareholders of the Company, may
consider in his or her discretion (i) the interests of the Company's employees,
suppliers, creditors and customers, (ii) the economy of the nation, (iii)
community and societal interests and (iv) the long-term as well as short-term
interests of the Company and its shareholders, including the possibility that
these interests may be best served by the continued independence of the Company.
Pursuant to this provision, the Board of Directors may consider numerous
judgmental or subjective factors affecting a proposal, including certain
nonfinancial matters, and on the basis of these considerations may oppose a
business combination or other transaction which, viewed exclusively from a
financial perspective, might be attractive to some, or even a majority, of the
Company's shareholders.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
The authorized but unissued shares of Common Stock and Preferred Stock are
available for future issuance without shareholder approval. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate acquisitions and
employee benefit plans.
The existence of authorized but unissued and unreserved Common Stock and
Preferred Stock may enable the Board of Directors to issue shares to persons
friendly to current management which could render more difficult or discourage
an attempt to obtain control of the Company by means of a proxy contest, tender
offer, merger, or otherwise, and thereby protect the continuity of the Company's
management.
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<PAGE> 39
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Securities is
.
SHARES AVAILABLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding
4,100,000 shares of Common Stock. Of these shares, the 1,500,000 shares of
Common Stock offered hereby will be freely tradeable by persons other than
"affiliates" of the Company without restriction or further registration under
the Securities Act.
Dennis A. Bakal, the Company's majority shareholder, has agreed to enter
into a lock-up agreement with the Representative providing that, subject to
certain exceptions, he will not offer, sell or otherwise dispose of, directly or
indirectly, any shares of Common Stock owned by him on completion of this
Offering or upon the exercise of stock options held by him for a period of 60
months from the date of this Prospectus subject to certain conditions. See
"Principal Shareholders" and "Underwriting." As a result, notwithstanding
possible earlier eligibility for sale under the provisions of Rule 144 under the
Securities Act, Mr. Bakal's shares will not be eligible for sale until the
lock-up period expires. However, the lock-up agreement provides for the earlier
release of the shares upon the Company's achievement of certain performance
goals as described below. Of the shares subject to the lock-up, 20% of his
shares will be released on each of January 1, 1998, 1999, 2000, 2001 and 2002 in
the event that the net income of the Company for the preceding year exceeds
certain prescribed levels or the average market price of the Company's Common
Stock for the 20 trading days preceding the end of the year exceeds certain
levels. In any event, all of the shares subject to lock-up will be released on
January 1, 2002.
In general, under Rule 144 as currently in effect, if two years have
elapsed since the later of the date of acquisition of "restricted securities"
from the Company or any "affiliate" of the Company, as those terms are defined
under the Securities Act, the holder is entitled to sell within any three-month
period a number of shares of Common Stock that does not exceed the greater of 1%
of the then-outstanding shares of Common Stock (approximately 41,000 shares
immediately after the Offering or approximately 43,250 shares if the
Underwriters' over-allotment option is exercised in full), or the average weekly
trading volume of shares of Common Stock on all exchanges and reported through
the automated quotation system of a registered securities association during the
four calendar weeks preceding the date on which notice of the sale is filed with
the Commission. Sales under Rule 144 are also subject to certain restrictions on
the manner of sales, notice requirements and the availability of current public
information about the Company. If three years have elapsed since the date of
acquisition of restricted shares from the Company or from any affiliate of the
Company, and the holder thereof is deemed not to have been an affiliate of the
Company at any time during the 90 days preceding a sale, such person would be
entitled to sell such Common Stock in the public market under Rule 144(k)
without regard to the volume limitations, manner of sale provisions, public
information requirements or notice requirements described above. The Commission
recently adopted a proposal to reduce the two- and three-year holding periods
described above to one- and two- years, respectively, which takes effect in late
April 1997.
No prediction can be made as to the effect, if any, that market sales of
shares or the availability of shares for sale will have on the market price
prevailing from time to time. An increase in the number of shares of Common
Stock that may become available for sale in the public market after the
expiration of the restrictions described above could adversely affect the market
price prevailing from time to time of the Common Stock in the public market and
could impair the Company's ability to raise additional capital through the sale
of its equity securities in the future.
REGISTRATION RIGHTS
Under the Bakal Agreement, upon the termination of Mr. Bakal's employment
or in the event he is no longer a director of the Company for any reason, he may
request registration for sale under the Securities Act of all or part of the
Common Stock then held by him. However, the Company shall not be required to
effect a demand registration under the Securities Act if: (i) the aggregate
market value of the shares of Common
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<PAGE> 40
Stock proposed to be registered does not equal or exceed $12,000,000 prior to an
initial public offering or $2,000,000 after an initial public offering; (ii)
within 12 months prior to any such request for registration, a registration of
securities of the Company has been effected in which Mr. Bakal had the right to
participate; (iii) the Company receives such request for registration within 180
days preceding the anticipated effective date of a proposed underwritten public
offering of securities of the Company approved by the Board of Directors prior
to the Company's receipt of such request; or (iv) the Board of Directors
reasonably determines in good faith that effecting such a demand registration at
such time would have a material adverse effect upon a proposed sale of all (or
substantially all) of the assets of the Company, or a merger, reorganization,
recapitalization, or similar transaction materially affecting the capital
structure or equity ownership of the Company which is actively being negotiated
with another party whose identity is disclosed to Mr. Bakal; provided, however,
that the Company may only delay a demand registration for a period not exceeding
six months (or until such earlier time as such transaction is consummated or no
longer proposed).
In addition, under the Bakal Agreement, Mr. Bakal has unlimited piggyback
registration rights if the Company proposes to make a registered public
offering, including an initial public offering, of any of its securities under
the Securities Act, other than an offering pursuant to a demand registration or
an offering registered on Form S-8, Form S-4 or comparable forms. At the written
request of Mr. Bakal, the Company shall include in such registration and
offering, and in any underwriting of such offering, all shares of Common Stock
as may have been designated at his request.
Mr. Bakal's registration rights are subject to reduction in certain
circumstances and after reasonable negotiations among the managing underwriters,
the Company and Mr. Bakal. Mr. Bakal is required to pay all transfer taxes, if
any relating to the sale of his shares, the fees and expenses of his own counsel
and his pro rata portion of any underwriting discount, fee or commission or the
equivalent thereof. All other expenses shall be borne by the Company. The
Company is also obligated to indemnify Mr. Bakal in any of the Company's
registrations against certain losses and liabilities, including liabilities
under the Securities Act and state securities laws.
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<PAGE> 41
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, a copy
of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part, the Company has agreed to sell to the Underwriters, and
the Underwriters, severally and not jointly, have agreed to purchase from the
Company, on a "firm commitment" basis, if any are purchased, the number of
shares of Common Stock and Warrants (exclusive of shares of Common Stock and
Warrants issuable upon exercise of the Underwriters' over-allotment option) set
forth opposite their respective names below:
<TABLE>
<CAPTION>
SHARES OF
UNDERWRITERS COMMON STOCK WARRANTS
- ------------ ------------ ---------
<S> <C> <C>
Argent Securities, Inc. ....................................
Total............................................. 1,500,000 1,500,000
========= =========
</TABLE>
The Company has agreed to sell the shares of Common Stock and Warrants to
the Underwriters at a discount of ten percent (10%) of the initial public
offering price thereof. The Underwriters will offer the shares of Common Stock
and Warrants to the public at $ per share of Common Stock and
$ per Warrant as set forth on the cover page of this Prospectus and may
allow to certain dealers who are National Association of Securities Dealers,
Inc. ("NASD") members concessions not to exceed $ per share of Common
Stock and Warrant, of which not in excess of $ per share of Common
Stock and $ per Warrant may be reallowed to other dealers who are
members of the NASD. After the initial public offering, the public offering
price, concession and reallowances may be changed by the Underwriters.
Prior to this Offering, there has not been any public market for the Common
Stock or the Warrants. The initial public offering prices of the shares of
Common Stock and the Warrants and the exercise price and other terms of the
Warrants were determined by negotiations between the Company and the
Representative and do not necessarily relate to the assets, book value or
results of operations of the Company or any other established criteria of value.
The Company has granted an option to the Underwriters, exercisable during
the 45-day period from the date of this Prospectus, to purchase in the aggregate
up to a maximum of 150,000 additional shares of Common Stock and Warrants at the
price set forth on the cover page of this Prospectus, minus the underwriting
discount. The Underwriters' over-allotment option is exercisable upon the same
terms and conditions as are applicable to the sale of the shares of Common Stock
and Warrants offered hereby.
The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain liabilities in connection with
the Registration Statement, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may
be provided to officers, directors or person controlling the Company, the
Company has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy and is therefore
unenforceable.
The Company has agreed to pay certain blue sky legal fees of the
Underwriters and to pay to the Underwriters at the closing of the Offering a
non-accountable expense allowance of 3% of the aggregate offering price of the
shares of Common Stock and Warrants offered hereby (including any shares of
Common Stock and Warrants purchased pursuant to the Underwriters' over-allotment
option).
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<PAGE> 42
The Company has agreed to sell to the Underwriters, or their respective
designees, for an aggregate purchase price of $150, an option (the
"Underwriters' Warrant") to purchase up to an aggregate of 150,000 shares of
Common Stock and 150,000 Warrants (an aggregate of 172,500 shares of Common
Stock and 172,500 Warrants assuming the exercise of the Underwriters'
over-allotment option) exercisable at 120% of the initial public offering price
of the Securities. The Underwriters' Warrant shall be exercisable during a four-
year period commencing one year after the effective date of the Registration
Statement of which this Prospectus is a part. The Underwriters' Warrant may not
be assigned, transferred, sold or hypothecated by the Underwriters until 12
months from the date of this Prospectus, except to officers or partners of the
Underwriters, to a successor to the Underwriters, to a purchaser of
substantially all of the assets of the Underwriters, or by operation of law. Any
profits realized by the Underwriters upon the sale of the Common Stock and
Warrants (or the underlying Securities) issuable upon exercise of the
Underwriters' Warrants may be deemed to be additional underwriting compensation.
The exercise price of the Warrants issuable upon exercise of the Underwriters'
Warrants during the period of exercisability shall be $7.20 per Warrant
(assuming an initial offering price of $6.00 per share). The exercise of the
Warrants subject to the Underwriters' Warrants and the number of shares of
Common Stock covered thereby are subject to adjustment in certain events to
prevent dilution. For the life of the Underwriters' Warrant, the holders thereof
are given, at a nominal cost, the opportunity to profit from a rise in the
market price of the Securities with a resulting dilution in the interest of
other shareholders. The Company may find it more difficult to raise capital for
its business if the need should arise while the Underwriters' Warrant is
outstanding. At any time when the holders of the Underwriters' Warrant might be
expected to exercise it, the Company would probably be able to obtain additional
capital on more favorable terms.
The Company has agreed with the Underwriters that the Company will pay to
the Underwriters a warrant solicitation fee (the "Warrant Solicitation Fee")
equal to 5% of the exercise price of the Warrants exercised beginning one year
from the date of this Prospectus and to the extent not inconsistent with the
guidelines of the NASD and the rules and regulations of the Commission
(including NASD Notice to Members 81-38). Such Warrant Solicitation Fee will be
paid to the Underwriters if (a) the market price of the Common Stock on the date
that any Warrant is exercised is greater than the exercise price of the Warrant;
(b) the exercise of such Warrant was solicited by the Underwriters; (c) prior
specific written approval for exercise is received from the customer if the
Warrant is held in a discretionary account; (d) disclosure of this compensation
agreement is made prior to or upon the exercise of such Warrant; (e)
solicitation of the exercise is not in violation of Rule 103 of Regulation M of
the Exchange Act; (f) the Underwriter provided bona fide services in exchange
for the Warrant Solicitation Fee; and (g) the Underwriter has been specifically
designated in writing by the holders of the Warrants as the broker. In addition,
unless granted an exemption by the Commission from Rule 103 of Regulation M
under the Exchange Act, the Underwriters will be prohibited from engaging in any
market making activities or solicited brokerage activities with respect to the
Securities for a specified period (generally five business days) prior to any
solicitation of the exercise of any Warrant or prior to the exercise of any
Warrant based on a prior solicitation until the later of the termination of such
solicitation activity or the termination (by waiver or otherwise) of any right
the Underwriters may have to receive such a fee for the exercise of the Warrants
following such solicitation. As a result, the Underwriters may be unable to
continue to provide a market for the Securities during certain periods while the
Warrants are exercisable.
The Representative has informed the Company that the Underwriters do not
intend to confirm sales of shares of Common Stock or Warrants offered hereby to
any accounts over which they exercise discretionary authority.
The Underwriters have been given certain "piggyback" and demand
registration rights with respect to the Common Stock underlying the
Underwriters' Warrants for a period of four years commencing one year from the
date of this Prospectus. The exercise of any such registration rights by the
Underwriters may result in dilution to the interest of the Company's
shareholders, hinder efforts by the Company to arrange future financing of the
Company and/or have an adverse effect on the market price of the Securities.
The Company has agreed that for a period of 24 months commencing from the
date of this Prospectus, it will not issue or sell, directly or indirectly, any
shares of its capital stock, or sell or grant options, warrants or rights to
purchase any shares of its capital stock, without the written consent of the
Representative, except for
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<PAGE> 43
issuances pursuant to (i) the public offering of the Company's securities as
described herein, (ii) the exercise of the Warrants and the Underwriters'
Warrants, and the Common Stock issuable thereunder, (iii) outstanding
convertible securities or contractual obligations disclosed in this Prospectus,
(iv) the grant of options and the issuance of shares issued upon exercise of
options to be granted under the Plan, and (v) an acquisition, merger or similar
transaction provided that the acquiror of such capital stock does not receive,
and will not be entitled to demand, registered securities during such 24-month
period. The Company has granted the Underwriters a two year preferential right
with respect to future financing relating to the offering of the Company's
securities. In addition, Mr. Bakal has agreed with the Representative in writing
not to sell, assign, or transfer any of his shares of the Company's securities
for a period of 60 months from the date of this Prospectus, subject to certain
conditions. See "Shares Available for Future Sale."
The Company has agreed that, for a period of five years following the
completion of this Offering, it will use its best efforts to cause the election
to its Board of Directors one designee of the Representative, provided that such
designee is reasonably acceptable to and approved by the Company. Alternatively,
the Representative may appoint an observer to attend all meetings of the Board
of Directors during such period. As of this date, no person has been identified
by the Representative for election as a director or for appointment as a
observer.
In February 1996, the Company granted the Representative 100,000 shares of
Common Stock in exchange for advice and services with respect to development of
a strategic business plan, merger and acquisition planning, board of director
structure and potential nominees and the introduction of the Company to
companies that could potentially save the Company money in its fuel costs.
LEGAL MATTERS
The validity of the Securities being offered hereby will be passed upon for
the Company by Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia.
Certain matters are being passed upon for the Underwriters by Johnson &
Montgomery, Atlanta, Georgia.
EXPERTS
The financial statements as of December 31, 1996 and for each of the two
years in the period ended December 31, 1996, that are included in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, to the extent and for the periods set forth in their report
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Commission through the Electronic Data
Gathering and Retrieval ("EDGAR") system a registration statement on Form SB-2
(together with all amendments, exhibits and schedules thereto, the "Registration
Statement") under the Securities Act with respect to the Securities offered by
this Prospectus. This Prospectus does not contain all of the information set
forth in such Registration Statement, certain parts of which have been omitted
in accordance with the rules and regulations of the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. For further
information, reference is made to such registration statement, including the
exhibits thereto, which may be inspected without charge at the Commission's
principal office at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;
and at the following Regional Offices of the Commission, except that copies of
the exhibits may not be available at certain of the Regional Offices: Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
and New York Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of all or any part of such material may be obtained from the
Commission at 450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549, upon
payment of
42
<PAGE> 44
certain fees prescribed by the Commission. The Commission maintains a World Wide
Web site on the Internet at http://www.sec.gov that contains reports, proxy,
information statements, and registration statements and other information filed
with the Commission through the EDGAR system.
The Company is not presently a reporting company and does not file reports
or other information with the Commission. However, on the effective date of the
Registration Statement, the Company will become a reporting company. Further,
the Company will register its securities under the Exchange Act. Accordingly,
the Company will become subject to the additional reporting requirements of the
Exchange Act and in accordance therewith will file reports, proxy statements and
other information with the Commission. In addition, after the completion of this
Offering, the Company intends to furnish its shareholders with annual reports
containing audited financial statements and such interim reports, in each case
as it may determine to furnish or as may be required by law.
43
<PAGE> 45
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheet as of December 31, 1996.......... F-3
Consolidated Statements of Operations for the years ended
December 31, 1995 and 1996................................ F-4
Consolidated Statements of Changes in Shareholders' Equity
(Deficit) for the years ended December 31, 1995 and
1996...................................................... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1995 and 1996................................ F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 46
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Professional Transportation Group Ltd., Inc.
and Subsidiaries:
We have audited the accompanying consolidated balance sheet of PROFESSIONAL
TRANSPORTATION GROUP LTD., INC. (a Georgia corporation) AND SUBSIDIARIES as of
December 31, 1996 and the related consolidated statements of operations, changes
in shareholders' equity (deficit), and cash flows for each of the two years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Professional Transportation
Group Ltd., Inc. and subsidiaries as of December 31, 1996 and the results of
their operations and their cash flows for each of the two years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
Atlanta, Georgia
March 11, 1997
(except with respect to the matter
discussed in the 13th paragraph of Note 5,
as to which the date is March 28, 1997)
F-2
<PAGE> 47
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash........................................................ $ 248,454
Trade accounts receivable, net of allowance for doubtful
accounts of $63,629....................................... 2,820,024
Due from affiliate (Note 5)................................. 228,893
Other....................................................... 176,365
----------
Total current assets.............................. 3,473,736
PROPERTY AND EQUIPMENT, NET................................. 1,679,011
OTHER ASSETS................................................ 192,132
----------
Total assets...................................... $5,344,879
==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable............................................ $2,214,670
Accrued liabilities......................................... 506,997
Current maturities of long-term debt and capital lease
obligations............................................... 397,977
----------
Total current liabilities......................... 3,119,644
----------
LINE OF CREDIT (NOTE 5)..................................... 878,379
----------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, NET OF CURRENT
MATURITIES................................................ 1,187,064
----------
DEFERRED INCOME TAXES....................................... 112,270
----------
DUE TO SHAREHOLDER (NOTE 5)................................. 48,469
----------
COMMITMENTS AND CONTINGENCIES (NOTES 5, 6, AND 10)..........
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock 100,000 shares authorized, no shares issued
and outstanding........................................... --
Common stock; no par value; 20,000,000 shares authorized,
2,600,000 issued and
outstanding............................................... --
Additional paid-in capital.................................. 15,166
Accumulated deficit......................................... (16,113)
----------
Total shareholders' deficit....................... (947)
----------
Total liabilities and shareholders' equity
(deficit)......................................... $5,344,879
==========
</TABLE>
The accompanying notes are an integral part of this consolidated balance sheet.
F-3
<PAGE> 48
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
OPERATING REVENUES.......................................... $17,484,765 $21,172,201
----------- -----------
OPERATING EXPENSES:
Salaries, wages, and benefits............................. 5,974,933 6,877,620
Purchased transportation.................................. 4,665,019 5,517,481
Operating supplies and expenses........................... 3,348,229 3,787,670
Fuel and fuel taxes....................................... 1,702,342 2,567,319
Communications and utilities.............................. 256,027 243,582
Depreciation.............................................. 103,025 242,041
Operating taxes and licenses.............................. 60,085 73,840
Other operating expenses.................................. 1,594,816 1,200,282
----------- -----------
Total operating expenses.......................... 17,704,476 20,509,835
----------- -----------
(LOSS) INCOME FROM OPERATIONS............................... (219,711) 662,366
OTHER (EXPENSE) INCOME:
Interest expense............................................ (137,573) (272,347)
Other income, net........................................... 107,084 93,059
----------- -----------
(LOSS) INCOME BEFORE INCOME TAXES........................... (250,200) 483,078
----------- -----------
BENEFIT (PROVISION) FOR INCOME TAXES (NOTES 2 AND 8)........ 22,000 (95,000)
PRO FORMA BENEFIT (PROVISION) FOR INCOME TAXES (NOTES 2 AND
8)........................................................ 73,000 (88,000)
----------- -----------
TOTAL BENEFIT (PROVISION) FOR INCOME TAXES.................. 95,000 (183,000)
----------- -----------
PRO FORMA NET (LOSS) INCOME................................. $ (155,200) $ 300,078
=========== ===========
PRO FORMA NET (LOSS) INCOME PER COMMON SHARE (NOTE 2)....... $ (0.06) $ 0.09
=========== ===========
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES
OUTSTANDING (NOTE 2)...................................... 2,500,000 3,281,862
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 49
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------ PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL EARNINGS (DEFICIT) TOTAL
--------- ------ ---------- ------------------ ---------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994.............. 2,500,000 $ -- $ 5,166 $ 146,543 $ 151,709
Net loss................................ -- -- -- (155,200) (155,200)
Pro forma tax adjustment (Notes 2 and
8).................................... -- -- -- (73,000) (73,000)
Distributions........................... -- -- -- (228,807) (228,807)
--------- ------ ------- --------- ---------
BALANCE, DECEMBER 31, 1995.............. 2,500,000 -- 5,166 (310,464) (305,298)
Net income.............................. -- -- -- 300,078 300,078
Pro forma tax adjustment (Notes 2 and
8).................................... -- -- -- 88,000 88,000
Pretax income of Rapid (Note 5)......... -- -- -- (37,309) (37,309)
Issuance of common stock................ 100,000 -- 10,000 -- 10,000
Distributions........................... -- -- -- (56,418) (56,418)
--------- ------ ------- --------- ---------
BALANCE, DECEMBER 31, 1996.............. 2,600,000 $ -- $15,166 $ (16,113) $ (947)
========= ====== ======= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 50
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
----------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Pro forma net (loss) income................................. $ (155,200) $ 300,078
----------- ---------
Adjustments to reconcile pro forma net (loss) income to net
cash (used in) provided by operating activities:
Pro forma income tax adjustment........................... (73,000) 88,000
Deferred income taxes..................................... (22,106) 25,000
Pretax income of Rapid (Note 5)........................... -- (37,309)
Depreciation.............................................. 103,025 242,041
Changes in operating assets and liabilities:
Trade accounts receivable, net......................... 69,109 (746,849)
Due from affiliate..................................... (344,227) (155,586)
Other current assets................................... (7,505) (136,899)
Accounts payable and accrued liabilities............... 235,757 642,575
----------- ---------
Total adjustments................................. (38,947) (79,027)
----------- ---------
Net cash (used in) provided by operating
activities...................................... (194,147) 221,051
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment......................... (1,029,719) (58,642)
Increase in other assets.................................... (72,779) (48,608)
----------- ---------
Net cash used in investing activities............. (1,102,498) (107,250)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from line of credit............................ 135,794 520,368
Repayments of long-term debt and capital lease
obligations............................................... (119,100) (414,188)
Proceeds from long-term debt................................ 1,239,547 --
Due to shareholder.......................................... 11,399 37,070
Cash distributions to shareholders.......................... -- (25,362)
----------- ---------
Net cash provided by financing activities......... 1,267,640 117,888
----------- ---------
NET (DECREASE) INCREASE IN CASH............................. (29,005) 231,689
CASH, BEGINNING OF YEAR..................................... 45,770 16,765
----------- ---------
CASH, END OF YEAR........................................... $ 16,765 $ 248,454
=========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 51
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
1. ORGANIZATION AND OPERATIONS
Professional Transportation Group Ltd., Inc. ("PTG, Ltd.") (previously
Professional Transportation Group, Ltd.) serves as a holding company for its
three operating subsidiaries: Timely Transportation, Inc. ("Timely"), Truck-Net,
Inc. ("Truck-Net"), and PTG, Inc. (collectively, the "Subsidiaries") (PTG, Ltd.
together with the Subsidiaries is hereafter referred to as the "Company"). The
Company, through the Subsidiaries, provides transportation and logistics
services primarily for the air freight and expedited delivery industries
throughout the continental United States. Timely operates a fleet of
company-owned and -leased vehicles to provide time-definite truckload
transportation services for companies in the air freight and expedited delivery
markets. Truck-Net provides brokerage services to companies, mainly in the air
freight industry, that are in need of third-party transportation. PTG, Inc.
operates a courier service in the Atlanta, Georgia, metropolitan region (d.b.a.
Rapid Transit) and provides third-party logistics services in recovering
copiers, fax machines, and telephone equipment that are in need of repair or
under expired leases.
Prior to January 1997, the Subsidiaries were owned and operated by the
majority shareholder of the Company as separate operating companies. On January
1, 1997, the respective shares of stock in the Subsidiaries were contributed to
PTG, Ltd. by their sole shareholder, whereupon each became a wholly-owned
subsidiary of PTG, Ltd.; and PTG, Ltd., which had previously been an operating
company, transferred its operations to PTG, Inc.
As the companies were all under common control, the above transactions were
treated as a reorganization (the "Reorganization") and were accounted for in a
manner similar to a pooling of interests. All references to number of shares and
to per share information in the financial statements have been adjusted to
retroactively reflect the Reorganization as if it had occurred on December 31,
1994.
In connection with the Reorganization, the Company effected a 5,000-for-1
stock split. All references in the accompanying financial statements to number
of shares and per share amounts of the Company's common stock have been
retroactively restated to reflect the increased number of shares outstanding
from the 5,000-for-1 stock split.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of PTG, Ltd. and
the Subsidiaries. All significant intercompany balances and transactions have
been eliminated.
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECOGNITION OF REVENUE
For financial reporting purposes, the Company recognizes revenue when a
shipment is loaded and dispatched. Significant related costs associated with
earning this revenue are accrued at that time. In 1991, the Emerging Issues Task
Force ("EITF") released Issue 91-9, "Revenue and Expense Recognition for Freight
Services in Process." The EITF reached a consensus that the preferable method of
recognizing revenue and expenses was either (1) recognition of both revenue and
direct cost when the shipment is completed or
F-7
<PAGE> 52
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(2) allocation of revenue between reporting periods based on relative transit
time in each reporting period and recognize expenses as incurred. The difference
between the Company's method of revenue recognition and the preferable methods
described above is not material to the accompanying consolidated financial
statements.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major property additions,
replacements, and betterments are capitalized, while maintenance and repairs
which do not extend the useful lives of these assets are expensed currently.
Depreciation is provided using the straight-line method for financial reporting
purposes over the estimated useful lives of the assets and accelerated methods
for income tax purposes. Upon retirement or disposal of assets, the cost and
related accumulated depreciation are removed from the balance sheet and any gain
or loss is reflected in earnings.
The detail of property and equipment at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
USEFUL LIVES
------------
<S> <C> <C>
Transportation equipment.................................... $1,623,503 7 years
Furniture, fixtures, and equipment.......................... 493,005 5 years
Other....................................................... 13,581 5 years
----------
2,130,089
Less accumulated depreciation............................... 451,078
----------
$1,679,011
==========
</TABLE>
LONG-LIVED ASSETS
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets to Be Disposed Of" requires that
long-lived assets and certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. When
events or changes in circumstances occur related to long-lived assets,
management estimates the future cash flows expected to result from the use of
the asset and its eventual disposition. Having found no instances whereby the
sum of expected future cash flows (undiscounted and without interest charges)
was less than the carrying amount of the assets thus requiring the recognition
of an impairment loss, management believes that the long-lived assets in the
accompanying balance sheet are appropriately valued.
ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31, 1996:
<TABLE>
<S> <C>
Salaries, wages, and benefits............................... $425,289
Other....................................................... 81,708
--------
$506,997
========
</TABLE>
SALARIES, WAGES, AND BENEFITS
Effective May 1995, the Company began leasing drivers and certain office
personnel from an independent personnel leasing company. Under the lease
agreement, the Company pays a fixed amount per leased employee (in addition to
compensation costs) to the employee leasing company to cover payroll processing,
unemployment insurance and workers' compensation. Salaries, wages, and benefits
on the accompanying statements of operations include fees paid to employee
leasing companies for processing of driver payroll of approximately $523,000 and
$812,000 for the years ended December 31, 1995 and 1996, respectively. In
F-8
<PAGE> 53
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
management's opinion, fees paid to the leasing company represent a substantial
cost savings to the Company due to the leasing company's ability to negotiate
better workers' compensation and employee benefits rates.
STOCK-BASED COMPENSATION PLANS
The Company accounts for its stock-based compensation plans under
Accounting Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock
Issued to Employees." The Company has adopted the disclosure option of SFAS No.
123, "Accounting for Stock-Based Compensation." SFAS No. 123 requires that
companies which do not choose to account for stock-based compensation as
prescribed by this statement shall disclose the pro forma effects on earnings
and earnings per share as if SFAS No. 123 had been adopted. Additionally,
certain other disclosures are required with respect to stock compensation and
the assumptions used to determine the pro forma effects of SFAS No. 123 (Note
7).
INCOME TAXES
Prior to the Reorganization, PTG, Ltd. and two of the Subsidiaries elected
to be treated as S corporations for federal and state income tax purposes.
Accordingly, all income or losses of these companies were recognized by the
shareholders on their individual tax returns. In connection with the Company's
expected initial public offering (the "Offering") (Note 3), these companies will
convert from S corporation to C corporation status and, accordingly, will be
subject to future federal and state income taxes. The Company follows the
practice of providing for income taxes based on SFAS No. 109, "Accounting for
Income Taxes." Under SFAS No. 109, deferred tax assets or liabilities at the end
of each period are determined using the tax rate expected to apply to taxable
income in the period in which the deferred tax asset or liability is expected to
be settled or realized (Note 8).
PRO FORMA NET (LOSS) INCOME PER COMMON SHARE
Pro forma net (loss) income per common share is computed using the pro
forma weighted average number of shares of common stock and dilutive common
stock equivalent shares from stock options (using the treasury stock method).
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NONCASH ACTIVITIES
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Cash paid for interest...................................... $137,573 $272,347
Cash paid for income taxes.................................. -- --
Assets contributed by affiliates............................ -- 314,353
Liabilities assumed from affiliates......................... -- 314,353
Noncash distributions to shareholders....................... 228,807 31,056
Capital lease obligations incurred.......................... 474,332 128,760
Common stock issued for services............................ -- 10,000
</TABLE>
3. THE OFFERING
The Company plans to proceed with the Offering of common stock and warrants
as described elsewhere in this Prospectus. The Company anticipates raising
approximately $7,598,000 million in capital net of underwriting discounts and
estimated offering expenses. Management anticipates using the net proceeds from
the Offering for general corporate and working capital purposes. There can be no
assurance that the Offering can be completed at the anticipated price, or at
all.
F-9
<PAGE> 54
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. LIQUIDITY
Although the Company had pro forma net income of $300,078 for the year
ended December 31, 1996, the Company experienced a net loss of $155,200 in the
year ended December 31, 1995 and there can be no assurance that the Company will
not incur net losses in the future. The Company had an accumulated deficit of
$16,113 at December 31, 1996. The Company's operating expenses have increased as
its business has grown and can be expected to increase significantly as a result
of the Company's expansion efforts. There can be no assurance that the Company
will be able to generate sufficient revenue to meet its operating expenditures
or to operate profitably.
Management believes that the proceeds of the Offering, together with cash
flow from operations, will be sufficient to satisfy its contemplated cash
requirements for at least 12 months following the consummation of the Offering.
The Company's financial requirements will depend upon, among other things, the
growth rate of the Company's business, the amount of cash flow generated by
operations, and the Company's ability to borrow funds or enter into lease or
purchase financing arrangements for the acquisition of new transportation
equipment or for working capital purposes. Should the Company require additional
debt or equity financing to support its operations, there can be no assurance
that such additional financing will be available to the Company at commercially
reasonable terms, or at all.
5. RELATED-PARTY TRANSACTIONS
The Company's majority shareholder also owns a controlling interest in
several other related affiliate companies. Significant related-party
transactions are detailed hereafter.
In December 1996, PTG, Inc. was involved in a nonmonetary exchange with
certain affiliated companies (the "Sellers"), whereby PTG, Inc. assumed certain
liabilities of the Sellers (including amounts due to the Subsidiaries of
$181,562) in exchange for certain assets, valued at $266,386, and the operations
of Rapid Transit Delivery Services ("Rapid"), a division of the Sellers. Such
assets and liabilities are included in the accompanying balance sheet as of
December 31, 1996. In addition, the operations of Rapid for the year ended
December 31, 1996 are included in the accompanying statement of operations as if
the transaction occurred on January 1, 1996. In the opinion of management, the
results of operations of Rapid for the year ended December 31, 1995 would not be
material to the overall financial statements.
The accompanying statements of operations are presented as if Rapid had
been part of the consolidated group as of January 1, 1996. An adjustment to
accumulated deficit has been reflected in the accompanying statements of changes
in shareholders' equity (deficit) to eliminate the results of operations of
Rapid for the period prior to the time Rapid was acquired by the Company.
Summarized financial information of Rapid for the year ended December 31,
1996 is as follows:
<TABLE>
<S> <C>
Revenues.................................................... $619,979
Income from operations...................................... 36,231
Income before income taxes.................................. 37,309
Pro forma net income........................................ 23,176
</TABLE>
PTG, Inc. is obligated to pay to a related party 5% of the gross sales of
Rapid for a period of 5 years.
During 1995, Truck-Net provided certain management services to an
affiliated company. Truck-Net received management fee income of $100,000 for
such services.
At December 31, 1996, PTG, Inc. purchased from USA Holdings, Inc. ("USA")
certain fixed assets with a book value of $47,967. In exchange for the assets,
PTG, Inc. transferred to USA $47,967 of receivables owed to PTG, Inc. by an
affiliated company.
F-10
<PAGE> 55
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During 1995 and 1996, the Company subleased office space from Professional
Sales Group, Ltd. ("PSG"). Prior to 1997, this arrangement was not formalized.
Rental expense paid by the Company under this arrangement during 1995 and 1996
was approximately $79,000 and $95,000, respectively.
In January 1997, the Company signed a noncancelable sublease agreement with
PSG which expires in April 2005. Under the agreement, the Company will pay a
monthly base rental of $10,000 plus taxes and maintenance, subject to annual
rental increases.
PSG provided certain management services to Truck-Net in 1995 and 1996.
Fees paid by Truck-Net for such services amounted to $240,000 and $120,000 in
1995 and 1996, respectively. The purpose of such payments was to furnish
compensation to the majority shareholder of the Company. Therefore, such amounts
are included in salaries, wages and benefits on the accompanying statements of
operations. Effective June 30, 1996, the payment of management fees to PSG was
discontinued.
Salaries and benefits of the Company's non-driver personnel are paid by PSG
and allocated to the Company at actual cost based upon time incurred for the
Company's operations. Compensation expense recognized under this arrangement
totaled approximately $1,128,000 and $1,222,000 for the years ended December 31,
1995 and 1996, respectively, and is included in salaries, wages, and benefits on
the accompanying statements of operations.
In December 1996, Truck-Net transferred 14,570 shares of common stock of
Amertranz Worldwide Holding Corp. ("Amertranz") to PSG. The shares had been
received by Truck-Net in July 1996 in exchange for $100,000 due Truck-Net by
Amertranz. In exchange for the shares, PSG issued a noninterest-bearing note to
Truck-Net in the amount of $100,000. The note becomes due within 60 days after
certain transfer restrictions on the shares are eliminated.
The majority shareholder has advanced amounts to the Company, both
personally and through affiliated companies, on an informal basis. The Company
had a net payable to the majority shareholder of the Company of $48,469 at
December 31, 1996 resulting from such transactions. This amount is included in
due to shareholder on the accompanying balance sheet.
The Company is also a guarantor of obligations of the majority shareholder
to a bank under line-of-credit agreements (the "LOC Agreements"). As of December
31, 1996, a total of approximately $1,205,000 was outstanding under the LOC
Agreements, of which $878,379 has been borrowed by the Company and included in
line of credit on the accompanying balance sheet. Substantially all assets of
the Company are pledged as collateral under the LOC Agreements. The LOC
Agreements bear interest at the bank's prime rate plus 1% (9.25% at December 31,
1996). Interest is payable monthly, and the LOC Agreements mature in March 1997.
In addition, Timely had approximately $265,000 committed under letters of credit
as of December 31, 1996. These letters of credit are security for certain of the
Company's capital lease agreements. The carrying amount of borrowings under the
LOC Agreements approximates fair value based on the borrowing rates currently
available to the Company for loans with similar terms and average maturities.
Subsequent to year-end, the majority shareholder obtained a new line of
credit (the "New Agreement") with another bank in the amount of $1,915,000 with
a $300,000 sublimit for letters of credit. The New Agreement bears interest at
the bank's base rate plus .75% (9.25% at the date of the New Agreement).
Interest is payable monthly beginning May 1997, and the New Agreement matures
January 1998. The Company remains guarantor of the New Agreement and the bank
has a security interest in substantially all assets of the Company under the New
Agreement. Funds from the New Agreement were used to repay the outstanding
balance of the LOC Agreements; as such, the balance under the LOC Agreements
recorded in the accompanying balance sheet has been classified as long-term. The
outstanding letters of credit have also been transferred to the New Agreement.
F-11
<PAGE> 56
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1996, the Company had total receivables of $228,893 from
affiliates included in due from affiliates on the accompanying balance sheet.
This receivable has been guaranteed by the Company's majority shareholder.
6. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt consists of the following at December 31, 1996:
<TABLE>
<S> <C>
Notes payable for transportation equipment, bearing interest
at 14.5%, with monthly principal and interest payments
totaling $6,623, maturing October 1998 through May 1999... $ 142,312
Note payable to a bank, bearing interest at 10.85%, with
monthly principal and interest payments of $4,150 through
November 2000, secured by transportation equipment........ 216,674
Note payable to a bank, bearing interest at 10.85%, with
monthly principal and interest payments of $10,844 through
May 1999, secured by transportation equipment............. 208,971
Note payable for transportation equipment, bearing interest
at 10.43%, with monthly principal and interest payments of
$8,176 through September 2000, secured by related
transportation equipment.................................. 302,551
Note payable to former shareholder, bearing interest at
8.45%, with weekly principal and interest payments of $500
through March 2003........................................ 126,754
Note payable to former shareholder, bearing interest at
17.98%, with weekly principal and interest payments of
$500 through December 2004................................ 110,217
----------
1,107,479
Less current maturities..................................... (288,480)
----------
$ 818,999
==========
</TABLE>
Future maturities of long-term debt at December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 288,480
1998........................................................ 309,419
1999........................................................ 159,599
2000........................................................ 219,797
2001........................................................ 36,505
Thereafter.................................................. 93,679
----------
Total............................................. $1,107,479
==========
</TABLE>
Substantially all of the Company's assets are pledged as security for its
long-term borrowings.
The carrying amount of long-term debt approximates fair value based on the
borrowing rates currently available to the Company for loans with similar terms
and average maturities.
F-12
<PAGE> 57
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company leases transportation and other equipment under capital leases.
Future minimum lease payments for assets under capital leases at December 31,
1996 are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 156,624
1998........................................................ 156,624
1999........................................................ 156,624
2000........................................................ 100,176
2001........................................................ 16,284
---------
Total minimum lease payments................................ 586,332
Less amount representing interest........................... (108,770)
---------
Present value of minimum lease payments..................... 477,562
Less current maturities..................................... (109,497)
---------
$ 368,065
=========
</TABLE>
At December 31, 1996, the Company had net assets under capital leases of
approximately $495,000, included in property and equipment on the accompanying
balance sheet.
7. STOCK-BASED COMPENSATION PLAN
In February 1996, the Company adopted the Professional Transportation Group
Ltd., Inc. 1996 Stock Option Plan for certain employees (the "Plan"). The
Company has reserved 1,500,000 shares of the Company's common stock for issuance
under the Plan. A summary of options granted under the Plan during 1996 is as
follows:
<TABLE>
<CAPTION>
NO. OF OPTIONS
NUMBER OF PER SHARE VESTED AT
OPTIONS EXERCISE EXPIRATION DECEMBER 31,
GRANTED VESTING PRICE DATE 1996
- --------- ------- --------- ---------- --------------
<C> <S> <C> <C> <C>
750,000 100% in 2001, subject to acceleration upon
the achievement of certain financial goals. $0.50 2001 200,000
250,000 The earlier of February 16, 1999 or 60 days
after consummation of an initial public
offering. $0.15 2001 0
50,000 The earlier of November 1, 1999 or 60 days
after an initial public offering for 50%;
the earlier of November 1, 2000 or 60 days
after the one-year anniversary of an
initial public offering for the remainder. $4.00 2001 0
- ---------
1,050,000
=========
</TABLE>
SFAS NO. 123
During 1995, the Financial Accounting Standards Board issued SFAS No. 123,
which defines a fair value-based method of accounting for an employee stock
option or similar equity instrument and encourages all entities to adopt that
method of accounting for all of their employee stock compensation plans.
However, it also allows an entity to continue to measure compensation cost for
these plans using the method of accounting prescribed by APB No. 25. Entities
electing to remain with the accounting in APB No. 25 must make pro forma
disclosures of net income and, if presented, earnings per share, as if the fair
value-based method of accounting defined in SFAS No. 123 had been applied.
The Company has elected to account for its stock-based compensation plans
under APB No. 25; however, the Company has computed for pro forma disclosure
purposes the value of all options granted for the
F-13
<PAGE> 58
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
year ended December 31, 1996 using the Black-Scholes option-pricing model as
prescribed by SFAS No. 123. If the accounting provisions of SFAS No. 123 had
been adopted as of the beginning of 1996, the effect on 1996 net earnings would
have been immaterial.
8. INCOME TAXES
Prior to the Reorganization, the Company and two of the Subsidiaries
elected to be treated as S corporations for federal and state income tax
purposes. Accordingly, all income and losses of these companies were recognized
by the shareholders on their individual tax returns. Truck-Net is a C
corporation for federal and state income tax purposes.
For all periods presented, the accompanying financial statements reflect
provisions for income taxes computed in accordance with the requirements of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." For periods prior to the Reorganization for those companies with S
corporation status, the provisions have been presented on a pro forma basis as
if the Company had been liable for federal and state income taxes during those
periods. The offsetting amounts to such pro forma income tax provisions are
reflected in shareholders' equity (deficit).
The significant components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
TOTAL ACTUAL PRO FORMA
-------- -------- ---------
<S> <C> <C> <C>
1995:
Current benefit...................................... $ 0 $ 0 $ 0
Deferred benefit..................................... (95,000) (22,000) (73,000)
-------- -------- --------
Total benefit................................ $(95,000) $(22,000) $(73,000)
======== ======== ========
1996:
Current provision (benefit).......................... $ 66,000 $ 70,000 $ (4,000)
Deferred provision................................... 117,000 25,000 92,000
-------- -------- --------
Total provision.............................. $183,000 $ 95,000 $ 88,000
======== ======== ========
</TABLE>
The provision (benefit) for income taxes differs from the amounts computed
by applying federal statutory rates due to the effect of state income taxes.
The Company's deferred tax liabilities arise from the use by Truck-Net of
the cash basis for income tax reporting purposes as opposed to the accrual basis
used for financial reporting purposes.
9. MAJOR CUSTOMERS
The Company's five largest customers accounted for approximately 61% and
66% of revenues for the years ended December 31, 1995 and 1996, respectively. Of
these customers, two companies accounted for a total of approximately 51% of net
revenues for the year ended December 31, 1996. The loss of one of these two
customers or a high rate of termination of services for the Company's other
customers would have a material adverse effect on the Company, its
profitability, and its financial condition.
10. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES -- UNRELATED PARTIES
The Company leases transportation and office equipment under noncancelable
operating leases with unrelated parties. The expense for noncancelable operating
leases was approximately $1,760,000 and $2,033,000 for the years ended December
31, 1995 and 1996, respectively.
F-14
<PAGE> 59
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Future minimum rental commitments under all noncancelable operating lease
agreements, excluding lease agreements that expire within one year, are as
follows as of December 31, 1996:
<TABLE>
<S> <C>
1997........................................................ $1,750,193
1998........................................................ 1,601,972
1999........................................................ 825,559
2000........................................................ 402,723
2001........................................................ 48,072
Thereafter.................................................. 16,033
----------
Total............................................. $4,644,552
==========
</TABLE>
LEGAL
The Company is party to a claim by the trustee of a customer which is in
bankruptcy. The claim alleges that the Company received preferential payments
from the customer prior to the customer's filing the bankruptcy petition. The
claimant is seeking approximately $435,000 related to the alleged preferential
payments. Management believes that the Company has meritorious defenses against
this claim and intends to vigorously defend this action; however, the outcome of
this claim cannot be determined at this time.
The Company is subject to various other legal actions arising in the normal
course of business. In the opinion of management, the ultimate resolution of
these matters will not have a material adverse effect on the Company's financial
position or results of operations.
F-15
<PAGE> 60
======================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, OR THE UNDERWRITERS. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 15
Dilution.............................. 16
Capitalization........................ 17
Dividend Policy....................... 17
Selected Consolidated Financial
Data................................ 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Business.............................. 22
Management............................ 29
Principal Shareholders................ 33
Certain Transactions.................. 33
Description of Securities............. 34
Shares Available for Future Sale...... 38
Underwriting.......................... 40
Legal Matters......................... 42
Experts............................... 42
Available Information................. 42
Consolidated Financial Statements..... F-1
</TABLE>
---------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================
1,500,000 SHARES OF
COMMON STOCK
AND
1,500,000 REDEEMABLE
COMMON STOCK PURCHASE
WARRANTS
PROFESSIONAL TRANSPORTATION
GROUP LTD., INC.
--------------------
PROSPECTUS
--------------------
ARGENT SECURITIES, INC.
Atlanta, Georgia
(404) 237-1234
, 1997
======================================================
<PAGE> 61
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation contain a provision which, subject
to certain limited exceptions, limits the liability of a director to the Company
or its shareholders for any breach of duty as a director. There is no limitation
of liability for: a breach of duty involving appropriation of a business
opportunity of the Company; an act or omission which involves intentional
misconduct or a knowing violation of law; any transaction from which the
director derives an improper personal benefit; or as to any payments of a
dividend or any other type of distribution that is illegal under Section
14-2-832 of the Georgia Business Corporation Code (the "Code"). In addition, if
at any time the Code shall have been amended to authorize further elimination or
limitation of the liability of director, then the liability of each director of
the Company shall be eliminated or limited to the fullest extent permitted by
such provisions, as so amended, without further action by the shareholders,
unless the provisions of the Code require such action. The provision does not
limit the right of the Company or its shareholders to seek injunctive or other
equitable relief not involving payments in the nature of monetary damages.
The Company's bylaws contain certain provisions which provide
indemnification to directors of the Company that is broader than the protection
expressly mandated in Sections 14-2-852 and 14-2-857 of the Code. To the extent
that a director or officer of the Company has been successful, on the merits or
otherwise, in the defense of any action or proceeding brought by reason of the
fact that such person was a director or officer of the Company, Sections
14-2-852 and 14-2-857 of the Code would require the Company to indemnify such
persons against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith. The Code expressly allows the Company to
provide for greater indemnification rights to its officers and directors,
subject to shareholder approval.
The indemnification provisions in the Company's bylaws require the Company
to indemnify and hold harmless any director who was or is a party or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
(including any action or suit by or in the right of the Company) because he is
or was a director of the Company, against expenses (including, but in no way
limited to, attorney's fees and disbursements, court costs and expert witness
fees), and against judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or proceeding.
Indemnification would be disallowed under any circumstances where
indemnification may not be authorized by action of the Board of Directors, the
shareholders or otherwise. The Board of Directors of the Company also has the
authority to extend to officers, employees and agents the same indemnification
rights held by directors, subject to all the accompanying conditions and
obligations. Indemnified persons would also be entitled to have the Company
advance expenses prior to the final disposition of the proceeding. If it is
ultimately determined that they are not entitled to indemnification, however,
such amounts would be repaid. Insofar as indemnification for liability rising
under the Act may be permitted to officers and directors of the Company pursuant
to the foregoing provisions, the Company has been informed that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
II-1
<PAGE> 62
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the Offering described in the Registration Statement:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 8,697
NASD fees................................................... 3,370
Nasdaq fees................................................. 1,000
Blue Sky Fees and Expenses.................................. 25,000
Printing and Engraving...................................... 100,000
Legal Fees and Expenses..................................... 150,000
Accounting Fees and Expenses................................ 70,000
Underwriter's Non-accountable allowance..................... 275,625
Miscellaneous Expenses...................................... 36,933
--------
Total: ........................................... $670,625
========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
No securities which were not registered under the Securities Act have been
sold by the Company within the past three years except for the following:
(i) In February 1996, the Company issued 100,000 shares to Argent
Securities, Inc. in exchange for advice and services with respect to
development of a strategic business plan, merger and acquisition planning,
board of director structure and potential nominees and the introduction of
the Company to companies that could potentially save the Company money in
its fuel costs.
The issuance of securities described above was made in reliance on the
exemptions from registration provided by Section 4(2) of the Securities Act and
Regulation D as promulgated by the Commission pursuant to the Securities Act.
The recipient of the securities in this transaction represented its intention to
acquire the securities for investment purposes only and not with a view to or
for the sale in connection with any distribution thereof, and appropriate
legends were affixed to the share certificate issued in such transaction. The
recipient of these securities had adequate access, through its relationship with
the Company, to information about the Company.
ITEM 27. EXHIBITS.
<TABLE>
<S> <C> <S>
1.1 -- Form of Underwriting Agreement.*
2.1 -- Asset Purchase Agreement, dated December 31, 1996, by and
between PTG, Inc. and Krogel Freight Systems of Georgia,
Krogel Freight Systems of Tampa and Krogel Air Freight.
2.2 -- Asset Purchase Agreement, dated December 31, 1996, by and
between PTG, Inc. and USA Holdings, Inc.
3.1 -- Amended and Restated Articles of Incorporation of the
Company.
3.2 -- Bylaws of the Company.
4.1 -- Specimen Common Stock Certificate.*
4.2 -- Specimen Redeemable Warrant Certificate.*
4.3 -- Form of Underwriters' Purchase Option Agreement.*
4.4 -- Form of Warrant Agreement.*
5.1 -- Opinion of Nelson Mullins Riley & Scarborough, L.L.P.*
10.1 -- Professional Transportation Group Ltd., Inc. 1996 Stock
Option Plan.
10.2 -- Employment Agreement by and between the Company and Dennis
A. Bakal, dated April 1, 1997.*
10.3 -- Employment Agreement by and between the Company and Linda K.
Roberts, dated April 1, 1997.*
10.4 -- Employment Agreement by and between the Company and William
M. Kelly, dated April 1, 1997.*
</TABLE>
II-2
<PAGE> 63
10.5 -- Employment Agreement by and between the Company and Stanley
E. Laiken, dated April 1, 1997.*
10.6 -- Form of Director's Indemnification Agreement to be entered
into by and between the Company and each of its directors.
10.7 -- Transportation Agreement, dated November 19, 1995, between
Timely Transportation, Inc. and Federal Express Corporation+
10.8 -- OmniTRACS Contract, dated May 8, 1995, by and between Timely
Transportation, Inc. and QUALCOMM Inc.
10.9 -- Amendment No. 1 to OmniTRACS Contract, dated June 23, 1995,
by and between Timely Transportation, Inc. and QUALCOMM Inc.
10.10 -- OmniTRACS Finance Lease, dated June 23, 1995, by and between
Timely Transportation, Inc. and QUALCOMM Inc.
10.11 -- Sublease, dated January 1, 1997, by and between the Company
and Professional Sales Group, Ltd.
10.12 -- Commercial Loan Agreement, dated March 28, 1997, by and
between the Company, Dennis A. Bakal, Timely Transportation,
Inc., Truck-Net,Inc., PTG, Inc. and SouthTrust Bank of
Georgia, N.A.
10.13 -- Commercial Revolving Note, dated March 28, 1997, by and
between Dennis A. Bakal and SouthTrust Bank of Georgia, N.A.
10.14 -- General Security Agreement, dated March 28, 1997, by and
between the Company, Timely Transportation, Inc., Truck-Net,
Inc., PTG, Inc. and SouthTrust Bank of Georgia, N.A.
10.15 -- Guaranty of Payment and Performance, dated March 28, 1997,
by and between the Company, Timely Transportation, Inc.,
Truck-Net, Inc., PTG, Inc. and SouthTrust Bank of Georgia,
N.A.
10.16 -- Transportation Service Agreement, dated February 6, 1997,
between the Company and Panalpina, Inc.
10.17 -- Service Agreement, dated February 1, 1997, between the
Company and T.T.C. Illinois, Inc.
21.1 -- Subsidiaries of the Company.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Nelson Mullins Riley & Scarborough, L.L.P. (filed
as part of Exhibit 5.1).
27.1 -- Financial Data Schedule for period ending December 31, 1996
(for SEC use only).
- ---------------
+ Confidential treatment has been requested for certain confidential portions of
this exhibit pursuant to Rule 406(b)(2) under the Securities Act. In
accordance with Rule 406(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
* To be filed by amendment.
ITEM 28. UNDERTAKINGS.
The Company will provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the underwriter to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the forgoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 64
The Company will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Securities Act as part of this registration statement as
of the time the Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and the offering of such securities at that time as the initial
bona fide offering of the securities.
II-4
<PAGE> 65
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Atlanta,
State of Georgia, on April 4, 1997.
PROFESSIONAL TRANSPORTATION GROUP
LTD., INC.
By: /s/ DENNIS A. BAKAL
------------------------------------
Dennis A. Bakal
President and Chief Executive
Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities listed on April 4, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
/s/ DENNIS A. BAKAL Director, President and Chief Executive
- ----------------------------------------------------- Officer (Principal Executive Officer)
Dennis A. Bakal
/s/ PETER C. ROTH Chief Financial Officer (Principal Financial
- ----------------------------------------------------- and Accounting Officer)
Peter C. Roth
</TABLE>
II-5
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- -----
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement.*............................
2.1 -- Asset Purchase Agreement, dated December 31, 1996, by and
between PTG, Inc. and Krogel Freight Systems of Georgia,
Krogel Freight Systems of Tampa and Krogel Air Freight......
2.2 -- Asset Purchase Agreement, dated December 31, 1996, by and
between PTG, Inc. and USA Holdings, Inc.....................
3.1 -- Amended and Restated Articles of Incorporation of the
Company.....................................................
3.2 -- Bylaws of the Company.......................................
4.1 -- Specimen Common Stock Certificate.*.........................
4.2 -- Specimen Redeemable Warrant Certificate*....................
4.3 -- Form of Underwriters' Purchase Option Agreement.*...........
4.4 -- Form of Warrant Agreement.*.................................
5.1 -- Opinion of Nelson Mullins Riley & Scarborough, L.L.P.*......
10.1 -- Professional Transportation Group Ltd., Inc. 1996 Stock
Option Plan.................................................
10.2 -- Employment Agreement by and between the Company and Dennis
A. Bakal, dated April 1, 1997.*.............................
10.3 -- Employment Agreement by and between the Company and Linda K.
Roberts, dated April 1, 1997.*..............................
10.4 -- Employment Agreement by and between the Company and William
M. Kelly, dated April 1, 1997*..............................
10.5 -- Employment Agreement by and between the Company and Stanley
E. Laiken, dated April 1, 1997.*............................
10.6 -- Form of Director's Indemnification Agreement to be entered
into by and between the Company and each of its
directors...................................................
10.7 -- Transportation Agreement, dated November 19, 1995, between
Timely Transportation, Inc. and Federal Express
Corporation.+...............................................
10.8 -- OmniTRACS Contract, dated May 8, 1995, by and between Timely
Transportation, Inc. and QUALCOMM Inc.......................
10.9 -- Amendment No. 1 to OmniTRACS Contract, dated June 23, 1995,
by and between Timely Transportation, Inc. and QUALCOMM
Inc.........................................................
10.10 -- OmniTRACS Finance Lease, dated June 23, 1995, by and between
Timely Transportation, Inc. and QUALCOMM Inc................
10.11 -- Sublease, dated January 1, 1997, by and between the Company
and Professional Sales Group, Ltd...........................
10.12 -- Commercial Loan Agreement, dated March 28, 1997, by and
between the Company, Dennis A. Bakal, Timely Transportation,
Inc., Truck-Net,Inc., PTG, Inc. and SouthTrust Bank of
Georgia, N.A................................................
10.13 -- Commercial Revolving Note, dated March 28, 1997, by and
between Dennis A. Bakal and SouthTrust Bank of Georgia,
N.A.........................................................
10.14 -- General Security Agreement, dated March 28, 1997, by and
between the Company, Timely Transportation, Inc., Truck-Net,
Inc., PTG, Inc. and SouthTrust Bank of Georgia, N.A.........
10.15 -- Guaranty of Payment and Performance, dated March 28, 1997,
by and between the Company, Timely Transportation, Inc.,
Truck-Net, Inc., PTG, Inc. and SouthTrust Bank of Georgia,
N.A.........................................................
10.16 -- Transportation Service Agreement, dated February 6, 1997,
between the Company and Panalpina, Inc......................
10.17 -- Service Agreement, dated February 1, 1997, between the
Company and T.T.C. Illinois, Inc............................
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- -----
<C> <C> <S> <C>
21.1 -- Subsidiaries of the Company.................................
23.1 -- Consent of Arthur Andersen LLP..............................
23.2 -- Consent of Nelson Mullins Riley & Scarborough, L.L.P. (filed
as part of Exhibit 5.1).....................................
27.1 -- Financial Data Schedule for period ending December 31, 1996
(for SEC use only)..........................................
</TABLE>
- ---------------
+ Confidential treatment has been requested for certain confidential portions of
this exhibit pursuant to Rule 406(b)(2) under the Securities Act. In
accordance with Rule 406(b)(2), these confidential portions have been omitted
from this exhibit and filed separately with the Commission.
* To be filed by amendment.
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
KROGEL FREIGHT SYSTEMS OF GEORGIA, INC.,
KROGEL FREIGHT SYSTEMS OF TAMPA, INC.,
KROGEL AIR FREIGHT, INC.
AND
PTG, INC.
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the date last written below, by and between KROGEL FREIGHT SYSTEMS
OF GEORGIA, INC. ("KFSG"), a Georgia corporation, KROGEL FREIGHT SYSTEMS OF
TAMPA, INC. ("KFST"), a Florida corporation, and KROGEL AIR FREIGHT, INC.
("KAF"), a Florida corporation (referred to hereinafter collectively as the
"Sellers"), and PTG, INC., ("Buyer") a Georgia corporation.
WHEREAS, Sellers desire to sell and Buyer desires to purchase certain
of the assets of Sellers, including, but not limited to, certain assets
associated with KFSG's business division operating under the name Rapid Transit
Delivery Service ("Rapid");
NOW, THEREFORE, in consideration of the mutual representations,
warranties, terms, conditions and covenants contained herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. TRANSFER OF RIGHTS IN CERTAIN INTANGIBLES AND PERSONAL
PROPERTY. On the terms and subject to the conditions of this Agreement,
Sellers hereby transfer to Buyer the following assets and rights of the
Sellers:
<PAGE> 2
(a) a list of names and addresses of all customers of
Rapid (the "Customer List");
(b) Sellers' rights, to the extent transferable, to use
the Rapid name and variations and derivations thereof;
(c) Sellers' rights, to the extent transferable, in any
and all telephone numbers used by Sellers;
(d) all accounts receivable attributable to Rapid in the
amount of $77,742.83, a list of which is set forth in Exhibit A attached hereto;
(e) all licenses, permits, registrations and/or
authorities, issued and/or required by any local, state, federal or other
government and/or governmental agency or unit, related and/or necessary to the
operation of the business of Rapid;
(f) pre-paid expenses in the amount of $38.46;
(g) deposits in the amount of $50.00;
(h) an account receivable in the amount of $14,000.00 due
from Timely Transportation, Inc.;
(i) certain equipment of Rapid valued at $13,581.20, a
list of which is attached hereto as Exhibit B;
(j) all information possessed by KFSG that is determined
by Buyer to be reasonably necessary for Buyer to commence operation of delivery
services substantially similar to those offered by Rapid, using the Rapid name
and servicing Rapid's current customers.
(k) additional fixed assets of KFSG, valued at
$31,191.00., a list of which is attached hereto as Exhibit C;
2
<PAGE> 3
(l) certain physical assets of KFST, valued at
$75,166.00, a list of which is attached hereto as Exhibit D;
(m) certain fixed assets of KAF, valued at $9,332.00, a
list of which is attached hereto as Exhibit E; and
2. CONSIDERATION GIVEN BY BUYER. In consideration for Sellers'
execution of this Agreement and performance of Sellers' obligations set forth
herein upon execution and delivery of this Agreement:
(a) Buyer hereby assumes certain accounts payable of
Sellers in the amount of $27,630.11, which the parties agree are those accounts
payable associated with Rapid, a complete list of such accounts payable and the
specific amounts assumed by Buyer are attached hereto as Exhibit F; and
(b) the parties acknowledging that the assets transferred
hereunder are subject to certain blanket security interests in the assets of
Sellers held by SunTrust Bank, Buyer agrees to pay SunTrust Bank for the
benefit of Sellers, amounts equal to five percent (5%) of the gross sales of
Rapid each month hereafter, payable on the fifteenth (15th) of each month for
the preceding month, for a period of five (5) years. In the event that the
debt to SunTrust is retired prior to the expiration of such arrangement, the
remaining payments shall be paid to KFAG.
3. OPEN ACCOUNTS RECEIVABLE AND PAYABLE. Any "open receivables,"
i.e., receivables generated by services performed by Rapid prior to the date of
this Agreement and not yet billed, shall be included in the receivables
purchased by Buyer and accounts payable for goods and services attributable to
Rapid, but for which bills have not yet been received, shall be assumed by
Buyer.
3
<PAGE> 4
4. NON-COMPETITION. Sellers agree that, for a period of three
(3) years from and after the date hereof, Sellers will not, directly or
indirectly, engage in or operate, own, manage, control, join or participate in
the ownership, management, operation or control of, or be connected in any way
with any business that performed courier or delivery service of any kind within
the State of Georgia.
Sellers agree to terminate the employment of all Sellers' current
employees involved in operation of Rapid. Sellers shall not rehire any such
terminated employees for a period of two (2) years from the date of this
Agreement, unless the prior written consent of Buyer is obtained.
5. REASONABLE EFFORTS. Sellers and Buyer will execute all
additional documents and take all further actions reasonably necessary to
effectuate the transfers and assignments contemplated above, and all other
terms of this Agreement. In addition, upon reasonable request by Buyer, and in
consideration of the terms contemplated in this Agreement, Sellers shall
transfer, assign or sublease any lease or contractual arrangement with third
parties relating to Rapid to Buyer in exchange for Buyer's assumption of
Sellers' obligations accruing under such lease or contract following the date
of such assignment, transfer or sublease.
6. WARRANTIES AND REPRESENTATIONS. Except as specifically and
explicitly set forth in this Agreement, Sellers make no warranties or
representations, express, implied or statutory as to any of the rights or
assets transferred, including without limitation any implied warranties of
merchantability or fitness for any particular purpose or as to the value of
such assets. Sellers' liability to Buyer for breach of contract or otherwise
shall be limited to the amount of the Purchase Price. Sellers shall have no
liability or obligation to any third party pursuant to this Agreement. To the
maximum extent allowed by applicable law, Sellers shall not be liable to Buyers
or third parties, pursuant to this Agreement or as a result of the performance
of this
4
<PAGE> 5
Agreement, for acts of negligence, lost profits or business, or indirect,
consequential or punitive damages.
Sellers warrant that all assets and rights, whether tangible and
intangible, being transferred pursuant to this Agreement will be free and
clear of any and all liens, claims and encumbrances, except as otherwise set
forth in this Agreement.
Sellers represent that there are no lawsuits pending or threatened
that the Sellers have reason to believe would affect Sellers' right to transfer
any of the assets or property rights being transferred pursuant to this
Agreement.
Sellers represent that Sellers have no reason to believe that Rapid's
customers plan to materially decrease their business with Rapid, but Sellers do
not warrant that Buyer will be able to retain Sellers' customers in the future.
7. RELATIONSHIP OF THE PARTIES. The relationship of the parties
shall be limited to that of independent Sellers and Buyer. The parties are not
engaged in and do not intend to engage in a joint venture, partnership or
similar relationship among any of the parties, and nothing contained herein or
any action taken pursuant hereto is to be construed as bringing about such a
relationship between any of the parties. Each party will take all actions
reasonably necessary to ensure that the other parties to this Agreement do not
become subject to liabilities or obligations as a result of the other party's
use of the "Rapid" name or any derivations of that name, and shall hold each
other harmless from such liabilities and obligations.
8. NOTICES. All notices and other communications under or in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given when hand delivered or when mailed via First Class Mail,
postage prepaid, and addressed as follows:
5
<PAGE> 6
If to Sellers: Krogel Air Freight Systems of Georgia, Inc.
Suite 1020
300 Galleria Parkway, N.W.
Atlanta, GA 30339
If to Buyer: PTG, Inc.
5025 Derrick Jones Road
Suite 120
Atlanta, Georgia 30349
9. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the transactions
contemplated hereby, and supersedes all prior agreements, arrangements and
understandings. This Agreement may be amended or modified only in a writing
signed by all parties hereto.
10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
11. WAIVER. Any of the terms and conditions of this Agreement may
be waived at any time and from time to time in writing by the party entitled to
the benefit thereof without affecting any other terms and conditions of this
Agreement. The waiver by either party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.
12. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13. BENEFIT. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the respective successors and permitted
assignees of the parties hereto. Except as otherwise expressly provided
herein, nothing expressed or implied herein shall be construed
6
<PAGE> 7
to confer upon or give any person, firm or corporation, other than the parties
hereto, any right or remedy hereunder or by reason hereof.
14. SEVERABILITY. If any provision of this Agreement is declared
or found to be illegal, unenforceable or void, then both parties shall be
relieved of all obligations arising under such provision, but only to the
extent that such provision is illegal, unenforceable or void, it being the
intent and agreement of the parties that this Agreement shall be deemed amended
by modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objective. If the remainder of this Agreement shall not be
affected by such declaration or finding and is capable of substantial
performance, then, each provision not so affected shall be enforced to the
extent permitted by law.
IN WITNESS WHEREOF, Buyer and Sellers have caused this Agreement to be
duly executed and delivered on the day and year last written below.
BUYER: SELLERS:
PTG, INC. KROGEL FREIGHT
SYSTEMS OF GEORGIA, INC.
By: /s/ Dennis A. Bakal By: /s/ Peter C. Roth
------------------------------- ---------------------------------
Dennis A. Bakal Peter C. Roth
President Chief Financial Officer
Date: 12/31/96 Date: 12/31/96
----------------------------- -------------------------------
7
<PAGE> 8
KROGEL FREIGHT SYSTEMS OF
TAMPA, INC.
By: /s/ Peter C. Roth
-------------------------------------
Peter C. Roth
Chief Financial Officer
Date: 12/31/96
-----------------------------------
KROGEL AIR FREIGHT, INC.
By: /s/ Peter C. Roth
-------------------------------------
Peter C. Roth
Chief Financial Officer
Date: 12/31/96
-----------------------------------
8
<PAGE> 1
EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
between
USA HOLDINGS, INC.,
and
PTG, INC.
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the date last written below, by and between USA HOLDINGS, INC.,
("USA"), a Georgia corporation, and PTG, INC., ("PTG"), a Georgia corporation.
WHEREAS, USA desire to transfer certain assets to PTG, in exchange for
certain assets of PTG;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, terms, conditions and covenants contained herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. TRANSFER OF FIXED ASSETS. USA hereby transfers to PTG all of
USA's right, title and interest in certain fixed assets, with a depreciated
book value of $47,967.00, and which are listed on Exhibit A attached hereto.
2. TRANSFER OF CERTAIN RECEIVABLES. PTG is the assignee of
certain receivables owed by Krogel Freight Systems. In exchange for the
transfer of fixed assets set forth above, PTG hereby transfers to USA
$47,967.00 of the amounts owed to PTG by Krogel Freight Systems.
3. REASONABLE EFFORTS. USA and PTG will execute all additional
documents and take all further actions reasonably necessary to effectuate the
transfers and assignments contemplated above and all other terms of this
Agreement.
1
<PAGE> 2
4. RELATIONSHIP OF THE PARTIES. The relationship of the parties
shall be limited to that of independent seller and buyer. The parties are not
engaged in and do not intend to engage in a joint venture, partnership or
similar relationship between any of the parties, and nothing contained herein
or any action taken pursuant hereto is to be construed as bringing about such a
relationship between any of the parties.
5. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the transactions
contemplated hereby, and supersedes all prior agreements, arrangements and
understandings. This Agreement may be amended or modified only in a writing
signed by all parties hereto.
6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
7. WAIVER. Any of the terms and conditions of this Agreement may
be waived at any time and from time to time in writing by the party entitled to
the benefit thereof without affecting any other terms and conditions of this
Agreement. The waiver by either party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.
8. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9. BENEFIT. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the respective successors and permitted
assignees of the parties hereto. Except as otherwise expressly provided
herein, nothing expressed or implied herein shall be construed
2
<PAGE> 3
to confer upon or give any person, firm or corporation, other than the parties
hereto, any right or remedy hereunder or by reason hereof.
10. SEVERABILITY. If any provision of this Agreement is declared
or found to be illegal, unenforceable or void, then both parties shall be
relieved of all obligations arising under such provision, but only to the
extent that such provision is illegal, unenforceable or void, it being the
intent and agreement of the parties that this Agreement shall be deemed amended
by modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objective. If the remainder of this Agreement shall not be
affected by such declaration or finding and is capable of substantial
performance, then, each provision not so affected shall be enforced to the
extent permitted by law.
IN WITNESS WHEREOF, USA and PTG have caused this Agreement to be duly
executed and delivered as of December 31, 1996.
BUYER: SELLER:
PTG,INC. USA HOLDINGS, INC.
By: /s/ Dennis A. Bakal By: /s/ Peter C. Roth
---------------------------- -------------------------------
Dennis A. Bakal Peter C. Roth
President Chief Financial Officer
3
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF AMENDMENT
TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PROFESSIONAL TRANSPORTATION GROUP, LTD.
I.
The name of the corporation is Professional Transportation Group, Ltd.
II.
Effective the date hereof, Article One of the Amended and Restated
Articles of Incorporation of Professional Transportation Group, Ltd. is amended
to read as follows:
"ARTICLE FIRST
The name of the Corporation is Professional Transportation Group Ltd.,
Inc."
III.
This amendment was duly approved by the Board of Directors without
shareholder action, which was not required, in accordance with Section 14-2-1002
of the Georgia Business Corporation Code on April 2, 1997.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed by its duly authorized officer as of the 3rd day of
April, 1997.
PROFESSIONAL TRANSPORTATION GROUP, LTD.
/s/ Dennis A. Bakal
----------------------------------------
By: Dennis A. Bakal
Title: President
<PAGE> 2
PROFESSIONAL TRANSPORTATION GROUP, LTD.
AMENDED AND RESTATED ARTICLES OF
INCORPORATION
I.
The name of the Corporation is PROFESSIONAL TRANSPORTATION GROUP, LTD.
II.
The Corporation is organized pursuant to the provisions of the Georgia
Business Corporation Code.
III.
This Corporation is authorized to issue two classes of shares of stock
to be designated as "preferred" and "common," respectively. The total number
of shares that may be issued by this Corporation is 20,100,000 shares without
nominal or par value, 100,000 shares to be preferred shares and 20,000,000
shares to be common shares. All or any part of the shares of the common and
preferred capital stock may be issued by the Corporation from time to time and
for such consideration as may be determined and fixed by the Board of
Directors, as provided by law, with due regard to the interest of the existing
shareholders; and when such consideration has been received by the Corporation,
such shares shall be deemed fully paid and nonassessable. Upon adoption
hereof, each of the 520 shares of stock of the Corporation issued and
outstanding prior to December 2, 1996, shall become 5,000 shares of common
stock of the Corporation.
IV.
Pursuant to the Official Code of Georgia Annotated (O.C.G.A.) Section
14-2-602, the Board of Directors may determine, in whole or in part, the
preferences, limitations, and relative rights of one or more series of any
class of shares of the Corporation, and designate the number of shares within
that series, before the issuance of any shares of that series. Each such
series of stock shall be given a distinguishing designation. All shares of
each series must have preferences, limitations, and relative rights identical
with those of other shares of the same series and, except to the extent
otherwise provided in the description of the series, with those of other series
in the same class; provided, however, that any of the voting powers,
preferences, designations, rights, qualifications, limitations, or restrictions
of or on the series of shares, or the holders thereof, may be dependent upon
facts ascertainable outside these Articles of Incorporation if the manner in
which the facts shall operate upon voting powers, designations, preferences,
rights, qualifications, limitations, or restrictions of or on the shares, or
the holders thereof, is clearly and expressly set forth in the Articles of
Incorporation. Before issuing any shares of a series created under this
Section, the Corporation must deliver to the Secretary of State for filing
articles of amendment, which are effective without shareholder action, that set
forth:
(1) the name of the Corporation;
(2) the text of the amendment determining the terms of the series of
shares;
<PAGE> 3
(3) the date the amendment was adopted; and
(4) a statement that the amendment was duly adopted by the Board of
Directors.
After a series of shares is established, the Board of Directors at any time and
from time to time may increase or decrease the number of shares contained in a
series, but not below the number of shares then issued, by filing articles of
amendment, which are effective without shareholder action, in the manner
provided in O.C.G.A. Section 14-2-602. As an initial matter, unless and until
amendment by the Board of Directors, the Corporation shall be authorized to
issue up to 20,000,000 shares of common stock, which shares shall have
unlimited voting rights and, subject to any preferential rights of subsequently
issued series of shares, shall be entitled to receive the net assets of the
Corporation upon dissolution.
V.
Any action required by the Georgia Business Corporation Code to be
taken at a meeting of the shareholders of the Corporation or any action which
may be taken at a meeting of the shareholders may be taken without a meeting if
written consent, setting forth the action so taken, shall be signed by persons
who would be entitled to vote at a meeting those shares having voting power to
cast not less than the minimum number (or numbers, in the case of voting by
classes) of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote were present and voted. Notice
shall be given within ten days of the taking of corporate action without a
meeting by less than unanimous written consent to those shareholders on the
record date whose shares were not represented on the written consent. For
purposes of written consent by the shareholders, the record date shall be
determined in accordance with the bylaws. No consent shall be effective as
approval of a plan of merger or plan of consolidation unless the requirements
for the effectiveness of such consent set forth in the Georgia Business
Corporation Code have been met.
VI.
The address of the registered agent of the Corporation on the date of
the adoption of the Amended and Restated Articles of Incorporation was Suite
1020, 300 Galleria Parkway, Atlanta, Georgia 30339, and the name of the
registered agent of the Corporation at that address was R. Kyle Woods.
VII.
The mailing address of the principal office of the Corporation is 5025
Derrick Jones Road, Suite 120, Atlanta, Georgia 30349.
2
<PAGE> 4
VIII.
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of the duty of
care or any other duty as a director, except that such liability shall not be
eliminated for:
(i) any appropriation, in violation of the director's duties, of
any business opportunity of the Corporation;
(ii) acts or omissions that involve intentional misconduct or a
knowing violation of law;
(iii) liability under O.C.G.A. Section 14-2-832 (or any successor
provision or redesignation thereof); and
(iv) any transaction from which the director received an improper
personal benefit.
If at any time the Code shall have been amended to authorize the
further elimination or limitation of the liability of a director, then the
liability of each director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Code, as so amended, without further action
by the shareholders, unless the provisions of the Code, as amended, require
further action by the shareholders.
Any repeal or modification of the foregoing provisions of this Article
VIII shall not adversely affect the elimination or limitation of liability or
alleged liability pursuant hereto of any director of the Corporation for or
with respect to any alleged act or omission of the director occurring prior to
such repeal or modification.
IX.
In discharging the duties of their respective positions and in
determining what is believed to be in the best interests of the Corporation,
the Board of Directors, committees of the Board of Directors, and individual
directors, in addition to considering the effects of any action on the
Corporation or its shareholders, may consider the interests of the employees,
customers, suppliers and creditors of the Corporation and its subsidiaries, the
communities in which offices or other establishments of the Corporation and its
subsidiaries are located, and all other factors such directors consider
pertinent. This provision solely grants discretionary authority to the
directors and shall not be deemed to provide to any other constituency any
right to be considered.
3
<PAGE> 5
IN WITNESS WHEREOF, the undersigned Corporation has caused these
Amended and Restated Articles of Incorporation to be executed by its president,
and attested to by its secretary on the 28th day of January, 1997.
PROFESSIONAL TRANSPORTATION
GROUP, LTD.
By: /s/ Dennis Bakal
----------------------------------------
Dennis Bakal, President
[CORPORATE SEAL]
ATTEST:
By: /s/ Linda K. Roberts
-------------------------------
Linda K. Roberts, Secretary
4
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
PROFESSIONAL TRANSPORTATION GROUP LTD., Inc.
ARTICLE I
OFFICES
Section 1. Registered Office and Agent. The registered office
of the Corporation shall be in the State of Georgia and the Corporation shall
at all times maintain a registered agent at the address of the registered
office.
Section 2. Other Offices. The Corporation may also have offices
at such other places both within and without the State of Georgia as the Board
of Directors may from time to time determine and the business of the
Corporation may require or make desirable.
ARTICLE II
SHAREHOLDERS MEETINGS
Section 1. Annual Meetings. A meeting of the shareholders of
the Corporation shall be held annually. The annual meeting of the shareholders
of the Corporation shall be held at the principal office of the Corporation or
at such other place in the United States as may be determined by the Board of
Directors, on such date following the close of the fiscal year as shall be
determined by the Board of Directors, for the purpose of electing Directors and
transacting such other business as may properly be brought before the meeting.
Section 2. Special Meetings. Special meetings of the
shareholders shall be held at the principal office of the Corporation or at
such other place in the United States as may be designated in the notice of
said meetings, upon call of the chairman of the Board of Directors or the
president and shall be called by the president or the secretary when so
directed by the Board of Directors or at the request (in compliance with
applicable requirements of the Code) in writing of shareholders owning at least
25% of the issued and outstanding capital stock of the Corporation entitled to
vote thereat. Any such request shall state the purposes for which the meeting
is to be called and the business that may be transacted at any special meeting
of shareholders shall be limited to that proposed in the notice of special
meeting given (including related or incidental matters that may be necessary or
appropriate to effectuate the proposed business).
Section 3. Notice of Meetings. Written notice of every meeting
of shareholders, stating the place, date and hour of the meeting, shall be
given personally or by mail to each shareholder of record entitled to vote at
such meeting not less than 10 nor more than 60 days before the date of the
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States Mail with first class postage thereon prepaid addressed to
the shareholder at his address as it appears on the Corporation's record of
stockholders. Attendance of a shareholder at a meeting of shareholders, in
person or by proxy, shall constitute a waiver of notice of such meeting and of
all objections to the place or time of meeting, or the manner in which it has
been called or convened, except when a shareholder attends a meeting solely for
the purpose of stating, at the beginning of the meeting, any such objection to
the transaction of any business. Notice need not be given to any shareholder
who signs a waiver of notice, in person or by proxy, either before or after the
meeting.
Section 4. Quorum. The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum for the transaction of business at all
meetings of the shareholders except as otherwise provided by statute, by the
articles of incorporation, or by these bylaws. If a quorum is not present or
represented at any meeting of the shareholders, a majority of the shareholders
entitled to vote thereat, present in person or represented by proxy, may
adjourn the meeting from time to time,
<PAGE> 2
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. If the adjournment is for
more than 30 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
Section 5. Voting. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of law or
of the articles of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of the question.
Each shareholder shall at every meeting of the shareholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power registered in his name on the books of the Corporation, but no proxy
shall be voted or acted upon after 11 months from its date, unless otherwise
provided in the proxy.
Section 6. Consent of Shareholders. Any action required or
permitted to be taken at any meeting of the shareholders may be taken without a
meeting if written consent, setting forth the action so taken, shall be signed
by persons who would be entitled to vote at a meeting those shares having
voting power to cast not less than the minimum number (or numbers, in the case
of voting by classes) of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote were present and
voted. The action must be evidenced by one or more written consents describing
the action taken, signed by shareholders entitled to take action without a
meeting, and delivered to the Corporation for inclusion in the minutes or
filing with the corporate records. Such consent shall have the same force and
effect as a meeting vote of shareholders. Where required by Section 14-2-704
or other applicable provision of the Georgia Business Corporation Code, the
Corporation shall provide shareholders with written notice of actions taken
without a meeting.
Section 7. List of Shareholders. The Corporation shall keep at
its registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its shareholders, giving their names
and addresses and the number, class and series, if any, of the shares held by
each. The officer who has charge of the stock transfer books of the
Corporation shall prepare and make, before every meeting of shareholders or any
adjournment thereof, a complete list of the shareholders entitled to vote at
the meeting or any adjournment thereof, arranged in alphabetical order, with
the address of and the number and class and series, if any, of shares held by
each. The list shall be produced and kept open at the time and place of the
meeting and shall be subject to inspection by any shareholder during the whole
time of the meeting for the purposes thereof. The said list may be the
Corporation's regular record of shareholders if it is arranged in alphabetical
order or contains an alphabetical index.
Section 8. Shareholder Notice Procedures. Only persons who are
nominated by, or at the direction of, the Board of Directors, or by a
shareholder who has given timely written notice containing information as
specified by the Board of Directors to the secretary of the Corporation prior
to the meeting at which Directors are to be elected, will be eligible for
election as Directors of the Corporation. At annual meetings, only such
business may be conducted as has been brought before the meeting by, or at the
direction of, the chairman of the Board of Directors or by a shareholder who
has given timely written notice to the secretary of the Corporation of such
shareholder's intention to bring such business before such meeting. For notice
of shareholder nominations or business to be conducted at an annual meeting to
be timely, such notice must be received by the Corporation not less than sixty
(60) nor more than ninety (90) days prior to the first anniversary of the
previous year's annual meeting.
Section 9. Limitations on Right of Inspection. The right of
inspection enumerated in subsection (c) of Section 14-2-1602 of the Georgia
Business Corporation Code, or any successor provision, may be exercised by a
shareholder owning in excess of two percent (2%) of the issued and outstanding
shares of the Corporation if such shareholder otherwise meets the requirements
of subsection (d) of such section. With respect to a shareholder owning two
percent (2%) or less of the issued and outstanding shares of the Corporation,
the right of inspection granted by such subsection shall be denied by the
Corporation to any shareholder unwilling to agree in writing to abstain
2
<PAGE> 3
(i) from purchasing or selling any shares of the Corporation;
(ii) from soliciting any proxies over shares of the Corporation, or
seeking to persuade any person to grant or withhold a proxy or
vote with respect to any shares of the Corporation; and
(iii) from sharing with any third person any undisclosed information
concerning the Corporation disclosed in such inspection or
otherwise learned by such shareholder exercising such
inspection right,
for so long as any information disclosed in such inspection is material and
remains undisclosed by the Corporation, and in any event, for one year from the
date of the exercise of such inspection right. The agreements required by this
Section 9 shall be required of the inspecting shareholder and all agents and
attorneys for such shareholder.
Section 10. Record Date for Action by Consent of Shareholders.
In order that the Corporation may determine the shareholders entitled to
consent to any action required or permitted to be taken at any meeting of the
shareholders in writing without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. Any
shareholder of record seeking to have the shareholders authorize or take any
action by written consent shall, by written notice to the secretary of the
Corporation, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten (10) days after the date
on which such request is received, adopt a resolution fixing the record date.
If no record date has been fixed by the Board of Directors within ten (10) days
of such request, then the record date for determining the shareholders entitled
to consent to action in writing without a meeting, when no prior action by the
Board of Directors is required by applicable law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation by delivery to its registered office in
the State of Georgia, its principal place of business, or an officer or agent
of the Corporation having custody of the books in which proceedings of
shareholders meetings are recorded, to the attention of the secretary of the
Corporation. Delivery shall be by hand or by certified or registered mail,
return receipt requested. If no record date has been fixed by the Board of
Directors and prior action of the Board of Directors is required by applicable
law, the record date for determining shareholders entitled to consent to action
in writing without a meeting shall be at the close of business on the date on
which the Board of Directors adopts the resolution taking such prior action.
ARTICLE III
DIRECTORS
Section 1. Powers. Except as otherwise provided by any legal
agreement among shareholders, the property, affairs, and business of the
Corporation shall be managed and directed by its Board of Directors, which may
exercise all powers of the Corporation and do all lawful acts and things which
are not by law, by any legal agreement among shareholders, by the articles of
incorporation, or by these bylaws directed or required to be exercised or done
by the shareholders.
Section 2. Number, Election, and Term. The number of Directors
of the Corporation shall be fixed by resolution of the Board of Directors from
time to time. Until such time as the Corporation's initial public offering is
consummated, the number of Directors shall be one. At and after such time as
the Corporation's initial public offering is consummated, the number of
Directors shall be between five and nine; provided, however, that no decrease
in the number of Directors shall have the effect of shortening the term of an
incumbent Director. The Directors shall be elected by plurality vote at the
annual meeting of shareholders, except as hereinafter provided, and each
Director elected shall hold office until his successor is elected and qualified
or until his earlier resignation, removal from office, or death. Directors
shall be natural persons who have attained the age of 18 years, but need not be
residents of the State of Georgia or shareholders of the Corporation.
Section 3. Vacancies. Vacancies, including vacancies resulting
from any increase in the number of Directors, but not including vacancies
resulting from removal from office by the shareholders, may be filled by a
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majority of the Directors then in office, though less than a quorum, or by a
sole remaining Director, and a Director so chosen shall hold office until the
next annual election and until his successor is duly elected and qualified
unless sooner displaced. If there are no Directors in office, then vacancies
shall be filled through election by the shareholders.
Section 4. Meetings and Notice. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Georgia. Regular meetings of the Board of Directors may
be held without notice at such time and place as shall from time to time be
determined by resolution of the board. Special meetings of the board may be
called by the chairman of the board or president or by any two Directors on one
days oral, telegraphic, or written notice duly given or served on each Director
personally or by facsimile transmission, or four days notice deposited, first
class postage prepaid, in the United States mail. Such notice shall state a
reasonable time, date, and place of meeting, but the purpose need not be stated
therein. Notice need not be given to any Director who signs a waiver of notice
either before or after the meeting. Attendance of a Director at a meeting
shall constitute a waiver of notice of such meeting and waiver of all objection
to the place and time of the meeting, or the manner in which it has been called
or convened, except when the Director states, at the beginning of the meeting,
any such objection or objections to the transaction of business.
Section 5. Quorum. At all meetings of the board a majority of
Directors shall constitute a quorum for the transaction of business, and the
act of a majority of the Directors present at any meeting at which there is a
quorum shall be the act of the board, except as may be otherwise specifically
provided by law, by the articles of incorporation, or by these bylaws. If a
quorum shall not be present at any meeting of the board, the Directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 6. Consent of Directors. Unless otherwise restricted by
the articles of incorporation or these bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all members of the board or
committee, as the case may be, consent thereto in writing, setting forth the
action so taken, and the writing or writings are filed with the minutes of the
proceedings of the board or committee. Such consent shall have the same force
and effect as a unanimous vote of the board.
Section 7. Committees. The Board of Directors may by resolution
passed by a majority of the whole board, designate from among its members one
or more committees, each committee to consist of two or more Directors. The
board may designate one or more Directors as alternate members of any
committee, who may replace any absent member at any meeting of such committee.
Any such committee, to the extent provided in the resolution, shall have and
may exercise all of the authority of the Board of Directors in the management
of the business and affairs of the Corporation, except that it shall have no
authority with respect to (1) amending the articles of incorporation or these
bylaws; (2) adopting a plan of merger or consolidation; (3) the sale, lease,
exchange or other disposition of all or substantially all the property and
assets of the Corporation; and (4) a voluntary dissolution of the Corporation
or a revocation thereof. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the Board
of Directors. A majority of each committee may determine its action and may
fix the time and places of its meetings, unless otherwise provided by the Board
of Directors. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
Section 8. Removal of Directors. At any shareholders' meeting
with respect to which notice of such purpose has been given, any Director may
be removed from office, with or without cause by the vote of shareholders
representing a majority of the issued and outstanding capital stock entitled to
vote for the election of Directors, and his successor may be elected at the
same or any subsequent meeting of shareholders; provided that to the extent any
vacancy created by such removal is not filled by such an election within 60
days after such removal, the remaining Directors shall, by majority vote, fill
any such vacancy.
Section 9. Compensation of Directors. Directors shall be
entitled to such reasonable compensation for their services as Directors or
members of any committee of the board as shall be fixed from time to time by
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resolution adopted by the board, and shall also be entitled to reimbursement
for any reasonable expenses incurred in attending any meeting of the board or
any such committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a president, a secretary, and a
treasurer. The Board of Directors may choose one or more vice presidents,
assistant secretaries and assistant treasurers. Any number of offices may be
held by the same person. The Board of Directors may appoint such other
officers and agents as it shall deem necessary, who shall hold their offices
for such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the board.
Section 2. Compensation. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors or a committee or officer
appointed by the board. Salary payments may be made at such intervals as may
be determined by the Board of Directors or such officer or committee. In
addition to salaries the Board of Directors may pay bonuses to officers and
other employees, the persons who may receive such bonuses and the amount and
time of payment being within the discretion of the Board of Directors.
Section 3. Term of Office. Unless otherwise provided by
resolution of the Board of Directors, the principal officers shall be chosen
annually by the board at the first meeting of the board following the annual
meeting of shareholders of the Corporation, or as soon thereafter as is
conveniently possible. Subordinate officers may be elected from time to time.
Each officer shall serve until his successor shall have been chosen and
qualified, or until his death, resignation, or removal.
Section 4. Removal. Any officer may be removed from office at
any time, with or without cause, by the Board of Directors whenever in its
judgment the best interest of the Corporation will be served thereby.
Section 5. Vacancies. Any vacancy in an office resulting from
any cause may be filled by the Board of Directors.
Section 6. Powers and Duties. Except as hereinafter provided,
the officers of the Corporation shall each have such powers and duties as
generally pertain to their respective offices, as well as such powers and
duties as from time to time may be conferred by the Board of Directors.
(a) President. The president shall be the chief
executive officer of the Corporation, shall preside at all meetings of the
shareholders and (unless the board shall have created an office of chairman of
the board) the Board of Directors, shall have general and active management of
the business of the Corporation and shall see that all orders and resolutions
of the Board of Directors are carried into effect. He shall execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
(b) Secretary. The secretary shall attend all meetings
of the Board of Directors and all meetings of the shareholders and record all
the proceedings of the meetings of the Corporation and of the Board of
Directors in a book to be kept for that purpose and shall perform like duties
for the standing committees when required. He shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or president, under whose supervision he shall be. He
shall have custody of the corporate seal of the Corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing by his signature.
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(c) Treasurer. The treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the president and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, he shall give the Corporation a bond
(which shall be renewed every six years) in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
(d) Assistant Officers. Vice presidents and assistants
to the secretary and treasurer, if any, shall perform such duties and have such
powers as the Board of Directors may from time to time prescribe.
Section 7. Voting Securities of Corporation. Unless otherwise
ordered by the Board of Directors, the president shall have full power and
authority on behalf of the Corporation to attend and to act and vote at any
meetings of security holders of corporations in which the Corporation may hold
securities, and at such meetings shall possess and may exercise any and all
rights and powers incident to the ownership of such securities which the
Corporation might have possessed and exercised if it had been present. The
Board of Directors by resolution from time to time may confer like powers upon
any other person or persons.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form of Certificate. Every holder of fully paid
stock in the Corporation shall be entitled to have a certificate in such form
as the Board of Directors may from time to time prescribe.
Section 2. Lost Certificates. The Board of Directors may direct
that a new certificate be issued in place of any certificate theretofore issued
by the Corporation and alleged to have been lost, stolen, or destroyed, upon
the making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen, or destroyed. When authorizing such issue of a
new certificate, the Board of Directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen, or destroyed certificate, or his legal representative, to advertise the
same in such manner as it shall require and to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen, or destroyed.
Section 3. Transfers.
(a) Transfers of shares of the capital stock of the
Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his duly authorized attorney, or with a
transfer clerk or transfer agent appointed as in Section 5 of this Article
provided, and on surrender of the certificate or certificates for such shares
properly endorsed and the payment of all taxes thereon.
(b) The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and for all other purposes, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by law.
(c) Shares of capital stock may be transferred by
delivery of the certificates therefor, accompanied either by an assignment in
writing on the back of the certificates or by separate written power of
attorney to sell, assign, and transfer the same, signed by the record holder
thereof, or by his duly authorized
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attorney in fact, but no transfer shall affect the right of the Corporation to
pay any dividend upon the stock to the holder of record as the holder in fact
thereof for all purposes, and no transfer shall be valid, except between the
parties thereto, until such transfer shall have been made upon the books of the
Corporation as herein provided.
(d) The board may from time to time, make such additional
rules as it may deem expedient and not inconsistent with these bylaws or the
articles of incorporation, concerning the issue, transfer, and registration of
certificates for shares of the capital stock of the Corporation.
Section 4. Record Date. In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion, or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than 60 days and, in case of
a meeting of shareholders, not less than 10 days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If no record date is fixed for the determination of shareholders, the record
date shall be at the close of business on the day next preceding the day on
which the notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. If no record date
is fixed for other purposes, the record date shall be at the close of business
on the day next preceding the day on which the Board of Directors adopts the
resolution relating thereto. A determination of shareholders of record
entitled to notice of or to vote at a meeting of shareholders shall apply to
any adjournment of the meeting unless the Board of Directors shall fix a new
record date for the adjourned meeting.
Section 5. Transfer Agent and Registrar. The Board of Directors
may appoint one or more transfer agents or one or more transfer clerks and one
or more registrars, and may require all certificates of stock to bear the
signature or signatures of any of them.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the articles of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the Corporation's capital stock, subject to the provisions of the
articles of incorporation. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Directors shall think conducive to the interest
of the Corporation, and the Directors may modify or abolish any such reserve in
the manner in which it was created.
Section 2. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 3. Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization, and the
words "Corporate Seal" and "Georgia". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise. In
the event it is inconvenient to use such a seal at any time, the signature of
the Corporation followed by the word "Seal" enclosed in parentheses shall be
deemed the seal of the Corporation.
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ARTICLE VII
INDEMNIFICATION
Section 1. Basis for Indemnification.
(a) Under the circumstances prescribed in Section 2 of
this Article, the Corporation shall indemnify and hold harmless any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit, or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in a manner he reasonably believed to be
in or not opposed to the best interests of the Corporation, or conduct was
unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself create a presumption that the person did not
act in a manner which he reasonably believed to be in or not opposed to the
best interest of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Under the circumstances prescribed in Section 2 of
this Article, the Corporation shall indemnify and hold harmless any person who
was or is a party or it threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact he is or was a director,
officer, employee or agent of the Corporation, or is or was a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation;
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation, unless and only to the extent that the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
Section 2. Right to Indemnification. To the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred
to in Section 1 of this Article, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith. Except as
provided in the preceding sentence and except as may be ordered by a court, any
indemnification under Section 1 of this Article shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in Section 1 of this Article. Such a determination shall be made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) by independent
legal counsel employed by the Corporation, in a written opinion, if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, or (iii) by the affirmative vote of a majority of the
shares entitled to vote thereon.
Section 3. Expenses. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such proceeding as authorized by the Board of
Directors generally or as to a specific case or as to a specific person or
persons (designated by name, title or class of persons), upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount of it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized in this Article VII.
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Section 4. Non-exclusivity. The provisions for indemnification
and advancement of expenses provided by this Article VII shall not be deemed
exclusive of any other rights, in respect of indemnification or otherwise, to
which those seeking indemnification may be entitled under any bylaw, agreement,
either specifically or in general terms, resolution, or approved by the
affirmative vote of the holders of a majority of the shares entitled to vote
thereon taken at a meeting the notice of which specified that such bylaw,
resolution or agreement would be placed before the shareholders, both as to
action by a director, officer, employee or agent in his official capacity and
as to action in another capacity while holding such office or position, except
that no such other rights, in respect to indemnification or otherwise, to which
those seeking indemnification may be entitled under any bylaw, agreement,
either specifically or in general terms, resolution, or approved by the
affirmative vote of the holders of a majority of the shares entitled to vote
thereon taken at a meeting the notice of which specified that such bylaw,
resolution or agreement would be placed before the shareholders, both as to
action by a director, officer, employee or agent in his official capacity and
as to action in another capacity while holding such office or position, except
that no such other rights, in respect to indemnification or otherwise, may be
provided or granted with respect to the liability of any director, officer,
employee or agent for (a) any appropriation, in violation of his duties, of any
business opportunity of the Corporation; (b) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(c) liabilities of a director imposed by Section 14-2-832 of the Georgia
Business Corporation Code; or (d) any transaction from which the director,
officer, employee, or agent derived an improper personal benefit.
Section 5. Insurance.
(a) The Corporation may purchase and maintain insurance
on behalf of any person who is or was a Director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VII.
(b) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders or
by an insurance carrier pursuant to insurance maintained by the Corporation,
the Corporation shall, not later than the next annual meeting of shareholders
unless such meeting is held within 3 months from the date of such payment, and,
in any event, within 15 months from the date of such payment, send by first
class mail (or if the Corporation shall have at the time more than 500
shareholders entitled to vote, by such other means as may be authorized by the
Georgia Business Corporation Code for notices of meetings of shareholders) to
its shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
Section 6. Right to Participate in Defense. As a condition to
any such right of indemnification, or to receive advancement of expenses, the
Corporation may require that it be permitted to participate in the defense of
any such action or proceeding through legal counsel designated by the
Corporation and at the expense of the Corporation.
Section 7. Continuation of Right of Indemnification. The rights
to indemnification and advancement of expenses provided in this Article VII
shall continue notwithstanding that a person who would otherwise have been
entitled to indemnification or advancement of expenses hereunder shall have
ceased to be a director, officer, employee or agent, and shall insure to the
benefit of the heirs, executors and administrators of such persons.
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ARTICLE VIII
AMENDMENTS
The Board of Directors shall have power to alter, amend, or repeal
these bylaws or adopt new bylaws by majority vote of all of the Directors, but
any bylaws adopted by the Board of Directors may be altered, amended, or
repealed and new bylaws adopted, by the shareholders by majority vote of all of
the shares having voting power.
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EXHIBIT 10.1
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
1996 STOCK OPTION PLAN
<PAGE> 2
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Award" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Board" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 "Change in Control" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 "Committee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Director" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 "Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 "Exercise Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Fair Market Value" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 "Grantee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "Incentive Stock Option" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 "Non-Employee Director" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 "Officer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 "Option" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 "Optionee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 "Permanent and Total Disability" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 "Purchasable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.20 "Qualified Domestic Relations Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.21 "Reload Option" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.22 "Restricted Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.23 "Restriction Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.24 "Section 16 Insider" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.25 "Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.26 "Stock Option Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE IV
ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Duties and Powers of the Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Interpretation; Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 Majority Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 Company Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN . . . . . . . . . . . . . . . . . . . . 6
5.1 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Antidilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VI
OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Types of Options Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Option Grant and Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3 Optionee Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 $100,000 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.5 Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.6 Exercise Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.7 Option Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.8 Reload Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.9 Nontransferability of Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.10 Termination of Employment or Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.11 Employment Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.12 Certain Successor Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.13 Effect of Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII
RESTRICTED STOCK . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 Awards of Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Non-Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3 Lapse of Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.4 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.5 Treatment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.6 Delivery of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII
STOCK CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IX
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . 14
9.1 Termination and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.2 Effect on Grantee's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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<TABLE>
<S> <C> <C> <C>
ARTICLE X
RELATIONSHIP TO OTHER COMPENSATION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 15
11.1 Replacement or Amended Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.2 Forfeiture for Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.3 Plan Binding on Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.4 Singular, Plural; Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.5 Headings, etc., No Part of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.6 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
SCHEDULE B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
</TABLE>
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<PAGE> 5
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
1996 STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless the
context clearly indicates to the contrary:
1.1 "Award" shall mean a grant of Restricted Stock.
1.2 "Board" shall mean the Board of Directors of the Company.
1.3 "Change in Control" shall mean the occurrence of either of the
following events:
(i) A change in the composition of the Board of Directors
as a result of which fewer than one-half of the
incumbent directors are directors who either:
(A) Had been directors of the Company 24 months
prior to such change; or
(B) Were elected, or nominated for election, to
the Board of Directors with the affirmative
votes of at least a majority of the directors
who had been directors of the Company 24
months prior to such change and who were
still in office at the time of the election
or nomination; or
(ii) Any "person" (as such term is used in sections 13(d)
and 14(d) of the Exchange Act), other than any person
who is a shareholder of the Company on or before the
effective date of the Plan, by the acquisition or
aggregation of securities is or becomes the
beneficial owner, directly or indirectly, of
securities of the Company representing 50 percent or
more of the combined voting power of the Company's
then outstanding securities ordinarily (and apart
from rights accruing under special circumstances)
having the right to vote at elections of directors
(the "Base Capital Stock"); except that any change in
the relative beneficial ownership of the Company's
securities by any person resulting solely from a
reduction in the aggregate number of outstanding
shares of Base Capital Stock, and any decrease
thereafter in such person's ownership of securities,
shall be disregarded until such person increases in
any manner, directly or indirectly, such person's
beneficial ownership of any securities of the
Company.
1.4 "Code" shall mean the United States Internal Revenue Code of
1986, including effective date and transition rules (whether or
not codified). Any reference herein to a specific section of
the Code shall be deemed to include a reference to any
corresponding provision of future law.
<PAGE> 6
1.5 "Committee" shall mean a committee of at least one Director
appointed from time to time by the Board. However, with respect
to any Options or Awards granted to a Section 16 Insider, the
Committee shall consist: (i) of the entire Board, or (ii) solely
of two or more Non-Employee Directors (who need not be members
of the Committee with respect to Options or Awards granted to
any other individuals).
1.6 "Company" shall mean Professional Transportation Group Ltd.,
Inc., a Georgia corporation and any successor company, and shall
include any subsidiary, 50% or more of the outstanding voting
stock of which is owned, directly or indirectly by Professional
Transportation Group, Ltd.
1.7 "Director" shall mean a member of the Board and any person who
is an advisory or honorary director of the Company if such
person is considered a director for the purposes of Section 16
of the Exchange Act, as determined by reference to such Section
16 and to the rules, regulations, judicial decisions, and
interpretative or "no-action" positions with respect thereto of
the Securities and Exchange Commission, as the same may be in
effect or set forth from time to time.
1.8 "Exchange Act" shall mean the Securities Exchange Act of 1934.
Any reference herein to a specific section of the Exchange Act
shall be deemed to include a reference to any corresponding
provision of future law.
1.9 "Exercise Price" shall mean the price at which an Optionee may
purchase a share of Stock under a Stock Option Agreement.
1.10 "Fair Market Value" on any date shall mean (i) the closing sales
price of the Stock, regular way, on such date on the national
securities exchange having the greatest volume of trading in the
Stock during the thirty-day period preceding the day the value
is to be determined or, if such exchange was not open for
trading on such date, the next preceding date on which it was
open; (ii) if the Stock is not traded on any national securities
exchange, the average of the closing high bid and low asked
prices of the Stock on the over-the-counter market on the day
such value is to be determined, or in the absence of closing
bids on such day, the closing bids on the next preceding day on
which there were bids; or (iii) if the Stock also is not traded
on the over-the-counter market, the fair market value as
determined in good faith by the Board or the Committee based on
such relevant facts as may be available to the Board, which may
include opinions of independent experts, the price at which
recent sales have been made, the book value of the Stock, and
the Company's current and future earnings.
1.11 "Grantee" shall mean a person who is an Optionee or a person who
has received an Award of Restricted Stock.
1.12 "Incentive Stock Option" shall mean an option to purchase any
stock of the Company, which complies with and is subject to the
terms, limitations and
2
<PAGE> 7
conditions of Section 422 of the Code and any regulations
promulgated with respect thereto.
1.13 "Non-Employee Director" shall have the meaning set forth in Rule
16b-3 under the Exchange Act, as the same may be in effect from
time to time, or in any successor rule thereto, and shall be
determined for all purposes under the Plan according to
interpretative or "no-action" positions with respect thereto
issued by the Securities and Exchange Commission.
1.14 "Officer" shall mean a person who constitutes an officer of the
Company for the purposes of Section 16 of the Exchange Act, as
determined by reference to such Section 16 and to the rules,
regulations, judicial decisions, and interpretative or
"no-action" positions with respect thereto of the Securities and
Exchange Commission, as the same may be in effect or set forth
from time to time.
1.15 "Option" shall mean an option, whether or not an Incentive Stock
Option, to purchase Stock granted pursuant to the provisions of
Article VI hereof.
1.16 "Optionee" shall mean a person to whom an Option has been
granted hereunder.
1.17 "Permanent and Total Disability" shall have the same meaning as
given to that term by Code Section 22(e)(3) and any regulations
or rulings promulgated thereunder.
1.18 "Plan" shall mean the Professional Transportation Group Ltd.,
Inc. 1996 Stock Option Plan, the terms of which are set forth
herein.
1.19 "Purchasable" shall refer to Stock which may be purchased by an
Optionee under the terms of this Plan on or after a certain date
specified in the applicable Stock Option Agreement.
1.20 "Qualified Domestic Relations Order" shall have the meaning set
forth in the Code or in the Employee Retirement Income Security
Act of 1974, or the rules and regulations promulgated under the
Code or such Act.
1.21 "Reload Option" shall have the meaning set forth in Section 6.8
hereof.
1.22 "Restricted Stock" shall mean Stock issued, subject to
restrictions, to a Grantee pursuant to Article VII hereof.
1.23 "Restriction Agreement" shall mean the agreement setting forth
the terms of an Award, and executed by a Grantee as provided in
Section 7.1 hereof.
1.24 "Section 16 Insider" shall mean any person who is subject to the
provisions of Section 16 of the Exchange Act, as provided in
Rule 16a-2 promulgated pursuant to the Exchange Act.
3
<PAGE> 8
1.25 "Stock" shall mean the Common Stock, no par value, of the
Company or, in the event that the outstanding shares of Stock
are hereafter changed into or exchanged for shares of a
different stock or securities of the Company or some other
entity, such other stock or securities.
1.26 "Stock Option Agreement" shall mean an agreement between the
Company and an Optionee under which the Optionee may purchase
Stock hereunder, a sample form of which is attached hereto as
Exhibit A (which form may be varied by the Committee in granting
an Option).
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as "Professional Transportation
Group Ltd., Inc. 1996 Stock Option Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of
the Company, its subsidiaries, and its shareholders by affording
certain employees and Directors of the Company, as well as key
consultants and advisors to the Company, an opportunity to
acquire or increase their proprietary interests in the Company.
The objective of the issuance of the Options and Awards is to
promote the growth and profitability of the Company because the
Grantees will be provided with an additional incentive to
achieve the Company's objectives through participation in its
success and growth and by encouraging their continued
association with or service to the Company.
2.3 Effective Date. The Plan shall become effective on February 16,
1996.
2.4 Shareholder Approval. The Company intends to obtain shareholder
approval of the Plan by February 16, 1997. If shareholder
approval of the Plan is not obtained by February 16, 1997, the
Plan will remain in effect and all Options and Awards granted by
the Plan will remain valid. However, if shareholder approval is
at that time required by the Code for Incentive Stock Options
and such shareholder approval has not been obtained, any
Incentive Stock Options issued under the Plan shall
automatically become options which do not qualify as Incentive
Stock Options.
ARTICLE III
PARTICIPANTS
The class of persons eligible to participate in the Plan shall consist of
all persons whose participation in the Plan the Committee determines to be in
the best interests of the Company which shall include, but not be limited to,
all Directors and employees (including leased employees), including but not
limited to executive personnel, of the Company, as well as key consultants and
advisors to the Company.
4
<PAGE> 9
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. The Plan shall be
administered by the Committee. The Committee shall select one
of its members as its Chairman and shall hold its meetings at
such times and places as it may determine. The Committee shall
keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it may deem
necessary. The Committee shall have the power to act by
unanimous written consent in lieu of a meeting, and to meet by
telephone. In administering the Plan, the Committee's actions
and determinations shall be binding on all interested parties.
The Committee shall have the power to grant Options or Awards in
accordance with the provisions of the Plan and may grant Options
and Awards singly, in combination, or in tandem. Subject to the
provisions of the Plan, the Committee shall have the discretion
and authority to determine those individuals to whom Options or
Awards will be granted and whether such Options shall be
accompanied by the right to receive Reload Options, the number
of shares of Stock subject to each Option or Award, such other
matters as are specified herein, and any other terms and
conditions of a Stock Option Agreement or Restriction Agreement.
The Committee shall also have the discretion and authority to
delegate to any Officer its powers to grant Options or Awards
under the Plan to any person who is an employee of the Company
but not an Officer or Director. To the extent not inconsistent
with the provisions of the Plan, the Committee may give a
Grantee an election to surrender an Option or Award in exchange
for the grant of a new Option or Award, and shall have the
authority to amend or modify an outstanding Stock Option
Agreement or Restriction Agreement, or to waive any provision
thereof, provided that the Grantee consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of the
Plan, the Committee also shall have complete authority to
interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to it, to determine the details and
provisions of each Stock Option Agreement, and to make all other
determinations necessary or advisable for the administration of
the Plan, including, without limitation, the amending or
altering of the Plan and any Options or Awards granted hereunder
as may be required to comply with or to conform to any federal,
state, or local laws or regulations.
4.3 No Liability. Neither any member of the Board nor any member of
the Committee shall be liable to any person for any act or
determination made in good faith with respect to the Plan or any
Option or Award granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a
meeting at which a quorum is present, or any action taken
without a meeting evidenced by a writing executed by all the
members of the Committee, shall constitute the action of the
Committee.
5
<PAGE> 10
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible
persons, their employment, death, retirement, disability, or
other termination of employment, and such other pertinent facts
as the Committee may require. The Company shall furnish the
Committee with such clerical and other assistance as is
necessary in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment pursuant to
the provisions of Section 5.2 hereof, the maximum number of
shares of Stock that may be issued hereunder shall be 300. Any
or all shares of Stock subject to the Plan may be issued in any
combination of Incentive Stock Options, non-Incentive Stock
Options, Restricted Stock, or SARs, and the amount of Stock
subject to the Plan may be increased from time to time in
accordance with Article X, provided that the total number of
shares of Stock issuable pursuant to Incentive Stock Options may
not be increased to more than 300 (other than pursuant to
anti-dilution adjustments) without shareholder approval. Shares
subject to an Option or issued as an Award may be either
authorized and unissued shares or shares issued and later
acquired by the Company. The shares covered by any unexercised
portion of an Option that has terminated for any reason (except
as set forth in the following paragraph), or any forfeited
portion of an Award, may again be optioned or awarded under the
Plan, and such shares shall not be considered as having been
optioned or issued in computing the number of shares of Stock
remaining available for option or award hereunder.
If Options are issued in respect of options to
acquire stock of any entity acquired, by merger or otherwise, by
the Company (or any subsidiary of the Company), to the extent
that such issuance shall not be inconsistent with the terms,
limitations and conditions of Code Section 422 or Rule 16b-3
under the Exchange Act, the aggregate number of shares of Stock
for which Options may be granted hereunder shall automatically
be increased by the number of shares subject to the Options so
issued; provided, however, that the aggregate number of shares
of Stock for which Options may be granted hereunder shall
automatically be decreased by the number of shares covered by
any unexercised portion of an Option so issued that has
terminated for any reason, and the shares subject to any such
unexercised portion may not be optioned to any other person.
5.2 Antidilution.
(a) If (1) the outstanding shares of Stock are changed
into or exchanged for a different number or kind of
shares or other securities of the Company by reason
of merger, consolidation, reorganization,
recapitalization, reclassification, combination or
exchange of shares, or stock split or stock dividend,
(2) any spin-off, spin-out or other distribution of
assets materially affects the price of the Company's
stock, or (3) there is any
6
<PAGE> 11
assumption and conversion to the Plan by the Company
of an acquired company's outstanding option grants,
then:
(i) the aggregate number and kind of shares of
Stock for which Options or Awards may be
granted hereunder shall be adjusted
proportionately by the Committee; and
(ii) the rights of Optionees (concerning the
number of shares subject to Options and the
Exercise Price) under outstanding Options and
the rights of the holders of Awards
(concerning the terms and conditions of the
lapse of any then-remaining restrictions),
shall be adjusted proportionately by the
Committee.
(b) If the Company shall be a party to any reorganization
in which it does not survive, involving merger,
consolidation, or acquisition of the stock or
substantially all the assets of the Company, the
Committee, in its discretion, may:
(i) notwithstanding other provisions hereof,
declare that all Options granted under the
Plan shall become exercisable immediately
notwithstanding the provisions of the
respective Stock Option Agreements regarding
exercisability, that all such Options shall
terminate 90 days after the Committee gives
written notice of the immediate right to
exercise all such Options and of the decision
to terminate all Options not exercised within
such 90-day period, and that all
then-remaining restrictions pertaining to
Awards under the Plan shall immediately
lapse; and/or
(ii) notify all Grantees that all Options or
Awards granted under the Plan shall be
assumed by the successor corporation or
substituted on an equitable basis with
options or restricted stock issued by such
successor corporation.
(c) If the Company is to be liquidated or dissolved in
connection with a reorganization described in Section
5.2(b), the provisions of such Section shall apply.
In all other instances, the adoption of a plan of
dissolution or liquidation of the Company shall,
notwithstanding other provisions hereof, cause all
then-remaining restrictions pertaining to Awards
under the Plan to lapse, and shall cause every Option
outstanding under the Plan to terminate to the extent
not exercised prior to the adoption of the plan of
dissolution or liquidation by the shareholders,
provided that, notwithstanding other provisions
hereof, the Committee may declare all Options granted
under the Plan to be exercisable at any time on or
before the fifth business day following such adoption
notwithstanding the provisions of the respective
Stock Option Agreements regarding exercisability.
7
<PAGE> 12
(d) The adjustments described in paragraphs (a) through
(c) of this Section 5.2, and the manner of their
application, shall be determined solely by the
Committee, and any such adjustment may provide for
the elimination of fractional share interests;
provided, however, that any adjustment made by the
Board or the Committee shall be made in a manner that
will not cause an Incentive Stock Option to be other
than an Incentive Stock Option under applicable
statutory and regulatory provisions. The adjustments
required under this Article V shall apply to any
successors of the Company and shall be made
regardless of the number or type of successive events
requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. The Committee may, under this Plan,
grant either Incentive Stock Options or Options which do not
qualify as Incentive Stock Options. Within the limitations
provided in this Plan, both types of Options may be granted to
the same person at the same time, or at different times, under
different terms and conditions, as long as the terms and
conditions of each Option are consistent with the provisions of
the Plan. Without limitation of the foregoing, Options may be
granted subject to conditions based on the financial performance
of the Company or any other factor the Committee deems relevant.
6.2 Option Grant and Agreement. Each Option granted hereunder shall
be evidenced by minutes of a meeting or the written consent of
the Committee and by a written Stock Option Agreement executed
by the Company and the Optionee. The terms of the Option,
including the Option's duration, time or times of exercise,
exercise price, whether the Option is intended to be an
Incentive Stock Option, and whether the Option is to be
accompanied by the right to receive a Reload Option, shall be
stated in the Stock Option Agreement. No Incentive Stock Option
may be granted more than ten years after the earlier to occur of
the effective date of the Plan or the date the Plan is approved
by the Company's shareholders.
Separate Stock Option Agreements may be used for
Options intended to be Incentive Stock Options and those not so
intended, but any failure to use such separate agreements shall
not invalidate, or otherwise adversely affect the Optionee's
interest in, the Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an
Incentive Stock Option to any person who, at the time the
Incentive Stock Option is granted:
(a) is not an employee of the Company; or
(b) owns or is considered to own stock possessing at
least 10% of the total combined voting power of all
classes of stock of the Company or any of its parent
or subsidiary corporations; provided, however, that
this limitation shall not apply if at the time an
Incentive Stock Option is
8
<PAGE> 13
granted the Exercise Price is at least 110% of the
Fair Market Value of the Stock subject to such Option
and such Option by its terms would not be exercisable
after five years from the date on which the Option is
granted.
6.4 $100,000 Limitation. Except as provided below, the Committee
shall not grant an Incentive Stock Option to, or modify the
exercise provisions of outstanding Incentive Stock Options held
by, any person who, at the time the Incentive Stock Option is
granted (or modified), would thereby receive or hold any
Incentive Stock Options of the Company, such that the aggregate
Fair Market Value (determined as of the respective dates of
grant or modification of each option) of the stock with respect
to which such Incentive Stock Options are exercisable for the
first time during any calendar year is in excess of $100,000 (or
such other limit as may be prescribed by the Code from time to
time); provided that the foregoing restriction on modification
of outstanding Incentive Stock Options shall not preclude the
Committee from modifying an outstanding Incentive Stock Option
if, as a result of such modification and with the consent of the
Optionee, such Option no longer constitutes an Incentive Stock
Option; and provided that, if the $100,000 limitation (or such
other limitation prescribed by the Code) described in this
Section 6.4 is exceeded, the Incentive Stock Option, the
granting or modification of which resulted in the exceeding of
such limit, shall be treated as an Incentive Stock Option up to
the limitation and the excess shall be treated as an Option not
qualifying as an Incentive Stock Option.
6.5 Exercise Price. The Exercise Price of the Stock subject to each
Option shall be determined by the Committee. Subject to the
provisions of Section 6.3(b) hereof, the Exercise Price of an
Incentive Stock Option shall not be less than the Fair Market
Value of the Stock as of the date the Option is granted (or in
the case of an Incentive Stock Option that is subsequently
modified, on the date of such modification).
6.6 Exercise Period. The period for the exercise of each Option
granted hereunder shall be determined by the Committee, but the
Stock Option Agreement with respect to each Option intended to
be an Incentive Stock Option shall provide that such Option
shall not be exercisable after the expiration of ten years from
the date of grant (or modification) of the Option (subject,
however, to the provisions of Section 6.3(b) hereof). In
addition, no Incentive Stock Option granted under the Plan shall
be exercisable prior to shareholder approval of the Plan.
6.7 Option Exercise.
(a) Unless otherwise provided in the Stock Option
Agreement or Section 6.6 hereof, an Option may be
exercised at any time or from time to time during the
term of the Option as to any or all full shares which
have become Purchasable under the provisions of the
Option, but not at any time as to less than 100
shares unless the remaining shares that have become
so Purchasable are less than 100 shares. The
Committee shall have the authority to prescribe in
any Stock Option Agreement that the
9
<PAGE> 14
Option may be exercised only in accordance with a
vesting schedule during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the
Company at its principal office a written notice of
exercise with respect to a specified number of shares
of Stock and (ii) payment to the Company at that
office of the full amount of the Exercise Price for
such number of shares in accordance with Section
6.7(c). If requested by an Optionee, an Option may
be exercised with the involvement of a stockbroker in
accordance with the federal margin rules set forth in
Regulation T (in which case the certificates
representing the underlying shares will be delivered
by the Company directly to the stockbroker).
(c) The Exercise Price is to be paid in full in cash upon
the exercise of the Option and the Company shall not
be required to deliver certificates for the shares
purchased until such payment has been made; provided,
however, that in lieu of cash, all or any portion of
the Exercise Price may be paid by tendering to the
Company shares of Stock duly endorsed for transfer
and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise
issuable upon exercise of the Option, in each case to
be credited against the Exercise Price at the Fair
Market Value of such shares on the date of exercise
(however, no fractional shares may be so transferred,
and the Company shall not be obligated to make any
cash payments in consideration of any excess of the
aggregate Fair Market Value of shares transferred
over the aggregate Exercise Price); provided further,
that the Board may provide in a Stock Option
Agreement (or may otherwise determine in its sole
discretion at the time of exercise) that, in lieu of
cash or shares, all or a portion of the Exercise
Price may be paid by the Optionee's execution of a
recourse note equal to the Exercise Price or relevant
portion thereof, subject to compliance with
applicable state and federal laws, rules and
regulations.
(d) In addition to and at the time of payment of the
Exercise Price, the Optionee shall pay to the Company
in cash the full amount of any federal, state, and
local income, employment, or other withholding taxes
applicable to the taxable income of such Optionee
resulting from such exercise. However, in the
discretion of the Committee any Stock Option
Agreement may provide that all or any portion of such
tax obligations, together with additional taxes not
exceeding the actual additional taxes to be owed by
the Optionee as a result of such exercise, may, upon
the irrevocable election of the Optionee, be paid by
tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or
by authorization to the Company to withhold shares of
Stock otherwise issuable upon exercise of the Option,
in either case in that number of shares having a Fair
Market Value on the date of exercise equal to the
amount of such taxes thereby being paid, and subject
to such restrictions as to the approval and timing of
any such election as the Committee may from time to
time determine to be necessary or
10
<PAGE> 15
appropriate to satisfy the conditions of the
exemption set forth in Rule 16b-3 under the Exchange
Act, if such rule is applicable.
(e) The holder of an Option shall not have any of the
rights of a shareholder with respect to the shares of
Stock subject to the Option until such shares have
been issued and transferred to the Optionee upon the
exercise of the Option.
6.8 Reload Options.
(a) The Committee may specify in a Stock Option Agreement
(or may otherwise determine in its sole discretion)
that a Reload Option shall be granted, without
further action of the Committee, (i) to an Optionee
who exercises an Option (including a Reload Option)
by surrendering shares of Stock in payment of amounts
specified in Sections 6.7(c) or 6.7(d) hereof, (ii)
for the same number of shares as are surrendered to
pay such amounts, (iii) as of the date of such
payment and at an Exercise Price equal to the Fair
Market Value of the Stock on such date, and (iv)
otherwise on the same terms and conditions as the
Option whose exercise has occasioned such payment,
subject to such other conditions or terms as the
Committee shall specify at the time such exercised
Option is granted.
(b) Unless provided otherwise in the Stock Option
Agreement, a Reload Option may not be exercised by an
Optionee (i) prior to the end of a one-year period
from the date that the Reload Option is granted, and
(ii) unless the Optionee retains beneficial ownership
of the shares of Stock issued to such Optionee upon
exercise of the Option referred to above in Section
6.8(a)(i) for a period of one year from the date of
such exercise.
6.9 Nontransferability of Option. No Option shall be transferable
by an Optionee other than by will or the laws of descent and
distribution or, in the case of non-Incentive Stock Options,
pursuant to a Qualified Domestic Relations Order, and no Option
shall be transferable by an Optionee who is a Section 16 Insider
prior to shareholder approval of the Plan. During the lifetime
of an Optionee, Options shall be exercisable only by such
Optionee (or by such Optionee's guardian or legal
representative, should one be appointed).
6.10 Termination of Employment or Service. The Committee shall have
the power to specify, with respect to the Options granted to a
particular Optionee, the effect upon such Optionee's right to
exercise an Option of termination of such Optionee's employment
or service under various circumstances, which effect may include
immediate or deferred termination of such Optionee's rights
under an Option, or acceleration of the date at which an Option
may be exercised in full; provided, however, that in no event
may an Incentive Stock Option be exercised after the expiration
of ten years from the date of grant thereof.
6.11 Employment Rights. Nothing in the Plan or in any Stock Option
Agreement shall confer on any person any right to continue in
the employ of the Company, or
11
<PAGE> 16
shall interfere in any way with the right of the Company to
terminate such person's employment at any time.
6.12 Certain Successor Options. To the extent not inconsistent with
the terms, limitations and conditions of Code Section 422 and
any regulations promulgated with respect thereto, an Option
issued in respect of an option held by an employee to acquire
stock of any entity acquired, by merger or otherwise, by the
Company (or any subsidiary of the Company) may contain terms
that differ from those stated in this Article VI, but solely to
the extent necessary to preserve for any such employee the
rights and benefits contained in such predecessor option, or to
satisfy the requirements of Code Section 424(a).
6.13 Effect of Change in Control. The Committee may determine, at
the time of granting an Option or thereafter, that such Option
shall become exercisable on an accelerated basis in the event
that a Change in Control occurs with respect to the Company (and
the Committee shall have the discretion to modify the definition
of a Change in Control in a particular Option Agreement). If
the Committee finds that there is a reasonable possibility that,
within the succeeding six months, a Change in Control will occur
with respect to the Company, then the Committee may determine
that all outstanding Options shall be exercisable on an
accelerated basis.
ARTICLE VII
RESTRICTED STOCK
7.1 Awards of Restricted Stock. The Committee may grant Awards of
Restricted Stock, which shall be governed by a Restriction
Agreement between the Company and the Grantee. Each Restriction
Agreement shall contain such restrictions, terms, and conditions
as the Committee may, in its discretion, determine, and may
require that an appropriate legend be placed on the certificates
evidencing the subject Restricted Stock. Shares of Restricted
Stock granted pursuant to an Award hereunder shall be issued in
the name of the Grantee as soon as reasonably practicable after
the Award is granted, provided that the Grantee has executed the
Restriction Agreement governing the Award, the appropriate blank
stock powers, and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may
require as a condition to the issuance of such shares. If a
Grantee shall fail to execute the foregoing documents within any
time period prescribed by the Committee, the Award shall be
void. At the discretion of the Committee, shares issued in
connection with an Award may be held by the Company for the
account of the Grantee or deposited together with the stock
powers with an escrow agent designated by the Committee. Unless
the Committee determines otherwise and as set forth in the
Restriction Agreement, upon issuance of the shares, the Grantee
shall have all of the rights of a shareholder with respect to
such shares, including the right to vote the shares and to
receive all dividends or other distributions paid or made with
respect to the shares.
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<PAGE> 17
7.2 Non-Transferability. Until any restrictions upon Restricted
Stock awarded to a Grantee shall have lapsed in a manner set
forth in Section 7.3, such shares of Restricted Stock shall not
be transferable other than by will or the laws of descent and
distribution, or pursuant to a Qualified Domestic Relations
Order, nor shall they be delivered to the Grantee.
7.3 Lapse of Restrictions. Restrictions upon Restricted Stock
awarded hereunder shall lapse at such time or times and on such
terms and conditions as the Committee may, in its discretion,
determine at the time the Award is granted or thereafter.
7.4 Termination of Employment. The Committee shall have the power
to specify, with respect to each Award granted to any particular
Grantee, the effect upon such Grantee's rights with respect to
such Restricted Stock of the termination of such Grantee's
employment under various circumstances, which effect may include
immediate or deferred forfeiture of such Restricted Stock or
acceleration of the date at which any then-remaining
restrictions shall lapse.
7.5 Treatment of Dividends. At the time an Award of Restricted
Stock is made the Committee may, in its discretion, determine
that the payment to the Grantee of any dividends, or a specified
portion thereof, declared or paid on such Restricted Stock shall
be (i) deferred until the lapsing of the relevant restrictions
and (ii) held by the Company for the account of the Grantee
until such lapsing. In the event of such deferral, there shall
be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the
year at a rate per annum determined by the Committee. Payment
of deferred dividends, together with interest thereon, shall be
made upon the lapsing of restrictions imposed on such Restricted
Stock, and any dividends deferred (together with any interest
thereon) in respect of Restricted Stock shall be forfeited upon
any forfeiture of such Restricted Stock.
7.6 Delivery of Shares. Except as provided otherwise in Article IX
below, within a reasonable period of time following the lapse of
the restrictions on shares of Restricted Stock, the Committee
shall cause a stock certificate to be delivered to the Grantee
with respect to such shares and such shares shall be free of all
restrictions hereunder.
ARTICLE VIII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, or deliver any certificate for shares of Restricted Stock
granted hereunder, prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which the Stock is then listed;
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<PAGE> 18
(b) The completion of any registration or other qualification of
such shares which the Committee shall deem necessary or
advisable under any federal or state law or under the rulings or
regulations of the Securities and Exchange Commission or any
other governmental regulatory body;
(c) The obtaining of any approval or other clearance from any
federal or state governmental agency or body which the Committee
shall determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Board from time to time may
establish for reasons of administrative convenience.
Stock certificates issued and delivered to Grantees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant
to applicable federal and state securities laws.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination and Amendment. The Board may at any time terminate
the Plan, and may at any time and from time to time and in any
respect amend the Plan; provided, however, that the Board
(unless its actions are approved or ratified by the shareholders
of the Company within twelve months of the date that the Board
amends the Plan) may not amend the Plan to:
(a) Increase the total number of shares of Stock issuable
pursuant to Incentive Stock Options, except as
contemplated in Section 5.2;
(b) Change the class of employees eligible to receive
Incentive Stock Options that may participate in the
Plan; or
(c) Otherwise materially increase the benefits accruing
to recipients of Incentive Stock Options under the
Plan.
9.2 Effect on Grantee's Rights. No termination, amendment, or
modification of the Plan shall affect adversely a Grantee's
rights under a Stock Option Agreement or Restriction Agreement
without the consent of the Grantee or his legal representative.
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<PAGE> 19
ARTICLE X
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its subsidiaries from establishing any other form of incentive or other
compensation plan for employees or Directors of the Company or any of its
subsidiaries.
ARTICLE XI
MISCELLANEOUS
11.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of the Plan, the Committee
may modify outstanding Options or Awards or accept the surrender
of outstanding Options or Awards and grant new Options or Awards
in substitution for them. However no modification of an Option
or Award shall adversely affect a Grantee's rights under a Stock
Option Agreement or Restriction Agreement without the consent of
the Grantee or his legal representative.
11.2 Forfeiture for Competition. If a Grantee provides services to a
competitor of the Company or any of its subsidiaries, whether as
an employee, officer, director, independent contractor,
consultant, agent, or otherwise, such services being of a nature
that can reasonably be expected to involve the skills and
experience used or developed by the Grantee while an employee of
the Company or subsidiary, then that Grantee's rights under any
Options outstanding hereunder shall be forfeited and terminated,
and any shares of Restricted Stock held by such Grantee subject
to remaining restrictions shall be forfeited, subject in each
case to a determination to the contrary by the Committee.
11.3 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.
11.4 Singular, Plural; Gender. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun
shall include the feminine gender.
11.5 Headings, etc., No Part of Plan. Headings of Articles and
Sections hereof are inserted for convenience and reference; they
do not constitute part of the Plan.
11.6 Interpretation. With respect to Section 16 Insiders,
transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action
by the Plan administrators fails to so comply, it shall be
deemed void to the extent permitted by law and deemed advisable
by the Plan administrators.
* * * * *
15
<PAGE> 20
Exhibit A to Professional
Transportation Group Ltd., Inc.
1996 Stock Option Plan -
Form of Stock Option Agreement
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), entered into as of this
____ day of ________, _____, by and between Professional Transportation Group
Ltd., Inc., a Georgia corporation (the "Company"), and _________________ (the
"Optionee").
WHEREAS, on February __, 1996, the Board of Directors and sole shareholder
of the Company adopted a stock option plan known as the "Professional
Transportation Group Ltd., Inc. 1996 Stock Option Plan" (the "Plan"); and
WHEREAS, the Committee has granted the Optionee a stock option to purchase
the number of shares of the Company's common stock as set forth below, and in
consideration of the granting of that stock option the Optionee intends to
remain in the employ of the Company; and
WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to such option in accordance with the Plan.
NOW, THEREFORE, as an employment incentive and to encourage stock
ownership, and also in consideration of the mutual covenants contained herein,
the parties hereto agree as follows.
1. Incorporation of Plan. This option is granted pursuant to the
provisions of the Plan and the terms and definitions of the Plan
are incorporated herein by reference and made a part hereof. A
copy of the Plan has been delivered to, and receipt is hereby
acknowledged by, the Optionee.
2. Grant of Option. Subject to the terms, restrictions,
limitations and conditions stated herein, the Company hereby
evidences its grant to the Optionee, not in lieu of salary or
other compensation, of the right and option (the "Option") to
purchase all or any part of the number of shares of the
Company's Common Stock, no par value (the "Stock"), set forth on
Schedule A attached hereto and incorporated herein by reference.
The Option shall be exercisable in the amounts and at the time
specified on Schedule A. The Option shall expire and shall not
be exercisable on the date specified on Schedule A or on such
earlier date as determined pursuant to Section 8, 9, or 10
hereof. Schedule A states whether the Option is intended to be
an Incentive Stock Option.
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<PAGE> 21
3. Purchase Price. The price per share to be paid by the Optionee
for the shares subject to this Option (the "Exercise Price")
shall be as specified on Schedule A, which price shall be an
amount not less than the Fair Market Value of a share of Stock
as of the Date of Grant (as defined in Section 11 below) if the
Option is an Incentive Stock Option.
4. Exercise Terms. The Optionee must exercise the Option for at
least the lesser of 100 shares or the number of shares of
Purchasable Stock as to which the Option remains unexercised.
In the event this Option is not exercised with respect to all or
any part of the shares subject to this Option prior to its
expiration, the shares with respect to which this Option was not
exercised shall no longer be subject to this Option.
5. Option Non-Transferable. No Option shall be transferable by an
Optionee other than by will or the laws of descent and
distribution or, in the case of non-Incentive Stock Options,
pursuant to a Qualified Domestic Relations Order, and no Option
shall be transferable by an Optionee who is a Section 16 Insider
prior to shareholder approval of the Plan. During the lifetime
of an Optionee, Options shall be exercisable only by such
Optionee (or by such Optionee's guardian or legal
representative, should one be appointed).
6. Notice of Exercise of Option. This Option may be exercised by
the Optionee, or by the Optionee's administrators, executors or
personal representatives, by a written notice (in substantially
the form of the Notice of Exercise attached hereto as Schedule
B) signed by the Optionee, or by such administrators, executors
or personal representatives, and delivered or mailed to the
Company as specified in Section 14 hereof to the attention of
the President or such other officer as the Company may
designate. Any such notice shall (a) specify the number of
shares of Stock which the Optionee or the Optionee's
administrators, executors or personal representatives, as the
case may be, then elects to purchase hereunder, (b) contain such
information as may be reasonably required pursuant to Section 12
hereof, and (c) be accompanied by (i) a certified or cashier's
check payable to the Company in payment of the total Exercise
Price applicable to such shares as provided herein, (ii) shares
of Stock owned by the Optionee and duly endorsed or accompanied
by stock transfer powers having a Fair Market Value equal to the
total Exercise Price applicable to such shares purchased
hereunder, or (iii) a certified or cashier's check accompanied
by the number of shares of Stock whose Fair Market Value when
added to the amount of the check equals the total Exercise Price
applicable to such shares purchased hereunder. Upon receipt of
any such notice and accompanying payment, and subject to the
terms hereof, the Company agrees to issue to the Optionee or the
Optionee's administrators, executors or personal
representatives, as the case may be, stock certificates for the
number of shares specified in such notice registered in the name
of the person exercising this Option.
7. Adjustment in Option. The number of shares subject to this
Option, the Exercise Price and other matters are subject to
adjustment during the term of this Option in accordance with
Section 5.2 of the Plan.
ii
<PAGE> 22
8. Termination of Employment.
(a) Except as otherwise specified in Schedule A hereto,
in the event of the termination of the Optionee's
employment with the Company or any of its
subsidiaries, other than a termination that is either
(i) for cause, (ii) voluntary on the part of the
Optionee and without written consent of the Company,
or (iii) for reasons of death or disability or
retirement, the Optionee may exercise this Option at
any time within 90 days after such termination to the
extent of the number of shares which were Purchasable
hereunder at the date of such termination.
(b) Except as specified in Schedule A attached hereto, in
the event of a termination of the Optionee's
employment that is either (i) for cause or (ii)
voluntary on the part of the Optionee and without the
written consent of the Company, this Option, to the
extent not previously exercised, shall terminate
immediately and shall not thereafter be or become
exercisable.
(c) Unless and to the extent otherwise provided in
Exhibit A hereto, in the event of the retirement of
the Optionee at the normal retirement date as
prescribed from time to time by the Company, the
Optionee shall continue to have the right to exercise
any Options for shares which were Purchasable at the
date of the Optionee's retirement (provided that, on
the date which is 90 days after the date of
retirement, the Options will become void and
unexercisable unless on the date of retirement the
Optionee enters into a noncompete agreement with
Professional Transportation Group, Ltd. and continues
to comply with such noncompete agreement). This
Option does not confer upon the Optionee any right
with respect to continuance of employment by the
Company. This Option shall not be affected by any
change of employment so long as the Optionee
continues to be an employee of the Company.
9. Disability of Optionee. In the event of termination of
employment because of the Optionee's Permanent and Total
Disability (as defined in the Plan), the Optionee (or his or her
personal representative) may exercise this Option, within a
period ending on the earlier of (a) the last day of the one year
period following the Optionee's Permanent and Total Disability
or (b) the expiration date of this Option, to the extent of the
number of shares which were Purchasable hereunder at the date of
such termination.
10. Death of Optionee. Except as otherwise set forth in Schedule A
with respect to the rights of the Optionee upon termination of
employment under Section 8(a) above, in the event of the
Optionee's death while employed by the Company or within 90 days
after a termination of such employment (if such termination was
neither (i) for cause nor (ii) voluntary on the part of the
Optionee and without the written consent of the Company), the
appropriate persons described in Section 6 hereof or persons to
whom all or a portion of this Option is transferred in
accordance with Section 5 hereof may exercise this Option at any
time within a period ending on the earlier of (a) the last day
of the one year period following
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<PAGE> 23
the Optionee's death or (b) the expiration date of this Option.
If the Optionee was an employee of the Company at the time of
death, this Option may be so exercised to the extent of the
number of shares that were Purchasable hereunder at the date of
death. If the Optionee's employment terminated prior to his or
her death, this Option may be exercised only to the extent of
the number of shares covered by this Option which were
Purchasable hereunder at the date of such termination.
11. Date of Grant. This Option was granted by the Board of
Directors of the Company on the date set forth in Schedule A
(the "Date of Grant").
12. Compliance with Regulatory Matters. The Optionee acknowledges
that the issuance of capital stock of the Company is subject to
limitations imposed by federal and state law and the Optionee
hereby agrees that the Company shall not be obligated to issue
any shares of Stock upon exercise of this Option that would
cause the Company to violate law or any rule, regulation, order
or consent decree of any regulatory authority (including without
limitation the Securities and Exchange Commission) having
jurisdiction over the affairs of the Company. The Optionee
agrees that he or she will provide the Company with such
information as is reasonably requested by the Company or its
counsel to determine whether the issuance of Stock complies with
the provisions described by this Section 12.
13. Restriction on Disposition of Shares. The shares purchased
pursuant to the exercise of an Incentive Stock Option shall not
be transferred by the Optionee except pursuant to the Optionee's
will, or the laws of descent and distribution, until such date
which is the later of two years after the grant of such
Incentive Stock Option or one year after the transfer of the
shares to the Optionee pursuant to the exercise of such
Incentive Stock Option.
14. Miscellaneous.
(a) This Agreement shall be binding upon the parties
hereto and their representatives, successors and
assigns.
(b) This Agreement is executed and delivered in, and
shall be governed by the laws of, the State of
Georgia.
(c) Any requests or notices to be given hereunder shall
be deemed given, and any elections or exercises to be
made or accomplished shall be deemed made or
accomplished, upon actual delivery thereof to the
designated recipient, or three days after deposit
thereof in the United States mail, registered, return
receipt requested and postage prepaid, addressed, if
to the Optionee, at the address set forth below and,
if to the Company, to the executive offices of the
Company at 5025 Derrick Jones Road, Suite 120,
Atlanta, GA 30349.
(d) This Agreement may not be modified except in writing
executed by each of the parties hereto.
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<PAGE> 24
IN WITNESS WHEREOF, the Board of Directors of the Company has caused this
Stock Option Agreement to be executed on behalf of the Company and the
Company's seal to be affixed hereto and attested by the Secretary or an
Assistant Secretary of the Company, and the Optionee has executed this Stock
Option Agreement under seal, all as of the day and year first above written.
PROFESSIONAL TRANSPORTATION
GROUP LTD., INC. OPTIONEE
By:
--------------------------- ------------------------------
Name: Name:
Title: Address:
ATTEST:
------------------------------
------------------------------
- ------------------------------
Secretary/Assistant Secretary
[SEAL]
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<PAGE> 25
SCHEDULE A
TO
STOCK OPTION AGREEMENT
BETWEEN
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
AND
____________________________________
Dated: __________
1. Number of Shares Subject to Option: _____________________ shares.
2. This Option (Check one) [ ] is [ ] is not an Incentive Stock Option.
3. Option Exercise Price: $_______________ per share.
4. Date of Grant: _____________________
5. Option Vesting Schedule:
Check one:
( ) Options are exercisable with respect to all shares on
or after the date hereof
( ) Options are exercisable with respect to the number of
shares indicated below on or after the date indicated
next to the number of shares:
No. of Shares Vesting Date
------------- ------------
6. Option Exercise Period:
Check One:
( ) All options expire and are void unless exercised on
or before ______________, 199__.
( ) Options expire and are void unless exercised on or before
the date indicated next to the number of shares:
No. of Shares Expiration Date
------------- ---------------
7. Effect of Termination of Employment of Optionee (if different from that
set forth in Sections 8 and 10 of the Stock Option Agreement):
vi
<PAGE> 26
SCHEDULE B
NOTICE OF EXERCISE
The undersigned hereby notifies Professional Transportation
Group Ltd., Inc. (the "Company") of this election to exercise the undersigned's
stock option to purchase _________________ shares of the Company's common
stock, no par value (the "Common Stock"), pursuant to the Stock Option
Agreement (the "Agreement") between the undersigned and the Company dated
______________ . Accompanying this Notice is (1) a certified or a cashier's
check in the amount of $_______ __ payable to the Company, and/or (2)
_______________ shares of the Company's Common Stock presently owned by the
undersigned and duly endorsed or accompanied by stock transfer powers, having
an aggregate Fair Market Value (as defined in the Professional Transportation
Group, Ltd. 1996 Stock Option Plan) as of the date hereof of
$__________________, such amounts being equal, in the aggregate, to the
purchase price per share set forth in Section 3 of the Agreement multiplied by
the number of shares being purchased hereby (in each instance subject to
appropriate adjustment pursuant to Section 5.2 of the Agreement).
IN WITNESS WHEREOF, the undersigned has set his hand and seal,
this ____ day of ____________, 199___.
OPTIONEE [OR OPTIONEE'S
ADMINISTRATOR,
EXECUTOR OR PERSONAL
REPRESENTATIVE]
______________________________________
Name:
Position (if other than Optionee):
vii
<PAGE> 1
EXHIBIT 10.6
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
DIRECTOR'S
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of __________ ___ 1997, between Professional
Transportation Group Ltd., Inc., a Georgia corporation (the "Corporation"), and
_____________________________ (the "Director").
WHEREAS, the Director is a member of the Board of Directors of the Corporation
and in such capacity is performing a valuable service to the Corporation; and
WHEREAS, the Corporation's Bylaws (the "Bylaws") provide for the
indemnification of the directors of the Corporation pursuant to Sections
14-2-850 through 14-2-856 of the Georgia Business Corporation Code, as amended
to date (the "State Statute"); and
WHEREAS, the Bylaws and State Statute specifically contemplate that contracts
may be entered into between the Corporation and the members of its Board of
Directors with respect to indemnification of such directors; and
WHEREAS, in order to provide to the Director assurances with respect to the
protection provided against liabilities that he may incur in the performance of
his duties to the Corporation, and to thereby induce the Director to serve as a
member of its Board of Directors, the Corporation has determined and agreed to
enter into this contract with the Director.
NOW, THEREFORE, in consideration of the premises and the Director's continued
service as a director after the date hereof, the parties agree as follows:
1. BOARD-AUTHORIZED INDEMNIFICATION. The Corporation hereby agrees to
hold harmless and indemnify the Director to the full extent that the State
Statute, or any amendment thereof or other statutory provision adopted after
the date hereof, authorizes such indemnification by action of the Board of
Directors without shareholder approval. Such indemnification, and the
conditions and limitations thereon set forth in the State Statute, shall not in
any respect limit, condition or otherwise restrict the indemnification set
forth in Section 2 hereof.
2. SHAREHOLDER-AUTHORIZED INDEMNIFICATION. Subject only to the
exclusions set forth in Section 3 hereof, and in addition to the indemnity
specified in Section 1 hereof (but without duplication of payments with respect
to indemnified amounts), the Corporation hereby further agrees to hold harmless
and indemnify the Director against any and all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the Director in connection with any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (including an action by
<PAGE> 2
or in the right of the Corporation), to which the Director is, was, or at any
time becomes a party, or is threatened to be made a party, by reason of the
fact that the Director is, was, or at any time becomes a director, officer,
employee or agent of the Corporation, or is or was serving or at any time
serves at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise.
3. LIMITATIONS ON SHAREHOLDER-AUTHORIZED INDEMNITY. No indemnity
pursuant to Section 2 hereof shall be paid by the Corporation:
(a) With respect to any proceeding in which the Director is
adjudged, by final judgment not subject to further appeal, liable to
the Corporation or is subjected to injunctive relief in favor of the
Corporation:
(i) for any appropriation, in violation of his duties, of
any business opportunity of the Corporation;
(ii) for acts or omissions which involve intentional
misconduct or a knowing violation of law;
(iii) for the types of liabilities set forth in Section
14-2-832 of the Georgia Business Corporation Code; or
(iv) for any transaction from which the Director received
an improper personal benefit;
(b) With respect to any suit in which final judgment is rendered
against the Director for an accounting of profits, made from the
purchase or sale by the Director of securities of the Corporation,
pursuant to the provisions of Section 16(b) of the Securities Exchange
Act of 1934 or similar provisions of any federal, state, or local
statutory law, or on account of any payment by the Director to the
Corporation in respect of any claim for such an accounting; or
(c) If a final decision by a court having jurisdiction in the
matter shall determine that such indemnification is not lawful.
4. CONTRIBUTION. If the indemnification provided in Sections 1 and 2 is
unavailable and may not be paid to the Director for any reason other than those
set forth in paragraph (a) or (b) of Section 3, then in respect of any
threatened, pending, or completed action, suit, or proceeding in which the
Corporation is jointly liable with the Director (or would be if joined in such
action, suit or proceeding), the Corporation shall contribute to the amount of
expenses, judgments, fines, and settlements paid or payable by the Director in
such proportion as is appropriate to reflect (i) the relative benefits received
by the Corporation on the one hand and the Director on the other hand from the
transaction from which such action, suit, or proceeding arose, and (ii) the
relative fault of the Corporation on the one hand and of the Director on the
other in
2
<PAGE> 3
connection with the events which resulted in such expenses, judgments, fines,
or settlement amounts, as well as any other relevant equitable considerations.
The relative fault of the Corporation on the one hand and of the Director on
the other shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information, and opportunity to correct
or prevent the circumstances resulting in such expenses, judgments, fines, or
settlement amounts. The Corporation agrees that it would not be just and
equitable if contribution pursuant to this Section 4 were determined by pro
rata allocation or any other method of allocation that does not take account of
the foregoing equitable considerations.
5. CONTINUATION OF OBLIGATIONS. All agreements and obligations of the
Corporation contained herein shall continue during the period the Director is a
director, officer, employee, or agent of the Corporation (or is serving at the
request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise)
and shall continue thereafter for so long as the Director shall be subject to
any possible claim or threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, or investigative, by reason of the fact
that the Director was a director of the Corporation or serving in any other
capacity referred to herein.
6. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by the
Director of notice of the commencement of any action, suit, or proceeding, the
Director will, if a claim in respect thereof is to be made against the
Corporation under this Agreement (other than under Section 2 hereof), notify
the Corporation of the commencement thereof, but the omission to so notify the
Corporation will not relieve the Corporation from any liability which it may
have to the Director otherwise than under this Agreement. With respect to any
such action, suit, or proceeding as to which the Director so notifies the
Corporation:
(a) The Corporation will be entitled to participate therein at its
own expense; and
(b) Subject to Section 7 hereof, and if the Director shall have
provided his written affirmation of his good faith belief that his
conduct did not constitute behavior of the kind described in paragraph
3(a) hereof and that he is entitled to indemnification hereunder, the
Corporation may assume the defense thereof.
After notice from the Corporation to the Director of its election so
to assume such defense, the Corporation will not be liable to the Director
under this Agreement for any legal or other expenses subsequently incurred by
the Director in connection with the defense thereof, other than reasonable
costs of investigation or as otherwise provided below. The Director shall have
the right to employ its separate counsel in such action, suit, or proceeding,
but the fees and expenses of such counsel incurred after notice from the
Corporation of its assumption of the defense thereof shall be at the expense of
the Director unless (i) the employment of counsel by the Director has been
authorized by the Corporation, (ii) counsel designated by the Corporation to
conduct such defense shall not be reasonably satisfactory to the Director, or
(iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of such
counsel shall be at the expense of the
3
<PAGE> 4
Corporation. For the purposes of clause (ii) above, the Director shall be
entitled to determine that counsel designated by the Corporation is not
reasonably satisfactory if, among other reasons, the Director shall have been
advised by qualified counsel that, because of actual or potential conflicts of
interest in the matter between the Director, other officers or directors
similarly indemnified by the Corporation, and/or the Corporation,
representation of the Director by counsel designated by the Corporation is
likely to materially and adversely affect the Director's interest or would not
be permissible under applicable canons of legal ethics.
The Corporation shall not be liable to indemnify the Director under
this Agreement for any amounts paid in settlement of any action or claim
effected without the Corporation's written consent. The Corporation shall not
settle any action or claim in any manner which would impose any penalty or
limitation on the Director without the Director's written consent. Neither the
Corporation nor the Director will unreasonably withhold consent to any proposed
settlement.
7. ADVANCEMENT AND REPAYMENT OF EXPENSES. Upon request therefor
accompanied by reasonably itemized evidence of expenses incurred, and by the
Director's written affirmation of his good faith belief that his conduct met
the standard applicable to Board-authorized indemnification pursuant to Section
1 hereof or did not constitute behavior of the kind described in paragraph 3(a)
hereof and that he is entitled to indemnification hereunder, the Corporation
shall advance to the Director the reasonable expenses (including attorneys'
fees and costs of investigation and defense (including the fees of expert
witnesses, other professional advisors, and private investigators)) incurred by
him in defending any civil or criminal suit, action, or proceeding for which
the Director is entitled (assuming an applicable standard of conduct is met) to
indemnification pursuant to this Agreement. The Director agrees to reimburse
the Corporation for all reasonable expenses paid by the Corporation, whether
pursuant to this Section or Section 6 hereof, in defending any action, suit, or
proceeding against the Director in the event and to the extent that it shall
ultimately be determined that the Director is not entitled to be indemnified by
the Corporation for such expenses under either Section 1 or Section 2 of this
Agreement. Any advances and the Director's agreement to repay shall be
unsecured and interest-free.
8. AGREEMENT TO SERVE. The Director hereby agrees to continue to serve
as a director of the Corporation faithfully and to the best of his ability so
long as he is duly elected and qualified in accordance with the provisions of
the Corporation's bylaws or until such time as he tenders his resignation in
writing.
9. ENFORCEMENT
(a) The Corporation expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it
hereby in order to induce the Director to serve as a director of the
Corporation and acknowledges that the Director will in the future be
relying upon this Agreement in continuing to serve in such capacity.
4
<PAGE> 5
(b) In the event the Director is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is
successful in such action, the Corporation shall reimburse the
Director for all of the Director's reasonable fees and expenses in
bringing and pursuing such action.
10. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable in whole or in part for any
reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
11. VESTED RIGHTS, SPECIFIC PERFORMANCE. No amendment to the articles of
incorporation or bylaws of the Corporation or any other corporate action shall
in any way limit the Director's rights under this Agreement. In any proceeding
brought by or on behalf of the Director to specifically enforce the provisions
of this Agreement, the Corporation hereby waives the claim or defense therein
that the plaintiff or claimant has an adequate remedy at law, and the
Corporation shall not urge in any such proceeding the claim or defense that
such remedy at law exists. The provisions of this Section 11, however, shall
not prevent the Director from seeking a remedy at law in connection with any
breach of this Agreement.
12. LIABILITY INSURANCE. In the event that the Corporation maintains an
insurance policy or policies providing Directors' or Officers' liability
insurance, the Director shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
provided under such policy or policies in effect. Copies of all correspondence
between the Corporation and the company or companies providing such insurance
shall be promptly delivered to the Director by the Corporation.
13. NON-EXCLUSIVITY, ETC. The rights of the Director hereunder shall be
in addition to any other rights with respect to indemnification, advancement of
expenses or otherwise that the Director may have under the Corporation's bylaws
or the Georgia Business Corporation Code or otherwise.
14. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the Director, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Corporation effectively to
bring suit to enforce such rights.
15. NO DUPLICATION OF PAYMENTS. The Corporation shall not be liable under
this Agreement to make any payment to the Director hereunder to the extent the
Director has otherwise actually received payment (under insurance policy, bylaw
or otherwise) of the amounts otherwise payable hereunder.
16. APPLICABILITY OF AGREEMENT. This Agreement shall apply only with
respect to acts or omissions of the Director occurring on or after the
effective date hereof, and this Agreement
5
<PAGE> 6
shall continue in effect regardless of whether the Director continues to serve
as a Director, but only in respect of acts or omissions occurring prior to the
termination of the Director's service as a Director.
17. GOVERNING LAW; SUCCESSORS; AMENDMENT AND TERMINATION.
(a) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Georgia.
(b) This Agreement shall be binding upon the Director and the
Corporation and its successors and assigns (including any transferee
of all or substantially all of its assets and any successor by merger
or otherwise by operation of law), and shall inure to the benefit of
the Director, his heirs, personal representatives, and assigns and to
the benefit of the Corporation and its successors and assigns.
(c) No amendment, modification, termination, or cancellation of
this Agreement shall be effective unless in writing signed by both
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
DIRECTOR PROFESSIONAL TRANSPORTATION
GROUP LTD., INC.
- ------------------------- By:
Name: -------------------------------------
Dennis A. Bakal,
President and Chief Executive Officer
6
<PAGE> 1
EXHIBIT 10.7
FEC Contract No. __________
TRANSPORTATION AGREEMENT
This Agreement made the 19th day of November, 1995, between
FEDERAL EXPRESS CORPORATION ("FedEx") and TIMELY TRANSPORTATION,
INC. ("Carrier").
RECITALS
1. Carrier owns or controls motor vehicles, and is ready, willing
and able to operate the vehicles for cargo transportation services in
conjunction with FedEx's express package delivery business.
2. FedEx desires to hire the Carrier to perform services for
FedEx in accordance with the terms and subject to the conditions of
this Agreement.
For and in consideration of the mutual covenants contained in this
Agreement, Carrier and FedEx agree as follows:
Section 1. Transportation Services. (a) FedEx will tender cargo to
Carrier from time to time during the term of this Agreement for transportation
by Carrier (the "Services") on the routes and Lanes listed on EXHIBIT A attached
(collectively, the "Lanes") excluding any Lanes and/or routes listed on SCHEDULE
A-1 attached. Cargo tendered shall be accompanied by FedEx's Uniform Straight
Bill of Lading, substantially in the form of EXHIBIT B or FedEx's Vendor's
Uniform Straight Bill of Lading (the "Bill of Lading"). Carrier will give FedEx
******************************************************** for the transportation
of FedEx's cargo. Nothing in this Agreement shall preclude FedEx from using the
services of other contractors in the event Carrier is unable or unwilling, for
any reason, to perform the Services for the Lanes. Additionally, nothing in this
Agreement shall preclude FedEx from performing the Services itself or having the
Services performed by a wholly-owned subsidiary or affiliate of FedEx at any
time during the Term of this Agreement and FedEx may perform all or part of the
Services itself or have all or part of the Services performed by a wholly owned
subsidiary or affiliate of FedEx at any time during the Term of this Agreement
without any liability or obligation to Carrier of any kind. Carrier's service
shall be provided at its own expense and under its entire control as an
independent contractor.
(b) Carrier shall utilize serviceable equipment and vehicles maintained
in good and legal operating condition in order to perform the Services. Carrier
shall at all times be responsible for and pay all costs and expenses necessary
or incidental to the maintenance and operation of the equipment and vehicles,
including the cost of fuel, supplies, licenses, permits and tolls. Carrier shall
have exclusive control and direction of the equipment and vehicles used in the
performance of Services pursuant to this Agreement. When transporting
25449
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 2
2
FedEx's cargo, Carrier shall devote its vehicle to the exclusive use of FedEx.
Additionally, unless otherwise agreed by FedEx, all rollers and locking devices
utilized by carrier in performing the Services shall be at all times in
accordance with the specifications contained in SCHEDULE A-2 attached.
(c) Carrier, at its sole cost and expense, shall procure and maintain
all licenses and permits required by local, state, or federal authorities for
the performance of the Services and shall file and maintain appropriate tariffs
required by any applicable jurisdiction. Carrier shall comply with all
applicable laws, ordinances, codes, rules and regulations in performing the
Services, including those of the Interstate Commerce Commission or any successor
entity to the Interstate Commerce Commission (the Interstate Commerce commission
or any successor entity to the Interstate Commerce Commission is referred to as
the "I.C.C."). A copy of Carrier's I.C.C. Permit is attached as EXHIBIT C.
(d) Carrier's drivers shall be properly licensed and qualified for the
operation of Carrier's vehicles and the performance of the Services.
(e) Carrier shall protect and preserve FedEx's cargo and shall
transport all cargo with prompt and reasonable dispatch in accordance with
scheduled delivery requirements of FedEx. Carrier will train its drivers in the
proper handling of FedEx's cargo (including hazardous materials when shipped in
accordance with the provisions of the International Airline Transportation
Association) ("IATA") from the point of origin to the point of delivery,
including the loading and unloading of the vehicles.
(f) Carrier will meet with representatives of FedEx on a quarterly
basis and any other time at FedEx's request to discuss the transportation
requirements of FedEx, which meetings may be in person or via telephone.
(g) Carrier and FedEx acknowledge and agree that these Services are
designed to meet the distinct needs of FedEx.
(h) Except as otherwise provided in this Agreement, in the event FedEx
tenders cargo to any other carrier ("Third Party Carrier") during the term of
this Agreement for the performance of Services on the Lanes, then upon the
written request of Carrier, FedEx ********************************************
************************ for the performance by such Third Party Carrier of the
Services on the Lane. The foregoing shall not apply, however, in any instance
where Carrier is unable or unwilling to perform any services on the Lanes in
accordance with the requirements of FedEx or in any instance where FedEx itself
or any wholly-owned subsidiary or affiliate of FedEx performs such Services on
the Lanes.
(i) Carrier agrees to maintain a service level of ********************
at all times during the Term of this Agreement in connection with its
performance of the Services and in accordance with the service requirements set
forth in EXHIBIT D.
25449
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<PAGE> 3
3
(j) Notwithstanding any other provision of this Agreement, FedEx may
terminate this Agreement at any time and without penalty or other charge as to
any Lane(s) or route(s) on which FedEx no longer requires any services to be
performed due to FedEx's not providing Service on such Lane(s) or route(s). Any
termination under this Section 1(j) shall be effective thirty (30) days
following Carrier's receipt of written notice from FedEx.
Section 2. Compensation and Invoices. (a) FedEx will pay the Carrier
fees (the "Fees") for its performance of the Services in accordance with the
rates set forth in EXHIBIT A. Carrier shall take such steps as are required by
applicable law and the I.C.C. to ensure such rates are lawful. Unless otherwise
agreed by FedEx and Carrier, Carrier will invoice FedEx upon completion of
Carrier's performance of Services and each invoice will reference the applicable
Bill(s) of Lading and be accompanied by any other documentation as may be
requested by FedEx for its proper review of carrier's invoice. Invoices will be
due and payable within thirty (30) days of receipt by FedEx, unless otherwise
required by applicable law. FedEx shall have no obligation to Carrier for any
Fees for any Services which are not invoiced to FedEx by Carrier within ninety
(90) days of Carrier's completion of such services.
(b) The rates set forth in EXHIBIT A (the "Rates") shall be subject to
change in accordance with the fuel index set forth in SCHEDULE A-3 attached (the
"Fuel Index"). The Rates shall be automatically increased or decreased, as the
case may be, in accordance with the Fuel Index and each invoice submitted to
FedEx shall be based on the applicable Rates in effect at the time of
performance of the applicable Services. All miles used in calculating the Rates
are Household Goods tariff miles as filed with the I.C.C. and the Rates are
based on such Household Goods tariff miles.
(c) Except as provided in Section 2(b), the Rates shall
remain in effect until ************. At any time after **************, Carrier
may adjust the Rates by an amount equal to ***********************************
******************************************. Carrier shall provide notice of its
request to adjust the Rates in writing to FedEx which notice shall include
written proof reasonably satisfactory to FedEx to demonstrate *****************
*********************************** **************************. The Rates shall
not be adjusted by an amount greater than **********************************
********************************************************************. Any such
adjusted Rates shall remain in effect for the remainder of the Term.
(d) Notwithstanding the foregoing, and subject in all cases to the
provisions of Section 15, in the event Carrier fails to meet the delivery time
commitments required by FedEx in connection with any Services and (i) if such
failure is caused by any action or inaction of Carrier or Carrier's employees,
agents or subcontractors, and (ii) if such failure causes a FedEx service
failure or in any way affects the operations of FedEx, then Carrier shall refund
to FedEx any and all Fees paid by FedEx to Carrier for such Services by no later
than
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<PAGE> 4
4
thirty (30) days following the request of FedEx for such refund, which request
shall be accompanied by documentation evidencing such failure. Additionally, in
the event Carrier does not refund to FedEx any such Fees within such thirty (30)
day period, then FedEx may deduct from, and set-off against, any Fees payable to
Carrier an amount equal to the amount of any such refund to which FedEx is
entitled pursuant to this Section 2(d). Upon the request of Carrier, FedEx
agrees to review with Carrier any Services which FedEx claims this Section 2(d)
applies to in order to determine the actual cause of any failure in Services and
whether this Section 2(d) should be applicable.
(e) The Rates include the amount of any present or future sales, use,
excise or other similar tax applicable to the performance of the Services
("Tax"), and FedEx shall have no responsibility for the payment of any such Tax.
Section 3. Right of Audit. Carrier shall keep full and accurate records
and documentation to substantiate the amounts claimed in any invoice, which
records shall be made available to FedEx at all reasonable times. In addition,
Carrier's records related to this Agreement shall be open to audit by FedEx or
any authorized representative of FedEx during the Term of this Agreement and
until two (2) years after the termination of this Agreement.
Section 4. Right to Withhold Payments. In addition to its right to
withhold payments under Section 2, FedEx may withhold any payment of any invoice
in whole or part to protect itself from (i) defective or unsatisfactory
performance of the Services by Carrier, (ii) third-party claims filed or
reasonable evidence indicating probable filing of third-party claims arising
from Carrier's performance of the Services, or (iii) evidence of fraud,
overbilling or overpayment discovered upon audit, but only to the extent of such
fraud, overbilling or overpayment. FedEx shall provide Carrier with written
notice as to the reason or reasons that any payment of Fees due under this
Agreement is withheld by FedEx.
Section 5. Term. (a) The term of this Agreement (the "Term") shall
commence on November 19, 1995, and continue for thirty-six (36) months
thereafter. Notwithstanding the foregoing, if either party shall be required to
cease and desist from the performance of Services or other obligations set forth
in this Agreement by reason of any provision of law, order of any court,
commission, or other public authority, either party shall have the right to
terminate this Agreement immediately upon written notice to the other party.
(b) Notwithstanding the foregoing or any other provision of this
Agreement, FedEx shall be permitted to terminate this Agreement at any time and
for any reason upon thirty (30) days prior written notice to Carrier and upon
payment of the Termination Charge (as defined below). The Termination Charge
shall equal the product of the Average Monthly Fee (as defined below) and the
Termination Factor (as defined below). The "Average Monthly Fee" shall equal
********************************************************* under this Agreement
********************************************************************* of this
Agreement. The "Termination Factor" shall equal the
25449
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<PAGE> 5
5
following numbers determined by the termination date of the
Agreement:
<TABLE>
<CAPTION>
Contract Year During
Which Termination Occurs Termination Factor
------------------------ ------------------
<S> <C>
1 3
2 2
3 1
</TABLE>
Section 6. Carrier's Indemnification. Carrier shall indemnify, defend
and hold harmless FedEx, its officers, directors and employees from and against
any and all claims, actions, losses, damages, expenses, judgments and costs
(including reasonable attorneys' fees and costs) resulting from or arising out
of Carrier's performance of the Services including, but not limited to:
(i) any negligent act or omission or obligation of
Carrier resulting in any claim, action or suit
brought for the recovery of taxes, indemnities,
losses or payments including, but not limited to,
any claim, action or suit arising under the tax,
labor or social security laws of any federal, state
or local taxing authority together with all
penalties, fines or interest thereon imposed or
levied by any federal, state or local taxing
authority;
(ii) any claim, demand, liability, tax, or judicial or
administrative investigation or proceeding
(i) arising from any act, omission, or obligation
of carrier or anyone hired, employed by, or
associated or affiliated with Carrier, or
(ii) arising in any way with respect to Carrier's
performance of the Services including, but not
limited to, any claim, action, demand, damages,
losses and costs related to any loss of, damage to
or destruction of property and vehicles, or from
the death of or injury to any person, but only to
the extent not arising from the willful misconduct
or negligence of FedEx; and
(iii) any and all claims, damages, fines, penalties, or any
consequences arising out of its breach of warranty or
failure to abide by the terms of this Agreement.
Section 7. Insurance. (a) Carrier shall maintain and furnish to
FedEx certificates evidencing the types of insurance coverage and endorsements
specified in EXHIBIT E. Such insurance shall be written by insurance companies
licensed to do business in the states where the Services are performed, shall be
in form and substance satisfactory to FedEx, and shall provide that insurance
will not be subject to cancellation, termination, or change except after thirty
(30) days' written notice to FedEx.
<PAGE> 6
6
(b) The Carrier warrants to FedEx that the Carrier has not done and
will not do anything which would cause the insurance policy or policies carried
by the Carrier to be suspended, impaired, canceled or otherwise adversely
affected.
(c) The Carrier shall supply to FedEx certificates of insurance
evidencing the coverage required herein immediately upon execution of this
Agreement by the Carrier, and prior to providing any Services and copies of all
applicable insurance policies upon demand by FedEx within ten (10) business days
of request by FedEx.
Section 8. Claims and Liability Standards. (a) Carrier shall assume all
risk of loss and liability in the transportation of any goods for FedEx from the
time of Carrier's receipt of such goods from FedEx until proper delivery of the
same has been made. All claims will be filed and resolved in accordance with the
provisions of 49 CFR ss.1005, including the I.C.C.'s order of 04/18/72 regarding
"Twenty-Two Questions and Answers" in Ex Parte No. 263. All liability standards
and burdens of proof will be governed by the common law applicable to common
carriers and by the provisions of 49 U.S.C. ss.ss.11707 and 10730 (the Carmack
Amendment).
(b) Subject to the limitations set forth in this Section 8(b), Carrier
will be liable for the full actual loss incurred in connection with any services
provided by Carrier unless FedEx declares a lesser value in writing on the
applicable Bill of Lading. The loss shall be calculated based on the destination
market value, and not on the "depreciated value" of the goods lost or damaged.
Notwithstanding the foregoing, Carrier's liability pursuant to this Section 8(b)
shall not exceed ****************
*********.
(c) If FedEx cannot determine which of FedEx's cargo was on a
particular vehicle or is unable to prove the actual value of the cargo which was
lost or damaged, the value of such cargo is hereby stipulated between the
parties *********************************, not to exceed **********************
**************************.
Section 9. Events of Default. (a) If any one or more of the following
events of default (herein "Events of Default") shall occur, then this Agreement
may, at the option of the party not in default, be immediately terminated in
whole or in part, although such termination shall not be deemed an election of
remedies:
(i) if either party shall default in the performance of
any of its obligations contained in this Agreement;
(ii) if either party shall file a voluntary petition in
bankruptcy, or shall be adjudicated bankrupt or
insolvent, or shall file any petition or answer
seeking reorganization, composition, readjustment,
liquidation or similar relief for itself under any
present or future statutes, laws or regulations, or
shall seek or consent or acquiesce in the
appointment of any trustee, or shall make any
general assignment for the benefit of it's
creditors, or shall admit in writing its inability
to pay its debts generally as they become due;
25449
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 7
7
if a petition shall be filed against either party
seeking any reorganization, composition,
readjustment, liquidation or similar relief under any
present or future statute, law or regulation, and the
same shall remain undismissed or unstayed for an
aggregate of sixty (60) days (whether or not
consecutive) or if any trustee, receiver or
liquidator of any party is appointed, which
appointment shall remain unvacated or unstayed from
an aggregate of sixty (60) days (whether or not
consecutive); or
(iii) if any representation or warranty made by either
party herein or made in any statement or certificate
furnished or required hereunder, or in connection
with this Agreement proves untrue in any material
respect as of the date of the issuance or making
thereof.
(b) Upon the occurrence of an Event of Default, the non-defaulting
party shall have such further remedies against the defaulting party as may be
available to it at law or in equity. In addition to any other remedies available
to the non-defaulting party, upon the occurrence of any Event of Default, the
non-defaulting party may terminate one (1) or more Lanes.
Section 10. Change in Control. In addition to such other rights as
FedEx may have, FedEx shall have the right to immediately terminate this
Agreement upon any change (i) in the ownership or voting control of fifty-one
(51%) or more of the capital stock or assets of Carrier, if a corporation, or
(ii) in the ownership of Carrier or its assets, if not a corporation. Carrier
shall notify FedEx in writing at least thirty (30) days before any such change
in control of the capital stock, business, or assets of Carrier.
Section 11. Safety, Order and Security. Carrier shall enforce strict
discipline and good order among its employees, and shall take all necessary
precautions in the performance of the Services to insure the safety of all
persons and property. Carrier will, at FedEx's request and subject to applicable
laws, cooperate with FedEx in the investigation of any of Carrier's employees
suspected of theft or other wrongdoing with respect to FedEx, its employees, its
property and/or the Services. Additionally, Carrier shall permit FedEx or its
representatives to interview Carrier's employees and, if requested by FedEx,
Carrier will permit FedEx access to Carrier's facilities, so that FedEx may
investigate any suspected theft or other wrong doing with respect to the
services and conduct the aforementioned interviews.
Section 12. Compliance With Laws. (a) Carrier agrees that it will
comply with all applicable federal, state and local laws, regulations and codes
in the performance of the services under this Agreement including, but not
limited to, all rules and regulations of the I.C.C.
To the extent applicable to the Carrier, it agrees to comply
with the affirmative action requirements applicable to contracts with
<PAGE> 8
8
government contractors as set forth in Title 41 of the Code of Federal
Regulations.
(b) Carrier hereby agrees to employ only persons who are legally
authorized to work in the United States and to have an I-9 employment
authorization form if required, for each person employed by it.
(c) Carrier further agrees to indemnify, defend and hold harmless
FedEx, its officers, directors and employees from and against all claims,
liabilities, losses and expenses (including reasonable attorneys' fees) arising
in connection with Carrier's failure to comply with the provisions of this
Section.
Section 13. Independent Contractor Relationship. The parties intend
that an independent contractor relationship will be created by this Agreement.
FedEx is interested only in the results of Carrier's Services and shall not
exercise any control over the conduct or supervision of the Services or the
means of its performance. Carrier shall have full responsibility for the payment
of all federal, state and local taxes and contributions, including penalties and
interest, imposed pursuant to unemployment insurance, social security, income
tax, workers' compensation or any other similar statute, and Carrier shall be
solely responsible for any liability to third parties resulting from the
negligent or intentional acts or omissions of Carrier, its agents, employees or
subcontractors arising from or occurring in the course of the Services.
Section 14. Disclosure of Information. Carrier acknowledges that
certain of FedEx's valuable, confidential and proprietary information may come
into Carrier's possession. Accordingly, Carrier agrees that all such information
furnished to Carrier by FedEx shall remain the exclusive property of FedEx, and
agrees to hold all information it obtains from or about FedEx in strictest
confidence, not to use such information other than for the performance of the
Services, and to cause any of its employees or subcontractors to whom such
information is transmitted to be bound to the same obligation of confidentiality
to which Carrier is bound. Carrier shall not communicate FedEx's information in
any form to any third party without FedEx's prior written consent. In the event
of any violation of this provision, FedEx shall be entitled to preliminary and
permanent injunctive relief as well as an equitable accounting of all profits or
benefits arising out of such violation, which remedy shall be in addition to any
other rights or remedies to which FedEx may be entitled.
Section 15. Excusable Delay. (a) Neither party shall be responsible to
the other party for any excusable delay or failure ("Excusable Delay") in the
performance of its respective duties under this Agreement. An Excusable Delay
shall be deemed to have occurred if a party's delay or failure in performance is
due to causes beyond its respective reasonable control and not occasioned by its
respective intentional acts or negligence including, but not limited to, acts of
God, partial or complete destruction of equipment, court actions and orders,
acts of public enemies, acts of any kind of the governments of the United
States, war, natural disaster, severe
<PAGE> 9
9
inclement weather, insurrection or riots, civil commotion, fire, floods,
plagues, epidemics or any other such acts; provided, however, that none of the
foregoing shall be considered an Excusable Delay if the cause of any such delay
can be cured in any legal way, including the payment of money and provided that
strikes, lock-outs and non-availability of labor will not be Excusable Delays.
Both parties shall use their best efforts to inform the other by written notice
in the event of the occurrence of an Excusable Delay.
Section 16. Subcontractors. Except as expressly provided in this
Section 16, Carrier shall not cause or permit any shipment tendered hereunder to
be transported by any other motor carrier or by railroad or other modes of
transportation. Carrier may have any of the Services performed by Subcontractors
subject to the prior written approval of FedEx, which approval shall not be
unreasonably withheld. Nothing in this Agreement or otherwise shall create any
contractual relationship between FedEx and any Subcontractor and no subcontract
entered into relating to any part of Carrier's obligations hereunder shall
relieve Carrier of its obligations to FedEx hereunder, it being agreed that
Carrier shall be primarily liable to FedEx for the performance of its
obligations hereunder regardless of whether Carrier elects to have any portion
of such obligations performed by a Subcontractor. Carrier's obligation to pay
its Subcontractors is an independent obligation from FedEx's obligation to pay
Carrier, and FedEx shall have no obligation to pay or to see to the payment of
any monies to any Subcontractor. Further, FedEx's withholding of payments in
accordance with this Agreement shall not be grounds for Carrier to withhold
payments properly due its Subcontractors. It is a condition of this Agreement
that all Subcontract Services shall be performed in compliance with the
requirements of this Agreement, the I.C.C. and any other regulatory agency or
governmental body having jurisdiction over such Subcontract Service.
Section 17. Miscellaneous. (a) Assignment. This Agreement shall inure
to the benefit of and be binding upon each of the parties and their respective
successors and assigns, but neither the rights nor the duties of either party
under this Agreement may be voluntarily assigned or delegated without the prior
written consent of the other party, except that FedEx may assign all or any part
of its rights and delegate its duties under this Agreement to a wholly-owned
subsidiary.
(b) Section Headings. All section headings and captions used in this
Agreement are purely for convenience and shall not affect the interpretation of
this Agreement.
(c) Exhibits. All exhibits described in this Agreement shall be deemed
to be incorporated in and made a part of this Agreement, except that if there is
any inconsistency between this Agreement and the provisions of any exhibit the
provisions of this Agreement shall control. Terms used in an exhibit and also
used in this Agreement shall have the same meaning in the exhibit as in this
Agreement.
(d) Applicable Law. This Agreement shall be governed by and interpreted
in accordance with the laws of Tennessee, and the parties
<PAGE> 10
10
submit to the jurisdiction of any appropriate court within Tennessee for
adjudication of disputes arising from this Agreement.
(e) Modification. Except as otherwise provided, this Agreement shall
not be modified except by written agreement signed on behalf of FedEx and the
Carrier by their respective authorized officers.
(f) Exclusive Agreement. Except as provided below, this Agreement
supersedes all prior understandings, representations, negotiations and
correspondence between the parties, constitutes the entire agreement between
them with respect to the matters described, and shall not be modified or
affected by any course of dealing, course of performance or usage of trade. It
is acknowledged by the parties, however, that this Agreement applies only to
FedEx's revenue producing cargo and does not apply to FedEx's non-revenue
producing cargo. Accordingly, this Agreement does not supersede any prior
agreement between the parties as to non-revenue producing cargo, if any such
agreement is in effect.
(g) Severability. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired.
(h) Waiver. The failure of either party at any time to require
performance by the other of any provision of this Agreement shall in no way
affect that party's right to enforce such provision, nor shall the waiver by
either party of any breach of any provision of this Agreement be taken or held
to be a waiver of any further breach of the same provision or any other
provision.
(i) Survival. The provisions of this Agreement which by their nature
extend beyond the expiration or earlier termination of the Agreement will
survive and remain in effect until all obligations are satisfied. Specifically,
the carrier's obligations to indemnify FedEx and the provisions of Section 8
shall survive this Agreement.
(j) Disclosure. The Carrier shall in each instance obtain the prior
written approval of FedEx concerning exact text and timing of news releases,
articles, brochures, advertisements, prepared speeches and other information
releases concerning this Agreement.
(k) Further Assurances. Each party agrees that it will take such
actions, provide such documents, do such things and provide such further
assurances as may reasonably be requested by the other party during the term of
this Agreement. Carrier agrees to provide to FedEx, from time to time, such
financial information as FedEx may reasonably request to determine Carrier's
ability to perform its obligations under this Agreement and Carrier shall
provide FedEx with audited financial statements of Carrier within ninety (90)
days of the end of Carrier's fiscal year, for each fiscal year during the Term
of this Agreement.
<PAGE> 11
11
(l) Counterparts. This Agreement may be executed in any number of
counterparts and each fully executed counterpart shall be deemed an original.
(m) Notices. All notices, approvals, requests, consents and other
communications given pursuant to this Agreement shall be in writing and shall be
effective when received if hand-delivered, sent by facsimile, sent by Federal
Express service or sent by United States certified or registered mail, addressed
as follows:
If to FedEx via U.S. Mail: Federal Express Corporation
P.O. Box 727 - Comat 2848
Memphis, Tennessee 38194
Attention: Manager
or via FedEx: Federal Express Corporation
Contract Carrier Administration
and Planning
2813 Business Park, Building I
Memphis, Tennessee 38118-2848
Attention: Manager
If to Carrier: Timely Transportation, Inc.
100 Galleria Pkwy N.W. #115
Atlanta, GA 30339
Attn: Dennis Bakal
(n) No Lien. Carrier shall no lien on any cargo tendered to Carrier
under this Agreement.
Section 18. Validity of Agreement. This Agreement shall not
be valid nor binding upon FedEx unless it shall have been executed
by an officer of FedEx.
IN WITNESS WHEREOF, the parties have made and executed this Agreement
as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By:/s/ Clifford Hardt
---------------------------------
Title:V.P. AGT&T
------------------------------
("FedEx")
TIMELY TRANSPORTATION, INC.
By:/s/ William Kelly
---------------------------------
Title: V.P. Transportation
------------------------------
("Carrier")
<PAGE> 12
12/04/95 FEDERAL EXPRESS CORPORATION PAGE 1
TRUCKLOAD SCHEDULE OF RATES AND CHARGES
CTV Roller Deck
<TABLE>
<CAPTION>
TIMELY TRANSPORTATION INC ROUND
TRIP
TRANSIT MIN ROUND
HHG TIME CHARGE TRIP RATE/MILE
Lane MILES (HOURS) ($/LOAD) SCHEDULE AD HOC
- ---- ----- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
* 145 3.2 * * *
* 624 13.9 * * *
* 1,144 25.4 * * *
* 1,225 27.2 * * *
* 1,250 27.8 * * *
* 306 6.8 * * *
* 647 14.4 * * *
* 436 9.7 * * *
* 1,048 23.3 * * *
* 253 5.6 * * *
* 449 10.0 * * *
* 145 3.2 * * *
* 326 7.2 * * *
* 624 13.9 * * *
* 306 6.8 * * *
* 647 14.4 * * *
* 436 9.7 * * *
* 253 5.6 * * *
* 449 10.0 * * *
* 243 5.4 * * *
* 679 15.1 * * *
* 476 10.6 * * *
* 813 18.1 * * *
* 838 18.6 * * *
* 287 6.4 * * *
* 153 3.4 * * *
* 209 4.6 * * *
* 380 8.4 * * *
* 243 5.4 * * *
* 679 15.1 * * *
* 476 10.6 * * *
* 1,221 27.1 * * *
* 809 18.0 * * *
* 1,225 27.2 * * *
* 909 20.2 * * *
* 1,048 23.3 * * *
* 813 18.1 * * *
* 1,250 27.8 * * *
* 287 6.4 * * *
</TABLE>
Report P6a Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 13
12/04/95 FEDERAL EXPRESS CORPORATION PAGE 2
TRUCKLOAD SCHEDULE OF RATES AND CHARGES
CTV Roller Deck
<TABLE>
<CAPTION>
TIMELY TRANSPORTATION INC ROUND
TRIP
TRANSIT MIN ROUND
HHG TIME CHARGE TRIP RATE/MILE
Lane MILES (HOURS) ($/LOAD) SCHEDULE AD HOC
- ---- ----- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
* 209 4.6 * * *
* 380 8.4 * * *
</TABLE>
Report P6a Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 14
11/07/95 Federal Express Corporation Page 1
Truckload Schedule of Rates and Charges
Bulk Dry Van
<TABLE>
<CAPTION>
TIMELY TRANSPORTATION INC TRANSIT MIN
HHG TIME CHARGE ONE WAY RATE/MILE
Lane MILES (HOURS) ($/LOAD) SCHED AD HOC
- ---- ----- ------- -------- ----- ------
<S> <C> <C> <C> <C> <C>
* 624 13.9 * * *
* 1,144 25.4 * * *
* 1,225 27.2 * * *
* 306 6.8 * * *
* 306 6.8 * * *
* 647 14.4 * * *
* 436 9.7 * * *
* 1,048 23.3 * * *
* 253 5.6 * * *
* 449 10.0 * * *
* 145 3.2 * * *
* 326 7.2 * * *
* 624 13.9 * * *
* 306 6.8 * * *
* 647 14.4 * * *
* 436 9.7 * * *
* 253 5.6 * * *
* 449 10.0 * * *
* 243 5.4 * * *
* 679 15.1 * * *
* 476 10.6 * * *
* 813 18.1 * * *
* 838 18.6 * * *
* 287 6.4 * * *
* 153 3.4 * * *
* 209 4.6 * * *
* 380 8.4 * * *
* 243 5.4 * * *
* 1,334 29.6 * * *
* 679 15.1 * * *
* 400 8.9 * * *
* 476 10.6 * * *
* 1,221 27.1 * * *
* 809 18.0 * * *
* 1,225 27.2 * * *
* 909 20.2 * * *
* 1,048 23.3 * * *
* 1,100 24.4 * * *
* 813 18.1 * * *
* 1,250 27.8 * * *
</TABLE>
Report P6a Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 15
11/07/95 Federal Express Corporation Page 2
Truckload Schedule of Rates and Charges
Bulk Dry Van
<TABLE>
<CAPTION>
TIMELY TRANSPORTATION INC TRANSIT MIN
HHG TIME CHARGE ONE WAY RATE/MILE
Lane MILES (HOURS) ($/LOAD) SCHED AD HOC
- ---- ----- ------- -------- ----- ------
<S> <C> <C> <C> <C> <C>
* 838 18.6 * * *
* 1,098 24.4 * * *
* 782 17.4 * * *
* 921 20.5 * * *
* 794 17.6 * * *
* 1,145 25.4 * * *
* 287 6.4 * * *
* 380 8.4 * * *
* 1,172 26.0 * * *
* 788 17.5 * * *
</TABLE>
Report P6a Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 16
11/06/95 Federal Express Corporation
Truckload Schedule of Rates and Charges
Accessorial Charges
TIMELY TRANSPORTATION INC
<TABLE>
<CAPTION>
ACCESSORIAL UNIT CHARGE
CHARGE DESCRIPTION $/UNIT
- ------------------------------ --------------- ------------------
<S> <C> <C>
Stop-Off Stop *
Inter-City Load *
Trailer Staging/Detention Hour *
Cancellation of Load Load *
Layover Day *
Positioning Mile *
Dead Head Mile *
Deadhead Miles Per Mile *
</TABLE>
Report P6b Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 17
11/07/95 FEDEX STRATEGIC CONTRACT CORE CARRIER PROGRAM PAGE 1
Bulk Dry Van State-to-State Rate Summary
TIMELY TRANSPORTATION INC
<TABLE>
<CAPTION>
DESTINATION
--------------------------------------------------------------------------------------------------------
ORIGIN AL AZ AR CA CO CT DC DE FL GA ID IL IN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL * * * * * * * * * * * * *
AZ * * * * * * * * * * * * *
AR * * * * * * * * * * * * *
CA * * * * * * * * * * * * *
CO * * * * * * * * * * * * *
CT * * * * * * * * * * * * *
DC * * * * * * * * * * * * *
DE * * * * * * * * * * * * *
FL * * * * * * * * * * * * *
GA * * * * * * * * * * * * *
ID * * * * * * * * * * * * *
IL * * * * * * * * * * * * *
IN * * * * * * * * * * * * *
IA * * * * * * * * * * * * *
KS * * * * * * * * * * * * *
KY * * * * * * * * * * * * *
LA * * * * * * * * * * * * *
ME * * * * * * * * * * * * *
MD * * * * * * * * * * * * *
MA * * * * * * * * * * * * *
MI * * * * * * * * * * * * *
MN * * * * * * * * * * * * *
MS * * * * * * * * * * * * *
MO * * * * * * * * * * * * *
MT * * * * * * * * * * * * *
NE * * * * * * * * * * * * *
NH * * * * * * * * * * * * *
NJ * * * * * * * * * * * * *
NM * * * * * * * * * * * * *
NY * * * * * * * * * * * * *
NV * * * * * * * * * * * * *
NC * * * * * * * * * * * * *
ND * * * * * * * * * * * * *
OH * * * * * * * * * * * * *
OK * * * * * * * * * * * * *
OR * * * * * * * * * * * * *
PA * * * * * * * * * * * * *
RI * * * * * * * * * * * * *
SC * * * * * * * * * * * * *
SD * * * * * * * * * * * * *
TN * * * * * * * * * * * * *
TX * * * * * * * * * * * * *
UT * * * * * * * * * * * * *
VT * * * * * * * * * * * * *
VA * * * * * * * * * * * * *
WA * * * * * * * * * * * * *
WV * * * * * * * * * * * * *
WI * * * * * * * * * * * * *
WY * * * * * * * * * * * * *
</TABLE>
Report State 1 Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 18
11/07/95 FEDEX STRATEGIC CONTRACT CORE CARRIER PROGRAM PAGE 2
Bulk Dry Van State-to-State Rate Summary
TIMELY TRANSPORTATION INC
<TABLE>
<CAPTION>
DESTINATION
--------------------------------------------------------------------------------------------------------
ORIGIN IA KS KY LA ME MD MA MI MN MS MO MT NE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL * * * * * * * * * * * * *
AZ * * * * * * * * * * * * *
AR * * * * * * * * * * * * *
CA * * * * * * * * * * * * *
CO * * * * * * * * * * * * *
CT * * * * * * * * * * * * *
DC * * * * * * * * * * * * *
DE * * * * * * * * * * * * *
FL * * * * * * * * * * * * *
GA * * * * * * * * * * * * *
ID * * * * * * * * * * * * *
IL * * * * * * * * * * * * *
IN * * * * * * * * * * * * *
IA * * * * * * * * * * * * *
KS * * * * * * * * * * * * *
KY * * * * * * * * * * * * *
LA * * * * * * * * * * * * *
ME * * * * * * * * * * * * *
MD * * * * * * * * * * * * *
MA * * * * * * * * * * * * *
MI * * * * * * * * * * * * *
MN * * * * * * * * * * * * *
MS * * * * * * * * * * * * *
MO * * * * * * * * * * * * *
MT * * * * * * * * * * * * *
NE * * * * * * * * * * * * *
NH * * * * * * * * * * * * *
NJ * * * * * * * * * * * * *
NM * * * * * * * * * * * * *
NY * * * * * * * * * * * * *
NV * * * * * * * * * * * * *
NC * * * * * * * * * * * * *
ND * * * * * * * * * * * * *
OH * * * * * * * * * * * * *
OK * * * * * * * * * * * * *
OR * * * * * * * * * * * * *
PA * * * * * * * * * * * * *
RI * * * * * * * * * * * * *
SC * * * * * * * * * * * * *
SD * * * * * * * * * * * * *
TN * * * * * * * * * * * * *
TX * * * * * * * * * * * * *
UT * * * * * * * * * * * * *
VT * * * * * * * * * * * * *
VA * * * * * * * * * * * * *
WA * * * * * * * * * * * * *
WV * * * * * * * * * * * * *
WI * * * * * * * * * * * * *
WY * * * * * * * * * * * * *
</TABLE>
Report State 1 Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 19
11/07/95 FEDEX STRATEGIC CONTRACT CORE CARRIER PROGRAM PAGE 3
Bulk Dry Van State-to-State Rate Summary
TIMELY TRANSPORTATION INC
<TABLE>
<CAPTION>
DESTINATION
--------------------------------------------------------------------------------------------------------
ORIGIN NH NJ NM NY NV NC ND OH OK OR PA RI SC
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL * * * * * * * * * * * * *
AZ * * * * * * * * * * * * *
AR * * * * * * * * * * * * *
CA * * * * * * * * * * * * *
CO * * * * * * * * * * * * *
CT * * * * * * * * * * * * *
DC * * * * * * * * * * * * *
DE * * * * * * * * * * * * *
FL * * * * * * * * * * * * *
GA * * * * * * * * * * * * *
ID * * * * * * * * * * * * *
IL * * * * * * * * * * * * *
IN * * * * * * * * * * * * *
IA * * * * * * * * * * * * *
KS * * * * * * * * * * * * *
KY * * * * * * * * * * * * *
LA * * * * * * * * * * * * *
ME * * * * * * * * * * * * *
MD * * * * * * * * * * * * *
MA * * * * * * * * * * * * *
MI * * * * * * * * * * * * *
MN * * * * * * * * * * * * *
MS * * * * * * * * * * * * *
MO * * * * * * * * * * * * *
MT * * * * * * * * * * * * *
NE * * * * * * * * * * * * *
NH * * * * * * * * * * * * *
NJ * * * * * * * * * * * * *
NM * * * * * * * * * * * * *
NY * * * * * * * * * * * * *
NV * * * * * * * * * * * * *
NC * * * * * * * * * * * * *
ND * * * * * * * * * * * * *
OH * * * * * * * * * * * * *
OK * * * * * * * * * * * * *
OR * * * * * * * * * * * * *
PA * * * * * * * * * * * * *
RI * * * * * * * * * * * * *
SC * * * * * * * * * * * * *
SD * * * * * * * * * * * * *
TN * * * * * * * * * * * * *
TX * * * * * * * * * * * * *
UT * * * * * * * * * * * * *
VT * * * * * * * * * * * * *
VA * * * * * * * * * * * * *
WA * * * * * * * * * * * * *
WV * * * * * * * * * * * * *
WI * * * * * * * * * * * * *
WY * * * * * * * * * * * * *
</TABLE>
Report State 1 Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 20
11/07/95 FEDEX STRATEGIC CONTRACT CORE CARRIER PROGRAM PAGE 4
Bulk Dry Van State-to-State Rate Summary
TIMELY TRANSPORTATION INC
<TABLE>
<CAPTION>
ORIGIN SD TN TX UT VT VA WA WV WI WY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL * * * * * * * * * *
AZ * * * * * * * * * *
AR * * * * * * * * * *
CA * * * * * * * * * *
CO * * * * * * * * * *
CT * * * * * * * * * *
DC * * * * * * * * * *
DE * * * * * * * * * *
FL * * * * * * * * * *
GA * * * * * * * * * *
ED * * * * * * * * * *
IL * * * * * * * * * *
IN * * * * * * * * * *
IA * * * * * * * * * *
KS * * * * * * * * * *
KY * * * * * * * * * *
LA * * * * * * * * * *
ME * * * * * * * * * *
MD * * * * * * * * * *
MA * * * * * * * * * *
MI * * * * * * * * * *
MN * * * * * * * * * *
MS * * * * * * * * * *
MO * * * * * * * * * *
MT * * * * * * * * * *
NE * * * * * * * * * *
NH * * * * * * * * * *
NJ * * * * * * * * * *
NM * * * * * * * * * *
NY * * * * * * * * * *
NV * * * * * * * * * *
NC * * * * * * * * * *
ND * * * * * * * * * *
OH * * * * * * * * * *
OK * * * * * * * * * *
OR * * * * * * * * * *
PA * * * * * * * * * *
RI * * * * * * * * * *
SC * * * * * * * * * *
SD * * * * * * * * * *
TN * * * * * * * * * *
TX * * * * * * * * * *
UT * * * * * * * * * *
VT * * * * * * * * * *
VA * * * * * * * * * *
WA * * * * * * * * * *
WV * * * * * * * * * *
WI * * * * * * * * * *
WY * * * * * * * * * *
</TABLE>
Report State 1 Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 21
11/07/95 FEDEX STRATEGIC CONTRACT CORE CARRIER PROGRAM PAGE 1
CTV Roller Deck State-to-State Rate Summary
TIMELY TRANSPORTATION INC
<TABLE>
<CAPTION>
DESTINATION
------------------------------------------------------------------------------------------------------------
Origin AL AZ AR CA CO CT DC DE FL GA ID IL IN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL * * * * * * * * * * * * *
AZ * * * * * * * * * * * * *
AR * * * * * * * * * * * * *
CA * * * * * * * * * * * * *
CO * * * * * * * * * * * * *
CT * * * * * * * * * * * * *
DC * * * * * * * * * * * * *
DE * * * * * * * * * * * * *
FL * * * * * * * * * * * * *
GA * * * * * * * * * * * * *
ID * * * * * * * * * * * * *
IL * * * * * * * * * * * * *
IN * * * * * * * * * * * * *
LA * * * * * * * * * * * * *
KS * * * * * * * * * * * * *
KY * * * * * * * * * * * * *
LA * * * * * * * * * * * * *
ME * * * * * * * * * * * * *
MD * * * * * * * * * * * * *
MA * * * * * * * * * * * * *
MI * * * * * * * * * * * * *
MN * * * * * * * * * * * * *
MS * * * * * * * * * * * * *
MO * * * * * * * * * * * * *
MT * * * * * * * * * * * * *
NE * * * * * * * * * * * * *
NH * * * * * * * * * * * * *
NJ * * * * * * * * * * * * *
NM * * * * * * * * * * * * *
NY * * * * * * * * * * * * *
NV * * * * * * * * * * * * *
NC * * * * * * * * * * * * *
ND * * * * * * * * * * * * *
OH * * * * * * * * * * * * *
OK * * * * * * * * * * * * *
OR * * * * * * * * * * * * *
PA * * * * * * * * * * * * *
RI * * * * * * * * * * * * *
SC * * * * * * * * * * * * *
SD * * * * * * * * * * * * *
TN * * * * * * * * * * * * *
TX * * * * * * * * * * * * *
UT * * * * * * * * * * * * *
VT * * * * * * * * * * * * *
VA * * * * * * * * * * * * *
WA * * * * * * * * * * * * *
WV * * * * * * * * * * * * *
WI * * * * * * * * * * * * *
WY * * * * * * * * * * * * *
</TABLE>
Report State 1 Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 22
11/07/95 FEDEX STRATEGIC CONTRACT CORE CARRIER PROGRAM PAGE 2
CTV Roller Deck State-to-State Rate Summary
TIMELY TRANSPORTATION INC
<TABLE>
<CAPTION>
DESTINATION
------------------------------------------------------------------------------------------------------------
ORIGIN IA KS KY LA ME MD MA MI MN MS MO MT NE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL * * * * * * * * * * * * *
AZ * * * * * * * * * * * * *
AR * * * * * * * * * * * * *
CA * * * * * * * * * * * * *
CO * * * * * * * * * * * * *
CT * * * * * * * * * * * * *
DC * * * * * * * * * * * * *
DE * * * * * * * * * * * * *
FL * * * * * * * * * * * * *
GA * * * * * * * * * * * * *
ID * * * * * * * * * * * * *
IL * * * * * * * * * * * * *
IN * * * * * * * * * * * * *
IA * * * * * * * * * * * * *
KS * * * * * * * * * * * * *
KY * * * * * * * * * * * * *
LA * * * * * * * * * * * * *
ME * * * * * * * * * * * * *
MD * * * * * * * * * * * * *
MA * * * * * * * * * * * * *
MI * * * * * * * * * * * * *
MN * * * * * * * * * * * * *
MS * * * * * * * * * * * * *
MO * * * * * * * * * * * * *
MT * * * * * * * * * * * * *
NE * * * * * * * * * * * * *
NH * * * * * * * * * * * * *
NJ * * * * * * * * * * * * *
NM * * * * * * * * * * * * *
NY * * * * * * * * * * * * *
NV * * * * * * * * * * * * *
NC * * * * * * * * * * * * *
ND * * * * * * * * * * * * *
OH * * * * * * * * * * * * *
OK * * * * * * * * * * * * *
OR * * * * * * * * * * * * *
PA * * * * * * * * * * * * *
RI * * * * * * * * * * * * *
SC * * * * * * * * * * * * *
SD * * * * * * * * * * * * *
TN * * * * * * * * * * * * *
TX * * * * * * * * * * * * *
UT * * * * * * * * * * * * *
VT * * * * * * * * * * * * *
VA * * * * * * * * * * * * *
WA * * * * * * * * * * * * *
WV * * * * * * * * * * * * *
WI * * * * * * * * * * * * *
WY * * * * * * * * * * * * *
</TABLE>
Report State 1 Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 23
11/07/95 FEDEX STRATEGIC CONTRACT CORE CARRIER PROGRAM PAGE 3
CTV Roller Deck State-to-State Rate Summary
TIMELY TRANSPORTATION INC
<TABLE>
<CAPTION>
DESTINATION
------------------------------------------------------------------------------------------------------------
ORIGIN NH NJ NM NY NV NC ND OH OK OR PA RI SC
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL * * * * * * * * * * * * *
AZ * * * * * * * * * * * * *
AR * * * * * * * * * * * * *
CA * * * * * * * * * * * * *
CO * * * * * * * * * * * * *
CT * * * * * * * * * * * * *
DC * * * * * * * * * * * * *
DE * * * * * * * * * * * * *
FL * * * * * * * * * * * * *
GA * * * * * * * * * * * * *
ID * * * * * * * * * * * * *
IL * * * * * * * * * * * * *
IN * * * * * * * * * * * * *
IA * * * * * * * * * * * * *
KS * * * * * * * * * * * * *
KY * * * * * * * * * * * * *
LA * * * * * * * * * * * * *
ME * * * * * * * * * * * * *
MD * * * * * * * * * * * * *
MA * * * * * * * * * * * * *
MI * * * * * * * * * * * * *
MN * * * * * * * * * * * * *
MS * * * * * * * * * * * * *
MO * * * * * * * * * * * * *
MT * * * * * * * * * * * * *
NE * * * * * * * * * * * * *
NH * * * * * * * * * * * * *
NJ * * * * * * * * * * * * *
NM * * * * * * * * * * * * *
NY * * * * * * * * * * * * *
NV * * * * * * * * * * * * *
NC * * * * * * * * * * * * *
ND * * * * * * * * * * * * *
OH * * * * * * * * * * * * *
OK * * * * * * * * * * * * *
OR * * * * * * * * * * * * *
PA * * * * * * * * * * * * *
RI * * * * * * * * * * * * *
SC * * * * * * * * * * * * *
SD * * * * * * * * * * * * *
TN * * * * * * * * * * * * *
TX * * * * * * * * * * * * *
UT * * * * * * * * * * * * *
VT * * * * * * * * * * * * *
VA * * * * * * * * * * * * *
WA * * * * * * * * * * * * *
WV * * * * * * * * * * * * *
WI * * * * * * * * * * * * *
WY * * * * * * * * * * * * *
</TABLE>
Report State 1 Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 24
11/07/95 FEDEX STRATEGIC CONTRACT CORE CARRIER PROGRAM PAGE 4
CTV Roller Deck State-to-State Rate Summary
TIMELY TRANSPORTATION INC
<TABLE>
<CAPTION>
DESTINATION
ORIGIN SD TN TX UT VT VA WA WV WI WY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL * * * * * * * * * *
AZ * * * * * * * * * *
AR * * * * * * * * * *
CA * * * * * * * * * *
CO * * * * * * * * * *
CT * * * * * * * * * *
DC * * * * * * * * * *
DE * * * * * * * * * *
FL * * * * * * * * * *
GA * * * * * * * * * *
ID * * * * * * * * * *
IL * * * * * * * * * *
IN * * * * * * * * * *
IA * * * * * * * * * *
KS * * * * * * * * * *
KY * * * * * * * * * *
LA * * * * * * * * * *
ME * * * * * * * * * *
MD * * * * * * * * * *
MA * * * * * * * * * *
MI * * * * * * * * * *
MN * * * * * * * * * *
MS * * * * * * * * * *
MO * * * * * * * * * *
MT * * * * * * * * * *
NE * * * * * * * * * *
NH * * * * * * * * * *
NJ * * * * * * * * * *
NM * * * * * * * * * *
NY * * * * * * * * * *
NV * * * * * * * * * *
NC * * * * * * * * * *
ND * * * * * * * * * *
OH * * * * * * * * * *
OK * * * * * * * * * *
OR * * * * * * * * * *
PA * * * * * * * * * *
RI * * * * * * * * * *
SC * * * * * * * * * *
SD * * * * * * * * * *
TN * * * * * * * * * *
TX * * * * * * * * * *
UT * * * * * * * * * *
VT * * * * * * * * * *
VA * * * * * * * * * *
WA * * * * * * * * * *
WV * * * * * * * * * *
WI * * * * * * * * * *
WY * * * * * * * * * *
</TABLE>
Report State 1 Proprietary and Confidential Round 2
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 25
SCHEDULE A-1
TO THAT CERTAIN
TRANSPORTATION AGREEMENT
EXCLUDED ROUTES
1. Routes out of Williams-Sonoma, Memphis, Tennessee
2. Routes out of VanStar Co., Indianapolis, Indiana
3. Routes out of L.L. Bean, Freeport, Maine
4. Routes requiring specialized equipment that the Carrier does not
possess.
5. Routes not included in EXHIBIT A.
<PAGE> 26
ROLLER DECK SPECS
CONTAINER TRANSPORT VEHICLES - CTVS
A-2
FedEx, as part of it's regular operating scenario, requires that carriers
provide trailers, on specific routes, that are able to handle aircraft container
movements. These containers are referred to as Unit Load Devices (ULD's).
Carriers may provide either retractable or live roller systems. The equipment
provided must be able to handle up to 5 container positions and containers up to
96 inches wide. All containers are 125 inches in length. Regardless of the
roller system used, all equipment must have container stops for each container
position.
Roller equipment must be maintained in a safe and usable condition at all times.
The carrier is responsible for inspection of equipment and making repairs, as
needed, on a periodic basis. Spare equipment may be necessary while these
inspections and repairs are being conducted.
RETRACTABLE ROLLERS
FedEx will provide a list of manufacturers and contacts for those carriers
investigating the use of retractable rollers. This type of equipment has the
rollers permanently place in the trailers and the rollers are raised by means of
air pressure supplied from the tractor.
LIVE ROLLERS
Live roller systems use conveyor roller stock attached to the floor of a
standard 53 foot long, 102 inch wide dry van. There are three (3) sets of
rollers that run the length of the trailer. The two (2) outside rollers are 24
inches wide and are attached to the floor along the right and left walls. The
third roller is 12 inches wide and is mounted to the floor along the center line
of the trailer. This will leave two (2) unrestricted walkways the length of the
trailer. Walkways must be a minimum of 15 inches wide.
<PAGE> 27
Page 2
Roller Deck Space
Container Transport Vehicles - CTV5
A-2, Cont'd.
CONTAINER STOPS
Both retractable and live roller systems require container stops for every
container position. The stop should be a piece of metal two (2) inches wide by
1/2 inch thick. The height of the stop must be sufficient to not allow a
container to jump it. The stop and it's holding unit must be stressed to hold a
9,000 pound container (maximum) in place.
The stops must be placed to hold a 125 inch long container in place with a
minimum of slack, but must allow enough slack to move the container and remove
pressure from the stop to allow it to be removed.
On retractable systems, the stops should be flipped into a holding unit that is
set below the top of the floor. This will allow the container to be rolled over
the top of the stop.
On live systems, the stops should be flipped into a holding unit that is below
the top of the conveyor roller system. The holding unit must be attached to the
floor of the trailer in such a way as be able to hold a 9,000 pound container.
<PAGE> 28
FUEL INDEX
Schedule A-3
In accordance with Section 2(b) of the Transportation Agreement made and entered
into as of the ____ of ____, 1995, by and between FedEx and Carrier.
All shipments will be subject to a fuel surcharge adjustment based on the
following scale. The base price has been established at $1.15 per gallon.
Current ICC National Average Survey Diesel Fuel Price Per Gallon
<TABLE>
<CAPTION>
FROM THROUGH FUEL SURCHARGE OR CREDIT
- ---- ------- ------------------------
PER MILE
--------
<S> <C> <C>
$.91 $.969 ($0.03)
$.97 $1.029 ($0.02)
$1.03 $1.089 ($0.01)
$1.09 $1.149 $0.00
$1.15 $1.209 $0.00
$1.21 $1.269 $0.01
$1.27 $1.329 $0.02
$1.33 $1.389 $0.03
$1.39 $1.449 $0.04
$1.45 $1.509 $0.05
$1.51 $1.569 $0.06
$1.57 $1.629 $0.07
$1.63 $1.689 $0.08
$1.69 $1.749 $0.09
$1.75 $1.809 $0.10
$1.81 $1.869 $0.11
$1.87 $1.929 $0.12
$1.93 $1.989 $0.13
</TABLE>
The current price is determined each Monday from the ICC fuel survey as reported
by the ICC and published in various trade magazines. The ICC Hotline number to
determine weekly prices is 1- 202-927-7600, 1, 5. The fuel surcharge or credit,
will be effective after the current price has been recorded for two (2)
consecutive Mondays. Any fuel surcharge will be invoiced as a separate item, and
any fuel credit will be applied against the next succeeding invoice submitted by
carrier to FedEx.
<PAGE> 29
Exhibit B
To That Certain
Transportation Agreement
Between
TIMELY TRANSPORTATION, INC.
("Carrier")
and
FEDERAL EXPRESS CORPORATION
("FedEx")
Dated ______________
- --------------------------------------------------------------------------------
BILL OF LADING
CONTRACT TERMS AND CONDITIONS
<PAGE> 30
<TABLE>
<S> <C> <C>
PAGE: 1 F E D E R A L E X P R E S S BILL OF LADING
B/L #: B 9528414053 ------------------------------------------------
CURRENT DATE: 10/13/95 Z F E C ROUTE ID: LC210 KIAC LANE NUMBER: 8245
CURRENT DATE: 17:22 Z SCHD DEPT DATE: OCT 11, 1995
ORIG: FEDERAL EXPRESS
100 ACCESS RD
RICKENBACKER A.N.G.B.
LOCKBOURNE, OH 43217-0000
DEPT DOCK: ___________
DEST: FEDERAL EXPRESS CORPORATION
HARRISBURG INTERNATIONAL AIRPORT
MIDDLETON, PA 17057-0001
ARRV DOCK: ______________
ACTL DEPT TIME: _____________________________ EMP #: _________________ EMP NAME: ______________________________
BASED ON SCHED DEPT OF 13:30L FROM LCKH, SCHED ARRV TO MDTR IS 21:35L ON 10/11/95
***** IN CASE OF EARLY OR LATE DEPARTURE, ADD LEG STEM TIME TO *****
***** ACTUAL DEPARTURE TIME TO DETERMINE NEW PLANNED/ESTIMATED ARRIVAL TIME *****
COMPLETE ROUTING WITH STEM TIME FROM ORIGIN LOCATION: LCKH
LCKH 08:05 MDTR 01:50 ABER ___:___ _____ ___:___ _____ ___:___ _____
IN THE EVENT OF ANY DELAY OF 30 MINUTES OR MORE,
CONTACT: TRUCK DESK 1-800-537-3912
LOAD MANAGER: MARKECH, DENNIS TELEPHONE NUMBER: 614-492-5022
DELIVERING CARRIER: TRACTOR #: XXXX
TRAILER A: 58787 SEAL #: 1557197 TRAILER B: ________________ SEAL #: ___________
DRIVER #1 NAME: ______________________________________________ DOLLY #: __________
SCHEDULE TRUCK TYPE: CTV5
U N I T L O A D D E V I C E D A T A
-----------------------------------------
DESCRIPTION OF ARTICLES : FREIGHT OF ALL KINDS
POS ULD H/M PCS A/E WGT A/E DEST SVC SECURED BY PACKAGE DEST
- ------ --------------- ------ ------ ---- ------- ---- -------- ------ ------------- ---------------------
1 AAM9028FM 0074 A 04490 A ABER ES1 204609 ABE
2 AMJ0646FM 0050 E 01340 A ABER ES1 X ABE
3 AMJ1815FM 0057 E 03250 A MDTR ES1 X MDT
4F AYYD345FM 0160 E 01600 A MDTR ES1 X GTY PURE
4B AYYC266FM 0000 00300 A MDTR X
5 SAA0618FM 0141 E 01410 E MDTR ES1 X MDT
- ------ --------------- ------ ------ ---- ------- ---- -------- ------ ------------- ------- ------- -------
- ------ --------------- ------ ------ ---- ------- ---- -------- ------ ------------- ------- ------- -------
- ------ --------------- ------ ------ ---- ------- ---- -------- ------ ------------- ------- ------- -------
- ------ --------------- ------ ------ ---- ------- ---- -------- ------ ------------- ------- ------- -------
TRAILER A TOTALS: PIECES 000482 WEIGHT 0012390
TRAILER B TOTALS: PIECES 000000 WEIGHT 0000000
TOTAL: PIECES 000482 WEIGHT 0012390
REMARKS:
LOADING TIME START ___:___ FINISH ___:___ DATE ___/___/___
ULD LOCK AND SEAL VERIFICATION (DRIVER)
--------------------------------------------------------------------------------------------
RECEIVED BY: EMP NO: DATE: 10/12/95
----------------------- ----------------------------
NOTE: MARK "x" IN H/M COLUMN BILL ALL FREIGHT FEDERAL EXPRESS CORPORATION
IF HAZARDOUS MATERIALS CHARGES TO: CONTRACT CARRIER ADMIN - 2848
P.O. BOX 727
MEMPHIS, TN 38194
</TABLE>
<PAGE> 31
Exhibit C
To That Certain
Transportation Agreement
Between
TIMELY TRANSPORTATION, INC.
("Carrier")
and
FEDERAL EXPRESS CORPORATION
("FedEx")
Dated ___________________
- --------------------------------------------------------------------------------
CARRIER'S INTERSTATE
COMMERCE COMMISSION PERMIT
<PAGE> 32
PM-31
(REV. 10/84)
INTERSTATE COMMERCE COMMISSION
SERVICE DATE
MAR 9 1992
PERMIT
NO. MC 249372 (SUB 0-P)
TIMELY TRANSPORTATION, INC.
ATLANTA, GA
This Permit is evidence of the carrier's authority to engage in
transportation as a contract carrier by motor vehicle.
This authority will be effective as long as the carrier maintains
compliance with the requirements pertaining to insurance coverage for the
protection of the public (49 CFR 1043); the designation of agents upon whom
process may be served (49 CFR 1044); the execution of contracts (49 CFR 1053)*;
and for passenger carriers, tariffs of schedules (49 CFR 1312).
This authority is subject to any terms, conditions, and limitations as
are now, or may later be, attached to this privilege.
The Transportation service to be performed is described on the reverse
side of this document.
By the Commission.
SIDNEY L. STRICKLAND, JR.
(SEAL) Secretary
NOTE: If there are any discrepancies regarding this Permit, please notify the
Commission within 30 days.
__________________
* While the execution of contracts must be accomplished, it is
unnecessary to file them with the Commission.
<PAGE> 33
NO. MC 249372 (SUB 0-P)
PAGE 2
To operate as a contract carrier, by motor vehicle, in interstate or foreign
commerce, over irregular routes, transporting general commodities (except
hazardous materials, household goods, and commodities in bulk), between points
in the U.S. (Except AK and HI), under continuing contract(s) with commercial
shippers or receivers of such commodities.
NOTE: Willful and persistent noncompliance with applicable safety fitness of
regulations as evidenced by a DOT safety rating of "Unsatisfactory" or
by other indicators, could result in a proceeding required the holder
of this certificate or permit to show cause why this authority should
not be suspended or revoked.
<PAGE> 34
Exhibit D
To That Certain
Transportation Agreement
Between
TIMELY TRANSPORTATION, INC.
("Carrier")
and
FEDERAL EXPRESS CORPORATION
("FedEx")
Dated __________________
- --------------------------------------------------------------------------------
SERVICE REQUIREMENTS
<PAGE> 35
SERVICE REQUIREMENTS
EXHIBIT D
In accordance with Section 1(i) of the Transportation Agreement made and entered
into as of the 19th of November, 1995 by and between FedEx and (Carrier), the
carrier agrees to maintain a service level of ***** at all times during the Term
of this Agreement.
The service level is zero based. It will be determined by using the departure
and arrival times contained in the FedEx Dispatch system.
The stem times used to determine the service level will be determined by
dividing Household Goods Miles by a speed of 45 miles per hour.
The carrier will be responsible for all service failures that are within the
direct control of the carrier and of the carriers' employees or agents.
The carrier will be responsible for the service failures of any subcontractor
used to handle a FedEx movement under this agreement.
Service levels will be calculated at the end of each month and the carriers will
be informed of all delays attributed to them. The carrier will be allowed to
arbitrate all service failures charged to them that they are in dispute with.
In the event that the carrier maintains the service level required by the Terms
of the Agreement but has unacceptable service levels on an individual lane,
FedEx reserves the right to replace the carrier on the individual lane.
FedEx will provide to the carrier, in writing, notice of any lanes that have
acceptable service levels and may be removed under the provisions of this
exhibit.
Before a carrier is removed from an individual lane for unacceptable service
levels, FedEx will allow the carrier a period of two (2) weeks from the date of
notice, to provide the service levels required. The carrier agrees to take
reasonable steps to improve the service level and provide to FedEx, in writing,
what those steps are.
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<PAGE> 36
Revenue and Container Movements for FedEx -- 05/01/95
Contract Carrier Administration & Planning
INDEX
1) Service Requirements
A. Pickup and Delivery Times
B. Transit Times
C. Loading and Unloading
D. Bills of Lading
E. Delays
F. 24 Hour Telephone Number
G. Carrier Service Level
H. Carrier Equipment Availability
I. General Rules
2) Equipment Requirements
Trailer Size - Type of Doors
3) Billing Information
A. Billing Address
B. Billing
C. Telephone Numbers for Questions
<PAGE> 37
Revenue and Container Movements for FedEx
Contract Carrier Administration & Planning
1) SERVICE REQUIREMENTS
FedEx transports freight of all kinds, empty aircraft containers and pallets
(a.k.a. ULD(s) - unit load device(s), from facility to facility via surface
transportation as part of our integrated network.
A. Pickup and Delivery Times
Pickup and delivery times are established by Contract Carrier
Administration & Planning and Surface Operations Control in
Memphis, and the origin and destination FedEx locations, to
coincide with their operational requirements.
B. Transit Times
Established pickup and delivery times must be adhered to and
any delay must be reported to FedEx when the delay is
identified. (See delay and 24 hour telephone sections). All
federal, state and local laws, and regulations, must be
complied with at all times while under a FedEx load.
================================================================================
Departure
The Bill of Lading you receive from the FedEx origin will show: your scheduled
departure time, scheduled arrival time, and the time necessary to complete your
trip (STEM TIME). A FedEx employee will initial the Bill of Lading, as well as
show your time out. In the event you leave early or late, you are expected to
meet your STEM TIME requirement. Make sure you and the FedEx employee agree upon
the time you are being shown out. You are required at all times to drive within
the applicable speed limits along your route.
In route
In the event you are going to be delayed into destination by thirty minutes or
more, please contact your Company Dispatch so that they may call FedEx and
inform us of the delay and the reason for it. It is important that you
COMMUNICATE any delay(s) of over thirty (30) minutes so that FedEx may alert
affected locations to provide personnel to move the packages.
<PAGE> 38
Page 2
Revenue and Container Movement for FedEx -- 05/01/95
Contract Carrier Administration & Planning Cont'd.
Arrival
If you are late for your arrival time, please inform the FedEx employee arriving
you, of the reason for your delay. This will allow FedEx to track the causes for
delays and be proactive in actions needed to improve service.
================================================================================
C. Loading and Unloading
FedEx will be responsible for loading and unloading all shipments.
D. Bill of Lading
Bills of Lading are computer generated and printed at the origin
location. The driver will be provided a copy of the Bill of Lading
after it is completed. The Bill of Lading will include toll free
telephone numbers to report delays in the event the driver cannot
contact their dispatch.
E. Delays
Any delay (at origin/destination/enroute) must be reported to FedEx as
soon as the delay is identified.
Dispatch/driver should reference the route number, origin, destination,
and Carrier name, when reporting. You must know your route number.
F. Toll Free Number - FOR DELAYS ONLY: 1-800-537-3912 (24 hour
coverage)
G. Carrier Service Level
All arrivals and departures are tracked and monitored by Carrier for
compliance with established pickup and delivery times. A service level
report will be prepared monthly by Carrier for use in future Carrier
selection. The FedEx Carrier service level system is zero based
tolerance. A delay of one (1) minute constitutes a service failure.
<PAGE> 39
Page 3
Revenue and Container Movement for FedEx -- 05/01/95
Contract Carrier Administration & Planning Cont'd.
H. Carrier Equipment Availability
Due to the large volume of inbound phone calls received daily, carriers
are requested to send their equipment availability to Surface
Operations Control by FAX rather than verbally. The FAX number is
901-368-4586.
I. General Rules
The following must be passed on to your employees:
You are not to perform any unsafe or illegal acts when you are carrying
a FedEx load.
Please remember that when you are at our facilities, many of them are
under the control of the Federal Aviation Administration. The same
rules that apply when you are in an airport are in effect at all of our
airport facilities.
No firearms or explosives are allowed.
Smoking is not permitted at any FedEx facility except in designated
areas.
All pets must stay in the cab of your tractor until you are off of the
airport property.
FedEx locations can be extremely busy and congested. For your safety
and the safety of our employees, please follow all directions unless
they place you in an unsafe position.
Please stay away from the operation area unless directed to enter by a
FedEx employee. Ask any FedEx employee for directions to the drive
waiting area.
J. Equipment Requirements
Trailer size and door requirements.
A 53 x 102 trailer with swing doors is required for most freight and
container movements unless otherwise specified.
<PAGE> 40
Page 4
Revenue and Container Movement for FedEx -- 05/01/95
Contract Carrier Administration & Planning Cont'd.
Roller bed trailers are required for some freight and container/pallets
moves. These requirements will be specified at the time of dispatch.
K. Billing Information
Mailing Address:
Federal Express Corporation
Contract Carrier Administration & Planning
P.O. Box 727
Memphis, TN 38194-2848
Physical Address:
Federal Express Corporation
Contract Carrier Administration & Planning
2813 Business Park Drive, Building I
Memphis, TN 38118
Billing:
Invoice each move separately, referencing the route number for that
move and the date of the move on the invoice. The route number is
provided on the Bill of Lading given to the driver. Assessorial charges
must be a separate line item and identified accordingly.
L. Telephone Numbers for Questions
Billing:
Cindy Lantrip 901-797-6670
Carol Johnson 901-797-6669
Lethelea Jackson 901-797-6563
<PAGE> 41
Page 5
Revenue and Container Movement for FedEx -- 05/01/95
Contract Carrier Administration & Planning Cont'd.
M. Route Information:
Eastern Region - Deidra Daniel-Edwards 901-797-6554
Central Region - Deloris Crowe 901-797-6680
Western Region - Barbara Coulter 901-797-6544
Southern Region - Monte Morgan 901-797-6559
<PAGE> 42
Exhibit E
To That Certain
Transportation Agreement
Between
TIMELY TRANSPORTATION, INC.
("Carrier")
and
FEDERAL EXPRESS CORPORATION
("FedEx")
Dated _________________
================================================================================
INSURANCE
(a) Worker's Compensation Insurance, with "Broad Form All States"
endorsement and employer's liability limits as required by applicable law. Such
insurance shall provide for a waiver of subrogation by the insurer against
FedEx, its officers, directors and employees.
(b) Comprehensive General Liability Insurance, naming FedEx, its
officers, directors and employees as additional insureds, as their interest may
appear under the terms of this Agreement, including bodily injury liability and
contractual liability endorsements, with a combined single limit of not less
than $____________.
(c) Automobile Liability Insurance covering the Carrier's owned,
non-owned and hired vehicles, naming FedEx, its officers, directors and
employees as additional insureds, as their interests may appear under the terms
of this Agreement, including bodily injury and property damage endorsements,
with a combined single limit of not less than $____________.
(d) Contractual Liability Insurance incorporating the express language
of Section 6 of the Agreement and expressly covering the obligations and
liabilities of the Carrier under Sections 6.
(e) Cargo Liability - Insurance with minimum limits of $__________ per
occurrence, which policy or policies shall name FedEx, its officers, directors
and employees as additional insureds, as their interests may appear under the
terms of this Agreement.
25449
<PAGE> 1
EXHIBIT 10.8
OMNITRACS(R) CONTRACT
This Contract (the "Agreement") is made and entered into as of this 8th day
of May , 1995, (the "Effective Date") by and between the company listed
hereinbelow ("Customer") and QUALCOMM Incorporated ("QUALCOMM"). QUALCOMM will
provide equipment ("Equipment") and services for a two-way Ku-band,
satellite-based, mobile messaging and position location reporting service (the
"OmniTRACS Service"). The Equipment and the OmniTRACS Service are collectively
referred to herein as the "OmniTRACS System." Customer agrees to be bound by
the quantities and prices of items ordered below, as well as the terms and
conditions of this Agreement.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
CUSTOMER INFORMATION
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Customer: TIMELY TRANSPORTATION, INC. Phone: (404) 953-2963
Fax: (404) 850-1966
- --------------------------------------------------------------------------------------------------------------------------------
Invoice Address: Shipping Address:
100 Galleria Pkwy., NW, Ste. 115 Same
Atlanta, GA 30339
Attn: Dennis A. Bakal, Pres. & CEO Attn:
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
EQUIPMENT
- --------------------------------------------------------------------------------------------------------------------------------
Item Description Qty. Price Extended Amt.
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
01 MCT (Mobile Communications Terminal) 100 $390,000.00
$3,900/unit
- --------------------------------------------------------------------------------------------------------------------------------
02 Outdoor Unit Mounting Bracket 100 $150 /mount NC
- --------------------------------------------------------------------------------------------------------------------------------
03 Remote Buzzer 100 $30 /each $3,000.00
- --------------------------------------------------------------------------------------------------------------------------------
04 Pager (transmitter and receiver) 0 $150 /each $0.00
- --------------------------------------------------------------------------------------------------------------------------------
05 Remote Message Waiting Light 0 $10 /each $0.00
- --------------------------------------------------------------------------------------------------------------------------------
06 QC-4T40 Mobile Printer 0 $695 /each $0.00
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
MCT MAINTENANCE
- ----------------------------------------------------------------------------------------------------------------------------
Item Type Description Rate
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
07 Extended Provides MCT Warranty maintenance after expiration of $15/mo. per MCT
Maintenance Warranty Period.
Service
- ----------------------------------------------------------------------------------------------------------------------------
08 Out-of-Extended For MCT maintenance after expiration of the Warranty Price per failure: Communications Unit,
Maintenance Period if Customer does not elect Extended $750; Outdoor Unit, $600; Display Unit,
Service Maintenance. $200
- ----------------------------------------------------------------------------------------------------------------------------
09 Customer Damage For MCT maintenance due to accidental damage or Price per failure is applicable Spares
Maintenance repairs that would not be covered by the MCT Price or: Communications Unit, $750;
Service Warranty. Outdoor Unit, $600; Display Unit, $200.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
SOFTWARE AND MAINTENANCE
- -----------------------------------------------------------------------------------------------------------------------
Item Description Qty. Price Extended Amt.
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 QTRACS/PC Software License 0 $4,500 /copy $0.00
- -----------------------------------------------------------------------------------------------------------------------
11 COMPAQ 486 PC System (CPPC) 0 $3,500 /CPPC $0.00
- -----------------------------------------------------------------------------------------------------------------------
12 Annual Extended Software Maintenance 15% of the then list license fee
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
OPTIONAL SERVICES
- ----------------------------------------------------------------------------------------------------------------------------------
Item Description Qty. Price Extended Amt.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
13 MCT Installation (Does not include travel See Att. $ 150 /MCT See Att. 3
expenses) 3
- ----------------------------------------------------------------------------------------------------------------------------------
14 Additional Training:
Drivers/Dispatchers (Does not include travel 0 $ 500 /session
Installers expenses) 0 $1,000 /session $0.00
- ----------------------------------------------------------------------------------------------------------------------------------
15 "Panic Button" or DTTS Service 0 $ 30 /Panic Button
(Does not include installation or 37 Pin Accessory Cable) $ 10 /message plus $0.00
Regular Message Rate
- ----------------------------------------------------------------------------------------------------------------------------------
16 37 Pin Accessory Cable (for Panic Button or DTTS Service, VIS
and other OmniTRACS optional services or systems) 0 $ 35 /each $0.00
- ----------------------------------------------------------------------------------------------------------------------------------
17 Vehicle Information Systems The SensorTRACS(R), JTRACS(TM) and/or TrailerTRACS(R) Systems may be
purchased in accordance with separate attachments or as set forth
("VIS") in Attachment 3, Special Provisions.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
MESSAGE SERVICES
- -----------------------------------------------------------------------------------------------------------------------------------
Item Type Description Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
18 Message Service CUSTOMER ELECTS BY INITIALING: ( /s/ GW ) Base Connection
Election ( __________) Base Message Service
- -----------------------------------------------------------------------------------------------------------------------------------
19.a. Base Connection Includes 1 automatic position poll per hour. $35/mo. per MCT
(partial mo. to be prorated).
- -----------------------------------------------------------------------------------------------------------------------------------
19.b. Base Message Base Connection (including 1 automatic position $50.00/mo. per MCT
Service poll per hour) plus Base Message Use. Base Message (partial mo. to be prorated).
Use is defined as Customer not having greater than
the following per MCT per month in either messages (Special Requested Position Polls,
or characters: Emergency Messages, Priority Messages,
Group Messages, Change in MCT Group
Message per month per MCT: 180 Membership, Macro Creation or Updates,
Characters per month per MCT: 18,000 Panic Button or DTTS Messages, and messages
Automatic Position Polls: 720 (1/hour per MCT) from or to printers, facsimile machines or
other future message types which require
In the event regular messages or characters are special handling are not included in Base
greater than the Base Message Use for any MCT in Message Use and will be invoiced at the
any month, the additional messages or characters, rates set forth in this Schedule (pages
as applicable, will be charged at the Regular 1-2) or future rates to be determined)
Message Rate.
- -----------------------------------------------------------------------------------------------------------------------------------
20 Regular Message Message is considered sent once, even though it may $0.05 per message plus $0.002 per character
Rate need to be transmitted on multiple occasions until transmitted.
acknowledged.
- -----------------------------------------------------------------------------------------------------------------------------------
21 Special Requested Position Polls requested in addition to the $0.05 each
Position Polls automatic position polls included with Base
Connection
- ----------------------------------------------------------------------------------------------------------------------------------
22 Emergency and FROM DISPATCH TO DRIVER: When "E" for $2.00 plus Regular Message Rate.
Priority Message "Emergency" is designated, places a message in the
Rates queue on a FIFO basis among all Emergency Messages.
FROM DRIVER TO DISPATCH: When "P" for $2.00 plus Regular Message Rate.
"Priority" is designated, places a message in the
queue on a FIFO basis among all Priority Messages.
- -----------------------------------------------------------------------------------------------------------------------------------
23 Group Message Fleet-wide messages are repeated a minimum of five Sliding Scale Rate based on number of
Rate times. vehicles:
Receipt is not acknowledged.
Rate Per Vehicle
# Vehicles Per Message
----------------------------------------------
1-25 Reg. Msg. Rate
26-50 0.15
51-100 $0.07
101-1,000 $0.03
1,001 & up $0.02
- -----------------------------------------------------------------------------------------------------------------------------------
24 Change in MCT Addition or deletion of an MCT from a defined $0.05 per MCT per change.
Group Membership group.
- -----------------------------------------------------------------------------------------------------------------------------------
25 Macro Creation or Initial creation of macros and changes or updates $10 per message plus applicable Group
Updates to macro definitions. Message Rate.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
ATTACHMENTS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
26 MCT Spares Price List See Attachment 1 which is incorporated herein in full.
- -----------------------------------------------------------------------------------------------------
27 Delivery Schedule See Attachment 2 which is incorporated herein in full.
- -----------------------------------------------------------------------------------------------------
28 Special Provisions See Attachment 3 which is incorporated herein in full.
- -----------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE> 3
OmniTRACS(R) TERMS AND CONDITIONS
1. OmniTRACS EQUIPMENT.
1.1 Delivery; Purchase of Additional Equipment. The OmniTRACS Mobile
Messaging Communications Terminals ("MCTs") and accessory equipment ordered
under this Agreement (collectively the "Equipment"), as set forth on Page 1,
shall be delivered in accordance with Attachment 2, Delivery Schedule. All
Equipment is shipped FOB QUALCOMM's San Diego facility. Risk of loss in
transit and the cost of any cargo insurance shall be borne by Customer. During
the Term, provided Customer is in compliance with the terms and conditions set
forth in this Agreement, Customer may order the additional Equipment described
on Page 1, subject to the pricing and other terms set forth therein, upon
delivery to QUALCOMM of Customer's valid purchase order specifying the desired
product and quantity. QUALCOMM will confirm such order with Customer and the
parties shall schedule a mutually agreed upon delivery date for such order in
accordance with the terms and conditions of this Agreement, including but not
limited to those set forth in the Delivery Schedule.
1.2 Acceptance and Title. Inspection and acceptance of the Equipment
shall occur within fifteen (15) days after the date of shipment. Customer
shall receive title to all deliverable Equipment (excluding the firmware
resident in the MCTs described in Section 1.4 below), only upon QUALCOMM's
receipt of complete and full payment. QUALCOMM shall be entitled to affix
tags, decals. or plates to the Equipment indicating QUALCOMM as the
manufacturer of the Equipment and displaying any QUALCOMM trademarks.
1.3 Installation of MCTS. The MCT installation price described on Page 1
does not include the price of the Outdoor Unit Mounting Bracket and is
conditioned upon installation occurring at the rate of both (i) a minimum of
five (5) vehicles per day per two (2) man crew (one bay) per facility. and (ii)
a minimum of twenty-five (25) vehicles per two (2) man crew (one bay) per
facility during a five (5) consecutive day period. In the event Customer does
not provide the minimum number of vehicles required in this Section, Customer
shall pay QUALCOMM, in addition to the installation price per MCT, an amount
equal to the sum of $125.00 multiplied by the number of vehicles below the
minimum vehicle availability requirement set forth herein. No MCTs will be
installed by QUALCOMM using Outdoor Unit Mounting Brackets which are not
provided by QUALCOMM or which do not meet the specifications set forth in the
bracket specification manuals published from time to time by QUALCOMM. Any
other Outdoor Unit Mounting Bracket proposed for use by Customer shall be
approved in advance by QUALCOMM's mechanical engineering staff as meeting or
exceeding minimum design standards. subject to the payment by Customer of any
costs incurred by QUALCOMM in performing the analysis necessary for such
approval.
QUALCOMM warrants that for thirty (30) days from the date on which the Service
(as defined in Section 3.1 below) is first initiated for any MCT installed by
QUALCOMM, such MCT will provide the Service. In the event such MCT fails to
provide the Service during such thirty (30) day period and QUALCOMM determines
that such failure is due to improper installation. then as Customer's sole and
exclusive remedy, QUALCOMM will provide free of charge the necessary parts and
labor to correct the installation.
1.4 Firmware. Customer acknowledges that software is resident in the MCTs
and in certain other accessory Equipment which may be provided to Customer
hereunder ("Firmware"), and that access to and use of which shall be governed
by the general provisions relating to Software set forth in Sections 2.1, 2.3,
and 2.4 below.
1.5 Equipment Warranty. QUALCOMM warrants that upon shipment and
continuing for a period of twelve (12) months thereafter (the "Warranty
Period"), the major MCT components (which are the Outdoor Unit, Communication
Unit and Display Unit), shall be free from material defects in materials or
workmanship and capable of providing the Service ("Good Working Order")
(collectively (the "Warranty"). Customer shall remove and return at its
expense and risk of loss (unless otherwise directed by QUALCOMM) the failed MCT
or, preferably, the component thereof which is not in Good Working Order, to
QUALCOMM. and QUALCOMM shall perform maintenance in accordance with the
Maintenance Procedures described below and return a replacement MCT unit (or
component) free of charge to Customer during the Warranty Period. QUALCOMM's
warranty obligation is limited to repair or replacement of defective or
non-performing MCT components as required to restore the item to Good Working
Order. The Warranty is provided for the benefit of Customer only, and is not
transferable by Customer without the express consent, in advance, by QUALCOMM.
All other goods, including but not limited to goods not manufactured by
QUALCOMM (such as cables and mounting brackets) are expressly excluded from the
Warranty. Any such goods not manufactured by QUALCOMM shall be covered by the
applicable manufacturer's warranty, if any, and QUALCOMM's sole obligation in
connection therewith shall be to use reasonable efforts to assist Customer in
obtaining such warranty service, at Customer's expense.
1.6 Warranty Exclusions. QUALCOMM excludes from the Warranty and has no
obligation to repair or replace any MCT which is not in Good Working Order due
to: (i) use of the MCT with software, cable connections, or mounting brackets,
other than those furnished by QUALCOMM or approved by QUALCOMM, which approval
shall not be unreasonably withheld; (ii) damage to antennas, radomes (including
painting) or other equipment resulting from physical impact or other abuse
following delivery FOB QUALCOMM's San Diego facility; (iii) improper handling
of any component of the OmniTRACS System, including Software, (iv) alteration,
modification or repair other than pursuant to QUALCOMM's advance written
instructions or by QUALCOMM; or (v) normal wear and tear. Customer further
acknowledges that the Outdoor Unit and the Communication Unit of the MCT have
been sealed and that if the seal is broken on any of these units the Warranty
is voided for that MCT. In the event that any returned MCT is not in Good
Working Order due to any of the provisions listed in the preceding two (2)
sentences, the Warranty shall be
-3-
<PAGE> 4
considered void and all such maintenance action will be billed at either the
Out-of-Extended Maintenance Rates set forth on Page 1 or the then current spare
parts price, as currently set forth in Attachment 1, at QUALCOMM's sole
discretion.
1.7 Extended Maintenance and Out-Of-Extended Maintenance Service. After
the expiration of the Warranty Period, Customer may elect to obtain QUALCOMM's
Extended Maintenance Service on a fleetwide basis only, by paying for Extended
Maintenance Service with the first invoice for monthly Extended Maintenance
Service fees at the rates set forth on Page 1. QUALCOMM will begin invoicing
Customer for Extended Maintenance Service one (1) month prior to the expiration
of the Warranty Period for the first MCT or lot of MCTs shipped to Customer.
Under the Extended Maintenance Service, QUALCOMM shall provide continued
Warranty service for Customer's MCTs during the remainder of the Term at the
Extended Maintenance Rate. QUALCOMM reserves the absolute right to terminate
the Extended Maintenance Service without prior notification to Customer in the
event that (i) Customer has not paid the applicable charges in accordance with
the provisions of this Agreement or (ii) the Extended Maintenance Service is
not maintained without interruption, for any reason, for all initiated MCTs in
Customer's possession for which the Warranty Period has expired. QUALCOMM also
reserves the right to refuse Extended Maintenance Service after expiration of
the Term, to condition the availability thereof upon the upgrade of MCTs and
other Equipment, at Customer's expense and/or to increase the prices for
Extended Maintenance Service. In the event that Customer has not elected the
Extended Maintenance Service, Customer will be billed on a per failure basis at
the Out-of-Extended Maintenance Rates set forth on Page 1 ("Out-of-Extended
Maintenance Service"). The Out-of-Extended Maintenance Rates are valid only
for repairs which would otherwise qualify under the Warranty. QUALCOMM's
obligation to provide Extended Maintenance Services or Out-of-Extended
Maintenance Services to Customer is contingent upon Customer removing and
returning at its expense and risk of loss the MCT or component thereof
requiring such service to QUALCOMM. QUALCOMM shall not be obligated to perform
any Extended Maintenance Service or Out- of-Extended Maintenance Service if the
MCT is not in Good Working Order as a result of Customer's improper or
negligent use of the Equipment which causes physical damage, or which otherwise
would be excluded from the Warranty, and Customer shall pay QUALCOMM for such
service an additional amount equal to either the Out-of-Extended Maintenance
Rates or the then current spare parts price as currently set forth in
Attachment 1, at QUALCOMM's sole discretion.
1.8 Maintenance Procedures. All Warranty repairs, Extended Maintenance
Service and Out-of-Extended Maintenance Service by QUALCOMM will be
accomplished at QUALCOMM's facility or other QUALCOMM designated site in
accordance with QUALCOMM's then current OmniTRACS Advance Replace RMA
Procedure, as updated from time to time at QUALCOMM's discretion. Customer
shall be responsible for all costs associated with the removal of the MCTs or
components thereof, including all shipping costs to QUALCOMM, all risk of loss
in transit, and the installation of the replacement MCTs or components.
QUALCOMM shall advance replace MCTs or components after proper notification by
Customer that the MCT or component thereof is not in Good Working Order.
Proper notification (orally or in writing) will be deemed to have occurred when
Customer has contacted QUALCOMM's Customer Service Center and been assigned a
Return Material Authorization Number ("RMA") for the MCT or component thereof
deemed not to be in Good Working Order. QUALCOMM shall use its best efforts to
advance replace any defective or non-performing item within seventy-two (72)
hours after receiving proper notification, provided such notification is
received at QUALCOMM during the normal work week (Monday through Friday and
prior to 2:00 p.m. Pacific Time), excluding national holidays. For
notification received outside the normal work week or during a national
holiday, QUALCOMM shall use its best efforts to repair or replace any defective
or non-performing item within a target of one hundred and twenty (120) hours.
The replacement component or MCT, which may be previously used or repaired
items, will be shipped to the Customer's operations center or other Customer
designated facility and receipt of such at the Customer operations center or
other Customer designated facility constitutes replacement, at which time title
to such replacement component or MCT shall vest in Customer if and to the same
extent that title to the replaced component or MCT was vested in Customer.
Replacement components or MCTs shall be subject to the greater of the remaining
Warranty term applicable to the replaced component or MCT or a sixty (60) day
service warranty beginning as of the date such replacement item is shipped.
Title to the defective or non-performing items shall automatically be reassigned
to QUALCOMM if the exchanged item is owned by Customer. The assigned RMA shall
be clearly visible on each shipping form and associated shipping carton. Failure
to have this RMA will result in the immediate return of all items to Customer.
The defective or non-performing items shall be returned to QUALCOMM within
fourteen (14) days after assignment to Customer of the RMA. Failure to return
such item during this period will result in Customer being invoiced the higher
of the then current QUALCOMM price or the applicable spare parts price as
currently set forth in Attachment 1. In addition, Customer will be notified that
QUALCOMM will discontinue its "advance replace" RMA policy for Customer and
future RMAs will be considered "no advance replace;" that is, replacement
components for future RMAs will not be shipped until the failed components have
been returned. At the time that all past due components are received by QUALCOMM
or paid for in full in accordance herewith, QUALCOMM will resume advance
replacement of failed MCTs and components.
1.9 Upgrade Warranty. In the event any MCT or component is upgraded for
purposes of refurbishment or to add a feature, such upgrade will be completed
in accordance with QUALCOMM's Advance Replace RMA Procedure, unless otherwise
agreed by the parties. Any such upgraded MCT or component shall be subject to
the remaining Warranty term applicable to the upgraded MCT or component, or if
such item was not covered by Warranty, such MCT or component shall be covered
by a sixty (60) day upgrade warranty beginning as of the date such upgrade is
shipped.
1.10 No Right to Distribute or Remarket. No right is granted to Customer
hereunder to distribute or remarket Equipment, and QUALCOMM reserves the right
to refuse to provide the Service to
-4-
<PAGE> 5
any person obtaining the Equipment from Customer without QUALCOMM's prior
written consent.
2. OmniTRACS SOFTWARE.
2.1 Software License. The term "Software" as used herein, includes all
software licensed to Customer by QUALCOMM pursuant to the provisions of this
Agreement, including Firmware as described in Section 1.4, and any
documentation delivered in connection with such software. QUALCOMM grants to
Customer a non-exclusive, non-transferable, revocable license to use the
Software solely in conjunction with the OmniTRACS System, and (i) with respect
to Software other than the Firmware, at one (1) location (the "Site") and (ii)
on one (1) Customer controlled or owned central processing unit and operating
system software. both meeting QUALCOMM's specifications for use with the
Software (the "Authorized Equipment"). QUALCOMM further grants to Customer the
right to transfer its license to use the Firmware during the useful life of the
Equipment, in conjunction with the transfer of its ownership subject to the
limitations of Section 1.10, provided that prior to the transfer of the
Equipment, the transferee shall agree in writing to treat the Firmware as
confidential proprietary information of QUALCOMM, and to observe all copyright
and trademark rights of QUALCOMM. Customer further acknowledges that QUALCOMM
has no obligation to provide the Service to such transferee of the Equipment
nor any other person or entity other than to Customer pursuant to the terms and
conditions of this Agreement. and that QUALCOMM may condition its agreement to
provide the Service to any transferee upon QUALCOMM's approval of the
creditworthiness of such transferee, the payment by such transferee of a
relicensing fee and/or the upgrade of Equipment at such transferee's expense.
2.2 Delivery, Acceptance and Installation. QUALCOMM will ship Software
ordered hereunder FOB QUALCOMM's San Diego facility. For Software installed by
QUALCOMM. acceptance shall occur upon installation; in all other cases,
acceptance of the Software shall occur within fifteen (15) days after shipment.
Unless otherwise expressly agreed, Customer shall be responsible for installing
the Software into its Authorized Equipment at the Site. Installation of
Software by QUALCOMM will be on a time and materials basis at QUALCOMM's then
current rates plus reimbursement for travel and per diem expenses.
2.3 Unauthorized Use of the Software. Customer shall not (i) alter,
modify or adapt the Software, including but not limited to translating,
decompiling, disassembling, reverse engineering or creating derivative works;
(ii) copy the Software (except that Customer may make up to (3) copies of the
Software other than the Firmware for inactive back-up and archival purposes);
(iii) sublicense. assign or otherwise transfer the Software in whole or in part
(except as otherwise provided with respect to the Firmware in Section 2.1);
(iv) use the Software on other than the Authorized Equipment at the Site, or
(v) use the Software except as specifically contemplated by and set forth in
this Agreement. Use of the Software by Customer for purposes other than the
OmniTRACS System is a material breach of this Agreement and will be subject to
the prompt application of the termination provisions set forth in Section 6.2.
2.4 Proprietary Information. Customer expressly acknowledges that the
entire right and title to the Software. including but not limited to all
copyright, trade secret and other intellectual or proprietary rights to the
Software, shall remain with QUALCOMM, and QUALCOMM has the exclusive right (i)
to protect the Software by copyright registration or otherwise and (ii) to
reproduce, publish, display, sell and distribute such Software to anyone.
Customer shall not remove any copyright notices or any confidential or
proprietary legends from the Software. Customer also hereby acknowledges and
agrees that the Software constitutes a valuable proprietary product and trade
secret of QUALCOMM embodying substantial creative efforts and confidential
information, ideas and expressions. Accordingly, Customer shall observe
complete confidentiality with respect to the Software, and shall not disclose
all or any portion of the Software to any third party or entity, except as such
disclosure may be necessary or appropriate to Customer's employees in the
course of their employment. Customer shall advise any employees of Customer
receiving access to the Software of the confidential and proprietary nature of
the Software and obtain from each of such employees his or her agreement to
abide by the obligations of Customer set forth in Sections 2.3 and 2.4.
2.5 Software Warranty. The Software has been developed to permit Customer
to use the MCTs and access QUALCOMM's Network Management Facility computer(s)
and to perform other related functions. QUALCOMM warrants that for a period of
twelve (12) months (the "Software Warranty Period"), each Software product
shall perform substantially in accordance with the specifications contained in
the applicable Software manuals (the "Software Warranty"). For Software
installed by QUALCOMM, the Software Warranty Period shall commence upon
installation; in all other cases the Software Warranty Period shall commence
upon shipment. QUALCOMM will use reasonable efforts to correct errors, if any,
which are discovered within the Warranty Period which either are present at the
time of delivery of Software or are caused by warranty corrections performed
by QUALCOMM and which inhibit the Software's performance such that it does not
perform substantially in accordance with the specifications contained in the
applicable Software manual. The preceding remedies am available to Customer
only if (i) QUALCOMM is notified, in writing, by Customer of any defect within
fifteen (15) days after Customer's discovery of the defect, (ii) Customer's
notification shall contain a detailed description, in writing, of any
malfunction of the Software, including the frequency of the malfunction and the
conditions surrounding the malfunction, (iii) QUALCOMM from its examination can
repeat the error or malfunction to disclose that such defect actually exists,
and (iv) the Software has not been subjected to misapplication, misuse, damage,
negligence or accident. Any use of or modifications made to software not
supplied by QUALCOMM but which interface with the Software and which impair the
functionality of the Software shall be undertaken at Customer's sole risk.
Customer acknowledges that QUALCOMM's ability to provide the Software Warranty
requires Customer's full cooperation, including sample and/or diagnostic output
and reasonable access to the Authorized Equipment and may require down-time of
the Authorized Equipment. QUALCOMM's Software Warranty obligation is limited
to the above remedy and QUALCOMM makes no warranty that operation of the
Software will be uninterrupted or error free or that any errors discovered can
be corrected.
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2.6 Software Maintenance. During the Software Warranty
Period, Customer will also receive maintenance for the Software ("Software
Maintenance") at no additional cost consisting of: (i) upgrades and
enhancements when such upgrades and enhancements are developed by QUALCOMM and
made generally available without cost to other licensees of the Software, (ii)
Soft telephone support to assist Customer's designated technical
representative(s) in answering routine questions with respect to the use of the
Software, (iii) maintenance for deviations between the Software and the
documentation furnished by QUALCOMM, as determined by QUALCOMM, and (iv)
applicable Software documentation updates. Any upgrades or enhancements
developed or published by QUALCOMM which are not made generally available at no
additional cost to other licensees will be offered to Customer at QUALCOMM's
then current published rates. Determination of whether an upgrade or
enhancement will be made available at no additional cost or will be made
available only for an additional cost is the sole and exclusive right of
QUALCOMM. Upgrades and enhancements will be shipped to Customer in a mutually
acceptable media. QUALCOMM will install upgrades and enhancements only upon
request, with installation on a time and materials basis at QUALCOMM's then
current rates plus reimbursement for travel and per diem expenses. If QUALCOMM
fails to fulfill its Software Maintenance obligations as set forth herein,
Customer's sole and exclusive remedy is the right to terminate Software
Maintenance immediately.
2.7 Extended Software Maintenance. After the expiration of the Software
Warranty for the Software, Customer may obtain continued Software Maintenance
("Extended Software Maintenance") by paying QUALCOMM's then current annual
Extended Software Maintenance fee for each Software product licensed under this
Agreement calculated at fifteen (15%) of the then list price for the licensed
Software product (the "Annual Maintenance Fee"). After the expiration of the
Software Warranty Period, Customer may elect to obtain QUALCOMM's Extended
Software Maintenance by paying the first Annual Maintenance Fee. QUALCOMM will
invoice Customer for the first Annual Maintenance Fee one (1) month prior to
expiration of the Software Warranty Period. Thereafter, the Annual Maintenance
Fee shall be due and payable annually within thirty (30) days after the
anniversary of the expiration of the Software Warranty Period. QUALCOMM
reserves the absolute right to terminate the Extended Software Maintenance
without prior notification to Customer in the event that Customer has not paid
the applicable charges in accordance with this Section. QUALCOMM's Extended
Software Maintenance shall be limited to support to the current version and the
immediately previously released version of the Software. If QUALCOMM fails to
fulfill its Extended Software Maintenance obligations as set forth herein, the
customer's sole and exclusive remedy is the right to terminate the Extended
Software Maintenance immediately for the Software and QUALCOMM shall refund to
Customer any prepaid fees, prorated based upon a thirty (30) day month,
beginning from the effective date of such termination.
2.8 Support Modem and Remote Access. QUALCOMM may as a condition to
providing Software Maintenance and Extended Software Maintenance hereunder,
require Customer to dedicate a communication port off of Customer's computer and
supply a dedicated phone line for use with a modem supplied by Customer meeting
QUALCOMM's specifications, for QUALCOMM's remote access use in support of the
Software. Customer will provide QUALCOMM with a user account and password to
access the software on a 24 hour basis as an on-line end-user (with file
transfer capability), within a reasonable time after Customer has made a request
for support or as mutually agreed upon for installation of an upgrade or
enhancement. QUALCOMM will only access the account for purposes of (i) support
and maintenance of the Software, (ii) installations of upgrades, enhancements
and new version releases of the Software on mutually agreed upon schedules. and
(iii) or integration or other support agreed on between QUALCOMM and Customer.
2.9 Other Support. Except as provided in this Section 2, no software
maintenance, support or other services are provided under this Agreement. If
Customer requests and QUALCOMM elects to make corrections for difficulties or
defects traceable to Customer's errors or those of a third party, or to provide
support for system changes, upgrades, modifications, merges or improvements,
interfaces, operating systems, hardware configuration, data management, or
other system administration issues, Customer shall pay for QUALCOMM's services
on a time and materials basis at QUALCOMM's then current rates plus
reimbursement for travel and per diem expenses.
2.10 Return of the Software. Upon any termination or expiration of this
Agreement, Customer shall, within ten (10) days of such termination or
expiration, return to QUALCOMM at Customer's expense all copies of the Software
and supporting documentation or, at QUALCOMM's discretion, provide written
certification that Customer has destroyed all copies of the Software including
any documentation.
3. OmniTRACS SERVICE.
3.1 OmniTRACS Service. The OmniTRACS Service (the "Service") consists of
a two-way Ku-band, satellite-based, mobile messaging and position location
reporting service using various components of the OmniTRACS System which is
provided to Customer hereunder for installation and use only on Customer's
vehicles or owner-operators' vehicles contracting with Customer.
3.2 Customer Service. Customer shall immediately notify QUALCOMM of any
interruption in the Service. The QUALCOMM Customer Service Center at (800)
541-7490 shall be contacted whenever there is a Service operation or Equipment
failure, Software problem, or other service/information is required.
3.3 Activation of the Service; Price Increases. The Service for each MCT
is considered to be activated in Customer's message service account upon the
earlier of the date on which Customer requests QUALCOMM to activate the Service
for the MCT or thirty (30) days after date of shipment of the MCT. At time
of activation, Services and the associated service rates and/or fees shall
commence for all activated MCTs. The message service rates set forth on Page 1
are subject to annual increases based upon increases in the Bureau of Labor
Statistics Consumer Price Index, Subgroup "Urban Consumers (Revised)" as
published by the U.S. Department of Labor
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<PAGE> 7
for the Los Angeles-Long Beach-Anaheim Metropolitan Area (1967 = 100 Base).
Increases shall be calculated no more than once per calendar year and shall be
limited to the difference between the index rate at the beginning of the
calendar year and the index rate at the end of the calendar year.
3.4 International Use. QUALCOMM has not yet received permission to
transmit or operate the Service in Mexico, and therefore, Customer is not
authorized to use the Service in Mexico. QUALCOMM has received interim
approval which permits QUALCOMM's customers to operate the Service in Canada
while their trucks are temporarily located in Canada (hereinafter "Interim
Approval"). Customer acknowledges that the Canadian Government has the
authority to rescind the Interim Approval. In the event the Canadian
Government rescinds the Interim Approval, QUALCOMM shall immediately notify
Customer of such rescission and Customer shall cease operating the Service in
Canada until Customer is notified by QUALCOMM that approval has been
reinstituted.
3.5 Unauthorized Use of the Service. Customer shall not use, or attempt
to use, the Equipment or Services for any Unauthorized Purpose or in such a
manner as to interfere with use by other customers of the OmniTRACS System.
"Unauthorized Purpose" as used herein includes: (i) obtaining access to or use
of Services with intent to avoid payment, in whole or in part, of charges due
under this Agreement. (ii) access to, use of, alteration of, or destruction of
the data files, programs, procedures, or information of Customer or any other
QUALCOMM customer, (iii) use of the Equipment or Services with the intent to
reverse engineer or clone the OmniTRACS System, (iv) use of the Software in
such a manner to void the Software license provided in Section 2 or (v) use of
the Services or Software furnished pursuant to this Agreement for any purpose
or in any manner which, directly or indirectly. violates the law or aids any
unlawful act or undertaking. QUALCOMM may, without notice to Customer, and
without liability to QUALCOMM, discontinue the Service in response to a request
from a government agency, including but not limited to the FCC. For other
QUALCOMM actions to discontinue Service to prevent use for an Unauthorized
Purpose, QUALCOMM will use best efforts to provide Customer twelve (12) hours
notification prior to discontinuing the Service. QUALCOMM shall restore the
Service as soon as the Service can be provided without undue risk of use for an
Unauthorized Purpose. Customer shall not be credited message service charges
for Service interruptions resulting from QUALCOMM's actions under this Section.
3.6 Dangerous Operation. Customer acknowledges that the use of MCTs while
the vehicle is in motion is DANGEROUS. Accordingly. Customer shall instruct
all of its driven NOT TO USE THE SERVICE THE VEHICLE IS IN MOTION. If, and
only if, the vehicle is being driven by a team, the non-driver may operate the
MCT while the vehicle is in motion, provided the non-driver ensures such
operation does not distract the driver.
3.7 Warranty. QUALCOMM warrants that it shall maintain the Service so as
to provide Service Availability at least 98% per month for all hours, except
from 10 p.m. to 3 am., Pacific Time, when QUALCOMM generally performs
maintenance actions. As used herein, "Service Availability" shall mean
provision of the Service free from interruption or break and shall include, in
addition to the ability of QUALCOMM's Network Management Facility to receive
Customer's outbound messages, the ability to transmit messages from the NMF to
the involved satellite and then to a ground terminal, and the ability to
receive at the Network Management Facility an acknowledgment originating at the
ground terminal that the message has been received. This Service Availability
is predicated upon normal usage for MCTs in service in the U.S. and does not
include interruption of Service as a result of force majeure events. For
purposes of this paragraph, "force majeure events" shall include, without
limitation, satellite transponder failure, acts of God, natural disasters,
strikes, compliance with governmental laws, and other events which are beyond
the reasonable control of QUALCOMM. In any month in which QUALCOMM does not
provide at least 98% Service Availability, then, as Customer's sole and
exclusive remedy, Customer shall be entitled to receive upon request a credit
against Customer's Service account in an amount per initiated MCT equal to (a)
$15.00, if Service Availability is less than 98% but more than 95%, or (b)
$25.00, if Service Availability is 95% or less. In the event the Service
Availability is less than 85% in any month, Customer shall not be charged any
monthly message charges for such month. The foregoing shall be Customer's sole
and exclusive remedy for any breach of warranty by QUALCOMM in connection with
the Services.
3.8 Position Polls Data Retention. OmniTRACS position location data for
MCTs operating within the continental United States ("position polls data")
will be deleted by QUALCOMM within fourteen (14) days after receipt of
acknowledgment of delivery to Customer over its telecommunications link (the
"fourteen day period"). QUALCOMM will maintain position polls data during this
fourteen day period for service and maintenance purposes and will each day
automatically delete position polls data which has previously been stored for
fourteen (14) days. A limited Optional Position Polls Data Retention Service
is available for a fee, which will be quoted upon request.
3.9 Ground Telecommunications Link. Customer shall be responsible for all
charges, nonrecurring and recurring, associated with the telephone ground
communications link between Customer's dispatch facility computer and
QUALCOMM's Network Management Facility in San Diego, California. Customer
shall select either a QUALCOMM-provided 800 Number Service or a leased line
service. QUALCOMM shall have no warranty obligations in connection with any
telephone ground communications link, other than to pass through to Customer
any warranties provided by the vendor or other provider thereof.
3.10 Other Support. Except as provided in this Section 3, no other
messaging or position location reporting services or support are provided under
this Agreement. If Customer requests and QUALCOMM elects to provide other
messaging or position location reporting research or other support services,
Customer shall pay for QUALCOMM's services on a time and materials basis at
QUALCOMM's then current rates, plus reimbursement for travel and per diem
expenses, if applicable.
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<PAGE> 8
4. DISCLAIMERS, LIMITATION OF LIABILITY AND INDEMNIFICATION.
4.1 Limitation of Liability and Remedies. QUALCOMM's entire liability and
Customer's exclusive remedies for any damages arising from the performance or
nonperformance of the Equipment, Software, Maintenance, Service or other
services provided under this Agreement, regardless of the form of action,
whether in contract, breach of warranty, indemnification. or tort, including
negligence, strict liability, or otherwise, shall be: (i) for breach of
warranty for the installation of MCTs the remedy set forth in Section 1.3; (ii)
for breach of warranty for the Equipment or for maintenance obligations
relating to the Equipment, the remedies set forth in Section 1; (iii) for
breach of warranty for the Software or for the maintenance obligations for the
Software the remedies set forth in Section 2; (iv) for breach of warranty for
the Service, including any breach of warranty relating to telecommunications
equipment, the remedies set forth in Section 3; and (v) for claims other than
as set forth above, QUALCOMM's liability shall be limited to direct damages
proven in an amount not to exceed the total purchase price paid by Customer for
the Equipment purchased during the calendar year in which the claim arose.
THE ENTIRE LIABILITY OF QUALCOMM AND THE EXCLUSIVE REMEDY OF CUSTOMER FOR
BREACH OF WARRANTY SHALL BE THE REPLACEMENT OF THE SOFTWARE OR REPLACEMENT OF
THE EQUIPMENT WHICH DOES NOT MEET THE WARRANTIES SET FORTH IN SECTIONS 1 AND 2
OF THIS AGREEMENT. Provided however, in the event that such remedy for breach
of warranty fails of its essential purpose, QUALCOMM shall then, as Customer's
sole and exclusive remedy, reimburse Customer for that part of the Software or
Equipment as to which Customer has a claim in an amount not to exceed the
license fees paid for the Software or the purchase price paid for the
Equipment, as to which Customer has a claim, depreciated on a five (5) year
straight line basis from the date of shipment of the Software or the Equipment.
IN NO EVENT SHALL QUALCOMM BE LIABLE TO CUSTOMER FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR SPECIAL DAMAGES, INCLUDING BUT NOT LIMITED TO ANY LOST
PROFITS, LOST SAVINGS OR OTHER INCIDENTAL DAMAGES ARISING OUT OF THE USE OR
INABILITY TO USE THE EQUIPMENT, THE SOFTWARE, OR THE SERVICE PROVIDED
HEREUNDER, EVEN IF QUALCOMM HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
4.2 Disclaimer of Warranties. EXCEPT FOR THE WARRANTIES SPECIFICALLY SET
FORTH IN SECTION 1 FOR THE EQUIPMENT, SECTION 2 FOR THE SOFTWARE, AND SECTION 3
FOR THE SERVICES, THE EQUIPMENT, SOFTWARE, SERVICES AND MAINTENANCE PROVIDED
HEREUNDER ARE PROVIDED "AS IS" AND THERE ARE NO OTHER WARRANTIES MADE BY
QUALCOMM, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
4.3 Indemnification. Customer shall indemnify, defend and hold QUALCOMM
harmless against any and all losses, claims, damages or expenses (including
attorneys' fees) arising out of or related to: (i) any personal injury to or
death of any person or persons, any loss or damage of any property or any
interruption of services which are caused or claimed to have been caused
directly or indirectly from Customer's (including its employees or independent
contractors) negligent operation and/or related use or misuse of the OmniTRACS
System and Equipment including, without limitation, use of the Equipment by the
driver of a vehicle which is in motion; (ii) use of any Outdoor Unit Mounting
Bracket or other equipment not provided or approved for use with the Equipment
by QUALCOMM; (iii) any use of the OmniTRACS System by Customer for an
Unauthorized Purpose; (iv) data or other information transmitted over the
OmniTRACS System, excluding any database provided by QUALCOMM; or (v) any
breach by Customer of any of the terms and conditions of this Agreement.
5. INVOICING AND PAYMENT.
5.1 Invoicing. Deliverable Equipment and Software will be invoiced upon
shipment. The Base Connection Fee or Base Message Service Fee, as applicable,
and the Extended Maintenance Service Fee will be invoiced, in advance, on a
monthly cycle. All other Message Service, Extended Software Maintenance,
Installation, Communication Link and other service charges will be invoiced as
of the end of the monthly cycle in which they are incurred.
5.2 Payment. Customer shall pay all invoices issued within thirty (30)
days from the date of invoice. QUALCOMM reserves the right to change the
credit terms at any time, when, in QUALCOMM's opinion, Customer's financial
condition or previous payment record so warrants. Should Customer become
delinquent in the payment of any sum due, QUALCOMM, after ten (10) days from
the date of written notice to Customer. shall not be obligated to continue
performance under this Agreement or any other agreement between QUALCOMM and
Customer. A late charge of the lesser of 1.5% per month or the maximum amount
permitted by law, will be added to past due accounts. All reasonable costs and
expenses, including but not limited to attorneys' fees, court costs and service
charges incurred by QUALCOMM in collecting payment will be an expense of and
charge to Customer. Customer waives any existing and future claims and offsets
against payments due hereunder, and agrees to pay the amounts due.
5.3 Security Interest. Customer hereby grants and QUALCOMM reserves a
purchase money security interest in each item of Equipment purchased hereunder,
and in any proceeds therefrom, for the amount of its purchase price. Upon
request by QUALCOMM, Customer shall sign any document QUALCOMM deems is
necessary to perfect such security interest. Payment in full of the purchase
price of any item of Equipment purchased hereunder shall release the security
interest in that item of Equipment. If Customer fails to make any payment to
third parties or do any act as provided for in this Agreement, QUALCOMM shall
have the right, but not the obligation, without notice to or demand on
Customer, and without releasing Customer from any obligation hereunder, to make
or do the same, and to pay, purchase, contest or compromise any encumbrance,
charge, or lien which in the judgment of
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<PAGE> 9
QUALCOMM appears to affect any Equipment in Customer's possession which is owned
by QUALCOMM or in which QUALCOMM has a security interest, and in exercising any
such right, incur any liability and expend whatever amounts in its discretion it
may deem necessary therefor. All expenses so incurred by QUALCOMM shall be
without demand immediately due and payable by Customer and any accounts past due
shall be subject to the late charge described in Section 5.2 above for each
delinquent month or part thereof, until paid.
5.4 Taxes. All prices and rates for the Equipment, Software, Service,
Maintenance and other services provided for under this Agreement do not include
sales, use, excise or similar taxes assessed at any time. Excepting those
taxes imposed upon QUALCOMM's income and FCC license fees, all applicable taxes
and/or assessments (including but not limited to assessments imposed by the
FCC) shall be paid by Customer. In the event that QUALCOMM. at its sole
discretion, pays for any such items on behalf of Customer, QUALCOMM will
invoice Customer such amount and Customer shall reimburse QUALCOMM in
accordance with Section 5.2.
6. TERM AND TERMINATION.
6.1 Term. The term of this Agreement shall commence upon the Effective
Date and shall continue in effect for a period of five (5) years (the "Term").
Thereafter, the Agreement shall be automatically extended on a year-to-year
basis (the "Extended Term") unless terminated by either party in writing on not
less than ninety (90) days prior written notice to the other party prior to the
applicable anniversary of the Effective Date, provided that QUALCOMM may, by
notice delivered to Customer at least ninety (90) days prior to each such
anniversary, condition such renewal upon Customer's agreement to upgrade all or
a portion of the Equipment included in the OmniTRACS System at QUALCOMM's then-
current prices applicable to such upgrades, Customer's acceptance of QUALCOMM's
then-current terms and conditions and inclusion of QUALCOMM's then-current
pricing for the Service and Extended Maintenance.
6.2 Termination. Without limiting other causes, the occurrence of any of
the following shall constitute a material default and breach of this Agreement
and shall allow the non-defaulting party to terminate this Agreement for cause
after the expiration of the applicable period of cure, if any: (i) Any failure
by Customer to pay all sums which it is obligated to pay hereunder within ten
(10) calendar days of written notice that such sum is due; (ii) Any
unauthorized disclosure or use regarding the Software or the Equipment shall
permit QUALCOMM to terminate immediately; (iii) The Agreement shall terminate
automatically, without notice, upon (a) the appointment of a receiver to take
possession of all or substantially all of Customer's assets, (b) a general
assignment by Customer for the benefit of its creditors, or (c) the institution
of a bankruptcy or other insolvency proceeding by or against Customer; (iv) Any
material default by either party of an obligation. covenant or condition
hereunder, other than those set forth above, which is not cured within thirty
(30) calendar days after the defaulting party receives written notice of such
default; or (v) Any event which would constitute a material default or breach
of any agreement between Customer and QUALCOMM or any third party for the lease
of the Equipment. QUALCOMM's right to terminate hereunder shall include the
right to terminate the Service without additional notice to Customer.
7. OTHER TERMS.
7.1 Confidentiality of Agreement and Information. Customer agrees that
any information contained in any document, including but not limited to this
Agreement and the pricing contained herein. or obtained from examination of any
Equipment or Software furnished by QUALCOMM hereunder (whether or not marked
with a confidential or proprietary data legend) shall be deemed to be
QUALCOMM's confidential or proprietary data. Customer shall not, except as
necessary for the performance of this Agreement, duplicate, use or disclose to
any third person (including any company affiliated with Customer) any such
confidential or proprietary data, without the prior written approval of
QUALCOMM, not to be unreasonably withheld, except as to any such disclosures
which are required by law. Upon the termination or earlier cancellation of
this Agreement, Customer shall promptly return to QUALCOMM all confidential or
proprietary data received. If the parties have executed a separate
Non-Disclosure Agreement for the protection of confidential or proprietary
data, the terms and conditions of such Non-Disclosure Agreement shall take
precedence over this Section.
7.2 Choice of Law and Forum. This Agreement shall be governed by and
construed under the laws of the State of California, without reference to its
conflict of laws provisions. All disputes arising hereunder shall be heard
only by a court of competent jurisdiction in the County of San Diego, State of
California, and Customer hereby submits to the jurisdiction of such courts for
the purpose of litigating such disputes.
7.3 Assignability. Neither this Agreement, nor any rights, duties or
interest herein, shall be assigned, transferred, distributed, sublicensed,
subcontracted, pledged, or hypothecated by Customer without QUALCOMM's prior
written consent. Any such attempted conveyance in violation of this Section
shall be void and shall constitute a material default entitling QUALCOMM to
terminate this Agreement.
7.4 Severability. If any of the provisions of this Agreement is
determined to be invalid, illegal, or otherwise unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby; and the parties shall substitute for the affected
provision an enforceable provision which approximates the intent and economic
effect of the affected provision as closely as possible.
7.5 Survivability. The following provisions of this Agreement shall
survive any expiration or complete termination of this Agreement: 1.5, 1.6,
1.9, 2.3 through 2.5 inclusive, 2.10, 3.5 through 3.7 inclusive. 4.1 through
4.3 inclusive, 5.3, 5.4, 7.1, 7.2, 7.7 and 7.8.
7.6 Waiver of Breach. The waiver by any party of a breach of any of the
provisions of this Agreement shall not operate as a waiver of any subsequent
breach.
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7.7 Notices. All notices must be in writing and shall be deemed given:
(i) when delivered personally; (ii) when delivered by facsimile machine if
confirmation of receipt is requested and obtained; (iii) five (5) days after
having been mailed registered or certified mail, return receipt requested,
postage prepaid; and (iv) one (1) day after having been mailed by overnight
mail with a reliable express mail courier. Notices shall be addressed or
delivered to the Customer invoice address on Page 1 hereof and to QUALCOMM at
6455 Lusk Blvd., San Diego, CA 92121-2779, Attn: OmniTRACS Contracts
Administration.
7.8 Attorneys' Fees. If any party or parties commences an action against
any party or parties arising out of or in connection with this Agreement, the
prevailing party or panics shall be entitled to recover from the losing party
or parties reasonable attorneys' fees and costs of suit.
7.9 Force Majeure. Neither party shall be liable to the other for failure
or delay in the performance of a required obligation other than the payment of
money if such failure or delay is caused by riot, fire, flood, natural
disaster, act of God, governmental action or decree, or other event beyond such
party's control, provided that such party gives prompt written notice of such
condition and resumes its performance as soon as possible, and provided further
that the other party may terminate this Agreement if such condition continues
for a period of one hundred and eighty (180) days without demonstration by the
non-performing party of the ability to resume performance of its obligations
within a reasonable period.
7.10 Remedies. Due to the unique, confidential and proprietary nature of
the Software, Customer understands and agrees that QUALCOMM's remedies at law
for Customer's breach of this Agreement may be inadequate and that QUALCOMM
shall be entitled to equitable relief, including without limitation, injunctive
relief, specific performance or other equitable remedies in addition to all
other remedies provided herein or available to QUALCOMM at law or equity. No
remedy made available to QUALCOMM by any of the provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or otherwise.
7.11 QUALCOMM Lease. In the event Customer enters into a separate lease
agreement with QUALCOMM to lease all or a portion of the Equipment from
QUALCOMM, notwithstanding any provision to the contrary contained in this
Agreement, title to such leased Equipment shall remain vested at all times in
QUALCOMM or its assignees, any references to Customer's purchase of or
obligation to pay the purchase price for the leased Equipment shall have no
force and effect, and payment for the Equipment shall be as set forth in the
separate lease agreement between QUALCOMM and Customer.
7.12 Entire Agreement. This Agreement contains the entire understanding,
agreements and representations of the parties, and Customer acknowledges and
agrees that in entering into this Agreement, Customer did not rely upon any
representations or warranties other than those set forth herein. This
Agreement supersedes all prior writings, discussions and understandings
concerning the subject matter. Any additional or different terms or conditions
proposed by Customer or contained in any purchase order are hereby rejected and
shall be of no force and effect unless expressly agreed to in writing by
QUALCOMM. In order to be binding, any waiver, alteration, amendment or
modification of any of the provisions of this Agreement must be in writing and
signed by a duly authorized representative of both parties.
7.13 Counterparts and Facsimile Delivery. This Agreement may be executed
in two or more identical counterparts, each of which shall be deemed to be an
original and all of which taken together shall be deemed to constitute the
Agreement when a duly authorized representative of each party has signed a
counterpart. The parties may sign and deliver this Agreement by facsimile
transmission. Each party agrees that the delivery of the Agreement by
facsimile shall have the same force and effect as delivery of original
signatures and that each party may use such facsimile signatures as evidence of
the execution and delivery of the Agreement by all parties to the same extent
that an original signature could be used.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
by their duly authorized representatives as of the date first set forth on Page
1.
QUALCOMM Incorporated CUSTOMER
By: /s/ Teresa White By: /s/ Gary Weilheimer, for the Company
------------------------ --------------------------------------------
Name: Teresa White Name: Timely Transportation - Gary Weilheimer
---------------------- -------------------------------------------
Title: VP Finance Title: Chief Financial Officer
---------------------- -----------------------------------------
-10-
<PAGE> 11
ATTACHMENT 1
SPARES PRICE LIST*
<TABLE>
<S> <C> <C>
Outdoor Unit #10-4150 $ 1,830.00
Communications Unit #10-6490 $ 2,000.00
Display Unit (QWERTY) #CV90-3656-1 $ 380.00
20' Outdoor Cable #CV90-2567-20 $ 85.00
17' Display Cable #CV90-3689-17 $ 55.00
20' Power Cable #CV90-2794-20 $ 70.00
Comm Unit Mounting Tray #10-8435-3 $ 65.00
(Includes Stud Plate Kit)
Display Holster Kit #10-2682-1 $ 30.00
(Includes Backing Plate)
</TABLE>
* Current price list as of the Effective Date of this Agreement; all
prices are subject to periodic change without notice.
-11-
<PAGE> 12
ATTACHMENT 2
DELIVERY SCHEDULE
The prices set forth in this Agreement and the following Delivery Schedule are
predicated upon this Agreement being executed by both Parties on or before
April 28, 1995.
The MCTs purchased under this Agreement shall be delivered as follows:
<TABLE>
<CAPTION>
Delivery Quantity
-------- ---------
<S> <C>
June 1995 60 Units
TBD (Prior to March 1, 1997) 40 Units
---------
TOTAL MCTs 100 Units
</TABLE>
Deliveries may be made incrementally throughout the month until the total
monthly quantity is received. QUALCOMM's obligation to deliver the Equipment
is contingent upon QUALCOMM credit approval and, if applicable, receipt by
QUALCOMM of written confirmation of financing approval for the purchase of the
Equipment. Delivery dates are defined to be the date QUALCOMM ships the
Equipment. All deliveries shall be made to the Shipping Address first
specified in this Agreement unless otherwise specified by Customer within
thirty (30) days prior to the scheduled delivery date.
For the MCTs for which delivery is to be determined, Customer shall give
QUALCOMM sixty (60) days prior written notice of the desired delivery date(s)
and quantities of such MCTs to be delivered to Customer. QUALCOMM will use its
reasonable efforts to meet the delivery date requested by Customer, and will
notify Customer if a different delivery date is required.
For other Equipment and Optional Services purchased under this Agreement,
corresponding delivery schedules shall be specified upon mutual agreement.
-12-
<PAGE> 13
ATTACHMENT 3
SPECIAL PROVISIONS
I. MCT PRICE CONTINGENCY.
The price of $3,900.00 for each MCT is specifically predicated upon
Customer purchasing and accepting delivery of one hundred (100) MCTs in
accordance with the delivery schedule set forth in Attachment 2, Delivery
Schedule. In the event Customer does not purchase and accept delivery of 100
MCTs in accordance with the Delivery Schedule, then the purchase price for all
MCTs (delivered and undelivered) shall be increased based on the actual
quantity purchased as follows:
Total of 1 - 50 MCTs $4,000
Total of 51- 99 MCTs $3,950
In the event of a price adjustment in accordance with this Paragraph, QUALCOMM
will invoice Customer and Customer shall pay, in accordance with Section 5,
entitled "Invoicing and Payment," an additional amount for each MCT previously
purchased by Customer equal to the difference between the applicable price set
forth in the above schedule and $3,900.00. Additionally, upon such price change
pursuant to this Paragraph, Customer shall pay the full applicable increased
purchase price in accordance with Section 5 for all MCTs delivered to Customer
after the price change.
II. OUTDOOR UNIT MOUNTING BRACKET.
QUALCOMM agrees to provide one (1) outdoor unit mounting bracket with
each MCT purchased and delivered hereunder for no charge. Any additional
outdoor unit mounting brackets will be at the price set forth in Item 02 at
Page 1.
III. BASE MESSAGE SERVICE OPTION.
At any time during the initial term of this Agreement, Customer may
elect, by providing written notification to QUALCOMM, to replace the
calculation for those Message Services charges constituting the Base Connection
Fee (Item 19a) and the Regular Message Rate (Item 20) with the Base Message
Service charge of $50.00 per month per MCT, as more particularly described in
Item 19.b. on Page 2. Such election shall become effective upon the beginning
of QUALCOMM's billing cycle which immediately follows the receipt by QUALCOMM
of such notification, provided such notification is given at least one week
prior to the commencement of QUALCOMM's next billing cycle.
IV. THIRD PARTY SOFTWARE.
Customer is retaining a third party software vendor for development of
its satellite interface software to the OmniTRACS System. Customer
acknowledges that it shall be solely responsible for ensuring that the third
party interface software is capable of providing the
-13-
<PAGE> 14
OmniTRACS Service. QUALCOMM shall not be liable to Customer in the event the
OmniTRACS System does not function due to the interface software provided by
Customer being defective or improperly interfaced to the OmniTRACS System.
Additionally, Customer acknowledges that QUALCOMM, at its sole discretion, may
require that the third party interface software be tested using QUALCOMM's test
hub prior to Customer using the third party interface software with QUALCOMM's
satellite network.
V. LEASED LINE COMMUNICATIONS LINK.
A. Nonrecurring Charges. QUALCOMM will provide a digital leased
line communications link between Customer's asynchronous dispatch facility
computer and QUALCOMM's Network Management Facility ("NMF") in San Diego,
California. QUALCOMM agrees to waive the one-time installation site charge of
$4,190.00 (covers dedicated communications resources) and the one-time
telecommunications service provider installation charge of $1,081.00, for the
Async leased line communications link. Customer shall be required to provide a
Codex 35XX DSU/CSU (two (2) port) (Modem), which Customer may elect to purchase
from QUALCOMM for $1,713.00. QUALCOMM will invoice and Customer agrees to pay
the amount set forth above in accordance with Section 5 of this Agreement
entitled "Invoicing and Payment."
B. Recurring Charges. QUALCOMM will invoice and Customer agrees
to pay $541.00 per month for the asynchronous leased line communication link
between Customer's dispatch facility at area code and prefix 404 - 953 to
QUALCOMM's NMF at area code and prefix 619 - 587. The monthly fee is subject
to adjustment, as QUALCOMM's telecommunications service provider adjusts its
monthly fee. QUALCOMM will invoice Customer monthly for the asynchronous
leased line after installation and Customer shall pay for the leased line in
accordance with Section 5.
C. Dial Restore Line. QUALCOMM will also provide a Dial Restore
Line at QUALCOMM's NMF for a monthly fee of $40.00. QUALCOMM will invoice
Customer monthly for the Dial Restore Line after installation and Customer
shall pay for the Dial Restore Line in accordance with Section 5. Customer
shall be responsible for installing and maintaining at all times, at Customer's
expense, a dedicated common business line at Customer's facility to support the
Dial Restore Line.
-14-
<PAGE> 1
EXHIBIT 10.9
AMENDMENT NO. 1 TO OMNITRACS(R) CONTRACT
THIS AMENDMENT NO. 1 is made and entered into this 23rd day of June,
1995, by and between Timely Transportation, Inc. ("Customer") with its
principal place of business located at 100 Galleria Parkway N.W., Ste. 115,
Atlanta, GA 30339, and QUALCOMM Incorporated ("QUALCOMM"), with its principal
place of business located at 6455 Lusk Boulevard, San Diego, California
92121-2779.
RECITALS
A. QUALCOMM and Customer entered into a written OmniTRACS Contract dated
May 8, 1995 (the "Contract") for certain services and equipment.
B. By this Amendment No. 1, both QUALCOMM and Customer desire to amend
the Contract as hereinafter set forth.
TERMS
NOW, THEREFORE, for and in consideration of the mutual promises set
forth herein, QUALCOMM and Customer agree as follows:
1. Amendment of Attachment 3 entitled, "Special Provisions". Paragraph
I, "MCT Price Contingency," shall be deleted in its entirety.
2. Amendment of Attachment 3 entitled, "Special Provisions". A new
Paragraph VI is added as follows:
"VI. QUALCOMM FINANCING.
A. Finance Lease. QUALCOMM and Customer contemplate financing
the purchase of up to one hundred (100) refurbished MCTs, in accordance with
the terms of the OmniTRACS Finance Lease ("Finance Lease") entered concurrently
herewith. The MCT price set forth in the Finance Lease includes installation,
Outdoor Unit Mounting Brackets, and Remote Buzzers. The Finance Lease terms
apply to the first sixty (60) refurbished MCTs ordered, and will be amended to
reflect the additional forty (40) refurbished MCTs as those MCTs are ordered,
in accordance with Attachment 2, Delivery Schedule. The financing terms in the
Finance Lease are applicable only to the one hundred (100) refurbished MCTs
ordered hereunder. QUALCOMM's obligation to ship to one hundred (100)
refurbished MCTs ordered hereunder is contingent upon mutual acceptance and
completion of the Finance Lease concurrently with execution of this Amendment.
B. Additional Orders. Customer may purchase additional MCTs at
the price set forth on Page 1, Item 01. The MCTs shall have the Warranty
Period set forth in Section 1.5 of the Contract."
<PAGE> 2
2. Effectiveness of Contract. Except as expressly provided herein,
nothing in this Amendment shall be deemed to waive or modify any of the
provisions of the Contract, or any amendment or addendum thereto. In the event
of any conflict between the Contract, this Amendment or any other amendment or
addendum thereof, the document later in time shall prevail.
3. Counterparts and Facsimile Delivery. This Amendment may be executed
in two or more identical counterparts, each of which shall be deemed to be an
original and all of which taken together shall be deemed to constitute this
Amendment when a duly authorized representative of each party has signed a
counterpart. The parties may sign and deliver this Amendment by facsimile
transmission. Each party agrees that the delivery of this Amendment by
facsimile shall have the same force and effect as delivery of original
signatures and that each party may use such facsimile signatures as evidence of
the execution and delivery of this Amendment by all parties to the same extent
that an original signature could be used.
IN WITNESS WHEREOF, QUALCOMM and Customer hereto have executed this
Amendment as of the day and year first above written.
QUALCOMM Incorporated TIMELY TRANSPORTATION, INC.
By: /s/ Teresa White By: /s/ Gary Weilheimer for the Company
---------------------------------- ------------------------------------
Print: Teresa White Print: Gary Weilheimer
------------------------------- ---------------------------------
Title: Vice President, Finance Title: Chief Financial Officer
------------------------------- ---------------------------------
2
<PAGE> 1
EXHIBIT 10.10
QUALCOMM Incorporated
6455 Lusk Blvd.
San Diego, CA 92121-2779
ATTN: OmniTRACS(R)
Contracs Administration
Effective Date: June 23, 1995
OMNITRACS(R) FINANCE LEASE -- CALIFORNIA
LESSOR NAME: QUALCOMM Incorporated
6455 Lusk Boulevard
San Diego, CA 92121-2779
Tel: (800) 544-4977
Fax: (619) 658-1577
LESSEE NAME: TIMELY TRANSPORTATION, INC.
100 Galleria Parkway NW, Ste. 115
Atlanta, GA 30339
Tel: (404) 953-2963
Fax: (404) 850-1966
LEASED EQUIPMENT
<TABLE>
<CAPTION>
EQUIPMENT DESCRIPTION PRICE QUANTITY TOTAL
--------------------- ----- -------- -----
<S> <C> <C> <C>
*OmniTRACS Mobile Communication Terminal (the "MCT") $3,980.00/ea. 60 $238,800.00
(Includes: Communication Unit, Outdoor Unit,
Display, associated Cables and sixty (60) month
OmniTRACS Warranty)
*PRICE APPLIES TO REFURBISHED MCTS ONLY, AND
INCLUDES INSTALLATION, BRACKETS AND REMOTE BUZZERS
TOTAL CASH PRICE: $238,800.00
</TABLE>
<TABLE>
<CAPTION>
AMOUNT FINANCED
---------------
<S> <C> <C>
1. AMOUNT FINANCED (Total Cash Price less the Down Payment) $238,800.00
</TABLE>
-1-
<PAGE> 2
<TABLE>
<S> <C> <C>
2. ANNUAL PERCENTAGE RATE 10.00%
3. FINANCE CHARGE $ 63,111.73
4. TOTAL MONTHLY PAYMENT $ 5,031.86
5. TOTAL AMOUNT OF PAYMENTS $301,911.73
6. TOTAL SALE PRICE $301,911.73
(Total Cash Price plus the Finance Charge)
</TABLE>
-2-
<PAGE> 3
PAYMENT SCHEDULE
LESSEE'S PAYMENT SCHEDULE WILL BE AS FOLLOWS:
PAYMENT TERMS: UPON SIGNING THIS AGREEMENT, AND PRIOR TO SHIPMENT OF THE
EQUIPMENT, LESSEE WILL PAY LESSOR THE FIRST MONTH'S PAYMENT OF $5,031.86.
SUBSEQUENT PAYMENTS OF $5,031.86 ARE DUE MONTHLY, IN ADVANCE, ON THE FIRST DAY
OF EACH MONTH (THE "PAYMENT DATE") BEGINNING ON THE FIRST DAY OF THE MONTH
FOLLOWING SHIPMENT.
TERMS AND CONDITIONS
A. TERM. The term of this Finance Lease shall commence on the Effective
Date and shall continue for sixty (60) months or so long as any amounts are
owing under the Payment Schedule or under any applicable document(s).
B. LESSEE'S PROMISE TO PAY AND TERMS OF REPAYMENT. Lessee promises to
comply with this Agreement and to pay Lessor the Total Amount of Payments,
which includes the Finance Charge indicated above. Lessee promises to make
payments in accordance with the Payment Schedule.
C. PREPAYMENT. Lessee may prepay the amounts financed under this
Agreement, in full or in part without penalty at any time during the term of
the Agreement and such amount will be applied toward the principal balance.
However the monthly payment amount will not be adjusted, only the total amount
owing will be reduced.
D. LATE CHARGE. Lessee shall pay a late charge of five (5%) percent of
any payment not received within ten (10) days of the Payment Date. In
addition, a late charge of 1.5% per month, or the maximum amount permitted by
law, whichever is greater, will be added to past due accounts.
E. DEFAULT -- ENTIRE BALANCE DUE. If Lessee is in material default
hereunder, all sums owing hereunder shall be immediately due and payable (less
any unearned Finance Charge) without giving Lessee advance notice, or benefit
of a cure period.
F. DEFAULT -- REMEDIES. If Lessee is in material default hereunder, in
addition to all sums owing hereunder becoming immediately due and payable,
Lessor may use any of the remedies available to Lessor under California law,
the Uniform Commercial Code (UCC), or any other applicable law, including, but
not limited to, taking possession of the Equipment and selling it according to
law. In addition, Lessor is not obligated to provide maintenance on or service
to the Equipment.
G. CROSS-DEFAULT. Any default under this Agreement, whether monetary or
non-monetary, shall automatically be considered a default under that certain
OmniTRACS Contract (the "Contract") dated as of May 8, 1995 between Lessor and
Lessee, subject to all
-3-
<PAGE> 4
remedies and rights of termination as set forth therein, but not limited to,
Section 6.2, "Termination."
H. SECURITY INTEREST. Lessee hereby grants and Lessor reserves a
purchase money security interest in each item of Equipment purchased hereunder,
and in any proceeds therefrom, for the amount of its purchase price. Lessee
shall execute any and all documents Lessor deems necessary to perfect its
security interest, including, but not limited to, UCC financing statements.
Payment in full of the purchase price of any item of Equipment purchased
hereunder shall release the security interest in that item of Equipment.
Lessee shall at all times keep the Equipment free and clear from any liens or
encumbrances.
I. TRANSFER OF TITLE. Lessee acknowledges that title to leased Equipment
shall remain vested at all times in Lessor or Lessor's assignees until Lessor
transfers title to Lessee upon receipt of payment in full of all amounts due
under this Agreement. Lessee shall have no right, or interest in the Equipment
except as provided in this Finance Lease and shall hold the Equipment subject
and subordinate to Lessor's rights. Lessee shall, at Lessee's expense, protect
and defend Lessor's title against all persons claiming interest against or
through Lessee. It is understood that the equipment is and will remain
personal property and once installed on Lessee's vehicle, remains separate
personal property from the vehicle.
J. ASSIGNABILITY.
(i) By Lessee: Neither this Agreement, nor any rights, duties, or
interest herein, shall be assigned, transferred, pledged, or hypothecated by
Lessee, without the express written consent of Lessor, in its sole and absolute
discretion. Any such attempted conveyance in violation of this provision shall
be void, and shall constitute a material default hereunder, and under the
Contract, entitling Lessor to terminate this Agreement.
(ii) By Lessor. Lessee acknowledges that Lessor may sell and assign
Lessor's right, title and interest in this Agreement, and Lessee hereby
irrevocably consents to any such transfer. After such assignment, the term
QUALCOMM will mean QUALCOMM as manufacturer of the Equipment. QUALCOMM's
Assignee shall not be obligated in any way to perform any of Lessor's
obligations or be in any way responsible for any warranties made by Lessor.
QUALCOMM'S ASSIGNEE MAKES NO WARRANTIES TO LESSEE, EXPRESS OR IMPLIED, OTHER
THAN THE WARRANTY THAT QUALCOMM'S ASSIGNEE WILL NOT INTERFERE WITH LESSEE'S
RIGHT OF QUIET ENJOYMENT AND USE OF THE EQUIPMENT SO LONG AS LESSEE IS NOT IN
DEFAULT. QUALCOMM'S ASSIGNEE SPECIFICALLY DISCLAIMS ANY WARRANTY OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. AS TO QUALCOMM'S
ASSIGNEE, LESSEE LEASES THE EQUIPMENT "AS IS." In addition, in no event shall
QUALCOMM's Assignee be liable for any claim arising or relating to strict
liability in tort. However, any assignment by Lessor shall not relieve Lessor
of Lessor's obligations or warranties contained herein and in the OmniTRACS
Contract. The parties agree that this is a "Finance Lease" as defined in the
Uniform Commercial Code ("UCC").
-4-
<PAGE> 5
K. RISK OF LOSS AND INSURANCE. Lessee agrees that Lessee shall bear the
risk of any physical damage, loss or destruction of the Equipment. Effective
upon Lessor's shipment of the Equipment, and throughout the term of this
Agreement, Lessee agrees to maintain, at its sole cost and expense, and with
insurers acceptable to Lessor, insurance coverage for the Equipment in an
amount not less than the replacement value of the Equipment, and Lessee agrees
to name Lessor as additional insured. Lessee shall, at its own expense, also
carry bodily injury insurance. All insurance certificates and coverage
hereunder shall provide that the policies under which insurance is issued shall
not be canceled or materially altered without thirty (30) days prior written
notice to Lessor. Lessee shall provide Lessor with a copy of the policy.
L. MCT WARRANTY.
(i) Refurbished Equipment Warranty. The sixty (60) month MCT Warranty
provided by Lessor is limited to the refurbished Equipment which is the subject
of this Agreement. The Warranty provisions are set forth in Sections 1.5
through 1.9 of the Contract. The remedies available to Lessee, and limitations
of Warranty, are set forth in Section 4 of the Contract.
(ii) Additional MCTs. MCTs purchased which are not the subject of this
Agreement shall have the Warranty Period set forth in Section 1.5 of the
Contract, and are subject to the terms and conditions set forth in Sections 1.5
through 1.9 of the Contract. The remedies available to Lessee, and limitations
of Warranty, are set forth in Section 4 of the Contract.
M. LIMITATION OF LIABILITY. Lessor shall not be liable to Lessee for any
liability, claim, loss, damage or expense of any kind or nature (including
strict liability in tort) caused, directly or indirectly, by the Equipment or
its inadequacy, deficiency, or defect or by the use or maintenance of the
Equipment, or any repairs, servicing or adjustments to the Equipment; or any
delay in providing or failure to provide any part, or any loss of use or
business, or any other damage of any kind or nature.
N. INDEMNITY. Lessee shall and does hereby indemnify and hold Lessor
harmless from and against any and all claims, costs, expenses, damages and
liabilities, including reasonable attorneys' fees, arising out of Lessee's
ownership, selection, possession, leasing, renting, operation, control, use,
maintenance, delivery, return or other disposition of the Equipment.
O. SEVERABILITY. If any of the provisions of this Agreement is
determined to be invalid, illegal or otherwise unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby; and the parties shall substitute for the affected
provision an enforceable provision which approximates the intent and economic
effect of the affected provision as closely as possible.
P. ATTORNEYS' FEES. In any action arising out of or in connection with
this Agreement, Lessor shall be entitled to recover its reasonable attorneys'
fees and costs, without deduction or offset of any kind.
-5-
<PAGE> 6
Q. WAIVER OF BREACH. Lessee agrees that any delay or failure by Lessor
to enforce Lessor's rights under this Agreement shall not prevent Lessor from
enforcing any rights at a later time.
R. GOVERNING LAW AND FORUM. This Agreement shall be governed by and
construed under the laws of the State of California, without reference to its
conflict of laws provisions. All disputes arising hereunder shall be heard
only by a court of competent jurisdiction in the County of San Diego, State of
California, and Customer hereby submits to the jurisdiction of such courts for
the purpose of litigating such disputes.
S. SURVIVABILITY. The terms and conditions of this Agreement that by
their sense and context are intended to survive after performance hereunder
shall survive the termination or expiration of this Agreement, including but
not limited to Paragraphs H, M and N.
T. ENTIRE AGREEMENT. This Agreement contains the entire understanding,
agreements and representations of the parties, and Lessee agrees and
acknowledges that in entering into this Agreement Lessee did not rely on any
representations or warranties other than those set forth herein. This
Agreement supersedes all other prior writings, discussions and understandings
concerning the subject matter. Any additional or different terms and
conditions proposed by Lessee are hereby rejected and shall be of no force and
effect unless expressly agreed to in writing by Lessor. In order to be
binding, any waiver, alteration, amendment, or modification of any provisions
of this Agreement must be in writing and signed by duly authorized
representatives of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the Effective Date set
forth above.
TIMELY TRANSPORTATION, INC.
By: /s/ Gary Weilheimer for the Company
--------------------------------------
Printed Name: Gary Weilheimer
----------------------------
Its: Chief Financial Office
-------------------------------------
QUALCOMM INCORPORATED
By: /s/ Teresa White
--------------------------------------
Printed Name: Teresa White
----------------------------
Its: Vice President, Finance
-------------------------------------
-6-
<PAGE> 7
Timely Transportation
Amortization Schedule
<TABLE>
<CAPTION>
Payment # Payment Principle Interest Payoff
---------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
$238,800.00
INTEREST RATE: 10.000% 1 $ 5,031.86 $ 5,031.86 $ 0.00 $233,768.14
PERIODIC RATE: 0.833% 2 $ 5,031.86 $ 3,083.79 $1,948.07 $230,684.34
Unit Price (Includes Install & Buzzers) $ 3,980.00 3 $ 5,031.86 $ 3,109.49 $1,922.37 $227,574.85
No. MCT 60 4 $ 5,031.86 $ 3,135.41 $1,896.46 $224,439.45
Units Extended $238,800.00 5 $ 5,031.86 $ 3,161.53 $1,870.33 $221,277.91
TERM (months): 60 6 $ 5,031.86 $ 3,187.88 $1,843.98 $218,090.03
AMOUNT FINANCED: $238,800.00 7 $ 5,031.86 $ 3,214.45 $1,817.42 $214,875.59
PAYMENT: $ 5,031.86 8 $ 5,031.86 $ 3,241.23 $1,790.63 $211,634.36
9 $ 5,031.86 $ 3,268.24 $1,763.62 $208,366.11
10 $ 5,031.86 $ 3,295.48 $1,736.38 $205,070.64
11 $ 5,031.86 $ 3,322.94 $1,708.92 $201,747.70
Assumptions: 12 $ 5,031.86 $ 3,350.63 $1,681.23 $198,397.06
13 $ 5,031.86 $ 3,378.55 $1,653.31 $195,018.51
(1) Five (5) year finance lease 14 $ 5,031.86 $ 3,406.71 $1,625.15 $191,611.80
(2) Refurbished units 15 $ 5,031.86 $ 3,435.10 $1,596.77 $188,176.71
(3) Unit Price Includes 16 $ 5,031.86 $ 3,463.72 $1,568.14 $184,712.98
MCT $3,800 17 $ 5,031.86 $ 3,492.59 $1,539.27 $181,220.40
Installs $ 100 18 $ 5,031.86 $ 3,521.69 $1,510.17 $177,698.70
Bracket $ 50 19 $ 5,031.86 $ 3,551.04 $1,480.82 $174,147.66
Buzzers $ 30 20 $ 5,031.86 $ 3,580.63 $1,451.23 $170,567.03
Ex War N/C 21 $ 5,031.86 $ 3,610.47 $1,421.39 $166,956.56
---
$3,980 22 $ 5,031.86 $ 3,640.56 $1,391.30 $163,316.01
23 $ 5,031.86 $ 3,670.90 $1,860.97 $159,645.11
24 $ 5,031.86 $ 3,701.49 $1,330.38 $155,943.62
25 $ 5,031.86 $ 3,732.33 $1,299.53 $152,211.29
26 $ 5,031.86 $ 3,763.43 $1,265.43 $145,447.86
27 $ 5,031.86 $ 3,794.80 $1,237.07 $144,653.06
28 $ 5,031.86 $ 3,826.42 $1,205.44 $140,826.64
29 $ 5,031.86 $ 3,858.31 $1,173.56 $136,968.83
30 $ 5,031.86 $ 3,890.46 $1,141.40 $133,077.87
31 $ 5,031.86 $ 3,922.88 $1,108.98 $129,154.90
32 $ 5,031.86 $ 3,955.57 $1,076.29 $125,199.42
33 $ 5,031.86 $ 3,988.53 $1,043.33 $121,210.89
34 $ 5,031.86 $ 4,021.77 $1,010.09 $117,189.12
35 $ 5,031.86 $ 4,055.29 $ 976.58 $113,133.83
36 $ 5,031.86 $ 4,089.08 $ 942.78 $109,044.75
37 $ 5,031.86 $ 4,123.16 $ 908.71 $104,921.60
38 $ 5,031.86 $ 4,157.52 $ 874.86 $100,764.08
39 $ 5,031.86 $ 4,192.16 $ 839.70 $ 96,571.92
40 $ 5,031.86 $ 4,227.10 $ 804.77 $ 92,344.82
41 $ 5,031.86 $ 4,262.32 $ 769.54 $ 88,082.50
42 $ 5,031.86 $ 4,297.84 $ 734.02 $ 83,784.66
43 $ 5,031.86 $ 4,333.66 $ 698.21 $ 79,451.00
44 $ 5,031.86 $ 4,369.77 $ 662.09 $ 75,081.23
45 $ 5,031.86 $ 4,406.19 $ 625.68 $ 70,675.05
46 $ 5,031.86 $ 4,442.90 $ 588.96 $ 66,232.15
47 $ 5,031.86 $ 4,479.93 $ 551.93 $ 61,752.22
48 $ 5,031.86 $ 4,517.26 $ 514.60 $ 57,234.96
49 $ 5,031.86 $ 4,554.90 $ 476.96 $ 52,680.05
50 $ 5,031.86 $ 4,592.86 $ 439.00 $ 48,087.19
51 $ 5,031.86 $ 4,631.14 $ 400.73 $ 43,456.06
52 $ 5,031.86 $ 4,669.73 $ 362.13 $ 38,786.33
53 $ 5,031.86 $ 4,708.64 $ 323.22 $ 34,077.69
54 $ 5,031.86 $ 4,747.88 $ 283.98 $ 29,929.80
55 $ 5,031.86 $ 4,787.45 $ 244.42 $ 24,542.36
56 $ 5,031.86 $ 4,827.34 $ 204.52 $ 19,715.01
57 $ 5,031.86 $ 4,867.57 $ 164.29 $ 14,847.44
58 $ 5,031.86 $ 4,908.13 $ 123.73 $ 9,939.31
59 $ 5,031.86 $ 4,949.03 $ 82.83 $ 4,990.28
60 $ 5,031.86 $ 4,990.28 $ 41.59 $ 0.00
---------- ---------- ---------
301,911.73 238,800.00 63,111.73
</TABLE>
<PAGE> 1
EXHIBIT 10.11
SUBLEASE
THIS SUBLEASE is made and entered into as of January 1, 1997 at
Atlanta, Georgia, by and between PROFESSIONAL SALES GROUP, LTD., a Georgia
corporation (hereinafter "Sublessor"), and PROFESSIONAL TRANSPORTATION GROUP,
LTD., a Georgia corporation (hereinafter "Sublessee").
DEMISE AND DESCRIPTION OF PROPERTY
1. Sublessor hereby leases to Sublessee, and Sublessee hereby
leases from Sublessor, for the term, and subject to the conditions and
covenants hereinafter set forth, the property, hereinafter referred to as the
"subleased premises," located in College Park, Clayton County, Georgia
described as follows: Approximately Seventeen Thousand (17,000) square feet of
office/warehouse space at Southridge Parkway, College Park, Building O, and
designated on the floor plan attached hereto as Exhibit "1," and incorporated
herein by reference. Sublessor, however, shall have the right to make limited
use of the subleased premises for the performance of certain management and
administrative functions, consistent with its existing operation and practice
at the subleased premises.
TERM
2. The term of this Sublease shall commence on January 1, 1997
and end on April 30, 2005, provided, however, that this Sublease shall sooner
terminate on sooner termination for any cause whatsoever of that certain lease,
and any amendments thereto, hereinafter collectively referred to as the Main
Lease, dated August 8, 1995, between Weeks Realty, L.P., as Landlord, and
Professional Sales Group, Ltd., as Tenant, leasing the above-described
property. The foregoing notwithstanding, Sublessee may terminate this Sublease
at any time upon sixty (60) days written notice to Sublessor.
RENTAL
3. For and during the term of this Sublease, Sublessee shall pay
to Sublessor as rent for the subleased premises a total base rental amount of
One Million Dollars ($1,000,000.00), payable in one hundred (100) equal monthly
installments commencing on January 1, 1997, and due on or before the first day
of each calendar month, together with any additional rental as set forth
hereinafter. In addition, Sublessee shall pay to Sublessor Sublessee's pro
rata share of any increases in base rental under the Main Lease and
attributable to the subleased premises.
In addition to the base rental set forth above, Sublessee
agrees to pay Sublessor additional rental equal to the pro rata share of common
area maintenance charges under the Main Lease and attributable to the subleased
premises.
Sublessee will provide janitorial services, main services,
pest control, toiletries and other goods and services necessary for the
maintenance of the subleased premises.
<PAGE> 2
CONSENT OF LANDLORD
This Sublease is conditioned upon obtaining Landlord's written consent
hereto to the extent required by the Main Lease.
TAXES AND INSURANCE
4. Sublessee shall pay upon demand, as additional rental during
the term of this Sublease and any extension or renewal thereof, the amount by
which all taxes (including, but not limited to, ad valorem taxes, special
assessments and governmental charges) payable by the Sublessor on the subleased
premises. The tax for the subleased premises shall be determined by proration
on the basis that the rentable floor area of the subleased premises bears to
the rentable floor area of entire property assessed.
Sublessee agrees to pay the amount for all taxes levied upon
or measured by the rent payable hereunder, whether as a so-called sales tax,
transaction privilege tax, excise tax, or otherwise (but no income taxes of
Landlord shall be payable by Tenant). Such taxes shall be due and payable at
the same time as and in addition to each payment of rent.
Sublessee agrees to pay Landlord as additional rental,
Sublessee's pro rata share of the insurance premiums payable by Sublessor for
fire and extended coverage. Sublessor's pro rata share shall be based on the
square footage of the subleased premises leased to Sublessor (as specified
above) compared to the total square footage of leasable space in the entire
building. Sublessee agrees to pay Sublessor said increased amount within
thirty (30) days after receipt of a notice in writing from Sublessor, of the
increase in said insurance premiums. If during the final year of the Sublease,
or any extension or renewal thereof, the term does not coincide with the year
upon which the insurance rate is determined, the increase in premiums for the
portion of that year shall be prorated according to the number of months during
which tenant is in possession of the subleased premises.
Sublessee, at his expense, shall maintain at all times during
the term of this Sublease agreement, auto and public liability insurance with a
minimum combined single limit of $1,000,000.00 per occurrence and worker's
compensation insurance with mandatory statutory limits. All such policies
shall name Sublessor and Landlord as additional named insureds, and provide for
20 days written notice prior to cancellation for any reason. Appropriate
certificates of insurance will be delivered to Sublessor prior to occupancy of
the facilities an at any applicable renewal date.
UTILITIES
5. Sublessee shall be responsible for all electrical, water, and
sewer charges for the demised premises. Sublessor shall not be liable in the
event of any interruption in the supply of any utilities unless caused by
Sublessor's gross negligence or willful misconduct. Sublessee agrees that it
will not install any equipment which will exceed or overload the capacity of
any utility facilities and that if any equipment installed by Sublessee shall
require additional utility
2
<PAGE> 3
facilities, the same shall be installed by Sublessee at Sublessee's expense in
accordance with plans and specifications approved in writing by Sublessor.
ASSUMPTION AGREEMENT AND COVENANTS
6. (a) The Sublessee shall comply with all of the provisions
of the Main Lease which are to be observed or performed during the term hereof
by the Sublessor as Tenant thereunder, except that the payment of rent shall be
governed by the provisions of Paragraph 3, above, and Paragraphs 3.01, 3.02,
3.03 and 3.04 of the Main Lease shall be inapplicable to Sublessee. Sublessee
is responsible for all repair and maintenance of the demised premises, except
those items specifically the responsibility of the Landlord under the Main
Lease and any amendments thereto.
(b) In the event of cancellation or termination of the
Main Lease prior to the expiration date thereof and prior to the expiration
date of this Sublease or any extensions or renewals thereof, or in the event of
the surrender thereof, whether voluntary, involuntary, or by operation of law,
at Landlord's option, the Sublessee shall make full and complete attornment to
the Landlord for the balance of the term of this Sublease, including any
extensions and renewals thereof, on the same covenants and conditions as are
contained herein, so as to establish direct privity of estate and contract
between the Landlord and the Sublessee and with the same force and effect as
though this Sublease was originally made directly from the Landlord to the
Sublessee. The Sublessee shall make all rent payments thereunder directly to
the Landlord. The Sublessor represents that the Landlord has covenanted that,
in the event of the cancellation, termination, expiration, or surrender of the
Main Lease, the Landlord will accept the Sublessee, its successors and assigns,
as its Lessee for a period equal to the full unelapsed portion of the term of
this Sublease, including any extensions and renewals thereof, and on the same
covenants and conditions as are contained herein, and the Landlord will
thereafter become the Lessor under this lease.
(c) Insofar as the provisions of the Main Lease do not
conflict with specific provisions herein contained, they and each of them are
incorporated into this Sublease as full as if completely rewritten herein, and
the Sublessee agrees to be bound to the Sublessor by all of the terms of the
Main Lease and to assume toward Sublessor and perform all of the obligations
and responsibilities that Sublessor by the Main Lease assumes toward the
Landlord, and to indemnify and hold harmless Sublessor to the Landlord as
provided in the Main Lease. The relationship between the Sublessee and
Sublessor hereunder shall be the same as that between the Sublessor and the
Landlords under the Main Lease.
7. Notwithstanding any provision of the Main Lease to the
contrary, neither the Landlord nor the Sublessor shall be liable to Sublessee,
or any of its agents, employees, servants, or invitees, for any damage to
persons or property due to the condition or design or any defect in the
building or its mechanical systems which may exist or subsequently occur, and
Sublessee, with respect to itself and its agents, employees, servants, and
invitees, hereby expressly assumes all risks and damage to persons and
property, either proximate or remote by reason of the present or future
condition of the leased premises of the building. Sublessee agrees that it
will indemnify and hold harmless Sublessor and Landlord of, from, and against
all suits,
3
<PAGE> 4
claims, and actions of every kind by reasons of any breach, violation, or
nonperformance of any term or conditions on the part of the Sublessee
hereunder. Additionally, Sublessee agrees to indemnify and hold Sublessor and
Landlord harmless of, from, and against all claims, actions, damages,
liabilities, and expenses asserted against the Sublessor and/or Landlord on
account of injuries to person or damage to property when and to the extent that
any such danger or injury may be caused, either proximately or remotely, wholly
or in part by any act or omission, whether negligent or not, of Sublessee or
any of its agents, servants, employees, contractors, patrons, or invitees
(while such invitees are on the leased premises) or of any other person
entering on the leased premises under or with the expressed or implied
invitation of Sublessee, or if any such injury or damage may in any other way
arise from or out of the occupancy or use by Sublessee, its agents, employees,
and invitees, of the leased premises. This paragraph is for the benefit of the
Sublessor and Landlord of the leased premises only, and no right of action
shall accrue hereunder to any third party by way of subrogation or otherwise.
ASSIGNMENT AND SUBLETTING
8. (a) No assignment or subletting of the leased premises or
any part thereof shall be made by Sublessee without Sublessor's prior written
consent.
(b) In the event of an assignment, the assignee shall
agree in writing to assume all of the terms, covenants, and conditions of this
Sublease on Sublessee's part to be performed, and a duplicate original of such
agreement shall be delivered to Sublessor within ten (10) days following the
date of its execution or its effective date, whichever is sooner. The
liability of Sublessee hereunder and the liability of any assignee of this
lease shall survive any assignment or subletting, and such liability shall be
unaffected by any extension of time which Sublessor may grant to any assignee
or sublessee for the payment of any rent or other charges due hereunder, or for
the performance of any other term, covenant, or condition of this lease.
(c) The foregoing notwithstanding, subject to obtaining
any necessary approval by the Landlord, Sublessee may sublease or assign any
portion of the subleased premises to any of its wholly owned subsidiaries.
LEASE TERMINATION
9. Sublessee agrees that at the termination of this Sublease or
any extension thereof, an inspection of the demised premises will be made by
Sublessor and Sublessee, to determine what, if any, repairs are necessitated to
the demised premises, caused by Sublessee's occupancy thereof, normal wear and
tear excepted, and such repairs will be completed by the Sublessee within
thirty (30) days of the termination of this lease. If any such repairs are not
completed within the thirty (30) day period, Sublessor reserves the right to
complete such repairs, with contractors of Sublessor's choice, and to bill
Sublessee for such repairs plus an administrative fee of 15% of the charges
incurred. Sublessee agrees to pay any such charges within ten (10) days of
receipt of such invoice.
4
<PAGE> 5
EMINENT DOMAIN
10. If the whole or any part of the leased premises shall be taken
by any public authority under the power of eminent domain, then the term of
this Sublease shall cease on the part so taken from the date the possession of
that part shall be required for any public purpose, and the rent shall be
payable up to that day.
GENERAL
11. (a) This lease embodies the entire agreement between the
parties hereto relative to the subject matter hereof and shall not be modified,
changed, or altered in any respect except in writing.
(b) The covenants, agreements, and obligations herein
contained shall extend to, bind, and inure to the benefit not only of the
parties hereto but their successors and assigns; and where more than one party
shall be Sublessor under this lease, the word "Sublessor" whenever used in this
lease shall be deemed to include all such parties jointly and severally.
(c) Whenever under this Sublease, a provision is made for
notice of any kind, such notice shall be in writing and signed by or on behalf
of the party giving or making the same, and it shall be deemed insufficient
notice and service thereof if such notice is sent by registered or certified
mail, postage prepaid, to the address furnished for such purpose. All notices
to be given to the Sublessor hereunder shall be given to it at the address
written below, unless and until some other place is designated in writing by
Sublessor.
12. This Sublease will be governed by the laws of the State of
Georgia.
SUBLESSOR
PROFESSIONAL SALES GROUP, LTD.
a Georgia corporation
Date: By: /s/ Dennis A. Bakal
------------------------------ ------------------------------------
Dennis A. Bakal
------------------------------------
[Printed Name]
Signed, sealed and delivered Title: President
in the presence of: ------------------------------
5025 Derrick Jones Road
Suite 120
- ----------------------------------- Atlanta, Georgia 30349
Notary Public
My Commission Expires:
-------------
5
<PAGE> 6
SUBLESSOR
PROFESSIONAL TRANSPORTATION
GROUP, LTD.
a Georgia corporation
Date: By: /s/ Dennis A. Bakal
------------------------------ ------------------------------------
Dennis A. Bakal
------------------------------------
[Printed Name]
Signed, sealed and delivered Title: President
in the presence of: ------------------------------
5025 Derrick Jones Road
Suite 120
- ----------------------------------- Atlanta, Georgia 30349
Notary Public
My Commission Expires:
-------------
6
<PAGE> 1
EXHIBIT 10.12
SOUTHTRUST
COMMERCIAL LOAN AGREEMENT
THIS COMMERCIAL LOAN AGREEMENT is made and entered into on March 28,
1997, by and among DENNIS A. BAKAL, a Georgia resident, PROFESSIONAL
TRANSPORTATION GROUP, LTD., a Georgia corporation, TRUCK/NET, INC., a Georgia
corporation, TIMELY TRANSPORTATION, INC., a Georgia corporation, and PTG, INC.,
a Georgia corporation, with their principal place of business and chief
executive offices located at 5025 Derrick Jones Road, Suite 120, Atlanta,
Georgia 30349 (collectively, "Borrower"), and SOUTHTRUST BANK OF GEORGIA, N.A.,
a national banking association ("Bank").
WITNESSETH:
For and in consideration of the mutual promises, undertakings and
covenants set forth herein, and for other valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, Bank and Borrower,
intending to be legally bound, agree as follows:
1. DEFINITIONS. As used in this Agreement and in addition to
those terms defined elsewhere in this Agreement, the following terms shall have
the meanings set forth below, unless the context otherwise requires:
Accounting terms used in this Agreement, such as "current
assets," "current liabilities," "LIFO reserve," "net income," and "total
liabilities," shall have the meanings normally given them by, and shall be
calculated, both as to amounts and classification of items, in accordance with,
generally accepted accounting principles in the United States.
"Agreement" shall mean this Commercial Loan Agreement,
together with any amendments or supplements hereto and any schedules or
exhibits hereto.
"Borrower" shall mean the person or entity named in the first
sentence of this Agreement and who executes this Agreement below as "Borrower."
For purposes of Sections 7(m) and 8(h), "Borrower" also includes any member of
a "control group" (as defined in ERISA) of which the named Borrower is a
member.
"Borrowing Base" shall mean eighty percent (80%) of Eligible
Accounts, plus eighty percent (80%) of Eligible Securities.
"Borrowing Base Certificate" shall mean a certificate, in form
and substance satisfactory to Bank, setting forth in detail the Borrowing Base
and certified by Borrower to be true and correct as of its date.
"Compliance Certificate" shall mean a certificate, in form and
substance satisfactory to Bank, assuring Bank of Borrower's compliance with all
of the terms and conditions of this Agreement and certified by Borrower to be
true and correct as of its date.
"Eligible Accounts" shall mean the aggregate of the
outstanding balances of all of Borrower's accounts (as such term is defined by
Article 9 of the Uniform Commercial Code) that conform to the representations
and warranties of Borrower contained in each and every document and instrument
executed in connection with the Revolving Loans; provided that no account owing
by any account debtor of Borrower shall be deemed to be included in Eligible
Accounts if (i) the account is unpaid more than ninety (90) days after the
invoice date thereof; (ii) twenty-five percent (25%) or more of the aggregate
balances of all accounts owed to Borrower by said account debtor are unpaid
more than ninety (90) days after the invoice dates thereof; (iii) such account
would make all accounts owing by said account debtor to Borrower
<PAGE> 2
aggregate more than twenty-five percent (25%) of all accounts owed to Borrower
by all account debtors; (iv) the account debtor is a division, subsidiary,
affiliate or employee of Borrower or is any other person, corporation,
partnership or other legal entity related through common stock ownership or
otherwise related directly or indirectly to Borrower or any of the Borrower's
shareholders or is an employee of Borrower; (v) the account debtor is a
creditor of Borrower or otherwise has available with respect to the account any
offset, recoupment, credit, charge or defense (to the extent of such offset,
recoupment, credit, charge or defense); (vi) Borrower has received any notice
of the death of the account debtor or any partner thereof, or of the
dissolution, termination of existence, insolvency, business failure,
appointment of a receiver for any part of the property of, assignment for the
benefit of creditors by, or the filing of a petition in bankruptcy or the
commencement of any proceeding under any bankruptcy or insolvency laws by or
against, the account debtor; (vii) the account arises out of a contract with or
an order from an agency of the United States government; (viii) Bank has deemed
the account to be ineligible because of uncertainty about the credit worthiness
of the account debtor or because Bank otherwise reasonably considers the
collateral value thereof to Bank to be impaired or Borrower's or Bank's ability
to realize such value to be insecure; (ix) the location of the account debtor
to which the goods generating the account were sent is outside the United
States and such account debtor has not provided to Borrower a letter of credit
satisfactory to Bank; (x) the goods generating the account have not been
delivered to the account debtor; or (xi) Bank, in its sole discretion,
determines in good faith that such account is ineligible.
"Eligible Securities" shall mean all marketable securities,
cash, cash equivalents, or other investments, together with all additions
thereto, whether by deposit, dividend, accrual of interest or otherwise, owned
by Borrower Dennis A. Bakal and held by Raymond James & Associates, Inc., in
Account Nos. 70387710, 19916332, and 34016468.
"Event of Default" shall mean any default or event of default
under this Agreement, the Note or any Security Instrument (as hereinafter
defined).
"Fixed Charge Coverage" at any date shall mean a fraction the
numerator of which is the sum of net income for any period ending on such date,
plus the interest, lease and rental expenses of Borrower for the period, plus
the sum of non-cash expenses or allowances for the period (including, without
limitation, amortization or write-down of intangible assets, and depreciation),
and the denominator of which is the sum of the current portion of the long-term
debt as of such date, plus the interest, lease and rental expenses for the
period.
"Guarantor" shall mean any person or entity who endorses the
Note or who now or hereafter guarantees the payment, performance or collection
of this Agreement, the Note or the Obligations, in whole or in part.
"Loan" shall mean each and every Revolving Loan.
"Loan Documents" shall mean this Agreement, the Note and all
documents, instruments and agreements executed in connection therewith or
pursuant thereto.
"Note" shall mean each Revolving Note.
"Obligations" shall mean any and all indebtedness, liabilities
and obligations of Borrower to Bank whatsoever, including, without limiting the
generality of the foregoing: any and all indebtedness, liabilities and
obligations of Borrower to Bank arising out of the Loan; all Bank's fees,
charges and expenses of or incidental to the preparation, renewal, modification
or enforcement of Borrower's obligations arising out of the Loan and any and
all extensions or renewals thereof in whole or in part; and any indebtedness,
liabilities or obligations of Borrower to Bank under any later or future
advances or loans made by Bank to Borrower, and any and all extensions or
renewals thereof in whole or in part, joint or several, and in any event
whether existing as of the date hereof or hereafter arising and whether direct,
indirect, absolute or contingent, as
-2-
<PAGE> 3
maker, endorser, guarantor or otherwise, including, without limitation, Bank's
participation in others' loans and all charges, interest, expenses, and costs
of collection in connection with the foregoing, including, without limitation,
fifteen percent (15%) of the foregoing as attorneys' fees (if collected by or
through an attorney) and other legal and court costs.
"Obligor" shall mean Borrower, Guarantor and each other
individual or entity primarily or secondarily, directly or indirectly, liable
for, whether as maker, endorser, surety, guarantor or otherwise, or directly or
indirectly securing, any of the Obligations, together with his, her, its or
their heirs, administrators, executors, successors and assigns, including,
without limitation, any resulting or surviving corporation following any merger
or any other reorganization, any debtor in possession or similar entity
following the filing of a petition for relief by or against such Obligor under
any chapter of the Federal Bankruptcy Code, as amended, or in any similar
proceeding under any state or federal law, and any proprietorship, partnership,
corporation, trust or other entity resulting from or arising out of the
dissolution, liquidation or change in form of business organization by such
Obligor or following any change of name or domicile by such Obligor.
2. THE LOAN. (a) WORKING CAPITAL LINE OF CREDIT. Upon the
execution of this Agreement and provided that Borrower is in compliance with
its terms and conditions, Borrower may from time to time request from Bank, and
Bank in its discretion may extend to Borrower, a working capital line of credit
in the maximum amount of up to an aggregate principal sum outstanding equal to
the face amount of a Commercial Revolving Note dated of even date herewith
(said amount being $1,915,000.00, and which note, together with any and all
amendments thereto and renewals thereof, are referred to as the "Revolving
Note") made by Borrower to the order of Bank and in form and substance
satisfactory to Bank (the "Maximum Sum"), which sum may, at Bank's discretion,
be borrowed, and which Borrower shall repay, together with interest thereon and
loan fees and commitment fees, as applicable, in accordance with the terms and
conditions of the Revolving Note, which shall evidence Borrower's obligation to
repay each advance made under the line of credit, together with such interest
and fees, if applicable (each such advance a "Revolving Loan" and all such
advances collectively the "Revolving Loans"). Borrower may borrow, repay, and
reborrow a maximum aggregate amount of advances outstanding under working
capital Revolving Loans not to exceed the lesser of the Maximum Sum or the
Borrowing Base. If at any time the outstanding principal balance of the
Revolving Note exceeds the Borrowing Base, Borrower shall pay Bank immediately,
without notice or demand, the amount of such excess, regardless of the
stipulated date of maturity, if not payable on demand. Proceeds of the working
capital line of credit Revolving Loans will be used by Borrower solely for its
working capital needs in its present line of business and for only such other
purposes as may be specifically approved by Bank in writing. Each request for,
and each acceptance of, an advance of any Revolving Loans shall constitute a
reaffirmation of the truth and accuracy of the representations and warranties
set forth in this Agreement and in the Borrowing Base Certificate.
(b) If requested to do so by Borrower, and subject to the terms
and conditions set forth in this Agreement, Lender agrees to issue one or more
letters of credit for the account of Borrower; provided, however, that (i)
prior to the issuance of each letter of credit Borrower shall execute and
deliver to Lender a letter of credit application and agreement (on Lender's
standard form therefor) for such letter of credit which shall specify the terms
and conditions of such letter of credit, (ii) each letter of credit shall be in
form and substance mutually acceptable to Borrower and Lender, (iii) prior to
the issuance of each letter of credit, Borrower shall pay to Lender a
non-refundable letter of credit fee therefor at the rate of 1.25% per annum
plus any other usual and customary fees and charges imposed by Lender in the
issuance of a letter of credit, (iv) the sum of the aggregate stated amount of
all letters of credit then outstanding plus all then outstanding reimbursement
obligations under letter of credit agreements shall not exceed $300,000 at any
one time, (v) no letters of credit shall be issued on or after the maturity of
the Revolving Loans, (vi) the proceeds of each Letter of credit may be used
only for a purpose for which Borrower would be entitled to obtain a Revolving
Loan hereunder, and (vii) Borrower's reimbursement obligations to Lender for
any and all amounts paid by Lender with respect to any draw under any letter of
credit shall constitute an Obligation of Borrower to Lender which will be
secured and guaranteed on an equal priority basis with all other Obligations
pursuant to this Agreement and the other Loan Documents and, subject to the
terms and conditions of this Agreement,
-3-
<PAGE> 4
Borrower may obtain or Lender may make a Revolving Loan hereunder in order to
repay each reimbursement obligation. Notwithstanding anything in this
Agreement to the contrary, Lender shall not be obligated hereunder or under any
letter of credit agreement to issue any letter of credit if the sum of the
aggregate principal balance of the Revolving Loans then outstanding plus the
aggregate stated amount of all letters of credit then outstanding plus the
aggregate outstanding principal amount of all reimbursement obligations then
outstanding exceeds, or would exceed with the issuance of such letter of
credit, the lesser of the Maximum Sum or the Borrowing Base then in effect.
3. SECURITY. As security for the full payment and performance of
the Obligations, Borrower hereby assigns, conveys, and grants a security
interest to Bank in all property, real and personal, in which Borrower has an
interest and which is in or comes into the possession, control or custody of
Bank (including, but not limited to, balances, credits, deposits, accounts and
monies), all property in which Borrower has heretofore granted or hereinafter
grants to Bank a security interest or has heretofore conveyed or hereinafter
conveys to Bank security title to secure any obligation pursuant to each and
every mortgage, deed to secure debt, security agreement or other instrument,
agreement or document heretofore or hereinafter executed by Borrower in favor
of Bank (collectively the "Security Instruments"), and all proceeds and
products of the foregoing property and all books and records relating thereto
and all property of Borrower in which Bank has acquired or hereafter otherwise
acquires a lien, encumbrance or other right (all of the aforesaid property
collectively the "Collateral"), and Borrower hereby agrees that Bank may, at
any time and without notice, apply any balances, credits, deposits, accounts,
monies or other indebtedness now or hereafter owing by Bank to Borrower in
satisfaction of any of the Obligations, whether or not due.
4. CONDITIONS TO INITIAL REVOLVING LOAN. Bank shall not be
obligated to make the initial Revolving Loan unless:
(a) Each of the conditions set forth in Section 5 hereof
have been satisfied;
(b) Bank shall have received payment in full of all fees,
charges, and expenses due in connection with this Agreement, including, without
limitation, any loan fees, commitment fees, service fees and attorneys' fees;
and
(c) Bank shall have received all loan documentation
deemed reasonably necessary or desirable by Bank or its counsel, satisfactory
in form and substance to Bank, providing for the Loan to be extended, secured
and guaranteed.
5. CONDITIONS TO ALL LOANS. Bank shall not be obligated to make
any Loan, unless:
(a) The representations and warranties made by or on
behalf of Borrower in connection with the Loan and the representations and
warranties contained in this Agreement are true and correct on and as of the
date of the request for the Loan;
(b) If the request is for a Revolving Loan, the amount of
the Revolving Loan requested, when aggregated with the unpaid principal balance
of all Revolving Loans, does not exceed the lesser of the Borrowing Base or the
Maximum Sum;
(c) At the time of the request for the Loan, no Event of
Default or an event that upon notice or lapse of time or both would constitute
an Event of Default shall have occurred, and there is no claim, action, suit or
proceeding pending or threatened against Borrower, or any other fact or
circumstance, that would, in Bank's sole opinion, materially affect any of
Borrower's assets or result in a material adverse change in the business
condition, affairs, or operations of Borrower; and
(d) Bank, in its sole discretion, determines to make the
Loan.
-4-
<PAGE> 5
6. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to
induce Bank to enter into this Agreement and to make or extend Loans as
contemplated hereby, Borrower represents and warrants to Bank, each of which
representations and warranties is deemed to be material, that:
(a) Each Obligor which is a corporation is duly
organized, validly existing and in good standing under the laws of the State of
Georgia, and has full right, power and authority to conduct its business as
currently conducted and is qualified to do business in all jurisdictions in
which it conducts its business; Borrower's principal place of business and
chief executive office is located at the address set forth above.
(b) Each Obligor has full right, power and authority to
enter into the Loan Documents to which it or he is a party and to consummate
the transactions contemplated thereby and has taken all necessary action to
authorize the execution, delivery and performance of such Loan Documents and
the documents contemplated to be executed and delivered thereby.
(c) The execution, delivery and performance by each
Obligor of the Loan Documents to which such Obligor is a party have been duly
authorized by all requisite action on the part of such Obligor and do not and
will not (i) violate any provision of such Obligor's articles of incorporation,
by-laws, partnership agreement or other organizational documents, or any law,
judgment, order or ruling of any court or governmental agency, or (ii) be in
conflict with, result in a breach of, or constitute, following notice or lapse
of time or both, a default under any mortgage, indenture, security agreement,
contract or other instrument, agreement or undertaking to which any Obligor is
a party or which purports to be binding on any Obligor or any of its property.
(d) This Agreement and each of the Loan Documents
constitutes or will constitute upon execution thereof the legal, valid and
binding obligation of the party executing the same, enforceable against it or
him in accordance with its terms, and each Obligor possesses all permits,
memberships, franchises, contracts, licenses, trademark rights, trade names,
patents, and other authorizations necessary to enable it or him to conduct its
or his business operations as now conducted, and no filing with, and no
consent, approval, permission, authorization, order or license of, any
individual, entity, or governmental authority, bureau or agency is necessary in
connection with the execution, delivery, performance, validity or
enforceability of the Loan Documents.
(e) Except as disclosed in a letter from Lender to
Borrower of even date herewith, there is no litigation, action, proceeding or
investigation pending or threatened before any court or administrative or
governmental agency that may, individually or collectively, adversely affect
the financial condition or business operations of any Obligor or any of its or
their properties or assets or that questions the validity of any action taken
or to be taken by any Obligor pursuant to or in connection with the
transactions contemplated by this Agreement, nor does Borrower know or have any
reasonable grounds to know the basis for the institution of such litigation,
action, proceeding or investigation.
(f) The most recent financial statements of each Obligor
delivered to Bank are preliminary drafts that are not yet complete, but to
Borrower's best knowledge, are correct and fairly and accurately present the
financial condition of such Obligor and the results of operations as of such
date and for such period to which such statements relate and have been prepared
in accordance with generally accepted accounting principles applied in a manner
consistent with any financial statement previously furnished to Bank, except as
noted in such statements. Since the date of those most recent financial
statements of each Obligor, there has been no material adverse change in the
financial condition of such Obligor and, after due inquiry, there exists no
material liability or obligation, direct or indirect, fixed or contingent,
assertable against such Obligor that is not reflected in its most recent
financial statements or in the notes thereto.
(g) All federal, state and other tax returns of Borrower
required by law to be filed have been completed in full and have been duly
filed with the appropriate governmental agency. All taxes, assessments and
withholdings shown on such returns or billed to Borrower have been paid, and
Borrower maintains
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<PAGE> 6
adequate reserves and accruals in respect of all such federal, state and other
taxes, assessments and withholdings. There are no unpaid assessments pending
or threatened against Borrower for any taxes or withholdings, and Borrower
knows of no basis therefor; and no waivers of the Statute of Limitations have
been granted to the Commissioner of Internal Revenue or any other taxing
authority by Borrower.
(h) The minimum funding standards of Section 302 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), have
been met at all times with respect to all "plans" (if any) of each Obligor to
which such standards apply; no Obligor has made a "partial withdrawal" or a
"complete withdrawal" from any "multi- employer plan"; no "reportable event" or
"prohibited transaction" has occurred with respect to any such "plan" (as all
quoted terms are defined in ERISA); no Obligor has incurred any material
liability to the Pension Benefit Guaranty Corporation established under ERISA
in connection with any "plan."
(i) Except as otherwise expressly disclosed by Borrower
to Bank in writing on the date of this Agreement, no "hazardous substance" (as
that term is defined in Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ["CERCLA"]) has
been released, discharged, disposed of, or stored on any Obligor's owned or
leased real or personal property whether by any Obligor, by any third party or
by any predecessor in interest or title to such Obligor; each Obligor and all
of such Obligor's properties are in compliance with all applicable local, state
and federal environmental laws and regulations; no notice has been served on
any Obligor by any governmental authority or any individual or entity claiming
violation of any environmental protection law or regulation, or demanding
compliance with any environmental protection law or regulation, or demanding
payment, indemnity, or contribution for any environmental damage or injury to
natural resources; no "hazardous substance" (as defined in CERCLA) is produced
or used in any Obligor's business; and no improvement on any real property
owned or leased by any Obligor contains any asbestos, including, without
limitation, asbestos insulation on ceilings, piping or structural members or
supports.
(j) No representation or warranty by Borrower made herein
and no statement or certificate to be furnished to Bank pursuant hereto in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or will omit to state a material fact
necessary to make the statements therein not misleading.
7. AFFIRMATIVE COVENANTS OF BORROWER. Borrower covenants and
agrees that from and after the date hereof, and so long as the Obligations
remain unpaid or this Agreement remains in effect, as follows:
(a) Borrower shall deliver to Bank, in form and content
satisfactory to Bank, within ninety (90) days after the last day of each fiscal
year of Borrower, annual financial statements of each corporate Borrower on a
consolidated basis, including statements of income, expenses, retained earnings
and cash flows for the just-ended fiscal year and a balance sheet as of the end
of such fiscal year, such statements to be prepared and audited by a certified
public accountant acceptable to Bank.
(b) Borrower shall deliver to Bank, in form and content
satisfactory to Bank, within thirty (30) days after the last day of each
calendar month, interim financial statements of each corporate Borrower,
including an income and expense statement and balance sheet, such statements to
present fairly the financial condition and results of operations as of and for
the periods specified, to set forth all material claims and liabilities,
contingent or otherwise, and fully to disclose any Event of Default, including
the nature and period of existence thereof, and such statements to be prepared
and certified by the chief financial officer of the corporate Borrowers.
(c) Borrower shall deliver to Bank, in form and content
satisfactory to Bank, within thirty (30) days after the last day of each
calendar month, such data, information and reports of or concerning Borrower
and each Obligor as Bank may reasonably request and the following additional
documents and information: an aging of Borrower's accounts receivable and a
Borrowing Base Certificate. Borrower shall deliver to Bank,
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<PAGE> 7
in form and content satisfactory to Bank, within thirty (30) days after the
last day of each fiscal quarter, a Compliance Certificate and a report from
Raymond James & Associates, Inc. showing the status of the accounts of Borrower
Dennis A. Bakal maintained with Raymond James & Associates, Inc. and which
comprise the Eligible Securities, including account balances and a description
of all investments in the accounts. Additionally, Borrower shall deliver to
Bank, in form and content satisfactory to Bank, within one hundred twenty (120)
days after the last day of each calendar year, a personal financial statement
on Dennis A. Bakal.
(d) Borrower shall keep adequate records and books of
accounts, in which complete entries will be made, reflecting all its financial
transactions, and shall maintain its books, accounts and records, including,
without limitation, all books and records evidencing or relating to Collateral,
in accordance with generally accepted accounting principles, at Borrower's
chief executive office as set forth in this Agreement, and shall not remove
said books and records from such address without the prior written consent of
Bank.
(e) Borrower shall permit Bank or any persons duly
designated by Bank to call at the places of business of Borrower at any
reasonable time, and without hindrance or delay to visit, inspect, audit and
check any of Borrower's properties, books, records, journals, orders, receipts
and any correspondence or other data relating to Borrower's business or any
other transactions between or among the parties hereto, and to make copies
thereof and take extracts therefrom, and to discuss Borrower's financial
affairs with Borrower's financial officers and accountants.
(f) Borrower shall pay and discharge or cause to be paid
and discharged promptly all taxes, assessments, fees, withholdings and other
governmental charges or levies imposed upon it, or upon its income and profits,
or upon any property belonging to it, as well as all claims of any kind
(including claims for labor, materials and supplies), which, if unpaid, might
by law become a lien or charge against said property; provided, however, that
Borrower shall not be required to pay any such tax, assessment, fee,
withholding, charge, levy or claim if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate proceedings,
and if it shall have either: (i) set aside on its books reserves (segregated
to the extent required by sound accounting practice) deemed by Bank adequate
with respect thereto, or (ii) established a deposit with Bank sufficient to pay
or discharge such tax, assessment, fee, withholding, charge, levy or claim, if
such proceedings are adversely determined.
(g) Each corporate Borrower shall maintain its existence
in good standing in the state of its organization or incorporation, maintain
its qualification to conduct business and good standing in all jurisdictions
where, under applicable law, the failure so to qualify could have a material
adverse effect on Borrower's business or its ability to perform the Loan
Documents, and conduct its business in the manner in which it is now conducted
subject only to changes made in the ordinary course of business.
(h) Borrower shall promptly, and in any event within five
(5) business days after it becomes aware thereof, notify Bank in writing of the
occurrence of any material adverse change in its or any Obligor's business,
properties, operations or conditions (financial or other) which could
reasonably be expected to impair substantially its or such Obligor's ability to
perform its or his obligations pursuant to this Agreement, or any of the other
Loan Documents, the occurrence of any Event of Default or the occurrence of any
pending or threatened litigation claiming damages in excess of $10,000 or
seeking relief that, if granted, would adversely affect the financial condition
or business operations of Borrower or any Obligor.
(i) Borrower shall pay or cause to be paid the principal
of, and, if any, the interest and premium on all indebtedness heretofore or
hereafter incurred or assumed by it when and as the same shall become due and
payable, unless such indebtedness be renewed or extended; and faithfully
observe, perform and discharge all the covenants, conditions and obligations
that are imposed upon it by any and all indentures and other agreements
securing or evidencing such indebtedness or pursuant to which such indebtedness
is issued, and not permit the continuance of any act or omission that is, or
pursuant to the provisions thereof may be declared to be, a default in the
payment of principal and interest, unless waived, pursuant to the
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<PAGE> 8
provisions thereof; provided, however, that Borrower shall not be required to
make any payment or to take any other action pursuant to this subparagraph at
any time while it shall be currently contesting in good faith by appropriate
proceedings its obligations to make such a payment or to take such action, if
it shall have either: (i) set aside on its books, reserves (segregated to the
extent required by sound accounting practices) deemed adequate with respect
thereto, or (ii) established a deposit with Bank sufficient to pay any such
amount if such proceedings are adversely determined.
(j) Borrower shall take all appropriate action necessary
to protect its business and assets consistent with normal practices; conduct
its business in a sound and businesslike manner; and do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and all of its rights.
(k) Borrower shall pay or reimburse Bank for any
out-of-pocket expenses, including, without limitation, attorneys' fees,
incurred by Bank in preparing, negotiating, modifying or amending the Loan
Documents.
(l) Borrower shall fund all of its "plans" (if any) to
which the minimum funding standards of Section 302 of ERISA apply in accordance
with such standards; furnish Bank, promptly upon Bank's request, copies of all
reports or other statements filed with, or received from, the United States
Department of Labor, the Internal Revenue Service, or the Pension Benefit
Guaranty Corporation with respect to all of Borrower's "plans"; and promptly
advise Bank of the occurrence of any "reportable event" or "prohibited
transaction" with respect to any such "plan" (as all quoted terms are defined
in ERISA).
(m) Borrower shall comply with all applicable present and
future local, state and federal laws, including, without limitation,
environmental laws and regulations; notify Bank immediately if any "hazardous
substance" (as defined in CERCLA) is released, discharged, disposed of, stored,
or discovered on any real or personal property owned or leased by Borrower;
notify Bank in writing within three (3) days after Borrower receives notice
from any governmental authority or any individual or entity claiming violation
of any environmental protection law or regulation, or demanding compliance with
any environmental protection law or regulation, or demanding payment,
indemnity, or contribution for any environmental damage or injury to natural
resources; and permit Bank from time to time without hindrance or delay to
observe Borrower's operations and to perform tests (including soil tests and
ground water tests) for "hazardous substances" on any real or personal property
owned or leased by Borrower.
(n) Borrower shall maintain its principal transaction
account with Bank.
(o) Dennis A. Bakal shall at all times maintain a senior
management position with each corporate Borrower or Obligor.
8. NEGATIVE COVENANTS. Borrower covenants and agrees
that from and after the date hereof, and so long as the Obligations remain
unpaid or this Agreement remains in effect, without the prior written consent
of Bank, Borrower shall not:
(a) Create, incur, assume, or suffer to exist any
indebtedness of any description whatsoever not existing as of the date of this
Agreement, except (i) indebtedness incurred under this Agreement, (ii) any
trade indebtedness incurred in the ordinary course of business payable within
sixty (60) days of its incurrence, (iii) subordinated indebtedness in favor of
Professional Sales Group, Ltd., a Georgia corporation, an affiliate of
Borrower, and (iv) loans between the parties comprising Borrower.
(b) Enter into any merger, reorganization or
consolidation; enter into a partnership or joint venture with any other person
or entity; make any substantial change in the basic type of business now
conducted by it; sell, lease, transfer or otherwise dispose of all or any
substantial portion of its assets; take any action
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<PAGE> 9
that would make it impossible for it to carry out its business as now
conducted; change its name; or change the location of its principal place of
business or chief executive office.
(c) Guarantee, endorse, become surety with respect to, or
otherwise become directly or contingently liable for or in connection with any
obligation or indebtedness of any other person or entity, except that Borrower
may endorse negotiable instruments for collection in the ordinary course of
business; make any loans, advances or extensions of credit to any person or
entity, except for travel advances made to employees in the ordinary course of
business; make any investments in any subsidiary or affiliate of any Obligor or
any individual or entity related to any Obligor; make any investments in or
acquisitions of any business enterprise.
(d) Allow any single judgment for the payment of money in
excess of $10,000.00 or of any number of judgments for the payment of money in
excess of the aggregate sum of $25,000.00, excluding amounts in either case
with respect to which an insurance carrier admits full coverage (except for
applicable deductibles), to remain unsatisfied against it for a period of
thirty (30) consecutive days, unless execution thereof is stayed.
(e) Sell, transfer, lease, pledge, abandon, grant any
lien on or security interest in, or otherwise encumber or dispose of any of its
properties or assets, including without limitation the Collateral or any
interest therein, and, except for liens for taxes not yet due and payable,
Borrower shall not permit or suffer to exist any lien, security interest or
other encumbrance on any of its properties or assets.
(f) Take or fail to take any action which would result in
the imposition of withdrawal liability under Title IV of ERISA.
(g) Release, discharge, dispose of, store, accept or
receive for storage or disposal, or allow to be stored or disposed of, any
"hazardous substance" (as defined in CERCLA) on or in any real or personal
property owned or leased by Borrower, except as otherwise expressly consented
to by Bank in writing; or release, discharge, use, transport, or dispose of any
"hazardous substance" in an unlawful manner.
9. RIGHTS AND REMEDIES EXCLUSIVE OF DEFAULT. Before or after the
occurrence of an Event of Default: Bank may examine, audit or inspect
Borrower's books and records constituting, evidencing or otherwise relating to
the Collateral, wherever located, at any reasonable time or times, and, without
hindrance or delay, may enter upon Borrower's premises for such purposes.
Borrower shall assist Bank in whatever way reasonably necessary to make each
such examination, audit and inspection. Bank, from time to time at its option,
may perform any agreement of Borrower hereunder which Borrower shall fail to
perform and take any other action which Bank deems necessary for the
maintenance or preservation of any of the Collateral or its interest therein,
and Borrower agrees to reimburse forthwith Bank for all reasonable costs and
expenses of Bank in connection with the foregoing, together with interest
thereon from the date incurred until reimbursed. Borrower hereby constitutes
Bank or its designee as its attorney-in-fact: to receive, open, and dispose of
all mail addressed to the Borrower; to notify the postal authorities to change
the address and delivery of mail addressed to the Borrower to such address as
Bank may designate; to endorse Borrower's name upon any notes, acceptances,
checks, drafts, money orders and other remittances that may come into Bank's
possession and to deposit or otherwise collect the same; to sign Borrower's
name on any invoice or bill of lading, on drafts against customers, and notices
to customers; to send verifications of accounts to customers; to execute in
Borrower's name any affidavits and notices with regard to any or all lien
rights; and to do all other acts and things necessary to carry out this
Agreement. Borrower hereby waives notice of presentment, protest and dishonor
of any instrument so endorsed. All acts of said attorney-in-fact or designee
are hereby authorized and ratified, and said attorney-in-fact or designee shall
not be liable for any acts of omission or commission, or for any error of
judgment or mistake of fact or law, unless resulting from Bank's gross
negligence or intentional misconduct; this power being coupled with an interest
is irrevocable while the Obligations remain outstanding.
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<PAGE> 10
10. RIGHTS AND REMEDIES UPON DEFAULT. Upon the occurrence of any
one or more Events of Default: Bank may terminate this Agreement and any
obligations of Bank to Borrower under any other agreement, document or
instrument and may declare the Obligations, notwithstanding any provisions
thereof, without demand or notice of any kind, immediately due and payable,
whereupon the Obligations shall become immediately due and payable and may be
collected forthwith; Bank shall have the right to take immediate possession of
the Collateral without notice or resort to legal process and without demand or
notice of any kind to set off and deduct the outstanding balance of the
Obligations from sums, if any, which now or hereafter may be owing by Bank to
Borrower; and Bank may exercise from time to time any rights and remedies
available to it under the Uniform Commercial Code and other applicable law.
Borrower agrees to pay all costs of Bank of collection of the Obligations and
enforcement of rights hereunder, and, if collected by or through an attorney,
fifteen percent (15%) of the unpaid Obligations as attorneys' fees and also
other legal and court expenses. Notwithstanding anything stated to the
contrary in this Agreement or in any other instrument evidencing, securing, or
otherwise relating to the Obligations, prior to the occurrence of any
NONMONETARY Event of Default and the exercise of any remedy granted in the Loan
Documents following a NONMONETARY Event of Default, including, without
limitation the right to accelerate the maturity of the indebtedness evidenced
by the Note and secured by any Security Instrument, both of the following two
(2) conditions shall have been satisfied: (a) Borrower shall have received
written notice of any event or condition which, if not cured, will give rise to
a NONMONETARY Event of Default ("default condition") hereunder, which notice
shall specify the default condition which will result in a NONMONETARY Event of
Default and set forth the requirements to cure such default condition; and (b)
Borrower shall have failed to cure such default condition within ten (10) days
following the receipt of said written notice; PROVIDED, HOWEVER, THAT NO SUCH
NOTICE SHALL BE REQUIRED AS TO ANY MONETARY EVENT OF DEFAULT.
11. MISCELLANEOUS. (a) Each and every right, power or privilege
granted to Bank under the Loan Documents or available to Bank at law or in
equity shall be cumulative and may be exercised, and no delay in exercising any
such right, power or privilege shall impair any such right, power or privilege
or be construed as a waiver of any Event of Default or any acquiescence
therein. All rights, powers and privileges granted to Bank hereunder shall be
cumulative, and shall not be exclusive of any other rights, powers and
privileges granted to Bank by the Loan Documents or any other document,
instrument or agreement, or available at law or in equity. No single or
partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. No waiver by Bank of any Event of Default hereunder
shall constitute a waiver of any subsequent Event of Default. No waiver shall
be valid against Bank unless made in writing and signed by Bank, and then only
to the extent expressly specified therein.
(b) All notices, demands and communications required or
permitted hereunder shall be deemed to have been sufficiently given or served
for all purposes if in a writing delivered personally to a party or to an
officer of the party to whom the same is directed, or if sent by first-class or
certified mail, postage and charges prepaid, addressed to such party at the
following address, or to such other address as shall be furnished in writing by
any party to the other pursuant to the provisions hereof:
If to Bank, to: SouthTrust Bank of Georgia, N.A.
One Georgia Center, 22nd Floor
600 West Peachtree Street
Atlanta, Georgia 30308
Attn: Corporate Lending
If to Borrower, to: c/o Professional Transportation Group, Ltd.
5025 Derrick Jones Road
Suite 120
Atlanta, Georgia 30349
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<PAGE> 11
Any such notice shall be deemed given as of the date so delivered personally,
or three (3) days after the date on which the same was deposited, first-class
or certified postage prepaid, in a regularly maintained receptacle for the
deposit of United States Mail, addressed as aforesaid.
(c) This Agreement and the other Loan Documents shall be
governed by and construed and enforced in accordance with the substantive laws
of the State of Georgia, without regard to principles governing conflicts of
law. BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED IN THE STATE OF GEORGIA AND, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS
WITH RESPECT TO ANY ACTION INSTITUTED IN ANY SUCH COURT AND AGREES THAT SERVICE
OF PROCESS IN ANY SUCH ACTION WILL BE SUFFICIENT IF SERVED ON BORROWER BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR IN ANY MANNER PROVIDED BY LAW.
NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST BORROWER OR THE COLLATERAL IN THE COURTS OF ANY OTHER
JURISDICTION BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO ENFORCE THE
OBLIGATIONS OF BORROWER UNDER THIS AGREEMENT OR THE RIGHTS OF BANK WITH RESPECT
TO THE COLLATERAL.
(d) This Agreement shall inure to the benefit of Bank, its
successors and assigns, and to any person to whom Bank may grant an interest in
the Obligations, and shall be binding upon Borrower and its or his respective
heirs, personal representatives, executors, administrators, successors and
assigns; provided, however, that Borrower shall have no right to assign its
rights or obligations hereunder to any person or entity. Time is of the
essence in the payment and performance of every provision and covenant of this
Agreement and the other Loan Documents. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction. This Agreement may not be amended or modified, and Borrower
shall not take any action herein prohibited, or omit to perform any action
required to be performed by it, unless Borrower shall obtain the prior written
consent of Bank to such amendment, modification, action or omission to act, and
no course of dealing between Borrower and Bank shall operate as a waiver of any
right, power or privilege granted under this Agreement, under the other Loan
Documents, or available at law or in equity. This Agreement and the other Loan
Documents contain the entire agreement between Borrower and Bank regarding the
Loan and the Collateral. Upon the execution and delivery of this Agreement,
the terms and conditions of any commitment letter relating to the Loan shall be
of no further force or effect. NO ORAL REPRESENTATIONS OR STATEMENTS SHALL BE
BINDING ON BANK, AND NO AGENT OF BANK HAS THE AUTHORITY TO VARY THE TERMS OF
THIS AGREEMENT, EXCEPT IN WRITING ON THE FACE HEREOF OR ON A SEPARATE PAGE
ATTACHED HERETO. If any provision of this Agreement conflicts or is
inconsistent with any provision of the Note, the provisions of the Note shall
control.
(e) Borrower, for itself, its heirs, personal
representatives, executors, administrators, successors and assigns, hereby
agrees to indemnify and hold harmless Bank and its affiliates, successors and
assigns, and its stockholders, officers, directors, employees, agents and
attorneys from and against any and all claims, demands, liabilities, losses,
costs, expenses, damages, suits and judgments (including, without limitation,
liability under CERCLA, the Federal Resource Conservation and Recovery Act, and
other environmental laws and regulations, and costs of defense and attorneys'
fees) resulting from any representation or warranty made by Borrower or on
Borrower's behalf pursuant to Section 7(m) of this Agreement having been false
when made, or resulting from Borrower's breach of any of the covenants set
forth in Section 8(n) or Section 9(k) of this Agreement. This Agreement of
indemnity shall be a continuing agreement and shall survive payment of the
Obligations and termination of the other provisions of this Agreement.
12. BENEFIT TO GUARANTORS. In consideration for the execution and
delivery by the corporate Borrowers of that certain Guaranty of Payment and
Performance of even date hererwith, Borrower Dennis A. Bakal agrees to make the
benefit of all Loans hereunder available to the corporate Borrowers (including,
without limitation, each and every of the other Obligors). Borrower
acknowledges and agrees that each of the corporate Borrowers is under common
management and control with Borrower and will benefit directly and materially
by the extension of the Loans hereunder.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their duly authorized representatives on or as of the
date first above written.
BORROWER:
/s/ Dennis A. Bakal (SEAL)
- -----------------------------------------------
DENNIS A. BAKAL
PROFESSIONAL TRANSPORTATION GROUP, LTD., A GEORGIA CORPORATION
By: /s/ Dennis A. Bakal
--------------------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
TRUCK/NET, INC., a Georgia corporation
By: /s/ Dennis A. Bakal
--------------------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
TIMELY TRANSPORTATION, INC., A GEORGIA CORPORATION
By: /s/ Dennis A. Bakal
--------------------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
PTG, INC., a Georgia corporation
By: /s/ Dennis A. Bakal
--------------------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
BANK:
SOUTHTRUST BANK OF GEORGIA, N.A., a national banking association
By: /s/ Barbara A. Gewert
--------------------------------------------
Barbara A. Gewert, Vice President
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<PAGE> 1
EXHIBIT 10.13
COMMERCIAL REVOLVING NOTE
(Working Capital Line of Credit)
$1,915,000.00 Atlanta, Georgia March 28, 1997
FOR VALUE RECEIVED, the undersigned DENNIS A. BAKAL, a Georgia
resident (hereinafter referred to as "Maker"), promises to pay to the order of
SOUTHTRUST BANK OF GEORGIA, N.A., a national banking association (hereinafter
referred to as "Payee"; Payee and any subsequent holder of this Note being
referred to collectively as "Holder"), at any office of Payee in Atlanta,
Georgia, or at such other place as Holder may designate, the principal amount
of One Million Nine Hundred Fifteen Thousand and No/100 Dollars
($1,915,000.00), or such lesser amount as may be outstanding and unpaid
hereunder, together with interest on so much thereof as is outstanding
hereunder from time to time at the rate stated below from the date of this Note
(or other interest accrual date shown below) until maturity, and at the rate of
interest which is two percent (2%) per annum in excess of the rate stated below
after maturity, said principal and interest to be due and payable as stated
below.
INTEREST RATE. Interest will accrue on each advance made under this
Note at a rate per annum which is three- quarters (0.75) of one percentage
point in excess of the Base Rate (hereinafter referred to as the "Floating
Rate"). "Base Rate," as used herein, means the rate of interest designated by
Payee from time to time as its Base Rate. Maker understands that the Base Rate
merely serves as a basis for calculating rates of interest and is not
necessarily the lowest rate charged by Payee. The Base Rate on the date of
this Note is eight and one-half percent (8.50%) per annum and, consequently,
the rate of interest charged under this Note on any advance made on the date of
this Note is nine and one-quarter percent (9.25%) per annum. Any change in the
rate of interest accruing under this Note resulting from a change in the Base
Rate shall be effective on any day the Base Rate changes.
PAYMENT SCHEDULE. Principal and interest shall be due and payable as
follows: Interest only on the outstanding principal amount shall be due and
payable monthly, in arrears, beginning on May 1, 1997, and continuing on the
first day of each month thereafter until maturity. On January 31, 1998, all
unpaid principal, plus accrued and unpaid interest, shall be due and payable in
full.
INTEREST ACCRUAL. Interest shall accrue daily on the unpaid principal
amount of this Note and will be calculated at the rate stated above on the
basis of a 360-day year and the actual days elapsed by multiplying the unpaid
principal amount by the per annum rate stated above, multiplying the product
thereof by the actual number of days elapsed, and dividing the product so
obtained by 360.
REBORROWINGS. Until the earlier of maturity of this Note, or the
occurrence of any event giving Holder the right to accelerate the maturity of
this Note as provided below, or written or oral notice to Maker of Holder's
election to terminate the line of credit (which notice Holder may give at its
discretion), Maker may borrow hereunder, repay the principal amount in whole or
in part upon the terms and conditions set forth herein, and reborrow hereunder,
so long as the aggregate unpaid principal amount of such advances does not
exceed the principal amount of this Note at any time. To the extent permitted
by law, any accrued interest not paid when due as set forth above may at
Holder's discretion be paid by Holder providing an advance hereunder in the
amount of such unpaid interest, or if the outstanding principal balance under
this Note would not permit such advance, the unpaid interest shall be added to
the principal balance due hereunder. Any such advance or principal amount
shall accrue interest at the rate provided for herein.
SECURITY. As security for the full payment and performance of this
Note, Maker hereby assigns, conveys, and grants a security interest to
Holder in all property in which Maker has an interest which is in or comes into
the possession, control or custody of Holder, all property in which Maker has
heretofore granted or hereafter grants to Holder a security interest to secure
any obligation, and all property of Maker in which Holder has acquired or
hereafter otherwise acquires a lien, encumbrance or other right (including, but
not limited to, balances, credits, deposits, accounts and monies). Maker
hereby agrees that Holder may, at any time and without notice, apply any
balances, credits, deposits, accounts, monies or other indebtedness now or
hereafter owing by Holder to Maker in satisfaction of any indebtedness
evidenced by this Note whether or not due.
FINANCIAL STATEMENTS. Maker agrees, for so long as there is any
amount outstanding under this Note or Maker is entitled to request advances
hereunder, to provide Holder financial statements and other information of or
concerning Maker and any other Obligor (as hereinafter defined), in such
detail, of such quality (i.e., audited, reviewed, unaudited or otherwise), and
with such frequency and timeliness as Holder may reasonably request from time
to time. All financial statements required by Holder as set forth above shall
be prepared in accordance with generally accepted accounting principles (except
for the absence of footnotes with respect to monthly and quarterly financial
statements) and shall fairly present the financial condition and results of
operations of the Obligor specified as of the end of and for the period covered
thereby.
USE OF PROCEEDS. Maker represents and agrees that the proceeds of the
loan evidenced by this Note shall be used solely for business purposes and
shall not be used for any personal, family, household, consumer or other
purpose.
LATE CHARGE. If any payment of the principal amount outstanding under
this Note is late ten (10) days or more, in addition to interest after maturity
as provided above, Maker agrees to pay a late charge equal to one-half of one
percent (1/2%) of the amount of the payment which is late, subject to a minimum
late charge of $5.00 and a maximum late charge of $250.00 for any one payment
as compensation for administrative and other costs associated with the late
payment as set forth below.
<PAGE> 2
MAXIMUM RATE OF INTEREST. If, at any time, the rate or amount of
interest, late charges, attorneys' fees or any other charge payable under this
Note should exceed the maximum rate or amount permitted by applicable law, then
for such time as such rate or amount would be excessive, its application shall
be suspended and there shall be charged instead the maximum rate or amount
permitted under such law, and any excess interest or other charge paid by Maker
or collected by Holder shall be refunded to Maker or credited against the
principal amount of this Note, at the election of Holder or as required by
applicable law. Maker agrees that the late charge provided in this Note is a
reasonable estimate of probable additional unanticipated internal costs to
Holder of reporting and accounting for the late payment, that such costs are
difficult or impossible to estimate accurately, and that the agreement to pay a
late charge is a reasonable liquidated damages provision.
DEFAULT. The following shall constitute events of default under this
Note: a failure of Maker (Maker and each other person primarily or secondarily
liable to Holder for the indebtedness evidenced by this Note hereinafter
collectively referred to as "Obligors") to make any payment of principal or
interest or any other amount under this Note when due or failure of Maker to
perform or observe any promise or agreement contained in this Note; the death
of (if an individual), death of a general partner (if a partnership), or
dissolution of (if a partnership or corporation), insolvency of, general
assignment for the benefit of creditors by, any Obligor; the commencement of a
voluntary proceeding under any law relating to bankruptcy, insolvency,
reorganization, arrangement, composition or readjustment of debt, dissolution,
liquidation or debtor relief law or statute of any jurisdiction, whether now or
hereafter in effect, including without limitation the filing of a petition
under any chapter of the Federal Bankruptcy Code, as amended, by or against, or
acquiescence in writing to same by, or failure to timely and diligently
controvert any such involuntary proceeding by, any Obligor; the filing of a
proceeding for the appointment of a receiver, custodian, trustee, liquidator or
similar official for Obligor or Obligor's property or consenting to the
appointment of same; the failure of an involuntary petition for relief under
the federal bankruptcy code to be dismissed within thirty (30) days after the
commencement thereof or in which an order for relief is entered; the making by
any Obligor of a conveyance fraudulent as to creditors under any state or
federal law; entry of any judgment against, or issuance of a levy or writ of
execution, attachment or garnishment against any of the property of, any
Obligor; the inability of any Obligor to pay debts as they become due or admit
in writing to such effect; the transfer by any Obligor of all or substantially
all of his, her or its assets outside the ordinary course of business, or the
waste, loss or dissipation of a substantial part of such person's assets; if
any Obligor is a partnership, the withdrawal or removal of any general partner
of such partnership; if any Obligor is a corporation, the transfer, directly or
indirectly (including through any voting trust, irrevocable proxy, or the
like), of the ownership or power to vote more than thirty percent (30%) of the
voting stock of such corporation; the suspension of the operation of any
Obligor's present business; the occurrence of any default or event authorizing
acceleration as provided under any promissory note or other evidence of debt,
loan agreement, security agreement, pledge agreement, assignment, mortgage,
deed to secure debt, deed of trust, lease agreement or other agreement or
contract between any Obligor and Holder or any third party; any statement,
representation or warranty of any Obligor made orally or in writing in any
document evidencing, securing or otherwise relating to the indebtedness
evidenced by this Note or in any other writing or statement at any time
furnished or made by any Obligor to Holder is false or misleading in a material
respect as of the date furnished or made; revocation or termination of any
guaranty executed in favor of Holder guaranteeing the indebtedness evidenced by
this Note; the financial responsibility of any Obligor becomes impaired at any
time in the sole opinion of Holder; or, the determination by Holder that it
otherwise deems itself to be insecure.
REMEDIES. If this Note is payable on demand, all of the principal
amount outstanding hereunder and all accrued but unpaid interest thereon shall
be due and payable in full upon demand by Holder, whether or not any event of
default described below has occurred and whether or not Holder reasonably deems
itself to be insecure. If any event of default under this Note should occur,
all unpaid amounts of any or all of the principal amount outstanding hereunder
and all accrued but unpaid interest thereon shall, at the option of Holder and
without notice or demand, become immediately due and payable and Holder shall
have and be entitled to exercise, from time to time, all the rights and
remedies available to it as provided elsewhere in this Note, in any other
agreement or contract between Maker and Holder and under applicable law. All
of Holder's rights and remedies shall be cumulative, and any failure of Holder
to exercise any such right or remedy shall not be construed as a waiver of the
right to exercise the same or any other right or remedy at any time and from
time to time thereafter.
WAIVER. With respect to the obligations of Maker under this Note, to
the extent permitted by applicable law, Maker waives the following: (1)
demand, presentment, protest, notice of dishonor, suit against any party and
all other requirements necessary to charge or hold Maker liable on this Note;
(2) all statutory provisions and requirements for the benefit of Maker
(including notice requirements), now or hereafter in force (except to the
extent provided for in any other contract or agreement between Maker and
Holder); and (3) the right to interpose any set-off or counterclaim of any
nature or description in any litigation in which Holder and any Maker shall be
adverse parties.
NOTICES. Any and all notices, elections, demands, requests and
responses thereto permitted or required to be given under this Note shall be in
writing, signed by or on behalf of the party giving the same, and shall be
deemed to have been properly given and shall be effective upon being personally
delivered, or three (3) days after being deposited in the United States mail,
postage prepaid, certified with return receipt requested, to Maker if mailed to
the address set forth above Maker's name at the end of this Note and to Holder
at the address set forth in the beginning of this Note or at such other address
within the continental United States for either party as such party may
designate by notice to the other given in accordance with the provisions of
this paragraph; provided, however, that the time period in which a response to
any such notice, election, demand or request must be given shall commence on
the date of receipt thereof; and provided further that no notice of change of
address shall be effective until the date of receipt thereof. Personal
delivery to a party or to any officer, partner, agent or employee of such party
at said address shall constitute receipt. Rejection or other refusal to accept
or inability to deliver because of a changed address of which no notice has
been received shall also constitute receipt.
EXPENSES AND COLLECTION COSTS. Maker agrees to pay all filing fees
and taxes in connection with this Note and all costs of collecting or securing
or attempting to collect or secure any of the indebtedness evidenced by this
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<PAGE> 3
Note, including, without limitation, court costs, litigation expenses and
reasonable attorneys' fees, and all accrued but unpaid interest thereon, if
this Note is referred to an attorney for collection. If attorneys' fees in
such amount would be prohibited by applicable law, then Maker agrees to pay
reasonable attorneys' fees not to exceed the maximum amount allowed by law.
PARTICIPATION OF NOTE. Maker understands that Holder may enter into
participation agreements with participating institutions whereby Holder will
sell undivided interest in this Note to such other institutions. Maker agrees
that Holder may furnish information regarding Maker, including financial
information, to such institutions from time to time and also to prospective
participating institutions in order that such institutions may make an informed
decision whether to purchase a participation in this Note. Maker hereby grants
to each such participating institution, to the extent of its participation in
this Note, the right to set off deposit accounts maintained by Maker, or any of
them, with such institution, against unpaid amounts owed under this Note. Upon
written request from Holder, Maker agrees to make each payment under this Note
directly to each such participating institution in proportion to the
participant's interest in this Note as set forth in such request from Holder.
MISCELLANEOUS. No delay by Holder in enforcing its rights hereunder
shall prejudice Holder's rights to enforce this Note. No waiver by Holder
shall be effective unless made in writing by a duly authorized officer or agent
of Holder, and no waiver by Holder of any right or remedy shall constitute a
waiver of any other or future right or remedy. This Note shall inure to the
benefit of Holder, its successors and assigns, and to any person to whom Holder
may grant an interest in any of the indebtedness evidenced hereby, and shall be
binding upon Maker, and his, her, its, or their respective heirs, executors,
administrators, successors and assigns. Maker, if more than one, includes each
person executing this Note, who are jointly and severally liable for all
obligations of Maker under this Note, and each Maker has subscribed its name
hereto without condition that anyone else should sign or become bound hereon
and without any other condition whatever being made. Holder may release any
Obligor or renew or extend the maturity hereof without affecting any
obligations of any other Obligor to repay the principal amount outstanding
hereunder and all accrued but unpaid interest. THIS NOTE SHALL BE GOVERNED,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
GEORGIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
CONSENT TO JURISDICTION. MAKER HEREBY CONSENTS TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF GEORGIA, AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON
CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED IN ANY SUCH COURT AND AGREES
THAT PROCESS IN ANY SUCH ACTION WILL BE SUFFICIENT IF SERVED ON MAKER BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED OR IN ANY MANNER PROVIDED BY LAW.
NOTWITHSTANDING THE FOREGOING, HOLDER SHALL HAVE THE RIGHT TO BRING ANY ACTION
OR PROCEEDING AGAINST MAKER OR MAKER'S PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION HOLDER DEEMS NECESSARY OR APPROPRIATE IN ORDER TO ENFORCE THE
OBLIGATIONS OF MAKER UNDER THIS NOTE.
HEADINGS. The headings of the paragraphs set forth in this Note are
for convenience of reference only, and are not to be considered a part hereof
and shall not limit or otherwise affect any of the terms hereof.
TIME OF ESSENCE. Time is of the essence of the payment and
performance of this Note.
IN WITNESS WHEREOF, Maker has executed this Note under seal, or has
caused this Note to be executed by its duly authorized agent and its seal to be
affixed hereto, as of the date first above written.
ADDRESS OF 5025 DERRICK JONES ROAD
MAKER: SUITE 120
ATLANTA, GEORGIA 30349
MAKER:
/s/ Dennis A. Bakal (SEAL)
- ----------------------------------------------
DENNIS A. BAKAL
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<PAGE> 1
EXHIBIT 10.14
GENERAL SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement"), dated as of March 28, 1997, is
made by the undersigned PROFESSIONAL TRANSPORTATION GROUP, LTD., a Georgia
corporation, TRUCK/NET, INC., a Georgia corporation, TIMELY TRANSPORTATION,
INC., a Georgia corporation, and PTG, INC., a Georgia corporation (hereinafter
collectively referred to as "Debtor"), with SOUTHTRUST BANK OF GEORGIA, N.A., a
national banking association ("Secured Party").
WITNESSETH:
FOR VALUE RECEIVED, and in consideration of loans, extensions of credit
or other financial accommodations previously, now or hereafter made by Secured
Party to Debtor or which are otherwise to the direct interest and benefit of
Debtor, Debtor hereby agrees with Secured Party as follows:
1. SECURITY INTEREST. As security for the full and prompt payment
and performance of the Secured Obligations (as hereinafter defined), Debtor
hereby grants, bargains, sells, conveys, assigns and sets over to Secured
Party, and grants to Secured Party a security interest in, the following
property and rights of Debtor:
A. (Inventory and Documents) all inventory of Debtor, whether now owned or
hereafter acquired by Debtor and wherever
located, including, without limitation, all
goods, merchandise, raw materials, work in
process, finished goods, and other tangible
personal property held for sale or lease or
furnished under contracts of service or used or
consumed in Debtor's business and all returned,
reclaimed and repossessed goods (collectively,
the "Inventory"), together with all documents
now or hereafter representing any such
Inventory (collectively, the "Documents"), and
all proceeds and products of the foregoing.
B. (Accounts) all accounts, contract rights, instruments and
chattel paper whether arising from the sale of
Inventory or the rendering of services by
Debtor or otherwise and whether now owned or
hereafter acquired by Debtor and whether now
existing or hereafter arising and all returned,
reclaimed and repossessed goods (collectively,
the "Accounts"), together with all books and
records relating to such Accounts, and all
proceeds of the foregoing.
C. (Intangibles) all general intangibles of Debtor, whether now
owned or hereafter acquired by Debtor,
including, without limitation, any goodwill,
choses in action, causes of action,
literary rights, rights to performance,
confidential information, purchase orders,
trade secrets, trademarks, service marks,
patents, copyrights, inventions and other
proprietary information (collectively, the
"Intangibles"), together with all books and
records relating to such Intangibles, and all
proceeds of the foregoing.
D. (Equipment) all equipment of Debtor, whether now owned or
hereafter acquired by Debtor and wherever
located, including, without limitation, all
machinery, computer equipment and peripherals,
furniture, furnishings, and motor vehicles, and
all replacements thereof and substitutes
therefor, and all accessories, additions,
attachments and other goods now or hereafter
installed in or affixed thereto or used in
connection therewith (collectively, the
"Equipment"), together with all warranties and
service contracts relating to such Equipment,
and all proceeds of the foregoing. The term
"Equipment," as used in this Agreement, also
includes fixtures, including leasehold
improvements and machinery and appliances which
are attached to real property in such a manner
as to become fixtures (collectively, the
"Fixtures").
(All of the property and rights described in paragraphs A, B, C and D above, as
applicable, are sometimes hereinafter collectively referred to as the
"Collateral.")
<PAGE> 2
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR. Debtor
covenants, represents and warrants to Secured Party that:
(a) Each entity comprising Debtor is duly organized, existing and
in good standing under the laws of the state of its incorporation and is duly
qualified and in good standing in every other state in which the nature of its
business or the ownership of its properties makes qualification necessary, and
the execution, delivery and performance of this Agreement are within Debtor's
corporate powers, have been duly authorized, are not in contravention of any
law, judgment, order, writ or decree of any court or governmental authority or
the terms of Debtor's certificate of incorporation, by-laws or other
incorporation papers, or of any agreement or undertaking to which Debtor is a
party or by which Debtor or its property is bound.
(b) Debtor agrees to make all records concerning or constituting
the Collateral available to Secured Party, its agents, attorneys and
accountants, upon request at any reasonable time and without hindrance or
delay, and to allow Secured Party to inspect, audit, check or make copies or
extracts of such records.
(c) Except as otherwise noted in a schedule attached to this
Agreement, Debtor is the owner of the Collateral, free and clear of all
security interests, liens and encumbrances other than the security interest
granted to Secured Party herein, and has the full right and power to transfer
the Collateral to Secured Party and to grant to Secured Party a security
interest therein. Except as expressly authorized hereunder, Debtor will not
sell, transfer, assign or convey any of the Collateral or any interest therein,
nor create any other security interest therein, nor permit any financing
statement other than that of Secured Party's to be filed in any public office
with respect thereto (except as otherwise expressly agreed in writing by
Secured Party), nor permit either Debtor's or Secured Party's rights therein to
be reached by attachment, levy, garnishment or other judicial process.
(d) Debtor will pay promptly when due all taxes, charges and
assessments upon the Collateral or any part thereof, the use or operation of
the Collateral, the proceeds thereof, this Agreement and any note evidencing
the Secured Obligations. At its option, Secured Party may discharge any taxes,
liens, security interests or other encumbrances or any item levied or placed on
the Collateral or any part thereof, but Secured Party shall not be under any
duty to exercise any such authority. Debtor agrees to reimburse Secured Party,
upon demand, for any payment made by Secured Party pursuant to the foregoing
authorization.
(e) Debtor shall bear the risk of loss of, damage to, or
destruction of the Collateral, whether in possession of Debtor, Secured Party
or a third party. Secured Party shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if
Secured Party takes such action for that purpose as Debtor shall reasonably
request in writing, but no omission on the part of Secured Party to take any
action, whether or not requested by Debtor, shall of itself be deemed a failure
to exercise reasonable care.
(f) Debtor shall do, make, execute and deliver to Secured Party all
such additional acts, things, assignments, assurances, and instruments as
Secured Party may require to vest completely in Secured Party its rights
hereunder and in or to the Collateral. At the request of Secured Party, Debtor
will execute financing statements as provided for under the Uniform Commercial
Code in form satisfactory to Secured Party and will pay the cost of filing the
same in all public offices where filing is deemed by Secured Party to be
necessary or desirable. Debtor agrees that a carbon or photostatic copy of
this Agreement may be filed as a financing statement in any public office. If
certificates of title are now or hereafter issued or outstanding with respect
to any of the Collateral, Debtor will cause the interest of Secured Party to
be properly noted thereon at Debtor's expense. Debtor will deliver all
instruments, documents and chattel paper which constitute a part of the
Collateral to Secured Party upon request, duly endorsed by Debtor to the order
of Secured Party or in blank, in each case, in form satisfactory to Secured
Party. Secured Party may elect not to perfect its security interest in all or
any part of the Collateral without impairing its rights against Debtor or any
other party.
(g) Debtor hereby irrevocably makes, constitutes and appoints
Secured Party and any of its officers or designees as Debtor's true and lawful
attorney-in-fact with full power and authority to do any and all acts necessary
or proper to carry out the intent of this Agreement, including, without
limitation, the right, power and authority (i) to receive and give receipt for
any amount or amounts due or to become due to Debtor with respect to the
Collateral and to endorse and negotiate in the name of Debtor any check or
other item issued in payment or on account thereof, and in the name of Secured
Party or of Debtor to enforce by suit,
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<PAGE> 3
compromise, settle, discharge, extend the time of payment, file claims or
otherwise participate in bankruptcy proceedings, and deal in and with
Collateral and any proceeds thereof; (ii) to open mail addressed to Debtor,
remove any Collateral or proceeds of Collateral therefrom, and deliver the
remainder of such mail to Debtor; (iii) to do all acts and things deemed by
Secured Party to be appropriate to protect, preserve and realize upon the
Collateral; and (iv) to obtain, adjust, settle, or cancel any insurance carried
with respect to the Collateral and to endorse in Debtor's name and give
receipts for checks and drafts issued in payment of losses and as return
premiums with respect to any such insurance, but Secured Party shall not be
under any duty to exercise any such authority or power or in any way be
responsible for collecting or realizing upon the Collateral. Debtor hereby
ratifies and confirms all that Secured Party, its officers or designees, shall
do as such attorney-in-fact by virtue of the foregoing powers, which powers are
coupled with an interest and are irrevocable until this Agreement has been
terminated as hereinafter provided. Secured Party shall not be liable for any
act or omission which Secured Party, its officers or designees shall take or
fail to take pursuant to the foregoing powers.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO INVENTORY.
Debtor further agrees with Secured Party as follows:
(a) Debtor will allow Secured Party and any of its officers,
agents, attorneys or accountants to examine or inspect the Inventory wherever
located at all reasonable times.
(b) Debtor will keep the Inventory in good condition and will not
waste or destroy any of the same. If Debtor should fail to take appropriate
steps, as determined by Secured Party, to maintain the Inventory in good
condition, Secured Party, at its option, may take such steps and expend such
funds as it deems necessary for the preservation of the Inventory. Debtor
agrees to reimburse Secured Party on demand for any sums spent by Secured Party
with respect to the maintenance of the Inventory.
(c) Until the occurrence of an event of default hereunder, Debtor
may use the Inventory in any lawful manner consistent with Debtor's customary
business, provided that such use is not inconsistent with this Agreement or
with the terms or conditions of any policy of insurance thereon, and Debtor may
sell the Inventory in the ordinary course of business. A sale in the ordinary
course of business does not include a return to a vendor for credit or other
transfer in partial or total satisfaction of a debt. Until the occurrence of
event of default, Debtor may also use and consume any raw materials or
supplies, the use and consumption of which is necessary in order to carry on
Debtor's customary business.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO ACCOUNTS.
Debtor hereby further agrees with Secured Party as follows:
(a) Each Account owing to Debtor, and all names of all account
debtors, amounts owing, due dates, and other facts appearing on Debtor's
records relating thereto, are true, correct and genuine and are what they
purport to be, and each such Account arises out of a bona fide sale of goods or
other property sold and delivered to, or out of services rendered by Debtor to,
the account debtors so indicated, and the amount of each such debt is
unconditionally owed to Debtor by each such account debtor, except for normal
cash discounts, and is not subject to any offset, credit, deduction, or
counterclaim, and Debtor is the sole owner thereof.
(b) The address of Debtor's chief executive office and principal
place of business is the address shown above Debtor's signature at the end of
this Agreement. Debtor agrees not to change the address of Debtor's chief
executive office without giving at least fifteen (15) days prior written notice
to Secured Party.
(c) Secured Party shall have the right at any time upon ten (10)
days prior notice to Debtor, whether before or after the occurrence of a
default hereunder by Debtor, to notify any or all account debtors or obligors
on the Accounts to make payment directly to Secured Party, or to make payment
to an address (a "lockbox") under the exclusive control of Secured Party. Upon
request of Secured Party, Debtor agrees immediately to notify any or all
account debtors and obligors to make payment directly to Secured Party or to
such lockbox and to place Secured Party's or such lockbox's address on Debtor's
invoices and statements as the address to which payment should be made. To the
extent Secured Party does not so elect to notify, or does not request Debtor to
notify, the account debtor or obligors, Debtor shall continue to collect such
Accounts. Debtor agrees not to commingle any proceeds of any of the Accounts
with any of Debtor's own
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<PAGE> 4
funds, goods or property, and at all times to hold such proceeds in trust for
Secured Party until delivery thereof is made to Secured Party. Debtor agrees
to deliver all proceeds of the Accounts in precisely the form received by
Debtor, with the endorsement of Debtor if requested by Secured Party. Secured
Party may apply such proceeds to any of the Secured Obligations, whether or not
such Secured Obligations have matured by their terms, or Secured Party may, at
its option, release such proceeds to Debtor for use in Debtor's business.
Secured Party need not apply nor give credit for any item included in such
proceeds until Secured Party has received final payment therefor at its offices
in cash or cash equivalents acceptable to Secured Party.
(d) Weekly, monthly, or at such other intervals as Secured Party
shall designate, Debtor agrees to deliver to Secured Party lists and agings of
all Accounts in such form, and in such detail, as Secured Party shall require,
together with copies of invoices, delivery receipts, bills of lading and such
other documents in support of or relating to Accounts as Secured Party shall
require.
(e) If any of the Accounts arise out of contracts with the United
States or any agency thereof, Debtor agrees to notify Secured Party thereof and
to execute such documents as shall be necessary to permit Secured Party to
perfect its right to receive payment under the Federal Assignment of Claims
Act.
(f) Debtor will promptly notify Secured Party in writing in the
event the account debtor on any Account refuses to accept or returns any goods
which are the subject of the Account, and of the bankruptcy, insolvency, or
cessation of business of or by any such account debtor, and of any claim
asserted against Debtor for credit allowances, adjustments, offsets or
counterclaims by any such account debtor;
(g) Upon request of Secured Party, Debtor will purchase insurance
covering the loss of, and cost of reconstruction of, Debtor's records of its
Accounts and all books and records relating thereto, such insurance to be
issued by an insurer acceptable to Secured Party and to contain such coverage
provisions as Secured Party shall request.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO INVENTORY AND
EQUIPMENT. Debtor agrees with Secured Party as follows:
(a) Debtor's Inventory and Equipment, as applicable, are kept or
stored only at the address shown above Debtor's signature at the end of this
Agreement and at the following addresses:
- ------------------------- ------------------------- ------------------------
- ------------------------- ------------------------- ------------------------
- ------------------------- ------------------------- ------------------------
- ------------------------- ------------------------- ------------------------
(Failure to list any address where Inventory or Equipment are kept shall not
limit or affect Secured Party's security interest therein.)
Debtor agrees not to keep or store any Inventory or Equipment, as applicable,
at any address other than those set forth above without giving at least fifteen
(15) days prior written notice to Secured Party.
(b) Debtor agrees not to sell or otherwise dispose of any
Equipment, as applicable, except worn out or obsolete Equipment which is
immediately replaced with other Equipment of equivalent function and of equal
or greater value (and if a motor vehicle, upon which the security interest of
Secured Party has been properly noted on the certificate of title therefor).
(c) All Inventory, if applicable, is and will be produced in
compliance with the Federal Fair Labor Standards Act.
(d) Debtor will maintain insurance at all times with respect to all
Inventory and/or Equipment, as applicable, against risk of fire (including
so-called extended coverage), theft, water damage and such other risks as
Secured Party may require from time to time and, in the case of motor vehicles,
against risk of collision and vandalism, in such amounts, in such form, for
such perils, and written by companies as may be satisfactory to Secured Party.
Secured Party shall be named as loss payee under such policies of insurance.
-4-
<PAGE> 5
Debtor may furnish such insurance through an existing policy or a policy
independently obtained and paid for by Debtor. All policies of insurance shall
provide for a minimum of ten (10) days prior written notice to Secured Party
before cancellation. At request of Secured Party, Debtor will deliver such
policies, or at Secured Party's option, certificates thereof, to Secured Party
to be held by it. Debtor hereby assigns all insurance policies at any time
covering any Inventory, Equipment, Specific Equipment or Farm Products, as
applicable, and all return or unearned premiums thereunder to Secured Party as
additional collateral for the Secured Obligations. Secured Party in its
discretion may apply any proceeds of such insurance to the payment of the
Secured Obligations, whether or not due, in such order of application as
Secured Party may elect, or may release such proceeds to Debtor for use in
purchasing other Inventory and/or Equipment, as applicable, as a replacement
for any loss thereof. In the event Debtor fails to provide any insurance as
required herein, Secured Party may, at its option, purchase such insurance or,
at Secured Party's option and after ten (10) days' prior written notice to
Debtor, Secured Party may purchase insurance covering only Secured Party's
interest in the Inventory and/or Equipment, as applicable. Debtor agrees to
reimburse Secured Party on demand for the cost of such insurance.
(e) Upon request of Secured Party at any time, Debtor will deliver
to Secured Party lists or copies of all Accounts which are proceeds of
Inventory or Equipment, as applicable, promptly after they arise. Unless
Secured Party shall have otherwise agreed with Debtor in writing, Debtor will
deliver to Secured Party, promptly upon receipt, all proceeds (except goods) of
the Inventory or Equipment, as applicable, received by Debtor, including
proceeds of such Accounts, in precisely the form received by Debtor, with the
endorsement of Debtor if requested by Secured Party. Debtor agrees not to
commingle any proceeds of such Collateral with any of Debtor's own funds, goods
or property, and at all times to hold such proceeds upon express trust for
Secured Party until delivery thereof is made to Secured Party. To evidence
Secured Party's rights hereunder, Debtor will assign or endorse proceeds to
Secured Party in such form as Secured Party may request and Secured Party shall
have the full power and authority to collect, compromise, endorse, sell or
otherwise deal with proceeds in its own name or that of Debtor. Secured Party
in its discretion may apply cash proceeds to the payment of any of the Secured
Obligations, whether or not due, in the order of application as Secured Party
may elect, or may release such cash proceeds to Debtor for use in the operation
of Debtor's business.
6. WAIVERS OF DEBTOR. Debtor hereby expressly waives:
(a) notice of acceptance of this Agreement;
(b) notice of the existence or creation of any or all of the
Secured Obligations;
(c) notice of any default, nonpayment, partial payment,
presentment, demand and all other notices which Debtor may be entitled to
whatsoever;
(d) any invalidity or disability in whole or in part with respect
to any Collateral, at the time of its acceptance or at any other time, as
well as with respect to the liability of any Obligor;
(e) the fact that the Collateral or any part thereof may at any
time or from time to time be incorrectly estimated or deteriorate in value
for any cause whatsoever;
(f) all diligence in collection or protection of or realization
upon the Collateral, the Secured Obligations, or any part thereof, or any
security for any of the foregoing;
(g) any duty or obligation on the part of Secured Party to
ascertain the extent or nature of the Collateral, or any part thereof, or
the liability of Obligor, as well as any duty or obligation on the part of
Secured Party to take any steps or actions to safeguard, protect, deal
with, handle, obtain or convey information with respect to the Collateral
or any part thereof; and
(h) any right to require Secured Party to proceed against any
Obligor, if Debtor is not the same as Obligor, as set forth in Section
10-7-24 of the Official Code of Georgia.
-5-
<PAGE> 6
DEBTOR HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS DEBTOR MAY HAVE TO NOTICE
PRIOR TO THE SEIZURE OF THE COLLATERAL. THIS WAIVER IS GIVEN BY DEBTOR TO
SECURED PARTY IN ACCORDANCE WITH SECTION 44-14-263 OF THE OFFICIAL CODE OF
GEORGIA IN ORDER TO ELIMINATE THE REQUIREMENT THAT SECURED PARTY FURNISH A BOND
SHOULD SECURED PARTY SEEK AN IMMEDIATE WRIT OF POSSESSION.
/s/ Dennis A. Bakal
- --------------------------------------------------------
SIGNATURE ON BEHALF OF DEBTOR
7. EXPENDITURES. All sums expended by Secured Party for which Debtor
is obligated to reimburse Secured Party under this Agreement shall bear
interest from the date the expenditure is made until the date paid at the rate
provided in any promissory note evidencing the Secured Obligation with respect
to which the sum was expended by Secured Party, or if no single such promissory
note exists or is identifiable, then at the rate which is two (2) percentage
points in excess of the rate of interest per annum announced by Secured Party
from time to time as its base rate of interest as of the date such expenditure
was made.
8. DEFAULT. Any or all of the Secured Obligations shall, at the option
of Secured Party and notwithstanding the stated maturity date of any instrument
evidencing any such Secured Obligations, become immediately due and payable,
without notice or demand, except as specifically provided in any such
investment, upon the occurrence of any of the following events, each of which
shall constitute an event of default hereunder:
(a) The failure of any Obligor to pay or perform as and when due
any of the Secured Obligations;
(b) The failure of Debtor to pay or perform as and when due any
covenant or agreement contained in this Agreement or if any warranty or
representation made or any writing furnished to Secured Party by or on behalf
of Debtor in or in connection with this Agreement is breached or is false or
inaccurate in any material respect when made or furnished;
(c) Loss, theft, damage, or destruction of any material part of the
Collateral, or any levy, seizure, garnishment or attachment thereof or thereon;
(d) The death of (if an individual), or dissolution of (if a
partnership or corporation), insolvency of, general assignment for the benefit
of creditors by, filing of a petition under any chapter of the federal
bankruptcy code by or against, filing of an application in any court for a
receiver for, entry of any judgment against, or issuance of a levy or writ of
execution, attachment or garnishment against any of the property of, any
Obligor;
(e) The transfer by any Obligor of all or substantially all of his,
her or its assets outside the ordinary course of business, or the waste, loss
or dissipation of a substantial part of such person's assets;
(f) If any Obligor is a partnership, the withdrawal or removal of
any general partner of such partnership;
(g) If any Obligor is a corporation, the transfer, directly or
indirectly (including through any voting trust, irrevocable proxy, or the
like), of the ownership or power to vote more than fifty percent (50%) of the
voting stock of such corporation;
(h) The occurrence of any default or event authorizing acceleration
as provided under any promissory note or other evidence of debt, loan
agreement, security agreement, pledge agreement, assignment, mortgage, deed to
secure debt, deed of trust, lease agreement or other agreement or contract
between any Obligor and Secured Party;
(i) The financial responsibility of any Obligor becomes impaired at
any time in the sole opinion of Secured Party; or
-6-
<PAGE> 7
(j) The determination by Secured Party that it otherwise deems
itself to be insecure.
9. REMEDIES. Upon the occurrence of any event of default set forth in
the preceding paragraph 8 and at any time thereafter, Secured Party shall have
and be entitled to exercise, from time to time, all the rights and remedies of
a secured party under the Uniform Commercial Code, and other applicable law,
including, without limitation, the right to take possession of all or any part
of the Collateral and, with or without taking possession thereof, to sell the
Collateral at one or more public or private sales, at Secured Party's option.
At Secured Party's request, Debtor agrees to assemble the Collateral and to
make it available to Secured Party at a place to be designated by Secured
Party. Debtor waives any notice of sale or other disposition of the
Collateral. To the extent that such notice may not be waived under applicable
law, Debtor agrees that notice of sale or other disposition of the Collateral
hereunder, or any part thereof, shall be sufficient if such notice is provided
to Debtor in accordance with the notice provisions set forth in this Agreement
at least five (5) calendar days before the time of the sale or disposition.
Debtor agrees to pay Secured Party on demand all expenses incurred or paid by
Secured Party in protecting or enforcing the Secured Obligations and the rights
of Secured Party hereunder, including Secured Party's right to take possession
of and sell or dispose of the Collateral, and in repossessing, collecting and
storing the Collateral, preparing the Collateral for sale, advertising and
conducting such sale, and collecting the proceeds of such sale. The proceeds
of any sale or other disposition or collection of the Collateral shall be
applied, first, to the payment of all costs and expenses incurred by Secured
Party in connection with such sale or other realization including, without
limitation, attorneys' fees as specified above and all costs of litigation, and
to the repayment of all advances made by Secured Party hereunder for the
account of Debtor and the payment of all costs and expenses paid or incurred by
Secured Party in connection with this Agreement or in the exercise of any right
or remedy hereunder or under applicable law; second, to the payment of the
Secured Obligations in such order as Secured Party may elect; and third, to
Debtor, or any other person entitled thereto, or as a court of competent
jurisdiction may direct. Debtor will remain obligated to pay any deficiency.
10. SET-OFF RIGHTS. Secured Party shall have the right to set off the
Secured Obligations against any indebtedness or liability of Secured Party to
Debtor at any time existing. As additional security for the Secured
Obligations, Debtor hereby transfers and assigns to Secured Party, and grants
to Secured Party a security interest in, all account balances, credits,
deposits, and rights of withdrawal of Debtor with Secured Party, whether now
owned or hereafter acquired, and whether jointly or severally held, and Debtor
agrees that Secured Party shall have a lien upon and security interest in all
property of Debtor of every kind now or hereafter in the possession or control
of Secured Party for any reason.
11. NOTICES. Any and all notices, elections, demands, requests and
responses thereto permitted or required to be given under this Agreement shall
be in writing, signed by or on behalf of the party giving the same, and shall
be deemed to have been properly given and shall be effective upon being
personally delivered, or three (3) days after being deposited in the United
States mail, postage prepaid, certified with return receipt requested, to
Debtor if mailed to the address set forth above Debtor's name at the end of
this Agreement and to Secured Party at the address set forth in the beginning
of this Agreement or at such other address within the continental United States
for either party as such party may designate by notice to the other given in
accordance with the provisions of this paragraph; provided, however, that the
time period in which a response to any such notice, election, demand or request
must be given shall commence on the date of receipt thereof; and provided
further that no notice of change of address shall be effective until the date
of receipt thereof. Personal delivery to a party or to any officer, partner,
agent or employee of such party at said address shall constitute receipt.
Rejection or other refusal to accept or inability to deliver because of a
changed address of which no notice has been received shall also constitute
receipt.
12. MISCELLANEOUS. (a) At such time as the Secured Obligations are paid
and satisfied in full and Secured Party has no other or further obligation,
contingent or otherwise, to make any present or future advance of funds or to
incur any present or future expense contemplated by the agreements relating to
the Secured Obligations, Secured Party will deliver to Debtor a written
termination of this Agreement upon written request therefor from Debtor. Prior
to such termination this shall be a continuing Agreement in every respect.
(b) No delay by Secured Party in enforcing its rights hereunder
shall prejudice its rights to enforce this Agreement. All rights and remedies
under this Agreement, under any other agreement and under applicable law shall
be cumulative, and any failure of Secured Party to exercise any such right or
remedy shall not be construed as a waiver of the right to exercise the same or
any other right or remedy at any time and
-7-
<PAGE> 8
from time to time thereafter. No waiver by Secured Party shall be effective
unless made in writing by a duly authorized officer or agent of Secured Party,
and no waiver by Secured Party of any right or remedy shall constitute a waiver
of any other or future right or remedy. This Agreement shall inure to the
benefit of Secured Party, its successors and assigns, and to any person to whom
Secured Party may grant an interest in any of the Secured Obligations, and
shall be binding upon Debtor and his, her, its or their respective heirs,
executors, administrators, successors and assigns. THIS AGREEMENT SHALL BE
GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF GEORGIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
(c) DEBTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN THE STATE OF GEORGIA AND, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS
WITH RESPECT TO ANY ACTION INSTITUTED IN ANY SUCH COURT AND AGREES THAT SERVICE
OF PROCESS IN ANY SUCH ACTION WILL BE SUFFICIENT IF SERVED ON DEBTOR BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED OR IN ANY MANNER PROVIDED BY LAW.
NOTWITHSTANDING THE FOREGOING, SECURED PARTY SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST DEBTOR OR THE COLLATERAL IN THE COURTS OF ANY
OTHER JURISDICTION SECURED PARTY DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
ENFORCE THE OBLIGATIONS OF DEBTOR UNDER THIS AGREEMENT OR THE RIGHTS OF SECURED
PARTY WITH RESPECT TO THE COLLATERAL.
13. DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"Obligor" means and includes Debtor and each other person primarily
or secondarily liable to Secured Party for any of the Secured Obligations,
together with his, her, its or their heirs, administrators, executors,
successors and assigns, including any resulting or surviving corporation
following any merger or any other reorganization, and also includes any debtor
in possession or similar entity following the filing of a petition for relief
by or against Obligor under any chapter of the federal bankruptcy code or in
any similar proceeding under state or federal law, and also includes any
proprietorship, partnership, corporation, trust, or other entity resulting from
or arising out of the dissolution, liquidation or change in form of business
organization by Obligor or following any change of name or domicile by Obligor.
"Secured Obligations" means all debts and other obligations now owed
by Debtor to Secured Party, all debts and other obligations owed by Debtor to
Secured Party in the future, all extensions and renewals of any such debts or
obligations, and all interest and other lawful fees and charges on any or all
such debts and obligations, including, without limitation, late charges,
penalty interest, premiums and costs of collection (including attorneys' fees)
for which Debtor has agreed to pay or reimburse Secured Party, or for which
Debtor is obligated to pay Secured Party under applicable law, together with
each and every promissory note, guaranty, or other instrument or writing now or
hereafter evidencing the obligation of Debtor to pay any such debt, the
interest thereon or such other charges; whether such debts or other obligations
are now foreseen or unforeseen; whether now due or to become due in the future;
whether arising from contract, tort or otherwise; whether arising from an
original obligation of Debtor to Secured Party or from an obligation of Debtor
which was purchased by Secured Party, whether from time to time increased,
reduced or entirely extinguished and then reincurred; whether direct or
indirect, absolute or contingent, liquidated or unliquidated, secured or
unsecured; whether otherwise guaranteed or not; and whether arising out of one
or more loans or other extension of credit from, or line of credit with, or the
issuance of one or more letters of credit by, or the acceptance of one or more
bankers' acceptances by, or the lease of personal property from, or the
furnishing of other financial accommodation by Secured Party, or otherwise.
The Secured Obligations include, without limitation, interest, fees and other
charges on any debt or obligation of Debtor to Secured Party accruing after the
filing of a petition under any chapter of the federal bankruptcy code by or
against Debtor and any loans or other credit or financial accommodations
extended to Debtor after the filing of any such petition. The Secured
Obligations shall also include, without limitation, any amounts which Debtor
may be obligated to pay Secured Party under this Agreement and all costs and
expenses incurred by Secured Party in connection with the collection and
realization upon the Collateral and enforcement of its rights hereunder,
including without limitation, court costs, litigation expenses and attorneys'
fees in an amount equal to fifteen percent (15%) of the unpaid balance of the
Secured Obligations if referred to an attorney for collection.
All terms used in this Agreement which are not expressly defined herein
shall have the meaning, if any, ascribed to them in Article 9 of the Uniform
Commercial Code.
14. TIME OF ESSENCE. Time is of the essence of every provision of this
Agreement.
-8-
<PAGE> 9
IN WITNESS WHEREOF, each Debtor has executed this Agreement under seal, or
has caused this Agreement to be executed by its duly authorized agent and its
seal to be affixed hereto, as of the date set forth above.
ADDRESS OF 5025 DERRICK JONES ROAD
DEBTOR: SUITE 120
ATLANTA, GEORGIA 30349
DEBTOR:
PROFESSIONAL TRANSPORTATION GROUP, LTD., A GEORGIA
CORPORATION
By: /s/ Dennis A. Bakal
-----------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
TRUCK/NET, INC., A GEORGIA CORPORATION
By: /s/ Dennis A. Bakal
----------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
TIMELY TRANSPORTATION, INC., A GEORGIA CORPORATION
By: /s/ Dennis A. Bakal
----------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
PTG, INC., A GEORGIA CORPORATION
By: /s/ Dennis A. Bakal
-----------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
-9-
<PAGE> 10
EXHIBIT 10.14E
EXISTING LIEN SCHEDULE
All liens reflected as of March 28, 1997 on the Uniform Commercial Code
Records maintained by (a) the Clerk of Superior Court of Cobb County, Georgia,
(b) the Clerk of Superior Court of Fulton County, Georgia, and (c) the Central
Index maintained by the Georgia Superior Court Clerks' Cooperative Authority.
-10-
<PAGE> 11
EXHIBIT "A"
Debtor: PROFESSIONAL TRANSPORTATION GROUP, LTD., a Georgia corporation
Secured Party: SOUTHTRUST BANK OF GEORGIA, N.A., a national banking association
<TABLE>
<S> <C>
A. all inventory of Debtor, whether now owned or hereafter acquired by Debtor and wherever located,
(Inventory and including, without limitation, all goods, merchandise, raw materials, work in process, finished
Documents) goods, and other tangible personal property held for sale or lease or furnished under
contracts of service or used or consumed in Debtor's business and all returned, reclaimed
and repossessed goods (collectively, the "Inventory"), together with all documents now or
hereafter representing any such Inventory (collectively, the "Documents"), and all proceeds
and products of the foregoing.
B. all accounts, contract rights, instruments and chattel paper whether arising from the
(Accounts) sale of Inventory or the rendering of services by Debtor or otherwise and whether now
owned or hereafter acquired by Debtor and whether now existing or hereafter arising and
all returned, reclaimed and repossessed goods (collectively, the "Accounts"), together
with all books and records relating to such Accounts, and all proceeds of the foregoing.
C. all general intangibles of Debtor, whether now owned or hereafter acquired by Debtor,
(Intangibles) including, without limitation, any goodwill, choses in action, causes of action, literary
rights, rights to performance, confidential information, purchase orders, trade secrets,
trademarks, service marks, patents, copyrights, inventions and other proprietary
information (collectively, the "Intangibles"), together with all books and records
relating to such Intangibles, and all proceeds of the foregoing.
D. all equipment of Debtor, whether now owned or hereafter acquired by Debtor and wherever
(Equipment) located, including, without limitation, all machinery, computer equipment and
peripherals, furniture, furnishings, and motor vehicles, and all replacements thereof and
substitutes therefor, and all accessories, additions, attachments and other goods now or
hereafter installed in or affixed thereto or used in connection therewith (collectively,
the "Equipment"), together with all warranties and service contracts relating to such
Equipment, and all proceeds of the foregoing. The term "Equipment," as used in this
Agreement, also includes fixtures, including leasehold improvements and machinery and
appliances which are attached to real property in such a manner as to become fixtures
(collectively, the "Fixtures").
</TABLE>
<PAGE> 12
EXHIBIT "A"
Debtor: TRUCK/NET, INC., a Georgia corporation
Secured Party: SOUTHTRUST BANK OF GEORGIA, N.A., a national banking association
<TABLE>
<S> <C>
A. all inventory of Debtor, whether now owned or hereafter acquired by Debtor and wherever
(Inventory and located, including,without limitation, all goods, merchandise, raw materials, work in process,
Documents) finished goods, and other tangible personal property held for sale or lease or furnished under
contracts of service or used or consumed in Debtor's business and all returned, reclaimed and
repossessed goods (collectively, the "Inventory"), together with all documents now or
hereafter representing any such Inventory (collectively, the "Documents"), and all proceeds and
products of the foregoing.
B. all accounts, contract rights, instruments and chattel paper whether arising from the
(Accounts) sale of Inventory or the rendering of services by Debtor or otherwise and whether now
owned or hereafter acquired by Debtor and whether now existing or hereafter arising and all
returned, reclaimed and repossessed goods (collectively, the "Accounts"), together with all
books and records relating to such Accounts, and all proceeds of the foregoing.
C. all general intangibles of Debtor, whether now owned or hereafter acquired by Debtor,
(Intangibles) including, without limitation, any goodwill, choses in action, causes of action, literary
rights, rights to performance, confidential information, purchase orders, trade secrets,
trademarks, service marks, patents, copyrights, inventions and other proprietary information
(collectively, the "Intangibles"), together with all books and records relating to such
Intangibles, and all proceeds of the foregoing.
D. all equipment of Debtor, whether now owned or hereafter acquired by Debtor and wherever located,
(Equipment) including, without limitation, all machinery, computer equipment and peripherals, furniture,
furnishings, and motor vehicles, and all repalcements thereof and substitutes therefore, and
all accessories, additions, attachments and other goods now or hereafter installed or affixed thereto
or used in connection therewith (collectively, the "Equipment"), together with all warranties and
service contracts relating to such Equipment, and all proceeds of the foregoing. The term
"Equipment ," as used in this Agreement, also includes fixtures, including leasehold improvements
and machinery and appliances which are attached to real property in such a manner as to become
fixtures (collectively, the "Fixtures").
</TABLE>
<PAGE> 13
EXHIBIT "A"
Debtor: TIMELY TRANSPORTATION, INC., a Georgia corporation
Secured Party: SOUTHTRUST BANK OF GEORGIA, N.A., a national banking association
<TABLE>
<S> <C>
A. all inventory of Debtor, whether now owned or hereafter acquired by Debtor and wherever
(Inventory and located, including, without limitation, all goods, merchandise, raw materials, work in
Documents) process, finished goods, and other tangible personal property held for sale or lease or
furnished under contracts of service or used or consumed in Debtor's business and all
returned, reclaimed and repossessed goods (collectively, the "Inventory"), together with
all documents now or hereafter representing any such Inventory (collectively, the
"Documents"), and all proceeds and products of the foregoing.
B. all accounts, contract rights, instruments and chattel paper whether arising from the sale
(Accounts) of Inventory or the rendering of services by Debtor or otherwise and whether now owned or
hereafter acquired by Debtor and whether now existing or hereafter arising and all
returned, reclaimed and repossessed goods (collectively, the "Accounts"), together with
all books and records relating to such Accounts, and all proceeds of the foregoing.
C. all general intangibles of Debtor, whether now owned or hereafter acquired by Debtor,
(Intangibles) including, without limitation, any goodwill, choses in action, causes of action, literary
rights, rights to performance, confidential information, purchase orders, trade secrets,
trademarks, service marks, patents, copyrights, inventions and other proprietary
information (collectively, the "Intangibles"), together with all books and records
relating to such Intangibles, and all proceeds of the foregoing.
D. all equipment of Debtor, whether now owned or hereafter acquired by Debtor and wherever
(Equipment) located, including, without limitation, all machinery, computer equipment and peripherals,
furniture, furnishings, and motor vehicles, and all replacements thereof and substitutes
therefor, and all accessories, additions, attachments and other goods now or hereafter
installed in or affixed thereto or used in connection therewith (collectively, the
"Equipment"), together with all warranties and service contracts relating to such
Equipment, and all proceeds of the foregoing. The term "Equipment," as used in this
Agreement, also includes fixtures, including leasehold improvements and machinery and
appliances which are attached to real property in such a manner as to become fixtures
(collectively, the "Fixtures").
</TABLE>
<PAGE> 14
EXHIBIT "A"
Debtor: PTG, INC., a Georgia corporation
Secured Party: SOUTHTRUST BANK OF GEORGIA, N.A., a national banking association
<TABLE>
<S> <C>
A. all inventory of Debtor, whether now owned or hereafter acquired by Debtor and wherever
(Inventory and located, including, without limitation, all goods, merchandise, raw materials, work in
Documents) process, finished goods, and other tangible personal property held for sale or lease or
furnished under contracts of service or used or consumed in Debtor's business and all
returned, reclaimed and repossessed goods (collectively, the "Inventory"), together with
all documents now or hereafter representing any such Inventory (collectively, the
"Documents"), and all proceeds and products of the foregoing.
B. all accounts, contract rights, instruments and chattel paper whether arising from the sale of
(Accounts) Inventory or the rendering of services by Debtor or otherwise and whether now owned or
hereafter acquired by Debtor and whether now existing or hereafter arising and all
returned, reclaimed and repossessed goods (collectively, the "Accounts"), together with all
books and records relating to such Accounts, and all proceeds of the foregoing.
C. all general intangibles of Debtor, whether now owned or hereafter acquired by Debtor,
(Intangibles) including, without limitation, any goodwill, choses in action, causes of action, literary rights,
rights to performance, confidential information, purchase orders, trade secrets, trademarks,
service marks, patents, copyrights, inventions and other proprietary information
(collectively, the "Intangibles"), together with all books and records relating to such
Intangibles, and all proceeds of the foregoing.
D. all equipment of Debtor, whether now owned or hereafter acquired by Debtor and wherever located,
(Equipment) including, without limitation, all machinery, computer equipment and peripherals, furniture,
furnishings, and motor vehicles, and all replacements thereof and substitutes therefor, and all
accessories, additions, attachments and other goods now or hereafter installed in or affixed
thereto or used in connection therewith (collectively, the "Equipment"), together with all
warranties and service contracts relating to such Equipment, and all proceeds of the
foregoing. The term "Equipment," as used in this Agreement, also includes fixtures, including
leasehold improvements and machinery and appliances which are attached to real property in such
a manner as to become fixtures (collectively, the "Fixtures").
</TABLE>
<PAGE> 1
EXHIBIT 10.15
GUARANTY OF PAYMENT AND PERFORMANCE
THIS GUARANTY OF PAYMENT AND PERFORMANCE ("Guaranty"), dated as of
March 28, 1997, is made by the undersigned PROFESSIONAL TRANSPORTATION GROUP,
LTD., a Georgia corporation, TRUCK/NET, INC., a Georgia corporation, TIMELY
TRANSPORTATION, INC., a Georgia corporation, and PTG, INC., a Georgia
corporation (hereinafter jointly, severally and collectively referred to as
"Guarantor"), with SOUTHTRUST BANK OF GEORGIA, N.A., a national banking
association ("Bank").
WITNESSETH:
FOR VALUE RECEIVED, and to induce Bank to make a loan, extend credit
or make other financial accommodations available to DENNIS A. BAKAL, a Georgia
resident (as hereinafter further defined, "Borrower"), and for the
consideration set forth below, Guarantor hereby agrees with Bank as follows:
1. PURPOSE. This Guaranty is made for the purpose of
securing for Borrower one or more loans or other extensions of credit from, or
a line of credit with, or the issuance of one or more letters of credit by, or
the acceptance of one or more bankers' acceptances by, or the lease of personal
property from or the furnishing of other financial accommodations by Bank, in
amounts and upon terms and conditions as Bank, in its sole discretion, may deem
appropriate. All such loans or other financial accommodations now or hereafter
provided by Bank to Borrower, and all extensions or renewals of debts or other
obligations now or at any time hereafter owing by Borrower to Bank, are made by
Bank in reliance on this Guaranty, are to the interest and benefit of
Guarantor, and are sufficient consideration for the execution and delivery of
this Guaranty by Guarantor. Each term and provision of every promissory note or
other evidence of debt, and every loan agreement, security agreement, mortgage,
deed to secure debt, deed of trust, letter of credit reimbursement agreement,
bankers' acceptance agreement, lease agreement and every other contract now or
hereafter executed by Borrower and delivered to Bank, shall bind Guarantor as
if executed by Guarantor as the primary and individual obligation of Guarantor.
2. GUARANTY. Guarantor, jointly and severally if more
than one, hereby unconditionally guarantees to Bank the prompt payment and
performance by Borrower when due of all the Guaranteed Obligations (as
hereinafter defined). This Guaranty is a guaranty of payment and performance
and not of collection. In the event Borrower at any time fails to pay or
perform any of the Guaranteed Obligations as and when the same become due,
whether by acceleration of maturity or otherwise, and in accordance with all
applicable terms and conditions, Guarantor agrees to pay such debt or perform
such obligation immediately. Upon failure of Guarantor to do so, Bank may, in
its discretion, enforce the collection of such debt or the performance of such
obligation against Guarantor by action in any court of competent jurisdiction,
or in any other manner provided by law, the same as if such debt or obligation
were the primary and individual debt or obligation of Guarantor, and without
first seeking to enforce such debt or obligation by action or otherwise against
Borrower; or, Bank may, in its discretion, proceed in any manner provided by
law or by contract for collection of debts against either or both Guarantor and
Borrower the same as if such debts and obligations were primarily and
individually the debt of both Guarantor and Borrower, jointly and severally.
3. CONTINUING GUARANTY. THIS GUARANTY IS AN ABSOLUTE,
UNCONDITIONAL AND CONTINUING GUARANTEE. This Guaranty extends to all
Guaranteed Obligations contracted or owing by Borrower to Bank now and at any
time prior to Bank's return of this Guaranty to Guarantor or the termination of
this Guaranty pursuant to the provisions of this paragraph, even though from
time to time and for extended periods of time there may be no debt or
obligation owed to Bank by Borrower. Subject to the following provisions,
Guarantor shall have the right to terminate this Guaranty at any time effective
ten (10) days after receipt by Bank of written notice of Guarantor's intention
to terminate this Guaranty. Such termination will not affect Guarantor's
obligations with respect to, and this Guaranty will remain in full force and
effect with respect to, all of the Guaranteed Obligations then due and owing or
then contracted for or existing, whether or not yet due, at the time such
notice becomes effective, and all obligations described in paragraph 4.e. of
this Guaranty, whether then existing or arising in the future, and also with
respect to any subsequent loans, extensions of credit, and other financial
accommodations which, prior to the effectiveness of such notice, Bank may have
committed to make to Borrower (regardless of whether Bank waives any default or
condition precedent to the making of such loans, extensions of credit, or other
financial
<PAGE> 2
accommodations), together with all interest thereon and all expenses,
including costs of collection and attorneys' fees, with respect to such
Guaranteed Obligations and this Guaranty.
4. WAIVERS AND AGREEMENTS OF GUARANTOR. Guarantor
hereby irrevocably:
a. Consents to all terms, covenants, conditions
and agreements heretofore or hereafter made by Borrower with Bank, including,
without limitation, agreements regarding the manner of disposing any collateral
held as security for the Guaranteed Obligations in a commercially reasonable
manner and agreements regarding the manner and time of giving notice of any
sale or other intended disposition of any of such collateral;
b. Consents that Bank may, without discharging
Guarantor or in any way affecting the obligations of Guarantor under this
Guaranty, without notice to or further consent from Guarantor: (i) exchange,
release or surrender to Borrower or to any Guarantor or any other person, or
waive, release, subordinate, fail to perfect any lien or security interest in,
or otherwise impair, any collateral now or hereafter held as security for any
of the Guaranteed Obligations or any right of set off against any deposit
account of Borrower; (ii) waive or delay the exercise of any of its rights or
remedies against Borrower or any other person or entity, including, without
limitation, Guarantor; (iii) with or without consideration, release Borrower or
any other person or entity, including, without limitation, any other guarantor
of the Guaranteed Obligations; (iv) renew, extend, or modify the terms of any
of the Guaranteed Obligations or of any promissory note or other instrument or
agreement evidencing the same; (v) apply payments made by Borrower, Guarantor
or any other person or entity to any of the Guaranteed Obligations in such
manner and in such order as Bank may elect; (vi) apply payments received for
Borrower's account first to pay any indebtedness of Borrower that is not
guaranteed by Guarantor, if any, before reducing the Guaranteed Obligations;
and (vii) in the event of the filing of a petition (whether voluntary or
involuntary) under any chapter of the federal bankruptcy code with respect to
Borrower, participate in the bankruptcy proceedings and exercise any and all
rights set forth in clauses (i) through (vi) above or otherwise available to
Bank under applicable law, including, without limitation, voting for or against
any plan of reorganization, consenting to the use of any cash collateral,
consenting to the sale, use or lease of any collateral securing any of the
Guaranteed Obligations, and entering into any compromise or settlement
regarding the Guaranteed Obligations or any collateral therefor;
c. Waives all notices whatsoever with respect to
this Guaranty or with respect to the Guaranteed Obligations or any collateral
therefor, including, without limitation, notice of (i) Bank's acceptance of
this Guaranty or its intention to act, or its actions, in reliance hereon; (ii)
the existence, creation or incurring of any of the Guaranteed Obligations or
the terms or amounts thereof or any change therein; (iii) presentment and
nonpayment or dishonor with respect to any promissory note or other instrument
or agreement now or hereafter evidencing any of the Guaranteed Obligations, and
any other demands and notices, except any notice that may be required by law
which cannot be waived; (iv) any default by Borrower or any surety, pledgor,
grantor of any lien or security interest, or guarantor, including, without
limitation, Guarantor; (v) the obtaining or release of any guaranty or surety
agreement (in addition to this Guaranty), or any pledge, assignment, security
agreement, mortgage, deed to secure debt, deed of trust or other security for
any of the Guaranteed Obligations;
d. Waives any right to require Bank to take
action against Borrower as provided for in Section 10-7-24 of the Official
Code of Georgia Annotated or any other statute or applicable law, and waives
any requirement that suit under this Guaranty be brought within any period of
time shorter than the general statute of limitations applicable to contracts
under seal;
e. Agrees that, if at any time all or any part of
any payment previously applied by Bank to any of the Guaranteed Obligations
must be returned by Bank for any reason, whether upon the claim of a preference,
fraudulent transfer, prior lien or other claim of a creditor, debtor in
possession, trustee in bankruptcy or other representative of creditors of
Borrower, or otherwise, and whether by court order, administrative order or
non-judicial settlement, this Guaranty shall continue in effect or shall be
reinstated, as the case may be, and Guarantor shall remain liable for the full
amount returned as if such amount had never been received by Bank,
notwithstanding any termination, cancellation or revocation of this Guaranty
(whether under paragraph 3 above or
-2-
<PAGE> 3
otherwise) or cancellation of any promissory note or other instrument or
agreement evidencing any of the Guaranteed Obligations;
f. Agrees that this Guaranty will be valid and binding upon
Guarantor when delivered to Bank by anyone having possession hereof after
execution of this Guaranty by Guarantor.
g. Agrees that Guarantor's liability under this Guaranty is
absolute and is not conditioned on the execution of this or any similar
guaranty by any other person or upon the occurrence or nonoccurrence of any
other event;
h. Waives any right to require Bank to marshall the assets of
Borrower or any other person and agrees that Bank may proceed against any
collateral securing the Guaranteed Obligations (whether or not Guarantor or any
other person holds a lien on only a part of such collateral) and against
parties liable on any of the Guaranteed Obligations in such order as Bank may
elect, the benefit of any rule of law or equity to the contrary being hereby
expressly waived by Guarantor;
i. Agrees that the liability of Guarantor under this Guaranty
shall not be affected or impaired by, and this Guaranty shall remain fully
enforceable against Guarantor for the full amount of the Guaranteed Obligations
less only payments thereon actually received and retained by Bank irrespective
of and without reduction on account of (i) any defense, offset or counterclaim
which Borrower may have or assert with respect to any of the Guaranteed
Obligations, including, without limitation, filing of a petition in bankruptcy,
discharge in bankruptcy, confirmation of a plan or reorganization (whether Bank
voted for or against such plan), composition with creditors (whether or not
including Bank), failure of consideration, breach of warranty, statute of
frauds, statute of limitations, accord and satisfaction, wavier, estoppel,
release, usury, or fraud or misrepresentation, (ii) termination of any present
or future relationship between Guarantor and Borrower or between Guarantor and
any other guarantor of any obligations of Borrower, or (iii) death,
incompetency, or dissolution of Guarantor or Borrower;
j. Agrees that Bank may, at its election, release or satisfy
of record any collateral for this Guaranty only after any applicable preference
periods have elapsed; and
k. Waives, renounces and agrees not to assert any right,
claim or cause of action against Borrower, including, without limitation, a
claim for reimbursement, subrogation, indemnification or otherwise. The
waiver, renunciation and agreement set forth in the preceding sentence is for
the benefit of Bank and also for the benefit of Borrower, who may assert the
benefits thereof as a third-party beneficiary and Guarantor may be released
from such waiver, renunciation and agreement only by the execution and
delivery, by Bank and Borrower, of an instrument expressly releasing Guarantor
therefrom.
5. FINANCIAL STATEMENTS. Guarantor agrees, for so long as there is
any amount outstanding of the Guaranteed Obligations, to provide Bank copies of
each income tax return filed by Guarantor after the date of this Guaranty and
financial statements and other information of or concerning Guarantor, in such
detail, of such quality (i.e., audited, reviewed, unaudited or otherwise), and
with such frequency as Bank may reasonably request from time to time. All
financial statements required by Bank as set forth above shall be prepared in
accordance with generally accepted accounting principles (except for the
absence of footnotes with respect to monthly and quarterly financial
statements) and shall fairly present the financial position and results of
operations of Guarantor as of and for the periods specified.
6. STATUTE OF LIMITATIONS. Guarantor acknowledges that the statute
of limitations applicable to this Guaranty shall begin to run only upon
Guarantor's failure to refusal to pay any of the Guaranteed Obligations
following default in the payment or performance thereof by Borrower; provided,
that if subsequent to such default, Bank reaches an agreement with Borrower on
any terms causing Bank to forbear in the enforcement of its claims against
Guarantor, the statute of limitations shall be reinstated for its full duration
until Borrower again defaults.
7. COLLECTION COSTS. Guarantor hereby agrees to pay all costs of
collecting under this Guaranty, including, without limitation, court costs,
litigation expenses and attorneys' fees in an amount equal to fifteen
-3-
<PAGE> 4
percent (15%) of the unpaid balance of the Guaranteed Obligations if referred
to an attorney for collection. If attorneys' fees in such amount would be
prohibited by applicable law, then Guarantor agrees to pay reasonable
attorneys' fees not to exceed the maximum amount allowed by law.
8. NOTICES. Any and all notices, elections, demands, requests and
responses thereto permitted or required to be given under this Guaranty shall
be in writing, signed by or on behalf of the party giving the same, and shall
be deemed to have been properly given and shall be effective upon being
personally delivered, or three (3) days after being deposited in the United
States mail, postage prepaid, certified with return receipt requested, to
Guarantor if mailed to the address set forth above Guarantor's name at the end
of this Guaranty and to Bank at the address set forth in the beginning of this
Guaranty or at such other address within the continental United States for
either party as such party may designate by notice to the other given in
accordance with the provisions of this paragraph; provided, however, that the
time period in which a response to any such notice, election, demand or request
must be given shall commence on the date of receipt thereof; and provided
further that no notice of change of address shall be effective until the date
of receipt thereof. Personal delivery to a party or to any officer, partner,
agent or employee of such party at said address shall constitute receipt.
Rejection or other refusal to accept or inability to deliver because of a
changed address of which no notice has been received shall also constitute
receipt.
9. CONSENT TO JURISDICTION. GUARANTOR HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF GEORGIA AND,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES ANY OBJECTION BASED ON VENUE
OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED IN ANY SUCH COURT
AND AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION WILL BE SUFFICIENT IF
SERVED ON GUARANTOR IN CANADA OR THE UNITED STATES OF AMERICA BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED OR IN ANY MANNER PROVIDED BY LAW.
NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST GUARANTOR OR GUARANTOR'S PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO ENFORCE THE
OBLIGATIONS OF GUARANTOR UNDER THIS GUARANTY.
10. DEFINITIONS. As used in this Guaranty, the following terms have
the following meanings:
"Borrower" means the entity identified above in this Guaranty,
together with his, her, its or their heirs, administrators, executors,
successors and assigns, including any resulting or surviving corporation
following any merger or any other reorganization, and also includes any debtor
in possession or similar entity following the filing of a petition for relief
by or against Borrower under any chapter of the federal bankruptcy code or in
any similar proceeding under state or federal law, and also includes any
proprietorship, partnership, corporation, trust, or other entity resulting from
or arising out of the dissolution, liquidation or change in form of business
organization by Borrower or following any change of name or domicile by
Borrower.
"Guaranteed Obligations" means all debts and other obligations now
owed by Borrower to Bank, all debts and other obligations owed by Borrower to
Bank in the future, all extensions and renewals of any such debts or
obligations, and all interest and other lawful fees and charges on any or all
such debts and obligations, including, without limitation, late charges,
penalty interest, premiums and costs of collection (including reasonable
attorneys' fees) for which Borrower has agreed to pay or reimburse Bank, or for
which Borrower is obligated to pay Bank under applicable law, together with
each and every promissory note or other instrument or writing now or hereafter
evidencing the obligation of Borrower to pay any such debt, the interest
thereon or such other charges; whether such debts or other obligations are now
foreseen or unforeseen; whether now due or to become due in the future; whether
incurred with or without notice to Guarantor; whether arising from contract,
tort or otherwise; whether arising from an original obligation of Borrower to
Bank or from an obligation of Borrower which was purchased by Bank, whether
from time to time increased, reduced or entirely extinguished and then
reincurred; whether direct or indirect, absolute or contingent, liquidated or
unliquidated, secured or unsecured; whether otherwise guaranteed or not; and
whether arising out of one or more loans or other extensions of credit from, or
line of credit with, or the issuance of one or more letters of credit by, or
the acceptance of one or more bankers' acceptances by, or the lease of personal
property from, or the furnishing of other financial accommodation by Bank, or
otherwise. The Guaranteed Obligations include, without limitation, interest,
fees and other charges on any debt or obligation of Borrower to Bank accruing
after the filing of a petition under any chapter of the federal bankruptcy code
by or
-4-
<PAGE> 5
against Borrower and any loans or other credit or financial accommodations
extended to Borrower after the filing of any such petition. THE GUARANTEED
OBLIGATIONS SPECIFICALLY ARE NOT LIMITED TO DEBTS AND OTHER OBLIGATIONS
CONTRACTED FOR OR ARISING CONCURRENTLY WITH OR PRIOR TO THE EXECUTION OF THIS
GUARANTY AND ARE NOT LIMITED IN AMOUNT UNLESS OTHERWISE SPECIFICALLY SET FORTH
IN WRITING IN THIS GUARANTY.
11. MISCELLANEOUS. No delay by Bank in enforcing its rights
hereunder shall prejudice its rights to enforce this Guaranty. All rights and
remedies under this Guaranty, under any other agreement and under applicable
law shall be cumulative, and any failure of Bank to exercise any such right or
remedy shall not be construed as a waiver of the right to exercise the same or
any other right or remedy at any time and from time to time, thereafter. No
waiver by Bank shall be effective unless made in writing by a duly authorized
officer or agent of Bank, and no waiver by Bank of any right or remedy shall
constitute a waiver of any other or future right or remedy. This Guaranty
shall inure to the benefit of Bank, its successors and assigns, and to any
person to whom Bank may grant an interest in any of the Guaranteed Obligations,
and shall be binding upon Guarantor, and his, her, its or their respective
heirs, executors, administrators, successors and assigns. This Guaranty sets
forth the entire agreement and understanding of Guarantor with respect to the
subject matter hereof. GUARANTOR ACKNOWLEDGES THAT NO AGENT OF BANK HAS MADE
ANY REPRESENTATION WHICH IS INCONSISTENT WITH ANY OF THE TERMS OF THIS GUARANTY
AND THAT NO OFFICER OR AGENT OF BANK HAS THE AUTHORITY TO VARY THE TERMS OF
THIS GUARANTY EXCEPT IN A WRITING SIGNED BY A DULY AUTHORIZED OFFICER OF BANK.
The making of the loans and providing of the other financial accommodations
referred to in this Guaranty shall be solely in the discretion of Bank, and
reference thereto in this Guaranty, whether in paragraph 1 hereof or elsewhere,
shall not be deemed to be a commitment by Bank to make any loan or provide any
financial accommodation. In the event any one or more of the provisions of
this Guaranty shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions of this
Guaranty shall not in any way be affected or impaired thereby. If more than
one person or entity signs this Guaranty below, the liability of such persons
or entities on this Guaranty is joint and several, and all references to the
singular in this Guaranty also include the plural. In the event of
termination, cancellation, revocation or release of this Guaranty as to any one
or more Guarantors, this Guaranty shall continue in full force and effect with
respect to the remaining Guarantors. THIS GUARANTY SHALL BE GOVERNED,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
GEORGIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty under seal as of
the date first above written.
ADDRESSES OF
EACH GUARANTOR: 5025 DERRICK JONES ROAD
SUITE 120
ATLANTA, GEORGIA 30349
GUARANTOR:
PROFESSIONAL TRANSPORTATION GROUP, LTD., A
GEORGIA CORPORATION
By: /s/ Dennis A. Bakal
------------------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
TRUCK/NET, INC., A GEORGIA CORPORATION
By: /s/ Dennis A. Bakal
------------------------------------------
Dennis A. Bakal, President
-5-
<PAGE> 6
[CORPORATE SEAL]
TIMELY TRANSPORTATION, INC., A GEORGIA CORPORATION
By: /s/ Dennis A. Bakal
----------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
PTG, INC., A GEORGIA CORPORATION
By: /s/ Dennis A. Bakal
----------------------------------
Dennis A. Bakal, President
[CORPORATE SEAL]
-6-
<PAGE> 1
EXHIBIT 10.16
TRANSPORTATION SERVICE AGREEMENT
PREPARED FOR
PANALPINA, INC.
MR. HANS TOGGWEILER
EXECUTIVE VICE PRESIDENT
PRESENTED BY
TRUCK/NET, INC.
STANLEY E. LAIKEN
VICE PRESIDENT
FEBRUARY 1997
<PAGE> 2
TRANSPORTATION SERVICE AGREEMENT
This CONTRACT is for non exclusive services by and between TRUCK/NET, INC.
(hereinafter called "CARRIER") and PANALPINA, INC. (hereinafter called
"SHIPPER").
In consideration of the mutual undertakings herein contained, SHIPPER hereby
agrees to utilize Carrier for the transportation of a portion of SHIPPER's
traffic, and CARRIER hereby agrees to transport such traffic for SHIPPER,
subject to the following terms and conditions:
1. POINTS OF SERVICE AND CARRIER'S PERMIT
CARRIER agrees, as a contract carrier and independent contractor, and not as an
agent or employee of SHIPPER to transport for SHIPPER freight of all kinds as
specified and classified on the Bill of Lading, between points as authorized in
CARRIER's contract carrier permit issued by the Interstate Commerce Commission.
2. INSURANCE
CARRIER will keep in force during the term of this agreement, Worker's
Compensation, Comprehensive General/Automobile Liability Insurance, Public
Liability and Property Damage Insurance coverage as mandated by the Department
of Transportation (or other governmental body or agency authorized to set
minimum insurance requirements) or that is reasonable business practice for the
transportation of property under this agreement, whichever is greater.
Certification of such insurance shall be furnished to the SHIPPER.
3. INDEMNIFICATION
Each party hereto agrees to indemnify and save harmless the other party and
Consignee, and their respective employees and agents from any and all
liability, expense (including Attorney fees), cause of action, suit, claim, or
judgment, including liability for injury or death to persons (including the
other party's or Consignee employees) and for loss or damage to property
(including the other party's or Consignee's property) arising out of or
attributable to the acts or omissions of such party including equipment
furnished or service provided, regardless of whether such equipment or
furnished or service provided, regardless of whether such equipment or services
are furnished or performed by such party, its sub-contractors, agents, or
employees, to the extent that such injury, death or damage results from either
negligent acts or omissions or reckless or intentional misconduct of the other
party or Consignee, or acts of the other party or Consignee over which such
party has no control.
The CARRIER assumes full responsibility for, and cost of, compliance with all
laws, rules, and regulations governing highway contract carriers, and all
Federal, State or Municipal license fees, taxes and other charges, now in
force, or hereafter promulgated from time to time.
<PAGE> 3
4. CLAIMS
SHIPPER or Consignee shall notify the CARRIER within a reasonable period of
time upon the discovery of any loss of or damage to property transported by
CARRIER pursuant to this AGREEMENT. All claims for loss or damage to property
transported by CARRIER must be filed with CARRIER within six (6) months
following delivery or date of expected delivery.
Compensation for any loss or damage to property transported by the CARRIER
pursuant to this AGREEMENT shall be settled based on the Warsaw Convention.
5. APPLICATION OF BILL OF LADING
To the extent that the terms and conditions contained in the uniform Straight
Bill of Lading are not inconsistent with this AGREEMENT, or are inconsistent
with this AGREEMENT, the Bill of Lading shall govern the rights and
responsibilities of the parties with respect to the shipments tendered
hereunder.
6. PAYMENT BY SHIPPER OR CONSIGNEE
SHIPPER or Consignee will promptly make payments of invoices submitted by
Carrier to Shipper or Consignee. Invoices shall be accompanied by
substantiating documentation reflecting the service provided and the charges
therefore.
7. STANDARDS OF CARRIER PERFORMANCE
CARRIER agrees to perform all transportation service under this AGREEMENT in a
first-class, efficient, workmanlike manner, in conformity with generally
accepted standards and practices of the transportation industry. CARRIER
agrees to use equipment that is in providing transportation service to SHIPPER
in a first-class condition and in full compliance with applicable safety
regulations. Drivers, agents and helpers of CARRIER will conduct themselves in
a courteous and businesslike manner.
8. TERM
This AGREEMENT shall become effective upon execution by both parties and, shall
remain in effect for a period of twenty-four (24) months, and automatically
renew for subsequent one year periods unless either party gives written notice
of its intent to cancel this AGREEMENT ninety (90) days prior to the end of the
contract year, or subsequent one (1) year extension.
Any assignment or brokerage of this Contract by the CARRIER without the written
consent of the SHIPPER having first been obtained, shall be void and of no
effect.
However, it is contemplated that TRUCK/NET, Inc. will subcontract for the
service of other carriers to perform the services contemplated in this
agreement, and no consent of the shipper will be required.
All mileage rates used during the TERM of this AGREEMENT shall be based on Rand
McNally Household Goods Carrier's Bureau, mileage guide No. 15 or subsequent
updates.
<PAGE> 4
9. SEPARABILITY
In the event that any provision contained in this AGREEMENT shall violate any
applicable statue, ordinance, rule or law, such provision shall be ineffective
to the extent of such violations without invalidating any other provision of
this AGREEMENT.
10. GOVERNING LAW
The provisions of this AGREEMENT shall be construed and enforced according to
the laws of the State of Georgia to the extent that they are not inconsistent
with the applicable federal or state regulatory laws binding upon the CARRIER.
11. NOTICES
Notices hereunder shall be given in writing by U.S. Mail, postage prepaid, or
facsimile to the other party and shall be effective upon receipt of
acknowledgement to the originating party. Notification must show effective
date, expiration date, and carrier name, and shall be sent to the following
addresses:
(CARRIER) (SHIPPER)
TRUCK/NET, INC. PANALPINA, INC.
5025 Derrick Jones Road 1776 On The Green, 67 Park Place
College Park, GA 30349 Morristown, NJ 07960-7103
Attention: Dennis Bakal Attention: Hans Toggweiler
Facsimile: 770-907-3392 Facsimile: 201-254-5712
12. FORCE MAJEURE
Neither party shall be liable for delay or failure to perform, in whole or in
part, any obligation required of it pursuant to this AGREEMENT, by reason of
contingencies beyond the reasonable control of the party affected, including
among other, act of God, civil commotion, fire, explosion, labor dispute,
earthquake, flood or windstorm, or by reason of any law, regulation, or
requirement of any governmental authority.
13. CONFIDENTIALITY
Except as otherwise required by law, neither party may disclose to others
except third party auditing services any information regarding this AGREEMENT
nor the services provided hereunder without prior written approval of the other
party.
14. ADDENDUM
All conditions of this AGREEMENT shall be applicable to the addendums as they
pertain on attachments provided by either the CARRIER or SHIPPER.
<PAGE> 5
15. ENTIRE UNDERSTANDING
This AGREEMENT and the attached Appendices represent the entire understanding
of the parties and cannot be amended except in writing signed by both parties
and supersedes and replaces all previous agreements.
In witness whereof, the parties hereto have caused this AGREEMENT to be
executed by their duly authorized representatives as follows:
(CARRIER) (SHIPPER)
TRUCK/NET, INC. PANALPINA, INC.
By: /s/ Stanley E. Laiken By: /s/ Hans Toggweiler
-------------------------------- ----------------------------------
Title: Vice President Title: Executive Vice President
----------------------------- -------------------------------
Date: Feb. 6, 1997 Date: Feb. 7, 1997
------------------------------ --------------------------------
<PAGE> 1
EXHIBIT 10.17
T.T.C., Illinois, Inc.
The employment professionals
An ESOP company
SERVICE AGREEMENT
In consideration of the mutual promises contained herein and other
good and valuable consideration the receipt of which is hereby conclusively
acknowledged as acceptable, T.T.C., ILLINOIS, INC., hereinafter T.T.C., and
PROFESSIONAL TRANSPORTATION GROUP, LTD. hereinafter Client, agree that
effective on the 1st day of February, 1997, they shall perform in accordance
--- --------
with the following terms:
1.SPECIFIC OBLIGATIONS:
A. T.T.C.: For each employee enrolled hereunder, T.T.C. shall
(1) process and issue employee paychecks and related W-2 forms, (2) provide and
administer benefits (as appropriate per worksite) for plans sponsored by
T.T.C., and/or note Client-sponsored benefit plan payroll-deductions on
employee paystubs, (3) process all garnishments, levies and deduction orders
imposed upon employees' wages, (4) calculate, collect and pay all payroll taxes
including income tax, social security tax and other payroll taxes as may be
required under local, state and federal laws to be withheld from the
compensation paid to employees or paid directly by an employer, and it shall
prepare and timely file with the proper governmental agencies or authorities
all required returns and reports, (5) comply with state and federal
unemployment compensation requirements, including reporting wages, making
required contributions, and responding to claims, charges, and hearings as is
warranted under the circumstances, (6) obtain and pay the costs of providing
all necessary and legally required worker's compensation (and Longshore and
Harbor Workers Act, where applicable) insurance coverage, manage worker's
compensation (and Longshore) claims in conjunction with the insurance carrier
and worker's compensation claim adjusting firm, and furnish to Client a
certificate of insurance evidencing the issuance to T.T.C. and maintenance by
T.T.C. of policies providing such coverage, listing Client on the Alternate
Employer Endorsement to the applicable policies, and (7) send to Client an
invoice for payment of an amount calculated by multiplying the total gross
wages each classification of employees has earned by the applicable factors set
forth in Schedule A, which is attached hereto and made a part hereof.
B. CLIENT: At least 2 days prior to the date upon which T.T.C.
issues paychecks to the employees enrolled hereunder, Client shall fax to
T.T.C. information including the number of miles driven or hours worked, as
applicable, by each of the employees. Upon receipt of the invoice from T.T.C.,
Client shall immediately pay
Copyright 1995 196c--
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<PAGE> 2
by wire transfer the amount billed to T.T.C.'s designated bank account.
2. GENERAL TERMS:
A. Employee Enrollment and Direction: Each employee shall be
enrolled hereunder upon receipt by T.T.C.'s corporate headquarters of the
completed W-4 and I-9 forms and other applicable payroll information for such
employee. Each party hereto shall have direction and control of the employees
covered hereby to the extent necessary to fulfill its obligations hereunder and
to comply with all applicable laws and regulations. However, T.T.C. shall not
have direction and control sufficient to render it the master or principal of
any employee covered hereby for master-servant/principal-agent liability.
B. Insurance: Client shall maintain at least $1,000,000 in all
applicable liability insurance coverage, and it shall have T.T.C. listed as an
additional named insured with respect to such policies (only as to claims
against T.T.C. by virtue of its status vis-a-vis the employees enrolled
hereunder). Securing such insurance shall not in any way limit Client's
indemnification obligations hereunder.
C. Limitation of Services: T.T.C. will provide only those
services specified herein and no other services shall be provided or implied,
including without limitation, any strategic, operational or other
business-related decisions with regard to Client's business. T.T.C. will
provide no equipment to the employees. T.T.C. shall not be obligated for
matters for which it has not received notice.
D. T.T.C. Indemnification: T.T.C. shall assume sole and
exclusive responsibility for its performance or failure to perform its
"Specific Obligations" as set forth above. T.T.C. shall unconditionally
indemnify Client and its affiliated companies, agents, shareholders, employees
not enrolled hereunder, officers, directory, assigns, insurers, and
representatives for and hold them harmless from and against any and all costs,
expenses, fees, settlements, judgments, losses or damages, of whatever nature
incurred as a result of or arising from claims or demands attributable to
T.T.C.'s performance or failure to perform its "Specific Obligations."
E. Client Indemnification: Client shall assume sole and
exclusive responsibility for and shall unconditionally indemnify T.T.C. and its
affiliated companies, agents, shareholders, officers, directors, assigns,
insurers, and representatives for and hold them harmless from and against any
and all costs, expenses, fees, settlements, judgments, losses or damages, of
whatever nature incurred as a result of or arising from claims or demands
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<PAGE> 3
pertaining to: (1) employment matters not specifically listed within the
"Specific Obligations" of T.T.C., (2) actions and inactions of the employees
enrolled hereunder, (3) the following categories of persons: (i) all persons
who are not enrolled hereunder or for whom payroll data and payment have not
been submitted to T.T.C. in accordance with the provisions hereof, (ii) all
persons who cease to be enrolled hereunder by virtue of termination of this
agreement as of the last payroll ending date for which T.T.C. was timely paid
for its services, and (iii) upon termination hereof or upon Client's sponsoring
a health benefit plan, COBRA continuees who had been enrolled in a plan
sponsored by T.T.C., (4) employee welfare or benefit plans sponsored, offered
or administered by Client, (5) property of or used/handled by Client or the
employees enrolled hereunder, and (6) injury exposures which are outside the
scope of state worker's compensation laws and the Longshore and Harbor Workers
Act.
F. Termination: This Agreement shall endure until terminated by
either party. T.T.C. must give Client 30 days' advance written notice of
termination unless (i) Client breaches this Agreement or (ii) Client
experiences a material adverse change in its financial condition, is unable to
pay its debts as they become due in the ordinary course of business, becomes
insolvent, files bankruptcy or closes its business.
G. Standard Provisions:
1. Inaction Not Deemed Waiver: The failure of either
party strictly to enforce any provision hereof shall not be construed
as a waiver thereof or as excusing either party from future
performance in strict accordance with the provisions of the Agreement.
2. Survival of Indemnification Obligations: The
obligations of each party hereto to indemnify the other party hereto
shall survive termination hereof.
3. Savings: If any provision of this Agreement is held
to be invalid under the law of any state or the United States, such
provision shall be modified to comply with the requirements of such
law or shall be renegotiated for the purpose of adequate replacement.
The invalidity of any such provision or paragraph shall not render the
remaining provisions or paragraphs of this Agreement invalid, and the
agreement shall otherwise continue in full force and effect until its
termination.
4. Incorporation of Laws: All applicable laws
pertaining to professional employer organizations are incorporated
herein, but the incorporation of such laws shall
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<PAGE> 4
in no way affect the indemnification and liability limitation
provisions hereof.
5. Place of Contract: This Agreement shall be
determined to be a contract made and performed within the State of
Illinois and for all purposes shall be governed and construed under
and in accordance with the laws of the state of Illinois.
6. Notice: Notice must be transmitted to the
headquarters of the other party.
7. Timeliness: Time is of the essence with respect to
performance and notice.
8. Third Party Beneficiaries: The parties hereto are
the only beneficiaries of any rights herein contained or created.
9. Integration: This document, which includes the
signed schedule(s) attached hereto and made a part hereof, constitutes
the full, complete, absolute and entire agreement between the parties.
There are no oral representations, agreements, or understandings
affecting the same and any further representations, agreements,
understandings or waivers, in order to be binding upon the parties
hereto, must be reduced to a writing, signed by the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement,
consisting of four (4) pages on this 27th day of January, 1997.
---- -------
T.T.C., ILLINOIS, INC. PROFESSIONAL TRANSPORTATION
GROUP, LTD.
BY: /s/ Mike McCafferty BY: /s/ Dennis Bakal
------------------------------ --------------------------------
Its President Its President
ATTEST: ATTEST:
/s/ Don Ciaccio /s/ L. K. Roberts
- --------------------------------- -----------------------------------
Secretary Secretary
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4
<PAGE> 5
January 17, 1997
PROFESSIONAL TRANSPORTATION GROUP, LTD.
SCHEDULE "A"
The following formula shall be used in calculating the cost of
employment service on a weekly basis:
Total employee gross pay multiplied by a factor of:
<TABLE>
<S> <C>
GEORGIA CLERICAL 1.1075
GEORGIA WAREHOUSE 1.1630
NORTH CAROLINA CLERICAL 1.1166
INDIANA CLERICAL 1.1166
CONNECTICUT CLERICAL 1.1175
TENNESSEE CLERICAL 1.1070
NEW YORK CLERICAL 1.1239
NEW JERSEY CLERICAL 1.1320
</TABLE>
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<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
Timely Transportation, Inc., a Georgia corporation, doing business as "Timely
Transportation"
Truck-Net, Inc., a Georgia corporation, doing business as "Truck-Net"
PTG, Inc., a Georgia corporation, doing business as "Rapid Transit"
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
and to all references to our firm included in or made a part of this
Registration Statement.
Arthur Andersen LLP
Atlanta, Georgia
April 4, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PROFESSIONAL TRANSPORTATION GROUP LTD., INC. FOR THE
YEAR ENDED DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 248,454
<SECURITIES> 0
<RECEIVABLES> 2,883,653
<ALLOWANCES> 63,629
<INVENTORY> 0
<CURRENT-ASSETS> 3,473,736
<PP&E> 2,130,089
<DEPRECIATION> 451,078
<TOTAL-ASSETS> 5,344,879
<CURRENT-LIABILITIES> 3,119,644
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (947)
<TOTAL-LIABILITY-AND-EQUITY> 5,344,879
<SALES> 0
<TOTAL-REVENUES> 21,172,201
<CGS> 0
<TOTAL-COSTS> 20,493,350
<OTHER-EXPENSES> (93,059)
<LOSS-PROVISION> 16,485
<INTEREST-EXPENSE> 272,347
<INCOME-PRETAX> 483,078
<INCOME-TAX> 183,000
<INCOME-CONTINUING> 300,078
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 300,078
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
