<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 14, 1997.
REGISTRATION NO. 333-24619
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
(Name of Small Business Issuer in Its Charter)
<TABLE>
<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:
<TABLE>
<S> <C>
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
<TABLE>
<CAPTION>
==================================================================================================
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(5)
==================================================================================================
</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.
(5) Previously paid.
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 MAY 14, 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 8 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.
<TABLE>
<CAPTION>
==================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ------------------------------------------------------------------------------------------------------------------
<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 150% 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 $624,688, 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
(LOGO PTG)
[Rendering of airplane soaring above Company truck with Company name and the
words "We Pick Up Where Planes Leave Off" set out in a compass-type logo]
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 trailers 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 SmallCap
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 300,000 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 AND OPERATING 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 and unaudited historical financial data.
The summary consolidated financial data as of March 31, 1997 and for the three
months ended March 31, 1996 and 1997 have been derived from the unaudited
financial statements of the Company which include all adjustments, consisting of
only normal recurring adjustments (except as provided in footnote 1 below),
which the Company considers necessary for a fair presentation and results of
operations for these periods. The summary consolidated financial information
should be read in conjunction with "Selected Consolidated Financial and
Operating 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.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------- ----------------------------
1995 1996 1996 1997
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues.................... $17,484,765 $21,172,201 $ 4,128,024 $ 7,413,873
Operating expenses.................... 17,704,476 20,629,835(1) 4,367,112 7,289,310(1)
Income (loss) from operations......... (219,711) 542,366 (239,088) 124,563
Other income (expense)................ (30,489) (221,288) (82,538) (7,620)
Pro forma income (loss) before income
taxes............................... (250,200) 321,078 (321,626) 116,943
Benefit (provision) for income
taxes(2)............................ 22,000 (95,000) 86,000 (68,000)
Pro forma benefit (provision) for
income taxes(3)..................... 73,000 (42,000) 36,000 24,000
----------- ----------- ----------- -----------
Net income before income tax provision
due to change in tax status......... (155,200) 184,078 (199,626) 72,943
Income tax provision due to change in
tax status.......................... -- -- -- (246,000)
----------- ----------- ----------- -----------
Pro forma net income (loss)........... $ (155,200) $ 184,078 $ (199,626) $ (173,057)
=========== =========== =========== ===========
Pro forma net income (loss) per
share............................... $ (0.06) $ 0.06 $ (0.08) $ (0.07)
=========== =========== =========== ===========
Weighted average number of common and
common equivalent shares
outstanding......................... 2,500,000 3,281,862 2,533,333 2,600,000
=========== =========== =========== ===========
OPERATING DATA:
Number of tractors.................... 76 150 70 150
Number of trailers.................... 149 248 118 248
Average revenue per mile(5)........... $ 1.17 $ 1.11 $ 1.15 $ 1.11
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1997
DECEMBER 31, ----------------------------
1996 ACTUAL AS ADJUSTED(6)
------------ ----------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....................................... $ 354,092 $ 106,623 $ 5,592,561
Total assets.......................................... 5,344,879 6,305,292 14,041,230
Total liabilities..................................... 5,345,826 6,443,296 6,443,296
Shareholders' equity (deficit)........................ (947) (138,004) 7,597,934
</TABLE>
- ---------------
(1) For the year ended December 31, 1996, the Company has recorded $120,000 in
non-cash compensation expense on a pro forma basis to reflect the fair value
of services provided by Dennis A. Bakal for the period July 1, 1996 through
December 31, 1996. A similar non-cash adjustment of $60,000 has been made
for the three months ended March 31, 1997 to reflect the fair value of
services provided during that period. See Note 5 to the Consolidated
Financial Statements.
(2) Reflects the Company's tax provision as required by SFAS No. 109,
"Accounting for Income Taxes."
6
<PAGE> 8
(3) For the years ended December 31, 1995 and 1996 and the three months ended
March 31, 1996, the benefit (provision) has been presented on a pro forma
basis as if the Company and all of its subsidiaries had been C corporations
for federal and state income tax purposes during these periods.
(4) An adjustment of $246,000 has been made in the three months ended March 31,
1997 to record the cumulative deferred income taxes attributable to the
Company and certain of the Company's subsidiaries which were previously not
subject to corporate-level income taxes. These deferred income taxes, of
which approximately $82,000 is reflected as a current liability result from
the use of accelerated depreciation and cash basis tax reporting by these
entities. See Note 8 to the Consolidated Financial Statements.
(5) Based on revenues of Timely before any inter-company eliminations.
(6) 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.
7
<PAGE> 9
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 $184,078 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 $58,113 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" and the Financial Statements, including the
notes thereto.
DEPENDENCE ON CERTAIN CUSTOMERS; ABSENCE OF WRITTEN AGREEMENTS
For the year ended December 31, 1996 and the quarter ended March 31, 1997,
the Company's five largest customers accounted for approximately 66% and 74%,
respectively 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 the year ended December 31, 1996
and approximately 44% and 17%, respectively, during the quarter ended March 31,
1997. 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
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Company's competition ranges from small operators who can compete on certain
lane segments, often with 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. For example, federal regulatory authorities (including the
Surface Transportation Board and the Department of Transportation) have broad
authority and power to regulate motor carrier operations (including equipment
specifications and commodities transported); approve rates, charges and
accounting systems; and prescribe certain safety requirements. Such matters as
weight and dimension of equipment are also subject to federal and state
regulation. 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. In particular, the Company is required to obtain a certificate of
registration from the U.S. Environmental Protection Agency in order to have the
ability to transport hazardous materials. 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.
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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, including Linda K. Roberts, Vice
President/Administration and William M. Kelly, Vice President/Transportation.
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
intends to obtain a $1 million "key-man" life insurance policy on the life of
Mr. Bakal, under which the Company would be the beneficiary. 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 are automatically renewable unless otherwise terminated. See
"Management -- Executive Compensation/Employment Agreements."
MANAGEMENT'S BROAD DISCRETION IN APPLICATION OF PROCEEDS
Management of the Company presently intends to use a significant portion
(approximately $5,486,000 or 70.9%) 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."
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
and Operating 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."
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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."
CONTROL BY SOLE DIRECTOR
As of the date of this Prospectus, Dennis A. Bakal, the Company's Chief
Executive Officer, President and majority shareholder, is also the Company's
sole director. The Company also does not have an audit or compensation
committee. 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 new directors will be appointed by
Mr. Bakal and shareholders will not have the opportunity to vote on such new
members. 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. See
"Management." In addition, after the Offering, the Board of Directors will
establish audit and compensation committees, at least a majority of the members
of which will be independent directors. Until such time as additional members
are added to the Board of Directors, Mr. Bakal will be in a position to control
the policies and affairs of the Company.
POTENTIAL ACQUISITIONS
The Company may in the future utilize a portion of the net proceeds of the
Offering to pursue acquisitions of complementary services or businesses. Future
acquisitions may result in potentially dilutive issuances of equity securities,
the incurrence of additional debt, the write-off of costs, and the amortization
of expenses related to goodwill and other intangible assets, all of which could
have a material adverse effect on the Company's business, operating results and
financial condition. Future acquisitions would involve numerous additional
risks, including difficulties in the assimilation of the operations, services
and personnel of the acquired company, the diversion of management's attention
from other business concerns, entering markets in which the Company has little
or no direct prior experience and the potential loss of key employees of the
acquired company. The Company currently has no agreements or understandings with
regard to any acquisitions. Shareholders will not vote on any potential
acquisitions (unless required by applicable law) nor have the opportunity to
review any potential acquisition candidate.
DILUTION
Based upon the net tangible book value of the Company at March 31, 1997,
investors in this Offering will suffer an immediate and substantial dilution of
their investment of approximately $4.15 or 69% 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
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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, 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."
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. In addition, Mr. Bakal has personally
guaranteed the Company's bank indebtedness, the facilities lease, many equipment
operating leases and other liabilities of the Company. To the extent that these
guarantees remain in place on December 31, 1997, the Company is obligated to
compensate Mr. Bakal for providing such guarantees in an amount equal to 1% of
the outstanding balance of such loans and other obligations. 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. The
Company has adopted a policy whereby all future transactions with its officers,
directors or affiliates must be approved by a majority of disinterested
directors of the Company and on terms no less favorable to the Company than
those that are generally available from unaffiliated third parties. See
"Management -- Executive Compensation/ Employment Agreements" and "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 of approximately $435,000
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."
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.
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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-
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
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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 150,000 shares
of Common Stock and 150,000 Warrants (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 150% 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.
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
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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 one year 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."
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
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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.
16
<PAGE> 18
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 $7,736,000, based on an assumed initial public offering price of
$6.00 per share of Common Stock and $0.125 per Warrant (approximately $8,956,000
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 25.9%
Purchase of computer and related equipment(2).... 250,000 3.2
Working capital and general corporate
purposes(3).................................... 5,486,000 70.9
---------- -----
Total.................................. $7,736,000 100%
========== =====
</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 (to an affiliate of the Company's Chief Executive Officer), 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 $1,220,000, 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.
17
<PAGE> 19
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 March 31, 1997, the net tangible book value (deficit) of the Company was
$(138,004), or approximately $(0.05) 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 March 31, 1997 would
have been $7,597,934, or approximately $1.85 per share. This represents an
immediate increase in pro forma net tangible book value of $1.90 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 March 31, 1997......... $(0.05)
Increase per share attributable to shares offered hereby.... 1.90
------
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 March 31, 1997,
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% $ 57,166 0.63% $ 0.02
New Shareholders.................... 1,500,000 36.6 9,000,000 99.37 6.00
--------- ------ ---------- ------
Total..................... 4,100,000 100.00% $9,057,166 100.00%
========= ====== ========== ======
</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.
18
<PAGE> 20
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997 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>
MARCH 31, 1997
------------------------
PRO FORMA
ACTUAL AS ADJUSTED
---------- -----------
<S> <C> <C>
Cash........................................................ $ 202,146 $5,688,084
========== ==========
Current maturities of long-term debt and capital lease
obligations............................................... $ 482,325 $ 482,325
========== ==========
Long-term debt and capital lease obligations, net of current
maturities................................................ $2,249,708 $2,249,708
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................................ 57,166 7,635,216
Warrants.................................................. -- 157,888
Accumulated deficit....................................... (195,170) (195,170)
---------- ----------
Total shareholders' equity (deficit).............. (138,004) 7,597,934
---------- ----------
Total capitalization............................ $2,111,704 $9,847,642
========== ==========
</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 300,000 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. There are no covenants in any loan
documents to which the Company is currently a party which restrict the Company's
ability to declare or pay dividends. There is no assurance, however, that such
restrictions will not be agreed to by the Company in future financing
transactions.
19
<PAGE> 21
SELECTED CONSOLIDATED FINANCIAL AND OPERATING 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 selected consolidated financial data as of
March 31, 1997 and for the three months ended March 31, 1996 and 1997 have been
derived from the unaudited financial statements of the Company which include all
adjustments, consisting of only normal recurring adjustments (except as provided
in footnote 1 below), which the Company considers necessary for a fair
presentation and results of operations for these periods. 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, THREE MONTHS ENDED MARCH 31,
------------------------- ----------------------------
1995 1996 1996 1997
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues.................... $17,484,765 $21,172,201 $ 4,128,024 $ 7,413,873
Operating expenses.................... 17,704,476 20,629,835(1) 4,367,112 7,289,310(1)
Income (loss) from operations......... (219,711) 542,366 (239,088) 124,563
Other income (expense)................ (30,489) (221,288) (82,538) (7,620)
Pro forma income (loss) before income
taxes............................... (250,200) 321,078 (321,626) 116,943
Benefit (provision) for income
taxes(2)............................ 22,000 (95,000) 86,000 (68,000)
Pro forma benefit (provision) for
income taxes(3)..................... 73,000 (42,000) 36,000 24,000
----------- ----------- ----------- -----------
Net income before income tax provision
due to change in tax status......... (155,200) 184,078 (199,626) 72,943
Income tax provision due to change in
tax status.......................... -- -- -- (246,000)
Pro forma net income (loss)........... $ (155,200) $ 184,078 $ (199,626) $ (173,057)
=========== =========== =========== ===========
Pro forma net income (loss) per
share............................... $ (0.06) $ 0.06 $ (0.08) $ (0.07)
=========== =========== =========== ===========
Weighted average number of common and
common equivalent shares
outstanding......................... 2,500,000 3,281,862 2,533,333 2,600,000
=========== =========== =========== ===========
OPERATING DATA:
Number of tractors.................... 76 150 70 150
Number of trailers.................... 149 248 118 248
Average revenue per mile(5)........... $ 1.17 $ 1.11 $ 1.15 $ 1.11
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1997
DECEMBER 31, ----------------------------
1996 ACTUAL AS ADJUSTED(6)
------------ ----------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....................................... $ 354,092 $ 106,623 $ 5,592,561
Total assets.......................................... 5,344,879 6,305,292 14,041,230
Total liabilities..................................... 5,345,826 6,443,296 6,443,296
Shareholders' equity (deficit)........................ (947) (138,004) 7,597,934
</TABLE>
- ---------------
(1) For the year ended December 31, 1996, the Company has recorded $120,000 in
non-cash compensation expense on a pro forma basis to reflect the fair value
of services provided by Dennis A. Bakal for the period July 1, 1996 through
December 31, 1996. A similar non-cash adjustment of $60,000 has been made
for the three months ended March 31, 1997 to reflect the fair value of
services provided during that period. See Note 5 to the Consolidated
Financial Statements.
(2) Reflects the Company's tax provision as required by SFAS No. 109,
"Accounting for Income Taxes."
(3) For the years ended December 31, 1995 and 1996 and the three months ended
March 31, 1996, the benefit (provision) has been presented on a pro forma
basis as if the Company and all of its subsidiaries had been C corporations
for federal and state income tax purposes during these periods.
20
<PAGE> 22
(4) An adjustment of $246,000 has been made in the three months ended March 31,
1997 to record the cumulative deferred income taxes attributable to the
Company and certain of the Company's subsidiaries which were previously not
subject to corporate-level income taxes. These deferred income taxes, of
which approximately $82,000 is reflected as a current liability, result from
the use of accelerated depreciation and cash basis tax reporting by these
entities. See Note 8 to the Consolidated Financial Statements.
(5) Based on revenues of Timely before any inter-company eliminations.
(6) 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."
21
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following analysis of the Company's financial condition as of March 31,
1997 and the Company's results of operations for the years ended December 31,
1995 and 1996 and the three month periods ended March 31, 1996 and 1997 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. The financial information provided below has been
rounded in order to simplify its presentation. However, the percentages provided
below are calculated using the detailed financial information contained in the
Consolidated Financial Statements, the notes thereto and the other financial
data included elsewhere in this Prospectus.
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. For the quarter ended
March 31, 1997, FedEx accounted for approximately 44% of the Company's
consolidated operating revenues. 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,
22
<PAGE> 24
accounted for approximately 16% and 8% of the Company's consolidated operating
revenues for the year ended December 31, 1996 and 1995, respectively and
approximately 17% for the quarter ended March 31, 1997.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 compared to Three Months Ended March 31,
1996
The Company's operating revenues increased approximately $3.3 million, or
80%, to approximately $7.4 million during the three months ended March 31, 1997,
from approximately $4.1 million for the three months ended March 31, 1996. For
the quarter ended March 31, 1997, Timely, Truck-Net and PTG accounted for
approximately $5.2 million, $1.9 million and $288,000, respectively, of the
Company's revenues. The increase in the Company's operating revenues is
primarily attributable to the expansion of Timely and Truck-Net operations for
major customers such as FedEx and Panalpina. Revenues for the three month period
ended March 31, 1996 were adversely affected by severe weather conditions in the
northeastern portion of the U.S. during January and February 1996. In addition,
in February 1996, a major customer of both Timely and Truck-Net filed a Chapter
7 bankruptcy petition. See "-- Year Ended December 31, 1996 compared to Year
Ended December 31, 1995" and "Business -- Litigation." The combination of the
severe weather conditions and the bankruptcy idled certain of the Company's
equipment and drivers during the first quarter of 1996.
The Company's operating expenses increased approximately $2.9 million, or
67%, to approximately $7.3 million in the three months ended March 31, 1997,
from approximately $4.4 million in the three months ended March 31, 1996. For
the quarter ended March 31, 1997, Timely, Truck-Net and PTG accounted for
approximately $5.1 million, $1.9 million and $276,000, respectively, of the
Company's operating expenses. The increase in the Company's operating expenses
is primarily due to increased levels of operation of both Timely and Truck-Net,
which required investments by the Company in additional personnel, equipment and
office space. In addition, the operating expenses for the three month period
ended March 31, 1997 reflect $60,000 in compensation expense on a pro forma
basis to reflect the fair value of services provided by Mr. Bakal during the
period. See Note 5 to the Consolidated Financial Statements.
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 statement of operations for the three months ended March 31,
1996 reflects a tax benefit on a pro forma basis as if the Company and all its
subsidiaries were liable for federal income taxes as taxable corporate entities
for such period. For the three month period ended March 31, 1997, the Company
has recognized a tax provision totaling $290,000, of which $246,000
(approximately $0.10 per share) is a one-time charge related to the termination
of the S Corporation election of the Company and its subsidiaries (except
Truck-Net) and represents the recognition of deferred tax liabilities
attributable to these entities, which treatment is mandated by SFAS Statement
No. 109, "Accounting for Income Taxes." The change in the Company's income tax
provision from a benefit of $122,000 for the three months ended March 31, 1996
to a provision of $44,000 (excluding the $246,000 one-time charge) for the three
months ended March 31, 1997 is a direct result of the change in income before
income taxes from a loss of approximately $322,000 in the first quarter of 1996
to income of approximately $117,000 in the first quarter of 1997.
The Company's pro forma net loss decreased approximately $27,000, or 13%,
to approximately $173,000 for the first quarter of 1997 from approximately
$200,000 for the first quarter of 1996 primarily as a result of increased
revenues. Pro forma net income would have increased approximately $273,000 had
it not been necessary for the Company to record the tax provision related to the
change in tax status of the Company and certain of its subsidiaries.
Year Ended December 31, 1996 compared to Year Ended December 31, 1995.
The Company's operating revenues increased approximately $3.7 million, or
21%, to approximately $21.2 million during the year ended December 31, 1996,
from approximately $17.5 million for the year ended December 31, 1995. This
increase is attributable to (i) the inclusion for the entire year of revenues
for Timely from the FedEx agreement, which commenced in November 1995, (ii) the
growth of the transit services
23
<PAGE> 25
provided by Truck-Net 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. 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.
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 approximately $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 $2.9 million, or
16.5%, to approximately $20.6 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. For the year ended December 31, 1996, Timely accounted for
approximately $13.4 million or 64.8% of the Company's operating expenses and
Truck-Net accounted for approximately $6.3 million or 30.7% of the Company's
operating expenses and PTG accounted for approximately $936,000 or 4.5% or the
Company's operating expenses.
Other expense increased approximately $191,000 to approximately $221,000 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 $137,000 in 1996 is a direct result
of the change in pretax income from a loss of approximately $250,000 in 1995 to
income of approximately $321,000 in 1996.
Pro forma net income increased approximately $339,000 to approximately
$184,000 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 $107,000 at March 31,
1997. The Company's primary long-term and working capital requirements have been
to fund capital expenditures for tractors, 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
24
<PAGE> 26
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.
Net cash provided by operating activities totaled approximately $221,000 in
1996 compared to a use of approximately $194,000 in 1995. This increase in cash
flow from operations resulted primarily from improved operating results,
increased depreciation, and an increase in accounts payable, partially offset by
a rise in accounts receivable which resulted from the significant increase in
transportation volumes in December 1996 compared to the same period in 1995.
Cash used in investing activities decreased from approximately $1.1 million
in 1995 to approximately $107,000 in 1996 as Timely's revenue equipment purchase
program wound down and the Company began making more extensive use of operating
lease agreements for its equipment acquisitions. Net cash provided by financing
activities totaled approximately $1.27 million in 1995 as the Company made
long-term borrowings to finance Timely's equipment additions. Net cash provided
from financing activities decreased to approximately $118,000 in 1996 reflecting
reduced capital requirements as a result of the significant reduction in
property and equipment purchases and the increased use of operating leases for
equipment acquisitions.
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's original maturity date was January 31, 1998. In May
1997, SouthTrust provided the Company a binding letter extending the maturity
date to April 1, 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 March 31, 1997, the Company had approximately $202,000 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.
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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
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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
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<PAGE> 29
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 3.9% of the Company's revenues in the three months ended
March 31, 1997, 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 and the quarter ended March 31, 1997,
the Company's five largest customers accounted for approximately 66% and 74%,
respectively, 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 the year ended December 31, 1996 and approximately 44%
and 17%, respectively, during the quarter ended March 31, 1997. No other
customer accounted for more than 10% of the Company's
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combined revenues in any of the reported periods. The loss of either FedEx or
Panalpina would have a material adverse effect on the results of operations for
the Company.
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 under operating leases from 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, which it anticipates
taking delivery of by the end of May 1997.
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
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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 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 agreement with the leasing company is open-ended in that it
covers all the individuals designated by the Company to be enrolled thereunder.
Employees are enrolled for the duration of their employment (which is at the
Company's will) and not solely for a specific one-time delivery. The Company may
terminate the agreement at any time upon notice to the 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. As described above, all of the Company's employees, other than its
executive officers, are leased from a third-party leasing company. 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.
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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 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.
Specifically, the U.S. Environmental Protection Agency ("EPA") requires motor
carrier operators to obtain a Certificate of Registration in order to transport
hazardous materials. The Company has initiated programs to comply with all
applicable environmental regulations. For example, the Company requires each of
its drivers to participate in training regarding the handling of hazardous
materials, including tests given to the drivers after such training to ensure
that the basic skills have been achieved. 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 (in the form of the EPA-required Certificate of
Registration) to ship environmentally hazardous substances and, to date, has
experienced no claims for hazardous substance shipments. The shipment of
hazardous materials has not been a material part of the Company's business to
date. 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 (which are determined on a case-by-case basis).
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
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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 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. The
Company occupies approximately 17,000 square feet of space in this facility and
pays Mr. Bakal's affiliate rent of $10,000 per month. 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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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.............................. 55 Chief Financial Officer
William M. Kelly........................... 50 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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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. However, the new directors will
be appointed by Mr. Bakal and shareholders will not have the opportunity to vote
on such new members.
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.
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<PAGE> 36
EXECUTIVE COMPENSATION/EMPLOYMENT AGREEMENTS
The following table sets forth compensation paid to the Company's Chief
Executive Officer during the years ended December 31, 1996 and 1995. No other
Named Executive Officer's salary and bonus equaled or exceeded $100,000 for
services rendered to the Company during such years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION(1) ------------
----------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- --------------------------- ---- -------- ------ ------------
<S> <C> <C> <C> <C>
Dennis A. Bakal.......................................... 1996 $120,000 -- --
President & Chief Executive Officer 1995 240,000 -- --
</TABLE>
- ---------------
(1) The Company did not directly pay any compensation to Mr. Bakal during these
years. Truck-Net paid a company which is wholly owned by Mr. Bakal such
amounts for certain management services provided to Truck-Net. See "Certain
Transactions" and Note 5 to the Consolidated Financial Statements.
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 "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 of $100,000, $88,650 and $100,000, respectively,
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
35
<PAGE> 37
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.
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(1) 62.2% $0.50 2001
Linda K. Roberts................................ 70,000(2) 5.8 0.15 2001
Peter C. Roth................................... 50,000(3) 4.1 4.00 2001
William M. Kelly................................ 70,000(2) 5.8 0.15 2001
Stanley E. Laiken............................... 70,000(2) 5.8 0.15 2001
</TABLE>
- ---------------
(1) 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.
(2) 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.
(3) 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
36
<PAGE> 38
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.
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 $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,
37
<PAGE> 39
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 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. Pursuant to the
employment agreement entered into by the Company and Mr. Bakal, the Company will
use its best efforts to remove and cause to be terminated all guarantees
provided by Mr. Bakal. If the Company is unable to do so prior to December 31,
1997, the Company is obligated to compensate Mr. Bakal for providing such
guarantees.
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. See Note 5 to the Consolidated Financial
Statements.
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. See Note 5 to the
Consolidated Financial Statements.
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. The Company has adopted a policy whereby all future
transactions with affiliates must 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.
38
<PAGE> 40
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 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
39
<PAGE> 41
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 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 Reliance Trust Company, Atlanta,
Georgia.
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.
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 foregoing 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.
40
<PAGE> 42
DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Company is attempting to obtain a directors and officers liability
insurance policy which will insure (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 on
terms it deems acceptable.
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 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
41
<PAGE> 43
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.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Securities is Reliance Trust
Company, Atlanta, Georgia.
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 one year has 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 two 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.
42
<PAGE> 44
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 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.
43
<PAGE> 45
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 nine percent (9%) 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 2 1/2% 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).
44
<PAGE> 46
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 exercisable at 150% 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 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,
45
<PAGE> 47
(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. 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 Consolidated Financial Statements of the Company 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 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.
46
<PAGE> 48
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.
47
<PAGE> 49
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets as of December 31, 1996 and
March 31, 1997 (unaudited)................................ F-3
Consolidated Statements of Operations for the years ended
December 31, 1995 and 1996 and for the three month periods
ended March 31, 1996 and 1997 (unaudited)................. F-4
Consolidated Statements of Changes in Shareholders' Equity
(Deficit) for the years ended December 31, 1995 and 1996
and for the three month period ended March 31, 1997
(unaudited)............................................... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1995 and 1996 and for the three month periods
ended March 31, 1996 and 1997 (unaudited)................. F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 50
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.
ARTHUR ANDERSEN LLP
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> 51
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash........................................................ $ 248,454 $ 202,146
Trade accounts receivable, net of allowance for doubtful
accounts of $63,629 at December 31, 1996 and $59,455 at
March 31, 1997............................................ 2,820,024 3,243,845
Due from affiliate (Note 5)................................. 228,893 337,599
Other....................................................... 176,365 231,177
---------- ----------
Total current assets.............................. 3,473,736 4,014,767
PROPERTY AND EQUIPMENT, NET................................. 1,679,011 2,001,919
OTHER ASSETS................................................ 192,132 288,606
---------- ----------
Total assets...................................... $5,344,879 $6,305,292
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable............................................ $2,214,670 $2,473,671
Accrued liabilities......................................... 506,997 952,148
Current maturities of long-term debt and capital lease
obligations............................................... 397,977 482,325
---------- ----------
Total current liabilities......................... 3,119,644 3,908,144
---------- ----------
LINE OF CREDIT (NOTE 5)..................................... 878,379 930,379
---------- ----------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, NET OF CURRENT
MATURITIES................................................ 1,187,064 1,319,329
---------- ----------
DEFERRED INCOME TAXES....................................... 112,270 261,975
---------- ----------
DUE TO SHAREHOLDER (NOTE 5)................................. 48,469 23,469
---------- ----------
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.................................. 57,166 57,166
Accumulated deficit......................................... (58,113) (195,170)
---------- ----------
Total shareholders' deficit....................... (947) (138,004)
---------- ----------
Total liabilities and shareholders' equity
(deficit)....................................... $5,344,879 $6,305,292
========== ==========
</TABLE>
The accompanying notes are an integral part of this consolidated balance sheet.
F-3
<PAGE> 52
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996 AND
THE THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTH PERIODS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------- -------------------------
1995 1996 1996 1997
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING REVENUES......................... $17,484,765 $21,172,201 $4,128,024 $7,413,873
----------- ----------- ---------- ----------
OPERATING EXPENSES:
Salaries, wages, and benefits............ 5,974,933 6,997,620 1,444,871 2,514,224
Purchased transportation................. 4,665,019 5,517,481 1,106,283 1,973,192
Operating supplies and expenses.......... 3,348,229 3,787,670 944,700 1,330,599
Fuel and fuel taxes...................... 1,702,342 2,567,319 503,718 962,519
Communications and utilities............. 256,027 243,582 70,762 96,723
Depreciation............................. 103,025 242,041 48,662 76,187
Operating taxes and licenses............. 60,085 73,840 15,936 30,393
Bad debt expense......................... 435,000 16,485 7,485 3,000
Other operating expenses................. 1,159,816 1,183,797 224,695 302,473
----------- ----------- ---------- ----------
Total operating expenses......... 17,704,476 20,629,835 4,367,112 7,289,310
----------- ----------- ---------- ----------
(LOSS) INCOME FROM OPERATIONS.............. (219,711) 542,366 (239,088) 124,563
OTHER (EXPENSE) INCOME:
Interest expense........................... (137,573) (272,347) (66,632) (74,596)
Other income, net.......................... 107,084 51,059 (15,906) 66,976
----------- ----------- ---------- ----------
(LOSS) INCOME BEFORE INCOME TAXES.......... (250,200) 321,078 (321,626) 116,943
----------- ----------- ---------- ----------
BENEFIT (PROVISION) FOR INCOME TAXES (NOTES
2 AND 8)................................. 22,000 (95,000) 86,000 (68,000)
PRO FORMA BENEFIT (PROVISION) FOR INCOME
TAXES (NOTES 2 AND 8).................... 73,000 (42,000) 36,000 24,000
INCOME TAX PROVISION DUE TO CHANGE IN TAX
STATUS (NOTE 8).......................... -- -- -- (246,000)
----------- ----------- ---------- ----------
TOTAL BENEFIT (PROVISION) FOR INCOME
TAXES.................................... 95,000 (137,000) 122,000 (290,000)
----------- ----------- ---------- ----------
PRO FORMA NET (LOSS) INCOME................ $ (155,200) $ 184,078 $ (199,626) $ (173,057)
=========== =========== ========== ==========
PRO FORMA NET (LOSS) INCOME PER COMMON
SHARE (NOTE 2)........................... $ (0.06) $ 0.06 $ (.08) $ (.07)
=========== =========== ========== ==========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING (NOTE 2)... 2,500,000 3,281,862 2,533,333 2,600,000
=========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 53
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996 AND FOR THE
THREE MONTH PERIOD ENDED MARCH 31, 1997 (UNAUDITED)
<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.............................. -- -- -- 184,078 184,078
Pro forma tax adjustment (Notes 2 and
8).................................... -- -- -- 42,000 42,000
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)
Contribution to capital by related party
(Note 5).............................. -- -- 42,000 -- 42,000
Pro forma compensation expense (Note
5).................................... -- -- -- 120,000 120,000
--------- ------ ------- --------- ---------
BALANCE, DECEMBER 31, 1996.............. 2,600,000 -- 57,166 (58,113) (947)
Net income (unaudited).................. -- -- -- (173,057) (173,057)
Pro forma tax adjustment................ -- -- -- (24,000) (24,000)
Pro forma compensation expense (Note
5).................................... -- -- -- 60,000 60,000
--------- ------ ------- --------- ---------
BALANCE, MARCH 31, 1997 (UNAUDITED)..... 2,600,000 -- $57,166 $(195,170) $(138,004)
========= ====== ======= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 54
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996 AND THE
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTH PERIODS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------- ---------------------
1995 1996 1996 1997
------------ ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Pro forma net (loss) income..................... $ (155,200) $ 184,078 (199,626) (173,057)
----------- --------- --------- ---------
Adjustments to reconcile pro forma net (loss)
income to net cash (used in) provided by
operating activities:
Pro forma income tax adjustment............... (73,000) 42,000 (36,000) (24,000)
Pro forma compensation expense................ -- 120,000 -- 60,000
Loss on investments........................... -- 42,000 -- --
Deferred income taxes......................... (22,106) 25,000 (64,000) 149,705
Pretax income of Rapid (Note 5)............... -- (37,309) (13,786) --
Depreciation.................................. 103,025 242,041 48,662 76,187
Changes in operating assets and liabilities:
Trade accounts receivable, net............. 69,109 (746,849) (207,460) (423,821)
Due from affiliate......................... (344,227) (155,586) 59,201 (108,706)
Other current assets....................... (7,505) (136,899) (122,212) (54,812)
Accounts payable and accrued liabilities... 235,757 642,575 508,694 704,152
----------- --------- --------- ---------
Total adjustments..................... (38,947) 36,973 173,099 378,705
----------- --------- --------- ---------
Net cash (used in) provided by
operating activities................ (194,147) 221,051 (26,527) 205,648
----------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............. (1,029,719) (58,642) (1,001) (331,095)
Increase in other assets........................ (72,779) (48,608) (127,075) (96,474)
----------- --------- --------- ---------
Net cash used in investing
activities.......................... (1,102,498) (107,250) (128,076) (427,569)
----------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from line of credit................ 135,794 520,368 57,413 52,000
Repayments of long-term debt and capital lease
obligations................................... (119,100) (414,188) (113,599) (107,931)
Proceeds from long-term debt.................... 1,239,547 -- 102,315 256,544
Due to shareholder.............................. 11,399 37,070 120,467 (25,000)
Cash distributions to shareholders.............. -- (25,362) -- --
----------- --------- --------- ---------
Net cash provided by financing
activities.......................... 1,267,640 117,888 166,596 175,613
----------- --------- --------- ---------
NET (DECREASE) INCREASE IN CASH................. (29,005) 231,689 11,993 (46,308)
CASH, BEGINNING OF PERIOD....................... 45,770 16,765 16,765 248,454
----------- --------- --------- ---------
CASH, END OF PERIOD............................. $ 16,765 $ 248,454 28,758 202,146
=========== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 55
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996 AND MARCH 31, 1996 AND 1997 (UNAUDITED)
(ALL AMOUNTS AND RELATED DISCLOSURES APPLICABLE TO THE
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1997 ARE UNAUDITED)
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
F-7
<PAGE> 56
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 (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.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Provision for uncollectible accounts is made at each balance sheet date to
reduce accounts receivable to their estimated net realizable value. Bad debt
expense for the year ended December 31, 1995 includes a provision of
approximately $425,000 related to the bankruptcy of a major customer of both
Timely and Truck-Net.
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>
F-8
<PAGE> 57
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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
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>
F-9
<PAGE> 58
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR MARCH 31, 1996 AND
1997
In the opinion of management, the unaudited condensed consolidated
financial statements contain all normal and recurring adjustments necessary to
present fairly the consolidated financial position of the Company at March 31,
1997 and the consolidated results of the Company's operations and its cash flows
for the three months ended March 31, 1996 and 1997.
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 $7,736,000 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.
4. LIQUIDITY
Although the Company had pro forma net income of $184,078 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
$58,113 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.
F-10
<PAGE> 59
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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. In the accompanying 1996 consolidated statement of operations, the
Company has recorded $120,000 in compensation expense on a pro forma basis to
reflect the fair value of services provided by the majority shareholder for the
period July 1, 1996 through December 31, 1996 (i.e., the period after payment of
management fees to PSG was discontinued). A similar adjustment of $60,000 has
been made in the consolidated statement of operations for the three months ended
March 31, 1997 to reflect the fair value of services provided during that
period.
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. At the date the
shares were transferred (December 17, 1996), they had a market value of
approximately $58,000. Consequently, the Company recorded a $42,000 investment
loss to write down this investment to its fair value prior to the transfer. A
$42,000 capital contribution has been recorded in the accompanying consolidated
statements of changes in shareholder's equity to reflect the excess of
consideration paid by PSG over the market value of the stock on the date of
transfer.
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.
F-11
<PAGE> 60
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 matured 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.
In May 1997, the maturity date of borrowings under the New Agreement was
extended to April 1, 1998.
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>
F-12
<PAGE> 61
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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. Specifically, the notes payable to the former shareholder
are secured by the shares of Truck-Net previously owned by such shareholder.
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.
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.
F-13
<PAGE> 62
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 year ended December 31, 1996
using the Black-Scholes option-pricing model as prescribed by SFAS No. 123 using
the following weighted average assumptions:
<TABLE>
<CAPTION>
OPTION PRICE
----------------------
$0.15 TO $0.50 $4.00
-------------- -----
<S> <C> <C>
Risk free interest rate..................................... 6.48% 6.48%
Expected dividend yield..................................... 0% 0%
Expected lives (in years)................................... 5 5
Expected volatility......................................... 39.15% 35.36%
</TABLE>
The total value of options granted for the year ended December 31, 1996 was
computed as approximately $7,000, which would be amortized on a pro forma basis
over the vesting period of the options.
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, PTG, Ltd. 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.
F-14
<PAGE> 63
PROFESSIONAL TRANSPORTATION GROUP LTD., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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).......................... $ 20,000 $ 70,000 $(50,000)
Deferred provision................................... 117,000 25,000 92,000
-------- -------- --------
Total provision.............................. $137,000 $ 95,000 $ 42,000
======== ======== ========
</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.
In connection with the Reorganization, PTG, Ltd. and the Subsidiaries which
had previously been treated as S Corporations for tax purposes were converted to
C Corporations. As a result of this change in tax status, the Company recorded
an increase in its provision for income taxes of approximately $246,000 for the
three months ended March 31, 1997 to reflect the deferred income taxes
attributable to those entities which had previously been exempt from federal
income taxation. These deferred income taxes result from the use of accelerated
depreciation and cash basis tax reporting by these entities.
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-15
<PAGE> 64
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-16
<PAGE> 65
======================================================
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.......................... 8
Use of Proceeds....................... 17
Dilution.............................. 18
Capitalization........................ 19
Dividend Policy....................... 19
Selected Consolidated Financial and
Operating Data...................... 20
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 21
Business.............................. 25
Management............................ 32
Principal Shareholders................ 36
Certain Transactions.................. 36
Description of Securities............. 38
Shares Available for Future Sale...... 41
Underwriting.......................... 43
Legal Matters......................... 45
Experts............................... 45
Available Information................. 45
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. (LOGO)
ATLANTA, GEORGIA
(404) 237-1234
, 1997
======================================================
<PAGE> 66
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> 67
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..................... 229,688
Miscellaneous Expenses...................................... 36,933
--------
Total ............................................ $624,688
========
</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
exemption from registration provided by Section 4(2) of 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.
10.5 -- Employment Agreement by and between the Company and Stanley
E. Laiken, dated April 1, 1997.
</TABLE>
II-2
<PAGE> 68
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 the periods ending December 31,
1996 and March 31, 1997 (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.
* Previously filed.
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> 69
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> 70
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 May 13, 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 May 13, 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> 71
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> 72
<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 the periods ending December 31,
1996 and March 31, 1997 (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.
* Previously filed.
<PAGE> 1
EXHIBIT 1.1
1,500,000 Shares of Common Stock
and
1,500,000 Redeemable Common Stock Purchase Warrants
of
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
UNDERWRITING AGREEMENT
Atlanta, Georgia
May ___, 1997
ARGENT SECURITIES, INC.
3340 Peachtree Road, N.E.
Suite 450
Atlanta, Georgia 30326
Gentlemen:
Professional Transportation Group Ltd., Inc., a Georgia corporation
(the "Company"), confirms its agreement with Argent Securities, Inc.
("Argent"), and each of the other underwriters named in Schedule I hereto
(collectively, the "Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 11), for whom Argent
is acting as representative (in such capacity, Argent shall hereinafter be
referred to as the "Representative"), with respect to the sale by the Company,
and the purchase by the Underwriters, acting severally and not jointly, of One
Million Five Hundred Thousand (1,500,000) shares (the "Shares") of the
Company's common stock, no par value (the "Common Stock"), and One Million Five
Hundred Thousand (1,500,000) Redeemable Common Stock Purchase Warrants (the
"Redeemable Warrants") (collectively, the Shares and the Redeemable Warrants
are sometimes referred to herein as the "Firm Securities"), each of the
Redeemable Warrants entitles the holder thereof to purchase one share of Common
Stock at an exercise price of $______ per share pursuant to a warrant agreement
(the "Warrant Agreement") between the Company and the warrant agent, set forth
in Schedule II, and with respect to the grant by the Company to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of 225,000 additional Shares
and 225,000 Redeemable Warrants (the "Additional Securities") for the purpose
of covering over-allotments, if any. The aforesaid Firm Securities together
with all or any part of the Additional Securities are hereinafter collectively
referred to as the "Securities." The Company also proposes to issue and sell
to the Underwriters for an approximate price of $150 ($0.001 per warrant),
non-callable warrants entitling the Underwriters to purchase from the Company
an option pursuant to the Underwriters' Common Stock Purchase Warrant and
Warrant Purchase Option (the "Underwriters' Purchase Option") for the purchase
of an aggregate of 150,000 Shares (the "Underwriters' Shares") and 150,000
Redeemable Common Stock Purchase Warrants (the "Underwriters' Warrants"). The
shares of Common Stock issuable upon exercise of the
<PAGE> 2
Redeemable Warrants and the Underwriters' Warrants are hereinafter sometimes
referred to as the "Warrant Shares." The Shares, the Redeemable Warrants, the
Underwriters' Shares, the Underwriters' Warrants, and the Warrant Shares are
more fully described in the Registration Statement (as defined in Section 1(a)
hereof) and the Prospectus (as defined in Section 1(a) hereof) referred to
below. Unless the context otherwise requires, all references to the "Company"
shall include all subsidiaries (as defined in Section 2(c) hereof) referred to
below and identified in the Prospectus, as if separately stated herein. All
representations, warranties and opinions of counsel shall cover such
subsidiaries.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters as of the
date hereof, and as of the Closing Date and any Option Closing Date, (as
defined in Section 2 (c) hereof), if any, as follows:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement, and an amendment or amendments thereto, on Form SB-2
(File No. 333-24619) under the Act (the "Registration Statement"), including a
preliminary prospectus relating to the Shares and Redeemable Warrants which
registration statement and any amendment or amendments have been prepared by
the Company in material compliance with the requirements of the Act. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Firm Securities may commence, the term "Registration Statement" as used in
this Agreement means the registration statement as amended by said
post-effective amendment. If an abbreviated registration statement is prepared
and filed with the Commission in accordance with Rule 462(b) under the Act (an
"Abbreviated Registration Statement"), the term "Registration Statement" as
used in this Agreement includes the Abbreviated Registration Statement. The
term "Prospectus" as used in this Agreement means the final prospectus included
in the Registration Statement on the date it became effective, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b). The term "Preliminary Prospectus" as used in this
Agreement means a preliminary prospectus in the form included in the
registration statement at the time of the initial filing of the registration
statement with the Commission, and as such prospectus shall have been amended
from time to time prior to the date of the Prospectus.
(b) Neither the Commission nor any state regulatory
authority has issued any order preventing or suspending the use of any
Preliminary Prospectus, the Registration Statement or Prospectus or any part
thereof and no proceedings for a stop order have been instituted or are
2
<PAGE> 3
pending or, to the best knowledge of the Company, threatened. Each of the
Preliminary Prospectus, the Registration Statement and Prospectus at the time
of filing thereof conformed in all material respects with the requirements of
the Act, and neither the Preliminary Prospectus, the Registration Statement or
Prospectus at the time of filing thereof contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
and necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that this representation and
warranty does not apply to statements made or statements omitted in reliance
upon and in conformity with written information furnished to the Company with
respect to the Underwriters by or on behalf of the Underwriters expressly for
use in such Preliminary Prospectus, Registration Statement or Prospectus.
(c) When the Registration Statement becomes effective and
at all times subsequent thereto up to the Closing Date and the Option Closing
Date, if any, and during such longer period as the Prospectus may be required
to be delivered in connection with sales by the Underwriters or a dealer, the
Registration Statement and the Prospectus will contain all material statements
which are required to be stated therein in material compliance with the Act,
and will in all material respects conform to the requirements of the Act;
neither the Registration Statement, nor any amendment thereto, at the time the
Registration Statement or such amendment is declared effective under the Act,
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus at the time the Registration
Statement becomes effective, at the Closing Date and at the Option Closing
Date, if any, will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty does not apply to
statements made or statements omitted in reliance upon and in conformity with
information supplied to the Company in writing by or on behalf of the
Underwriters expressly for use in the Registration Statement or Prospectus or
any amendment thereof or supplement thereto.
(d) The Company has been duly organized and is now, and
at the Closing Date and the Option Closing Date, if any, will be, validly
existing as a corporation in good standing under the laws of the State of
Georgia. Other than the Company's Subsidiaries (as defined in Section 1(e)),
the Company does not own, directly or indirectly, an interest in any
corporation, partnership, trust, joint venture or other business entity;
provided, that the foregoing shall not be applicable to the investment of the
net proceeds from the sale of the Securities in short-term, low-risk
investments as set forth under "Use of Proceeds" in the Prospectus. The
Company is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of its
properties or the character of its operations require such qualification or
licensing, except where the failure to so register or qualify does not have a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect"). The Company has
all requisite power and authority (corporate and other), and has obtained any
and all necessary material applications, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or regulatory
officials and bodies (including, without limitation, those having jurisdiction
over environmental or similar matters), to own or lease its properties and
conduct its business as described in the Prospectus; the
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<PAGE> 4
Company is and has been doing business in material compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all material federal, state, local and foreign laws, rules and
regulations; and the Company has not received any notice of proceedings
relating to the revocation or modification of any such authorization, approval,
order, license, certificate, franchise, or permit which, singly or in the
aggregate, would have a Material Adverse Effect. The disclosures in the
Registration Statement concerning the effects of federal, state and local laws,
rules and regulations on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which they were made.
(e) The Company's subsidiaries (collectively, the
"Subsidiaries") are Timely Transportation, Inc., Truck-Net, Inc. and PTG, Inc.
Each Subsidiary is a corporation duly organized, validly existing and in good
standing in the jurisdiction of its incorporation, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not,
singly or in the aggregate, have a Material Adverse Effect; all of the
outstanding shares of capital stock of each of the Subsidiaries, have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by the Company free and clear of any lien, adverse claim, security interest,
equity or other encumbrance, except as otherwise disclosed in the Prospectus.
(f) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus under
"Capitalization" and will have the adjusted capitalization set forth therein on
the Closing Date and the Option Closing Date, if any, based upon the
assumptions set forth therein, and the Company is not a party to or bound by
any instrument, agreement or other arrangement providing for the Company to
issue any capital stock, rights, warrants, options or other securities, except
for this Agreement and as otherwise described in the Prospectus. The
Securities, the Underwriters Shares, the Underwriter's Warrants, and the
Warrant Shares and all other securities issued or issuable by the Company
conform or, when issued and paid for, will conform in all material respects to
all statements with respect thereto contained in the Registration Statement and
the Prospectus. All issued and outstanding securities of the Company have been
duly authorized and validly issued and are fully paid and non-assessable; the
holders thereof have no rights of rescission with respect thereto, and are not
subject to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company, or similar contractual rights granted by the
Company. The Securities, the Underwriters' Shares, and the Underwriter's
Warrants to be issued and sold by the Company hereunder, and the Warrant Shares
issuable upon exercise of the Redeemable Warrants and the Underwriter's
Warrants and payment therefor, are not and will not be subject to any
preemptive or other similar rights of any shareholder, have been duly
authorized and, when issued, paid for and delivered in accordance with the
terms hereof and thereof, will be validly issued, fully paid and non-assessable
and will conform in all material respects to the descriptions thereof contained
in the Prospectus; and the holders thereof will not be subject to any liability
solely as such holders.
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<PAGE> 5
Upon the issuance and delivery pursuant to the terms hereof of the Securities
to be sold by the Company hereunder, the Underwriters will acquire good and
marketable title to such Securities free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity
of any kind whatsoever.
(g) The financial statements of the Company, together
with the related notes and schedules thereto, included in the Registration
Statement, the Preliminary Prospectus and the Prospectus fairly present the
financial position and the results of operations of the Company at the
respective dates and for the respective periods to which they apply; and such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved,
except as may be otherwise disclosed in the Prospectus. There has been no
material adverse change or development involving a prospective change in the
condition, financial or otherwise, or in the earnings, business affairs,
position, prospects, value, operation, properties, business, or results of
operation of the Company, not arising in the ordinary course of business, since
the dates of the financial statements included in the Registration Statement
and the Prospectus and prior to the Closing Date or the Option Closing Date, if
any, and the outstanding debt, the property, both tangible and intangible, and
the business of the Company, conforms in all material respects to the
descriptions thereof contained in the Registration Statement and in the
Prospectus.
(h) Arthur Andersen LLP, whose report is filed with the
Commission as a part of the Registration Statement, is an independent public
accountant as required by the Act.
(i) The Company (i) has paid or accrued all federal,
state and local taxes for which it is liable, including, but not limited to,
withholding taxes and taxes payable under Chapters 21 through 24 of the
Internal Revenue Code of 1986 (the "Code"), (ii) has furnished all tax and
information returns it is required to furnish pursuant to the Code, and has
established adequate reserves for such taxes which are not due and payable, and
(iii) does not have knowledge of any tax deficiency or claims outstanding,
proposed or assessed against it (other than certain state or local tax returns,
as to which the failure to file, singly or in the aggregate, would not have a
Material Adverse Effect.)
(j) The Company maintains insurance, which is in full
force and effect, of the types and in the amounts which it reasonably believes
to be necessary for its business, including, but not limited to, personal and
product liability insurance covering all personal and real property owned or
leased by the Company against fire, theft, damage and all risks customarily
insured against.
(k) There is no action, suit, proceeding, inquiry,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or, to the knowledge of the Company, threatened
against (or circumstances known to the Company that may give rise to the same),
or involving the properties or business of the Company which: (i) is required
to be disclosed in the Registration Statement which is not so disclosed (and
such proceedings as are summarized in the Registration Statement are
accurately summarized in all respects); or (ii) singly or in the aggregate
would have a Material Adverse Effect.
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<PAGE> 6
(l) The Company has full legal right, power and authority
to enter into this Agreement, the Underwriters' Purchase Option and the Warrant
Agreement and to consummate the transactions provided for in such agreements;
and this Agreement, the Underwriters' Purchase Option and the Warrant Agreement
have each been duly and properly authorized, executed and delivered by the
Company. Each of this Agreement, the Underwriters' Purchase Option and the
Warrant Agreement, constitutes a legal, valid and binding agreement of the
Company, subject to due authorization, execution and delivery by the
Representative and/or the Underwriters, enforceable against the Company in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or equitable,
and except as rights to indemnity or contribution may be limited by applicable
law). Neither the Company's execution or delivery of this Agreement, the
Underwriters' Purchase Option, and the Warrant Agreement, its performance
hereunder and thereunder, its consummation of the transactions contemplated
herein and therein, nor the conduct of its business as described in the
Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or
will constitute a default under, or result in the creation or imposition of any
lien, charge, claim, encumbrance, pledge, security interest defect or other
restriction or equity of any kind whatsoever upon any property or assets
(tangible or intangible) of the Company pursuant to the terms of: (i) the
Articles of Incorporation or Bylaws of the Company, as amended; (ii) any
material license, contract, indenture, mortgage, deed of trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any other
agreement or instrument to which the Company is a party or by which the Company
is bound or to which any of its properties or assets (tangible or intangible)
is or may be subject, other than conflicts that, singly or in the aggregate,
will not have a Material Adverse Effect; or (iii) any statute, judgment,
decree, order, rule or regulation applicable to the Company of any arbitrator,
court, regulatory body or administrative agency or other governmental agency or
body (including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having jurisdiction
over the Company or any of its activities or properties.
(m) No consent, approval, authorization or order of, and
no filing with, any court, regulatory body, government agency or other body,
domestic or foreign, is required for the issuance of the Securities pursuant to
the Prospectus and the Registration Statement, the performance of this
Agreement and the transactions contemplated hereby, except such as have been or
may be obtained under the Act, under the bylaws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") or may be required under
state securities or Blue Sky laws in connection with (i) the Underwriters'
purchase and distribution of the Securities to be sold by the Company
hereunder; or (ii) the issuance and delivery of the Underwriters' Shares, the
Underwriter's Warrants or the Warrant Shares.
(n) All executed agreements or copies of executed
agreements filed as exhibits to the Registration Statement to which the Company
is a party or by which the Company may be bound or to which any of its assets,
properties or businesses may be subject have been duly and validly authorized,
executed and delivered by the Company, and constitute the legal, valid and
binding agreements of the Company, enforceable against it in accordance with
its respective
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<PAGE> 7
terms subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and subject, as to enforceability
to general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law) and except with respect to provisions
requiring indemnification or contribution under applicable law. The
descriptions contained in the Registration Statement of contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown with respect thereto by the Act and there are
no material contracts or other documents which are required by the Act to be
described in the Registration Statement or filed as exhibits to the
Registration Statement which are not described or filed as required, and the
exhibits which have been filed are complete and correct copies of the documents
of which they purport to be copies.
(o) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus and prior
to the Closing Date or the Option Closing Date, if any, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not:
(i) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money in any material amount; (ii) entered into any
transaction other than in the ordinary course of business; (iii) declared or
paid any dividend or made any other distribution on or in respect of its
capital stock; or (iv) made any changes in capital stock, material changes in
debt (long or short term) or liabilities other than in the ordinary course of
business, material changes in or affecting the general affairs, management,
financial operations, shareholders' equity or results of operations of the
Company.
(p) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus and prior
to the Closing Date or the Option Closing Date, if any, and except as may
otherwise be indicated or contemplated herein or therein, no default exists in
the due performance and observance of any material term, covenant or condition
of any license, contract, indenture, mortgage, installment sales agreement,
lease, deed of trust, voting trust agreement, stockholders agreement, note,
loan or credit agreement, or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to which
the Company is a party or by which the Company may be bound or to which any of
the property or assets (tangible or intangible) of the Company is subject or
affected, except that this representation shall not apply to defaults which in
the aggregate would not have a Material Adverse Effect.
(q) To the best knowledge of the Company, the Company has
generally enjoyed a satisfactory employer-employee relationship with its
employees and is in compliance in all material respects with all federal, state
and local laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours.
(r) To the best knowledge of the Company, since its
inception, the Company has not incurred any liability arising under or as a
result of the application of the provisions of the Act.
(s) Subsequent to the respective dates as of which
information is set forth in the Registration Statement and Prospectus and prior
to the Closing Date or the Option Closing
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<PAGE> 8
Date, if any, and except as may otherwise be indicated or contemplated herein
or therein, the Company does not presently maintain, sponsor or contribute to,
and never has maintained, sponsored or contributed to, any program or
arrangement that is an "employee pension benefit plan," a "multi-employer plan"
as such terms are defined in Sections 3(2), 3(l) and 3(37) respectively of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (any of
such plan being referred to herein as "ERISA Plans"). The Company does not
maintain or contribute, now or at any time previously, to a defined benefit
plan, as defined in Section 3(35) of ERISA.
(t) To the best knowledge of the Company, the Company is
not in violation in any material respect of any domestic or foreign laws,
ordinances or governmental rules or regulations to which it is subject, except
to the extent that any such violation would not, singly or in the aggregate,
have a Material Adverse Effect.
(u) No holders of any securities of the Company or of any
options, warrants or other convertible or exchangeable securities of the
Company exercisable for or convertible or exchangeable for securities of the
Company have the right to include any securities issued by the Company in the
Registration Statement or any registration statement to be filed by the Company
within twelve (12) months of the date hereof or to require the Company to file
a registration statement under the Act during such twelve (12) month period,
except such registration rights as have been waived or disclosed in the
Prospectus.
(v) Neither the Company, nor, to the Company's best
knowledge, any of its employees, directors, principal shareholders or
affiliates (within the meaning of the Act) has taken, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result in, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
the Securities or otherwise.
(w) Except as described in the Prospectus, to the best of
the Company's knowledge, the Company owns and has the unrestricted right to use
all material trade secrets, trademarks, trade names, know-how (including all
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), inventions, designs, processes, works of authorship,
computer programs and technical data and information (collectively herein
"Intellectual Property") required for or incident to the operations of the
Company's business, free and clear of and without violating any right, lien, or
claim of others, including without limitation, former employers of its
employees; provided, however, that the possibility exists that other persons or
entities, completely independently of the Company, or employees or agents,
could have developed trade secrets or items of technical information similar or
identical to those of the Company.
(x) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property owned or leased by it free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects, or other restrictions or
equities of any kind whatsoever, other than those referred to in the
Prospectus,
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<PAGE> 9
liens for taxes or assessments not yet due and payable or those that are not
material to the business of the Company.
(y) The Company has obtained such duly executed legally
binding and enforceable agreements as required by the Representative pursuant
to which the Company's Chief Executive Officer and President has agreed not to,
directly or indirectly, offer to sell, sell, grant any option for the sale of,
assign, transfer, pledge, hypothecate or otherwise encumber any of their shares
of Common Stock or other securities of the Company (either pursuant to Rule 144
of the Act or otherwise) or dispose of any beneficial interest therein for
certain periods of up to 60 months subject to earlier release upon the
Company's achievement of certain performance thresholds, following the
effective date of the Registration Statement without the prior written consent
of the Representative. The Company will cause the Transfer Agent, as defined
below, to mark an appropriate legend on the face of stock certificates
representing all of such shares of Common Stock and other securities of the
Company.
(z) Except as disclosed in the Prospectus, the Company
has not incurred any liability and there are no written arrangements or
understandings for services in the nature of a finder's or origination fee with
respect to the sale of the Securities or any other written arrangements,
agreements, understandings, payments or issuances with respect to the Company
or any of its officers, directors, employees or affiliates that may adversely
affect the Underwriters' compensation, as determined by the NASD.
(aa) The Securities have been approved for quotation on
the Nasdaq SmallCap Market of the Nasdaq Stock Market, Inc., subject to
official notice of issuance.
(bb) Neither the Company nor to the Company's best
knowledge any of its respective officers, employees, agents or any other person
acting on behalf of the Company, has, directly or indirectly, given or agreed
to give any money, gift or similar benefit (other than legal price concessions
to customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
governmental agency (domestic or foreign) or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is, or may be in a position to help or
hinder the business of the Company (or assist the Company in connection with
any actual or proposed transaction) which: (a) might subject the Company, or
any other such person to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign); (b) if not given
in the past, might have had a materially adverse effect on the assets, business
or operations of the Company; or (c) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company.
To the best of the Company's knowledge, the Company's internal accounting
controls are sufficient to cause the Company to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(cc) Except as set forth in the Prospectus, and to the
best knowledge of the Company, no officer, director or principal shareholder of
the Company, or any "affiliate" or "associate" (as these terms are defined in
Rule 405 promulgated pursuant to the Act) of any such person or entity or the
Company, has or has had, either directly or indirectly, (i) an interest in
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<PAGE> 10
any person or entity which (A) furnishes or sells services or products which
are furnished or sold or are proposed to be furnished or sold by the Company,
or (B) purchases from or sells or furnishes to the Company any goods or
services, except with respect to the beneficial ownership of not more than 1%
of the outstanding shares of capital stock of any publicly-held entity; or (ii)
a beneficial interest in any contract or agreement to which the Company is a
party or by which it may be bound or affected. Except as set forth in the
Prospectus under "Certain Transactions," there are no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among the Company, and
any officer, director, or principal shareholder of the Company, or any
affiliate or associate of any such person or entity, which is required to be
disclosed pursuant to Rule 404 of Regulation S-B.
(dd) Any certificate signed by any officer of the Company
and delivered to the Underwriters or to Underwriters' Counsel shall be deemed a
representation and warranty by the Company to the Underwriters as to the
matters covered thereby.
(ee) The Company has entered into an employment agreement
with Dennis A. Bakal as described in the Prospectus. Unless waived by the
Representative, the Company shall use its reasonable efforts at reasonable cost
to obtain a key-man life insurance policy in the amount of not less than
$1,000,000 on the life of Mr. Bakal, which policy shall be owned by the Company
and shall name the Company as the sole beneficiary thereunder.
(ff) No securities of the Company have been sold by the
Company within three years prior to the date hereof, except for grants of
options to purchase Common Stock under the Company's 1996 Stock Option Plan or
as disclosed in Part II of the Registration Statement.
(gg) The minute books of the Company have been made
available to Underwriter's Counsel and contain a complete summary of all
material meetings and consent actions of the Board of Directors and
Shareholders of the Company since the date of its incorporation.
2. Purchase, Sale and Delivery of the Securities, Additional
Securities and Agreement to Issue Underwriters' Purchase
Option.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter,
and each Underwriter, severally and not jointly, agree to purchase from the
Company at the price per share and the price per warrant set forth below, that
proportion of the number of Shares and Redeemable Warrants set forth in
Schedule I opposite the name of such Underwriter that such number of Shares and
Redeemable Warrants bears to the total number of Shares and Redeemable
Warrants, respectively, subject to such adjustment as the Underwriters in their
discretion shall make to eliminate any sales or purchases of fractional
Securities, plus any additional numbers of Securities which such Underwriter
may become obligated to purchase pursuant to the provisions of Section 11
hereof.
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<PAGE> 11
(b) In addition, on the basis of the representations,
warranties, covenants and agreements, herein contained, but subject to the
terms and conditions herein set forth, the Company hereby grants an option to
the Underwriters, severally and not jointly, to purchase up to an additional
225,000 Shares and 225,000 Redeemable Warrants from the Company at the prices
set forth below. The option granted hereby will expire 45 days after the date
of this Agreement, and may be exercised in whole or in part from time to time
(but not more than once) only for the purpose of covering over-allotments which
may be made in connection with the offering and distribution of the Additional
Securities upon notice by the Representative to the Company setting forth the
number of Additional Securities as to which the Underwriters are then
exercising the option and the time and date of payment and delivery for such
Additional Securities. Any such time and date of delivery shall be determined
by the Underwriters, but shall not be later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Date, as
defined in paragraph (c) below, unless otherwise agreed to between the
Representative and the Company. In the event such option is exercised, each of
the Underwriters, acting severally and not jointly, shall purchase such number
of Option Securities then being purchased which shall have been allocated to
such Underwriter by the Representative, and which such Underwriter shall have
agreed to purchase, subject in each case to such adjustments as the
Underwriters in their discretion shall make to eliminate any sales or purchases
of fractional Securities. Nothing herein contained shall obligate the
Underwriters to make any over-allotments. No Additional Securities shall be
delivered unless the Firm Securities shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Securities shall be made at the offices of counsel
to the Representative in Atlanta, Georgia, or at such other place as shall be
agreed upon by the Underwriters and the Company. Such delivery and payment
shall be made at 10:00 a.m. (New York City time) on the third full business day
following the date of this Agreement or at such other time and date as shall be
agreed upon by the Representative and the Company (such time and date of
payment and delivery being hereafter called "Closing Date"). In addition, in
the event that any or all of the Additional Securities are purchased by the
Underwriters, payment of the purchase price for, and delivery of certificates
for such Additional Securities shall be made at the above-mentioned office or
at such other place and at such time (such time and date of payment and
delivery being hereinafter called "Option Closing Date") as shall be agreed
upon by the Representative and the Company on the Option Closing Date as
specified in the notice from the Representative to the Company. Delivery of
the certificates for the Firm Securities and the Additional Securities, if any,
shall be made to the Underwriters against payment by the Underwriters of the
purchase price for the Firm Securities and the Additional Securities, if any,
to the order of the Company as the case may be by certified check in New York
Clearing House funds or, at the election of the Representative and the Company,
all or a portion of the funds may be paid by Bank wire transfer of funds or by
Representative's commercial check. Certificates for the Firm Securities and
the Additional Securities, if any, shall be in definitive, fully registered
form, shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Underwriters may request in writing at least
two (2) business days prior to Closing Date or the Option Closing Date, as the
case may be. The certificates or the Depository Trust Corporation electronic
notifications, as the case may be, for the Firm Securities and the Additional
Securities, if any, shall be made available to the Underwriters at the
above-mentioned office or such other
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<PAGE> 12
place as the Underwriters may designate for inspection, checking and packaging
no later than 9:30 a.m. on the last business day prior to Closing Date or the
Option Closing Date, as the case may be.
The purchase price of the Shares and Redeemable
Warrants to be paid by each of the Underwriters, severally and not jointly, to
the Company for the Securities purchased under Clauses (a) and (b) above will
be $______ per Share and $______ per Redeemable Warrant (which price is net of
the Underwriters' discount). The Company shall not be obligated to sell any
Securities hereunder unless all Securities to be sold by the Company are
purchased hereunder.
(d) On the Closing Date, the Company shall issue and sell
to the Underwriters the Underwriters' Purchase Option at a purchase price of
$150.00, which purchase option shall entitle the holders thereof to purchase an
aggregate of 150,000 Shares and 150,000 Warrants. The Underwriters' Purchase
Option shall be exercisable for a period of four (4) years commencing one (1)
year from the effective date of the Registration Statement at an initial
exercise price equal to one hundred fifty percent (150%) of the initial public
offering price of the Shares and Redeemable Warrants. The Underwriter's
Purchase Option Agreement and form of Purchase Option Certificate shall be
substantially in the form filed as an exhibit to the Registration Statement.
Payment for the Underwriters' Purchase Option shall be made on Closing Date.
The Company has reserved and shall continue to reserve a sufficient number of
Shares for issuance upon exercise of the Underwriters' Purchase Option.
3. Public Offering of the Securities. As soon after the
Registration Statement becomes effective and as the Representative deems
advisable, but in no event more than three (3) business days after such
effective date, the Underwriters shall make a public offering of the securities
(other than to residents of or in any jurisdiction in which qualification of
the Securities is required and has not become effective) at the price and upon
the other terms set forth in the Prospectus. The Underwriters may allow such
concessions and discounts upon sales to other dealers as set forth in the
Prospectus.
4. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable and will not at any time, whether before or after the
effective date of the Registration Statement but prior to the Closing Date or
Option Closing Date, if any, file any amendment to the Registration Statement
or supplement to the Prospectus or file any document under the Exchange Act (i)
before termination of the offering of the Securities by the Underwriters, which
the Underwriters shall not previously have been advised and furnished with a
copy, or (ii) to which the Underwriters shall have objected or (iii) which is
not in compliance with the Act or the Exchange Act.
(b) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Underwriters and confirm by
notice in writing: (i) when the Registration Statement, as amended, becomes
effective, if the provisions of Rule 430A
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<PAGE> 13
promulgated under the Act will be relied upon, when the Prospectus has been
filed in accordance with said Rule 430A and when any post-effective amendment
to the Registration Statement becomes effective; (ii) of the issuance by the
Commission of any stop order or of the initiation, or the threatening of any
proceeding, suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of the Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto, or the institution or
proceeding for that purpose; (iii) of the issuance by any state securities
commission of any proceedings for the suspension of the qualification of the
Securities for offering or sale in any jurisdiction or of the initiation, or
the threatening, of any proceeding for that purpose; (iv) of the receipt of any
comments from the Commission; and (v) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information. If the Commission or any state
securities commission or regulatory authority shall enter a stop order or
suspend such qualification at any time, the Company will make every effort to
obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and
substance satisfactory to the Underwriters) or transmit the Prospectus by a
means reasonably calculated to result in filing with the Commission pursuant to
Rule 424(b)(1) (or, if applicable and if consented to by the Underwriters
pursuant to Rule 424(b)(4)) not later than the Commission's close of business
on the earlier of (i) the second business day following the execution and
delivery of this Agreement and (ii) the fifth business day after the effective
date of the Registration Statement.
(d) During such period as the Prospectus is required by
law to be delivered in connection with of the Securities by an underwriter or
dealer, the Company will give the Underwriters notice of its intention to file
or prepare any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Securities which differs
from the corresponding prospectus on file with the Commission at the time the
Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Act), will
furnish the Underwriters with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file any such prospectus to which the Underwriters or Johnson
& Montgomery ("Underwriters' Counsel") shall reasonably object.
(e) The Company shall cooperate in good faith with the
Underwriters, and Underwriters' Counsel, at or prior to the time the
Registration Statement becomes effective, in endeavoring to qualify the
Securities for offering and sale under the securities laws of such
jurisdictions as the Underwriters may reasonably designate, and shall cooperate
with the Underwriters and Underwriters' Counsel in the making of such
applications, and filing such documents and shall furnish such information as
may be required for such purpose; provided, however, the Company shall not be
required to: (i) qualify as a foreign corporation or file a general consent to
service of process in any such jurisdiction; or (ii) qualify or "blue sky" in
any state which requires a lock-up of securities held by officers, directors or
affiliates of the Company for a period greater than five (5) years (or such
earlier date if the Representative has exercised the Underwriters' Purchase
Option). In each jurisdiction where such qualification shall
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<PAGE> 14
be effected, the Company will, unless the Underwriters agree that such action
is not at the time necessary or advisable, use all reasonable efforts to file
and make such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such qualification.
(f) During the time when the Prospectus is required to be
delivered under the Act, the Company shall use all reasonable efforts to comply
with all requirements imposed upon it by the Act and the Exchange Act, as now
and hereafter amended, so far as necessary to permit the continuance of sales
of or dealings in the Securities in accordance with the provisions hereof and
the Prospectus, or any amendments or supplements thereto. If at any time when
the Prospectus relating to the Securities is required to be delivered under the
Act, any event shall have occurred as a result of which, in the opinion of
counsel for the Company or Underwriters' Counsel, the Prospectus, as then
amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will notify the Underwriters
promptly and prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act, each such amendment or
supplement to be reasonably satisfactory to Underwriters' Counsel, and the
Company will furnish to the Underwriters a reasonable number of copies of such
amendment or supplement.
(g) As soon as practicable, but in any event not later
than 90 days after the end of the 12-month period commencing on the day after
the end of the fiscal quarter of the Company during which the effective date of
the Registration Statement occurs, the Company shall make generally available
to its security holders, in the manner specified in Rule 158(b) of the Act, and
to the Underwriters, an earning statement which will be in such form and detail
required by, and will otherwise comply with, the provisions of Section 11(a)
and Rule 158(a) of the Act, which statement need not be audited unless required
by the Act, covering a period of at least 12 consecutive months after the
effective date of the Registration Statement.
(h) During a period of five (5) years after the date
hereof and provided that the Company is required to file reports with the
Commission under Section 12 of the Exchange Act, the Company will provide the
Representative's director Designee or Attendee, as defined herein, copies of
the below described documents prior to release where applicable and will
furnish to its shareholders and to the Underwriter as soon as practicable after
the end of the Company's fiscal year end, annual reports (including financial
statements audited by independent public accountants):
(i) as soon as they are available, copies of all
reports (financial or other) mailed to shareholders;
(ii) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the Commission, the
NASD or any securities exchange;
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<PAGE> 15
(iii) every press release and every material news
item or article of interest to the financial community in respect of the
Company and any future subsidiaries or their affairs which was released or
prepared by the Company;
(iv) any additional information of a public nature
concerning the Company and any future subsidiaries or their respective
businesses which the Underwriters may reasonably request;
(v) a copy of any Schedule 13D, 13G, 14D-1, 13E-3
or 13E-4 received or filed by the Company from time to time;
(vi) such other information as may be reasonably
requested with reference to the property, business, shareholders and affairs of
the Company and its subsidiaries.
During such five-year period, if the Company has active
subsidiaries, the foregoing financial statements will be on a consolidated
basis to the extent that the accounts of the Company and its subsidiaries are
consolidated, and will be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(i) For as long as the Company is required to file
reports with the Commission under Section 12 of the Exchange Act, the Company
will maintain a Transfer Agent and a Warrant Agent, which may be the same
entity, and, if necessary under the jurisdiction of incorporation of the
Company, a Registrar (which may be the same entity as the Transfer and Warrant
Agent) for its Common Stock and Redeemable Warrants.
(j) The Company will furnish to the Underwriters or
pursuant to the Underwriters' direction, without charge, at such place as the
Underwriters may designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or post-effective amendments
thereto (two of which copies will be signed and will include all financial
statements and exhibits), the Prospectus, and all amendments and supplements
thereto, including any prospectus prepared after the effective date of the
Registration Statement, in each case as soon as available and in such
quantities as the Underwriters may reasonably request.
(k) Neither the Company, nor its officers or directors,
nor affiliates of any of them (within the meaning of the Act) will take,
directly or indirectly, any action designed to, or which might in the future
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any securities of the Company.
(1) The Company shall apply the net proceeds from the
sale of the Securities in substantially the manner, and subject to the
provisions, set forth under "Use of Proceeds" in the Prospectus. No portion of
the net proceeds will be used directly or indirectly to acquire any securities
issued by the Company.
(m) The Company shall timely file all such reports, forms
or other documents as may be required (including but not limited to a Form SR
as may be required pursuant to Rule 463 under the Act) from time to time, under
the Act and the Exchange Act and all such reports,
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<PAGE> 16
forms and documents filed will comply as to form and substance with the
applicable requirements under the Act and the Exchange Act.
(n) The Company shall furnish to the Underwriters as
early as practicable prior to each of the date hereof, the Closing Date and the
Option Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than forty-five
(45) days prior to the effective date of the Registration Statement) which have
been read by the Company's independent public accountants, as stated in their
letters to be furnished pursuant to Section 6(k) hereof.
(o) For a period of five (5) years from the Closing Date
(or such earlier date if the Representative has exercised the Underwriters'
Purchase Option), the Company shall furnish to the Underwriters, at the
Company's sole expense, (i) daily consolidated transfer sheets relating to the
Securities; (ii) a list of holders of Securities upon the Representative's
reasonable request; (iii) a list of, if any, the securities positions of
participants in the Depository Trust Company.
(p) For a period of five (5) years after the effective
date of the Registration Statement (or such earlier date if the Representative
has exercised the Underwriters' Purchase Option), the Company shall use its best
efforts to cause one (1) individual (the "Designee") selected by the
Representative to be elected to the Board of Directors of the Company (the
"Board"), if requested by the Representative. Alternatively, the
Representative shall be entitled to appoint an individual who shall be
permitted to attend, but not vote at, all meetings of the Board (the
"Attendee") and to receive all notices and other correspondence and
communications sent by the Company to members of the Board. Upon election to
the Board, the Designee shall be entitled to call special meetings of the Board
(but not more than once per month unless with the request of another member of
the Board) and to serve on the Audit or Compensation Committees. The Designee
may be removed by the Board only for "Cause" as that term is defined in the
employment agreement between the Company and Dennis A. Bakal. The Company
shall reimburse the Designee or Attendee for his or her out-of-pocket expenses
reasonably incurred and authorized in advance by the Company in connection
with his or her attendance of the Board meetings and pay such individual a fee
of $1,000 month. The Designee or Attendee shall also be entitled to
participate in any stock option plan of the Company for non-employees. To the
extent permitted by law, the Company agrees to indemnify and hold the Designee
(as a director) or Attendee harmless against any and all claims, actions,
awards and judgements arising out of his or her service as a director or
Attendee and in the event the Company maintains a liability insurance policy
affording coverage for the action of its officer and directors, to include
such Designee as an insured under such policy.
(q) For a period equal to the lesser of (i) five (5)
years from the date hereof, or (ii) the sale to the public of the Warrant
Shares, the Company will use its best efforts not to take any action or actions
which may prevent or disqualify the Company's use of Forms S-1 or, if
applicable, S-2 and S-3 (or other appropriate form) for the registration under
the Act of the Warrant Shares.
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<PAGE> 17
(r) For a period of five (5) years from the date hereof,
the Company shall use its best efforts at its cost and expense to maintain the
listing of the Securities on the Nasdaq SmallCap Market or Nasdaq National
Market System if the Company meets all of the requirements and qualifications
promulgated by the NASD, provided, however, that the Company may elect, with
the consent of the Representative which shall not be unreasonably withheld, to
have the Securities listed on the New York Stock Exchange in lieu of (or in
addition to) listing on Nasdaq.
(s) On or before the effective date of the Registration
Statement, the Company shall retain or make arrangements to retain a financial
public relations firm and a publicist reasonably satisfactory to the
Representative which shall be continuously engaged from such engagement date to
a date 24 months from the effective date of the Registration Statement. Upon
the expiration of such two (2) year period, such engagement shall continue
until the expiration of any lock-up period provided for in the lock-up
agreement with the Company's Chief Executive Officer and President subject to
the Company's right to terminate any such firm with the consent of the Designee
or Attendee, which consent will not be unreasonably withheld. Further, the
Company shall engage for a period of two years at least three firms (one of
which shall be the Representative and one of which shall be Standard & Poor's
Stock Reports Professional Edition) which are reasonably acceptable to the
Representative to provide industry research and advice to the Company. Upon
the expiration of such two-year period, such engagement shall continue until
the expiration of any lock-up period provided hereunder, subject to the
Company's right to terminate any such firm with the consent of the Designee or
Attendee, which consent will not be unreasonably withheld.
(t) The Company shall (i) file a Form 8-A with the
Commission providing for the registration under the Exchange Act of the
Securities and (ii) as soon as practicable, but in no event more than five (5)
business days after the effective date of the Registration Statement promptly
take all necessary and appropriate actions to be included in Standard and
Poor's Corporation Descriptions and/or Moody's OTC Manual and to continue such
inclusion for a period of not less than five (5) years.
(u) Following the Effective Date of the Registration
Statement and for a period of five (5) years thereafter (or such earlier date
if the Representative has exercised the Underwriters' Purchase Option), the
Company shall, at its sole cost and expense, prepare and file such blue sky
trading applications with such jurisdictions as the Representative may
reasonably request after consultation with the Company, and on the
Representative's reasonable request, furnish the Underwriters with a secondary
trading survey prepared by securities counsel to the Company.
(v) The Company shall not amend or alter any term of any
written employment agreement nor lock-up agreement between the Company and any
executive officer, director or affiliate, during the term thereof, in a manner
more favorable to such employee or entity, without the express written consent
of the Representative, until such time as the Underwriter's Purchase Option has
been exercised in full.
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<PAGE> 18
(w) Until the completion of the distribution of the
Securities, the Company shall not, without the prior written consent of the
Representative and Underwriters' Counsel, which consent shall not be
unreasonably withheld, issue, directly or indirectly, any press release or
other communication or hold any press conference with respect to the Company or
its activities or the offering contemplated hereby, other than trade releases
issued in the ordinary course of the Company's business consistent with past
practices with respect to the Company's operations.
(x) Commencing one (1) year from the date hereof, upon
the exercise of any Redeemable Warrant, the exercise of which was solicited by
the Underwriters in accordance with the applicable rules and regulations of the
NASD prevailing at the time of such solicitation, the Company shall pay to the
soliciting Underwriter a fee of 5% of the aggregate exercise price of such
Redeemable Warrant (the "Warrant Solicitation Fee") within five (5) business
days of such exercise, so long as the Underwriters provided bona fide services
in exchange for the Warrant Solicitation Fee and the Underwriters have been
specifically designated in writing by the holders of the Redeemable Warrant as
the broker. The Company further agrees that it will not solicit the exercise
of any Redeemable Warrant other than through the Underwriters, unless either:
(i) the Underwriters cannot legally solicit the exercise of the Redeemable
Warrants at the time of such solicitation; (ii) the Representative declines, in
writing, to solicit the exercise of the Redeemable Warrants within five (5)
business days of such a written request by the Company; or (iii) the
Representative consents to the solicitation of the exercise of the Redeemable
Warrants by the Company or another entity.
(y) The Company will use its best efforts to maintain its
registration under the Exchange Act in effect for a period of five (5) years
from the Closing Date.
(z) For a period of twenty-four (24) months commencing on
the effective date of the Registration Statement (or such later date if at
least 20% of the Redeemable Warrants remain unexercised or otherwise
outstanding), except with the written consent of the Representative, which
consent shall not be unreasonably withheld, the Company will not issue or sell,
directly or indirectly, any shares of its capital stock, or sell or grant
options, or warrants or rights to purchase any shares of its capital stock,
except pursuant to (i) this Agreement, (ii) the Underwriters' Purchase Option,
(iii) warrants and options of the Company heretofore issued and described in
the Prospectus, and (iv) the grant of options and the issuance of shares upon
exercise of options issued or to be issued under the Company's 1996 Stock
Option Plan which is described in the Prospectus; except that, during such
period, the Company may issue securities in connection with an acquisition,
merger or similar transaction, provided that such securities are not publicly
registered or issued pursuant to Regulation S of the Act, and the acquirer of
the securities is not granted registration rights with respect thereto which
are effective prior to 24 months after the effective date of the Registration
Statement and until the Underwriters' Purchase Option is exercised, the
Representative grants its consent, which consent will not be unreasonably
withheld. Notwithstanding anything to the contrary set forth in the prior
sentence, the Company may not issue any class or series of its preferred stock
for a period of 24 months from the effective date of the Registration Statement
(or such later date if at least 20% of the Redeemable Warrants remain
unexercised or otherwise outstanding) without the unanimous vote or consent of
the members (eligible to vote under applicable law) of the Board of Directors
of the Company. Prior to the
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<PAGE> 19
effective date of the Registration Statement, the Company will not issue any
options or warrants without the prior written consent of the Underwriters.
(aa) The Company will not file any registration statement
relating to the offer or sale of any of the Company's securities, except for
any registration statement on Form S-8, during the 12 months following the
Closing Date without the Underwriters' prior written consent, which consent
will not be unreasonably withheld.
(bb) The Company, for a period of twenty-four (24) months
following the effective date of the Registration Statement (or such earlier
date if the Representative has exercised the Underwriters' Purchase Option),
shall not redeem any of its securities, and shall not pay any dividends or make
any other cash distribution in respect of its securities in excess of the
amount of the Company's current or retained earnings derived after the
effective date of the Registration Statement without obtaining the
Representative's prior written consent, which consent shall not be unreasonably
withheld. The Representative shall either approve or disapprove such
contemplated redemption of securities or dividend payment or distribution
within five (5) business days from the date the Representative receive written
notice of the Company's proposal with respect thereto; a failure of the
Representative to respond within the five (5) business day period shall be
deemed approval of the transaction.
(cc) The Company maintains and will continue to maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary
in order to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences, and
(v) all quarterly reports filed on Form 10-Q or 10-QSB shall be reviewed by the
Company's accountant in accordance with SAS 71.
(dd) The Company, for a period of twenty-four (24) months
following the effective date of the Registration Statement (or such earlier
date if the Representative has exercised the Underwriters' Purchase Option),
shall implement the following procedures:
(i) Sixty days prior to fiscal year end, the
President will present to the Board of Directors a business plan to be adopted
by the Board at fiscal year end. The business plan will include the following:
a) monthly projections - including
balance sheet, profit/loss statement and cash
flow statements with underlying assumptions
b) upon Board approval, this document
becomes the annual budget
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<PAGE> 20
(ii) No later than the end of each month, the
Company will provide the Board with comparative financial statements for the
previous month showing actual balance sheet, profit/loss and cash flow vs.
budget with written explanations for deviation in excess of $50,000 or 10% of
line item presented (where the amount in such line item is material).
(iii) Monthly Board meetings (which may be by
telephone) to be held within 25 days of the end of the previous month to
include, if appropriate, discussion of the Company's quarterly report on Form
10-Q or 10- QSB and approval of any changes to the business plan based on
change of circumstances.
(iv) Implementation of a compensation committee,
which will be headed by an independent director or include the Designee, if
any, to make recommendations to the Board for compensation for all consultants,
officers and directors.
(v) Implementation of an audit committee which
will have as a member the Designee, if any, and one independent Director.
If the Company fails to comply with or breaches the provisions of Section 4(g),
(h), (i), (m), (n), (o), (r), (s), (t), (w), (y), (cc) or (dd) of this
Agreement in any material manner which continues for a period in excess of 90
days, the Underwriters may cause the Company to retain one or more consultants,
accountants or other professionals to assist the Company in curing the breach
or failure and the Company will reimburse such third party directly for
reasonable costs and expenses incurred.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the
Closing Date and the Option Closing Date (to the extent not paid at the Closing
Date) all expenses and fees (other than fees of Underwriters' Counsel, except
as provided in (iv) below) incident to the performance of the obligations of
the Company under this Agreement, including, without limitation: (i) the fees
and expenses of accountants and counsel for the Company; (ii) all costs and
expenses incurred in connection with the preparation, duplication, printing,
filing, delivery and mailing (including the payment of postage with respect
thereto) of the Registration Statement and the Prospectus and any amendments
and supplements thereto and the printing, mailing and delivery of this
Agreement, the Selected Dealer Agreements, the Agreement Among Underwriters,
Underwriters Questionnaires, Powers of Attorney and related documents,
including the cost of all copies thereof and of the Preliminary Prospectuses
and of the Prospectus and any amendments thereof or supplements thereto
supplied to the Underwriters in quantities as hereinabove stated; (iii) the
printing, engraving, issuance and delivery of the Securities including any
transfer or other taxes payable thereon; (iv) disbursements and fees of
Underwriters' Counsel in connection with the qualification of the Securities
under state securities or "Blue Sky" laws and determination of the status of
such securities under legal investment laws, including the costs of printing
and mailing the "Preliminary Blue Sky Memorandum," the "Supplemental Blue Sky
Memorandum" and "Legal Investments Survey," if any, which Underwriters' Counsel
Blue Sky fees (exclusive of filing fees and disbursements) shall be $1,000 for
each state in which application for registration or qualification is made up to
an aggregate of $35,000 for all states combined; (v) advertising
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<PAGE> 21
costs and expenses, including but not limited to costs and expenses in
connection with the "road show," information meetings and presentations, and
prospectus memorabilia all of which costs and expenses shall be approved in
advance by the Company; (vi) fees and expenses of the Transfer Agent; (vii) the
fees payable to the NASD; (viii) the fees and expenses incurred in connection
with the listing of the Securities on the Nasdaq SmallCap Market and any other
fees for application and admission to a registered stock exchange for which the
Representative requires, after consultation with the Company, the Company to
register the Securities; (ix) fees and expenses for any tombstone
advertisements reasonably requested by the Representative; (x) closing
binders; and (xi) lucite cubes containing a miniature definite Prospectus. All
fees and expenses payable to the Underwriters shall be payable at the Closing
Date or Option Closing Date, as applicable.
(b) If this Agreement is terminated by reason of any
action by the Representative in accordance with the provisions of Section 6,
Section 10(a) or Section 12, the Company shall reimburse and indemnify the
Underwriters for the actual and documented out-of-pocket expenses of the
Representative reasonably incurred in connection with the transactions
contemplated hereby; provided, however that the Company's reimbursement
obligation pursuant hereto shall be limited to $150,000.
(c) The Company further agrees that, in addition to the
expenses payable pursuant to subsection (a) of this Section 5, it will pay to
the Underwriters a non-accountable expense allowance equal to two and one-half
percent (2.5%) of the gross proceeds received by the Company from the sale of
the Securities. The Company will pay the non-accountable expense allowance on
the Closing Date by direct payment to third parties for fees and expenses
including, but not limited to, fees and expenses of Underwriter's Counsel and
the balance by deduction from the proceeds of the offering contemplated herein.
In the event the Underwriters elect to exercise the over-allotment option
described in Section 2(b) hereof, the Company further agrees to pay to the
Underwriters on the Option Closing Date (by deduction from the proceeds of the
offering) a non-accountable expense allowance equal to two and one-half percent
(2 1/2%) of the gross proceeds received by the Company from the sale of the
Additional Securities.
6. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters hereunder shall be subject to the continuing accuracy of
the representations and warranties of the Company herein as of the Closing Date
and the Option Closing Date, if any, as if they had been made on and as of the
Closing Date or the Option Closing Date, as the case may be; the accuracy on
and as of the Closing Date or Option Closing Date, if any, of the statements of
officers of the Company made pursuant to the provisions hereof; and the
performance by the Company on and as of the Closing Date and the Option Closing
Date, if any, of each of its covenants and obligations hereunder and to the
following further conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M., New York City time, on the date of this
Agreement or such later date and time as shall be consented to in writing by
the Underwriters, and, at the Closing Date and the Option Closing Date, if any,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been instituted
or shall be pending or contemplated by the Commission and any request on the
part of the Commission for
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<PAGE> 22
additional information shall have been complied with to the reasonable
satisfaction of Underwriter and Underwriters' Counsel. If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, the price of the
Securities and any price-related information previously omitted from the
effective Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the Act
within the prescribed time period, and prior to the Closing Date the Company
shall have provided evidence satisfactory to the Underwriters of such timely
filing, or a post-effective amendment providing such information shall have
been promptly filed and declared effective in accordance with the requirements
of Rule 430A of the Act.
(b) The Underwriters shall not have advised the Company
that the Registration Statement, or any amendment thereto, in the Underwriters'
reasonable opinion contains an untrue statement of fact which, is material or
omits to state a fact which is material and is required to be stated therein or
is necessary to make the statements therein not misleading, or that the
Prospectus, or any supplement thereto, in the Underwriters' reasonable opinion,
is material, contains an untrue statement of or omits to state a fact which is
material and is required to be stated therein or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) On or prior to the Closing Date and the Option
Closing Date, as the case may be, the Underwriters shall have received from
Underwriters' Counsel, such opinion or opinions with respect to the
organization of the Company the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as the Underwriters
reasonably may request and such counsel shall have received such papers and
information as they request to enable them to pass upon such matters.
(d) At the Closing Date and the Option Closing Date, if
any, the Underwriters shall have received an opinion of Nelson Mullins Riley &
Scarborough, L.L.P., counsel to the Company, dated the Closing Date, or Option
Closing Date, as the case may be, addressed to the Underwriter and in form and
substance satisfactory to Underwriters' Counsel, to the effect that:
(i) The Company: (A) has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Georgia with full corporate power and authority to own and operate its
properties and to carry on its business as set forth in the Registration
Statement and Prospectus; (B) to the best knowledge of such counsel, the
Company is duly registered or qualified as a foreign corporation in all
jurisdictions in which by reason of maintaining an office in such jurisdiction
or by owning or leasing real property in such jurisdiction it is required to be
so registered or qualified except where failure to register or qualify does not
have, singly or in the aggregate, a Material Adverse Effect; and (C) to the
best knowledge of such counsel, the Company has not received any notice of
proceedings relating to the revocation or modification of any such registration
or qualification.
(ii) The Registration Statement, each Preliminary
Prospectus that has been circulated and the Prospectus and any post-effective
amendments or supplements thereto (other than the financial statements,
schedules and other financial and statistical data included therein, including
such information set forth under the caption "Management's Discussion and
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<PAGE> 23
Analysis of Financial Condition and Results of Operations", as to which no
opinion need be rendered) comply as to form in all material respects with the
requirements of the Act and the conditions for use of a registration statement
on Form SB-2 have been satisfied by the Company. Such counsel shall state that
such counsel has participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company and representatives of the Underwriters at which
the contents of the Registration Statement, the Prospectus and related matters
were discussed and, although such counsel is not passing upon, has not
undertaken to determine independently and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus, on the basis of the foregoing, no facts
have come to the attention of such counsel which lead them to believe that
either the Registration Statement or any amendment thereto at the time such
Registration Statement or amendment became effective or the Prospectus as of
the date thereof contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or to make the
statements therein in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements and schedules and other financial and
statistical data included in the Registration Statement or Prospectus,
including such information set forth under caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations," or with respect to
statements or omissions made therein in reliance upon information furnished in
writing to the Company on behalf of any Underwriter expressly for use in the
Registration Statement or the Prospectus).
(iii) To the best of such counsel's knowledge, the
Company has a duly authorized, issued and outstanding capitalization as set
forth in the Prospectus as of the date indicated therein, under
"Capitalization." The Shares, the Redeemable Warrants, the Underwriters'
Purchase Option, the Underwriters' Warrants, and the Warrant Shares conform in
all material respects to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof, to counsel's best
knowledge, are not subject to personal liability by reason of being such
holders, and none of such securities were issued in violation of the preemptive
rights of any holder of any security of the Company.
(iv) The issuance of the Shares, Redeemable
Warrants and the Warrant Shares have been duly authorized and when issued and
paid for in accordance with this Agreement and the Warrant Agreement,
respectively, will be validly issued, fully paid and non-assessable securities
of the Company. The holders of the Securities when issued and paid for, will
not be subject to personal liability by reason of being such holders. To the
best of such counsel's knowledge, the Securities are not and will not be
subject to the preemptive or similar contractual rights of any shareholder of
the Company. The certificates representing the Shares and Redeemable Warrants
will comply with all applicable requirements of Georgia law.
(v) Based solely on telephonic, verbal
confirmation provided to such counsel by the staff of the Commission, the
Registration Statement and all post-effective amendments, if any, have become
effective under the Act, and, if applicable, filing of all pricing information
has been timely made in the appropriate form under Rule 430A, and, to the best
of
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<PAGE> 24
such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and to the best of such counsel's
knowledge, no proceedings for that purpose have been instituted or are pending
or threatened or contemplated under the Act; and any required filing of the
Prospectus pursuant to Rule 424(b) has been made.
(vi) To the best of such counsel's knowledge, (A)
there are no material contracts or other documents required to be described in
the Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement other than those described in the Registration Statement
and the Prospectus and filed as exhibits thereto, and (B) the descriptions in
the Registration Statement and the Prospectus and any supplement or amendment
thereto regarding such material contracts or other documents to which the
Company is a party or by which it is bound, are accurate in all material
respects and fairly represent the information required to be shown by
Regulation SB and the Act.
(vii) This Agreement, the Underwriters' Purchase
Option Agreement and the Warrant Agreement have each been duly and validly
authorized, executed and delivered by the Company, and assuming that it is a
valid and binding agreement of the Underwriters, as the case may be,
constitutes a legal, valid and binding agreement of the Company enforceable as
against the Company in accordance with its respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law or pursuant to public policy).
(viii) Neither the execution or delivery by the
Company of this Agreement, the Underwriters' Purchase Option Agreement, and the
Warrant Agreement, nor its performance hereunder or thereunder, nor its
consummation of the transactions contemplated herein or therein, nor the
conduct of its business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto, nor the issuance of the
securities conflicts with or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or constitutes or
will constitute a material default under, or result in the creation or
imposition of any material lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever upon any
property or assets (tangible or intangible) of the Company pursuant to the
terms of (A) the Articles of Incorporation, as amended, of the Company, or (B)
to the best knowledge of such counsel, and except to the extent it would not
have a Material Adverse Effect on the Company, any statute, judgment, decree,
order, rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body,
having jurisdiction over the Company or any of its respective activities or
properties.
(ix) No consent, approval, authorization or order,
and no filing with, any court, regulatory body, government agency or other body
(other than such as may be required by the NASD or under state securities laws,
as to which no opinion need be rendered) is required in connection with the
issuance by the Company of the Securities pursuant to the Prospectus and the
Registration Statement, the performance of this Agreement, the Underwriters'
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<PAGE> 25
Purchase Option and the Warrant Agreement by the Company, and the taking of any
action by the Company contemplated hereby or thereby, which has not been
obtained.
(x) To the best of such counsel's knowledge,
except as described in the Prospectus, no person, corporation, trust,
partnership, association or other entity holding securities of the Company has
the contractual right to include and/or register any securities of the Company
in the Registration Statement, require the Company to file any registration
statement or, if filed, to include any security in such registration statement
for twelve months from the date hereof.
(xi) The Securities have been approved for
quotation on the Nasdaq SmallCap Market.
In rendering such opinion such counsel may rely, (A) as to
matters involving the application of laws other than the laws of the United
States, the corporate laws of Georgia and jurisdictions in which they are
admitted, to the extent such counsel deems proper and to the extent specified
in such opinion, if at all, upon an opinion or opinions (in form and in
substance reasonably satisfactory to Underwriters' Counsel) of other counsel
reasonably acceptable to Underwriters' Counsel, familiar with the applicable
laws, and (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company; provided, that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and, in their
opinion, the Underwriters and they are justified in relying thereon.
(e) On or prior to each of the Closing Date and the
Option Closing Date, if any, Underwriters' Counsel shall have been furnished
such documents, certificates and opinions as they may reasonably require for
the purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
(f) Prior to the Closing Date and the Option Closing
Date, if any: (i) there shall have been no material adverse change nor
development involving a prospective change in the condition, financial or
otherwise, prospects or the business activities of the Company, whether or not
in the ordinary course of business, from the latest dates as of which such
condition is set forth in the Registration Statement and Prospectus; (ii) there
shall have been no transaction, not in the ordinary course of business, entered
into by the Company, from the latest date as of which the financial condition
of the Company is set forth in the Registration Statement and Prospectus which
is materially adverse to the Company; (iii) the Company shall not be in
material default under any provision of any instrument relating to any
outstanding indebtedness; (iv) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus; (v) no action, suit or proceeding, at law or in
equity, shall have been pending or to its knowledge threatened against
25
<PAGE> 26
the Company, or affecting any of its properties or businesses before or by any
court or federal or state commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding may materially adversely
affect the business, operations, prospects or financial condition or income of
the Company, except as set forth in the Registration Statement and Prospectus;
and (vi) no stop order shall have been issued under the Act and no proceedings
therefor shall have been initiated, threatened or contemplated by the
Commission.
(g) At the Closing Date and the Option Closing Date, if
any, the Underwriters shall have received a certificate of the Company signed
by the principal executive officer and by the chief financial or chief
accounting officer of the Company, dated the Closing Date or Option Closing
Date, as the case may be, to the effect that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, as if made on and as of the
Closing Date or the Option Closing Date, as the case may be, and the Company
has complied with all agreements and covenants and satisfied all conditions
contained in this Agreement on its part to be performed or satisfied at or
prior to such Closing Date or Option Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the best of each of such person's
knowledge, are contemplated or threatened under the Act;
(iii) The Registration Statement and the Prospectus
and, if any, each amendment and each supplement thereto, contain all material
statements and information required to be included therein, and none of the
Registration Statement, the Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading and
neither the Preliminary Prospectus nor any supplement thereto includes any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus and
except as otherwise contemplated therein: (A) the Company has not incurred up
to and including the Closing Date or the Option Closing Date as the case may
be, other than in the ordinary course of its business, any material liabilities
or obligations, direct or contingent; (B) the Company has not paid or declared
any dividends or other distributions on its capital stock; (C) the Company has
not entered into any transactions not in the ordinary course of business; (D)
there has not been any change in the capital stock or any increase in long-term
debt or any increase in the short-term borrowings (other than any increase in
the short term borrowings in the ordinary course of business) of the Company;
(E) the Company has not sustained any material loss or damage to its property
or assets, whether or not insured; (F) there is no litigation which is pending
or threatened against the Company
26
<PAGE> 27
which is required to be set forth in an amended or supplemented Prospectus
which has not been set forth;
(v) Neither the Company nor any of its officers
or affiliates shall have taken, and the Company, its officers and affiliates
will not take, directly or indirectly, any action designed to, or which might
reasonably be expected to, cause or result in the stabilization or manipulation
of the price of the Company's securities to facilitate the sale or resale of
the Shares.
References to the Registration Statement and the Prospectus in
this subsection (g) are to such documents as amended and supplemented at the
date of such certificate.
(h) By the effective date of the Registration Statement,
the Underwriters shall have received clearance from the NASD as to the amount
of compensation allowable or payable to the Underwriters, as described in the
Registration Statement.
(i) At the time this Agreement is executed, the
Representative shall have received a letter, dated such date, addressed to the
Representative in form and substance satisfactory in all respects (including
the non-material nature of the changes or decreases, if any, referred to in
clause (iii) below) to the Underwriters, from Arthur Andersen LLP:
(i) confirming that they are independent public
accountants with respect to the Company within the meaning of the Act;
(ii) stating that it is their opinion that the
financial statements of the Company included in the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Act;
(iii) stating that, on the basis of a limited
review which included a reading of the latest available unaudited interim
condensed financial statements of the Company (with an indication of the date
of the latest available unaudited interim condensed financial statements), a
reading of the latest available minutes of the shareholders and board of
directors and the various committees of the boards of directors of the Company,
consultations with officers and other employees of the Company responsible for
financial and accounting matters and other specified procedures and inquiries,
all of which have been agreed to by the Representative, nothing has come to
their attention which would lead them to believe that (A) the unaudited
condensed financial statements of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act or are not fairly presented in conformity
with generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements of the Company
included in the Registration Statement, or (B) at a specified date not more
than five (5) days prior to the effective date of the Registration Statement,
there has been any change in the capital stock, or any increase in total
borrowings of the Company, or any decrease in the shareholders' equity or
working capital of the Company as compared with amounts shown in the financial
statements included in the Registration Statement, other than as set forth in
or contemplated by the Registration Statement, or, if there was any change or
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<PAGE> 28
decrease, setting forth the amount of such change or decrease, and (C) during
the period from the closing date of the latest statement of income included in
the Prospectus to a specified date not more than five (5) days prior to the
effective date of the Registration Statement, there was any decrease in
revenue, net income or earnings per common share of the Company, in each case
as compared with the corresponding period of the prior year other than as set
forth in or contemplated by the Registration Statement, or, if there was any
such decrease, setting forth the amount of such decrease;
(iv) stating that they have compared specific
dollar amounts, numbers of Securities, percentages of revenue and earnings,
statements and other financial information pertaining to the Company set forth
in the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures did not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement; and
(v) statements as to such other matters incident
to the transaction contemplated hereby as the Underwriters may reasonably
request.
(j) At the Closing Date and the Option Closing Date, if
any, the Underwriters shall have received from Arthur Andersen LLP, a letter,
dated as of the Closing Date, or Option Closing Date, as the case may be, to
the effect that they reaffirm that statements made in the letter furnished
pursuant to Subsection (i) of this Section, except that the specified date
referred to shall be a date not more than five days prior to the Closing Date
and, if the Company has elected to rely on Rule 430A of the Rules and
Regulations, to the further effect that they have carried out procedures as
specified in clause (iii) of subsection (i) of this Section with respect to
certain amounts, percentages and financial information as specified by the
Underwriters and deemed to be a part of the Registration Statement pursuant to
Rule 430A(b) and have found such amounts, percentages and financial information
to be in agreement with the records specified in such clause (iii).
(k) On each of the Closing Date and the Option Closing
Date, if any, there shall have been duly tendered to the Underwriters for the
several Underwriters' accounts the appropriate number of Securities.
(l) No order suspending the sale of the Securities in any
jurisdiction designated by the Underwriters pursuant to subsection (e) of
Section 4 hereof shall have been issued on either the Closing Date or the
Option Closing Date, if any, and no proceedings for that purpose shall have
been instituted or to its knowledge or that of the Company shall be
contemplated.
If any condition to the Underwriters' obligations hereunder to
be fulfilled prior to or at the Closing Date or the Option Closing Date, as the
case may be, is not so fulfilled, the
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<PAGE> 29
Underwriters may terminate this Agreement or, if the Underwriters so elect, it
may waive any such conditions which have not been fulfilled or extend the time
for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each of the Underwriters, including specifically each person who may be
substituted for an Underwriter as provided in Section 11 hereof and each
person, if any, who controls any Underwriter ("controlling person") within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all losses, claims, damages, expenses or liabilities, joint or several
(and actions in respect thereof), whatsoever (including but not limited to any
and all expenses whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever), as such are incurred, to which such Underwriter or such
controlling person may become subject under the Act, the Exchange Act or any
other federal or state statutory laws or regulations at common law or otherwise
or under the laws of foreign countries arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained (i) in any
Preliminary Prospectus (except that the indemnification contained in this
paragraph with respect to any preliminary prospectus shall not inure to the
benefit of the Underwriter or to the benefit of any person controlling the
Underwriter on account of any loss, claim, damage, liability or expense arising
from the sale of the Securities by the Underwriter to any person if a copy of
the Prospectus, as amended or supplemented, shall not have been delivered or
sent to such person within the time required by the Act, and the untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in such Preliminary Prospectus was corrected in the
Prospectus, as amended and supplemented, and such correction would have
eliminated the loss, claim, damage, liability or expense), the Registration
Statement or the Prospectus (as from time to time amended and supplemented);
(ii) in any post-effective amendment or amendments or any new registration
statement and prospectus in which is included securities of the Company issued
or issuable upon exercise of the Underwriters' Purchase Option; or (iii) in any
application or other document or written communication (in this Section 7
collectively called "application") executed by the Company or based upon
written information furnished by the Company in any jurisdiction in order to
qualify the Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq Stock Market,
Inc. or any other securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company with respect to any Underwriter by or on
behalf of such Underwriter expressly for use in any Preliminary Prospectus, the
Registration Statement or Prospectus, or any amendment thereof or supplement
thereto, in any post-effective amendment, new registration statement or
prospectus or in any application, as the case may be, or (iv) any failure of
the Company to comply with any provision of this Underwriting Agreement
resulting in a claim or loss to the Underwriters.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Company may have at common law or
otherwise.
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<PAGE> 30
(b) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the Registration Statement, and each other
person, if any, who controls the Company within the meaning of Section 20 of
the Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to the Underwriters but only with respect to
statements or omissions, if any, made in any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto in any post-effective amendment, new registration statement or
prospectus, or in any blue sky application or any other such application made
in reliance upon, and in strict conformity with, written information furnished
to the Company with respect to any Underwriter by such Underwriter expressly
for use in such Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment thereof or supplement thereto or in any
post-effective amendment, new registration statement or prospectus, or in any
such application, provided that such written information or omissions only
pertain to disclosures in the Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment thereof or supplement thereto, in any
post-effective amendment, new registration statement or prospectus or in any
such application, provided, further, that the liability of each Underwriter to
the Company shall be limited to the amount of the net proceeds of the Offering
received by the Company. The Company acknowledges that the statements with
respect to the public offering of the Securities set forth under the heading
"Underwriting" and the stabilization legend and the last paragraph of the cover
page in the Prospectus have been furnished by the Underwriters expressly for
use therein and any information furnished by or on behalf of the Underwriter
filed in any jurisdiction in order to qualify the Securities under state
securities laws or filed with the Commission, the NASD or any securities
exchange constitute the only information furnished in writing by or on behalf
of the Underwriters for inclusion in the Prospectus and the Underwriters hereby
confirm that such statements and information are true and correct. This
indemnity will be in addition to any liability that the Underwriters might
otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, suit or proceeding,
such indemnified party shall, if a claim in respect thereof is to be made
against one or more indemnifying parties under this Section 7, notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure to so notify an indemnifying party shall
not relieve it from any liability which it may have under this Section 7 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may have otherwise avoided). In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to have
30
<PAGE> 31
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnifying party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party
or parties), in any of which events such fees and expenses of one additional
counsel shall be borne by the indemnifying parties. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. Anything in this Section 7 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its written consent; provided however,
that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 7, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that the express provisions of this Section 7 provide for indemnification
in such case, or (ii) contribution under the Act may be required on the part of
any indemnified party, then each indemnifying party in lieu of indemnifying
such indemnified party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, expenses or
liabilities (or actions in respect thereof) (A) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand from the offering of the Securities or (B) if the allocation
provided by clause (A) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (A) above but also the relative fault of each of the contributing
parties, on the one hand, and the party to be indemnified on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations. In any case where the Company is the contributing
party and the Underwriters are the indemnified party the relative benefits
received by the Company on the one hand, and the Underwriters, on the other,
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) bear to the total
underwriting discount received by the Underwriters hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus. Relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, expenses or liabilities (or actions in respect
thereof) referred to above in this subdivision (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), the Underwriters shall
not be required to contribute any amount in excess of the amount of the net
proceeds of
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<PAGE> 32
the Offering received by the Company. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls the Company within the meaning of the Act, each officer of the Company
who has signed the Registration Statement, and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to this subparagraph (d). Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect to which a claim for contribution may be made
against another party or parties under this subparagraph (d), notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this subparagraph (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution
agreement set forth above shall be in addition to any liabilities which any
indemnifying party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto,
shall be deemed to be representations, warranties and agreements at the Closing
Date and the Option Closing Date, as the case may be, and such representations,
warranties and agreements of the Company and the indemnity agreements contained
in Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, the
Company, or any controlling person, and shall survive termination of this
Agreement or the issuance and delivery of the Securities to the Underwriters.
9. Effective Date.
This Agreement shall become effective: (i) upon the execution and
delivery hereof by the parties hereto; or (ii) if, at any time this Agreement
is executed and delivered, it is necessary for the Registration Statement or a
post- effective amendment thereto to be declared effective before the offering
of the Securities may commence, when notification of the effectiveness of the
Registration Statement or such post-effective amendment has been released by
the Commission. Until such time as this Agreement shall have become effective,
it may be terminated by the Company, by notifying you, or by you, as
Representative of the several Underwriters, by notifying the Company.
10. Termination.
(a) The Underwriters shall have the right to terminate
this Agreement (i) if any calamitous domestic or international event or act or
occurrence has materially disrupted, or in the Underwriters' opinion will in
the immediate future materially disrupt general securities markets in the
United States; or (ii) if trading on the New York Stock Exchange, the American
Stock Exchange, the Nasdaq National Market, or in the over-the-counter market
shall have been suspended or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been
required on the over-the-counter market by the
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NASD or by order of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become involved in a war
or major hostilities; or (iv) if a banking moratorium has been declared by a
New York State or federal authority; or (v) if a moratorium in foreign exchange
trading has been declared; or (vi) if the Company shall have sustained a
material adverse loss, whether or not insured, by reason of fire, flood,
accident or other calamity that materially impairs the investment quality of
the Securities; or (vii) if there shall have been such material adverse change
in the conditions or prospects of the Company, involving a change not
contemplated by the Registration Statement.
(b) Notwithstanding any contrary provision contained in
this Agreement, any election hereunder or any termination of this Agreement
(including, without limitation, pursuant to Sections 9 and 10 hereof), and
whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way affected by such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
11. Substitution of the Underwriters. If one or more of the
Underwriters shall fail (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 6, Section 10 or
Section 12 hereof) to purchase the Securities which it or they are obligated to
purchase on such date under this Agreement (the "Defaulted Securities), the
Underwriters shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
Underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Underwriters shall not have completed such arrangements
within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the total number of Firm Securities to be purchased on such date, the
non-defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all nondefaulting
Underwriters; or
(b) if the number of Defaulted Securities exceeds 10% of
the total number of Firm Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Underwriters shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
12. Default by the Company. If the Company shall fail at the
Closing Date or the Option Closing Date, as applicable, to sell and deliver the
number of Securities which it is obligated to sell hereunder on such date, then
this Agreement shall terminate (or, if such default
33
<PAGE> 34
shall occur with respect to any Additional Securities to be purchased on the
Option Closing Date, the Underwriters may at the Underwriters' option, by
notice from the Underwriters to the Company, terminate the Underwriters'
several obligations to purchase Securities from the Company on such date)
without any liability on the part of any non-defaulting party other than
pursuant to Section 5 and Section 7 hereof. No action taken pursuant to this
Section 12 shall relieve the Company from liability, if any, in respect of such
default.
13. Notices. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be deemed
to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representative at Argent Securities, Inc., 3340 Peachtree Road, Suite 450,
Atlanta, GA 30326, with a copy to Johnson & Montgomery, One Buckhead Plaza,
3060 Peachtree Road, N.W., Suite 400, Atlanta, Georgia 30305, Attention:
Robert E. Altenbach, Esq. Notices to the Company shall be directed to the
Company, 5025 Derrick Jones Road, Suite 120, Atlanta, Georgia 30349, Attention:
Dennis A. Bakal with a copy to Nelson Mullins Riley & Scarborough, L.L.P., 999
Peachtree Street, N.E., First Union Plaza, Suite 1400, Atlanta, Georgia 30309,
Attention: Steven A. Cunningham, Esq.
14. Parties. This Agreement shall inure solely to the benefit of
and shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, and their respective
heirs and legal representatives and no other person shall have or be construed
to have any legal or equitable right, remedy or claim under or in respect of or
by virtue of this Agreement or any provisions herein contained. No purchaser
of Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
15. Construction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
without giving effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among us.
Very truly yours,
PROFESSIONAL TRANSPORTATION GROUP
LTD., INC.
By:
------------------------------
34
<PAGE> 35
Confirmed and accepted as of the date first above written
on behalf of themselves and the other several underwriters
named in Schedule I hereto:
Argent Securities, Inc., as
Representative of the Several Underwriters
By:
-----------------------------------------
Name: L. Phillips Reames
Title: Chairman
35
<PAGE> 36
SCHEDULE I
<TABLE>
<CAPTION>
Underwriter Number of Securities
- ----------- --------------------
<S> <C>
Argent Securities, Inc. 1,500,000 Shares of Common Stock
1,500,000 Redeemable Common
Stock Purchase Warrants
</TABLE>
36
<PAGE> 37
SCHEDULE II
Warrant Agent -
-----------------------
37
<PAGE> 1
EXHIBIT 4.1
NUMBER SHARES
PTG
PROFESSIONAL TRANSPORTATION
GROUP LTD., INC.
<TABLE>
<S> <C>
COMMON STOCK INCORPORATED UNDER THE LAWS OF THE STATE OF GEORGIA SEE REVERSE FOR CERTAIN DEFINITIONS
NO PAR VALUE CUSID 742963 10 1
THIS CERTIFIES THAT
BY
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
COUNTERSIGNED AND REGISTERED:
RELIANCE TRUST COMPANY
(ATLANTA, GA),
TRANSFER AGENT AND REGISTRAR
AUTHORIZED SIGNATURE
============================================PROFESSIONAL TRANSPORTATION GROUP LTD. INC.============================================
transferable on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this
Certificate properly endorsed. This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar:
Witness the facsimile seal of the Corporation and the facsimile signatures of the duly authorized officers.
Dated:
PROFESSIONAL TRANSPORTATION GROUP, LTD., INC.
AS WARRANT AGENT CORPORATE SEAL
1990
GEORGIA
/s/ Linda K. Roberts /s/ Dennis A. Bakal
SECRETARY PRESIDENT AUTHORIZED SIGNATURE
</TABLE>
- ----------------------------------------------
AMERICAN BANK NOTE COMPANY MAY 12, 1997 FM
3504 ATLANTIC AVENUE
SUITE 12
LONG BEACH, CA 90807 050438FC-C
(562) 989-2333
(FAX) (562) 426-7450 PROOF____REV 2
- ---------------------------------------------
<PAGE> 2
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were writtten out i full
according to applicable laws or regulations.
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT - as tenants by the entireties ------------ ------------
JT TEN - as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants under Uniform Gifts to Minors
in common Act
---------------------------
(State)
Additional abbreviations may also be used though not in the above list.
For value received, __________________ hereby sells, assigns and transfers unto.
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
/ /
- --------------------------------------------------------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
shares
- -------------------------------------------------------------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
Attorney
- -----------------------------------------------------------------------------------------------------------------------
to transfer the said stock ono the books of the within named Corporation with full power of substitution in the premises.
Dated
---------------------------
------------------------------------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME WRITTEN UPON THE FACE
OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEENT OR ANY
CHANGE WHATEVER.
SIGNATURE(S) GUARNTEED: ------------------------------------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARNTEED BY AN ELIGIBLE GURANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARNTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
</TABLE>
- -----------------------------------------------
AMERICAN BANK NOTE COMPANY MAY 8, 1997, se
3504 ATLANTIC AVENUE
SUITE 12
LONG BEACH, CA 90807 050438bk-C
(562) 989-2333
(FAX) (562) 426-7450 Proof_____ REV.1
- -----------------------------------------------
<PAGE> 1
EXHIBIT 4.2
REDEEMABLE COMMON STOCK
PURCHASE WARRANT
NUMBER WARRANTS
PROFESSIONAL TRANSPORTATION
GROUP LTD., INC.
<TABLE>
<S> <C>
VOID (UNLESS EXTENDED) AFTER 5:00 P.M. SEE REVERSE FOR CERTAIN DEFINITIONS
NEW YORK CITY TIME, ON __________,2002. CUSPID 742963 11 9
THIS CERTIFIES THAT, FOR VALUE RECEIVED
or registered assigns (the "Warrant Holder"), is entitled to purchase from PROFESSIONAL TRANSPORTATION GROUP, LTD., a Georgia
corporation (the "Company"), subject to the terms and conditions hereof and of the Warrant Agreement mentioned below, at any time
from _____, 1998 until on or before 5:00 p.m. New York City time, on ______, 2002 or on such later date as the Company may determine
(the "Expiration Date"), the number of fully paid and nonassessable shares of the Company's Common Stock, no par value (the "Shares)
stated above by surrendering this Warrant Certificate with the Subscription Form on the back thereof duly executed at the office of
Reliance Trust Company or at such other office or agency as the Company may from time to time designate (the "Warrant Agent"), and
by paying in full, to the Company in lawful money of the United States, $6.90 for each Share as to which this Warrant Certificate is
exercisable (the "Warrant Exercise Price").
This Warrant may be redeemed at the option of the Company at any time after 5:00 p.m. New York City time, on _____, 1996, if
the average closing bid price for the Common Stock equals or exceeds $10.50 per share for a period of twenty (20) consecutive
business days ending on the third day prior to the date of redemption at a redemption price of $0.125 per Warrant. The Company
shall send to the Warrant Holders whose securities are being redeemed written notice of redemption by first class mail not less than
thirty (30) days prior to the date fixed for redemption.
In case the Warrant Holders shall exercise this Warrant with respect to less than all of the Shares that may be purchased
hereunder, a new Warrant Certificate for the balance shall be countersigned and delivered to or upon the order of the Warrant
Holder.
This Warrant Certificate is issued under and in accordance with the Warrant Agreement dated as of _____,1997 between the Company
and the Warrant Agent (the "Warrant Agreement") and is subject to the terms and provisions contained therein, to all of which terms
and positions the holder of this Warrant Certificate consents by acceptance hereof. In the event of certain contingencies provided
for in the Warrant Agreement, the number of Shares subject to purchase price per Share thereof are subject to adjustment. Copies
of the Warrant Agreement are on, file at the principal corporate office of the Warrant Agent.
THIS WARRANT SHALL BE VOID AND OF NO EFFECT (UNLESS EXTENDED) AFTER 5:00 P.M. NEW YORK CITY TIME, ON ______, 2002.
WITNESS, the facsimile seal of the Company and the facsimile signatures of its duly authorized officers.
Dated: PROFESSIONAL TRANSPORTATION GROUP LTD. INC.
COUNTERSIGNED:
RELIANCE TRUST COMPANY
(ATLANTA, GA) AS WARRANT AGENT CORPORATE SEAL
1990
By: GEORGIA By: By:
/s/ Linda K. Roberts /s/ Dennis A. Bakal
SECRETARY PRESIDENT
</TABLE>
- ----------------------------------------------
AMERICAN BANK NOTE COMPANY MAY 12, 1997 FM
3504 ATLANTIC AVENUE
SUITE 12
LONG BEACH, CA 90607 050438FC-W
(562) 989-2333
(FAX) (562) 426-7450 METRO PROOF____REV 2
- ---------------------------------------------
<PAGE> 2
STATEMENT OF OTHER TERMS OF WARRANT
1. The Warrant represented by this Warrant Certificate (the "Warrant") shall
expire at and shall not be exercisable after, 5:00 P.M., New York City time, on
___________________, 2002 or on such later date determined by the Company.
2. Notwithstanding that the number of Shares purchasable upon the exercise
of a Warrant may have been adjusted pursuant to the terms of the Warrant
Agreement, the Company shall nonetheless not be required to issue fractions of
Shares upon exercise of a Warrant or to distribute Share Certificates that
evidence fractional shares. In lieu of fractional shares, there shall be
returned to the exercising registered holder of a Warrant upon such exercise an
amount in cash, in United States dollars, equal to the amount in excess of
that required to purchase the largest number of full Shares.
3. If any Shares issuable upon the exercise of this Warrant require
registration or approval of any governmental authority, including, without
limitation, the filing of necessary registration statements or amendments or
supplements thereto under the Securities Act of 1933, as amended, or the taking
of any action under the laws of the United States of America or any political
subdivision thereof before such Shares may be validly issued, then the Company
covenants that it will in good faith and as expeditiously as possible endeavor
to secure such registration or approval or to take such other action, as the
case may be: PROVIDED, HOWEVER, there is no assurance such registration or
approval can be obtained, and in no event shall such Shares be issued and the
Company is hereby authorized to suspend the exercise of all Warrants, for the
period during which it is endeavoring to obtain such registration or approval
or to take such other action.
4. This Warrant Certificate may be exchanged and is transferable at the
principal office of the Warrant Agent by the registered holder hereof or by his
duly authorized representative or attorney, upon surrender of this Warrant
Certificate duly endorsed or accompanied (if so required by the Company or the
Warrant Agent) by a written instrument, or instruments, of transfer
satisfactory to the Company or the Warrant Agent. If the right to purchase
less than all of the Shares covered hereby shall be so transferred, the
registered holder hereof shall be entitled to receive a new Warrant Certificate
or Warrant Certificates covering in the aggregate the remaining whole number of
Shares.
5. No Warrant Holder, as such, shall be entitled to vote or receive
dividends or be deemed the holder of Shares for any purpose, nor shall anything
contained in this Warrant Certificate be construed to confer upon any Warrant
Holder, as such, any of the rights of a shareholder of the Company or any right
to vote, give or withhold consent to any action by the company (whether upon
any recapitalization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings or
other action affecting shareholders (except as provided in the Warrant
Agreement), receive dividends or subscription rights, or otherwise, until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have been delivered as provided in the Warrant Agreement.
6. The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company or the Warrant Agent) for all purposes and shall not be
affected by any notice to the contrary.
7. This Warrant shall be binding upon any successors or assigns of the
Company.
SUBSCRIPTION FORM
(To Be Executed By The Warrant Holder If He Desires To
Exercise The Warrant In Whole Or In Part)
To: PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
The undersigned ___________________________________________________________
hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant Certificate for, and to purchase thereunder, _____________
Shares provided for therein and lenders payment herewith to the order of
PROFESSIONAL TRANSPORTATION GROUP LTD., INC., in the amount of
$______________________.
The undersigned requests that certificates for such Shares be issued as follows:
Name:__________________________________________________________________________
Address: ______________________________________________________________________
_______________________________________________________________________________
Sec. Sec. No. or Other I.D. No., if any: ______________________________________
Deliver: ______________________________________________________________________
Address: ______________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable
hereunder, that a new Warrant Certificates for the balance remaining of the
Shares purchasable under the Warrant Certificate be registered in the name of,
and delivered to, the undersigned at the address stated above.
<TABLE>
<S> <C>
Date: ___________________________ Signature _______________________________________
Note: The signature of this Subscription must correspond
with the name as written upon the face of this Warrant
Certificate in every particular, without alteration or
enlargement or any change whatsoever.
</TABLE>
ASSIGNMENT
(To Be Signed Only Upon Assignment)
For Value Received, the undersigned hereby sells, assigns and transfers onto
_______________________________________________________________________________
______________________________________________________________________ Warrants
evidenced by the within Warrant Certificate and appoints
_______________________________________________________________________________
to transfer said Warrant Certificate and Warrants on the books of PROFESSIONAL
TRANSPORTATION GROUP LTD., INC., with the full power of substitution in the
premises.
<TABLE>
<S> <C>
Date: _______________ ___________________________________________________
(Signature must conform in all respects to the name
In the presence of: of Warrant Holder specified on the face of this
Warrant Certificate, without alteration,
enlargement or any change whatsoever, and the
signature must be guaranteed in the usual manner).
</TABLE>
<PAGE> 1
EXHIBIT 4.3
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO A REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (REGISTRATION NO. 333-24619).
HOWEVER, NEITHER THE OPTIONS NOR SUCH SECURITIES CAN BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) A POST-EFFECTIVE AMENDMENT TO SUCH REGISTRATION STATEMENT, (ii)
A SEPARATE REGISTRATION STATEMENT UNDER SUCH ACT, OR (iii) AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
THE TRANSFER OF THIS OPTION IS
RESTRICTED AS DESCRIBED HEREIN.
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
UNDERWRITERS' PURCHASE OPTION AGREEMENT
150,000 Shares of Common Stock
and 150,000 Underwriters' Common Stock Purchase Warrants
THIS CERTIFIES that, for receipt in hand of $150.00 and other value
received, Argent Securities, Inc., 3340 Peachtree Road, N.E., Suite 450,
Atlanta, Georgia 30326 (hereinafter referred to as the "Holder" or
"Underwriter") is entitled to subscribe for and purchase from PROFESSIONAL
TRANSPORTATION GROUP LTD., INC., a Georgia corporation (the "Company"), upon
the terms and conditions set forth herein, at any time or from time to time
after May __, 1998 and before 5:00 P.M. on May __, 2002, New York time (the
"Exercise Period"), 150,000 shares of the Company's Common Stock, no par value
per share (the "Shares") at a price of $_____ per share (the "Exercise Price
per Share"), and an Underwriters' Common Stock Purchase Warrant or Warrants
("Underwriters' Warrants") for the purchase of an additional 150,000 shares of
the Company's Common Stock (the "Warrant Shares") at a price of $_______ per
Underwriters' Warrant. This Option may not be sold, transferred, assigned or
hypothecated, until May __, 1998 except that it may be transferred in whole or
in part, to (i) one or more officers or partners of the Holder (or the officers
or partners of any such person); (ii) a successor to the Holder, or the
officers or partners of such successor; (iii) a purchaser of substantially all
of the assets of the Holder; or (iv) by operation of law. The term "Holder" as
used herein shall include any transferee to whom this Option has been
transferred in accordance with the above. As used herein the term "Option"
shall mean and include this Underwriters' Purchase Option and any option or
options of like form and tenor hereafter issued as a consequence of the
exercise or transfer of this Option in whole or part.
Each Underwriters' Warrant shall entitle the holder thereof to
purchase one share of Common Stock (the shares of Common Stock issuable upon
exercise of the Underwriters' Warrants being referred to as the "Warrant
Shares") at $_____ per share. Each Underwriters' Warrant shall be in the form
attached hereto as "Exhibit A" and shall be identical in all material respects
to the warrants (the "Public Warrants"), issued pursuant to the Warrant
Agreement, dated ___________, 1997 (the "Warrant Agreement"), between the
Company and Reliance Trust
<PAGE> 2
Company, as Warrant Agent; provided, however, the Underwriters' Warrants shall
not be subject to redemption by the Company under any circumstances.
1. Term of Exercise.
(a) This Option may be exercised during the Exercise
Period as to the whole or any lesser number of Shares and Underwriters'
Warrants, by the surrender of an Underwriters' Option Certificate for this
Option (with the election at the end thereof duly executed) to the Company at
its offices at 5025 Derrick Jones Road, Suite 120, Atlanta, Georgia 30349 or
such other place as is designated in writing by the Company, together with a
certified or bank cashier's check payable to the order of the Company in an
amount equal to the Exercise Price (per Share and per Warrant, respectively)
multiplied by the number of Shares and Underwriters' Warrants for which this
Option is being exercised.
(b) For purposes of this Option, the term "Current Market
Price" at any date shall be deemed to be: (i) the average of the daily closing
prices of the Common Stock or the Public Warrants, as the case may be, for the
20 consecutive trading days immediately preceding such date in reported sales
price, or (ii) in case no such reported sale takes place on such date, the last
sales price regular way in either case as reported on the principal national
securities exchange on which the Common Stock or the Public Warrants, as the
case may be, is listed or admitted to trading, or (iii) if the Common Stock or
the Public Warrants, as the case may be, is not listed or admitted to trading
on any national securities exchange, the average of the closing bid and asked
prices regular way for the Common Stock or the Public Warrants, as the case may
be, on the Nasdaq National Market System or Nasdaq SmallCap Market of the
Nasdaq Stock Market, Inc. (together referred to as "Nasdaq") or (iv) if the
Common Stock or the Public Warrants, as the case may be, is not listed or
admitted for trading on any national securities exchange and is not reported on
NASDAQ or any similar organization, the average of the closing bid and asked
prices in the over-the-counter market as furnished by the National Quotation
Bureau, Inc. or if no such quotation is available, the fair market value as
determined by the Board of Directors in good faith.
2. Delivery of Certificates to Registered Holder. Upon each
exercise of this Option, the Holder shall be deemed to be the holder of record
of the Shares and Underwriters' Warrants issuable upon such exercise
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing such Shares or Underwriters' Warrants shall not then
have been actually delivered to the Holder. As soon as practicable after each
such exercise of this Option, the Company shall issue and deliver to the Holder
a certificate or certificates for the Shares and a certificate or certificates
for the Underwriters' Warrants registered in the name of the Holder or its
designee. If this option should be exercised in part only, the Company shall,
upon surrender of an Underwriters' Option Certificate for this Option for
cancellation, execute and deliver a new Underwriters' Option Certificate
evidencing the right of the Holder to purchase the balance of the Shares and
Underwriters' Warrant (or portions thereof) subject to purchase hereunder.
3. Option Register. Any Option issued upon the transfer or
exercise in part of this Option shall be numbered and shall be registered in an
Option Register as they are issued. The
2
<PAGE> 3
Company shall be entitled to treat the registered holder of any Option on the
Option Register as the owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in such Option
on the part of any other person, and shall not be liable for any registration
or transfer of Options which are registered or to be registered in the name of
a fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration or participation therein amounts to bad faith. The Options shall
be transferable only on the books of the Company upon delivery of an
Underwriters' Option Certificate duly endorsed by the Holder or by its duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer in all cases of transfer by an
attorney, executor, administrator, guardian, or other legal representative,
duly authenticated evidence his or its authority shall be produced. Upon any
registration of transfer, the Company shall deliver an Underwriters' Option
Certificate to the Holder thereof, for another Option, or other options of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like number of Shares (or portions thereof) and
Underwriters' Warrants upon surrender to the Company or its duly authorized
agent. Notwithstanding the foregoing, the Company shall have no obligation to
cause this Option to be transferred on its books to any person if, in the
opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations thereunder.
4. Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized and unissued Common Stock,
solely for the purpose of providing for the exercise of this Option and the
Underwriters' Warrants, such number of shares of Common Stock as shall, from
time to time, be sufficient therefor. The Company covenants that all shares of
Common Stock issuable upon exercise of this Option and the Underwriters'
Warrants when paid for in accordance with the respective terms thereof, shall
be validly issued, fully paid and nonassessable by the Company.
5. Anti-Dilution; Adjustments to Exercise Price.
(a) Upon the occurrence of any event (an "Event") as a
result of which an adjustment is made to the exercise price (the "Public
Exercise Price") of any of the Public Warrants, the number of Shares issuable
upon exercise of this Option shall be adjusted to equal thereafter the number
of Shares issuable prior to such Event multiplied by a fraction, the numerator
of which shall be the Public Exercise Price in effect prior to such Event and
the denominator of which shall be the Public Exercise Price subsequent to such
Event.
(b) Upon each adjustment of the number of Shares issuable
upon exercise of this Option pursuant to subparagraph 5(a) above, this Option
shall thereupon evidence the right to purchase such number of Shares at the
Exercise Price per Share obtained by (1) multiplying the Exercise Price per
share in effect immediately prior to the triggering Event by the number of
shares then purchasable upon exercise of this Option and (2) dividing the
product so obtained by the number of Shares purchasable upon exercise of this
Warrant subsequent to the triggering Event.
3
<PAGE> 4
(c) Notwithstanding any other provision of this Option,
any adjustment of the exercise price, and/or the number of Warrant Shares
purchasable upon the exercise of the Underwriters' Warrants shall be determined
solely by the antidilution and other adjustment provisions contained in the
Warrant Agreement (which provisions are incorporated herein by reference) as if
such Underwriters' Warrants were and had been outstanding on and from May ____,
1997.
(d) Whenever there shall be an adjustment as provided in
this paragraph 5, the Company shall promptly cause written notice thereof to be
sent by registered mail, postage prepaid, to the Holder, at its principal
office, which notice shall be accompanied by an officer's certificate setting
forth the number and Exercise Price per Share and per Warrant of the Shares and
Underwriters' Warrants issuable upon exercise of this Option and the exercise
price per Warrant Share and the number of Warrant Shares purchasable upon the
exercise of the Underwriters' Warrants after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof.
(e) All calculations under this paragraph 5 shall be made
to the nearest cent or to the nearest one-thousandth of a Share or Warrant, as
the case may be.
(f) The Company shall not be required to issue fractions
of shares of Common Stock or other capital stock of the Company upon the
exercise of Options. If any fraction of a share would be issuable on the
exercise of any Option (or specified portions thereof), the Company, in its
sole discretion, shall purchase such fraction for an amount in cash equal to
the same fraction of the Current Market Price of such share on the date of
exercise of the Option.
6. Reorganization/Reclassification.
(a) In case of any consolidation with or merger of the
Company with or into another corporation (other than a merger or consolidation
in which the Company is the surviving or continuing corporation), or in case of
any sale, lease or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, such successor, leasing
or purchasing corporation, as the case may be, shall (i) execute with the
Holder an agreement providing that the Holder shall have the right thereafter
to receive upon exercise of this Option solely the kind and amount of shares of
stock and other securities, property, cash or any combination thereof
receivable upon such consolidation, merger, sale, lease or conveyance by a
Holder of the number of shares of Common Stock and the Underwriters' Warrants
for which this Option might have been exercised immediately prior to such
consolidation, merger, sale, lease or conveyance, and (ii) make effective
provision in order to effect such agreement. Such agreement shall provide for
adjustment which shall be as nearly equivalent as practicable to the
adjustments for which paragraph 5 provides.
(b) In case of any reclassification or change of the
shares of Common Stock issuable upon exercise of this Option (other than a
change in par value or from par value to no par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and
4
<PAGE> 5
in which there is a reclassification or change (including a change to the right
to receive cash or other property) of the shares of Common Stock (other than a
change in par value, or from par value to no par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), the Holder shall have the right thereafter
to receive upon exercise of this Option solely the kind and amount of shares of
stock and other securities, property, cash or any combination thereof
receivable upon such reclassification, change, consolidation or merger by a
holder of the number of shares of Common Stock and the Underwriters' Warrants
for which this Option might have been exercised immediately prior to such
reclassification, change, consolidation or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments for which paragraph 5 provides.
(c) The above provisions of this paragraph 6 shall
similarly apply to successive reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales, leases or conveyances
similar to those described in subparagraphs 6(a) and (b).
7. Notice of Dividends/Distributions. If, in case at any time
the Company shall propose:
(a) to pay any dividend or make any distribution of
shares of Common Stock in shares of Common Stock or make any other distribution
(other than regularly scheduled cash dividends which are not in a greater
amount per share than the most recent such cash dividend) to all holders of
Common Stock; or
(b) to issue any rights, warrants or other securities to
all holders of Common Stock or Public Warrants entitling them to purchase any
additional shares of Common Stock or any other rights, warrants or other
securities; or
(c) to effect any reclassification or change or
outstanding shares of Common Stock, or any consolidation, merger, sale, lease
or conveyance of property, described in paragraph 6; or
(d) to effect any liquidation, dissolution, or winding-up of the Company;
or
(e) to take any other action which would cause an
adjustment to the exercise price of the Public Warrants; then, on each such
occasion, the Company shall give written notice thereof, by registered mail,
postage prepaid, to the Holder at the Holder's address as it shall appear in
the Option Register, mailed at least 15 days prior to: (i) the date as of which
the holders of record of shares of Common Stock to be entitled to receive any
such dividend, distribution, rights, warrants or other securities are to be
determined; (ii) the date on which any such reclassification, change of
outstanding shares of Common Stock, consolidation, merger, sale, lease,
conveyance of property, liquidation, dissolution, or winding-up is expected to
become effective, and the date as of which it is expected that holders of
record of shares of Common Stock or Public Warrants, as the case may be, shall
be entitled to exchange their shares or warrants for securities or other
property, if any, deliverable upon such reclassification, change of outstanding
shares, consolidation, merger, sale, lease, conveyance of property,
5
<PAGE> 6
liquidation, dissolution, or winding-up; or (iii) the date of such action which
would require an adjustment to the Public Exercise Price.
8. Payment of Taxes. The issuance of any Shares or Underwriters'
Warrants or other securities upon the exercise of this Option, and the delivery
of certificates or other instruments representing such shares of Common Stock,
Warrants or other securities, shall be made without charge to the Holder for
any tax or other charge in respect of such issuance. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or is not due and payable.
9. Registration Rights. (a) If, at any time after May __, 1998,
and before May __, 2002, the Company shall file a registration statement (other
than on Forms S-4 or S-8, or any successor forms) with the Securities and
Exchange Commission (the "Commission") while Shares or Underwriters' Warrants
are available for purchase upon exercise of this Option or while any Shares,
Underwriters' Warrants or Warrant Shares (which have not been so registered)
are outstanding, the Company shall give the Holder and all the then registered
holders of such Shares, Underwriters' Warrants or Warrant Shares at least 30
days prior written notice of the filing of such registration statement. If
requested by the Holder or by any such holder in writing within 20 days after
receipt of any such notice, the Company shall, at the Company's sole expense
(other than the fees and disbursements of counsel for the Holder or such Holder
and the underwriting discounts and commissions, if any, payable in respect of
the Warrants, Shares, Underwriters' Warrants and Warrant Shares sold by the
Holder or any such Holder), use its best efforts to register or qualify the
Shares, Underwriters' Warrants and Warrant Shares (collectively, the
"Underwriters' Securities") of the Holder or any such Holders who shall have
made such request concurrently with the registration covering such other
securities, all to the extent requisite to permit the public offering and sale
of the Underwriters' Securities through the facilities of all appropriate
securities exchanges and the over-the-counter market, and will use its best
efforts through its officers, directors, auditors and counsel to cause such
registration statement to become effective as promptly as practicable.
Notwithstanding the foregoing, if the managing underwriter of any such offering
shall advise the Company in writing that, in its opinion, the distribution of
all or a portion of the Underwriters' Securities requested to be included in
the registration concurrently with the securities being registered by the
Company would materially adversely affect the distribution of such securities
by the Company for its own account, the Underwriters' Securities shall not be
included in such registration statement or such registration statement shall
include only so many of the Underwriters' Securities as will not have such an
effect, provided that if any securities of the Company are included in such
registration statement for the account of any person other than the Company and
the Holder or any such Holder, the securities included in such registration
statement for such other person shall have been reduced pro rata to the
reduction of the Underwriters' Securities which were requested to be included
in such registration.
6
<PAGE> 7
(b) If at any time after May __, 1998 and before May __,
2002, the Company shall receive a written request from holders of Underwriters'
Securities who, in the aggregate, own (or upon exercise of the Option and
Underwriters' Warrants, will own) a majority of the total number of shares of
Common Stock issued or issuable upon exercise of the Option and the
Underwriters' Warrants, the Company shall, as promptly as practicable, prepare
and file with the Commission a registration statement sufficient to permit the
public offering and sale of the Underwriters' Securities through the facilities
of all appropriate securities exchanges and the over-the-counter market, and
will use its best efforts through its officers, directors, auditors and counsel
to cause such registration statement to become effective as promptly as
practicable; provided however, that the Company shall only be obligated to file
one such registration statement for which all expenses incurred in connection
with such registration (other than the fees and disbursements of counsel for
the Holder or such Holders and underwriting discounts and commissions, if any,
payable in respect of the Underwriters' Securities sold by the Holder or any
such Holder) shall be borne by the Company and one additional such registration
statement for which all such expenses shall be paid by the Holder and such
Holders.
(c) In the event of a registration pursuant to the
provisions of this paragraph 9, the Company shall use its best efforts to cause
the Underwriters' Securities so registered to be registered or qualified for
sale under the securities or blue sky laws of such jurisdictions as the Holder
or such Holders may reasonably request; provided, however, that the Company
shall not be required to (i) qualify to do business in any state by reason of
this paragraph 9(c) in which it is not otherwise required to qualify to do
business, (ii) or register or qualify in any state which will impose material
burdens on the Company or its principals.
(d) The Company shall keep effective any registration or
qualification contemplated by this paragraph 9 and shall from time to time
amend or supplement each applicable registration statement, preliminary
prospectus, final prospectus, application, document and communication for such
period of time as shall be required to permit the Holder or such Holders to
complete the offer and sale of the Underwriters' Securities covered thereby.
The Company shall in no event be required to keep any such registration or
qualification effect for a period in excess of nine months from the date on
which the Holder and such Holders are first free to sell such Underwriters'
Securities; provided, however, that if the Company is required to keep any such
registration or qualification in effect with respect to securities other than
the Underwriters' Securities beyond such period, the Company shall keep such
registration or qualification in effect as it relates to the Underwriters'
Securities for so long as such registration or qualification remains or is
required to remain in effect in respect of such other securities.
(e) In the event of a registration pursuant to the
provisions of this paragraph 9, the Company shall furnish to each of the five
largest Holders of any Underwriters' Securities included therein such amendment
and supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement
and each supplement or amendment thereto (including each preliminary
prospectus), all of which shall conform to the requirements of the Act and the
rules and regulations thereunder, and such other documents, as the Holder or
such Holders may reasonably request in order to facilitate the disposition of
the Underwriters' Securities included in such registration.
7
<PAGE> 8
(f) In the event of a registration pursuant to the
provisions this paragraph 9, the Company shall furnish to each holder of any
Underwriters' Securities so registered with an opinion of its counsel
(reasonably acceptable to the Holder) to the effect that (i) the registration
statement has become effective under the Act and no order suspending the
effectiveness of the registration statement, preventing or suspending the use
of the registration statement, any preliminary prospectus, any final
prospectus, or any amendment or supplement thereto has been issued, nor has the
Commission or any state securities authority instituted or threatened to
institute any proceedings with respect to such an order, (ii) the registration
statement and each prospectus forming a part thereof (including each
preliminary prospectus), and any amendment or supplement thereto, materially
complies as to form with the Act and the rules and regulations thereunder
(except as to financial statements, including schedules, and other accounting
and financial data, as to which counsel need express no opinion), and (iii)
such counsel has no knowledge or reason to know of any material misstatement or
omission in such registration statement or any prospectus, as amended or
supplemented.
(g) The Company agrees that until all the Underwriters'
Securities have been sold under a registration statement or pursuant to Rule
144 under the Act, it shall keep current in filing all reports, statements and
other materials required to be filed with the Commission to permit holders of
the Underwriters' Securities to sell such securities under Rule 144.
10. Indemnification.
(a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless the Holder, any holder of any of
the Underwriters' Securities, their officers, directors, partners, employees,
agents and counsel, and each person, if any, who controls any such person
within the meaning of Section 15 of the Act or Section 20(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), from and against any and
all loss, liability, charge, claim, damage and expense whatsoever (which shall
include, for all purposes of this paragraph 10, but not be limited to,
reasonable attorneys' fees and any and all expense whatsoever reasonably
incurred, and any and all amounts paid in settlement of any claim or
litigation), as and when incurred, arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any registration statement, preliminary prospectus or final
prospectus (as from time to time amended and supplemented), or any amendment or
supplement thereto, or (B) in any application or other document or
communication (in this paragraph 10 collectively called an "application")
executed by or on behalf of the Company filed in any jurisdiction in order to
register or qualify any of the Underwriters' Securities under the securities or
blue sky laws thereof or filed with the Commission or any securities exchange;
or any omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company with respect to the Holder or
any Holder of any of the Underwriters' Securities by or on behalf of such
Holder or Holders, or such other Holder, exclusively for inclusion in any such
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (ii) any breach of any
representation, warranty, covenant or agreement of the Company to indemnify,
which
8
<PAGE> 9
shall be in addition to any liability the Company may otherwise have, including
liabilities arising under this Option.
If any action is brought against the Holder or any Holder of
any of the Underwriters' Securities or any of its officers, directors,
partners, employees, agents or counsel, or any controlling persons of such
person (an "indemnified party") in respect of which indemnity may be sought
against the Company pursuant to the foregoing paragraph, such indemnified party
or parties shall promptly notify the Company in writing of the institution of
such action (but the failure to so notify shall not relieve the Company from
any liability it may have other than pursuant to this paragraph 10(a) except to
the extent that it has been harmed in any material respect by such failure) and
the Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or the
Company shall not have promptly employed counsel reasonably satisfactory to
such indemnified party or parties to have charge of the defense of such action
or such indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or in addition to those available
to the Company, if any, in which events the reasonable fees and expenses of
such counsel shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party
or parties. Anything in this paragraph 10 (a) to the contrary notwithstanding,
the Company shall not be liable for any settlement of any such claim or action
effected without its written consent.
(b) The Holder and any other Holder of Underwriters'
Securities agree to indemnify and hold harmless the Company, each director of
the Company, each officer of the Company who shall have signed any registration
statement covering Underwriters' Securities held by the Holder and such other
Holder and each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to the Holder and such
other Holder in paragraph 10(a), but only with respect to statements or
omissions, if any, made in any registration statement, preliminary prospectus,
or final prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company with respect to
the Holder or such other holder by or on behalf of the Holder or such other
Holder expressly for inclusion in any such registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in
any application, as the case may be. If any action shall be brought against
the Company or any other person so indemnified based on any such registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, and in respect of which indemnity
may be sought against the Holder pursuant to this paragraph 10(b), the Holder
and such other holder shall have the rights and duties given to the Company,
and the Company and each other person so indemnified shall have the rights and
duties given to the indemnified parties, by the provisions of paragraph 10(a).
9
<PAGE> 10
(c) To provide for just and equitable contribution, if
(i) an indemnified party makes a claim for indemnification pursuant to
paragraph 10(a) or 10(b) (subject to the limitations thereof) but is found in a
final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, or (ii) any indemnified or
indemnifying party seeks contribution under the Act, the Exchange Act or
otherwise, then the Company (including for this purpose any contribution made
by or on behalf of any director of the Company, any officer of the Company who
signed any such registration statement and any controlling person of the
Company), as one entity, and the Holder and any Holder of any of the
Underwriters' Securities included in such registration in the aggregate
(including for this purpose any contribution by or on behalf of an indemnified
party), as a second entity, shall contribute to the losses, liabilities,
claims, damages and expenses whatsoever to which any of them may be subject, on
the basis of relevant equitable considerations such as the relative fault of
the Company and the Holder or any such Holder in connection with the facts
which resulted in such losses, liabilities, claims, damages and expenses. The
relative fault, in the case of an untrue statement, alleged untrue statement,
omission or alleged omission, shall be determined by, among other things,
whether such statement, alleged statement, omission or alleged omission relates
to information supplied by the Company, by the Holder or by any Holder of
Underwriters' Securities included in such registration, and the parties
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement, alleged statement, omission or alleged omission. The
Company and the Holder agree that it would be unjust and inequitable if the
respective obligations of the Company and the Holder or any such other Holder
of the Underwriters' Securities for contribution were determined by pro rata or
per capita allocation of the aggregate losses, liabilities, claims, damages and
expenses (even if the Holder and the other indemnified parties were treated as
one entity for such purpose) or by any other method of allocation that does not
reflect the equitable considerations referred to in this paragraph 10(c). No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this paragraph
10(c), each person, if any, who controls the Holder or any Holder of any of the
Underwriters' Securities within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and each officer, director, partner, employee, agent
and counsel of each such person, shall have the same rights to contribution as
such person and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and each
officer, director, partner, employee, agent and counsel of each such person,
shall have the same rights to contribution as such person and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed any such registration statement, and each director of the Company shall
have the same rights to contribution as the Company, subject in each case to
the provisions of this paragraph 10(c). Anything in this paragraph 10(c) to
the contrary notwithstanding, no party shall be liable for contribution with
respect to the settlement of any claim or action effected without its written
consent. This paragraph 10(c) is intended to supersede any right to
contribution under the Act, the Exchange Act or otherwise.
(d) The provisions of this paragraph 10 shall survive
regardless of the expiration, exercise or surrender of this Option.
10
<PAGE> 11
11. Legend. The securities issued upon exercise of this Option
shall be subject to a stop transfer order and, when Company's counsel deem
appropriate, the certificate or certificates evidencing any such securities
shall bear the following legend:
"THE SHARES OR OTHER SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, PURSUANT TO A REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. HOWEVER, SUCH
SHARES OR OTHER SECURITIES CANNOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) A POST-EFFECTIVE AMENDMENT TO SUCH
REGISTRATION STATEMENT, (ii) A SEPARATE REGISTRATION STATEMENT
UNDER SUCH ACT, OR (iii) AN EXEMPTION FROM REGISTRATION UNDER
SUCH ACT."
12. Lost Certificates. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of any Option (and
upon surrender of any Option if mutilated), and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new Option of like date, tenor and denomination.
13. No Rights as Shareholder. No Holder of any Option shall have,
solely on account of such status, any rights of a shareholder of the Company,
either at law or in equity, or to any notice of meetings of shareholders or of
any other proceedings of the Company, except as provided in this Option.
14. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
(a) If to the registered holder of this Option, to the
address of such holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Paragraph l(a) of this Option; or
(c) if to the Holder, to the address set forth on the
first page of this Option.
15. Governing Law. This Option shall be construed in accordance
with the laws of the State of Georgia, without giving effect to conflict of
laws.
11
<PAGE> 12
Dated: May __, 1997
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
By:___________________________________________
Dennis A. Bakal, President
[Seal]
___________________________________________________
Secretary
12
<PAGE> 13
THE UNDERWRITER'S OPTION REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE UNDERWRITER'S OPTIONS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE UNDERWRITER'S PURCHASE OPTION
AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, _________ __, 2002
No. U.0.1 Underwriters' Options
UNDERWRITERS' PURCHASE OPTION CERTIFICATE
This Underwriters' Purchase Option Certificate certifies that Argent
Securities, Inc. or registered assigns (the "Holder" or "Holders"), is the
registered holder of options ("Underwriters' Options") under an Underwriters'
Purchase Option Agreement (the "Underwriters' Purchase Option Agreement") dated
as of ____________, 1997 between Professional Transportation Group Ltd., Inc.
(the "Company") and Argent Securities, Inc., to purchase initially, at any time
from ________ __, 1998 until 5:00 p.m. New York time on ________ __, 2002
("Expiration Date"), up to ________ Shares at a price of $_____ per share (the
"Exercise Price per Share") and ______ Underwriters' Warrants at a price of
$________ per Warrant (the "Exercise Price per Warrant"), upon surrender of this
Underwriters' Option Certificate and payment of the aggregate amount of the
Exercise Price per Share and per Warrant (collectively, the "Exercise Price") at
an office or agency of the Company, but subject to the conditions set forth
herein and in the Underwriters' Purchase Option Agreement. Payment of the
Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company.
No Underwriters' Option may be exercised after 5:00 p.m., New York
time, on the Expiration Date, at which time all Underwriters' Options evidenced
hereby, unless exercised prior thereto, shall thereafter be void.
The Underwriters' Options evidenced by this Underwriters' Purchase
Option Certificate are part of a duly authorized issue of warrants pursuant to
the Underwriters' Purchase Option Agreement, which Underwriters' Purchase Option
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
Holders.
<PAGE> 14
The Underwriters' Purchase Option Agreement provides that upon the
occurrence of certain events the Exercise Price per Share and number of Shares
issuable upon execution thereof, may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the Holder, issue a
new Underwriters' Purchase Option Certificate evidencing the adjustment in the
exercise price and the number and/or type of securities issuable upon the
exercise of the Underwriters' Options; provided, however, that the failure of
the Company to issue such new Underwriters' Option Certificates shall not in any
way change, alter or otherwise impair, the rights of the holder as set forth in
the Underwriters Purchase Option Agreement.
Upon due presentment for registration of transfer of this Underwriters'
Purchase Option Certificate at an office or agency of the Company, a new
Underwriters' Purchase Option Certificate or Underwriters' Option Certificates
of like tenor and evidencing in the aggregate a like number of Underwriters'
Options shall be issued to the transferees in exchange for this Underwriters'
Purchase Option Certificate, subject to the limitations provided herein and in
the Underwriters' Purchase Option Agreement, without any charge except for any
tax or other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Underwriters' Options
evidenced by this Certificate, the Company shall forthwith issue to the Holder
hereof a new Underwriters' Purchase Option Certificate representing such
numbered unexercised Underwriters' Options.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Underwriters' Purchase Option Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, and of any distribution to the
holder(s) hereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary.
All defined terms used in this Underwriters' Purchase Option
Certificate shall herein have the meanings assigned to them herein, or, if not
differently defined herein, in the Underwriters' Purchase Option Agreement.
IN WITNESS WHEREOF, the Company has caused this Underwriters' Purchase
Option Certificate to be duly executed under its corporate seal.
Dated as of _________________, 1997
PROFESSIONAL TRANSPORTATION GROUP
LTD., INC.
[SEAL]
By:
--------------------------------
Attest: Name:
------------------------------
Title:
-----------------------------
- ------------------------------
Secretary
2
<PAGE> 15
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Underwriters' Purchase Option Certificate, to purchase
_________ Shares and Underwriters' Warrants and herewith tenders in payment for
such securities a certified or official bank check payable in New York Clearing
House Funds to the order of Professional Transportation Group Ltd., Inc. in the
amount of $__________, all in accordance with the terms hereof. The undersigned
requests that a certificate for such securities be registered in the name of
_____________________________________ whose address is
______________________________________________________________________ and that
such Certificate be delivered to
________________________________________________ whose address is
__________________________________________________________________.
Dated:__________________
----------------------------------------
Signature
(Signature must conform in all respects to name of holder as specified
on the face of the Underwriters' Purchase Option Certificate.)
-------------------------------------------
Insert Social Security or
Other Identifying Number of Holder)
3
<PAGE> 16
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
ASSIGNMENT FORM
(To be executed by the registered holder to effect assignment of the foregoing
Warrant)
FOR VALUE RECEIVED _________________________________ hereby sells, assigns and
transfers unto _________________________________ the right to purchase ______
Shares and Underwriters' Warrants of the Company purchasable pursuant to the
within Underwriters' Option No. _______, on the terms and conditions set forth
therein, and does hereby irrevocably constitute and appoint
_____________________________________ and/or its transfer agent Attorney, to
transfer on the books of the Company, Shares and Underwriters' Warrants
representing such rights, with full power of substitution.
Dated:__________________
Signed:
-----------------------
Signature guaranteed:
- ------------------------------
4
<PAGE> 1
EXHIBIT 4.4
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of ____________, 1997 between Professional
Transportation Group Ltd., Inc., a Georgia corporation, having its principal
place of business at 5025 Derrick Jones Road, Suite 120, Atlanta, Georgia
30349, (the "Company") and Reliance Trust Company, a Georgia corporation,
having its principal place of business at 3384 Peachtree Road, Suite 900,
Atlanta, Georgia 30326 (the "Warrant Agent").
W I T N E S S E T H :
WHEREAS, the Company proposes to issue and sell to the public in an
initial public offering (the "IPO") 1,500,000 shares of the Company's Common
Stock, no par value per share (the "Shares"), and 1,500,000 Redeemable Common
Stock Purchase Warrants (the "Public Warrants") (plus an additional 225,000
Shares and 225,000 Public Warrants to cover overallotments);
WHEREAS, the Company also proposes to issue and sell to Argent
Securities, Inc. (the "Representative") in the IPO an option to purchase
150,000 Shares and 150,000 Public Warrants (the "Underwriter Warrants" and
together with the Public Warrants sometimes hereinafter referred to as the
"Warrants");
WHEREAS, the Public Warrants shall be evidenced by certificates
substantially in the form of Exhibit A annexed hereto (the "Warrant
Certificate"), each Public Warrant entitling the holder thereof to purchase one
share of Common Stock;
WHEREAS, the Public Warrants will have an exercise price of $_______
per share of Common Stock, subject to certain adjustments (the "Warrant
Price"), will be exercisable commencing on the first anniversary of the
effective date of the IPO ("First Exercise Date") until a date which is the
fifth anniversary of the effective date of the IPO ("Last Exercise Date"),
unless extended by the Company, and, except for the Underwriter's Warrants,
will be exercisable during any period of time fixed for that Warrant's
redemption in a Redemption Notice (hereinafter defined in Section 2.03), which
period of time will terminate on a stated Redemption Date (hereinafter defined
in Section 2.03);
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act in connection with the
issuance, registration, transfer, exchange and replacement of the Warrant
Certificates and exercise of the Warrants; and
WHEREAS, the Company and the Warrant Agent desire to set forth in this
Agreement the terms and conditions upon which the Warrant Certificates shall be
issued, transferred, exchanged and placed and the Warrants exercised, and to
provide for the rights of the holders of the Warrants;
<PAGE> 2
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and the respective undertakings herein below set forth, the
Company and the Warrant Agent agree as follows:
ARTICLE I
ISSUANCE AND EXECUTION OF WARRANTS
SECTION 1.01. The Company hereby appoints the Warrant Agent to act
on behalf of the Company in accordance with the terms and conditions herein set
forth, and the Warrant Agent hereby accepts such appointment and agrees to
perform the same in accordance with such provisions.
SECTION 1.02. The Warrant Certificates for the Warrants shall be
issued in registered form only. The text of the Warrant Certificate, including
the form of assignment and subscription printed on the reverse side thereof,
shall be substantially in the form of Exhibit A annexed hereto, which text is
hereby incorporated in this Agreement by reference as though fully set forth
herein and to whose terms and conditions the Company and the Warrant Agent
hereby agree. Each Warrant Certificate shall evidence the right, subject to
the provisions of this Agreement and of such Warrant Certificate, to purchase
the number of validly issued, fully paid and non-assessable shares of Common
Stock, as that term is defined in Section 1.05 of this Agreement, stated
therein, free of preemptive rights, subject to adjustment as provided in
Article III of this Agreement.
SECTION 1.03. Upon the written order of the Company, signed by the
President, Chief Financial Officer or any Vice President, and the Secretary,
Treasurer, Assistant Secretary or Assistant Treasurer of the Company, the
Warrant Agent shall issue and register Warrants in the names and denominations
specified in that order, and will countersign and deliver Warrant Certificates
evidencing the same in accordance with that order. Each Warrant Certificate
shall be dated the date of its countersignature. Each Warrant Certificate shall
be executed on behalf of the Company by the manual or facsimile signature of
the President of the Company, under its corporate seal, affixed or facsimile,
attested by the manual or facsimile signature of the Secretary of the Company
and shall be countersigned manually by the Warrant Agent. The Warrant
Certificates shall not be valid for any purpose unless so countersigned. In
case any officer whose facsimile signature has been placed upon any Warrant
Certificate shall have ceased to be such before such Warrant Certificate is
issued, it may be issued with the same effect as if such officer had not ceased
to be such on the date of issuance.
SECTION 1.04. Except as otherwise expressly stated herein, all
terms used in the Warrant Certificate have the meanings provided in this
Agreement.
SECTION 1.05. As used herein, the term "Common Stock" shall mean
the aggregate number of shares that the Company, by its Articles of
Incorporation, as from time to time amended, is authorized to issue, which are
not limited by its Articles of Incorporation to a fixed sum or percentage of
the book value in respect of the rights of the holders thereof to participate
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<PAGE> 3
in dividends or in distribution of assets upon the voluntary or involuntary
liquidation, dissolution, or winding up the Company.
SECTION 1.06. The Warrant Agent understands and agrees that the
Public Warrants and Shares are being sold separately in the IPO and that the
Shares and the Public Warrants will be traded separately immediately upon the
closing of the IPO.
ARTICLE II
WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS, CALL OF
WARRANTS AND TRADING OF WARRANTS
SECTION 2.01.
(a) Each Warrant shall entitle the person in whose name
at the time the Warrant shall be registered upon the books to be maintained by
the Warrant Agent for that purpose (the "Warrant Holder"), subject to the
provisions of the Warrant Certificates and of this Agreement, to purchase from
the Company any time on or after the First Exercise Date but at or before the
Last Exercise Date, up to the number of shares of Common Stock stated therein,
as adjusted, at the Warrant Price in effect at such date, payable in full at
the time of purchase in the manner provided in Section 2.02 of this Agreement.
(b) Each Warrant shall be exercisable in accordance with
the terms herein and in the Warrant Certificate which, among other things,
contains certain terms as to the Warrant Price.
SECTION 2.02.
(a) The Warrant Holder may exercise a Warrant, in whole
or in part, by surrender of the Warrant Certificate, with the form of
subscription thereon duly executed by the Warrant Agent at its corporate
office, together with the Warrant Price for each share of Common Stock to be
purchased in lawful money of the United States, or by certified check, bank
draft, or postal or express money order payable in United States dollars to the
order of the Company.
(b) Upon receipt of a Warrant Certificate with the form
of election to purchase thereon duly executed and accompanied by payment of the
aggregate Warrant Price for the shares of Common Stock for which the Warrant is
then being exercised, the Warrant Agent shall requisition from the Company's
transfer agent certificates for the total number of the shares of Common Stock
for which the Warrant is being exercised in such names and denominations as are
required for delivery to the Warrant Holder, and the Warrant Agent shall
thereupon deliver such certificates to or in accordance with the instructions
of the Warrant Holder. The Company covenants and agrees that it has duly
authorized and directed its transfer agent (and will authorize and direct all
its future transfer agents) to comply with all such requests of the Warrant
Agent.
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<PAGE> 4
(c) In case any Warrant Holder shall exercise his Warrant
with respect to less than all of the shares of Common Stock that may be
purchased under the Warrant, a new Warrant Certificate for the balance shall be
countersigned and delivered to or upon the order of the Warrant Holder.
(d) The Company covenants and agrees that it will pay
when due and payable any and all taxes which may be payable in respect to the
issuance of Warrants, or the issuance of any shares of Common Stock upon the
exercise of Warrants. However, neither the Company nor the Warrant Agent shall
be required to issue or deliver any Warrant Certificate or shares of Common
Stock in a name other than that of the Warrant Holder at the time of surrender
if any tax is payable in respect of such transfer until the person requesting
the same has paid to the Company the amount of such tax or has established to
the Company's satisfaction that such tax has been paid or shall not be due and
payable. In the event that any transfer tax is due and payable, the Warrant
Agent shall be under no obligation to issue or deliver any Warrant Certificate
or shares of Common Stock in a name other than that of the Warrant Holder until
the Company has notified the Warrant Agent that the transfer tax, if any, has
been paid, or in the alternative, that no transfer tax is due and payable by
reason of an exemption.
(e) The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently account to the
Company for all moneys received by the Warrant Agent for the purchase of shares
of Common Stock upon the exercise of Warrants.
(f) The Warrant Agent covenants and agrees that upon the
exercise of any of the Warrants, the Warrant Agent shall provide written notice
to the Company at 5025 Derrick Jones Road, Suite 120, Atlanta, Georgia 30349
and to the Representative at its office at 3340 Peachtree Street, NE, Suite
450, Atlanta, Georgia 30326, the expense of which notice shall be borne by the
Company. Each notice shall contain the name of the exercising Warrant Holder,
the number of shares of Common Stock that the Warrant Holder has elected to
purchase, the purchase price paid on a per share basis and the cumulative
number of Warrants exercised by all of the Warrant Holders as of the date of
the transaction which is the subject of the aforesaid notice. Such notice
shall be made on the date of the exercise of the Warrant. Nothing contained
herein shall be construed so as to prevent the Warrant Agent from providing the
information required in this Section 2.02 (f) in a consolidated or tabular
form, provided that all other provisions of this Section are complied with.
(g) The Warrant Agent covenants and agrees that it shall
provide a list of each and every holder of the Warrants to the Company and the
Representative at such time or from time to time as shall be required by the
Company or the Representative, but in no event shall such a list be provided
less frequently than once per annum at a date as shall be determined by the
Company.
SECTION 2.03. (a) Commencing on the first anniversary of the effective
date of the IPO, the Company may, subject to the conditions set forth herein,
redeem all, but not less than all, the Warrants then outstanding at a
redemption price of $0.125 per Warrant upon not less than thirty (30) days
prior written notice (the "Redemption Notice") to the holders thereof provided
that the average closing price of the Common Stock for the 10 consecutive
trading days
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<PAGE> 5
ending three (3) days prior to the date of the Redemption Notice is at least
$_____, subject to adjustment for stock dividends, stock splits and other
anti-dilution provisions as provided for under Article III herein. For
purposes of this Section 2.03, "closing price" at any date shall be deemed to
be: (i) the last sale price regular way as reported on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or (ii) if the Common Stock is not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices
regular way for the Common Stock as reported by the Nasdaq National Market or
Nasdaq Small Cap Market of the Nasdaq Stock Market, Inc. ("NASDAQ") or (iii) if
the Common Stock is not listed or admitted for trading on any national
securities exchange, and is not reported by NASDAQ, the average of the closing
bid and asked prices in the over-the-counter market as furnished by the
National Quotation Bureau, Inc. or if no such quotation is available, the fair
market value of the Common Stock as determined in good faith by the Board of
Directors of the Company. The Redemption Notice shall be deemed effective upon
mailing and the time of mailing is the "Effective Date of the Notice". The
Redemption Notice shall state a redemption date not less than thirty (30) days
from the Effective Date of the Notice (the "Redemption Date") . No Redemption
Notice shall be mailed unless all funds necessary to pay for redemption of all
Warrants then outstanding shall have first been set aside by the Company in
trust with the Warrant Agent for the benefit of all Warrant Holders so as to be
and continue to be available therefor. The redemption price to be paid to the
Warrant Holders will be $0.125 for each share of the Common Stock of the
Company to which the Warrant Holder would then be entitled upon exercise of the
Warrant being redeemed, as adjusted from time to time as provided herein (the
"Redemption Price"). In the event the number of shares of Common Stock issuable
upon exercise of the Warrant being redeemed are adjusted pursuant to Article
III hereof, then upon each such adjustment the Redemption Price will be
adjusted by multiplying the Redemption Price in effect immediately prior to
such adjustment by a fraction, the numerator of which is the number of shares
of Common Stock issuable upon exercise of the Warrant being redeemed
immediately prior to such adjustment and the denominator of which is the number
of shares of Common Stock issuable upon exercise of such Warrant being redeemed
immediately after such adjustment. The Warrants may only be redeemed if the
Company has in effect a current Registration Statement or post-effective
amendment covering the shares underlying the Warrants. The Warrant Holders may
exercise their Warrants between the Effective Date of the Notice and the
Redemption Date, such exercise being effective if done in accordance with
Section 2.02 (a), and if the Warrant Certificate, with form of election to
purchase duly executed and the Warrant Price, as applicable for such Warrant
subject to redemption for each share of Common Stock to be purchased is
actually received by the Warrant Agent at its office as provided on the first
page of this Agreement, no later than 5:00 P.M. New York time on the Redemption
Date.
(b) If any Warrant Holder does not wish to exercise any
Warrant being redeemed, the Warrant Holder should mail such Warrant to the
Warrant Agent at its office as provided on the first page of this Agreement,
after receiving the Redemption Notice required by this Section. If such
Redemption Notice shall have been so mailed, and if on or before the Effective
Date of the Notice all funds necessary to pay for redemption of all Warrants
then outstanding shall have been set aside by the Company in trust with the
Warrant Agent for the benefit of all Warrant Holders so as to be and continue
to be available therefor, then, on and after said Redemption Date,
notwithstanding that any Warrant subject to redemption shall not
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<PAGE> 6
have been surrendered for redemption, the obligation evidenced by all Warrants
not surrendered for redemption or effectively exercised shall be deemed no
longer outstanding, and all rights with respect thereto shall forthwith cease
and terminate, except only the right of the holder of each Warrant subject to
redemption to receive the Redemption Price for each share of Common Stock to
which he would be entitled if he exercised the Warrant upon receiving the
Redemption Notice of the Warrant.
(c) Notwithstanding anything contained in this Article
II, the Underwriter's Warrants shall not be eligible for redemption by the
Company.
ARTICLE III
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF WARRANT PRICE
SECTION 3.01. In case the Company shall at any time after the date
of this Agreement (i) declare a dividend on the outstanding Common Stock in
shares of its capital stock, (ii) subdivide the outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares, or (iv)
issue any shares of its capital stock by reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then, in each case,
the Warrant Price, and the number and kind of shares of Common Stock receivable
upon exercise, in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination, or reclassification shall
be proportionately adjusted so that the holder of any Warrant exercised after
such time shall be entitled to receive the aggregate number and kind of shares
which if such Warrant had been exercised immediately prior to such time, he
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination, or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
SECTION 3.02. In case the Company after the date hereof shall issue
rights, options, or warrants to all holders of Common Stock entitling them to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion
price per share, if a security convertible into or exchangeable for Common
Stock) less than the "current market price" (as defined in Section 3.04 hereof)
per share of Common Stock on the record date established for the issuance of
such rights, options or warrants, then, in such case, the Warrant Price shall
be adjusted by multiplying the Warrant Price in effect on the record date of
such issuance by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding on the record date for such issuance plus
the number of shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so to be issued (or the aggregate
initial conversion price of the convertible securities to be issued or sold)
would purchase at such "current market price" and of which the denominator
shall be the number of shares of Common Stock outstanding on the record date
for such issuance plus the number of additional shares of Common Stock to be
issued (or into which the convertible or exchangeable securities to be issued
or sold are initially convertible or exchangeable). Such adjustment shall
become effective at the close of business
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<PAGE> 7
on such record date; provided, however, that, to the extent the shares of
Common Stock (or securities convertible to or exchangeable for shares of Common
Stock) are not delivered, the Warrant Price shall be readjusted after the
expiration of such rights, options, or warrants (but only with respect to
Warrants exercised after such expiration), to the Warrant Price which would
then be in effect had the adjustments made upon the issuance of such rights or
warrants been made upon the basis of delivery of only the number of shares of
Common Stock or securities convertible into or exchangeable for shares of
Common Stock actually issued. In case any subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the board
of directors of the Company, whose determination shall be conclusive absent
manifest error. Shares of Common Stock owned by or held for the account of the
Company or any majority-owned subsidiary shall not be deemed outstanding for
the purpose of any such computation.
Notwithstanding the foregoing, no adjustment in the
Warrant Price or the number of shares of Common Stock issuable upon exercise of
the Warrants shall be made upon (i) the issuance of options (or upon exercise
thereof) by the Company pursuant to its Stock Option Plans, (ii) the issuance
of the Underwriter's Warrants, or (iii) any other options and warrants
outstanding as of the date hereof.
SECTION 3.03. In case the Company shall distribute to all holders
of Common Stock (including any such distribution made to the shareholders of
the Company in connection with a consolidation or merger in which the Company
is the continuing corporation) evidences of its indebtedness or assets (other
than cash dividends or distributions and dividends payable in shares of Common
Stock), subscription rights, options, or warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase
shares of Common Stock (excluding those referred to in Section 3.02 hereof),
then, in each case, the Warrant Price shall be adjusted by multiplying the
Warrant Price in effect immediately prior to the record date for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the "current market price" per share
of Common Stock on such record date, less the fair market value (as determined
in good faith by the board of directors of the Company, whose determination
shall be conclusive absent manifest error) of the portion of the evidences of
indebtedness or assets so to be distributed, or of such subscription rights,
options, or warrants, convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Common Stock, applicable to the
share, and of which the denominator shall be such "current market price" per
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of such
distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
SECTION 3.04. For the purpose of any computation under sections
3.02 and 3.03 hereof, the "current market price" per share of Common Stock on
any date shall be deemed to be the average of the daily closing prices for the
10 consecutive trading days ending three (3) days prior to such date. The
closing price for each day shall be the last reported sales price regular way
or, in case no such reported sale takes place on such day, the closing bid
price regular way, in either case on the principal national securities exchange
on which the Common
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<PAGE> 8
Stock is listed or admitted to trading or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, the highest reported
bid price as furnished by NASDAQ. If on any such date the Common Stock is not
quoted on NASDAQ or any such organization, the closing price shall be deemed to
be the average of the closing bid and asked prices in the over-the-counter
market as reported by the National Quotation Bureau or if no such quotation is
available, the fair value of the Common Stock on such date, as determined in
good faith by the board of directors of the Company, whose determination shall
be conclusive absent manifest error.
SECTION 3.05. No adjustment in the Warrant Price shall be required
if such adjustment is less than $0.05; provided, however, that any adjustments
which by reason of this Section 3.05 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article III shall be made to the nearest cent or to the
nearest one-thousandth of a share, as the case may be.
SECTION 3.06. In any case in which this Article III shall require
that an adjustment in the Warrant Price be made effective as of a record date
for a specified event, the Company may elect to defer, until the occurrence of
such event, issuing to the holder of any Warrant exercised after such record
date, the shares, if any, issuable upon such exercise over and above the
shares, if any, issuable upon such exercise on the basis of the Warrant Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the occurrence of
the event requiring such adjustment.
SECTION 3.07. Upon each adjustment of the Warrant Price as a result
of the calculations made in Section 3.01, 3.02, or 3.03 hereof, each Warrant
outstanding prior to the making of the adjustment in the Warrant Price shall
thereafter evidence the right to purchase, at the adjusted Warrant Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing
(A) the product obtained by multiplying the number of shares purchasable upon
exercise of a Warrant prior to adjustment of the number of shares by the
Warrant Price in effect prior to adjustment of the Warrant Price by (B) the
Warrant Price in effect after such adjustment of the Warrant Price.
SECTION 3.08. In case of any capital reorganization of the Company,
or of any reclassification of the Common Stock (other than a reclassification
of the Common Stock referred to in Section 3.01 hereof), or in the case of the
consolidation of the Company with or the merger of the Company into any other
corporation or of the sale, transfer, or lease of the properties and assets of
the Company as, or substantially as, an entirety to any other corporation or
other entity, each Warrant shall after such capital reorganization,
reclassification of Common Stock, consolidation, merger, sale, transfer, or
lease, be exercisable, on the same terms and conditions specified in this
Agreement, for the number of shares of stock or other securities, assets, or
cash to which a holder of the number of shares purchasable (at the time of such
capital reorganization, reclassification of Common Stock, consolidation,
merger, sale, transfer, or lease) upon exercise of such Warrant would have been
entitled upon such capital reorganization, reclassification of Common Stock,
consolidation, merger, sale, transfer, or lease; and in any such case, if
necessary, the provisions set forth in this Article III with respect to the
rights and
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<PAGE> 9
interests thereafter of the holders of the Warrants shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to any shares
of stock, other securities, assets, or cash thereafter deliverable on the
exercise of the Warrants. The subdivision or combination of shares of Common
Stock at any time outstanding into a greater or lesser number of shares shall
not be deemed to be a reclassification of the Common Stock for the purposes of
this subsection. The Company shall not effect any such consolidation, merger,
transfer, or lease, unless prior to or simultaneously with the consummation
thereof, the successor corporation (if other than the Company) resulting from
such consolidation or merger or the Corporation purchasing, receiving, or
leasing such assets or other appropriate corporation or entity shall expressly
assume, by written instrument in form satisfactory to the Underwriter, the
obligation to deliver to the holder of each Warrant such shares of stock,
securities, or assets as, in accordance with the foregoing provisions, such
holders may be entitled to purchase and to perform the other obligations of the
Company under this Agreement.
SECTION 3.09. The Company may make such reductions in the Warrant
Price, in addition to those required by this Article III, as it shall, in it
sole discretion, determine to be advisable.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF
WARRANT HOLDERS
SECTION 4.01. No Warrant Holder, as such, shall be entitled to vote or
receive dividends or be deemed the holder of shares of Common Stock for any
purposes, nor shall anything contained in any Warrant Certificate be construed
to confer upon any Warrant Holder, as such, any of the rights of a shareholder
of the Company or any right to vote, give or withhold consent to any action by
the Company, whether upon any recapitalization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise,
receive dividends or subscription rights, or otherwise, until in connection
with the exercise of any Warrant, such Warrant shall have been surrendered and
the purchase price or the shares of Common Stock for which such Warrant is
being exercised shall have been received by the Warrant Agent; provided,
however, that any such surrender and payment on any date when the stock
transfer books of the Company shall be closed shall constitute the person or
persons in whose name or names the certificate or certificates for those shares
of Common Stock are to be issued as the record holder or holders thereof for
all purposes at the opening of business on the next succeeding day on which
such stock transfer books are open and the Warrant surrendered shall not be
deemed to have been exercised, in whole or in part, as the case maybe, until
such next succeeding day on which stock transfer books are open.
SECTION 4.02. The Company covenants and agrees that it shall
contemporaneously provide to all Warrant Holders of record any publication,
mailing or notice of an event which it shall provide to all of its shareholders
of record and which event shall result in the adjustment to the Warrant Price
as provided in Article III hereof. For purposes of this Section 4.02, the
Warrant Holders of record shall be those Warrant Holders who are of record on a
date even with
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the date chosen by the Company for the purpose of determining the shareholders
of record who shall be entitled to receive such publication, mailing or notice.
SECTION 4.03. If any Warrant Certificate is lost, stolen, mutilated
or destroyed, the Company and the Warrant Agent may, on such terms as to
indemnity or otherwise as they may in their discretion reasonably impose, which
shall, in the case of a mutilated Warrant Certificate, include the surrender
thereof, issue a new Warrant Certificate of like denomination and tenor as, and
in substitution for, the Warrant Certificate so lost, stolen mutilated or
destroyed.
SECTION 4.04.
(a) The Company covenants and agrees that at all times it
shall reserve and keep available for the exercise of outstanding Warrants such
number of authorized shares of Common Stock and the aggregate number and kind
of any other securities which the Warrants are exercisable for, pursuant to the
provisions of Article III hereof, as are sufficient to permit the exercise in
full of such Warrants and that it will make available to the Warrant Agent from
time to time a number of duly executed certificates representing shares of
Common Stock and other securities, sufficient therefor.
(b) The Company shall use its best efforts to secure the
listing, upon official notice of issuance, of the shares of Common Stock
issuable upon exercise of Warrants upon any securities exchange upon which the
Common Stock becomes listed.
(c) The Company covenants that all shares of Common Stock
issued on exercise of Warrants shall be validly issued, fully paid,
non-assessable and free of preemptive rights.
(d) The Company has filed a Registration Statement on
Form SB-2 (Registration No. 333-24619) for the registration of, among other
things, the sale of the Warrants and the shares of Common Stock issuable upon
exercise thereof under the Securities Act of 1933, as amended (the "Act"). The
Company shall use its best efforts to secure the effectiveness of the
Registration Statement under the Act, and to register or qualify such Warrants
and shares of Common Stock under the laws of any states in which the sale of
the Warrants and shares of Common Stock was registered or qualified at the time
of the IPO and shall use its reasonable good faith efforts to register and
qualify such Warrants and shares of Common Stock in such additional states and
jurisdictions as may be appropriate. The Company further agrees to use its
best efforts to maintain the effectiveness of such Registration Statement and
such state qualifications, as aforesaid, by the filing of any and all
amendments to the Registration Statement and such state qualifications as may
be required from time to time under the Act or the laws of the various states
until the expiration or termination of all the Warrants in accordance herewith.
(e) The Company will furnish to the Warrant Agent, upon
request, an opinion of counsel satisfactory to the Warrant Agent to the effect
that (i) a Registration Statement under the Act is then in effect with respect
to the Warrants and shares of Common Stock issuable upon
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the exercise of the Warrants and that the prospectus included therein complies
as to form in all material respects, (except as to financial statements,
including schedules, and other accounting and financial data, as to which such
counsel need express no opinion), with the requirements of the Act and the
rules and regulations of the Commission thereunder; or a Registration Statement
under the Act with respect to said shares of Common Stock is not required. In
the event that said opinion states that such a Registration Statement is in
effect, the Company will from time to time furnish the Warrant Agent with
current prospectuses meeting the requirements of the Act and such rules and
regulations in sufficient quantity to permit the Warrant Agent to deliver a
prospectus ("Prospectus") to each Warrant Holder upon exercise thereof. The
Company further agrees to pay all fees, costs and expenses in connection with
the preparation and delivery to the Warrant Agent of the foregoing opinions and
Prospectuses and the above mentioned registrations and other actions, and to
immediately notify the Warrant Agent in the event that (i) the Commission shall
have issued or threatened to issue any order preventing or suspending the use
of any Prospectus; (ii) at any time any Prospectus shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(iii) for any reason it shall be necessary to amend or supplement any
Prospectus in order to comply with the Act.
SECTION 4.05. If the number of shares purchasable upon the
exercise of each Warrant is adjusted pursuant to Section 3.07 hereof, the
Company shall not be required to issue fractions of shares upon exercise of the
Warrants or to distribute share certificates which evidence fractional shares.
In lieu of fractional shares, the Company, in its sole discretion, may pay to
the registered holders of Warrant Certificates at the time such Warrants are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of a share. For purposes of this Section 4.05, the
current market value of a share issuable upon the exercise of a Warrant shall
be the closing price of a share of Common Stock, as determined pursuant to the
second and third sentences of Section 3.04, for the trading day immediately
prior to the date of such exercise.
ARTICLE V
TREATMENT OF WARRANT HOLDERS
SECTION 5.01. Prior to due presentment for registration of transfer
of any Warrant, the Company and the Warrant Agent may deem and treat the
Warrant Holder as the absolute owner of such warrant, notwithstanding any
notation of ownership or other writing thereon, for the purpose of any exercise
thereof and for all other purposes, and neither the Company nor the Warrant
Agent shall be affected by any notice to the contrary.
ARTICLE VI
CONCERNING THE WARRANT AGENT
AND OTHER MATTERS
SECTION 6.01. The Company will from time to time promptly pay,
subject to the provisions of Section 2.02 (d) of this Agreement, all taxes and
charges that may be imposed
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upon the Company or the Warrant Agent in respect of the issuance or delivery of
shares of Common Stock upon the exercise of Warrants.
SECTION 6.02.
(a) The Warrant Agent may resign and be discharged from
its duties under this Agreement upon sixty (60) days notice in writing, mailed
to the Company by registered or certified mail, and to each Warrant Holder.
The Company may remove the Warrant Agent or any successor warrant agent upon
sixty (60) days notice in writing, mailed to the Warrant Agent or successor
Warrant Agent, as the case may be, by registered or certified mail, and to each
Warrant Holder; provided, however, the Company shall appoint a new Warrant
Agent as hereinafter provided and such removal shall not become effective until
a successor Warrant Agent has been appointed and has accepted such appointment.
If the Warrant Agent shall resign or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Warrant Agent. If the Company
shall fail to make such appointment within a period of sixty (60) days after it
has been notified in writing of such resignation or incapability by the Warrant
Agent by a Warrant Holder, who shall, with such notice, submit his Warrant
Certificate for inspection by the Company, then any Warrant Holder may apply to
any court of competent jurisdiction or the appointment of a successor to the
Warrant Agent. Any successor Warrant Agent, whether appointed by the Company
or by such a court shall be a registered transfer agent, bank or trust company,
subject to the terms and conditions of this Section 6.02, in good standing and
incorporated under the laws of any State of the United States, having its
principal office in the United States of America. After appointment, the
successor Warrant Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Warrant Agent
without further act or deed. The former Warrant Agent shall deliver and
transfer to the successor Warrant Agent any property at the time held by it
hereunder and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Failure to give any notice provided for in
this Section, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the successor Warrant Agent, as the case may be.
(b) Any corporation into which the Warrant Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties
hereto. In case at the time such successor to the Warrant Agent shall succeed
to the agency created by this Agreement, any of the Warrant Certificates shall
have been countersigned but not delivered, any such successor to the Warrant
Agent may adopt the countersignature of the original Warrant Agent and deliver
such Warrant Certificates so countersigned, and in case at that time any of the
Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant Certificate in its own name or in
the name of the successor Warrant Agent; and in all such cases such Warrant
Certificates shall have the full force provided in the Warrant Certificates and
this Agreement.
12
<PAGE> 13
In case at any time the name of the Warrant Agent
shall be changed and at such time any of the Warrant Certificates shall have
been countersigned but not delivered, the Warrant Agent may adopt the
countersignature under this prior name and deliver Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
SECTION 6.03. The Company agrees to pay the Warrant Agent a
reasonable fee for all services rendered by it hereunder. The Company also
agrees to indemnify the Warrant Agent for, and to hold it harmless against, any
loss, liability or expense, incurred without gross negligence, willful
misconduct or bad faith on the part of the Warrant Agent, arising out of or in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises.
SECTION 6.04. The Company covenants and agrees that it shall, at
the Company's expense, provide to the Warrant Agent copies of its current
prospectus, if any, in such quantity as to enable the Warrant Agent to deliver
one copy of such current prospectus to such Warrant Holder who shall exercise
his rights under a Warrant. Notwithstanding anything else contained in this
Section 6.04, the Company shall not be obligated to provide copies of its
current prospectus for the purpose of allowing the Warrant Agent to deliver
such copies to any Warrant Holder who delivers all of his redeemable warrants
for redemption pursuant to Section 2.03 or who shall notice the Company of his
intent to permit redemption of all of his Warrants pursuant to Section 2.03
herein or to any person who shall hold any Warrant subject to the terms of this
Agreement after the earlier of the Redemption Date or the Last Exercise Date of
the Warrants.
SECTION 6.05. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Warrant certificates, by their
acceptance thereof, shall be bound:
(a) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, that fact or matter, unless other evidence in respect
thereof be herein specifically prescribed, may be deemed to be conclusively
proved and established by a certificate signed by the President or the
Secretary of the Company and delivered to the Warrant Agent. That certificate
shall be full authorization to the Warrant Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in reliance
upon that certificate.
(b) The Warrant Agent shall be liable hereunder only for
its own gross negligence, willful misconduct or bad faith.
(c) The Warrant Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this Agreement
or in the Warrant Certificates, except its countersignature thereof, or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
13
<PAGE> 14
(d) The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof, except the due execution hereof by the Warrant Agent, or
in respect of the validity or execution of any Warrant Certificate, except its
countersignature thereof; nor shall it be responsible for any Warrant
Certificate; nor shall it be responsible for the adjustment of the Warrant
Price or the making of any change in the number of shares of Common Stock
required under the provisions of Article III of this Agreement or responsible
for the manner, method or amount of any such change or the ascertaining of the
existence of facts that would require any such adjustment or change except with
respect to the exercise of Warrant Certificates after actual notice of any
adjustment of the Warrant Price; nor shall it by any act under this Agreement
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this
Agreement or any Warrant Certificate or as to whether any share of Common Stock
will when issued be validly issued, fully paid, non-assessable and free of
preemptive rights.
(e) The Warrant Agent and any shareholder, director,
officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrant Certificates or other securities of the Company to retain a pecuniary
interest in any transaction in which the Company may be interested or contract
with or lend money to or otherwise act as fully and freely as though it was not
the Warrant Agent or subject to this Agreement. Nothing herein shall preclude
the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
(f) The Warrant Agent is hereby authorized and directed
to accept instructions with respect to the performance of its duties hereunder
from any officer or assistant officer of the Company, and to apply to any such
officer or assistant officer for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered to be taken by
it in good faith in accordance with instructions of any such officer or
assistant officer.
(g) The Warrant Agent may consult with its counsel or
other counsel satisfactory to it, including counsel for the Company, and the
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken, offered, or omitted by it hereunder in good
faith and in accordance with the opinion of such counsel.
(h) The Warrant Agent shall incur no liability to the
Company or to any holder of any Warrant for any action taken by it in reliance
upon any Warrant Certificate or certificate for Common Stock, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed, and where necessary,
certified or acknowledged, by the proper person or persons.
SECTION 6.06. The Warrant Agent may, without the consent or
concurrence of the Warrant Holders, by supplemental agreement or otherwise,
concur with the Company in making any changes or corrections in this Agreement
that (i) it shall have been advised by counsel, who may be counsel for the
Company, are required to cure any ambiguity or to correct any defective or
inconsistent provision or clerical omission or mistake or manifest error herein
contained, or (ii) as provided in Section 3.09, the Company deems necessary of
advisable and which shall not
14
<PAGE> 15
be inconsistent with the provisions of the Warrant Certificates, provided such
changes or corrections do not adversely affect the privileges or immunities of
the Warrant Holders.
SECTION 6.07. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Warrant Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
SECTION 6.08. Forthwith upon the appointment after the date thereof
of any transfer agent for the Common Stock, or of any subsequent transfer agent
for the Common Stock, the Company will file with the Warrant Agent a statement
setting forth the name and address of such transfer agent.
SECTION 6.09. Notice or demand pursuant to this Agreement to be
given or made by the Warrant Agent or by any Warrant Holder to or on the
Company shall be sufficiently given or made and effective on the third business
day after posting thereof, unless otherwise provided in this Agreement, if sent
by first-class mail, postage prepaid, addressed (until another address is filed
in writing by the Company with the Warrant Agent) as follows:
Professional Transportation Group Ltd., Inc.
5025 Derrick Jones Road, Suite 120
Atlanta, Georgia 30349
Attention: Mr. Dennis A. Bakal, President
notice or demand pursuant to this Agreement to be given or made by the Company
or any Warrant Holder to or on the Warrant Agent shall be sufficiently given or
made and effective on the third business day after posting thereof, unless
otherwise provided in this Agreement, if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) as follows:
Reliance Trust Company
3384 Peachtree Road, Suite 900
Atlanta, Georgia 30326
Attn: Compliance Department
Notice or demand pursuant to this Agreement to be given or made by the Company
or the Warrant Agent to or on the Representative shall be sufficiently given or
made and effective on the third business day after posting thereof, unless
otherwise provided in this Agreement, if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the
Representative with the Company) as follows:
Argent Securities, Inc.
3340 Peachtree Street, Suite 450
Atlanta, Georgia 30326
Attn: L. Phillips Reames
15
<PAGE> 16
Notice or demand pursuant to this Agreement to be given or made by the Company
or the Warrant Agent to or on any Warrant Holder shall be sufficiently given or
made and effective on the third business day after posting thereof, unless
otherwise provided in this Agreement, if sent by first-class mail, postage
prepaid, addressed to such Warrant Holder at his last known address as it shall
appear in the records of the Company, if such notice shall be given by the
Company, or, if such notice shall be given by the Warrant Agent, as it shall
appear on the register maintained by the Warrant Agent.
A copy of any Notice or demand given or made pursuant to this
Agreement on the Warrant Agent, Company or Underwriter shall be promptly
forwarded by the recipient thereof to each of the Company, Warrant Agent or
Underwriter who shall not have received or made such demand or Notice.
SECTION 6.10. The validity, interpretation and performance of this
Agreement and the Warrants shall be governed by the law of the State of
Georgia.
SECTION 6.11. Nothing in this Agreement shall be construed to give
to any person or corporation other than the parties hereto and the Warrant
Holders any right, remedy or claim under promise or agreement hereof. All
covenants, conditions, stipulations, promises and agreements contained in this
Agreement shall be for the sole and exclusive benefit of the Company and the
Warrant Agent and their successors and of the Warrant Holders, and their heirs,
representatives, successors, assigns and transferees.
SECTION 6.12. A copy of this Agreement shall be available for
inspection by any Warrant Holder during the regular business hours and at the
corporate office of the Warrant Agent in Atlanta, Georgia, at which time the
Warrant Agent may require any Warrant Holder to submit his Warrant Certificate
for inspection by it.
SECTION 6.13. This Agreement shall terminate on the Last Exercise
Date, or such earlier date upon which all Warrants have been exercised or
redeemed, except that the Warrant Agent shall account to the Company pursuant
to Section 2.02 (e) of this Agreement for all cash held by it. The provisions
of Section 6.03 and 6.04 of this Agreement shall survive such termination.
SECTION 6.14. The Article headings in this Agreement are for
convenience only and are not part of this Agreement and shall not affect the
interpretation thereof.
SECTION 6.15. This Agreement may be executed in any number
counterparts, each of which is so executed shall be deemed to be an original,
and all such counterparts shall together constitute but one and the same
agreement.
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<PAGE> 17
ATTEST:___________________ PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
By:_____________________________________
Dennis A. Bakal, President
ATTEST:___________________ RELIANCE TRUST COMPANY
By:__________________________________
Name:________________________________
Title:_______________________________
17
<PAGE> 1
EXHIBIT 5.1
LAW OFFICES
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
A REGISTERED LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
<TABLE>
<S> <C> <C>
FIRST UNION PLAZA OTHER OFFICES:
SUITE 1400 Charleston, South Carolina
999 PEACHTREE STREET, N.E. Charlotte, North Carolina
ATLANTA, GEORGIA 30361 Columbia, South Carolina
TELEPHONE (404) 817-6000 Florence, South Carolina
TELECOPIER (404) 817-6050 Greenville, South Carolina
Myrtle Beach, South Carolina
</TABLE>
May 13, 1996
Professional Transportation Group Ltd., Inc.
5025 Derrick Jones Road
Suite 120
Atlanta, Georgia 30349
Gentlemen:
We have acted as counsel to Professional Transportation Group Ltd.,
Inc. (the "Company") in connection with the filing of a Registration Statement
on Form SB-2 (Reg. No. 333-24619) (the "Registration Statement") under the
Securities Act of 1933, covering the offering of up to 1,725,000 shares (the
"Shares") of the Company's Common Stock, no par value per share and up to
1,725,000 redeemable common stock purchase warrants (the "Warrants"). In
connection therewith, we have examined such corporate records, certificates of
public officials and other documents and records as we have considered
necessary or proper for the purpose of this opinion.
This opinion is limited by and is in accordance with, the January 1,
1992, edition of the Interpretive Standards applicable to Legal Opinions to
Third Parties in Corporate Transactions adopted by the Legal Opinion Committee
of the Corporate and Banking Law Section of the State Bar of Georgia.
Based on the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that the Shares and Warrants,
when issued and delivered as described in the Registration Statement, will be
legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus contained in the Registration Statement.
Very truly yours,
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PROFESSIONAL TRANSPORTATION GROUP, LTD.
AND
DENNIS A. BAKAL
DATED: APRIL 1, 1997
<PAGE> 2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PROFESSIONAL TRANSPORTATION GROUP, LTD., a Georgia corporation (the "Company"),
and DENNIS A. BAKAL, an individual resident of Georgia (the "Executive"), as of
this 1st day of April, 1997.
The Company presently employs the Executive as its Chief Executive
Officer and President. The Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and success of the
Company is substantial. The Board desires to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements which the Board has determined will reinforce and
encourage the continued dedication of the Executive to the Company and will
promote the best interests of the Company and its shareholders. The Executive is
willing to continue to serve the Company on the terms and conditions herein
provided.
Certain terms used in this Agreement are defined in Section 20.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree (as of the Effective Date) that:
1. Employment. The Company shall continue to employ the
Executive, and the Executive shall continue to serve the Company, as Chief
Executive Officer and President upon the terms and conditions set forth herein.
The Executive shall have such authority and responsibilities as are consistent
with his position and which may be set forth in the Bylaws or assigned by the
Board from time to time. The Executive shall devote his full business time,
attention, skill and efforts to the performance of his duties hereunder, except
during periods of illness or periods of vacation and leaves of absence
consistent with Company policy. The Executive may devote reasonable periods of
time to serve as a director or advisor to other organizations, to perform
charitable and other community activities, and to manage his personal
investments; provided, however, that such activities do not materially interfere
with the performance of his duties hereunder and are not in conflict or
competitive with, or adverse to, the interests of the Company.
2. Term. Unless earlier terminated as provided herein, the
Executive's employment under this Agreement shall be for a continuing term (the
"Term") of three years, which shall be extended automatically (without further
action of the Company or the Executive) each day for an additional day so that
the remaining term shall continue to be three years; provided, however, that
either party may at any time, by written notice to the other, fix the Term to a
finite term of three years, without further automatic extension, commencing with
the date of such notice. Notwithstanding the foregoing, the Term of employment
hereunder will end on the date that the Executive attains the age of 65.
<PAGE> 3
3. Compensation and Benefits.
a. The Company shall pay the Executive a salary at a rate of
not less than $300,000 per annum in accordance with the salary payment practices
of the Company. The Board (or an appropriate committee of the Board) shall
review the Executive's salary at least annually and may increase the Executive's
base salary if it determines in its sole discretion that an increase is
appropriate. Such increase must be approved by at least a majority of the Board
for any increase in Executive's salary of 7% or less and by the entire Board
(except Executive) for any increase of greater than 7%.
b. The Executive shall participate in a management incentive
program and shall be eligible to receive annual payments of a bonus in an amount
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 pursuant to that program. In addition, the
Compensation Committee shall annually consider the Executive's performance and
determine if any additional bonus is appropriate.
c. The Executive shall participate in the Plan and be eligible
for the grant of stock options, restricted stock and other awards thereunder.
d. The Executive shall continue to participate in all
retirement, welfare, deferred compensation, life and health insurance (including
health insurance for Executive's spouse and his dependents), and other benefit
plans or programs of the Company now or hereafter applicable to the Executive,
or applicable generally to employees of the Company or to a class of employees
that includes senior executives of the Company; provided, however, that during
any period during the Term that the Executive is subject to a Disability, and
during the 180-day period of physical or mental infirmity leading up to the
Executive's Disability, the amount of the Executive's compensation provided
under this Section 3 shall be reduced by the sum of the amounts, if any, paid to
the Executive for the same period under any disability benefit or pension plan
of the Company or any of its subsidiaries.
e. The Company shall provide to the Executive an automobile
owned or leased by the Company of a make and model appropriate to the
Executive's status (in the reasonable opinion of the Executive) or, in lieu
thereof, shall provide the Executive with an annual allowance to cover the cost
of the business use of an automobile owned or leased by the Executive.
f. The Company shall reimburse the Executive's reasonable
expenses for dues and capital assessments for country and dining club
memberships currently held by the Executive; provided, however, that if the
Executive during the term of his employment with the Company ceases his
membership in any such clubs and any bonds or other capital payments made by the
Company are repaid to the Executive, the Executive shall pay over such payments
to the Company.
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<PAGE> 4
g. The Company shall continue to reimburse the Executive for
travel, seminar, and other expenses related to the Executive's duties which are
incurred and accounted for in accordance with the historic practices of the
Company.
4. Termination.
a. The Executive's employment under this Agreement may be
terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
(ii) by the Company due to the Disability of the
Executive upon delivery of a Notice of Termination to the
Executive;
(iii) by the Company for Cause upon delivery of a
Notice of Termination to the Executive; and
(iv) by the Executive for any reason upon delivery of
a Notice of Termination to the Company within a 90-day period
beginning on the 30th day after any occurrence of a Change in
Control or within a 90-day period beginning on the one year
anniversary of the occurrence of any Change in Control.
b. If the Executive's employment with the Company shall be
terminated during the Term (i) by reason of the Executive's death, or (ii) by
the Company for Disability or Cause, the Company shall pay to the Executive (or
in the case of his death, the Executive's surviving spouse, if any, or if none,
then to his estate) within 15 days after the Termination Date, a lump sum cash
payment equal to (i) the Accrued Compensation, (ii) one-half of the amount
provided for in Section 3(a) for the year in which the termination takes place
and (iii) if such termination is other than by the Company for Cause, the Pro
Rata Bonus.
c. If the Executive's employment with the Company shall be
terminated by the Company in violation of this Agreement or by the Executive for
any reason after a Change in Control, in addition to other rights and remedies
available in law or equity, the Executive shall be entitled to the following:
(i) the Company shall pay the Executive in cash
within 15 days of the Termination Date an amount equal to all
Accrued Compensation and the Pro Rata Bonus;
(ii) the Company shall pay to the Executive in cash
at the end of each of the 36 consecutive 30-day periods
following the Termination Date an amount equal to one-twelfth
of the sum of the Base Amount and the Bonus Amount.
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<PAGE> 5
(iii) for the period from the Termination Date
through the date that Executive attains the age of 65 (the
"Continuation Period"), the Company shall at its expense
continue on behalf of the Executive and his dependents and
beneficiaries the life insurance, disability, medical, dental
and hospitalization benefits provided (x) to the Executive at
any time during the 90-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly
situated executives who continue in the employ of the Company
during the Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this Section
4(c)(iii) during the Continuation Period shall be no less
favorable to the Executive and his dependents and
beneficiaries than the most favorable of such coverages and
benefits during any of the periods referred to in clauses (x)
and (y) above. The Company's obligation hereunder with respect
to the foregoing benefits shall be limited to the extent that
the Executive obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case the Company
may reduce the coverage of any benefits it is required to
provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefit plans is no
less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This subsection
(iii) shall not be interpreted so as to limit any benefits to
which the Executive or his dependents or beneficiaries may be
entitled under any of the Company's employee benefit plans,
programs or practices following the Executive's termination of
employment, including without limitation, retiree medical and
life insurance benefits; and
(iv) the restrictions on any outstanding incentive
awards (including stock options) granted to the Executive
under the Plan or under any other incentive plan or
arrangement shall lapse and such incentive award shall become
100% vested, all stock options granted to the Executive shall
become immediately exercisable and shall become 100% vested.
d. In the event that the Executive shall no longer be the
Chief Executive Officer of the Company, other than by voluntary resignation or
if Executive is terminated for Cause, the Company shall, within 10 days after
termination as Chief Executive Officer, offer to repurchase all of the Company's
common stock owned by the Executive, at a purchase price equal to the Fair
Market Value of the common stock, as determined in accordance with the
provisions below. The question of the Fair Market Value of the Company's common
stock shall be submitted to three impartial and reputable appraisers. The
Executive and the Company shall each select one appraiser, and such appraisers
shall select a third, independent appraiser. The three appraisers shall
thereafter proceed as expeditiously as possible to determine (by concurrence of
a majority of such appraisers) the Fair Market Value of the common stock, and
the appraisers shall deliver an appraisal report to the Executive and the
Company as soon as practicable after it is completed. The determination of the
question of the Fair Market Value of the common stock by such appraisers shall
be final and binding on the Executive and the Company for purposes of this
Agreement. The Company shall pay the reasonable fees and
4
<PAGE> 6
expenses of such appraisers. For the purposes hereof, "Fair Market Value" shall
mean the relevant percentage of the fair value of the business of the Company
represented by the shares of common stock as to which such determination is
being made, which shall be determined on a going concern basis and as between a
willing seller and a willing buyer, taking into account the Company's financial
condition, performance, market share and other relevant criteria, but not taking
into account the absence of a public market for the shares or that the shares
constitute a minority interest in the Company. In the event that the offer to
repurchase required by this Section 4(d) occurs after an Initial Public
Offering, then "Fair Market Value" shall mean (i) the average closing sales
price for the 20 trading days prior to the date of termination if the Company's
common stock is traded on a national securities exchange; (ii) if the Company's
common stock is not traded on a national securities exchange, the average of the
closing high bid and low ask prices of the Company's common stock for the 20
trading days prior to the date of termination, if the Company's common stock is
traded on the over-the-counter market; or (iii) if the Company's common stock is
not traded on the over-the-counter market, then as determined in the manner
specified above for situations prior to the Initial Public Offering. Payment of
Fair Market Value to the Executive as required by this Section 4(d) shall be
made in equal installments at the end of each of the 36 consecutive months
following the termination of Executive's employment. The amount of this payment
shall be evidenced by a promissory note, bearing interest at 8% per annum and
Executive shall retain a security interest in the shares being repurchased and
shall retain the voting rights to such shares until the entire amount has been
paid.
e. The Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment
except as provided in Section 4(c)(iii).
f. In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")) to the Executive or for his benefit paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise in
connection with, or arising out of, his employment with the Company or a change
in ownership or effective control of the Company or of a substantial portion of
its assets (a "Payment" or "Payments"), would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive will be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties, other than interest
and penalties imposed by reason of the Executive's failure to file timely a tax
return or pay taxes shown due on his return, imposed with respect to such taxes
and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
5
<PAGE> 7
g. The severance pay and benefits provided for in this Section
4 shall be in lieu of any other severance or termination pay to which the
Executive may be entitled under any Company severance or termination plan,
program, practice or arrangement. The Executive's entitlement to any other
compensation or benefits shall be determined in accordance with the Company's
employee benefit plans and other applicable programs, policies and practices
then in effect.
5. Termination of Guarantees. It is understood that Executive has
individually guaranteed Company indebtedness and lease obligations, and has
incurred other costs for which he has not been compensated. In consideration of
the above services, the Company agrees to make every effort to remove and cause
to be terminated all guarantees provided by Executive in respect of certain bank
loans and capital leases before the scheduled loan pay-off dates of the
guaranteed loans or termination of the lease obligations. If the Company is
unable to remove and cause to be terminated any such loan guarantees on or prior
to December 31, 1997, the Company agrees to compensate Executive in addition
to all other compensation provided hereunder in an amount equal to one percent
(1%) of the outstanding balance of the guaranteed loans and other obligations,
which amount shall be paid to Executive in quarterly installments.
Upon termination of this Agreement, all guarantees made by Executive
must be immediately removed and terminated and certified as such by the lending
institution of other person in whose favor the guarantee was made. In the event
this Agreement terminates and the Company has been unable to remove and
terminate said loan guarantees prior to said termination of employment, then the
Company shall continue to pay Executive compensation at the rate and upon the
same terms as he was paid under this Agreement until said loan guarantees have
been removed and terminated. The Company further agrees to indemnify Executive
and hold Executive harmless from and against any and all claims, losses,
damages, liens, costs and expenses, including reasonable attorneys' fees and
costs, arising out of any default by the Company (or its subsidiaries) on loans
or other obligations guaranteed by Executive.
This Section 5 shall survive termination of this Agreement.
6. Trade Secrets, Non-Competition, Non-Solicitation, and
Related Matters.
a. The Executive shall not, at any time, either during the
Term of his employment or after the Termination Date, use or disclose any Trade
Secrets of the Company, except in fulfillment of his duties as the Executive
during his employment, for so long as the pertinent information or data remain
Trade Secrets, whether or not the Trade Secrets are in written or tangible form.
b. The Executive agrees to maintain in strict confidence and,
except as necessary to perform his duties for the Company, not to use or
disclose any Confidential Business Information for so long as the pertinent data
or information remains Confidential Business Information.
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c. Upon termination of employment, the Executive shall leave
with the Company all business records relating to the Company and its affiliates
including, without limitation, all contracts, calendars, and other materials or
business records, its business or customers, including all physical, electronic,
and computer copies thereof, whether or not the Executive prepared such
materials or records himself. Upon such termination, the Executive shall retain
no copies of any such materials, provided, however, the Executive may remove and
retain all personal items and materials.
d. The Executive may disclose Trade Secrets or Confidential
Business Information pursuant to any order or legal process requiring him (in
his legal counsel's reasonable opinion) to do so; provided, however, that the
Executive shall first have notified the Company of the request or order to so
disclose the Trade Secrets or Confidential Business Information in sufficient
time to allow the Company to seek an appropriate protective order.
e. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive shall not (without the prior
written consent of the Company) compete with the Company or any of its
affiliates in any way, including, but not limited to, (i) serving as an officer
of, director of, employee of, or consultant to, (ii) directly or indirectly,
forming, or (iii) directly or indirectly, acquiring more than a 5% investment
in, a Competing Business in the Territory.
f. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive shall not (except on behalf of
or with the prior written consent of the Company) either directly or indirectly,
on the Executive's own behalf or in the service or on behalf of others, (i)
solicit, divert, or appropriate to or for a Competing Business, or (ii) attempt
to solicit, divert, or appropriate to or for a Competing Business, any person or
entity that was a customer or prospective customer of the Company or any of its
affiliates on the date of termination and is located in the Territory.
g. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive will not, either directly or
indirectly, on the Executive's own behalf or in the service or on behalf of
others, (i) solicit, divert, or hire away, or (ii) attempt to solicit, divert,
or hire away, to any business located in the Territory, any employee of or
consultant to the Company or any of its affiliates engaged or experienced in the
Business, regardless of whether the employee or consultant is full-time or
temporary, the employment or engagement is pursuant to written agreement, or the
employment is for a determined period or is at will.
h. The Executive acknowledges and agrees that great loss and
irreparable damage would be suffered by the Company if the Executive should
breach or violate any of the terms or provisions of the covenants and agreements
set forth in this Section 6. The Executive further acknowledges and agrees that
each of these covenants and agreements is reasonably necessary to protect and
preserve the interests of the Company. The parties agree that money damages for
any breach of clauses (a) through (g) of this Section 6 will be insufficient to
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<PAGE> 9
compensate for any breaches thereof, and that the Executive or any of the
Executive's affiliates, as the case may be, will, to the extent permitted by
law, waive in any proceeding initiated to enforce such provisions any claim or
defense that an adequate remedy at law exists. The existence of any claim,
demand, action, or cause of action against the Company, whether predicated upon
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of any of the covenants or agreements in this Agreement;
provided, however, that nothing in this Agreement shall be deemed to deny the
Executive the right to defend against this enforcement on the basis that the
Company has no right to its enforcement under the terms of this Agreement.
i. The Executive acknowledges and agrees that: (i) the
covenants and agreements contained in clauses (a) through (g) of this Section 6
are the essence of this Agreement; (ii) that the Executive has received good,
adequate and valuable consideration for each of these covenants; (iii) each of
these covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company; (iv) the Company is and will be engaged
in and throughout the Territory in the Business; (v) a Competing Business could
be engaged in from any place in the Territory; and (vi) the Company has a
legitimate business interest in restricting the Executive's activities
throughout the Territory. The Executive also acknowledges and agrees that: (i)
irreparable loss and damage will be suffered by the Company should the Executive
breach any of these covenants and agreements; (ii) each of these covenants and
agreements in clauses (a) through (g) of this Section 6 is separate, distinct
and severable not only from the other covenants and agreements but also from the
remaining provisions of this Agreement; and (iii) the unenforceability of any
covenants or agreements shall not affect the validity or enforceability of any
of the other covenants or agreements or any other provision or provisions of
this Agreement. The Executive acknowledges and agrees that if any of the
provisions of clauses (a) through (g) of this Section 6 shall ever be deemed to
exceed the time, activity, or geographic limitations permitted by applicable
law, then such provisions shall be and hereby are reformed to the maximum time,
activity, or geographical limitations permitted by applicable law.
j. The Executive and the Company hereby agree that they will
negotiate in good faith to amend this Agreement from time to time to modify the
terms of this Section 6, the definition of the term "Territory," and the
definition of the term "Business," to reflect changes in the Company's business
and affairs so that the scope of the limitations placed on the Executive's
activities by this Section 6 accomplishes the parties' intent in relation to the
then current facts and circumstances. Any such amendment shall be effective only
when completed in writing and signed by the Executive and the Company.
7. Successors; Binding Agreement.
a. This Agreement shall be binding upon and shall inure to the
benefit of the Company, its Successors and Assigns and the Company shall require
any Successors and Assigns to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place.
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b. Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal personal representative.
8. Fees and Expenses. The Company shall pay all legal fees and
related expenses (including but not limited to the costs of experts, accountants
and counsel) incurred by the Executive as they become due as a result of (a) the
termination of the Executive's employment (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination of employment)
and (b) the Executive seeking to obtain or enforce any right or benefit provided
by this Agreement; provided, however, that the circumstances set forth in
clauses (a) and (b) above occurred on or after a Change in Control and except
that Executive shall not be entitled to such fees and expenses if his employment
is terminated for Cause.
9. Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other; provided, however, that all notices to the Company shall be
directed to the attention of the Board with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been received on
the date of delivery thereof.
10. Settlement of Claims. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others. The Company may, however,
withhold from any benefits payable under this Agreement all federal, state,
city, or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
11. Modification and Waiver. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and the Company.
No waiver by any party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
12. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
without giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought and maintained in a
court of competent jurisdiction in State of Georgia.
13. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
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14. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof.
15. Headings. The headings of Sections herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17. Demand Registration Rights.
a. Rights. Subject to the provisions of this Section 17(a),
upon the termination of the Executive's employment, for any reason except for
Executive's voluntary resignation or termination for Cause, the Executive may
request registration for sale under the Act of all or part of the Common Stock
then held by him (excluding, for purposes of this Section 17(a), shares subject
to the stock options held by the Executive as to which the vesting provisions
shall not have lapsed pursuant to this Agreement or otherwise). Any such request
shall specify the number of shares proposed to be registered and sold and the
name of the managing underwriter of the proposed offering (who must be
acceptable to the Company in its reasonable discretion).
b. Exceptions. The Company shall not be required to effect a
demand registration under the Act pursuant to Section 17(a) above if: (i) the
aggregate market value of the shares of Common Stock proposed to be registered
does not equal or exceed $12,000,000 prior to the Initial Public Offering or
$2,000,000 after the 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 the Executive had the right to participate pursuant to
this Section 17 or Section 18 hereof; (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 prior to the Company's receipt of such request; or (iv) the Board
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 the Executive; provided,
however, that the Company may only delay a demand registration pursuant to this
Section 17(b)(iv) for a period not exceeding six months (or until such earlier
time as such transaction is consummated or no longer proposed). The Company
shall promptly notify in writing the Executive of any decision not to effect any
such request for registration pursuant to this Section 17(b), which notice shall
set forth in reasonable detail the reason for such decision and shall include an
undertaking by the Company promptly to notify the Executive as soon as a demand
registration may be effected.
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c. Reduction. If the managing underwriters, the Company and
the Executive determine, after reasonable negotiations, that the number of
shares of Common Stock held by the Executive which the Executive requested to be
included in such registration exceeds the number which can be sold in such
offering, then the amount of such shares that may be included in such
registration shall be reduced to the number of shares that the managing
underwriters, the Company and the Executive determine is marketable, after
reasonable negotiations.
d. Withdrawal. The Executive may withdraw at any time before a
registration statement filed pursuant to this Section 17 is declared effective,
in which event the Company may withdraw such registration statement. If the
Company withdraws a registration statement under this Section 17(d) in respect
of a registration for which the Company would otherwise be required to pay some
expenses under Section 19(c), (d) and (e) hereof, then the Executive shall be
liable to the Company for all expenses of such registration specified in Section
19(c), (d) and (e) hereof.
18. Piggyback Registration Rights.
a. Rights. Subject to the provision of this Section 18, if the
Company proposes to make a registered public offering, including an initial
public offering, of any of its securities under the Act (whether to be sold by
it or by one or more third parties), other than an offering pursuant to a demand
registration under Section 17 hereof or an offering registered on Form S-8, Form
S-4, or comparable forms, the Company shall, not less than 45 days prior to the
proposed filing date of the registration form, give written notice of the
proposed registration to the Executive, and at the written request of the
Executive delivered to the Company within 15 days after the receipt of such
notice, shall include in such registration and offering, and in any underwriting
of such offering, all shares of Common Stock as may have been designated in the
Executive's request.
b. Primary Offering Reduction. If a registration in which the
Executive has the right to participate pursuant to this Section 18 is an
underwritten primary registration on behalf of the Company, and the managing
underwriters, the Company and the Executive determine, after reasonable
negotiations, that the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, then the
Company shall include in such registration the number of shares of the Common
Stock requested to be sold by the Company, any other person who has registration
rights pursuant to a written agreement with the Company and the shares requested
by Executive in proportion to the number of shares of Common Stock so requested
by each of them to be so included.
c. Secondary Offering Reduction. If a registration in which
the Executive has the right to participate pursuant to this Section 18 is an
underwritten secondary registration, and the managing underwriters, the Company
and the Executive determine, after reasonable negotiations, that the number of
shares requested to be included in such registration exceeds the number of
shares which can be sold in such offering, then the Company shall include in
such offering the number of shares of Common Stock owned and proposed to be sold
by the Company and by any other participants (including the Executive) proposing
(and entitled) to sell shares pursuant to such registration which the managing
underwriters, the Company and the Executive
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determine, after reasonable negotiations, can be sold in the offering, in
proportion to the number of shares of Common Stock so requested by each of them
to be included.
19. Other Registration Issues.
a. The Company shall have no obligation to file a registration
statement pursuant to Section 17 hereof, or to include shares of Common Stock
owned by the Executive in a registration statement pursuant to Section 18
hereof, unless and until the Executive has furnished the Company with all
information and statements about or pertaining to the Executive in such
reasonable detail as is reasonably deemed by the Company to be necessary or
appropriate with respect to the preparation of the registration statement.
Whenever the Executive has requested that any shares of Common Stock be
registered pursuant to Section 17 or 18 hereof, subject to the provisions of
those Sections, the Company shall, as expeditiously as reasonably possible:
(i) prepare and file with the SEC a registration statement
with respect to such shares and use its best efforts to cause such
registration statement to become effective as soon as reasonably
practicable thereafter (provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, the
Company shall furnish counsel for the Executive with copies of all such
documents proposed to be filed);
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than nine months or until
the underwriters have completed the distribution described in such
registration statement, whichever occurs first;
(iii) furnish to the Executive such number of copies of such
registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each
preliminary prospectus), and such other documents as the Executive may
reasonably request;
(iv) use its best efforts to register or qualify such shares
under such other securities or "Blue Sky" laws of such jurisdictions as
the Executive reasonably requests (and to maintain such registrations
and qualifications effective for a period of nine months or until the
underwriters have completed the distribution of such shares, whichever
occurs first), and to do any and all other acts and things which may be
necessary or advisable to enable the Executive or underwriters to
consummate the disposition in such jurisdictions of such shares;
provided, however, that the Company will not be required to (a) qualify
generally to do business in any jurisdiction where it would not be
required but for this Section 19(a)(iv), or (b) subject itself to
taxation in any such jurisdiction; provided, further, however, that,
notwithstanding anything to the contrary in this Agreement with respect
to the bearing of expenses, if any such jurisdiction shall
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require that expenses incurred in connection with the qualification of
such shares in that jurisdiction be borne in part or full by the
Executive, then the Executive shall pay such expenses to the extent
required by such jurisdiction;
(v) cause all such shares to be listed on securities
exchanges, if any, on which similar securities issued by the Company
are then listed;
(vi) provide a transfer agent and registrar for all such
shares not later than the effective date of such registration
statements;
(vii) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions as the Executive and underwriters reasonably request (and
subject to approval by the Company's counsel) in order to expedite or
facilitate the disposition of such shares; and
(viii) make available for inspection by the Executive, by any
underwriter participating in any distribution pursuant to such
registration statement, and by any attorney, accountant or other agent
retained by the Executive or underwriter, or by any such underwriter,
all financial and other records, pertinent corporate documents, and
properties (other than confidential intellectual property) of the
Company; provided, however, that the Company can condition delivery of
any information, records or corporate documents upon the receipt from
the Executive and the underwriter and their counsel, accountants,
advisors and agents, of a confidentiality agreement in form and
substance acceptable to the Company and its counsel in the exercise of
their exclusive discretion.
b. Holdback Agreement. In the event that the Company effects
an underwritten public offering of any of the Company's equity securities, the
Executive agrees, if requested by the managing underwriters, not to effect any
sale or distribution, including any sale pursuant to Rule 144 under the Act, of
any equity securities (except as part of such underwritten offering) during the
180-day period commencing with the effective date of the registration statement
for such offering.
c. Shareholder Expenses. If, pursuant to Section 17 or 18
hereof, shares of common stock owned by the Executive are included in a
registration statement, then the Executive shall pay all transfer taxes, if any,
relating to the sale of its shares, the fees and expenses of his own counsel,
and its pro rata portion of any underwriting discounts, fees or commissions or
the equivalent thereof.
d. The Company's Expenses. Except for the fees and expenses
specified in Section 18(c) hereof and except as provided below in this Section
19(d), the Company shall pay all expenses incident to the registration and to
the Company's performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees, fees and expenses of
compliance with securities or Blue Sky laws, underwriting discounts, fees and
commissions (other than the Executive's pro rata portion of any underwriting
discounts or commissions or the equivalent thereof), printing expenses,
messenger and delivery expenses, and fees and expenses
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of counsel for the Company and all independent certified public accountants and
other persons retained by the Company. If the Company shall previously have
paid, pursuant to this Section 19(d), the expenses of a registration, then the
Executive shall pay all expenses described in this Section 19(d) (but not
expenses described in Section 19(e) hereof).
e. Other. With respect to any registration pursuant to Section
17 or 18 hereof, the Company shall pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties) and the expenses and fees for listing the securities
to be registered on exchanges on which similar securities issued by the Company
are then listed.
f. Indemnity. In the event that any shares of common stock
owned by the Executive are offered or sold by means of a registration statement
pursuant to Section 17 or 18 hereof, the Company agrees to indemnify and hold
harmless the Executive and each person, if any, who controls or may control the
Executive within the meaning of the Act (the Executive and any such other
persons being hereinafter referred to individually as an "Indemnified Person"
and collectively as "Indemnified Persons") from and against all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities, costs,
and expenses, including, without limitation, interest, penalties, and reasonable
attorneys fees and disbursements, asserted against, resulting to, imposed upon
or incurred by such Indemnified Person, jointly or severally, directly or
indirectly (hereinafter referred to in this Section 19(f) in the singular as a
"claim" and in the plural as "claims"), based upon, arising out of, or resulting
from any untrue statement or alleged untrue statement of a material fact
contained in the registration statement, any preliminary or final prospectus
contained therein, or any amendment or supplement thereto, or any document
incident to registration or qualification of any such shares, or any omission or
alleged omission to state therein a material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, or any violation by the Company of the Act of any state
securities or Blue Sky laws, except insofar as such claim is based upon, arises
out of or results from information developed or certified by the Executive for
use in connection with the registration statement or arises out of or results
from the omission of information known to the Executive prior to the violation
or alleged violation. The Executive agrees to indemnify and hold harmless the
Company, its officers and directors, and each person, if any, who controls or
may control the Company within the meaning of the Act (the Company, its officers
and directors, and any such persons also being hereinafter referred to
individually in this context as an "Indemnified Person" and collectively as
"Indemnified Persons") from and against all claims based upon, arising out of,
or resulting from any untrue statement of a material fact contained in the
registration statement, or any omission to state therein a material fact
necessary in order to make the statement made therein, in the light of the
circumstances under which they were made, not misleading, to the extent that
such claim is based upon, arises out of, or results from information developed
or certified by the Executive for use in connection with the registration
statement or arises out of, or results from an omission of information known to
the Executive prior to the violation or alleged violation. Provided, however,
that the maximum amount of liability in respect of such indemnification shall be
limited, to an amount equal to the net proceeds actually received by the Company
or the Executive from the sale of such shares effected pursuant to such
registration. The indemnifications set forth herein shall be in addition to any
liability the Company or the Executive may otherwise have to the
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Indemnified Persons. Promptly after actually receiving definitive notice of any
claim in respect of which an Indemnified Person may seek indemnification under
this Section 19(f), such Indemnified Person shall submit written notice thereof
to either the Company or the Executive, as the case may be (sometimes being
hereinafter referred to as an "Indemnifying Person"). The omission of the
Indemnified Person so to notify the Indemnifying Person of any such claim shall
not relieve the Indemnifying Person from any liability it may have hereunder
except to the extent that (a) such liability was caused or increased by such
omission, or (b) the ability of the Indemnifying Person to reduce such liability
was materially adversely affected by such omission. In addition, the omission of
the Indemnified Person to notify the Indemnifying Person of any such claim shall
not relieve the Indemnifying Person from any liability it may have otherwise
than hereunder. The Indemnifying Person shall have the right to undertake, by
counsel or representatives of its own choosing, the defense, compromise or
settlement (without admitting liability of the Indemnified Person) of any such
claim asserted, such defense, compromise or settlement to be undertaken at the
expense and risk of the Indemnifying Person, and the Indemnified Person shall
have the right to engage separate counsel, at its own expense, whom counsel for
the Indemnifying Person shall keep informed and consult with in a reasonable
manner. In the event the Indemnifying Person shall elect not to undertake such
defense by its own representatives, the Indemnifying Person shall give prompt
written notice of such election to the Indemnified Person, and the Indemnified
Person shall undertake the defense, compromise or settlement (without admitting
liability of the Indemnified Person) thereof on behalf of and for the account
and risk of the Indemnifying Person by counsel or other representatives designed
by the Indemnified Person. In the event that any claim shall arise out of a
transaction or cover any period or periods wherein the Company and the Executive
shall each be liable hereunder for part of the liability or obligation arising
therefrom, then the parties shall, each choosing its own counsel and bearing its
own expenses, defend such claim, and no settlement or compromise of such claim
may be made without the joint consent or approval of the Company and the
Executive. Notwithstanding the foregoing, no Indemnifying Person shall be
obligated hereunder with respect to amounts paid in settlement or any claim if
such settlement is effected without the consent of such Indemnifying Person
(which consent shall not be unreasonably withheld).
20. Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which shall
include all amounts earned or accrued through the Termination Date but not paid
as of the Termination Date including (i) base salary, (ii) reimbursement for
reasonable and necessary expenses incurred by the Executive on behalf of the
Company during the period ending on the Termination Date, and (iii) bonuses and
incentive compensation (other than the Pro Rata Bonus).
b. "Act" shall mean the Securities Act of 1933, as amended.
c. "Adequate Justification" shall mean the occurrence after a
Change in Control of any of the following events or conditions: (i) a material
failure of the Company to comply with the terms of this Agreement; (ii) any
relocation of the Executive outside the metropolitan area where the Company's
principal executive office is located that is not approved by members of the
Incumbent Board (as such term is defined under Section 20(j)); or (iii) other
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than as provided for herein, the removal of the Executive from the position of
Chief Executive Officer or any other substantial diminution in the Executive's
authority or the Executive's responsibilities that is not approved by members of
the Incumbent Board.
d. "Base Amount" shall mean the greater of the Executive's
annual base salary (i) at the rate in effect on the Termination Date or (ii) at
the highest rate in effect at any time during the 90-day period prior to the
Change in Control, and shall include all amounts of his base salary that are
deferred under the qualified and non-qualified employee benefit plans of the
Company or any other agreement or arrangement.
e. "Board" shall have the meaning set forth in the recitals.
f. "Bonus Amount" shall mean the greater of (i) the most
recent annual bonus paid or payable to the Executive, or, if greater, the annual
bonus paid or payable for the full fiscal year ended prior to the fiscal year
during which a Change in Control occurred or (ii) the average of the annual
bonuses paid or payable during the three full fiscal years ended prior to the
Termination Date or, if greater, the three full fiscal years ended prior to the
Change in Control (or, in each case, such lesser period for which annual bonuses
were paid or payable to the Executive).
g. "Business" shall mean the providing of ground
transportation and logistic services for the air freight industry throughout the
U.S., and any other related business which the Company or any of its affiliates
is engaged in as of the date of termination of employment.
h. "Bylaws" shall mean the Amended and Restated Bylaws of the
Company, as amended, supplemented or otherwise modified from time to time.
i. "Cause" shall mean:
(i) prior to the Initial Public Offering, it is a
result of the conviction (from which no appeal may be or is
timely taken) of the Executive of a felony which leads to a
material injury to the Company or results in or was intended
to result in a direct or indirect gain to, or personal
enrichment of, the Executive; or
(ii) after the Initial Public Offering, it is a
result of:
(A) any act that (X) constitutes, on the
part of the Executive, fraud, dishonesty, or gross
malfeasance of duty, and (Y) is demonstrably likely
to lead to material injury to the Company or resulted
or was intended to result in direct or indirect gain
to or personal enrichment of the Executive; provided,
however, that such conduct shall not constitute
Cause:
(1) unless (w) there shall have
been delivered to the Executive a written
notice setting forth with specificity the
reasons that the Board believes the
Executive's conduct constitutes the
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<PAGE> 18
criteria set forth in clause (ii) (A), (x)
the Executive shall have been provided the
opportunity, if such behavior is susceptible
to cure, to cure the specific inappropriate
behavior within 15 days following written
notice, and (y) after such 15-day period,
the Board of Directors determines that the
behavior has not been cured, and (z) the
termination is evidenced by a resolution
adopted in good faith by two-thirds of the
members of the Board (other than the
Executive); or
(2) if such conduct (x) was
believed by the Executive in good faith to
have been in or not opposed to the interests
of the Company, and (y) was not intended to
and did not result in the direct or indirect
gain to or personal enrichment of the
Executive; or
(B) the conviction (from which no appeal may
be or is timely taken) of the Executive of a felony.
j. A "Change in Control" shall mean the occurrence during the
Term of any of the following events after the Initial Public Offering:
(i) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934 (the "1934 Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of 30% or more of the
combined voting power of the Company's then outstanding Voting
Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause
a Change in Control nor shall any acquisition cause a Change
in Control as long as Executive has Beneficial Ownership of
more than 50% of the Voting Securities. A "Non-Control
Acquisition" shall mean an acquisition by (1) an employee
benefit plan (or a trust forming a part thereof) maintained by
(x) the Company or (y) any corporation or other Person of
which a majority of its voting power or its equity securities
or equity interest is owned directly or indirectly by the
Company (a "Subsidiary"), (2) the Company or any Subsidiary,
or (3) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);
(ii) The individuals who, as of 90 days after the
consummation of the Initial Public Offering, are members of
the Board (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board; provided,
however, that if the election, or nomination for election by
the Company's shareholders, of any new director was approved
by a vote of at least two-thirds of the Incumbent Board, such
new director shall, for purposes of this Agreement, be
17
<PAGE> 19
considered as a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated
under the 1934 Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(iii) Approval by shareholders of the Company of:
(A) A merger, consolidation or reorganization
involving the Company, unless
(1) the shareholders of the Company,
immediately before such merger,
consolidation or reorganization,
own, directly or indirectly,
immediately following such merger,
consolidation or reorganization, at
least two-thirds of the combined
voting power of the outstanding
voting securities of the
corporation resulting from such
merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the
same proportion as their ownership
of the Voting Securities
immediately before such merger,
consolidation or reorganization,
and
(2) the individuals who were members of
the Incumbent Board immediately
prior to the execution of the
agreement providing for such
merger, consolidation or
reorganization constitute at least
two-thirds of the members of the
board of directors of the Surviving
Corporation.
(A transaction described in clauses (1)
and (2) shall herein be referred to as a
"Non-Control Transaction").
(B) A complete liquidation or dissolution of
the Company; or
(C) An agreement for the sale or other
disposition of all or substantially all of
the assets of the Company to any Person
(other than a transfer to a Subsidiary).
(iv) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's employment is
terminated prior to a Change in Control and the Executive
reasonably demonstrates that such termination (A) was at the
request of a third party who has indicated an intention or
taken steps reasonably calculated to effect a Change in
Control and who effectuates a Change
18
<PAGE> 20
in Control (a "Third Party") or (B) otherwise occurred in
connection with, or in anticipation of, a Change in Control
which actually occurs, then for all purposes of this
Agreement, the date of a Change in Control with respect to the
Executive shall mean the date immediately prior to the date of
such termination of the Executive's employment.
k. "Compensation Committee" shall mean the compensation
committee of the Board.
l. "Competing Business" shall mean any business that, in whole
or in part, is the same or substantially the same as the Business.
m. "Confidential Business Information" shall mean any
non-public information of a competitively sensitive or personal nature, other
than Trade Secrets, acquired by the Executive, directly or indirectly, in
connection with the Executive's employment (including his employment with the
Company prior to the date of this Agreement), including (without limitation)
oral and written information concerning the Company or its affiliates relating
to financial position and results of operations (revenues, margins, assets, net
income, etc.), annual and long-range business plans, marketing plans and
methods, account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of disclosure,
directly or indirectly, by the Executive, or was available to the Executive on a
non-confidential basis prior to its disclosure to the Executive.
n. "Continuation Period" shall have the meaning ascribed to it
in Section 4(c)(iii).
o. "Disability" shall mean a physical or mental infirmity
which impairs the Executive's ability to substantially perform his duties with
the Company for a period of 180 consecutive days, as determined by an
independent physician selected with the approval of both the Company and the
Executive.
p. "Effective Date" shall mean April 1, 1997.
q. "Fair Market Value" shall have the meaning ascribed to it
in Section 4(d).
r. "Initial Public Offering" shall mean the closing of the
first public offering of the Company's common stock registered under the Act in
which aggregate proceeds to the Company, net of all underwriting discounts and
commissions and other expenses of issuance and distribution as stated in the
prospectus relating to such offering, are equal to at least four million dollars
($4,000,000).
19
<PAGE> 21
s. "Notice of Termination" shall mean a written notice of
termination from the Company or the Executive which specifies an effective date
of termination, indicates the specific termination provision in this Agreement
relied upon, and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
t. "Plan" shall mean the 1996 Professional Transportation
Group, Ltd. Stock Option Plan adopted by the Board on February 16, 1996.
u. "Pro Rata Bonus" shall mean an amount equal to the Bonus
Amount multiplied by a fraction the numerator of which is the number of days in
the fiscal year through the Termination Date and the denominator of which is
365.
v. "SEC" shall mean the United States Securities and Exchange
Commission.
w. "Successors and Assigns" shall mean a corporation or other
entity acquiring all or substantially all the assets and business of the Company
(including this Agreement), whether by operation of law or otherwise.
x. "Termination Date" shall mean, in the case of the
Executive's death, his date of death, and in all other cases, the date specified
in the Notice of Termination.
y. "Territory" shall mean the United States.
z. "Trade Secrets" shall mean any information, including but
not limited to technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, information on customers, or a
list of actual or potential customers or suppliers, which: (i) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use, and is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy, or (ii) is otherwise
defined as a "trade secret" under applicable law.
20
<PAGE> 22
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective as
of the date first above written.
PROFESSIONAL TRANSPORTATION GROUP,
LTD.
ATTEST:
By: /s/ Peter C. Roth By: /s/ Linda K. Roberts
-------------------------- ------------------------------------
Name: Peter C. Roth Name: Linda K. Roberts
Title: CFO Title: Vice President
(CORPORATE SEAL)
EXECUTIVE
/s/ Dennis A. Bakal
------------------------------------
Name: Dennis A. Bakal
14
<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PROFESSIONAL TRANSPORTATION GROUP, LTD.
AND
LINDA K. ROBERTS
DATED: APRIL 1, 1997
<PAGE> 2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PROFESSIONAL TRANSPORTATION GROUP, LTD., a Georgia corporation (the "Company"),
and LINDA K. ROBERTS, an individual resident of Georgia (the "Executive"), as
of this 1st day of April 1997.
The Company presently employs the Executive as its Vice
President/Administration. The Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and success of the
Company is substantial. The Board desires to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements which the Board has determined will reinforce and
encourage the continued dedication of the Executive to the Company and will
promote the best interests of the Company and its shareholders. The Executive
is willing to continue to serve the Company on the terms and conditions herein
provided.
This Agreement will supersede in its entirety any prior understanding
of the parties, whether written or oral. Certain terms used in this Agreement
are defined in Section 16.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree (as of the Effective Date) that:
1. Employment. The Company shall continue to employ the
Executive, and the Executive shall continue to serve the Company, as vice
President/Administration upon the terms and conditions set forth herein. The
Executive shall have such authority and responsibilities as are consistent with
his position and which may be set forth in the Bylaws or assigned by the Board
or the Chief Executive Officer from time to time. The Executive shall devote
his full business time, attention, skill and efforts to the performance of his
duties hereunder, except during periods of illness or periods of vacation and
leaves of absence consistent with Company policy. The Executive may devote
reasonable periods of time to serve as a director or advisor to other
organizations, to perform charitable and other community activities, and to
manage his personal investments; provided, however, that such activities do not
materially interfere with the performance of his duties hereunder and are not
in conflict or competitive with, or adverse to, the interests of the Company.
2. Term. Unless earlier terminated as provided herein,
the Executive's employment under this Agreement shall be for a continuing term
(the "Term") of three years, which shall be extended automatically (without
further action of the Company or the Executive) each day for an additional day
so that the remaining term shall continue to be three years; provided, however,
that either party may at any time, by written notice to the other, fix the Term
to a finite term of three years, without further automatic extension,
commencing with the date of such notice. Notwithstanding the foregoing, the
Term of employment hereunder will end on the date that the Executive attains
the age of 65.
<PAGE> 3
3. Compensation and Benefits.
a. The Company shall pay the Executive a salary at a
rate of not less than $100,000 per annum in accordance with the salary payment
practices of the Company. The Board (or an appropriate committee of the Board)
shall review the Executive's salary at least annually and may increase the
Executive's base salary if it determines in its sole discretion that an
increase is appropriate.
b. The Executive shall participate in a management
incentive program and shall be eligible to receive annual payments of a bonus
in an amount 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 pursuant to that program. In
addition, the Compensation Committee shall annually consider the Executive's
performance and determine if any additional bonus is appropriate.
c. The Executive shall participate in the Plan and be
eligible for the grant of stock options, restricted stock and other awards
thereunder.
d. The Executive shall continue to participate in all
retirement, welfare, deferred compensation, life and health insurance
(including health insurance for Executive's spouse and his dependents), and
other benefit plans or programs of the Company now or hereafter applicable to
the Executive or applicable generally to employees of the Company or to a class
of employees that includes senior executives of the Company; provided, however,
that during any period during the Term that the Executive is subject to a
Disability, and during the 180-day period of physical or mental infirmity
leading up to the Executive's Disability, the amount of the Executive's
compensation provided under this Section 3 shall be reduced by the sum of the
amounts, if any, paid to the Executive for the same period under any disability
benefit or pension plan of the Company or any of its subsidiaries.
e. The Company shall provide to the Executive an
automobile owned or leased by the Company of a make and model appropriate to
the Executive's status (in the reasonable opinion of the Executive) or, in lieu
thereof, shall provide the Executive with an allowance not to exceed $700.00
per month to partially cover the cost of the business use of an automobile
owned or leased by the Executive.
f. The Company shall continue to reimburse the Executive
for travel, seminar, and other expenses related to the Executive's duties which
are incurred and accounted for in accordance with the historic practices of the
Company.
4. Termination.
a. The Executive's employment under this Agreement may
be terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
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<PAGE> 4
(ii) by the Company due to the Disability of the
Executive upon delivery of a Notice of
Termination to the Executive;
(iii) by the Company for Cause upon delivery of a
Notice of Termination to the Executive; and
(iv) by the Executive for any reason upon delivery
of a Notice of Termination to the Company
within a 90-day period beginning on the 30th
day after any occurrence of a Change in
Control or within a 90-day period beginning
on the one year anniversary of the occurrence
of a Change in Control.
b. If the Executive's employment with the Company shall
be terminated during the Term (i) by reason of the Executive's death, or (ii)
by the Company for Disability or Cause, the Company shall pay to the Executive
(or in the case of his death, the Executive's estate) within 15 days after the
Termination Date, a lump sum cash payment equal to (i) the Accrued
Compensation, (ii) one-half of the amount provided for in Section 3(a) for the
year in which the termination takes place and (iii) if such termination is
other than by the Company for Cause, the Pro Rata Bonus.
c. If the Executive's employment with the Company shall
be terminated by the Company in violation of this Agreement or by the Executive
for any reason after a Change in Control, in addition to other rights and
remedies available in law or equity, the Executive shall be entitled to the
following:
(i) the Company shall pay the Executive in cash
within 15 days of the Termination Date an
amount equal to all Accrued Compensation and
the Pro Rata Bonus;
(ii) the Company shall pay to the Executive in
cash at the end of each of the 36 consecutive
30-day periods following the Termination Date
an amount equal to one-twelfth of the sum of
the Base Amount and the Bonus Amount.
(iii) for the period from the Termination Date
through the date that Executive attains the
age of 65 (the "Continuation Period"), the
Company shall at its expense continue on
behalf of the Executive and his dependents
and beneficiaries the life insurance,
disability, medical, dental and
hospitalization benefits provided (x) to the
Executive at any time during the 90-day
period prior to the Change in Control or at
any time thereafter or (y) to other similarly
situated executives who continue in the
employ of the Company during the Continuation
Period. The coverage and benefits (including
deductibles and costs) provided in this
Section 4(c)(iii) during the Continuation
Period shall be no less favorable to the
Executive and his dependents and
beneficiaries than the most
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<PAGE> 5
favorable of such coverages and benefits
during any of the periods referred to in
clauses (x) and (y) above. The Company's
obligation hereunder with respect to the
foregoing benefits shall be limited to the
extent that the Executive obtains any such
benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may
reduce the coverage of any benefits it is
required to provide the Executive hereunder
as long as the aggregate coverages and
benefits of the combined benefit plans is no
less favorable to the Executive than the
coverages and benefits required to be
provided hereunder. This subsection (iii)
shall not be interpreted so as to limit any
benefits to which the Executive or his
dependents or beneficiaries may be entitled
under any of the Company's employee benefit
plans, programs or practices following the
Executive's termination of employment,
including without limitation, retiree medical
and life insurance benefits; and
(iv) the restrictions on any outstanding incentive
awards (including stock options) granted to
the Executive under the Plan or under any
other incentive plan or arrangement shall
lapse and such incentive award shall become
100% vested, all stock options granted to the
Executive shall become immediately
exercisable and shall become 100% vested.
d. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Executive in any
subsequent employment except as provided in Section 4(c)(iii).
e. In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")) to the Executive or for his benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the
Company or a change in ownership or effective control of the Company or of a
substantial portion of its assets (a "Payment" or "Payments"), would be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive will be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest
or penalties, other than interest and penalties imposed by reason of the
Executive's failure to file timely a tax return or pay taxes shown due on his
return, imposed with respect to such taxes and the Excise Tax), including any
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
f. The severance pay and benefits provided for in this
Section 4 shall be in lieu of any other severance or termination pay to which
the Executive may be entitled under any
4
<PAGE> 6
Company severance or termination plan, program, practice or arrangement. The
Executive's entitlement to any other compensation or benefits shall be
determined in accordance with the Company's employee benefit plans and other
applicable programs, policies and practices then in effect.
g. In the event that the Executive's employment
hereunder is terminated for any reason, the Executive shall, and does hereby,
tender his resignation as a director of the Company and its affiliates
effective as of the date of termination.
5. Trade Secrets, Non-Competition, Non-Solicitation, and
Related Matters.
a. The Executive shall not, at any time, either during
the Term of his employment or after the Termination Date, use or disclose any
Trade Secrets of the Company, except in fulfillment of his duties as the
Executive during his employment, for so long as the pertinent information or
data remain Trade Secrets, whether or not the Trade Secrets are in written or
tangible form.
b. The Executive agrees to maintain in strict confidence
and, except as necessary to perform his duties for the Company, not to use or
disclose any Confidential Business Information for so long as the pertinent
data or information remains Confidential Business Information.
c. Upon termination of employment, the Executive shall
leave with the Company all business records relating to the Company and its
affiliates including, without limitation, all contracts, calendars, and other
materials or business records, its business or customers, including all
physical, electronic, and computer copies thereof, whether or not the Executive
prepared such materials or records himself. Upon such termination, the
Executive shall retain no copies of any such materials, provided, however, the
Executive may remove and retain all personal items and materials.
d. The Executive may disclose Trade Secrets or
Confidential Business Information pursuant to any order or legal process
requiring him (in his legal counsel's reasonable opinion) to do so; provided,
however, that the Executive shall first have notified the Company of the
request or order to so disclose the Trade Secrets or Confidential Business
Information in sufficient time to allow the Company to seek an appropriate
protective order.
e. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive shall not (without the prior
written consent of the Company) compete with the Company or any of its
affiliates in any way, including, but not limited to, (i) serving as an officer
of, director of, employee of, or consultant to, (ii) directly or indirectly,
forming, or (iii) directly or indirectly, acquiring more than a 5% investment
in, a Competing Business in the Territory.
f. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the
5
<PAGE> 7
Executive shall not (except on behalf of or with the prior written consent of
the Company) either directly or indirectly, on the Executive's own behalf or in
the service or on behalf of others, (i) solicit, divert, or appropriate to or
for a Competing Business, or (ii) attempt to solicit, divert, or appropriate to
or for a Competing Business, any person or entity that was a customer or
prospective customer of the Company or any of its affiliates on the date of
termination and is located in the Territory.
g. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive will not, either directly or
indirectly, on the Executive's own behalf or in the service or on behalf of
others, (i) solicit, divert, or hire away, or (ii) attempt to solicit, divert,
or hire away, to any business located in the Territory, any employee of or
consultant to the Company or any of its affiliates engaged or experienced in
the Business, regardless of whether the employee or consultant is full-time or
temporary, the employment or engagement is pursuant to written agreement, or
the employment is for a determined period or is at will.
h. The Executive acknowledges and agrees that great loss
and irreparable damage would be suffered by the Company if the Executive should
breach or violate any of the terms or provisions of the covenants and
agreements set forth in this Section 5. The Executive further acknowledges and
agrees that each of these covenants and agreements is reasonably necessary to
protect and preserve the interests of the Company. The parties agree that
money damages for any breach of clauses (a) through (g) of this Section 5 will
be insufficient to compensate for any breaches thereof, and that the Executive
or any of the Executive's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists. The existence of
any claim, demand, action, or cause of action against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any of the covenants or agreements in this
Agreement; provided, however, that nothing in this Agreement shall be deemed to
deny the Executive the right to defend against this enforcement on the basis
that the Company has no right to its enforcement under the terms of this
Agreement.
i. The Executive acknowledges and agrees that: (i) the
covenants and agreements contained in clauses (a) through (g) of this Section 5
are the essence of this Agreement; (ii) that the Executive has received good,
adequate and valuable consideration for each of these covenants; (iii) each of
these covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company; (iv) the Company is and will be
engaged in and throughout the Territory in the Business; (v) a Competing
Business could be engaged in from any place in the Territory; and (vi) the
Company has a legitimate business interest in restricting the Executive's
activities throughout the Territory. The Executive also acknowledges and
agrees that: (i) irreparable loss and damage will be suffered by the Company
should the Executive breach any of these covenants and agreements; (ii) each of
these covenants and agreements in clauses (a) through (g) of this Section 5 is
separate, distinct and severable not only from the other covenants and
agreements but also from the remaining provisions of this Agreement; and (iii)
the unenforceability of any covenants or agreements shall not affect the
validity or enforceability of any of the other covenants or agreements or any
other provision or
6
<PAGE> 8
provisions of this Agreement. The Executive acknowledges and agrees that if
any of the provisions of clauses (a) through (g) of this Section 5 shall ever
be deemed to exceed the time, activity, or geographic limitations permitted by
applicable law, then such provisions shall be and hereby are reformed to the
maximum time, activity, or geographical limitations permitted by applicable
law.
j. The Executive and the Company hereby agree that they
will negotiate in good faith to amend this Agreement from time to time to
modify the terms of this Section 5, the definition of the term "Territory," and
the definition of the term "Business," to reflect changes in the Company's
business and affairs so that the scope of the limitations placed on the
Executive's activities by this Section 5 accomplishes the parties' intent in
relation to the then current facts and circumstances. Any such amendment shall
be effective only when completed in writing and signed by the Executive and the
Company.
6. Successors; Binding Agreement.
a. This Agreement shall be binding upon and shall inure
to the benefit of the Company, its Successors and Assigns and the Company shall
require any Successors and Assigns to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal
fees and related expenses (including but not limited to the costs of experts,
accountants and counsel) incurred by the Executive as they become due as a
result of (a) the termination of the Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing any such
termination of employment) and (b) the Executive seeking to obtain or enforce
any right or benefit provided by this Agreement; provided, however, that the
circumstances set forth in clauses (a) and (b) above occurred on or after a
Change in Control.
8. Notice. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to have been
duly given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other; provided, however, that all notices to the Company
shall be directed to the attention of the Board with a copy to the Secretary of
the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof.
9. Settlement of Claims. The Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be
7
<PAGE> 9
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against the Executive or others. The Company may, however, withhold from any
benefits payable under this Agreement all federal, state, city, or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.
10. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Executive
and the Company. No waiver by any party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Georgia
without giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought and maintained in a
court of competent jurisdiction in State of Georgia.
12. Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior
agreements, if any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof.
14. Headings. The headings of Sections herein are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
16. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which
shall include all amounts earned or accrued through the Termination Date but
not paid as of the Termination Date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the Executive
on behalf of the Company during the period ending on the Termination Date, and
(iii) bonuses and incentive compensation (other than the Pro Rata Bonus).
b. "Adequate Justification" shall mean the occurrence
after a Change in Control of any of the following events or conditions: (i) a
material failure of the Company to
8
<PAGE> 10
comply with the terms of this Agreement; (ii) any relocation of the Executive
outside the metropolitan area where the Company's principal executive office is
located that is not approved by members of the Incumbent Board (as such term is
defined under Section 16(i)(ii)); or (iii) other than as provided for herein,
the removal of the Executive from the position of President and Chief Operating
Officer or any other substantial diminution in the Executive's authority or the
Executive's responsibilities that is not approved by members of the Incumbent
Board.
c. "Base Amount" shall mean the greater of the
Executive's annual base salary (i) at the rate in effect on the Termination
Date or (ii) at the highest rate in effect at any time during the 90-day period
prior to the Change in Control, and shall include all amounts of his base
salary that are deferred under the qualified and non-qualified employee
benefit plans of the Company or any other agreement or arrangement.
d. "Board" shall have the meaning set forth in the
recitals.
e. "Bonus Amount" shall mean the greater of (i) the most
recent annual bonus paid or payable to the Executive, or, if greater, the
annual bonus paid or payable for the full fiscal year ended prior to the fiscal
year during which a Change in Control occurred or (ii) the average of the
annual bonuses paid or payable during the three full fiscal years ended prior
to the Termination Date or, if greater, the three full fiscal years ended prior
to the Change in Control (or, in each case, such lesser period for which annual
bonuses were paid or payable to the Executive).
f. "Business" shall mean the providing of ground
transportation and logistic services for the air freight industry throughout
the U.S., and any other related business which the Company or any of its
affiliates is engaged in as of the date of termination of employment.
g. "Bylaws" shall mean the Amended and Restated Bylaws
of the Company, as amended, supplemented or otherwise modified from time to
time.
h. The termination of the Executive's employment shall
be for "Cause" if it is the result of:
(i) any act that (A) constitutes, on the part of
the Executive, fraud, dishonesty, or gross
malfeasance of duty, or conduct grossly
inappropriate to the Executive's office, and
(B) is demonstrably likely to lead to
material injury to the Company or resulted or
was intended to result in direct or indirect
gain to or personal enrichment of the
Executive; provided, however, that such
conduct shall not constitute Cause:
(A) unless (1) there shall have been
delivered to the Executive a written
notice setting forth with
specificity the reasons that the
Board believes the Executive's
conduct constitutes the criteria set
forth in clause (i), (2) the
Executive shall have been provided
the opportunity, if such behavior is
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<PAGE> 11
susceptible to cure, to cure the
specific inappropriate behavior
within 30 days following written
notice, and (3) after such 30-day
period, the Board of Directors
determines that the behavior has not
been cured, and (4) the termination
is evidenced by a resolution adopted
in good faith by two-thirds of the
members of the Board (other than the
Executive); or
(B) if such conduct (1) was believed by
the Executive in good faith to have
been in or not opposed to the
interests of the Company, and (2)
was not intended to and did not
result in the direct or indirect
gain to or personal enrichment of
the Executive; or
(ii) the conviction (from which no appeal may be
or is timely taken) of the Executive of a
felony; or
(iii) the failure of the Executive to perform his
duties hereunder in a manner satisfactory to
the Board of Directors, as recommended by the
Chief Executive Officer and as determined by
the Board of Directors in its sole
discretion; provided, however, that the
Executive shall have 60 days to cure such
failure after receiving notice from the
Company. The Company shall be obligated to
provide only one notice to the Executive
pursuant to this Section 16(h)(iii).
Thereafter, the Company may terminate the
Executive, without the Executive having a
right to cure, if the Executive fails to
perform his duties in a manner satisfactory
to the Board of Directors, as recommended by
the Chief Executive Officer and as determined
by the Board of Directors in its sole
discretion.
i. A "Change in Control" shall mean the occurrence
during the Term of any of the following events after the Initial Public
Offering:
(i) An acquisition (other than directly from the
Company) of any voting securities of the
Company (the "Voting Securities") by any
"Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the "1934
Act")) immediately after which such Person
has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the
1934 Act) of 20% or more of the combined
voting power of the Company's then
outstanding Voting Securities; provided,
however, that in determining whether a Change
in Control has occurred, Voting Securities
which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would
cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1)
an employee
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<PAGE> 12
benefit plan (or a trust forming a part
thereof) maintained by (x) the Company or (y)
any corporation or other Person of which a
majority of its voting power or its equity
securities or equity interest is owned
directly or indirectly by the Company (a
"Subsidiary"), (2) the Company or any
Subsidiary, or (3) any Person in connection
with a "Non-Control Transaction" (as
hereinafter defined);
(ii) The individuals who, as of the date of the
Initial Public Offering, are members of the
Board (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of
the Board; provided, however, that if the
election, or nomination for election by the
Company's shareholders, of any new director
was approved by a vote of at least two-thirds
of the Incumbent Board, such new director
shall, for purposes of this Agreement, be
considered as a member of the Incumbent
Board; provided, further, however, that no
individual shall be considered a member of
the Incumbent Board if such individual
initially assumed office as a result of
either an actual or threatened "Election
Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other
actual or threatened solicitation of proxies
or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid
or settle any Election Contest or Proxy
Contest; or
(iii) Approval by shareholders of the Company of:
(A) A merger, consolidation or
reorganization involving the
Company, unless
(1) the stockholders of the
Company, immediately before
such merger, consolidation or
reorganization, own, directly
or indirectly, immediately
following such merger,
consolidation or
reorganization, at least
two-thirds of the combined
voting power of the
outstanding voting securities
of the corporation resulting
from such merger or
consolidation or
reorganization (the
"Surviving Corporation") in
substantially the same
proportion as their ownership
of the Voting Securities
immediately before such
merger, consolidation or
reorganization, and
(2) the individuals who were
members of the Incumbent
Board immediately prior to
the execution of the
agreement providing for such
merger, consolidation or
reorganization constitute at
least two-thirds of the
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<PAGE> 13
members of the board of directors of
the Surviving Corporation.
(A transaction described in clauses (1)
and (2) shall herein be referred to
as a "Non-Control Transaction").
(B) A complete liquidation or
dissolution of the Company; or
(C) An agreement for the sale or other
disposition of all or substantially
all of the assets of the Company to
any Person (other than a transfer to
a Subsidiary).
(iv) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated prior to a Change in
Control and the Executive reasonably
demonstrates that such termination (A) was at
the request of a third party who has
indicated an intention or taken steps
reasonably calculated to effect a Change in
Control and who effectuates a Change in
Control (a "Third Party") or (B) otherwise
occurred in connection with, or in
anticipation of, a Change in Control which
actually occurs, then for all purposes of
this Agreement, the date of a Change in
Control with respect to the Executive shall
mean the date immediately prior to the date
of such termination of the Executive's
employment.
j. "Compensation Committee" shall mean the compensation
committee of the Board.
k. "Competing Business" shall mean any business that, in
whole or in part, is the same or substantially the same as the Business.
l. "Confidential Business Information" shall mean any
non-public information of a competitively sensitive or personal nature, other
than Trade Secrets, acquired by the Executive, directly or indirectly, in
connection with the Executive's employment (including his employment with the
Company prior to the date of this Agreement), including (without limitation)
oral and written information concerning the Company or its affiliates relating
to financial position and results of operations (revenues, margins, assets, net
income, etc.), annual and long-range business plans, marketing plans and
methods, account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of
disclosure, directly or indirectly, by the Executive, or was available to the
Executive on a non-confidential basis prior to its disclosure to the Executive.
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<PAGE> 14
m. "Continuation Period" shall have the meaning ascribed
to it in Section 4(c)(iii).
n. "Disability" shall mean a physical or mental
infirmity which impairs the Executive's ability to substantially perform his
duties with the Company for a period of 180 consecutive days, as determined by
an independent physician selected with the approval of both the Company and the
Executive.
o. "Effective Date" shall mean April 1, 1997.
p. "Initial Public Offering" shall mean the closing of
the first public offering of the Company's common stock registered under the
Securities Act of 1933 in which aggregate proceeds to the Company, net of all
underwriting discounts and commissions and other expenses of issuance and
distribution as stated in the prospectus relating to such offering, are equal
to at least four million dollars ($4,000,000).
q. "Notice of Termination" shall mean a written notice
of termination from the Company or the Executive which specifies an effective
date of termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
r. "Plan" shall mean the 1996 Professional
Transportation Group, Ltd. Stock Option Plan adopted by the Board on February
16, 1996.
s. "Pro Rata Bonus" shall mean an amount equal to the
Bonus Amount multiplied by a fraction the numerator of which is the number of
days in the fiscal year through the Termination Date and the denominator of
which is 365.
t. "Successors and Assigns" shall mean a corporation or
other entity acquiring all or substantially all the assets and business of the
Company (including this Agreement), whether by operation of law or otherwise.
u. "Termination Date" shall mean, in the case of the
Executive's death, his date of death, and in all other cases, the date
specified in the Notice of Termination.
v. "Territory" shall mean the United States.
w. "Trade Secrets" shall mean any information, including
but not limited to technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, information on customers, or a
list of actual or potential customers or suppliers, which: (i) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy, or (ii) is
otherwise defined as a "trade secret" under applicable law.
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<PAGE> 15
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective
as of the date first above written.
PROFESSIONAL TRANSPORTATION GROUP LTD.
ATTEST:
By: /s/ Peter C. Roth By: /s/ Dennis A. Bakal
--------------------------- -------------------------------
Name: Peter C. Roth Name: Dennis A. Bakal
Title: CFO Title: CEO
(CORPORATE SEAL)
EXECUTIVE
/s/ Linda K. Roberts
---------------------------------
Name: Linda K. Roberts
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<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PROFESSIONAL TRANSPORTATION GROUP, LTD.
AND
WILLIAM M. KELLY
DATED: APRIL 1, 1997
<PAGE> 2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PROFESSIONAL TRANSPORTATION GROUP, LTD., a Georgia corporation (the "Company"),
and WILLIAM M. KELLY, an individual resident of Georgia (the "Executive"), as
of this 1st day of April 1997.
The Company presently employs the Executive as its Vice
President/Transportation. The Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and success of the
Company is substantial. The Board desires to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements which the Board has determined will reinforce and
encourage the continued dedication of the Executive to the Company and will
promote the best interests of the Company and its shareholders. The Executive
is willing to continue to serve the Company on the terms and conditions herein
provided.
This Agreement will supersede in its entirety any prior understanding
of the parties, whether written or oral. Certain terms used in this Agreement
are defined in Section 16.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree (as of the Effective Date) that:
1. Employment. The Company shall continue to employ the
Executive, and the Executive shall continue to serve the Company, as Vice
President/Transportation upon the terms and conditions set forth herein. The
Executive shall have such authority and responsibilities as are consistent with
his position and which may be set forth in the Bylaws or assigned by the Board
or the Chief Executive Officer from time to time. The Executive shall devote
his full business time, attention, skill and efforts to the performance of his
duties hereunder, except during periods of illness or periods of vacation and
leaves of absence consistent with Company policy. The Executive may devote
reasonable periods of time to serve as a director or advisor to other
organizations, to perform charitable and other community activities, and to
manage his personal investments; provided, however, that such activities do not
materially interfere with the performance of his duties hereunder and are not
in conflict or competitive with, or adverse to, the interests of the Company.
2. Term. Unless earlier terminated as provided herein,
the Executive's employment under this Agreement shall be for a continuing term
(the "Term") of three years, which shall be extended automatically (without
further action of the Company or the Executive) each day for an additional day
so that the remaining term shall continue to be three years; provided, however,
that either party may at any time, by written notice to the other, fix the Term
to a finite term of three years, without further automatic extension,
commencing with the date of such notice. Notwithstanding the foregoing, the
Term of employment hereunder will end on the date that the Executive attains
the age of 65.
<PAGE> 3
3. Compensation and Benefits.
a. The Company shall pay the Executive a salary at a
rate of not less than $100,000 per annum in accordance with the salary payment
practices of the Company. The Board (or an appropriate committee of the Board)
shall review the Executive's salary at least annually and may increase the
Executive's base salary if it determines in its sole discretion that an
increase is appropriate.
b. The Executive shall participate in a management
incentive program and shall be eligible to receive annual payments of a bonus
in an amount 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 pursuant to that program. In
addition, the Compensation Committee shall annually consider the Executive's
performance and determine if any additional bonus is appropriate.
c. The Executive shall participate in the Plan and be
eligible for the grant of stock options, restricted stock and other awards
thereunder.
d. The Executive shall continue to participate in all
retirement, welfare, deferred compensation, life and health insurance
(including health insurance for Executive's spouse and his dependents), and
other benefit plans or programs of the Company now or hereafter applicable to
the Executive or applicable generally to employees of the Company or to a class
of employees that includes senior executives of the Company; provided, however,
that during any period during the Term that the Executive is subject to a
Disability, and during the 180-day period of physical or mental infirmity
leading up to the Executive's Disability, the amount of the Executive's
compensation provided under this Section 3 shall be reduced by the sum of the
amounts, if any, paid to the Executive for the same period under any disability
benefit or pension plan of the Company or any of its subsidiaries.
e. The Company shall provide to the Executive an
automobile owned or leased by the Company of a make and model appropriate to
the Executive's status (in the reasonable opinion of the Executive) or, in lieu
thereof, shall provide the Executive with an allowance not to exceed $700.00
per month to partially cover the cost of the business use of an automobile
owned or leased by the Executive.
f. The Company shall continue to reimburse the Executive
for travel, seminar, and other expenses related to the Executive's duties which
are incurred and accounted for in accordance with the historic practices of the
Company.
4. Termination.
a. The Executive's employment under this Agreement may
be terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
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<PAGE> 4
(ii) by the Company due to the Disability of the
Executive upon delivery of a Notice of
Termination to the Executive;
(iii) by the Company for Cause upon delivery of a
Notice of Termination to the Executive; and
(iv) by the Executive for any reason upon delivery
of a Notice of Termination to the Company
within a 90-day period beginning on the 30th
day after any occurrence of a Change in
Control or within a 90-day period beginning
on the one year anniversary of the occurrence
of a Change in Control.
b. If the Executive's employment with the Company shall
be terminated during the Term (i) by reason of the Executive's death, or (ii)
by the Company for Disability or Cause, the Company shall pay to the Executive
(or in the case of his death, the Executive's estate) within 15 days after the
Termination Date, a lump sum cash payment equal to (i) the Accrued
Compensation, (ii) one-half of the amount provided for in Section 3(a) for the
year in which the termination takes place and (iii) if such termination is
other than by the Company for Cause, the Pro Rata Bonus.
c. If the Executive's employment with the Company shall
be terminated by the Company in violation of this Agreement or by the Executive
for any reason after a Change in Control, in addition to other rights and
remedies available in law or equity, the Executive shall be entitled to the
following:
(i) the Company shall pay the Executive in cash
within 15 days of the Termination Date an
amount equal to all Accrued Compensation and
the Pro Rata Bonus;
(ii) the Company shall pay to the Executive in
cash at the end of each of the 36 consecutive
30-day periods following the Termination Date
an amount equal to one- twelfth of the sum of
the Base Amount and the Bonus Amount.
(iii) for the period from the Termination Date
through the date that Executive attains the
age of 65 (the "Continuation Period"), the
Company shall at its expense continue on
behalf of the Executive and his dependents
and beneficiaries the life insurance,
disability, medical, dental and
hospitalization benefits provided (x) to the
Executive at any time during the 90-day
period prior to the Change in Control or at
any time thereafter or (y) to other similarly
situated executives who continue in the
employ of the Company during the Continuation
Period. The coverage and benefits (including
deductibles and costs) provided in this
Section 4(c)(iii) during the Continuation
Period shall be no less favorable to the
Executive and his dependents and
beneficiaries than the most
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<PAGE> 5
favorable of such coverages and benefits
during any of the periods referred to in
clauses (x) and (y) above. The Company's
obligation hereunder with respect to the
foregoing benefits shall be limited to the
extent that the Executive obtains any such
benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may
reduce the coverage of any benefits it is
required to provide the Executive hereunder
as long as the aggregate coverages and
benefits of the combined benefit plans is no
less favorable to the Executive than the
coverages and benefits required to be
provided hereunder. This subsection (iii)
shall not be interpreted so as to limit any
benefits to which the Executive or his
dependents or beneficiaries may be entitled
under any of the Company's employee benefit
plans, programs or practices following the
Executive's termination of employment,
including without limitation, retiree medical
and life insurance benefits; and
(iv) the restrictions on any outstanding incentive
awards (including stock options) granted to
the Executive under the Plan or under any
other incentive plan or arrangement shall
lapse and such incentive award shall become
100% vested, all stock options granted to the
Executive shall become immediately
exercisable and shall become 100% vested.
d. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Executive in any
subsequent employment except as provided in Section 4(c)(iii).
e. In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")) to the Executive or for his benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the
Company or a change in ownership or effective control of the Company or of a
substantial portion of its assets (a "Payment" or "Payments"), would be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive will be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest
or penalties, other than interest and penalties imposed by reason of the
Executive's failure to file timely a tax return or pay taxes shown due on his
return, imposed with respect to such taxes and the Excise Tax), including any
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
f. The severance pay and benefits provided for in this
Section 4 shall be in lieu of any other severance or termination pay to which
the Executive may be entitled under any
4
<PAGE> 6
Company severance or termination plan, program, practice or arrangement. The
Executive's entitlement to any other compensation or benefits shall be
determined in accordance with the Company's employee benefit plans and other
applicable programs, policies and practices then in effect.
g. In the event that the Executive's employment
hereunder is terminated for any reason, the Executive shall, and does hereby,
tender his resignation as a director of the Company and its affiliates
effective as of the date of termination.
5. Trade Secrets, Non-Competition, Non-Solicitation, and Related Matters.
a. The Executive shall not, at any time, either during
the Term of his employment or after the Termination Date, use or disclose any
Trade Secrets of the Company, except in fulfillment of his duties as the
Executive during his employment, for so long as the pertinent information or
data remain Trade Secrets, whether or not the Trade Secrets are in written or
tangible form.
b. The Executive agrees to maintain in strict confidence
and, except as necessary to perform his duties for the Company, not to use or
disclose any Confidential Business Information for so long as the pertinent
data or information remains Confidential Business Information.
c. Upon termination of employment, the Executive shall
leave with the Company all business records relating to the Company and its
affiliates including, without limitation, all contracts, calendars, and other
materials or business records, its business or customers, including all
physical, electronic, and computer copies thereof, whether or not the Executive
prepared such materials or records himself. Upon such termination, the
Executive shall retain no copies of any such materials, provided, however, the
Executive may remove and retain all personal items and materials.
d. The Executive may disclose Trade Secrets or
Confidential Business Information pursuant to any order or legal process
requiring him (in his legal counsel's reasonable opinion) to do so; provided,
however, that the Executive shall first have notified the Company of the
request or order to so disclose the Trade Secrets or Confidential Business
Information in sufficient time to allow the Company to seek an appropriate
protective order.
e. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive shall not (without the prior
written consent of the Company) compete with the Company or any of its
affiliates in any way, including, but not limited to, (i) serving as an officer
of, director of, employee of, or consultant to, (ii) directly or indirectly,
forming, or (iii) directly or indirectly, acquiring more than a 5% investment
in, a Competing Business in the Territory.
f. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the
5
<PAGE> 7
Executive shall not (except on behalf of or with the prior written consent of
the Company) either directly or indirectly, on the Executive's own behalf or in
the service or on behalf of others, (i) solicit, divert, or appropriate to or
for a Competing Business, or (ii) attempt to solicit, divert, or appropriate to
or for a Competing Business, any person or entity that was a customer or
prospective customer of the Company or any of its affiliates on the date of
termination and is located in the Territory.
g. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive will not, either directly or
indirectly, on the Executive's own behalf or in the service or on behalf of
others, (i) solicit, divert, or hire away, or (ii) attempt to solicit, divert,
or hire away, to any business located in the Territory, any employee of or
consultant to the Company or any of its affiliates engaged or experienced in
the Business, regardless of whether the employee or consultant is full-time or
temporary, the employment or engagement is pursuant to written agreement, or
the employment is for a determined period or is at will.
h. The Executive acknowledges and agrees that great loss
and irreparable damage would be suffered by the Company if the Executive should
breach or violate any of the terms or provisions of the covenants and
agreements set forth in this Section 5. The Executive further acknowledges and
agrees that each of these covenants and agreements is reasonably necessary to
protect and preserve the interests of the Company. The parties agree that
money damages for any breach of clauses (a) through (g) of this Section 5 will
be insufficient to compensate for any breaches thereof, and that the Executive
or any of the Executive's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists. The existence of
any claim, demand, action, or cause of action against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any of the covenants or agreements in this
Agreement; provided, however, that nothing in this Agreement shall be deemed to
deny the Executive the right to defend against this enforcement on the basis
that the Company has no right to its enforcement under the terms of this
Agreement.
i. The Executive acknowledges and agrees that: (i) the
covenants and agreements contained in clauses (a) through (g) of this Section 5
are the essence of this Agreement; (ii) that the Executive has received good,
adequate and valuable consideration for each of these covenants; (iii) each of
these covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company; (iv) the Company is and will be
engaged in and throughout the Territory in the Business; (v) a Competing
Business could be engaged in from any place in the Territory; and (vi) the
Company has a legitimate business interest in restricting the Executive's
activities throughout the Territory. The Executive also acknowledges and
agrees that: (i) irreparable loss and damage will be suffered by the Company
should the Executive breach any of these covenants and agreements; (ii) each of
these covenants and agreements in clauses (a) through (g) of this Section 5 is
separate, distinct and severable not only from the other covenants and
agreements but also from the remaining provisions of this Agreement; and (iii)
the unenforceability of any covenants or agreements shall not affect the
validity or enforceability of any of the other covenants or agreements or any
other provision or
6
<PAGE> 8
provisions of this Agreement. The Executive acknowledges and agrees that if
any of the provisions of clauses (a) through (g) of this Section 5 shall ever
be deemed to exceed the time, activity, or geographic limitations permitted by
applicable law, then such provisions shall be and hereby are reformed to the
maximum time, activity, or geographical limitations permitted by applicable
law.
j. The Executive and the Company hereby agree that they
will negotiate in good faith to amend this Agreement from time to time to
modify the terms of this Section 5, the definition of the term "Territory," and
the definition of the term "Business," to reflect changes in the Company's
business and affairs so that the scope of the limitations placed on the
Executive's activities by this Section 5 accomplishes the parties' intent in
relation to the then current facts and circumstances. Any such amendment shall
be effective only when completed in writing and signed by the Executive and the
Company.
6. Successors; Binding Agreement.
a. This Agreement shall be binding upon and shall inure
to the benefit of the Company, its Successors and Assigns and the Company shall
require any Successors and Assigns to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal
fees and related expenses (including but not limited to the costs of experts,
accountants and counsel) incurred by the Executive as they become due as a
result of (a) the termination of the Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing any such
termination of employment) and (b) the Executive seeking to obtain or enforce
any right or benefit provided by this Agreement; provided, however, that the
circumstances set forth in clauses (a) and (b) above occurred on or after a
Change in Control.
8. Notice. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to have been
duly given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other; provided, however, that all notices to the Company
shall be directed to the attention of the Board with a copy to the Secretary of
the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof.
9. Settlement of Claims. The Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be
7
<PAGE> 9
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against the Executive or others. The Company may, however, withhold from any
benefits payable under this Agreement all federal, state, city, or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.
10. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Executive
and the Company. No waiver by any party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Georgia
without giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought and maintained in a
court of competent jurisdiction in State of Georgia.
12. Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior
agreements, if any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof.
14. Headings. The headings of Sections herein are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
16. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which
shall include all amounts earned or accrued through the Termination Date but
not paid as of the Termination Date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the Executive
on behalf of the Company during the period ending on the Termination Date, and
(iii) bonuses and incentive compensation (other than the Pro Rata Bonus).
b. "Adequate Justification" shall mean the occurrence
after a Change in Control of any of the following events or conditions: (i) a
material failure of the Company to
8
<PAGE> 10
comply with the terms of this Agreement; (ii) any relocation of the Executive
outside the metropolitan area where the Company's principal executive office is
located that is not approved by members of the Incumbent Board (as such term is
defined under Section 16(i)(ii)); or (iii) other than as provided for herein,
the removal of the Executive from the position of President and Chief Operating
Officer or any other substantial diminution in the Executive's authority or the
Executive's responsibilities that is not approved by members of the Incumbent
Board.
c. "Base Amount" shall mean the greater of the
Executive's annual base salary (i) at the rate in effect on the Termination
Date or (ii) at the highest rate in effect at any time during the 90-day period
prior to the Change in Control, and shall include all amounts of his base
salary that are deferred under the qualified and non- qualified employee
benefit plans of the Company or any other agreement or arrangement.
d. "Board" shall have the meaning set forth in the
recitals.
e. "Bonus Amount" shall mean the greater of (i) the most
recent annual bonus paid or payable to the Executive, or, if greater, the
annual bonus paid or payable for the full fiscal year ended prior to the fiscal
year during which a Change in Control occurred or (ii) the average of the
annual bonuses paid or payable during the three full fiscal years ended prior
to the Termination Date or, if greater, the three full fiscal years ended prior
to the Change in Control (or, in each case, such lesser period for which annual
bonuses were paid or payable to the Executive).
f. "Business" shall mean the providing of ground
transportation and logistic services for the air freight industry throughout
the U.S., and any other related business which the Company or any of its
affiliates is engaged in as of the date of termination of employment.
g. "Bylaws" shall mean the Amended and Restated Bylaws
of the Company, as amended, supplemented or otherwise modified from time to
time.
h. The termination of the Executive's employment shall
be for "Cause" if it is the result of:
(i) any act that (A) constitutes, on the part of
the Executive, fraud, dishonesty, or gross
malfeasance of duty, or conduct grossly
inappropriate to the Executive's office, and
(B) is demonstrably likely to lead to
material injury to the Company or resulted or
was intended to result in direct or indirect
gain to or personal enrichment of the
Executive; provided, however, that such
conduct shall not constitute Cause:
(A) unless (1) there shall have been
delivered to the Executive a written
notice setting forth with
specificity the reasons that the
Board believes the Executive's
conduct constitutes the criteria set
forth in clause (i), (2) the
Executive shall have been provided
the opportunity, if such behavior is
9
<PAGE> 11
susceptible to cure, to cure the
specific inappropriate behavior
within 30 days following written
notice, and (3) after such 30-day
period, the Board of Directors
determines that the behavior has not
been cured, and (4) the termination
is evidenced by a resolution adopted
in good faith by two-thirds of the
members of the Board (other than the
Executive); or
(B) if such conduct (1) was believed by
the Executive in good faith to have
been in or not opposed to the
interests of the Company, and (2)
was not intended to and did not
result in the direct or indirect
gain to or personal enrichment of
the Executive; or
(ii) the conviction (from which no appeal may be
or is timely taken) of the Executive of a
felony; or
(iii) the failure of the Executive to perform his
duties hereunder in a manner satisfactory to
the Board of Directors, as recommended by the
Chief Executive Officer and as determined by
the Board of Directors in its sole
discretion; provided, however, that the
Executive shall have 60 days to cure such
failure after receiving notice from the
Company. The Company shall be obligated to
provide only one notice to the Executive
pursuant to this Section 16(h)(iii).
Thereafter, the Company may terminate the
Executive, without the Executive having a
right to cure, if the Executive fails to
perform his duties in a manner satisfactory
to the Board of Directors, as recommended by
the Chief Executive Officer and as determined
by the Board of Directors in its sole
discretion.
i. A "Change in Control" shall mean the occurrence
during the Term of any of the following events after the Initial Public
Offering:
(i) An acquisition (other than directly from the
Company) of any voting securities of the
Company (the "Voting Securities") by any
"Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the "1934
Act")) immediately after which such Person
has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the
1934 Act) of 20% or more of the combined
voting power of the Company's then
outstanding Voting Securities; provided,
however, that in determining whether a Change
in Control has occurred, Voting Securities
which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would
cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1)
an employee
10
<PAGE> 12
benefit plan (or a trust forming a part
thereof) maintained by (x) the Company or (y)
any corporation or other Person of which a
majority of its voting power or its equity
securities or equity interest is owned
directly or indirectly by the Company (a
"Subsidiary"), (2) the Company or any
Subsidiary, or (3) any Person in connection
with a "Non-Control Transaction" (as
hereinafter defined);
(ii) The individuals who, as of the date of the
Initial Public Offering, are members of the
Board (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of
the Board; provided, however, that if the
election, or nomination for election by the
Company's shareholders, of any new director
was approved by a vote of at least two-thirds
of the Incumbent Board, such new director
shall, for purposes of this Agreement, be
considered as a member of the Incumbent
Board; provided, further, however, that no
individual shall be considered a member of
the Incumbent Board if such individual
initially assumed office as a result of
either an actual or threatened "Election
Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other
actual or threatened solicitation of proxies
or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid
or settle any Election Contest or Proxy
Contest; or
(iii) Approval by shareholders of the Company of:
(A) A merger, consolidation or
reorganization involving the Company,
unless
(1) the stockholders of the
Company, immediately before
such merger, consolidation or
reorganization, own, directly
or indirectly, immediately
following such merger,
consolidation or
reorganization, at least
two-thirds of the combined
voting power of the
outstanding voting securities
of the corporation resulting
from such merger or
consolidation or
reorganization (the
"Surviving Corporation") in
substantially the same
proportion as their ownership
of the Voting Securities
immediately before such
merger, consolidation or
reorganization, and
(2) the individuals who were
members of the Incumbent
Board immediately prior to
the execution of the
agreement providing for such
merger, consolidation or
reorganization constitute at
least two-thirds of the
11
<PAGE> 13
members of the board of
directors of the Surviving
Corporation.
(A transaction described in clauses
(1) and (2) shall herein be referred
to as a "Non-Control Transaction").
(B) A complete liquidation or
dissolution of the Company; or
(C) An agreement for the sale or other
disposition of all or substantially
all of the assets of the Company to
any Person (other than a transfer to
a Subsidiary).
(iv) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated prior to a Change in
Control and the Executive reasonably
demonstrates that such termination (A) was at
the request of a third party who has
indicated an intention or taken steps
reasonably calculated to effect a Change in
Control and who effectuates a Change in
Control (a "Third Party") or (B) otherwise
occurred in connection with, or in
anticipation of, a Change in Control which
actually occurs, then for all purposes of
this Agreement, the date of a Change in
Control with respect to the Executive shall
mean the date immediately prior to the date
of such termination of the Executive's
employment.
j. "Compensation Committee" shall mean the compensation
committee of the Board.
k. "Competing Business" shall mean any business that, in
whole or in part, is the same or substantially the same as the Business.
l. "Confidential Business Information" shall mean any
non-public information of a competitively sensitive or personal nature, other
than Trade Secrets, acquired by the Executive, directly or indirectly, in
connection with the Executive's employment (including his employment with the
Company prior to the date of this Agreement), including (without limitation)
oral and written information concerning the Company or its affiliates relating
to financial position and results of operations (revenues, margins, assets, net
income, etc.), annual and long-range business plans, marketing plans and
methods, account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of
disclosure, directly or indirectly, by the Executive, or was available to the
Executive on a non-confidential basis prior to its disclosure to the Executive.
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<PAGE> 14
m. "Continuation Period" shall have the meaning ascribed
to it in Section 4(c)(iii).
n. "Disability" shall mean a physical or mental
infirmity which impairs the Executive's ability to substantially perform his
duties with the Company for a period of 180 consecutive days, as determined by
an independent physician selected with the approval of both the Company and the
Executive.
o. "Effective Date" shall mean April 1, 1997.
p. "Initial Public Offering" shall mean the closing of
the first public offering of the Company's common stock registered under the
Securities Act of 1933 in which aggregate proceeds to the Company, net of all
underwriting discounts and commissions and other expenses of issuance and
distribution as stated in the prospectus relating to such offering, are equal
to at least four million dollars ($4,000,000).
q. "Notice of Termination" shall mean a written notice
of termination from the Company or the Executive which specifies an effective
date of termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
r. "Plan" shall mean the 1996 Professional
Transportation Group, Ltd. Stock Option Plan adopted by the Board on February
16, 1996.
s. "Pro Rata Bonus" shall mean an amount equal to the
Bonus Amount multiplied by a fraction the numerator of which is the number of
days in the fiscal year through the Termination Date and the denominator of
which is 365.
t. "Successors and Assigns" shall mean a corporation or
other entity acquiring all or substantially all the assets and business of the
Company (including this Agreement), whether by operation of law or otherwise.
u. "Termination Date" shall mean, in the case of the
Executive's death, his date of death, and in all other cases, the date
specified in the Notice of Termination.
v. "Territory" shall mean the United States.
w. "Trade Secrets" shall mean any information, including
but not limited to technical or non- technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, information on customers, or a
list of actual or potential customers or suppliers, which: (i) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy, or (ii) is
otherwise defined as a "trade secret" under applicable law.
13
<PAGE> 15
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective
as of the date first above written.
<TABLE>
<CAPTION>
PROFESSIONAL TRANSPORTATION
GROUP LTD.
ATTEST:
<S> <C>
By: /s/ Linda K. Roberts By: /s/ Dennis A. Bakal
------------------------- -------------------------
Name: Linda K. Roberts Name: Dennis A. Bakal
Title: VP Title: CEO
(CORPORATE SEAL)
EXECUTIVE
/s/ William M. Kelly
------------------------
Name: William M. Kelly
</TABLE>
14
<PAGE> 1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PROFESSIONAL TRANSPORTATION GROUP, LTD.
AND
STANLEY E. LAIKEN
DATED: APRIL 1, 1997
<PAGE> 2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
PROFESSIONAL TRANSPORTATION GROUP, LTD., a Georgia corporation (the "Company"),
and STANLEY E. LAIKEN, an individual resident of Georgia (the "Executive"), as
of this 1st day of April 1997.
The Company presently employs the Executive as its Vice
President/Sales. The Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and success of the
Company is substantial. The Board desires to provide for the continued
employment of the Executive and to make certain changes in the Executive's
employment arrangements which the Board has determined will reinforce and
encourage the continued dedication of the Executive to the Company and will
promote the best interests of the Company and its shareholders. The Executive
is willing to continue to serve the Company on the terms and conditions herein
provided.
This Agreement will supersede in its entirety any prior understanding
of the parties, whether written or oral. Certain terms used in this Agreement
are defined in Section 16.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree (as of the Effective Date) that:
1. Employment. The Company shall continue to employ the
Executive, and the Executive shall continue to serve the Company, as Vice
President/Sales upon the terms and conditions set forth herein. The Executive
shall have such authority and responsibilities as are consistent with his
position and which may be set forth in the Bylaws or assigned by the Board or
the Chief Executive Officer from time to time. The Executive shall devote his
full business time, attention, skill and efforts to the performance of his
duties hereunder, except during periods of illness or periods of vacation and
leaves of absence consistent with Company policy. The Executive may devote
reasonable periods of time to serve as a director or advisor to other
organizations, to perform charitable and other community activities, and to
manage his personal investments; provided, however, that such activities do not
materially interfere with the performance of his duties hereunder and are not
in conflict or competitive with, or adverse to, the interests of the Company.
2. Term. Unless earlier terminated as provided herein,
the Executive's employment under this Agreement shall be for a continuing term
(the "Term") of three years, which shall be extended automatically (without
further action of the Company or the Executive) each day for an additional day
so that the remaining term shall continue to be three years; provided, however,
that either party may at any time, by written notice to the other, fix the Term
to a finite term of three years, without further automatic extension,
commencing with the date of such notice. Notwithstanding the foregoing, the
Term of employment hereunder will end on the date that the Executive attains
the age of 65.
<PAGE> 3
3. Compensation and Benefits.
a. The Company shall pay the Executive a salary at a
rate of not less than $88,650 per annum in accordance with the salary payment
practices of the Company. The Board (or an appropriate committee of the Board)
shall review the Executive's salary at least annually and may increase the
Executive's base salary if it determines in its sole discretion that an
increase is appropriate.
b. The Executive shall participate in a management
incentive program and shall be eligible to receive annual payments of a bonus
in an amount 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 pursuant to that program. In
addition, the Compensation Committee shall annually consider the Executive's
performance and determine if any additional bonus is appropriate.
c. The Executive shall participate in the Plan and be
eligible for the grant of stock options, restricted stock and other awards
thereunder.
d. The Executive shall continue to participate in all
retirement, welfare, deferred compensation, life and health insurance
(including health insurance for Executive's spouse and his dependents), and
other benefit plans or programs of the Company now or hereafter applicable to
the Executive or applicable generally to employees of the Company or to a class
of employees that includes senior executives of the Company; provided, however,
that during any period during the Term that the Executive is subject to a
Disability, and during the 180-day period of physical or mental infirmity
leading up to the Executive's Disability, the amount of the Executive's
compensation provided under this Section 3 shall be reduced by the sum of the
amounts, if any, paid to the Executive for the same period under any disability
benefit or pension plan of the Company or any of its subsidiaries.
e. The Company shall provide to the Executive an
automobile owned or leased by the Company of a make and model appropriate to
the Executive's status (in the reasonable opinion of the Executive) or, in lieu
thereof, shall provide the Executive with an allowance not to exceed $700.00
per month to partially cover the cost of the business use of an automobile
owned or leased by the Executive.
f. The Company shall continue to reimburse the Executive
for travel, seminar, and other expenses related to the Executive's duties which
are incurred and accounted for in accordance with the historic practices of the
Company.
4. Termination.
a. The Executive's employment under this Agreement may
be terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
2
<PAGE> 4
(ii) by the Company due to the Disability of the
Executive upon delivery of a Notice of
Termination to the Executive;
(iii) by the Company for Cause upon delivery of a
Notice of Termination to the Executive; and
(iv) by the Executive for any reason upon delivery
of a Notice of Termination to the Company
within a 90-day period beginning on the 30th
day after any occurrence of a Change in
Control or within a 90-day period beginning
on the one year anniversary of the occurrence
of a Change in Control.
b. If the Executive's employment with the Company shall
be terminated during the Term (i) by reason of the Executive's death, or (ii)
by the Company for Disability or Cause, the Company shall pay to the Executive
(or in the case of his death, the Executive's estate) within 15 days after the
Termination Date, a lump sum cash payment equal to (i) the Accrued
Compensation, (ii) one-half of the amount provided for in Section 3(a) for the
year in which the termination takes place and (iii) if such termination is
other than by the Company for Cause, the Pro Rata Bonus.
c. If the Executive's employment with the Company shall
be terminated by the Company in violation of this Agreement or by the Executive
for any reason after a Change in Control, in addition to other rights and
remedies available in law or equity, the Executive shall be entitled to the
following:
(i) the Company shall pay the Executive in cash
within 15 days of the Termination Date an
amount equal to all Accrued Compensation and
the Pro Rata Bonus;
(ii) the Company shall pay to the Executive in
cash at the end of each of the 36 consecutive
30-day periods following the Termination Date
an amount equal to one- twelfth of the sum of
the Base Amount and the Bonus Amount.
(iii) for the period from the Termination Date
through the date that Executive attains the
age of 65 (the "Continuation Period"), the
Company shall at its expense continue on
behalf of the Executive and his dependents
and beneficiaries the life insurance,
disability, medical, dental and
hospitalization benefits provided (x) to the
Executive at any time during the 90-day
period prior to the Change in Control or at
any time thereafter or (y) to other similarly
situated executives who continue in the
employ of the Company during the Continuation
Period. The coverage and benefits (including
deductibles and costs) provided in this
Section 4(c)(iii) during the Continuation
Period shall be no less favorable to the
Executive and his dependents and
beneficiaries than the most
3
<PAGE> 5
favorable of such coverages and benefits
during any of the periods referred to in
clauses (x) and (y) above. The Company's
obligation hereunder with respect to the
foregoing benefits shall be limited to the
extent that the Executive obtains any such
benefits pursuant to a subsequent
employer's benefit plans, in which case the
Company may reduce the coverage of any
benefits it is required to provide the
Executive hereunder as long as the
aggregate coverages and benefits of the
combined benefit plans is no less favorable
to the Executive than the coverages and
benefits required to be provided hereunder.
This subsection (iii) shall not be
interpreted so as to limit any benefits to
which the Executive or his dependents or
beneficiaries may be entitled under any of
the Company's employee benefit plans,
programs or practices following the
Executive's termination of employment,
including without limitation, retiree
medical and life insurance benefits; and
(iv) the restrictions on any outstanding incentive
awards (including stock options) granted to
the Executive under the Plan or under any
other incentive plan or arrangement shall
lapse and such incentive award shall become
100% vested, all stock options granted to the
Executive shall become immediately
exercisable and shall become 100% vested.
d. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Executive in any
subsequent employment except as provided in Section 4(c)(iii).
e. In the event that any payment or benefit (within the
meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "Code")) to the Executive or for his benefit paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with, or arising out of, his employment with the
Company or a change in ownership or effective control of the Company or of a
substantial portion of its assets (a "Payment" or "Payments"), would be subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive will be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest
or penalties, other than interest and penalties imposed by reason of the
Executive's failure to file timely a tax return or pay taxes shown due on his
return, imposed with respect to such taxes and the Excise Tax), including any
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
f. The severance pay and benefits provided for in this
Section 4 shall be in lieu of any other severance or termination pay to which
the Executive may be entitled under any
4
<PAGE> 6
Company severance or termination plan, program, practice or arrangement. The
Executive's entitlement to any other compensation or benefits shall be
determined in accordance with the Company's employee benefit plans and other
applicable programs, policies and practices then in effect.
g. In the event that the Executive's employment
hereunder is terminated for any reason, the Executive shall, and does hereby,
tender his resignation as a director of the Company and its affiliates
effective as of the date of termination.
5. Trade Secrets, Non-Competition, Non-Solicitation, and
Related Matters.
a. The Executive shall not, at any time, either during
the Term of his employment or after the Termination Date, use or disclose any
Trade Secrets of the Company, except in fulfillment of his duties as the
Executive during his employment, for so long as the pertinent information or
data remain Trade Secrets, whether or not the Trade Secrets are in written or
tangible form.
b. The Executive agrees to maintain in strict confidence
and, except as necessary to perform his duties for the Company, not to use or
disclose any Confidential Business Information for so long as the pertinent
data or information remains Confidential Business Information.
c. Upon termination of employment, the Executive shall
leave with the Company all business records relating to the Company and its
affiliates including, without limitation, all contracts, calendars, and other
materials or business records, its business or customers, including all
physical, electronic, and computer copies thereof, whether or not the Executive
prepared such materials or records himself. Upon such termination, the
Executive shall retain no copies of any such materials, provided, however, the
Executive may remove and retain all personal items and materials.
d. The Executive may disclose Trade Secrets or
Confidential Business Information pursuant to any order or legal process
requiring him (in his legal counsel's reasonable opinion) to do so; provided,
however, that the Executive shall first have notified the Company of the
request or order to so disclose the Trade Secrets or Confidential Business
Information in sufficient time to allow the Company to seek an appropriate
protective order.
e. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive shall not (without the prior
written consent of the Company) compete with the Company or any of its
affiliates in any way, including, but not limited to, (i) serving as an officer
of, director of, employee of, or consultant to, (ii) directly or indirectly,
forming, or (iii) directly or indirectly, acquiring more than a 5% investment
in, a Competing Business in the Territory.
f. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the
5
<PAGE> 7
Executive shall not (except on behalf of or with the prior written consent of
the Company) either directly or indirectly, on the Executive's own behalf or in
the service or on behalf of others, (i) solicit, divert, or appropriate to or
for a Competing Business, or (ii) attempt to solicit, divert, or appropriate to
or for a Competing Business, any person or entity that was a customer or
prospective customer of the Company or any of its affiliates on the date of
termination and is located in the Territory.
g. If the Executive is terminated for Cause or if the
Executive resigns without Adequate Justification, then for a period of one year
following the date of termination, the Executive will not, either directly or
indirectly, on the Executive's own behalf or in the service or on behalf of
others, (i) solicit, divert, or hire away, or (ii) attempt to solicit, divert,
or hire away, to any business located in the Territory, any employee of or
consultant to the Company or any of its affiliates engaged or experienced in
the Business, regardless of whether the employee or consultant is full-time or
temporary, the employment or engagement is pursuant to written agreement, or
the employment is for a determined period or is at will.
h. The Executive acknowledges and agrees that great loss
and irreparable damage would be suffered by the Company if the Executive should
breach or violate any of the terms or provisions of the covenants and
agreements set forth in this Section 5. The Executive further acknowledges and
agrees that each of these covenants and agreements is reasonably necessary to
protect and preserve the interests of the Company. The parties agree that
money damages for any breach of clauses (a) through (g) of this Section 5 will
be insufficient to compensate for any breaches thereof, and that the Executive
or any of the Executive's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists. The existence of
any claim, demand, action, or cause of action against the Company, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any of the covenants or agreements in this
Agreement; provided, however, that nothing in this Agreement shall be deemed to
deny the Executive the right to defend against this enforcement on the basis
that the Company has no right to its enforcement under the terms of this
Agreement.
i. The Executive acknowledges and agrees that: (i) the
covenants and agreements contained in clauses (a) through (g) of this Section 5
are the essence of this Agreement; (ii) that the Executive has received good,
adequate and valuable consideration for each of these covenants; (iii) each of
these covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company; (iv) the Company is and will be
engaged in and throughout the Territory in the Business; (v) a Competing
Business could be engaged in from any place in the Territory; and (vi) the
Company has a legitimate business interest in restricting the Executive's
activities throughout the Territory. The Executive also acknowledges and
agrees that: (i) irreparable loss and damage will be suffered by the Company
should the Executive breach any of these covenants and agreements; (ii) each of
these covenants and agreements in clauses (a) through (g) of this Section 5 is
separate, distinct and severable not only from the other covenants and
agreements but also from the remaining provisions of this Agreement; and (iii)
the unenforceability of any covenants or agreements shall not affect the
validity or enforceability of any of the other covenants or agreements or any
other provision or
6
<PAGE> 8
provisions of this Agreement. The Executive acknowledges and agrees that if
any of the provisions of clauses (a) through (g) of this Section 5 shall ever
be deemed to exceed the time, activity, or geographic limitations permitted by
applicable law, then such provisions shall be and hereby are reformed to the
maximum time, activity, or geographical limitations permitted by applicable
law.
j. The Executive and the Company hereby agree that they
will negotiate in good faith to amend this Agreement from time to time to
modify the terms of this Section 5, the definition of the term "Territory," and
the definition of the term "Business," to reflect changes in the Company's
business and affairs so that the scope of the limitations placed on the
Executive's activities by this Section 5 accomplishes the parties' intent in
relation to the then current facts and circumstances. Any such amendment shall
be effective only when completed in writing and signed by the Executive and the
Company.
6. Successors; Binding Agreement.
a. This Agreement shall be binding upon and shall inure
to the benefit of the Company, its Successors and Assigns and the Company shall
require any Successors and Assigns to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession or assignment had taken place.
b. Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal
fees and related expenses (including but not limited to the costs of experts,
accountants and counsel) incurred by the Executive as they become due as a
result of (a) the termination of the Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing any such
termination of employment) and (b) the Executive seeking to obtain or enforce
any right or benefit provided by this Agreement; provided, however, that the
circumstances set forth in clauses (a) and (b) above occurred on or after a
Change in Control.
8. Notice. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to have been
duly given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other; provided, however, that all notices to the Company
shall be directed to the attention of the Board with a copy to the Secretary of
the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof.
9. Settlement of Claims. The Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be
7
<PAGE> 9
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against the Executive or others. The Company may, however, withhold from any
benefits payable under this Agreement all federal, state, city, or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.
10. Modification and Waiver. No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Executive
and the Company. No waiver by any party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Georgia
without giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought and maintained in a
court of competent jurisdiction in State of Georgia.
12. Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersedes all prior
agreements, if any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof.
14. Headings. The headings of Sections herein are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
15. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
16. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
a. "Accrued Compensation" shall mean an amount which
shall include all amounts earned or accrued through the Termination Date but
not paid as of the Termination Date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the Executive
on behalf of the Company during the period ending on the Termination Date, and
(iii) bonuses and incentive compensation (other than the Pro Rata Bonus).
b. "Adequate Justification" shall mean the occurrence
after a Change in Control of any of the following events or conditions: (i) a
material failure of the Company to
8
<PAGE> 10
comply with the terms of this Agreement; (ii) any relocation of the Executive
outside the metropolitan area where the Company's principal executive office is
located that is not approved by members of the Incumbent Board (as such term is
defined under Section 16(i)(ii)); or (iii) other than as provided for herein,
the removal of the Executive from the position of President and Chief Operating
Officer or any other substantial diminution in the Executive's authority or the
Executive's responsibilities that is not approved by members of the Incumbent
Board.
c. "Base Amount" shall mean the greater of the
Executive's annual base salary (i) at the rate in effect on the Termination
Date or (ii) at the highest rate in effect at any time during the 90-day period
prior to the Change in Control, and shall include all amounts of his base
salary that are deferred under the qualified and non- qualified employee
benefit plans of the Company or any other agreement or arrangement.
d. "Board" shall have the meaning set forth in the
recitals.
e. "Bonus Amount" shall mean the greater of (i) the most
recent annual bonus paid or payable to the Executive, or, if greater, the
annual bonus paid or payable for the full fiscal year ended prior to the fiscal
year during which a Change in Control occurred or (ii) the average of the
annual bonuses paid or payable during the three full fiscal years ended prior
to the Termination Date or, if greater, the three full fiscal years ended prior
to the Change in Control (or, in each case, such lesser period for which annual
bonuses were paid or payable to the Executive).
f. "Business" shall mean the providing of ground
transportation and logistic services for the air freight industry throughout
the U.S., and any other related business which the Company or any of its
affiliates is engaged in as of the date of termination of employment.
g. "Bylaws" shall mean the Amended and Restated Bylaws
of the Company, as amended, supplemented or otherwise modified from time to
time.
h. The termination of the Executive's employment shall
be for "Cause" if it is the result of:
(i) any act that (A) constitutes, on the part of
the Executive, fraud, dishonesty, or gross
malfeasance of duty, or conduct grossly
inappropriate to the Executive's office, and
(B) is demonstrably likely to lead to
material injury to the Company or resulted or
was intended to result in direct or indirect
gain to or personal enrichment of the
Executive; provided, however, that such
conduct shall not constitute Cause:
(A) unless (1) there shall have been
delivered to the Executive a written
notice setting forth with
specificity the reasons that the
Board believes the Executive's
conduct constitutes the criteria set
forth in clause (i), (2) the
Executive shall have been provided
the opportunity, if such behavior is
9
<PAGE> 11
susceptible to cure, to cure the
specific inappropriate behavior
within 30 days following written
notice, and (3) after such 30-day
period, the Board of Directors
determines that the behavior has not
been cured, and (4) the termination
is evidenced by a resolution adopted
in good faith by two-thirds of the
members of the Board (other than
the Executive); or
(B) if such conduct (1) was believed by
the Executive in good faith to have
been in or not opposed to the
interests of the Company, and (2)
was not intended to and did not
result in the direct or indirect
gain to or personal enrichment of
the Executive; or
(ii) the conviction (from which no appeal may be
or is timely taken) of the Executive of a
felony; or
(iii) the failure of the Executive to perform his
duties hereunder in a manner satisfactory to
the Board of Directors, as recommended by the
Chief Executive Officer and as determined by
the Board of Directors in its sole
discretion; provided, however, that the
Executive shall have 60 days to cure such
failure after receiving notice from the
Company. The Company shall be obligated to
provide only one notice to the Executive
pursuant to this Section 16(h)(iii).
Thereafter, the Company may terminate the
Executive, without the Executive having a
right to cure, if the Executive fails to
perform his duties in a manner satisfactory
to the Board of Directors, as recommended by
the Chief Executive Officer and as determined
by the Board of Directors in its sole
discretion.
i. A "Change in Control" shall mean the occurrence
during the Term of any of the following events after the Initial Public
Offering:
(i) An acquisition (other than directly from the
Company) of any voting securities of the
Company (the "Voting Securities") by any
"Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (the "1934
Act")) immediately after which such Person
has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the
1934 Act) of 20% or more of the combined
voting power of the Company's then
outstanding Voting Securities; provided,
however, that in determining whether a Change
in Control has occurred, Voting Securities
which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would
cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (1)
an employee
10
<PAGE> 12
benefit plan (or a trust forming a part
thereof) maintained by (x) the Company or
(y) any corporation or other Person of
which a majority of its voting power or its
equity securities or equity interest is
owned directly or indirectly by the Company
(a "Subsidiary"), (2) the Company or any
Subsidiary, or (3) any Person in connection
with a "Non-Control Transaction" (as
hereinafter defined);
(ii) The individuals who, as of the date of the
Initial Public Offering, are members of the
Board (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of
the Board; provided, however, that if the
election, or nomination for election by the
Company's shareholders, of any new director
was approved by a vote of at least two-thirds
of the Incumbent Board, such new director
shall, for purposes of this Agreement, be
considered as a member of the Incumbent
Board; provided, further, however, that no
individual shall be considered a member of
the Incumbent Board if such individual
initially assumed office as a result of
either an actual or threatened "Election
Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other
actual or threatened solicitation of proxies
or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid
or settle any Election Contest or Proxy
Contest; or
(iii) Approval by shareholders of the Company of:
(A) A merger, consolidation or reorganization
involving the Company, unless
(1) the stockholders of the Company,
immediately before such merger,
consolidation or reorganization,
own, directly or indirectly,
immediately following such merger,
consolidation or reorganization,
at least two-thirds of the
combined voting power of the
outstanding voting securities of
the corporation resulting from
such merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the
same proportion as their ownership
of the Voting Securities
immediately before such merger,
consolidation or reorganization,
and
(2) the individuals who were members
of the Incumbent Board immediately
prior to the execution of the
agreement providing for such
merger, consolidation or
reorganization constitute at least
two-thirds of the
11
<PAGE> 13
members of the board of
directors of the Surviving
Corporation.
(A transaction described in clauses
(1) and (2) shall herein be referred
to as a "Non-Control Transaction").
(B) A complete liquidation or
dissolution of the Company; or
(C) An agreement for the sale or other
disposition of all or substantially
all of the assets of the Company to
any Person (other than a transfer to
a Subsidiary).
(iv) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated prior to a Change in
Control and the Executive reasonably
demonstrates that such termination (A) was at
the request of a third party who has
indicated an intention or taken steps
reasonably calculated to effect a Change in
Control and who effectuates a Change in
Control (a "Third Party") or (B) otherwise
occurred in connection with, or in
anticipation of, a Change in Control which
actually occurs, then for all purposes of
this Agreement, the date of a Change in
Control with respect to the Executive shall
mean the date immediately prior to the date
of such termination of the Executive's
employment.
j. "Compensation Committee" shall mean the compensation
committee of the Board.
k. "Competing Business" shall mean any business that, in
whole or in part, is the same or substantially the same as the Business.
l. "Confidential Business Information" shall mean any
non-public information of a competitively sensitive or personal nature, other
than Trade Secrets, acquired by the Executive, directly or indirectly, in
connection with the Executive's employment (including his employment with the
Company prior to the date of this Agreement), including (without limitation)
oral and written information concerning the Company or its affiliates relating
to financial position and results of operations (revenues, margins, assets, net
income, etc.), annual and long-range business plans, marketing plans and
methods, account invoices, oral or written customer information, and personnel
information. Confidential Business Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, computer programs,
and records, whether or not legended or otherwise identified by the Company and
its affiliates as Confidential Business Information, as well as information
which is the subject of meetings and discussions and not so recorded; provided,
however, that Confidential Business Information shall not include information
that is generally available to the public, other than as a result of
disclosure, directly or indirectly, by the Executive, or was available to the
Executive on a non-confidential basis prior to its disclosure to the Executive.
12
<PAGE> 14
m. "Continuation Period" shall have the meaning ascribed
to it in Section 4(c)(iii).
n. "Disability" shall mean a physical or mental
infirmity which impairs the Executive's ability to substantially perform his
duties with the Company for a period of 180 consecutive days, as determined by
an independent physician selected with the approval of both the Company and the
Executive.
o. "Effective Date" shall mean April 1, 1997.
p. "Initial Public Offering" shall mean the closing of
the first public offering of the Company's common stock registered under the
Securities Act of 1933 in which aggregate proceeds to the Company, net of all
underwriting discounts and commissions and other expenses of issuance and
distribution as stated in the prospectus relating to such offering, are equal
to at least four million dollars ($4,000,000).
q. "Notice of Termination" shall mean a written notice
of termination from the Company or the Executive which specifies an effective
date of termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
r. "Plan" shall mean the 1996 Professional
Transportation Group, Ltd. Stock Option Plan adopted by the Board on February
16, 1996.
s. "Pro Rata Bonus" shall mean an amount equal to the
Bonus Amount multiplied by a fraction the numerator of which is the number of
days in the fiscal year through the Termination Date and the denominator of
which is 365.
t. "Successors and Assigns" shall mean a corporation or
other entity acquiring all or substantially all the assets and business of the
Company (including this Agreement), whether by operation of law or otherwise.
u. "Termination Date" shall mean, in the case of the
Executive's death, his date of death, and in all other cases, the date
specified in the Notice of Termination.
v. "Territory" shall mean the United States.
w. "Trade Secrets" shall mean any information, including
but not limited to technical or non- technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, information on customers, or a
list of actual or potential customers or suppliers, which: (i) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy, or (ii) is
otherwise defined as a "trade secret" under applicable law.
13
<PAGE> 15
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective
as of the date first above written.
<TABLE>
<CAPTION>
PROFESSIONAL TRANSPORTATION
GROUP LTD.
ATTEST:
<S> <C>
By: /s/ Linda K. Roberts By: /s/ Dennis A. Bakal
-------------------------------- -------------------------------
Name: Linda K. Roberts Name: Dennis A. Bakal
Title: VP Title: CEO
(CORPORATE SEAL)
EXECUTIVE
/s/ Stanley E. Laiken
-------------------------------------------------------------
Name: Stanley E. Laiken
</TABLE>
14
<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 preferential access to its motor vehicles, equipment,
labor, drivers, and other facilities 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
<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
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<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
25449
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<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
*** Omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.
<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 $400,000.00 per truck load.
(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 as ten dollars ($10.00) per pound, not to exceed a maximum of
$400,000.00 per truck load.
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 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
May 13, 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>
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 MAR-31-1997
<CASH> 248,454 202,146
<SECURITIES> 0 0
<RECEIVABLES> 2,883,653 3,303,300
<ALLOWANCES> 63,629 59,455
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,473,736 4,014,767
<PP&E> 2,130,089 2,529,187
<DEPRECIATION> 451,078 527,268
<TOTAL-ASSETS> 5,344,879 6,305,292
<CURRENT-LIABILITIES> 3,119,644 3,908,144
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> (947) (138,004)
<TOTAL-LIABILITY-AND-EQUITY> 5,344,879 6,305,292
<SALES> 0 0
<TOTAL-REVENUES> 21,172,201 7,413,873
<CGS> 0 0
<TOTAL-COSTS> 20,629,835 7,289,310
<OTHER-EXPENSES> (51,059) (66,976)
<LOSS-PROVISION> 16,485 3,000
<INTEREST-EXPENSE> 272,347 74,596
<INCOME-PRETAX> 321,078 116,943
<INCOME-TAX> 137,000 290,000
<INCOME-CONTINUING> 184,078 (173,057)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 184,078 (173,057)
<EPS-PRIMARY> 0.06 (0.07)
<EPS-DILUTED> 0.06 (0.07)
</TABLE>
